Norshore Holding AS Company Presentation

Norshore Holding AS
Company Presentation
July 2014
This is Norshore
Our business & strategy
What we do
Our assets and people
 Drilling and subsea contractor
 Top hole drilling
 1 vessel in operation
 Providing innovative and cost
efficient drilling services to oil
companies around the world
 Plug & abandonment
 1 vessel under construction
 Riserless drilling
 Subsea & well intervention
 3 optional vessels
 100 people onshore & offshore
A fully integrated drilling and subsea player with highly versatile multi-purpose drilling vessels
2
Current ownership and outstanding subscription rights
Shareholder overview
Outstanding subscription rights
Current shareholders
Shares
Ownership
Voting rights
Ocean Champion Holding Ltd. (A)
Ocean Champion Holding Ltd. (B)
Ability Holding AS
SJA Invest AS
AID Invest AS
PIR AS
Nord-Peko Holding AS
Ability Holding Invest AS
Lande Investering AS
Other
Total
30,628,814
7,661,461
9,169,676
7,602,624
7,300,650
3,775,862
2,223,513
1,512,391
1,000,000
5,154,634
76,029,625
40.3%
10.1%
12.1%
10.0%
9.6%
5.0%
2.9%
2.0%
1.3%
6.8%
100.0%
44.8%
Outstanding subscription rights
Shares
Ocean Champion Holding Ltd.
Management rights
Total
Note
13.4%
11.1%
10.7%
5.5%
3.3%
2.2%
1.5%
7.5%
100.0%
Expiry
18,893,200 USD 31.7m CB
31 Dec 2018
800,000 Rights (12 Mar '13) 12 Mar 2015¹
19,693,200
USD 31.7m Convertible Bond
 During December 2012 – January 2014 Ocean
Champion granted several loans, totalling USD
31.7m, to the Company with a right to convert
such loans to equity at par value (NOK 10)
 From 20 February – 20 August 2014 the interest on
the loan is 10%, thereafter 12%
• Interest to be accrued yearly until
conversion or repayment
 Maturity : December 31, 2018
Subscription rights
 The Management has 800,000 subscription rights
 Every subscription right has the right to subscribe
for shares at par value (NOK 10)
 Approx. 30% held by management and board members
 Total Share Capital : USD 128m
 Total number of outstanding shares: 76.0m
• May be increased to 95.7m if all subscription rights are exercised
3
Shell is an important sponsor for the Norshore concept
Backing from major oil company
Global 3 year Frame Agreement
With major oil company
Likely contract schedule for Norshore Atlantic
2014
Apr
May
Jun
Jul
Aug
2015
Sep
Oct
Nov
Dec
jan
feb
mar
apr
World Wide Operations;
Top Hole Drilling
-
Well Intervention
-
Plug and Abandonment
-
Open Water Completion
-
Indonesia
Well intervention
Options
Riser-less Drilling
Sub Sea Construction
Malikai – Malaysia
Top hole drilling
Under evaluation
Major Oil Company
Malaysia/Australia
Top hole drilling, P&A
and completion work
Substantial potential for building additional backlog
4
Significant fleet expansion potential
Norshore is targeting 5 vessels in operation by 2018
Option TBN (1-3)
Norshore Pacific

Norshore Atlantic
Norshore holds options to take
delivery of 3 additional vessels
Construction contract signed
with Yantai CIMC Raffles
in December 2013
Delivered March 2014
Expected delivery in
October 2016
On contract from
May 2014
2014
Delivery time ~26 months
2015
2016
2017
2018
5
Fully operational set-up
Approximately 100 dedicated employees (onshore & offshore)
Petter H. Tomren
President / CEO
Arnstein Hernes
CFO
Olav Lie
VP Projects
Trond Haugland
VP Operations
Marketing
Finance
Norshore
site team
Norshore Atlantic
support team
Finance &
accounting
Tax & subsidiaries
Insurance
Newbuilding
projects
Upgrades
Engineering
Concepts
Vessel operations
Market / Contracts
Gøran Furland
VP HSEQ & Business Support
Human
Resources
Technical
HSEQ
IT & COMM
Proc. &
Logistics
Supporting
Operations and
Projects
6
Global services based on strong experience and relations
Geographic target areas
Bergen (Head office)
Amsterdam
Yantai
Kuala Lumpur
Nigeria
Jakarta
Offices
Construction site team
Rio
Vessel owning companies
Targeted areas of operation
Agent agreements
7
Norshore’s "license to operate"
Norshore Atlantic
In operation
Norshore Pacific

BOP
Under construction
Acquired

 NCS regulations, DNV class, Norwegian flag
 NCS regulations, DNV class, Singapore flag
 Manufacturer: Cameron
 DP3 capability
 DP3 capability
• 18-3/4 Well Head Connector
 National Oilwell equipment package:
• Drilling package (3x1,600HP mud pumps)
• Drilling tower (500t A&P HC)
• Offshore crane (150t – 3,000 m AHC)
 National Oilwell equipment package:
• Drilling package (3x1,600HP mud pumps)
• Drilling tower (700t A&P HC)
• Offshore crane (150t – 3,000 m AHC)
• 10,000 psi pressure rating
 Mud capacity: 1,250 m3
 Mud capacity: 2,250 m3
 Pipe deck capacity: 1,405 m3
 Pipe deck capacity: 2,200 m3
 Moon pool: 7,20 x 7,20 m
 Moon pool: 8,00 x 8,00 m
 Oceaneering WROV and LARS
 Oceaneering WROV and LARS (option)
 Halliburton cement unit
 Halliburton cement unit (option)
 Standard drilling BOP equipped
with annular preventer, pipe
rams and shear rams
 Used in combination with RMR
(riserless mud return)
 Used for:
• Riserless drilling of
complete wells
• Plug and abandonment
• Heavy well intervention
8
Historical financials (2012 – Q1 2014)
P&L
USDm
Revenues
Operating expenses
Balance sheet
2012
0.1
-
2013
-
Q1 2014
USDm
-
Cash and cash equivalents
-
Restricted cash
2.6
109.6
153.9
245.5
Total assets
112.3
158.5
303.9
-
-
150.0
27.4
30.0
33.0
-
0.3
0.3
EBITDA
(2.6)
(4.7)
(2.2)
Depreciation
(4.5)
(0.1)
(0.0)
EBIT
(7.1)
(4.8)
(2.3)
Net financials
(1.7)
(5.1)
(3.2)
Bond debt (Atlantic)
Profit before tax
(8.8)
(9.9)
(5.5)
Shareholder loan CB
Tax
(1.2)
(5.5)
Non IB debt
Other non-current liabilities
Other current liabilities
Shareholders equity
Cash flow
Total liabilities and equity
USDm
2012
2013
Operating c ash flow (OCF)
(4.9)
(0.7)
4.1
Cash and cash equivalents
Capital expenditures
(16.0)
(34.6)
(92.4)
Free c ash flow (FCF)
(20.9)
(35.3)
(88.3)
Net IB debt
18.7
27.5
-
10.0
-
6.0
20.6
28.6
79.0
97.6
92.0
112.3
158.5
303.9
Q1 2014
Gross IB debt
Shareholder loan CB
39.2
Fixed assets
Other current assets
(9.9)
16.6
-
(2.2)
(10.0)
Q1 2014
0.5
(4.7)
Net profit
4.1
-
(2.7)
-
2013
1.9
0.8
Onshore costs
-
2012
-
4.1
55.8
30.0
183.0
25.5
25.9
127.2
25.5
25.9
140.4
Other non-current liabilities
-
-
New debt
-
10.0
150.0
0.5
-
-
•
Secured bond, Issued by Norshore Atlantic BV
(1.7)
2.2
51.7
•
Interest 12% p.a., semi annually payments
1.9
4.1
55.8
•
Maturity 21 December 2018; Call after 3 years
•
(February 2017 - February 2018: 108%, February 2018 –
August 2018: 106%, August 2018 – December 2018: 104%)
New equity/other
Change in c ash
Cash c lose (End of period)
(10.0)
Adjusted Net IB debt
1)
1.9
27.4
 USD 150m Bond issued February 2014
Note: ¹) Net debt as of Q1 2014 adjusted for restricted cash of USD 13.1m
9
Sensitivities on vessel utilisation and valuation
Sensitivities - 2017e financials
Comments
Low
85%
Mid
90%
High
95%
USDm
"
"
"
"
"
152
(57)
(5)
90
(21)
69
161
(57)
(5)
99
(21)
78
170
(57)
(5)
108
(21)
87
"
"
"
128
140
268
128
140
268
128
140
268
Average vessel utilization rate:
Illustrative key financials 2017e
Revenues
Operating expenses
Onshore costs
EBITDA
Depreciation (25 years at cost)
EBIT
Valuation
Current market cap
Net debt as of Q1 2014
EV
 Table illustrates 2017 financials for Norshore
at different utilization levels with two units
in full operation
 EV calculations:
• Current market cap calculated assuming
NOK 10 per share (historical issue price)
• Gross interest bearing debt of USD 183m
and Gross cash position of USD 56m as of
Q1 2014
- Restricted cash of USD 13.1m not
included in net debt calculation, i.e.
final payments to Otto Marine (USD
8.5m) and NOV (USD 4.7m)
• Remaining capex of USD 293 million for
Norshore Pacific
10
Large market for specialised vessels within riserless
drilling - Top hole, P&A and drilling of complete wells
Worldwide floating drilling outlook (scope of work)
Rig years (330/365 basis)
Potential demand for niche DP drilling units
No. of vessel years (330/365 basis)
 Up to 30% of drilling demand handled by floating rigs
today could be handled by niche DP drilling units
 Approx. 15 niche drilling units, mostly LWI, currently
in operation or under construction
 Potential additional demand for approx. 55 units
Using the optimal tool for the right purpose
Source: IHS, Norshore
11
Summary
Significant cost savings potential for operators
without compromising safety or quality
5
1
Uniquely positioned
to capitalize on global
oil & gas industry
trends
Experienced
management team &
board of directors
4
2
Versatile vessels with
equipment from highquality providers
Significant fleet
expansion potential
3
Contract with highly
reputable oil & gas
operator
12
Group structrue
Norshore Holding AS
(Norway)
100%
Norshore
Management AS
(Norway)
Norwegian
crew
Private Joint Company
Administration
Owners equity: USD 128m
100%
100%
100%
100%
Norshore
Shipping Ltd.
(Cyprus)
Norshore AS
(Norway)
Norshore
Atlantic BV
(Netherlands)
Norshore
Pacific BV
(Netherlands)
International
crew
Onshore
organisation
Owner of Norshore
Atlantic vessel
Contracting party
with BlueSky and
Shell
Ownership of the
new shipbuilding
contract for
Norshore Pacific
13
Highly experienced senior management team
Petter H. Tomren (President & CEO)
Mr. Tomren holds more than 30 years
of experience from the oil industry,
mostly in managerial positions.
Mr. Tomren holds a BSc from the
University of Stavanger and a MSc
Petroleum Engineering from the
University of Tulsa, USA
Arnstein Hernes (CFO)
Olav Lie (VP Project)
Mr Lie holds more than 25 years of
experience from the shipping and
offshore industry and is one of
Norshore’s founders.
Mr Lie is educated at the Royal
Norwegian Naval Academy and
Bergen Maritime College
Gøran Furland (QHSE Director)
Mr. Hernes holds more than 25 years
of experience from the oil industry,
within finance and administration.
Mr. Furland holds more than 15 years
of experience from the offshore
industry, both onshore and offshore.
Mr. Hernes holds a MSc in Economics
and Business Administration and an
MBA from IESE Business School in
Barcelona
Mr. Furland is educated at Ålesund
University College (Nautical Science)
and the University of Bergen (Safety
and Risk Analysis)
Trond Haugland (VP Operation/Market)
Michele Steinsland (HR Manager)
Mr. Haugland holds more than 20
years of experience from the oil
industry, both offshore and onshore
and is one of Norshore’s founders.
Mrs. Steinsland holds broad
international experence from the oil
industry, mainly within HR, recruiting
and training.
Mr. Haugland holds a BSc in
Petroleum Engineering from the
University of Stavanger
Mrs. Steinsland holds a BSc from
Seton Catholic College in Australia
14
Board of directors
Geir N. Pedersen (Chairman)
Per Inge Remmen (Board member)
Mr. Pedersen is the founder of the oil service
company AGR (listed on the Oslo Stock
Exchange since 2006)
Mr. Remmen is the founder and former CEO of
Drilling Production Technology (DPT), acquired
by AGR in 2005
In addition to his history with AGR, Mr.
Pedersen has founded several other oil service
related companies in recent years, including
an oil company
Mr. Remmen holds more than 25 years of
experience from the upstream oil industry
And is a key contributor in the development
and use of new drilling technologies in the
North Sea
Mr. Pedersen holds more than 25 years of
experience from the oil service industry
Svein Fløysand (Board member)
Mr Fløysand is the founder of Dalseide &
Fløysand Group AS, the leading Norwegian
supplier of surface treatment and fire proofing
services
Mr Fløysand holds 30 years of experince from
the offshore and shipping sector and serves as
chairman and board member in several
companies
Per Haugum (Board member)
Mr. Haugum is co-founder of Drilling
Production Technology (DPT), acquired by AGR
in 2005
Mr. Haugum holds more than 20 years of
experience within upstream oil and oil service
industries, and has held roles as drilling
engineer, drilling supervisor and drilling
superintendent in Norsk Hydro and Aker
Drilling (now KCA Deutag)
15