12 Jan, 2012 SEB Enskilda Nordic Seminar, Copenhagen

12 Jan, 2012 SEB Enskilda Nordic Seminar, Copenhagen

SEB Enskilda Nordic Seminar
CFO – Esa Ikäheimonen
Copenhagen, January 11, 2012
Forward-looking statements
The statements described in this presentation that are not historical facts are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forwardlooking statements which could be made include, but are not limited to,
statements involving prospects for the Company, expected revenues, capital
expenditures, costs and results of operations and contingencies and other factors
discussed in the Company's most recent annual report on the Form 20-F for the
year ended December 31, 2010 and in the Company's other filings with the SEC,
which are available free of charge on the SEC's website at www.sec.gov. Should
one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
indicated. All subsequent written and oral forward-looking statements
attributable to the Company or to persons acting on our behalf are expressly
qualified in their entirety by reference to these risks and uncertainties. You
should not place undue reliance on forward-looking statements. Each forwardlooking statement speaks only as of the date of the particular statement, and we
undertake no obligation to publicly update or revise any forward-looking
statements. All non-GAAP financial measure reconciliations to the most
comparative GAAP measure are displayed in quantitative schedules on the
company’s web site at www.seadrill.com.
2
Contents
Company profile
Market outlook
Rig fleet
Financial gearing
Value creation
Summary
th gen. semi-submersible
6th gen.6semi-submersible
rig West
Pegasus
rig West
Capricorn
3
Company profile
World’s largest offshore driller ~ US$16.1 bn market cap.
Diverse fleet of quality rigs
2nd largest fleet of ultra-deepwater rigs
Largest and most modern fleet of jack-up and tender rigs
EBITDA annualized ~ US$2.4 billion *
Premium wide customer base
Contract backlog ~ US$12.6 billion **
Cash dividend annualized ~ US$1.4 billion *
Strong shareholder involvement
Industry leader with presence in all key markets
4
* Based on 3Q2011 ** As of December 31, 2011
Seadrill growth story
$113 bbl
$40 bbl
Growth … Performance … Scale benefits
5
Newbuild Orders & Acquisitions
Ultra-deepwater
(5 rigs, $3bn worth of investment)
3 ultra-deepwater drillships at Samsung @ US$600m per unit ordered
2 Seadragon ultra-deepwater units @ US$600m per unit acquired
Acquired 28.5 percent ownership in Sevan Drilling ASA
Shallow water
(added 9+3 rigs, sold 3, $1.9 bn worth of investment)
1 x CJ70 HE jack-up rig ordered @ US$530 m against 5-year contract
4 benign environment jack-up rigs @ US$200 m
3 tender rigs @ US$120m
1 semi-tender @ US$200m
33.75% shareholding acquired in the 3 jack-up rig company Asia Offshore Drilling
Divested 2 older jack-ups, retired 1 old tender barge and sold 1 new jack-up rig
Growth in modern assets … cash dividend
6
Rig investment economics
UDW floaters
Jack-ups
Tender rigs
Dayrate
US$500,000
US$145,000
US$170,000
Opex incl. G&A
US$170,000
US$60,000
US$60,000
Tax (of revenues)
3.5%
3.5%
3.5%
5Y cash-flow
US$526 million
US$133 million
US$175 million
Investment
US$600 million
US$200 million
US$200 million
Repaid in
5.7Y
7.5Y
5.7Y
Right purchase price and timing … superior return
7
Leading player in our markets
Largest modern fleet in our industry
8
Market fundamentals
Oil prices remain at historically high
levels
Higher growth in E&P spending
160
Brent Spot Price
140
120
US$ per barrel
100
80
60
40
Industry focused on new equipment
continues in all markets segments
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Low/High range
Utilization is increasing for all asset
classes
Average
Historical dayrates for Ultra-deepwater rigs
700
600
Significant increase in tenders and
requests from customers
500
USDk/day
400
300
200
Market poised to see higher daily
rates for ultra-deepwater units
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Low/High range
Strong demand for quality equipment
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Average
Recent drilling contracts
Unit
Dayrate
Term
Area
US$510-570,000
US$535,000
US$500,000
US$477,500
1.0yr
2.0yr
4.0yr
5.0yr
Ghana
Canada
Norway
US GoM
US$145,000
US$140,000
US$129,000
US$129,000
US$135,000
3.0yr
3.0yr
1.0yr
1.0yr
0.5yr
Arabian Gulf
Arabian Gulf
Southeast Asia
Southeast Asia
Southeast Asia
US$170,000
US$235,000
1.0yr
1.5yr
Indonesia
Equatorial Guinea
Ultra-deepwater floaters
West
West
West
West
Leo
Aquarius
Hercules
Capricorn
Jack-ups
West Triton
Offshore Resolute
West Ariel
West Prospero
West Callisto
Tender rigs
West Berani
West Esperanza
Quality equipment command premium daily rates
10
Major deepwater regions
Deepwater Discoveries
Discovered reserves in 2010, by water depth
Strong combination of exploration success and new areas
11
Source: DnB NOR Markets, PCF Energy, Pareto, Woodmac, OGX
Ultra-deepwater market development
UDW FLEET WILL GROW TO 165 UNITS BY 2014
US GoM INCREASINGLY ABSORBING THE PREMIUM ASSETS
UDW FIXTURES
UDW CONTRACT COVERAGE AND RIG AVAILABILITY
Contract Status & Expected Demand 2005-2013:
Ultra Deepwater Drilling Units (>7,500feet) - Worldwide
160
140
120
100
80
60
40
20
0
2005
2006
2007
Existing contracts
Supply
12
Source: SEB Enskilda, Fearnley Offshore
2008
Options
Development
2009
2010
2011
Requirements
Development forecast
2012
2013
Possibles
08.11.2011
Only 12% of UDW rigs drill wells in ultradeep waters
UDW newbuilds are replacing older rigs
13
Source: Pareto
Global floater fleet including newbuilds
Uncontracted floaters 11% of the total fleet which has an
average age of 25 years
14
Source: Pareto
Ultra-deepwater daily rates development
UDW dayrates reflect tighter market
15
Source: Morgan Stanley
US$8.6 billion contract backlog – Floaters
Staggered contract portfolio offers flexibility
16
* As of year-end 2011
*
Jack-up market development
JACK-UP FLEET EXPANSION
DEVELOPMENT IN # of JACK-UPs
AVERAGE DAILY RATES JACK-UPS
AVERAGE UTILIZATION RATES JACK-UPS
% utilization
300,000
100
250,000
95
90
200,000
85
150,000
80
75
100,000
70
50,000
65
0
>350ft
17
Source: SEB Enskilda, Pareto, ODS Petrodata
<350ft
WDR > 350ft
WDR < 350ft
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
Jan-02
Jan-01
Jan-00
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
Jan-02
Jan-01
60
US$2.4 billion contract backlog - Jack-ups
A strong mix of short and long-term contracts
18
* As of year-end 2011
*
Tender rig market outlook
Drilling concept focused on production drilling only
Main operational areas are shallow water Southeast Asia
and West Africa
Market expanding to Central and South America
Concept also being applied in deepwater in combination
with mini TLPs and Spars
Cost-effective and versatile concept
Niche market with Seadrill as the only major driller
participating
Limited availability of quality units pushes daily rates higher
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Semi-tenders
Tender barges
US$1.6 billion contract backlog –
Tender rigs *
2011
2Q 3Q
1Q
Unit
Customer
T7
T17
T11
T4
T12
T15
T16
Chevron
Chevron
Chevron
Chevron
Chevron
Chevron
US$64,000
West Setia 1
West Berani
West Menang
West Jaya
West Esperanza
West Alliance
West Pelaut
West Vencedor 1
Chevron
ConocoPhillips/Chevron
Murphy
BP
Shell
Shell
Chevron
US$167,000
1Q
2012
2Q 3Q
4Q
1Q
2013
2Q 3Q
4Q
1Q
1Q
2015
2Q 3Q
4Q
US$132,500
US$106,000
US$85' US$120,000
US$120,000
US$115,500
Newbuild
US$115,500
Newbuild
US$164,000
US$170,000
US$160,000
Transit
US$165,000
US$173,000
US$178,000
Transit US$235,000
Newbuild
US$171,000
US$138,500
US$120,000
US$210,000
Option
04.2016
03.2018
Yard plus transit period
Dayrate is partly in Euros (EUR/USD 1.40)
* As of year-end 2011
4Q
US$88,000
Long-term visibility … improved margins
20
2014
2Q 3Q
Newbuild
Contract
1
4Q
06.2018
Broad customer base ~ US$12.6 bn
contract backlog
Quality customers …. superb visibility
21
* As of year-end 2011
US$12.6 bn revenue backlog
#units
Average
term
Average
dayrate
Current
market rate
Floaters
19
2.5Y
US$527,000
US$500,000+
HE Jack-up rigs
3
4.4Y
US$340,000
US$360,000
Jack-up rigs
18
0.8Y
US$147,000
US$135,000
Semi-tenders
8
1.8Y
US$167,000
US$200,000+
Tender barges
7
2.3Y
US$116,000
US$115,000
Strong visibility locked in at favorable rates … market for
open position strengthening
22
Newbuild delivery schedule
2011
4Q
1Q
2012
2Q
3Q
4Q
1Q
2Q
2013
3Q
Name
Rig type
West Capricorn
Semi-submersible
4Q
Contracted until 2Q/2017
Contract status
West Leo
Semi-submersible
Contracted until 2Q/2013
West Tucana
High spec jack-up
Uncontracted
West Telesto
High spec jack-up
Uncontracted
West Castor
High spec jack-up
Uncontracted
West Oberon
High spec jack-up
Uncontracted
T15
Tender barge
Contracted until 1Q/2018
West Auriga
Drillship
Uncontracted
T17
Tender barge
Uncontracted
West Esperanza
Semi-tender
Contracted until 4Q/2014
West Vela
Drillship
Uncontracted
T16
Tender barge
Contracted until 2Q/2018
West Tellus
Drillship
Uncontracted
West Linus
HE Jack-up
Contracted until 4Q/2018
Newbuild portfolio provides growth and market exposure
23
EBITDA* development
10%
G
CA
24
R
%
52
* EBITDA – earnings before interest, tax, depreciation and amortization
Net interest bearing debt and dividend
Daily rates assumed:
UDW floaters – $500’
BE Jack-ups – $135’
Semi-tenders – $170’
Tender barges – $115’
Dividend level is sustainable
25
Debt refinanced at
similar terms
No conversion has
been assumed for the
US$650m convertible
bonds
Net interest bearing debt in deepwater
unit equivalents
Relative gearing significantly reduced per unit
Assumptions: 76 cent quarterly dividend, UDW dayrates US$500’, jack-up dayrates US$135’ and tender rig dayrates US$115’-170’
26
US$950 million senior secured bank
facilities
New West Capricorn facility
New Jack-up facility
Loan amount: US$550 mill.
Tenor: 5 years
Profile: 10 years
Security: UDW rig West Capricorn
Margin: In line with previous
credit facilities
Covenants: In line with previous
credit facilities
Loan amount: US$400 mill.
Tenor: 5 years
Profile: 10 years
Security: 4 jack-ups
Margin: In line with
previous credit facilities
Covenants: In line with
previous credit facilities
Attractive long-term financing in place
27
Leverage peer group
NR
59%
Baa3/BBB
39%
Baa3/BBB-
34%
Baa1/BBB+
32%
Baa1/A-
26%
SDRL
Debt cost
<
< 4.5%
RIG
6.3%
NE
ESV
DO
4.7%
5.7%
5.5%
Secured leverage caters for cheap financing
28
Source: Bloomberg, DnBNOR Markets, Moody’s and Standard & Poor ratings
Dividend policy
Dividend resolved at US$0.76
per share
Reflects improved earnings
visibility and functional debt
markets related to the
financing of our operations
Future dividends depend on:
Debt leverage
Contract coverage
Capital expenditures
Business outlook
Cash dividend – an important objective
29
Value creation and dividends
Share price
Jan-11
Share price
Jan-12
Total dividend
paid (US$ mill)
Share price
increase*
Dividend
Yield
Seadrill
34
34
1,437
11%
8.9%
Ensco
51
48
231
-3%
2.9%
Rowan
33
31
-
-6%
-
Diamond
65
56
487
-8%
6.2%
Noble
36
30
141
-13%
2.2%
Transocean
70
39
505
-42%
8.1%
Consistently outperforming peers … top dividend yield globally
30
Seadrill is uniquely positioned
Industry leader with diverse versatile fleet of
brand new rigs
Strong operational performance and rig
utilization
Increased geographical footprint
Superb market conditions for ultra-deepwater
rigs and semi-tenders
Record high order backlog and earnings
visibility
Access to debt financing for premium assets
funds growth
Favorable prospects support cash dividends
31
Asset portfolio
Core fleet –
50 units built after Y2000
10 built before Y2000
17 Ultra-Deepwater Units + 1 Mid-water semi
1 Mid-water Semi
20 High Specification Jack-ups
2 Jack-ups
13 Tender Rigs
7 Tender Rigs
Shareholdings
3.5% of Ensco (MV - US$391m)
39.9% of Archer (MV - US$355m)
23.6% of Sapura Crest (MV - US$438m)
33.75% of AOD (MV - US$50m)
28.5% of Sevan Drilling (MV – US$85m)
32