Post on 10-May-2020
Connecting What’s Needed with What’s Next™
Jefferies Energy ConferenceNovember 28, 2017 Houston, TX
Alan R. CurtisChief Financial Officer
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Forward-Looking Statements
Statements we make in this presentation that express a belief, expectation, or intention are forward looking. Forward-looking statements are generally accompanied by words such as “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “plan,” “forecast,” “budget,” “goal,” or other words that convey the uncertainty of future events or outcomes. These forward-looking statements are based on our current information and expectations that involve a number of risks, uncertainties, and assumptions. Among the factors that could cause the actual results to differ materially from those indicated in the forward-looking statements are: industry conditions, prices of crude oil and natural gas, our ability to obtain and the timing of new projects, and changes in competitive factors. Should one or more of these risks or uncertainties materialize, or should the assumptions underlying the forward-looking statements prove incorrect, actual outcomes could vary materially from those indicated.
For additional information regarding these and other factors, see our periodic filings with the Securities and Exchange Commission, including our most recent Reports on Forms 10-K and 10-Q.
Why Oceaneering?
Global integrated technology solutions provider of diversified services and products in all phases of the offshore oilfield life cycle
Strong market positions
Solid balance sheet
Financial flexibility to grow the company, with more focus on Opex in the production phase of the offshore oilfield life cycle
Leveraged to deepwater - longer term, deepwater remains critical to reserve replenishment
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• ROV• Survey (SP)• Tooling (SSP)
ROV = Remotely Operated Vehicles SSP = Subsea Products SP = Subsea Projects AI = Asset Integrity
EXPLORATION
10%
DEVELOPMENT
50%
PRODUCTION
35%
DECOMMISSIONING
5%
# of OperatingFloating Drilling Rigs
# of Subsea Tree Installations
# of Subsea TreesIn Service
# of Field Abandonments
PHASE
% OII Revenue
#1 Market Driver
Business Segment Product
and Service
Revenue Streams
• ROV• Survey (SP)• Tooling (SSP)• IWOCS – Installation &
Workover Control Systems (SSP)
• Subsea Hardware (SSP)• Umbilicals (SSP)• Vessel-based Installation
Services (SP)• Inspection Services (AI)
• ROV• Tooling (SSP)• IWOCS (SSP)• Subsea Hardware (SSP)• Vessel-based Inspection,
Maintenance & Repair Services (SP)
• Inspection Services (AI)
• ROV • Tooling (SSP)• IWOCS (SSP)
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In All Phases of the Offshore Oilfield Life Cycle
10%
50%
35%
5%
Exploration Development Production Decommissioning
Largest Exposure is in Field DevelopmentOilfield Revenue Mix
Source: OII Estimates: 2016
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5 Operating Segments
Remotely Operated Vehicles (“ROVs”)
Subsea Products
Subsea Projects
Asset Integrity
Advanced Technologies
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Revenue by Business Segment
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23% 20% 22%
29% 34% 30%
20% 15% 17%
13%11% 13%
15% 20% 18%
0%
25%
50%
75%
100%
Q3 2016,$549.3M
Q2 2017,$515.0M
Q3 2017,$476.1
ROV Subsea Products Subsea Projects Asset Integrity Advanced Technologies
Remotely Operated Vehicles 22%
Revenue Contribution Q3 2017
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Flagship of the Oceaneering Franchise
0%
25%
50%
75%
100%
0
50
100
150
200
250
300
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
2015Q2
2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
2016Q4
2017Q1
2017Q2
2017Q3
% w
ith OII R
OV
sC
ontra
cted
Flo
atin
g R
igs
at P
erio
d E
nd
Floaters Working Floaters Contracted % with OII ROVs
Floating Rig Demand History
Source: IHS-Petrodata, September 30, 2017
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Oceaneering 55% Market Share as of September 30, 2017
200
250
300
350
2008 2009 2010 2011 2012 2013 2014 2015 2016* 2017YTD**
0
10
20
30
40
50
Vehi
cle
Cou
nt a
t Per
iod
End
R
OV
Adds/R
etires
ROVs Added ROVs Retired OII Fleet Size
Oceaneering ROV Fleet Size – 279 ROVsas of September 30, 2017
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* Retired 39 ROVs in Q3 2016. ** Nine Months ended September 30, 2017
Oceaneering ROV Pricing
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD*
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
$11,000
Rev
enue
per
Day
on
Hire
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* Nine Months ended September 30, 2017
Revenue per day on hire
Oceaneering ROV Days on Hire
0%
25%
50%
75%
100%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YTD*
0
20,000
40,000
60,000
80,000
100,000
Utilization R
atesDay
s on
Hire
DoH Drill Support DoH Vessel Based Contracted Floater Utilization ROV Fleet Utilization
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Floating Rig Utilization constrains drilling support ROV days on hire
* Nine Months ended September 30, 2017 Approximately 50% of OII ROV fleet is utilized in Drilling Support activities; and OII averages >50% Floating Rig Market Share.
0%
25%
50%
75%
100%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Q1
2017Q2
2017Q3
Aver
age
RO
V F
unct
ion
Util
izat
ion
Drill Support ROV Utilization Vessel Based ROV Utilization
Oceaneering ROV Utilization Mix
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More Focus on Vessel-Based Services
10 ROVs to Heerema Marine Contractors Providing ROVs and subsea tooling aboard Heerema’s deepwater
construction vessels and semi-submersible crane vessels on a global basis through 2020.
8 ROVs to Mærsk Supply Services Providing ROVs, survey and associated services, including subsea
tooling, engineering, communication and data solutions, to support Mærsk’s global operations.
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Successfully Completed E-ROV Pilot Project for StatoilFully stand-alone battery powered Work class ROV system, remotely piloted from onshore via a surface 4G LTE data communication buoy
E-ROV concept winner 2017 World Oil
New Horizons Idea Award
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Remote Piloting and Automated Control Technology
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Full ROV piloting via broadband data communication link connection technologies such as 4G, fiber, or satellite link
Revolutionizes operational efficiency and allows Subject Matter Experts and/or ROV pilots to support ROV operations by establishing control through a remote Internet link
Norway Mission Support Center
Oceaneering ROV Remote Future is Here
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Communications via 4G, Fiber and Satellite
Mission Support Centers Forus, Stavanger, and
Houston, TX, and Morgan City, LA
Traditional ROV System Resident
ROV ConceptE-ROV Concept
Enabling better control and video imaging, precise tool manipulation, and adherence to industry requirements
Subsea Products
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Manufactured Products
Service and Rental
Production Control Umbilicals
Specialty Subsea Hardware
Supply electric and hydraulic power to subsea trees and inject chemicals into reservoirs and well streams.
Field development hardware used to connect production trees to umbilicals and flow lines.Also includes connectors and valves - Oceaneering Grayloc, Oceaneering Pipeline Connection & Repair Systems (PCRS) and Oceaneering Rotator.
30%
Revenue Contribution Q3 2017
Tooling & Subsea Work Systems
Supports well intervention, drilling, construction, field maintenance, and plugging and abandonment activities.
Installation and Workover Control Systems (IWOCS)
$0
$1,600
$3,200
$4,800
$6,400
$8,000
$0
$200
$400
$600
$800
$1,000
2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F
Subsea H
ardware C
apex($ in M
illions)O
II S
S P
rodu
cts
Bac
klog
($ in
Milli
ons)
Subsea Capex, Infield October 2017 SS Products Backlog
Subsea Hardware Capex ForecastSubsea Products backlog at the end of September 30, 2017: $284 million
Source: Infield Systems, October 2017; Capex for subsea trees, templates, manifolds, subsea boosters/compression/separation, umbilicals.* Subsea Products Backlog as of September 30, 2017.
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*
$0
$300
$600
$900
$1,200
$1,500
0
100
200
300
400
500
2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F
OII S
S P
roducts Revenue
($ in Millions)
Tree
s O
nstre
am
Trees Onstream SSProducts Revenue
Subsea Installations Forecast
Source: Infield Systems, October 2017. * Subsea Products revenue for the nine months ended September 30, 2017
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*
Oceaneering Well Intervention
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Delivering a one-stop-shop solution including vessel and ROV services, tooling, and well intervention solutions around the world
Oceaneering Proven Well Access Capabilities
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Riserless Intervention System winner 2017 World Oil Best Well Intervention Technology Award
IRIS and BORIS - rigless, riserless light well intervention systems
Reliably perform in depths to 10,000 feet and pressures to 10,000 psi
Maximize production and increase the recovery rate from offshore oil and gas reservoirs or, alternatively, prepare wells to be plugged and abandoned
Subsea Projects17%
Revenue Contribution Q3 2017
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Change out photo and replace with
AUV
Consist of Project Management, Survey, Data Management, Subsea Installation and IMR
Services
Deepwater Multi-Purpose Supply Vessels**
Spot or Contract Location
CharterEnd
3 Owned
*Ocean Intervention
*Ocean Intervention II
*Ocean Evolution (delivers end of 2017)
SpotSpot Spot
GOMGOMGOM
N/AN/AN/A
1 Chartered on Spot Market
*Ocean Alliance Spot GOM Mar ’18
Diving Support Vessels
Survey/Autonomous Underwater Vehicles (AUV) Services
Global Data Solutions
Subsea Projects Overview Assets Available for this Market
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* Jones Act Vessel** Supplemented with short-term vessel charters, as necessary
Strong Balance Sheet and Liquidity
Liquidity at 3Q 2017 o $472 million of cash, over $350 million in the U.S. o $500 million undrawn revolving credit facility, maturity October 2021o First debt maturities - $300 million in October 2019
Organic capital expenditureso Expect to range from $90 million to $110 million in 2017, and include
$40 million to $50 million maintenance
Acquisitions o Continue to consider investments that augment our service or product
offerings, with more focus on our customers’ operating expenditures
Dividendso Suspended until we see significant improvement in market outlook and
projected free cash flow
Consider share repurchases
Capital Sources and Allocations
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Leveraged to Deepwater
Projects take years to develop
Largely oil reservoirs With high production flow rates
Well capitalized customer base ~50% revenue from E&P majors in prior 3 years
Investment based on long-term commodity price expectations
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50
60
70
80
90
100
110
2016 2017F 2018F 2019F 2020F
Tota
l Liq
uids
MM
B/D
Long Term: Offshore Remains Essential
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Incremental production growth through 2020 requires significant investment in both on- and offshore
Current Sources of Production
Offshore is 23% of total incremental bbls to 2020
Shale
Other Onshore
Offshore
Source: Morgan Stanley Research , Wood Mackenzie, Rystad Energy, and Company Data – June 2017
2017 4Q and Full Year + 2018 Outlook
Forecasting considerably lower Q4 2017 operating income on relatively flat revenue
Most of the decline in our ROV and Subsea Projects
Modestly lower Subsea Products and Asset Integrity
Modestly higher Advanced Technologies
Continuing to project marginally profitable at the operating income level on a consolidated basis for the full year 2017
2018 earnings expected to be significantly lower than 2017
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Conclusion
Challenging market continues
Aligned our operations with anticipated level of activity
Longer term, deepwater is still critical to reserve replenishment
Looking for opportunities to grow the company
Defending, or growing our market share
Engaging more directly with our customers to develop value added solutions that increase their cash flow
Driving efficiencies throughout the organization
Controlling costs and maintaining an organization commensurate with existing business levels
Maintaining a strong balance sheet
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Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measurement. Oceaneering’s management uses EBITDA because we believe that this measurement is a widely accepted financial indicator used by investors and analysts to analyze and compare companies on the basis of operating performance, and that this measurement may be used by some investors and others to make informed investment decisions. You should not consider EBITDA in isolation from or as a substitute for net income or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. EBITDA calculations by one company may not be comparable to EBITDA calculations made by another company. The following table provides a reconciliation between net income (a GAAP financial measure) and EBITDA (a non-GAAP financial measure) for Oceaneering’s historical and projected results on a consolidated basis for the periods indicated:
2012 2013 2014 2015 20162016
thru Q32017
thru Q3
Net Income $ 289.0 $ 371.5 $ 428.3 $ 231.0 $ 24.6 $ 35.6 $ (7.2)
Depreciation & Amortization 176.5 202.2 229.8 241.2 250.2 194.0 160.5
Subtotal 465.5 573.7 658.1 472.2 274.8 229.6 153.3Interest Expense/Income, Net 2.3 1.7 4.4 23.4 20.3 15.6 16.3
Income Tax Expense 132.9 170.8 195.2 105.3 18.8 16.2 4.1
EBITDA $ 600.7 $ 746.2 $ 857.7 $ 600.9 $ 313.9 $ 261.4 $ 173.7
EBITDA Reconciliation to Net Income(USD in millions)
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Period Ended 2012 2013 2014 2015 20162016
thru Q32017
thru Q3
Net Income $ 289.0 $ 371.5 $ 428.3 $ 231.0 $ 24.6 $ 35.6 $ (7.2)
Depreciation & Amortization 176.5 202.2 229.8 241.2 250.2 194.0 160.5 Other Changes in Cash Provided by Operating Activities (27.7) (42.3) 63.7 88.2 65.7 32.1 (9.3)Cash Provided by Operating Activities 437.8 531.4 721.8 560.4 340.5 261.7 144.0 Purchases of Property & Equipment (300.6) (382.5) (386.9) (200.0) (112.4) (83.4) (59.9)
Free Cash Flow $ 137.2 $ 148.9 $ 334.9 $ 360.4 $ 228.1 $ 178.3 $ 84.1
Free Cash Flow (Through the Cycle)
“Free Cash Flow” (FCF) is a non-GAAP financial measurement. FCF represents cash flow provided by operating activities less organic capital expenditures (i.e., purchases of property and equipment other than those in business acquisitions. Management believes that this is an important measure because it represents funds available to reduce debt and pursue opportunities that enhance shareholder value, such as making acquisitions and returning cash to shareholders through dividends or share repurchases.
(USD in millions)
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28028%
OIISubsea 7FugroDOF SubseaC-InnovationsHelixSaipemTMTTechnipIKM GroupOther
8355%
Worldwide Fleet1010 Vehicles*
151 Floating Rigs Contracted**
Ownership Drill Support Market Share
Oceaneering ROV Leading Market PositionRemotely Operated Vehicles
Source: *OII Estimates - December 2016; **IHS Petrodata and OII Estimates – September 30, 2017
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80
52
79
21
31
16
16 21 36 4 6 40
10
20
30
40
50
60
70
80
90
100
0
10
20
30
40
50
60
70
80
90
100
GOM Africa North Sea Brazil Asia/Pac Other
RO
Vs
ROV Count Vessel Based, 87
Oceaneering ROV Fleet – 279 ROVsGeographic Profile – September 30, 2017
Other includes Canada, Mexico, and the Middle East.
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Investor Relations Contact
Suzanne SperaDirector, Investor Relations713-329-4707InvestorRelations@Oceaneering.com
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