Howard Weil Energy Conferences1.q4cdn.com/651804090/files/presentations/2014/03252014... ·...
Transcript of Howard Weil Energy Conferences1.q4cdn.com/651804090/files/presentations/2014/03252014... ·...
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Howard WeilEnergy Conference
March 2014
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Forward-Looking Statements
Statements made today that are not historical facts are forward-looking statements within the meaningof Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of1934. Forward-looking statements include words or phrases such as “anticipate,” “believe,” “estimate,”“expect,” “intend,” “plan,” “project,” “could,” “may,” “might,” “should,” “will” and similar words andspecifically include statements regarding the timing of delivery, mobilization, contract commencement,relocation or other movement of rigs. Such statements are subject to numerous risks, uncertainties andassumptions that may cause actual results to vary materially from those indicated, includinggovernmental regulatory, legislative and permitting requirements affecting drilling; downtime and otherrisks associated with offshore rig operations, relocations, severe weather or hurricanes; possiblecancellation or suspension of drilling contracts as a result of mechanical difficulties, performance orother reasons; risks inherent to shipyard rig construction, repair, maintenance or enhancement; andactual contract commencement dates. In addition to the numerous factors described above, you shouldalso carefully read and consider “Item 1A. Risk Factors” in Part I and “Item 7. Management’s Discussionand Analysis of Financial Condition and Results of Operations” in Part II of our most recent annualreport on Form 10-K, as updated in our subsequent quarterly reports on Form 10-Q, which are availableon the SEC’s website at www.sec.gov or on the Investor Relations section of our website atwww.enscoplc.com. Each forward-looking statement speaks only as of the date of the particularstatement, and we undertake no obligation to publicly update or revise any forward looking statements,except as required by law.
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Agenda
• Highlight major accomplishments and competitive position
• Strategy and process
• Supply and demand considerations
• Bright future ahead
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Dividend Growth
Nov. 2009 Apr. 2010 Feb. 2012 Feb. 2013 Nov. 2013
$0.10
$1.40 $1.50
$2.00
$3.00
Note: Dividend announcement date
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SDRL NE RIG RDC DO ESV
67%
40% 39% 37% 35%27%
Leverage Ratios
Strong Financial Position
Source: Total debt-to-capital ratios from ISI Group Oil Services Data & Valuation Handbook 28 February 2014.
• $11 billion of contracted revenue backlog
• Baa1/BBB+ ratings from Moody’s/S&P
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SDRL DO RIG NE ESV RDC
151%
89%73%
52% 49%
20%
Source: Thomson Reuters; most recent declared quarterly dividend annualized divided by 2013 earnings per share for dividend-paying offshore drillers. RIG and NE reflect dividends of $3.00 and $1.50 per share annually, respectively.
Payout Ratios
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Net Income Margin
Source: Thomson One; sum of trailing eight quarters of net income divided by sum of trailing eight quarters of revenue
ESV SDRL DO NE RDC RIG
29%
23% 23%
16% 16% 14%
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Rated #1• Total Satisfaction
• Performance and Reliability
• Deepwater Drilling
• Shelf Wells
• Technology
• Horizontal and Directional Wells
• Special Applications
• North Sea
Industry Leader in Customer Satisfaction
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Vision and Strategy
Invest in High-Quality Fleet
Talented Workforce Trained on Proven Systems
Global Platform
Operational Excellence
Strong Safety Record
Leader in Customer Satisfaction
Superior Margins/Return on Capital
Increase Shareholder Value
VisionAs the offshore driller of choice, we will go beyond what is expected to achieve a safe zero-incident workplace and to be the clear choice among employees, customers and investors
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Fleet Highgrading
• Six newbuild rigs to be delivered through 2016
• $570 million of budgeted rig enhancements to existing fleet in 2014
– ~$200 million of rig enhancements are customer-funded
• 13 rigs sold since 2009
– $80 million pre-tax gain on sales
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SDRL ESV NE RIG DO
3.23.9
8.49.3
19.7Years
New Ultra-Deepwater Fleet (≥ 7,500’)
Avg. Age of Fleet
Source: IHS-ODS Petrodata as of 1 March 2014 – Ultra-deepwater includes competitive semisubmersibles and drillships able to drill in 7,500’ and greater water depths including rigs that are cold stacked. Average age excludes rigs under construction or on order. Ensco has three drillships under construction. Average age is not adjusted for upgrades.
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2014 2015 2016
ENSCO 122
ENSCO DS-8
ENSCO DS-9
ENSCO 110
ENSCO DS-10
ENSCO 123
Drillships Premium jackups
Newbuild Delivery Schedule
3Q14 4Q141Q14 2Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16
Contracted
Contracted
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Floater Upgrades
• Major upgrades to several rigs
– ENSCO 5005
– ENSCO 5006
– ENSCO DS-2
– ENSCO 6001 and ENSCO 6002
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• Largest premium jackup fleet
• $1.3 billion committed to build four ultra-premium ENSCO 120 Series jackups and one premium jackup, ENSCO 110
Premium Jackup Fleet Overview
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• Two under construction
• $1 billion+ investment
• 40,000’ total drilling depth
• 400’ water depth
• 2.5 million pound quad derrick
• State-of-the-art cantilever
envelope
• Ultra-deep gas/long-reach wells
ENSCO 120 Series Ultra-Premium Jackups
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U.S. Gulf of Mexico
Ships 3
Semis 6
Jackups 8
Africa
Ships 4
Semis 2
Europe & Mediterranean
Semi 1
Jackups 10
Middle East
Jackups 10
Asia Pacific
Semi 4
Jackups 10
Mexico
Jackups 4
Brazil
Semis 6
Under Construction
Ships 3
Jackups 3
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Global Platform
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ENSCO 8500 Series® (7)
Samsung DP3 Drillships (8)
Megathyst DP3 Semisubmersibles (4)
Premium KFELS Jackup Mod V-A,B + Super A (13)
Shipyard
Common Equipment
Training
Repair & Maintenance
Spare Parts
Benefits of Standardization
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ENSCO 8500
ENSCO 8501
ENSCO 8502
ENSCO 8503
ENSCO 8504
ENSCO 8505
ENSCO 8506
StandardizationRepeat Customers See the Benefits
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Success of the ENSCO DS Series
BP Has Contracted 3 Drillships
ENSCO DS-3: U.S. Gulf of Mexico
ENSCO DS-4: Brazil / U.S. GOM
ENSCO DS-6: Angola
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• Record TRIR in 2013
• Zero-incident goal
• STOP work authority
• Comprehensive training
• Quality control and audit
• Dedicated safety
management systems
Safety, Health & Environment
0.0
0.2
0.4
0.6
0.8
1.0
1.2
2008 2009 2010 2011 2012 2013
Ensco Industry
Total RecordableIncident Rate
Note: 2013 TRIR for Industry is as of 3Q14.
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Competency Assurance Program
Commitment to Employee Development
International Association of Drilling Contractors (IADC) has awarded accreditation to Ensco training programs
• Focus on safety and efficiency of operations
• Defined policies and procedures
• Systems to ensure continuous development, monitoring and compliance around the globe
• Audited by Core Value Teams to maintain high standards
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• Rigs under construction
– 27 new floaters and 32 new jackups to be delivered in 2014
– 13 uncontracted floaters and 24 uncontracted jackups
• Aging global fleet
– 55% of jackups and 37% of floaters are older than 30 years
• Constraints for additional rig orders
– shipyard / equipment provider constraints
– crewing rigs with experienced personnel
– rising construction costs for jackup rigs
Supply Considerations
Source: IHS-ODS Petrodata as of 1 March 2014
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• Marketed utilization for global fleet
– 95% for floaters
– 94% for jackups
• New discoveries lead to additional appraisal and developmental drilling
– 70+ new discoveries per year on average since 2009
• Deepwater well programs taking longer to drill
Demand Considerations
Note: February 2014 – Marketed Utilization from IHS Petrodata World Rig Forecast; new discoveries include all discoveries in greater than 1,000’ water depth since 2009 from IHS GDC Watch-List.
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• Stable commodity prices above the economic breakeven for our customers
• Brazil to develop pre-salt basins
• Energy reform in Mexico to expand floater market
• Customer demand more diversified
– NOCs driven by domestic economy and politics
– Independent oil companies growing capex
Demand Considerations
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2014 2015 2016 2017
1.40
0.600.23
0.57
0.30
Newbuild Construction Rig Enhancements Sustaining
Estimated Capital Expenditures
$ billions
Sustaining
Enhancements
Newbuild
Source: 4Q13 Earnings Call
Note: Final rig enhancement and sustaining project capital expenditure budgets for 2015 –2017 TBD once budgets are completed
$200 million of rig enhancement capex to be funded by customers
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• Top 5% dividend yield – S&P 500
• Strong balance sheet and capital management flexibility
• #1 in customer satisfaction
• New ultra-deepwater rigs and largest premium jackup fleet
• Global presence
• Safety and operational excellence
• Superior financial results
Summary
Invest in High-Quality Fleet
Talented Workforce Trained on Proven Systems
Global Platform
Operational Excellence
Strong Safety Record
Leader in Customer Satisfaction
Superior Margins/Return on Capital
Increase Shareholder Value
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