Veritas DGC Inc. Investor Presentation - April 2004.
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Transcript of Veritas DGC Inc. Investor Presentation - April 2004.
2
This presentation contains forward-looking information and
statements within the meaning of the Private Securities Litigation
Act of 1995 concerning among other things, Veritas DGC Inc.'s
prospects and development for its operations all of which are
subject to certain risks, uncertainties and assumptions, including
among other things, changes in market conditions in the oil and gas
industry, prices of crude oil and natural gas, weather conditions,
and the Company's ability to finalize contractual arrangements.
Should one or more of these risks or uncertainties materialize, or
should the assumptions prove incorrect, actual results could vary
materially from those anticipated.
Forward-Looking Information
3
DataLibrary
Land SeismicAcquisition
DataProcessing
Veritas - A Global Provider of Integrated Geophysical Services,
Geophysical Information & Reservoir Solutions
4
Veritas – Company Strategy
Invest in people, technology and operational excellence
Focus on select geographic markets
Manage for free cash flow
Continue to invest in: R&D, Multi-Client data library and differentiating technology
Maintain financial flexibility
Continue to be a leading provider of sub surface information to the global oil and gas industry while
maximizing earnings and cash flow
5
Market Outlook
Flat to slightly improving operating environment
Contract business increasing as a percent of total market
Pricing concerns continue in segments of the contract market
Customer consolidation has slowed
Lower multi-client spending however library shelf sales continue to drive cash flow and profits
More alliance and relationship work being performed
Increasing interest in high margin products and services advanced data processing multi-component data 4D surveys
6
Revenue Mix
FY 2003 First half 2004
11%
29%
33%
27%
12%
24%
37%
27%
Contract Marine Contract Land MC Land MC Marine
$503 $252
($ millions)
8
Our Marine Business
Five 3D vessels, three Viking class, all multi streamer, all chartered
One 2D vessel
Solid streamers deployed on Vantage, Viking 1, Searcher and Viking 2
Focus has shifted to a mix of contract and data library work
Solid Streamers are seen as a major differentiator by many customers for contract work awards
9
Marine Acquisition
CanadaCanada
Gulf of MexicoGulf of Mexico TrinidadTrinidad
BrazilBrazil
North SeaNorth Sea
W. AfricaW. AfricaAsia PacificIndia
10
Our Land Business
Invested in light weight and arctic-specific equipment and standardized on Sercel recording equipment
Developed multi-component recording and processing capabilities
Maintained a high volume of alliance and relationship work
12
Our Data Processing Business
An order of magnitude improvement in compute price performance
Software and algorithm innovation results in incremental gains in past year
Recent installation of latest 64 bit AMD OPTERON CPU’s
Veritas is an industry leader in sub-surface imaging technology
14
Multi-Client Business Drivers
Geologic and hydrocarbon prospectivity
Efficient data collection and processing with un-compromised quality and turnaround
Conservative capitalization policy, amortization rates and margin assumptions
Areas with small blocks driven by government licensing rounds
Location, Location, Location
The value of Multi-Client is created by :
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Key Multi-Client Markets and Assets
CanadaCanadaFoothills 3DFoothills 3DScotia Shelf 3DScotia Shelf 3D
USUSOnshore 3DOnshore 3DGulf of Mexico 3DGulf of Mexico 3D
South AmericaSouth AmericaBrazil 2D & 3DBrazil 2D & 3D
EuropeEuropeUK 2D & 3DUK 2D & 3DNorway 3DNorway 3DFaeroes 2D & 3DFaeroes 2D & 3D
AfricaAfricaNigeria 3DNigeria 3D Asia PacificAsia Pacific
Australia 2DAustralia 2DIndonesia 2DIndonesia 2D
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Multi-Client Data as of January 31, 2004
189,000 sq km 3D
201,000 km 2D
Book value $348 million
Gross investment $1.3 billion
Life-to-date sales $1.6 billion
Total life-to-date booked margin 40%
Conservative library accounting
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Multi-Client Revenue
28%
27%
26%
12%
7% 15%
41%24%
13%
7%
Brazil Gulf of Mexico Land West Africa Other
($ millions)
$220 $123
FY 2003 First half 2004
20
Multi-Client Revenue Versus Investment
0
50
100
150
200
250
FY2000
FY2001
FY2002
FY2003
FYTD2004
MC Revenue
MC Investment(gross)
Difference
22
Current Capitalization($ in millions)
Cash and cash equivalents $70
Long-term debt Revolving credit facility $0 Term Loan A 27 Term Loan B 114 Term Loan C 40 Total long-term debt 181
Shareholders' equity 485
Total capitalization $666
Debt / total capitalization 27%Net debt / total capitalization 17%
23
Capital Spending
0
10
20
30
40
50
60
70
80
90
100
Other
Processing
Marine
Land
2000 2001 2002 2003 2004 YTD
$ M
illi
on 55
9689
31
14
24
Cash Investments
-100
-50
0
50
100
150
200
250
300Cash Flow fromOperations
Capex
MC Investment(net cash)
Net
2000 2001 2002 2003 2004 YTD
$ m
illio
ns
25
Recent Performance
Note: Q1 2004 excludes cumulative accounting adjustment of $22.1 million.FY 2003 excludes charges of $67.7 million
($ in thousands) FY 2003 2Q 2004 1H 2004 Revenue $503,001 $147,770 $252,120
Operating income 38,943 23,002 23,029
Interest expense 18,534 4,197 8,475
Net Income 7,783 14,239 9,861
EPS $0.23 $0.42 $0.29
Free cash flow $18,524 $23,791 $5,130
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Why Veritas?
First class technology people and assets
Operating in politically stable areas
Data library sales continue to generate profits
Managed for positive cash flow
Low leverage
A company well positioned for the future