Q1 2019 results and market update
Disclaimer
All statements in this presentation other than statements of historical fact are forward-looking statements, which are subject to a number of risks, uncertainties, and assumptions that are difficult to predict and are based upon assumptions as to future events that may not prove accurate. Certain such forward-looking statements can be identified by the use of forward-looking terminology such as "believe", "may", "will", "should", "would be", "expect" or "anticipate" or similar expressions, or the negative thereof, or other variations thereof, or comparable terminology, or by discussions of strategy, plans or intentions. Should one or more of these risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this presentation as anticipated, believed or expected. Prosafe does not intend, and does not assume any obligation to update any industry information or forward-looking statements set forth in this presentation to reflect subsequent events or circumstances.
Highlights
- Financial results
- Contract status
- Outlook
- Summary
Recent highlights – Q1 2019
Income statement
| (Unaudited figures in USD million) |
Q1 19 |
Q1 18 |
| Operating revenues |
67 |
83 |
| Operating expenses |
(43) |
(34) |
| Operating results before depreciation |
24 |
49 |
| Depreciation |
(26) |
(27) |
| Impairment |
(4) |
(0) |
| Operating (loss) profit |
(7) |
22 |
| Interest expenses |
(15) |
(21) |
| Other financial items |
(5) |
18 |
| Net financial items |
(20) |
(3) |
| (Loss) Profit before taxes |
(27) |
19 |
| Taxes |
(1) |
(3) |
| Net (Loss) Profit |
(28) |
16 |
|
|
|
| EPS |
(0.3) |
0.2 |
| Diluted EPS |
(0.3) |
0.2 |
- High utilisation of fully owned vessels of 62.5% (Q1 2018: 33.3%).
- Lower operating revenues despite higher utilisation due to lower average dayrates – approx. USD 125k in 2019 vs approx. USD 280k in 2018.
- Higher operating expenses mainly driven by higher activity and more units in operation, and USD 1.8 million of non-recurring costs
- EBITDA of USD 24 million was negatively impacted by lower average day rates.
- An impairment charge of USD 4.4 million relating to the investment in Dan Swift Pte Ltd was recognised as it is not expected to recover in the future.
- Net financial item was impacted by fair value adjustment on rate swaps and caps of approximately USD 6 million negative (Q1 2018: USD 16 million positive)
Operating revenue
| (USD million) |
Q1 19 |
Q4 18 |
Q1 18 |
2018 |
|
|
|
|
|
| Charter income |
56.8 |
63.7 |
76.5 |
293.2 |
| Other income |
10.5 |
10.4 |
6.3 |
37.6 |
| Total |
67.3 |
74.1 |
82.8 |
330.8 |
Balance sheet
| (Unaudited figures in USD million) |
31.03.19 |
31.12.18 |
31.03.18 |
|
|
|
|
| Vessels |
1,401 |
1,423 |
1,501 |
| New builds |
126 |
126 |
125 |
| Other non-current assets |
3 |
10 |
10 |
| Total non-current assets |
1,530 |
1,559 |
1,637 |
| Cash and deposits |
109 |
140 |
254 |
| Other current assets |
45 |
38 |
50 |
| Total current assets |
154 |
178 |
304 |
| Total assets |
1,684 |
1,737 |
1,940 |
|
|
|
|
| Total equity |
372 |
400 |
487 |
| Interest-free long-term liabilities |
22 |
19 |
44 |
| Interest-bearing long-term debt |
1,171 |
1,199 |
1,325 |
| Total long-term liabilities |
1,193 |
1,217 |
1,369 |
| Other interest-free current liabilities |
75 |
75 |
67 |
| Current portion of long-term debt |
44 |
45 |
19 |
| Total current liabilities |
119 |
120 |
85 |
| Total equity and liabilities |
1,684 |
1,737 |
1,940 |
| Key figures: |
|
|
|
| Working capital |
36 |
59 |
219 |
| Liquidity reserve |
264 |
277 |
254 |
| Interest-bearing debt |
1,215 |
1,243 |
1,343 |
| Net Interest-bearting debt |
1,106 |
1,103 |
1,089 |
| Book equity ratio |
22% |
23% |
25% |
- Total assets of ca. USD 1.7 billion
- Reduced cash balance mainly due to further repayment into committed Revolving Credit Facility (RCF) for optimal cash management. End of March, the available balance in the committed RCF is at USD 155 million.
- Total liquidity reserve per Q1 2019 remains strong at USD 264 million
- Long term debt balance decreased mainly due to further repayment into the RCF
- Book equity at 22%
- No equity covenant
-
Full covenant compliance
-
Highlights
- Financial results
- Contract status
- Outlook
- Summary
Fleet status: Contracts, wins and extensions
Outlook
Summary
Healthy oil price
Source: EIA
Global: Cashflow and sanctioning increase
Record high cash flows for E&Ps in 2018 onwards
Global offshore greenfield capex by sanctioning year
Source: Rystad Energy
Status - Order backlog
Firm backlog was USD 159 million per end Q1 2019
UKCS: £200 billion investment requirement
- In 2018, oil and gas accounted for 75 per cent of the UK's primary energy demand and the UK Government forecasts that it will still be required to meet around two-thirds of primary energy needs in 2035
- US\$5.5 billion of new investments sanctioned in 2018 and more than 400 million boe of new reserves
- 2019 should see a similar investment level sanctioned
- Following 14 years of decline, production has increased by a fifth over the past five years
- Significant transactions in 2018 include Equinor acquiring a stake in Rosebank, and Neptune Energy acquiring stakes into Seagull and Isabella
NCS: Investment rise and exploration success
- Investments are expected to rise to USD 21.5 billion in 2019 from USD 18.5 billion last year, according to a forecast from the Norwegian Oil & Gas Association
- Spending is likely to remain little changed at about USD 21.3 billion in 2020
- After peak spending year of 2012 through 2015, spending has normalized
- Norway leads with highest number of oil and gas discoveries in Q1 2019
Source: NPD
Brazil: High ambitions and tender activity ongoing
- Even upon conclusion of the tenders, contracted supply is considered insufficient to meet Petrobras' near/ medium term demand
- Petrobras offshore MMO spending forecast to exceed USD 3.5 billion in 2020 – the first time this threshold will be exceeded
- IOC's will also drive demand, with Equinor anticipated to have requirements over the existing contracted units based on committed and forecasted spending increase
Source: Rystad Energy
Mexico: Activity growth from 2020 anticipated
- Average age of offshore facilities in Mexico is over 25 years
- Over 50% of infrastructure weight was installed prior to 1991
- New President 'AMLO' focus on increasing production by 800,000 bpd to 2.6m bpd
- Increase in production will have a USD 20 billion price tag
- Free cash flow increasing since 2016
- Budget stabilizing growth next?
- Tenders ongoing in other segments e.g drilling
Offshore facilities by installation year (topside weight)
Source: Rystad Energy / Prosafe
Prospects & tendering – 4 year comparison
- 16 tenders ongoing for 2019 through 2021
- 24 North Sea prospects greater than 50% probability of going to tender next 3 years
- 11 prospects likely going to tender within Americas
- Longer term tenders materialised outside the North Sea and in particular Asia/ Pacific
Global opportunities Tendering activity – 4 year profile
Source: Prosafe
- Highlights
- Financial results
- Contract status
- Outlook
Summary
Summary
- High activity
- Utilisation of fully owned vessels in Q1 of 62.5% (33.3%)
- Two contract extensions and one award
- Performance on track
- Strong liquidity position
- Total liquidity reserve of USD 264 million
- Outlook unchanged. Improvement anticipated from 2020/2021
- Consolidation and fleet renewal on agenda