Investor Presentation • Feb 27, 2018
Investor Presentation
Open in ViewerOpens in native device viewer
INVESTOR PRESENTATION – TRANSFORMING THE COMPANY AT THE BOTTOM OF THE CYCLE
27 February 2018
These materials have been prepared by Awilco Drilling PLC (the "Company") solely for use in its dialogue with possible investors ("Recipients") in a contemplated private placement of new shares by the Company (the "Offer Shares") with selected investors in and outside of Norway as are permitted or catered for by exemption rules under applicable securities laws (the "Private Placement") and may not be reproduced or redistributed, in whole or in part, to any other person. These materials are being provided to the Recipients for information purposes only.
These materials and the conclusions contained herein are necessarily based on economic, market and other conditions, as in effect on, and the information available to the Company as of, their date. These materials do not purport to contain a complete description of the Company or the market(s) in which the Company operates.
An investment in the Company involves risk, and several factors could cause the actual results, performance or achievements of the Company to be materially different form any future results, performance or achievements that may be expressed or implied by statements and information in this presentation. 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. The Company does not intend, and does not assume any obligation, to update or correct the information included in this presentation. The contents of this presentation are not to be construed as financial, legal, business, investment, tax or other professional advice. Each prospective investor should therefore consult with its own financial, legal, business, tax or other adviser as to financial, legal, business and tax advice.
These materials have been provided to the Recipients on the basis that each Recipient keep these materials (and any other information that may be provided to such Recipient) confidential. The information used in preparing these materials was obtained by the Company and its representatives and is subject to change without notice. Neither the Company nor any of its affiliates or any third party have independently verified any such information. Neither the Company nor any of the affiliates (nor any of its or their respective directors, officers, employees, professional advisers or representative) makes any representation or warranty, express or implied, with respect to the fairness, correctness, accuracy, reasonableness or completeness of such information. Without limiting a person's liability for fraud, no responsibility or liability (whether in contract, tort or otherwise) is or will be accepted by the Company or any of its affiliates or any of its or their respective directors, officers, representatives, employees, advisers or agents as to, or in relation to, these materials, their contents, the accuracy, reliability, adequacy or completeness of the information used in preparing these materials, these materials, any of their contents or any of the results that can be derived from these materials or any written and any such responsibility, liability or obligations is expressly disclaimed, except to the extent that such responsibility, liability or obligations cannot be excluded by law. Analyses and opinions contained herein may be based on assumption that, if altered, can change the analyses or opinions expressed.
Any statement, estimate or projections included in these materials (or upon which any of the conclusion contained herein are based) with respect to anticipated future performance may prove not to be correct. No representation or warranty is given as to the completeness or accuracy of any forward-looking statement contained in these materials or the accuracy of any of the underlying assumptions. Nothing contained herein shall constitute any representation or warranty as to the future performance of the Company, any financial instrument, credit, currency rate or other market or economic measure. Information about past performance given in these materials is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance.
Neither the Company nor any of its affiliates accepts or will accept any responsibility, duty of care, liability or obligations for providing any Recipient with access to additional information, for updating, modifying or otherwise revising these materials or any of their contents, for correcting any inaccuracy in these materials or their contents which may become apparent, or for notifying any Recipient or any other person of any such inaccuracy.
The securities of the Company have not been and will not be registered under the US Securities Act of 1933 (the "Securities Act") or with any securities regulatory authority of any state or jurisdiction of the United States and may not be offered, sold, resold, pledged, delivered, distributed or transferred, directly or indirectly, into or within the United States unless registered under the Securities Act or pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act or in compliance with any applicable securities laws of any state or jurisdiction of the United States. There will be no public offering of the securities of the Company in the United States. These materials are strictly private and confidential and exempt from the general restriction (in section 21 of the Financial Services and Markets Act 2000 ("FSMA")) on the communication of invitations or inducements in investment activity pursuant to the FSMA (Financial Promotion) Order 2055,0 as amended (the "Order") on the ground that in the United Kingdom, these materials are being directed at a restricted number of persons who are: (A(x)(i) persons having professional experience in matters relating to investments, i.e., investment professionals within the means of Article 19(5) of the Order; (ii) high net with entities falling within the meaning of Article 49(2)(a) to (d) of the Order; or (iii) any other person to whom it can otherwise be lawfully distributed, and (B) "Qualified Investors) as defined in section 86(/\7) of the FSMA (persons meeting criteria "A" and "B" are referred to herein as "Relevant Persons"). In the United States, these materials are directed only at persons reasonably believed to be "qualified institutional buyers" ("QIB") as defined under the Securities Act. Any person who is not a Relevant Person or QIB should not accept these materials, not act or rely on these materials. These materials are not intended for distribution to, or use by, any person in any jurisdiction where such distribution or use would be contrary to local laws or regulations. The Company does not accept any liability to any person in relation to the distribution or possession of these materials in or from any jurisdiction.
This presentation shall be governed by Norwegian law. Any dispute arising in respect of this presentation is subject to the exclusive jurisdiction of the Norwegian courts with Oslo District Court as legal venue
Any investment in the Company's shares involves significant risks and prospective investors should consider, among others, the following risks related to the Company and its business:
The Company's rigs are exposed to various maritime hazards and incidents
The Company's insurances may not secure the value of its assets and liabilities
| Issuer | ▪ Awilco Drilling Plc ("Awilco Drilling" or the "Company") |
|---|---|
| About the issuer | ▪ Awilco Drilling is a UK-based drilling contractor. The Company currently owns and operates two semi-submersible rigs |
| Listing venue | ▪ Oslo Axess (AWDR NO) |
| Shares outstanding | ▪ 30,031,500, each with a par value of GBP 0.0065 |
| Market capitalisation | ▪ Approx. NOK 870 million (based on the Offer Price of NOK 29.00 per share) |
| Offering size and structure |
▪ Private Placement of new shares raising gross proceeds up to USD 65 million (NOK ~500 million) (the "Private Placement") |
| Offer price | ▪ The subscription price in the Private Placement has been set at NOK 29.00 per share (the "Offer Price") |
| Use of proceeds | ▪ The net proceeds from the Private Placement will be used to part finance the equity requirement for the building of a new semisubmersible drilling rig for harsh environment use, to be built by the premium yard KeppelFELS in Singapore at a price of approximately USD 425 million, and with planned delivery in 2021 |
| Pre-commitments | ▪ The Company has received significant indications of interest to participate in the Private Placement and the Private Placement is fully covered. Pre-subscriptions from the existing shareholders amount to approximately USD 40 million, including inter alia pre-subscription by Awilhelmsen Offshore AS (currently holding 43.3% of the capital), FVP Master Fund LP (currently holding 19.4% of the capital) and QVT Financial LP (currently holding 6.4% of the capital). In addition, Akastor ASA has undertaken to subscribe for shares in an amount of USD 10 million and will receive full allocation for this amount. Following a market sounding, significant additional subscriptions have been received. As a consequence, only existing shareholders of the Company can expect to receive allocations in the Private Placement from subscriptions following this announcement. |
| Application period | ▪ Start of application period: 27 February 2018 at 16:30 CET. ▪ Close of application period: 28 February 2018 at 08:00 CET. ▪ The Company, together with the Managers, reserve the right to close or extend the Application Period at any time in their sole discretion. If the Application Period is extended, the other dates referred to herein will be extended accordingly |
| Conditions for completion of the Private Placement |
▪ The completion of the Private Placement is subject to the approval by an Extraordinary General Meeting (the "EGM") to be summoned shortly after conditional allocation in the Private Placement has occurred and is expected to be held on or about 26 March 2018. Existing shareholders being allocated shares in the Private Placement undertakes to vote in favour of the approval of issuance of shares in the EGM ▪ Further to this, the completion of the Private Placement is conditional upon the New Shares having been fully paid and legally issued ▪ The Board reserves the right to cancel the Private Placement at any time and for any reason prior to delivery of the new shares |
| Subsequent Offering | ▪ The Board intends to conduct a subsequent offering at the same subscription price as in the Private Placement to existing shareholders in the Company who did not participate in the Private Placement (the "Subsequent Offering"). Non-tradable subscription rights will be awarded. The Subsequent Offering is conditional on completion of the Private Placement ▪ The Board may at its discretion decide not to proceed with the Subsequent Offering |
| Managers | ▪ ABG Sundal Collier ASA, Arctic Securities AS and Fearnley Securities AS act as Joint Lead Managers and Joint Bookrunners (the "Managers") |
Well regarded contractor with proven ability to create shareholder value
| 1 2018 NCS compliant premium Harsh Environment design and technology |
▪ The CS 60 ECO MW newbuild will be the most environmentally friendly drilling rig offered in the harsh environment market ▪ New technology including digitalisation ensuring high operating efficiency and very low opex and spread cost compared to competition |
|---|---|
| 2 Competitive newbuild pricing from premium yard being the "first one out" |
▪ The rig will be built at the premium shipyard KeppelFELS in Singapore at an "all-in" cost of USD 425m + USD 30m1 - "ready to drill" cost USD 455m ▪ Significant discount to historical newbuild prices and in the low range of implied values observed in recent asset transactions |
| 3 Favourable supply/demand and oil price macro picture |
▪ North Sea rig market outlook is improving after the worst downturn ever ▪ Market expected to move towards a more balanced supply in 2020/2021 as aging cold-stacked rigs will require contracts at a significant premium to current rig dayrate levels to justify the reactivation costs |
| 4 Financially attractive deal |
▪ Favourable newbuild contract with heavily "back-loaded" payment structure 10/10/80 and no additional cost of carry up to delivery ▪ 3 independent options at similar commercial terms providing significant upside potential (including "sleeping beauty provisions") |
Impeccable credentials of disciplined capital allocation and devotion to returning profits to shareholders
1) Other rig companies include the avg. total return for Seadrill, Transocean, Songa Offshore, Fred Olsen Energy and Noble Corp. Also include dividend payments
2) Value creation mentioned in USD, value creation in NOK is 231%
▪ Managing Partner, Founder, and Chief Executive Officer of QVT Financial LP
▪ CEO of Awilco Drilling
Competitive newbuild-deal with high flexibility and optionality vs. future market development. Current fleet with positive cash flow and negative net debt secures market position and organisational preparation
Financing structure allows for a strong return on invested capital for Awilco Drilling shareholders
1) MoM = Money multiple = Equity return for a given asset value divided by initial equity investment of USD 65m
2.5x
MoM1
4.1x
100
200
2) Capitalised costs of USD 30m for yard supervision, commissioning, spares, and tools not included
9
1
| Category Specs Yard Keppel FELS Design Depth capacity Up to 1,500 m Variable deck-load 5,000 t Hook-load 2.0 million lbs Station keeping Mooring and Thruster assist Drilling package Automated drilling control Thruster capacity 4 x 3,600 kW BOP 15k psi 18 3/4" 5 rams Accommodation Main generators 5 x 4,900 kW DNV, Drill (N), Posmoor Certificates Battery (Safety & Power), NCS & UK Clean (Tier III) Winterised compliant (basic) |
|
|---|---|
| Moss Maritime CS60 ECO MW | |
| 140 POB in one-person cabins | |
| (atar), |
Latest Design and Technology
✓ Delivery in 2021 + option to delay
✓ All warranties intact at delivery
✓ No depreciation and no SPS1
1
Lowest environmental footprint, designed and certified for Harsh ✓ Environment including Barents Sea
12 point mooring with thruster assist1 , hybrid power supply, energy saving ✓ features
Automated drilling controls, improved drilling efficiency, enhanced safety ✓ performance
Digitalization and integration of systems and controls, improved overall ✓ performance to the benefit of the owner and client
Reflecting the need to improve
Reduced fuel oil consumption/ emissions
The improved drilling efficiency and reliability of the CS60 ECO MW will deliver significant OPEX and spread cost savings in the range of USD 25,000 – 35,000 per day compared to competition
| Value added through three main layers | |||||||
|---|---|---|---|---|---|---|---|
| ✓ | Increased drilling efficiency |
▪ MH-RNX™ - Iron Roughneck designed to reduce OPEX and increase drilling efficiency ▪ Market leading technology for quick and reliable running of riser ▪ Leading systems and software products for automation of drilling and drillfloor operations ▪ Automatic drilling controls, digitalization |
|||||
| ✓ | Game changing maintenance concepts |
▪ Unique solutions for condition-based maintenance enabled by Condition Monitoring, Data Analytics and Reliability Centred Maintenance analysis (RCM). ▪ MHWirth Riglogger™ enables data transfer to implement maintenance optimization and combining continuous monitoring and analysis |
|||||
| ✓ | Reduced CO ₂ footprint |
▪ Reduced emissions and power consumption through energy efficient solutions, storage and increased efficiency ▪ Power optimized equipment and systems ▪ Systems for regeneration of power (VFDs, Batteries) |
Source: Managers, IHS Petrodata
14
2
Note: Seadrill rigs include: West Hercules, West Aquaris and West Eminence Odfjell Drilling rigs include: Deepsea Atlantic and Deepsea Stavanger
3
New investments expected on the back of a period of underinvestment among key operators on NCS, driving up rig demand
Currently, 28 of these rigs in NCS waters – of these are 15 contracted and the rest cold-stacked
Source: IHS Petrodata, Fearnley Securities
1) Including all harsh-environment, North Sea compatible midwater semi-subs currently under construction (please see appendix for further reference)
2) 3-month rolling dayrates since 2005, adj. for 2% yearly inflation
18
1) Methodology: Calculates the required dayrate to break-even for a given cost of SPS & Reactivation for a 5 year cycle (assumes rig free of debt before reactivation)
2) Assumptions: 5y SPS cycle, WACC = 10%, Utilisation = 95%, opex at USD 130kpd, G&A of USD 10kpd and maintenance capex of USD 20kpd, implying a cash opex at USD 160kpd
3) Including COSL Prospector which is in transit to Norway & Transocean Leader – currently undergoing SPS
19
Existing operations to deliver cash flow until delivery of newbuild(s) ✓
4
Ability to leverage existing organisational capabilities and position in the market
Attractive financial position with downside protection for newbuilds (10/10/80 payment structure)
High financial upside from increasing asset values – "first-one-out" newbuild
21
| Current fleet | Contract situation | SPS schedule | ||
|---|---|---|---|---|
| WILPHOENIX Category Year built Design Builder Classification Depth capacity Station keeping |
Specs 1982 – Extensively upgraded 2011 & 2016 Friede & Goldman L907 Enhanced Pacesetter Semi Submersible Gotaverken Arendal DNV 1A1 Column Stabilised Drilling Unit Up to 1,200 ft 8-point mooring |
Active: • Apache – to mid Q2 2018 • Undisclosed customer – 450 days from Sept 2018 |
Next SPS: Q2 2021 |
|
| Accommodation | 110 POB in two-man cabins | |||
| WILHUNTER Category Year built Design Builder Classification Depth capacity Station keeping Accommodation |
Specs 1983 – Upgraded in 2011 Friede & Goldman L907 Enhanced Pacesetter Semi Submersible Daewoo shipbuilding DNV 1A1 Column Stabilised Drilling Unit Up to 1,500 ft 8-point mooring 110 berths |
Cold-stacked: • USD 1m/year • "Option on the future" |
Next SPS: SPS required upon reactivation |
| Income statement | Balance sheet | ||||
|---|---|---|---|---|---|
| In USDm | Q4 2017 | Q4 2016 | FY 2017 | FY 2016 | |
| Contract revenue | 33.5 | 34.8 | 130.4 | 94.6 | Assets |
| Other revenue | 0.3 | 0.3 | 1.3 | 0.7 | |
| Total revenue | 33.9 | 35.1 | 131.7 | 95.3 | |
| Rig operating expenses | -7.2 | -7.3 | -27.8 | -36.7 | |
| General and administrative exp. | -2.0 | -2.4 | -8.8 | -8.9 | |
| Other opex | -0.1 | -0.1 | -0.4 | -0.2 | |
| Total operating expenses | -9.3 | -9.7 | -36.9 | -45.8 | |
| EBITDA | 24.5 | 25.4 | 94.8 | 49.5 | |
| Depreciation Impairment |
-4.0 -45.0 |
-3.7 | -15.7 -45.0 |
-15.6 | Equity and liabilities |
| EBIT / Operating income | -24.4 | 21.6 | 34.1 | 33.9 | |
| Net financial items | 0.0 | -2.9 | -5.3 | -9.5 | |
| Pre-tax profit | -24.4 | 18.7 | 28.8 | 24.4 | |
| Tax expense | 0.6 | -3.8 | -7.6 | -3.4 | |
| Net profit | -23.8 | 14.9 | 21.3 | 21.0 | |
| In USDm | Q4 2017 | Q4 2016 |
|---|---|---|
| Assets Rigs, machinery and equipment Deferred tax assets |
178.8 2.0 |
238.9 3.1 |
| Non-current assets | 180.8 | 241.9 |
| Trade and other receivables Prepayments and accrued revenue Inventory Cash and cash equivalents Current tax |
17.2 6.9 4.8 119.3 0.2 |
17.3 7.2 4.8 70.1 22.1 |
| Current assets | 148.4 | 121.5 |
| Total assets | 329.2 | 363.4 |
| Equity and liabilities Paid in capital Retained earnings Total equity |
130.1 94.2 224.3 |
130.1 96.9 227.1 |
| Deferred tax liability Long-term interest-bearing debt Non-current liabilities |
2.8 85.0 87.8 |
1.1 90.0 91.1 |
| Current portion of long-term debt Trade and other creditors Accruals and provisions Current tax payable |
10.0 1.2 9.5 4.2 |
10.0 0.6 10.7 23.9 |
| Current assets Total liabilities |
24.9 112.7 |
45.2 136.3 |
| SHAREHOLDER OVERVIEW1 | |||
|---|---|---|---|
| # | Shareholder | # of shares | In % of sales |
| 1 | Aw ilhelmsen Offshore |
12,998,938 | 43.3% |
| 2 | UBS Securities LLC | 4,686,226 | 15.6% |
| 3 | Citibank, N.A. | 1,907,507 | 6.4% |
| 4 | Euroclear Bank S.A./ | 1,767,646 | 5.9% |
| 5 | Citigroup Global Mar | 1,129,000 | 3.8% |
| 6 | Citibank, N.A. | 879,600 | 2.9% |
| 7 | Bank of America, N.A | 781,963 | 2.6% |
| 8 | Avanza Bank AB | 685,669 | 2.3% |
| 9 | Clearstream Banking | 591,415 | 2.0% |
| 10 | BNP Paribas | 336,253 | 1.1% |
| 11 | Nordnet Bank AB | 309,015 | 1.0% |
| 12 | Merrill Lynch, Pierc | 281,974 | 0.9% |
| 13 | State Street Bank AN | 276,021 | 0.9% |
| 14 | Interactive Brokers | 165,033 | 0.5% |
| 15 | J.P. Morgan Securities | 164,048 | 0.5% |
| 16 | UBS Sw itzerland AG |
152,710 | 0.5% |
| 17 | First Clearing LLC | 139,567 | 0.5% |
| 18 | DZ Privatbank S.A. 0 | 131,000 | 0.4% |
| 19 | Citibank, N.A. | 120,449 | 0.4% |
| 20 | JP Morgan Chase | 115,531 | 0.4% |
| Other | 2,411,935 | 8.0% | |
| Total | 30,031,500 | 100.0% |
Note: FVP Master Fund LP with affiliated and related parties holds 19.4% of the capital QVT Financial LP with affiliated and related parties holds 6.4% of the capital
| # | Rig Name | Manager | Rig Type | Rig Water Depth (ft) | Year In Service |
Rig Status | Contract Status |
Build Country |
Next SPS |
|---|---|---|---|---|---|---|---|---|---|
| 1 | Bideford Dolphin |
Dolphin (Fred Olsen Energy) |
Semisubmersible | 1750 | 1975 | Warm stacked | Not Contracted | Norway | 2020 |
| 2 | Songa Trym |
Songa Offshore |
Semisubmersible | 1200 | 1976 | Cold stacked | Not Contracted | Norway | 2021 |
| 3 | Borgland Dolphin |
Dolphin (Fred Olsen Energy) |
Semisubmersible | 1475 | 1977 | Warm stacked | Not Contracted | UK | 2021 |
| 4 | Songa Delta |
Songa Offshore |
Semisubmersible | 1500 | 1980 | Cold stacked | Not Contracted | Finland | 2020 |
| 5 | Bredford Dolphin |
Dolphin (Fred Olsen Energy) |
Semisubmersible | 1500 | 1980 | Cold stacked | Not Contracted | Netherlands | 2020 |
| 6 | Deepsea Bergen |
Odfjell Drilling | Semisubmersible | 1475 | 1983 | Drilling | Current Contracted | Norway | 2020 |
| 7 | Songa Dee |
Songa Offshore |
Semisubmersible | 1500 | 1984 | Cold stacked | Not Contracted | Japan | 2019 |
| 8 | Polar Pioneer | Transocean | Semisubmersible | 1640 | 1985 | Cold stacked | Not Contracted | Japan | 2020 |
| 9 | Transocean Arctic | Transocean | Semisubmersible | 1650 | 1986 | Drilling | Current Contracted | Japan | 2019 |
| 10 | West Alpha | North Atlantic Drilling | Semisubmersible | 1968 | 1986 | Cold stacked | Not Contracted | Japan | 2019 |
| 11 | Transocean Leader | Transocean | Semisubmersible | 4500 | 1987 | Yard | Current Contracted | South Korea | 2017 |
| 12 | Scarabeo 5 |
Saipem | Semisubmersible | 6233 | 1990 | Cold stacked | Not Contracted | Italy | 2020 |
| 13 | West Venture | North Atlantic Drilling | Semisubmersible | 2600 | 2000 | Cold stacked | Not Contracted | Japan | 2020 |
| 14 | West Navigator | North Atlantic Drilling | Drillship | 7500 | 2000 | Cold stacked | Not Contracted | Norway | 2020 |
| 15 | Leiv Eiriksson | Ocean Rig | Semisubmersible | 7500 | 2001 | Moving to location | Current Contracted | USA | 2021 |
| 16 | Stena Don |
Stena | Semisubmersible | 1640 | 2001 | Warm stacked | Not Contracted | Germany | 2020 |
| 17 | Eirik Raude | Ocean Rig | Semisubmersible | 10000 | 2002 | Cold stacked | Not Contracted | USA | 2017 |
| 18 | West Phoenix | North Atlantic Drilling | Semisubmersible | 10000 | 2008 | Drilling | Current Contracted | South Korea | 2018 |
| 19 | West Hercules | Seadrill | Semisubmersible | 10000 | 2008 | Warm stacked | Future Contracted | South Korea | 2018 |
| 20 | Deepsea Atlantic |
Odfjell Drilling | Semisubmersible | 10000 | 2009 | Drilling | Current Contracted | South Korea | 2019 |
| 21 | Transocean Barents | Transocean | Semisubmersible | 10000 | 2009 | Drilling | Current Contracted | Norway | 2019 |
| # | Rig Name | Manager | Rig Type | Rig Water Depth (ft) | Year In Service |
Rig Status | Contract Status |
Build Country |
Next SPS |
|---|---|---|---|---|---|---|---|---|---|
| 22 | West Aquarius | Seadrill | Semisubmersible | 10000 | 2009 | Hot stacked | Future Contracted | South Korea | 2019 |
| 23 | West Eminence | Seadrill | Semisubmersible | 10000 | 2009 | Cold stacked | Not Contracted | South Korea | 2019 |
| 24 | Deepsea Stavanger |
Odfjell Drilling | Semisubmersible | 10000 | 2010 | Drilling | Current Contracted | South Korea | 2020 |
| 25 | Transocean Spitsbergen | Transocean | Semisubmersible | 10000 | 2010 | Drilling | Current Contracted | Norway | 2020 |
| 26 | COSLPioneer | COSL | Semisubmersible | 1640 | 2010 | Warm stacked | Future Contracted | China | 2020 |
| 27 | COSLInnovator | COSL | Semisubmersible | 1640 | 2011 | Warm stacked | Future Contracted | China | 2021 |
| 28 | COSLPromoter | COSL | Semisubmersible | 1640 | 2012 | Drilling | Current Contracted | China | 2017 |
| 29 | Island Innovator | Odfjell Drilling | Semisubmersible | 2300 | 2012 | Moving to location | Future Contracted | China | 2017 |
| 30 | Scarabeo 8 |
Saipem | Semisubmersible | 9843 | 2012 | Warm stacked | Future Contracted | Italy | 2017 |
| 31 | COSLProspector | COSL | Semisubmersible | 5000 | 2014 | En route | Not Contracted | China | 2019 |
| 32 | Songa Encourage |
Songa Offshore | Semisubmersible | 1640 | 2015 | Drilling | Current Contracted | South Korea | 2020 |
| 33 | Songa Endurance |
Songa Offshore | Semisubmersible | 1640 | 2015 | Drilling | Current Contracted | South Korea | 2020 |
| 34 | Songa Equinox |
Songa Offshore | Semisubmersible | 1640 | 2015 | Drilling | Current Contracted | South Korea | 2020 |
| 35 | Songa Enabler |
Songa Offshore | Semisubmersible | 1640 | 2016 | Drilling | Current Contracted | South Korea | 2021 |
| 36 | West Mira | Seadrill | Semisubmersible | 10000 | 2019 | Under construction | Not Contracted | South Korea | 2023 |
| 37 | West Rigel | Not known | Semisubmersible | 10000 | 2020 | Standby | Not Contracted | Singapore | 2023 |
| 38 | North Dragon | North Sea Rigs | Semisubmersible | 1650 | 2020 | Standby | Not Contracted | China | 2023 |
| 39 | Bollsta Dolphin | Northern Drilling | Semisubmersible | 7500 | 2020 | Standby | Not Contracted | South Korea | 2023 |
| 40 | Stena MidMax |
Samsung | Semisubmersible | 6562 | 2020 | Under construction | Not Contracted | South Korea | 2023 |
| 41 | Beacon Atlantic |
North Sea Rigs | Semisubmersible | 1650 | 2020 | Under construction | Not Contracted | China | 2022 |
| 42 | Beacon Pacific |
North Sea Rigs | Semisubmersible | 1640 | 2020 | Under construction | Not Contracted | China | 2023 |
Any investment in the shares of Awilco Drilling involves significant risks. Before deciding whether or not to participate in the Placement, an investor should consider carefully all of the information set forth in this presentation and, in particular, the specific risk factors set out below. An investment in the shares is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or part of the investment. If any of the risks described below materialise, individually or together with other circumstances, they may have a material adverse effect on the Awilco Drilling's business, results of operations, cash flow and financial condition, which may cause a decline in the value and trading price of the shares that could result in a loss of all or part of any investment in the shares.
While the Company intends to enter into a construction contract for a new semi-submersible drilling rig, negotiations for such shipbuilding contract have not been finalised and there can be no assurance that the Company will be able to enter into the contract or that the terms of such contract, if entered into, will reflect the terms currently expected.
There will be a number of risks associated with construction of the Company's contemplated newbuilding, including risks of delay, risks of termination of the shipbuilding contracts by the Yard, the risk of need for variation orders and amendments resulting in additional need for capital, the ability of the Yard to perform its duties under the shipbuilding contracts, and the risk of failure by key suppliers to deliver necessary equipment. Delays in delivery of the newbuilding may affect the Company's potential revenue, or potentially loss of contracts from clients.
While the Placement is expected to fully finance the first instalment for the Company's contemplated newbuilding, the Company will need to raise significant amounts of new capital to finance the remaining instalments and other costs associated with the newbuilding. Furthermore, the Company USD 125 million bond matures in April 2019. There can be no assurance that the Company will be able to raise the capital which is necessary to pay for the newbuilding or repay the bond issue, or at that the cost of any new debt financing will be at an commercially attractive level. It is expected that a significant portion of the required funding to finance the newbuilding will have to be raised through new equity. This may result in significant dilution for existing shareholders. There is also risk that the Company will not be able to comply with the terms of any existing or new debt financing.
The Company has not entered into any contract for the employment of the newbuilding, and there can be no assurance that it will be able to enter into any such contracts on commercially acceptable terms. Furthermore, the contract for WilPhoenix will expire during the first half of 2018 and the WilHunter is currently cold-stacked. There can be no assurance that the Company will obtain contracts of employment for either WilPhoenix or WilHunter. In addition, any failure of a counterparty to comply with the terms of a contract for the employment of a rig may have material adverse consequences for the Company.
The demand for drilling rigs particularly sensitive to fluctuations in oil price, which in
turn is dependent on a number of factors such as general economic trends, the availability of oil in the world markets, the availability of alternative energy sources, regulation of the energy market etc.
The market for drilling rigs have historically been cyclical. An oversupply of rigs may have a significant negative effect on the rates for drilling rigs and may make it difficult to secure employment for rigs at acceptable rates.
Repair and maintenance costs for rigs are inherently difficult to predict and may be substantially higher than expected.
The Company will operate in the maritime environments and its rigs are exposed to a number of potential hazards, incidents and accidents which can result in downtime, repair costs, liability towards third parties or total losses of rigs, any one of which can have a material adverse effect on the Company's business, operating results or financial condition.
In the event of a casualty to a rig or other catastrophic events, the Company will rely on insurance to pay the insured value of the rig, the damage incurred or any liability towards third parties. However, the Company may not have insurance cover for the full range of risks to which the Company are exposed and/or any particular claim may not be paid. A significant loss that is not covered by insurance may have material adverse effect for the Company.
The Company owns two rigs and intends to enter into a contract for the construction of one additional rig. The limited number of rigs means that a failure to secure employment for any one rig or any incidents or adverse occurrences relating to any one rig may have a material adverse impact on the Company's profitability and financial position.
The Company may be subject to liability under environmental laws and regulations, which could have a material adverse effect on the Company's business results of operations and financial condition.
Contracts in the offshore sector require high standards of safety, and all offshore contracts are associated with considerable risks and responsibilities. These include technical, operational, commercial and political risks, and it is impossible to insure against all the types of risk and liabilities mentioned. For instance, under some contracts the Company may have unlimited liability for losses caused by its own gross negligence.
Operations in international markets are subject to risks inherent in international business activities, including, in particular, general economic conditions in each such market, overlapping differing tax structures, management and organisation spread over various jurisdictions, unexpected changes in regulatory requirements, complying with a variety of foreign laws and regulations.
The market in which the Company operates is highly competitive. Drilling contracts are often awarded on a competitive bid basis, with intense price competition frequently being the primary factor determining which qualified contractor is awarded the job. Many of the Company's competitors have significantly larger resources than the Company.
National and international laws and regulations may hinder or delay the Company's operations, increase the Company's operating costs, reduce demand for its services and/or restrict its ability to operate its rigs.
The market for the Company's services is characterised by continual and rapid technological developments that have resulted in, and will likely continue to result in, substantial improvements in equipment functions and performance. If the Company is not successful in acquiring new equipment or upgrading its existing equipment on a timely and cost effective basis in response to technological developments or changes in standards in the industry, this could have a material adverse effect on the Company's business.
The service life of the rigs to be operated by the Company will ultimately depend on their efficiency. The Company's two existing rigs, WilPhoenix and WilHunter, are both older rigs. There can be no assurance of how long the rigs will be in operation. The capital associated with the repair and maintenance of each rig increases with age.
The Company has a limited organisation and any loss of key employees may have a material negative impact on the Company.
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.