- This presentation contains forward looking information
- Forward looking information is based on management assumptions and analyses
- Actual experience may differ, and those differences may be material
- Forward looking information is subject to significant uncertainties and risks as they relate to events and/or circumstances in the future
- This presentation must be read in conjunction with other financial statements and the disclosures therein
Marine Contract
Marine market leadership 48% of 2014 revenues
Marine Contract acquires seismic data exclusively for oil and gas exploration and production companies
MultiClient
Diverse MultiClient library 41% of 2014 revenues
MultiClient initiates and manages seismic surveys which PGS acquires, processes, markets and sells to multiple customers on a non-exclusive basis
Operations
Productivity leadership
Operations supports Marine Contract and MultiClient with vessel resources and manages fleet renewal strategies
Imaging & Engineering
Technology differentiation 8% of 2014 revenues
Imaging and Engineering processes seismic data acquired by PGS for its MultiClient library and for external clients on contract and manages research and development activities
Client focus | Global presence | Innovation leadership
Strategy for Taking the Lead Lessons Learned from Previous Downturns
- Conservative financial gearing creates cyclical robustness
- Long term financing in place
- Preserving dividend capacity
- MultiClient reduces earnings volatility
- Conservative pre-funding requirements protect cash flow
- Lower late sales risk
- Reduce library build-ups and exposure
- New-build commitments fully funded
- Lowest cash cost wins
- Invest for 25 years use of vessels
- Focus on maximizing value over life of vessel
- Technology creates differentiation and downside protection
- Continuous cost focus
- Stay focused on core business
- Divest non-core when possible (PGS Onshore 2009/2010)
- Avoid capital commitments that cannot be sustained in a downturn
Financial Summary
210 216 128 125 - USD million
EBIT** Cash Flow from Operations
*EBITDA, when used by the Company, means EBIT excluding other charges/(income), impairment and loss/gain on sale of long-term assets and depreciation and amortization. **Excluding impairment and loss on sale of long-term assets of USD 56.9 million, USD 39.7 million in Q4 2014, USD 25.0 million in Q3 2014, USD 9.1 million in Q2 2014, USD 15 million in Q4 2013, as well as other charges of 4.7 million in Q2 2015 and 2.7 million in Q1 2015.
Balance Sheet Key Numbers – Strong Financial Position
|
June 30 |
June 30 |
December 31 |
| USD million |
2015 |
2014 |
2014 |
| Total assets |
3 297.4 |
3 665.7 |
3 563.0 |
| MultiClient Library |
749.9 |
727.9 |
695.2 |
| Shareholders' equity |
1 799.9 |
2 012.3 |
1 901.6 |
| Cash and cash equiv. |
57.6 |
42.9 |
54.7 |
| Restricted cash |
82.9 |
97.9 |
92.2 |
| Liquidity reserve |
545.7 |
382.9 |
454.7 |
| Gross interest bearing debt |
1 146.6 |
1 243.5 |
1 209.1 |
| Net interest bearing debt |
995.0 |
1 091.5 |
1 048.0 |
- Liquidity reserve of USD 545.7 million
- The new builds are fully funded with USD 258.5 million of undrawn facilities to cover remaining yard payments
- Shareholders' equity at 55% of total assets
Strong balance sheet – well positioned to handle the challenging market
The accompanying unaudited financial information has been prepared under IFRS. This information should be read in conjunction with the unaudited second quarter 2015 results released on July 23, 2015.
Attractive Debt Structure – No Maturities Before 2018
Long term Credit Lines and Interest
Bearing Debt |
Nominal
Amount as
of June 30,
2015 |
Total
Credit Line |
Financial Covenants |
USD 400.0 million Term Loan ("TLB"), Libor
(minimum 0.75%) + 250 basis points, due 2021 |
USD 395.0
million |
|
None, but incurrence test:
total leverage ratio
< 3.00:1 |
Revolving credit facility ("RCF"), due 2018
70 bps commitment fee on undrawn amount
Libor + margin of 200-235 bps on drawn amount |
USD 50.0
million |
USD 500.0
million |
Maintenance covenant:
total leverage ratio
< 2.75:1 |
Japanese ECF, 12 year with semi-annual
installments. 50% fixed/ 50% floating interest
rate |
USD 251.6
million |
USD 510.1
million |
None, but incurrence test
for loan 3&4:
Total leverage ratio < 3.00:1
and
Interest coverage ratio >
2.0:1 |
2018 Senior Notes, coupon of 7.375% and
callable from 2015 |
USD 450.0
million |
|
None, but incurrence test:
Interest coverage ratio
> 2.0:1 |
Resilient MultiClient Performance
- Pre-funding level in H1 2015 has averaged 144%
- Driven by projects in Africa, Europe and Australia
- Pre-funding level expected to be above 100% for the full year 2015
- MultiClient cash investments in 2015 of approximately USD 300 million
- Approximately 50% of active 3D vessel capacity now expected to be used for MultiClient projects in 2015
Good MultiClient Sales Performance from All Vintages
- Strong sales progress for all vintages
- Moderate net book values (NBV) for surveys completed 2010- 2015
- Work In Progress (WIP) approximately two years on average
- Amortization is primarily based on the ratio of cost to forecasted sales
- Full year 2015 amortization rate expected to be approximately 55%
Cap cost Accumulated revenue NBV
Proactive Cost Reductions Continue in 2015
- Cash cost in 2015, including severance and restructuring costs, is now expected to be approximately USD 250 million lower than in 2014
- PGS initially targeted a reduction of USD 150 million
- Cold-stacking of Ramform Explorer and Ramform Challenger, foreign exchange, a more wide-ranging reduction in staff and continued decline in variable project costs contribute to a further reduction in costs
Cold-stacking Ramform Viking: Reducing Capacity, CAPEX and Costs Further
- Ramform Challenger and Ramform Explorer will, as earlier announced, be stacked after the North Europe acquisition season
- To further reduce cost and CAPEX and improve utilization, PGS has decided to cold-stack a third vessel, Ramform Viking
- The vessel will complete a MultiClient program offshore East New Foundland in October and be stacked thereafter
- Originally scheduled for yard stay and classing in Q1 2016
- 20-year classing will be deferred and in-sea equipment used on vessels in operation – reduces 2016 maintenance capex by approximately USD 50 million
- Facilitates continued low maintenance CAPEX levels through 2016
- During 2015 PGS has reduced 3D streamer capacity by approximately 25%
- Reduces quarterly cash cost by USD 25-30 million
Focusing on cash preservation
Current Market Characteristics
- Cautious spending pattern among oil companies continues to impact seismic demand
- Low visibility in all regions
- Very low prices for contract work with some further price pressure
- Further capacity reduction needed to balance the market
- The weak market is expected to continue well into 2016
PGS response – sales focus, cost reduction, cash and capacity management
Marine Contract Bidding Activity
Source: PGS internal estimate as of end June 2015. Value of active tenders and sales leads are the sum of active tenders and sales leads with a probability weight and represents Marine 3D contract seismic only.
Order Book
Global Supply and Demand Trends
- 15-20% decline in sq.km acquired is expected in 2015, compared to 2014
- Average 2015 streamer capacity expected down 13%, compared to 2014
- Approximately 15% additional streamer capacity reduction needed to balance supply with current market demand
-15- Source of both graphs: PGS internal estimates. Capacity increases are calculated based on average number of streamers in one year compared to average number of
Towed Streamer EM – Mapping Resistivity of the Sub-surface
- Complementary to seismic
- Growing acceptance from oil companies
- Step change in efficiency compared to node based acquisition
- Superior data density resulting in more robust results and higher resolution images
2014 EM campaign:
- 11,000 sq. km of data acquired in Barents South East
- Pre-funding from clients
- Data now ready for delivery
In Conclusion: Well Positioned to Navigate the Challenging Market
- Resilient MultiClient performance
- Robust balance sheet
- No debt maturities before 2018
- Reducing costs further
- Cost effective operations
- Improved productivity
- Attractive MultiClient library
Competitively Positioned – Performance Through the Cycle
Thank you – Questions?
Appendix PGS Seismic Fleet
S
Ramforms Conventional
PGS Apollo
Ramform Sterling Ramform Sovereign
Ramform Valiant Ramform Viking
Ramform Vanguard
Ramform Explorer – to be cold stacked in 2H 2015
Sanco Spirit
Atlantic Explorer
PGS fleet – Flexible, with high towing capacity
Appendix Productivity Leadership is Key for Differentiation
Significant vessel decommissioning
Source: The cash cost curve is based on PGS' internal estimates and typical number of streamer towed, and excludes GeoStreamer productivity effect. The graph shows all seismic vessels operating in the market and announced new-builds. The Ramform Titan-class vessels are incorporated with 15 streamers, S-class with 14 streamers and the V-class with 12 streamers.