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PGS ASA Investor Presentation 2010
3712_rns_2010-04-30_d06172c2-523b-4775-81ac-99700ba5270f.pdf
Investor Presentation
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PGS
Unaudited First Quarter 2010 Results
(IFRS)
Oslo April 30, 2010
PGS
Cautionary Statement
- 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 the press release for the Q1 2010 results and the disclosures therein
-2-
PGS
GeoStreamer® Improves Margins
- Q1 2010 earnings
- EBITDA of USD 99.3 million
- Increasing share of GeoStreamer® with price uplifts
- Strong vessel utilization and performance
- Low Marine cost
- Net debt reduced to USD 537.4 million
- Almost all 2010 GeoStreamer® capacity sold
- Bidding activity increasing – however with price pressure on conventional streamer capacity
- PGS Apollo delivered
- Successfully completed the disposal of Onshore
- Organizational changes for future growth
2010 guidance maintained with EBITDA upside
PCS
Financial Summary – Continuing Business
Revenues
Adjusted EBITDA
EBIT
Cash flow from operations
*Excluding impairments of USD 0.5 million in Q1 10, USD 2.4 million in Q4, USD 52.4 million in Q3, USD 48.2 million in Q2 and USD 50.6 million in Q1 2009. Adjusted EBITDA, when used by the Company, means income before income tax expense (benefit) less, currency exchange gain (loss), other financial expense, other financial income, interest expense, income (loss) from associated companies, impairments of long-lived assets and depreciation and amortization.
PGS
Stable Vessel Booking
- Order book of USD 409 million
- Status as of end April:
- Booking visibility of approximately 6 months
- Direct awards increasing substantially due to GeoStreamer® demand
- Easier to build order book for GeoStreamer® capacity than conventional capacity
+
Achieving price premium on GeoStreamer® capacity
PGS
Petroleum Geo-Services ASA
Petroleum Geo-Services ASA
Financials
Unaudited First Quarter 2010 Results
PCS
Consolidated Statements of Operations Summary
| 2010 | 2009 | ||
|---|---|---|---|
| USD million (except per share data) | Q1 | Q1 | Q4 |
| Revenues | 259.4 | 390.8 | 303.7 |
| Adjusted EBITDA* | 99.3 | 206.3 | 141.5 |
| Operating profit (EBIT) excluding special items** | 34.8 | 155.2 | 45.5 |
| Operating profit (EBIT) | 34.2 | 104.6 | 43.0 |
| Net financial items | (19.3) | (14.9) | (13.2) |
| Income (loss) before income tax expense | 14.9 | 89.7 | 29.9 |
| Income tax expense (benefit) | 4.9 | 28.0 | 3.6 |
| Net income to equity holders | 16.2 | 54.2 | 22.9 |
| EPS basic | $0.08 | $0.31 | $0.11 |
| EPS diluted | $0.08 | $0.31 | $0.11 |
| EBITDA margin* | 38.3 % | 52.8 % | 46.6 % |
| EBIT margin** | 13.4 % | 39.7 % | 15.0 % |
-
Q1 2010 net financials items impacted by a currency loss of USD 10.2 million as a result of USD appreciating against NOK, EUR and GBP in the quarter
-
Adjusted EBITDA, when used by the Company, means income before income tax expense (benefit) less, currency exchange gain (loss), other financial expense, other financial income, interest expense, income (loss) from associated companies, impairments of long-lived assets and depreciation and amortization.
** Excluding impairments of USD 0.5 million in Q1 2010, USD 50.6 million in Q1 2009 and 2.4 million in Q4 2009.
The accompanying unaudited financial information has been prepared under IFRS. This information should be read in conjunction with the unaudited first quarter 2010 results released on April 30, 2010.
PCS
Marine – Q1 Highlights
Contract revenues
MultiClient revenues
- MultiClient late sales, up 86% from Q1 2009
- Marine contract EBIT margin of 23% in Q1 2010, compared to 12% in Q4 2009 and 53% in Q1 2009
- External Data Processing revenues of USD 23.2 million, compared to USD 20.6 million in Q1 2009
M
Marine Vessel Utilization
Seismic Streamer 3D Fleet Activity in Streamer Months
High Q1 2010 vessel utilization of 92%
-9-
PGS
Marine MultiClient Revenues per Region
Pre-funding and Late Sales Revenues Combined
- Q1 MultiClient pre-funding revenues primarily from Crystal III in the Gulf of Mexico
- Strong Gulf of Mexico and Europe late sales in Q1
- 33% of total 3D capacity used for MultiClient in Q1 2010, compared to 9% in Q1 2009
- Pre-funding ratio for the full year 2010 is increasing
Pre-funding in percent of MC cash investments was 66% in Q1 2010
-10-
PGS
Marine - Key Figures
| 2010 | |
|---|---|
| USD million | Q1 |
| Contract revenues | 155.4 |
| Total MC revenues | 76.5 |
| Processing and other revenues | 26.4 |
| Total Revenues | 258.3 |
| Operating cost | (152.0) |
| Adjusted EBITDA | 106.3 |
| Depreciation | (27.0) |
| MultiClient amortization | (34.8) |
| EBIT* | 44.6 |
| CAPEX** | (46.5) |
| Cash investment in MultiClient | (52.1) |
| Order book Marine | 409 |
| 2009 | |
| --- | --- |
| Q4 | Q3 |
| 158.2 | 263.3 |
| 118.7 | 74.1 |
| 26.3 | 24.1 |
| 303.2 | 361.5 |
| (156.6) | (185.4) |
| 146.6 | 176.1 |
| (31.4) | (33.7) |
| (61.4) | (28.8) |
| 53.8 | 113.6 |
| (41.0) | (39.1) |
| (47.1) | (34.4) |
| 438 | 533 |
Excluding impairments of long-lived assets of USD 0.5 million in Q1 2010, 2.0 million in Q4 2009, USD 52.4 million in Q3 2009, USD 48.2 million in Q2 2009 and 50.6 million in Q1 2009.
*Capex for Q3 2009 includes USD 26.2 million from Ramform Sterling's final installment, payment made July 1, 2009.
The accompanying unaudited financial information has been prepared under IFRS. This information should be read in conjunction with the unaudited first quarter 2010 results released on April 30, 2010.
Adjusted EBITDA, when used by the Company, means income before income tax expense (benefit) less, currency exchange gain (loss), other financial expense, other financial income, interest expense, income (loss) from associated companies, impairments of long-lived assets and depreciation and amortization.
PCS
Marine Cost* Development
- Flat cost development from Q4 2009
- Reduction from Q1 2009
- Primarily due to general cost reductions and lower project related costs
-
Partially offset by weaker USD and higher fuel prices
-
Amounts show the sum of operating cost and capitalized MultiClient cash investment.
PCS
Consolidated Statements of Cash Flows Summary
| USD million | Quarter ended March 31 | |
|---|---|---|
| 2010 | 2009 | |
| Cash provided by operating act. | 115.5 | 145.4 |
| Investment in MultiClient library | (52.1) | (44.8) |
| Capital expenditures | (47.9) | (93.7) |
| Other investing activities | 219.7 | (4.2) |
| Financing activities | (10.6) | 3.8 |
| Net increase (decr.) in cash and cash equiv. | 224.6 | 6.5 |
| Cash and cash equiv. at beginning of period | 126.0 | 95.2 |
| Cash and cash equiv. at end of period | 350.6 | 101.7 |
- Strong Q1 working capital development, primarily as a result of customer prepayments. Some reversal likely in Q2
- Net proceeds of USD 171.4 million in Q1 from sale of Onshore (net of transaction cost, cash disposed and USD 5.5 million of proceeds temporarily held in escrow account)
- USD 51.9 million of yard refunds on NB 532 received in Q1
The accompanying unaudited financial information has been prepared under IFRS. This information should be read in conjunction with the unaudited first quarter 2010 results released on April 30, 2010.
PGS
Consolidated Statements of Financial Position - Key Figures
| USD million | March 31
2010 | March 31
2009 | December 31
2009 |
| --- | --- | --- | --- |
| Total assets | 2 843.4 | 3 089.3 | 2 929.4 |
| MultiClient Library | 321.4 | 328.9 | 293.2 |
| Shareholders' equity | 1 466.9 | 1 202.7 | 1 449.0 |
| Cash and cash equiv. | 350.6 | 101.7 | 126.0 |
| Restricted cash | 31.4 | 22.4 | 18.0 |
| Liquidity reserve | 702.0 | 198.0 | 472.0 |
| Gross interest bearing debt * | 919.3 | 1 265.6 | 918.0 |
| Net interest bearing debt | 537.4 | 1 141.5 | 774.0 |
*Includes capital lease agreements
The accompanying unaudited financial information has been prepared under IFRS. This information should be read in conjunction with the unaudited first quarter 2010 results released on April 30, 2010.
PCS
Strong Capital Discipline and Debt Reduction
■ Term loan B
■ Convertible Bond
■ Revolving Credit Facility
■ Arrow Facilities
■ Oslo Seismic Note
■ 10% Senior Notes due 2010
■ Cash
- Net debt reduced by USD 686 million since peak at Q2 2008 to end Q1 2010
- Proceeds from cancellation of NB 533 is expected in Q3 2010 and will further strengthen net debt position
- Liquidity reserve at end Q1 2010 was USD 702 million, compared to USD 198 million at end Q1 2009
PGS
Robust Financing at Attractive Terms
| Long term Interest Bearing Debt | Balance as of March 31, 2010 | Total Credit Line | Financial Covenants |
|---|---|---|---|
| USD 600 million Term Loan (“TLB”), Libor + 175 basis points, due 2015 | USD 570.5 million | Incurrence test: total leverage ratio < 3.25:1 from 2009 to 2015** | |
| Revolving credit facility (“RCF”), Libor + 150 basis points, due 2012 | USD 0 million* | USD 350 million | Maintenance covenant: total leverage ratio < 3.25 in 2009 and 2010, and 3.0:1 thereafter** |
| USD 400 million convertible bond due 2012, coupon of 2.7% with strike NOK 216.19 | USD 310.8 million*** | ||
| Oslo Seismic Note, 8.28% interest, amortizing to 2011 | USD 33.9 million gross – USD 23.9 million net*** |
- Plus USD 4.7 million for bid/performance bonds
** May be adjusted as part of recently initiated amendment to leverage definition in credit agreement
*** USD 344.5 million of nominal value outstanding after repurchase
*** Net of USD 10 million on escrow account, which is restricted . Oslo Seismic note to be fully redeemed June1, 2010.
-16-
PGS
Petroleum Geo-Services ASA
Petroleum Geo-Services ASA
PGS going forward
Unaudited First Quarter 2010 Results
PGS
Streamer Operations Late April 2010
-18-
PCS
E&P Spending Increasing
Source: External broker research, estimated from company reports.
| Productivity & Structures | Microstrategy Crackles | Structure-Found Distinctions |
|---|---|---|
| Data review means retribution of: 1111, US $ Energy | ||
| CNOOC Limited Welcomes 2010 with Higher Production Growth and Robust CAPEX Investment | ||
| CNOOC-CONS, P.M. 3 (PMI)Investments, Inc. - CNOOC Limited (The Company) or 'CNOOC-Lite' VOTE: 12013, BEHW, BES, India, and received for 2010 business strategy and development plan. | ||
| Grade: 10th (lower) or more (average) and BAPS (10th/20th) only. | ||
| This total targeted net production of the Company in 2010 to 2015 with million barrels of oil equivalent (BOD) cash still at US$75 bilion/ea. The Company's net production for 2009 is estimated to be $20,000 million BOD cash still at US$60 bilion/ea. | ||
| During the year, nine new projects are expected to come on stream, including major projects such as: Arching 2011 and Building 2012. These new projects are all funded to effective China and are especially strongly supported by Company's production group of 2010. In the following, a total record rate of 100% square microfeets (20 square, 100% fullness) and a total of 200% annual income (200,000,000,000) are reported. Resources on retirement of recovery, is also expected to be an important driver for the production growth in 2010. | ||
| In order to maintain a sustainable growth, the Company will further enhance its exploration efforts in 2010. The Company's equivalent volumes will focus on exploration of 2010 and under natural gas exploration, and other areas and within such extensive exploration program including 96 exploration units, 21,000 microfeets (30 sources and 17,000 square microfeets (20 square). The Company aims to achieve a volume replacement rate of 800% of over 100% in 2010. | ||
| In 2010, outstanding microfeets in grade and relevant operations are expected to reach US$1,000 million. The Company's equivalent volumes will focus on expansion of 2010 and under natural gas exploration, and other areas and within such extensive expansion program including 96 expansion units, 21,000 microfeets (30 sources and 17,000 square microfeets (20 square). The Company aims to achieve a volume replacement rate of 800% of over 100% in 2010. | ||
| 2010 will be a successful year for the Company, especially for the production growth. While the operating on this has among other issues, primarily for the production of the product, the Company will be expected to be able to expand its research and development efforts and to continue to invest in the project. | ||
| 2010 will be a successful year for the Company, especially for the production growth. While the operating on this has among other issues, primarily for the production of the product, the Company will be expected to be able to expand its research and development efforts and to continue to invest in the project. | ||
| In 2010, the Company will be expected to be able to expand its research and development efforts and to continue to invest in the project. |
Oil Services
Nordic
The Major recovery
We remain bulldozer on the oil services space and see an average upside potential of -30% for the large cap names. Key drivers will be positive earnings revisions for 2011 and order intake, factors that we believe will start to materialize already in the first half of this year. Our TOP PICKS from our universe are TGX, ACERGT and SONYL4.
E&P spending revised higher...
- The key driver and predictor for E&P spending is the oil price. We believe that levels above USD 60 based are more than sufficient to make most new projects economically viable. Projects that were temporarily put on hold due to the substantial and abrupt drop in the oil price will start to resurface and drive E&P spending higher.
...with valuations approaching mid cycle levels
- The oil services index in Norway created by 92% in 2009, taking valuations back to historical average levels on earnings multiples. Further upside from the current levels will have to be derived from positive earnings revisions for 2011e earnings with subsequent high
E&P budgets: Rush of companies hiking spending
Daily Newsletter
20 January 2010
| Indices | Price | Low | Medium | High |
|---|---|---|---|---|
| Overall Revenge: 10 Service Index | $1,000 | $1,000 | $1,000 | $1,000 |
| COTTA | $23.5 | $23.5 | $23.5 | $23.5 |
| US Gold (Sony Sales) | $1.41 | $1.41 | $1.41 | $1.41 |
| EU Gold (Vintage) | $1.41 | $1.41 | $1.41 | $1.41 |
| S&P 500 | $1.00 | $1.00 | $1.00 | $1.00 |
| Net 500 | $1.00 | $1.00 | $1.00 | $1.00 |
| Net 100 | $1.00 | $1.00 | $1.00 | $1.00 |
| Capitalization and currency | $1,014 | $1,014 | $1,014 | $1,014 |
| LOSSEX | $1.01 | $1.01 | $1.01 | $1.01 |
| US Gold | $1.01 | $1.01 | $1.01 | $1.01 |
| BTS | $1.01 | $1.01 | $1.01 | $1.01 |
| Oasis Full | $1.01 | $1.01 | $1.01 | $1.01 |
CVG confirms three 2D ships removals in Q1
US independent McMoran Exploration set its 2010 E&P budget at $240m up from $138m in 2009. Last week, the co' made a gas discovery on its Davy Jones ultra-deep prospect in the US GoM, which could be one of the largest discoveries on the US GoM Shelf in decades. Unit Corp's 2010 budget of $365m is up 66% vs 2009, while BHP shows
PGS
Significant Capacity Additions Next Quarters
- Approximately 15+% capacity increase in 2010
- Approximately 5+% capacity increase in 2011
New capacity additions put pressure on conventional streamer pricing
Source: PGS Internal Estimate April 2010. The "Current expectations April 2010" are derived from announcements made regarding stacking/scrapping and anticipation of capacity that will be laid off. The graph shows 3D streamers, and the growth figures are compared from Q4 one year to Q4 the next year. -20-
PGS
Bidding Activity
Marine Seismic Acquisition
- Bidding activity and visibility is increasing
- Positive customer sentiment
- Massive interest for GeoStreamer® with pricing premium
- Increase in directly awarded volume
- 25% of PGS Q1 3D awarded work
- More extensions of existing work
Source: PGS Internal Estimate as of end March 2010. Value of Active Tenders and All Sales Leads are the sum of each tender and sales lead with a probability weight and represents Marine 3D contract seismic only. -21-
PGS
Favorably Positioned on the Industry Cost Curve
- PGS' position on industry cost curve is improving as Ramform Explorer will get more power and tow 10 streamers on a regular basis, rather than 8
- PGS fleet is positioned to generate the industry's best margins
- Positive to see decommissioning of older vessels from the seismic market
Source: The cash cost curve is based on PGS' internal estimates and typical number of streamer towed. The graph shows all seismic vessels in the market, both existing and new-builds. The Ramform S-class is incorporated with 14 streamers and the V-class with 12 streamers.
PGS
Average Order Book Margin Improving
- Order book margin positively impacted by GeoStreamer® work
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PGS
GeoStreamer® - Always Better
Margin in %
Q4 09
Timing of job start up (approximately)
Q4 10
- Geostreamer® rates are increasing, due to increased customer interest
- 6-streamer and 2D GeoStreamer® capacity generates margins comparable to high-end conventional
- Order book is building faster on GeoStreamer® capacity than conventional
- 10+ percentage points margin premium for GeoStreamer® vs. conventional streamer margin
Margin GeoStreamer 3D
Margin GeoStreamer 2D
-24-
PGS
GeoStreamer® - Always Better
Conventional streamer data
GeoStreamer® data
-25-
PGS
GeoStreamer® - Always Better
- Up to 50% of total time saved with GeoStreamer® compared to conventional streamers
- Weather window significantly improved
- Increased fleet flexibility
- Excellent data quality from surveys done in harsh environments
- Reduced cycle time to customers
PGS
50% GeoStreamer® Capacity by Year-end 2010
| Current GeoStreamer® operations | Planned GeoStreamer® roll-out |
|---|---|
| • 3D | |
| – Atlantic Explorer | |
| (6-streamer) | |
| – Ramform Challenger | |
| (10 streamer) | • Additional 3D vessels |
| – Ramform Valiant scheduled for GeoStreamer® upgrade May/June 2010 | |
| – Ramform Explorer scheduled for GeoStreamer® upgrade in June/July 2010 | |
| – Ramform Viking scheduled for GeoStreamer® upgrade Q4 2010/Q1 2011 | |
| • 2D | |
| – Beaufort Explorer |
Further GeoStreamer® rollout acceleration under consideration
PGS
GeoStreamer® – a New Generation MultiClient Library
- PGS’ objective: New acquisition of core hydrocarbon-producing areas of the North Sea with GeoStreamer® and/or HD3D
- 2010 sees PGS active in North Viking & Central Graben:
- 5,500 km² of MC GeoStreamer®
- 1,900 km² of MC HD3D
- Surveys highly pre-funded
- 2009 GeoStreamer® results show excellent uplift in image quality
- GeoStreamer® - a key future differentiator for PGS MultiClient in producing basins worldwide
PCS
Organizational Changes for Future Growth
- Simplifying organization with fewer management levels
- Creating a more "balanced" organization with a broader management team
- Promoting growth in the MultiClient business
- Creating value for all stakeholders
PGS
Organizational Changes for Future Growth
Focused organization
-30-
PGS
Reflections for Q2 2010
- Capacity fully booked
- Two Ramforms for GeoStreamer® upgrade
- Steaming capacity into the North Sea
- Shakedown of PGS Apollo
- More time spent at yard than in an average quarter
-31-
PGS
GeoStreamer® Improves Margins
- Q1 2010 earnings
- EBITDA of USD 99.3 million
- Increasing share of GeoStreamer® with price uplifts
- Strong vessel utilization and performance
- Low Marine cost
- Net debt reduced to USD 537.4 million
- Almost all 2010 GeoStreamer® capacity sold
- Bidding activity increasing – however with price pressure on conventional streamer capacity
- PGS Apollo delivered
- Successfully completed the disposal of Onshore
- Organizational changes for future growth
2010 guidance maintained with EBITDA upside
PGS
Unaudited First Quarter 2010 Results
(IFRS)
Oslo April 30, 2010
PGS
Main Yard Stays Next 6 Months
| Vessel | When | Expected Duration | Type of Yard Stay |
|---|---|---|---|
| Ramform Valiant | Scheduled to May/June 2010 | Approximately 17 days | Install GeoStreamer® |
| Nordic | Scheduled to May/June 2010 | Approximately 15 days | Upgrade gear, overhaul engineers |
| PGS Apollo | Scheduled June 2010 | Approximately 1 week | Yardstay to complete warranty work |
| Ramform Explorer | Scheduled to June/July 2010 | Approximately 45 days | 15 year bottom inspection, thruster power upgrade, new compressor drives, streamer reel upgrade, add extra generator set, main class and install GeoStreamer® |