marvin j. migura - oceaneering...jul 01, 2015 · oilfield rov fleet ownership drill support market...
TRANSCRIPT
July 1, 2015 - Houston, TX
Marvin J. MiguraExecutive Vice President
Oceaneering International, Inc.
Safe Harbor Statement
Statements we make in this presentation that express a belief, expectation, or intention are forward looking. Forward-looking statements are generally accompanied by words such as “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “plan,” “forecast,” “budget,” “goal,” or other words that convey the uncertainly of future events orother words that convey the uncertainly of future events or outcomes. These forward-looking statements are based on our current information and expectations that involve a number of risks, uncertainties, and assumptions. Among the factors that could cause the actual results to differ materially from those indicated in the forward-looking statements are: industry conditions, prices of crude oil and natural gas, our ability to obtain and the timing of new projects and changesability to obtain and the timing of new projects, and changes in competitive factors. Should one or more of these risks or uncertainties materialize, or should the assumptions underlying the forward-looking statements prove incorrect, actual outcomes could vary materially from those indicated.
For additional information regarding these and other factors, g g ,see our periodic filings with the Securities and Exchange Commission, including our most recent Reports on Forms 10-K and 10-Q.
OII Participation in Offshore Life CycleEXPLORATION DEVELOPMENT PRODUCTION DECOMMISSIONING
# of OperatingFloating Drilling Rigs
# Subsea Tree Installations
# Subsea TreesIn Service
# of Field Abandonments
PHASEPHASE
#1 Market #1 Market DriverDriver
Business Business Segment Segment P d tP d t
•• ROVROV•• Survey (SP)Survey (SP)•• Tooling (SSP)Tooling (SSP)
Product Product and and
Service Service Revenue Revenue StreamsStreams
•• ROVROV•• Survey (SP)Survey (SP)•• Tooling (SSP)Tooling (SSP)
•• ROVROV•• Tooling (SSP)Tooling (SSP)•• IWOCS (SSP)IWOCS (SSP)
•• ROV ROV •• Tooling (SSP)Tooling (SSP)•• IWOCS (SSP)IWOCS (SSP)
•• IWOCS IWOCS –– Installation & Installation & Workover Control Systems Workover Control Systems (SSP)(SSP)
•• Subsea Hardware (SSP)Subsea Hardware (SSP)•• UmbilicalsUmbilicals (SSP)(SSP)•• VesselVessel--based Installation based Installation
Services (SP)Services (SP)I ti S i (AI)I ti S i (AI)
•• Subsea Hardware (SSP)Subsea Hardware (SSP)•• VesselVessel--based Inspection, based Inspection,
Maintenance & Repair Maintenance & Repair Services (SP)Services (SP)
•• Inspection Services (AI) Inspection Services (AI)
ROV = Remotely Operated Vehicles SSP = Subsea Products SP = Subsea Projects AI = Asset Integrity
•• Inspection Services (AI)Inspection Services (AI)
Offshore Life Cycle Business Exposure
5%
Revenue Mix
15%
25%25%
55%55%
Exploration Development Production Decommissioning
Source: OII Estimates
Earnings Per Share Guidance2015 Estimate $2 80 to $3 20Earnings Per Share Guidance2015 Estimate $2 80 to $3 20
$5.00Actual Low Estimate High Estimate
2015 Estimate $2.80 to $3.202015 Estimate $2.80 to $3.20
$4.00
$5.00
are
$2 00
$3.00
ngs
per S
h
$1.00
$2.00
Ear
ni
$0.002008 2009 2010 2011 2012 2013 2014 2015E
OII 2015 Guidance Range as of April 22, 2015
2015 Earnings OutlookMajor Determinants for Last Three QuartersMajor Determinants for Last Three Quarters
• Vessel-Based IMR Projects• Vessel-Based IMR ProjectsVessel Based IMR Projects– “Call Out” or “Spot Market” Work– Impacts ROVs, Subsea Products, and Subsea Projects
Vessel Based IMR Projects– “Call Out” or “Spot Market” Work– Impacts ROVs, Subsea Products, and Subsea Projectsp , , j
• Floating Rig Use
p , , j
• Floating Rig Use• Floating Rig Use– OII ROVs on 50 Rigs with 2015 Contract Expirations
• Floating Rig Use– OII ROVs on 50 Rigs with 2015 Contract Expirations
Combined EPS – OSX CompaniesExcluding OIICombined EPS – OSX CompaniesExcluding OII
$80Actual Consensus Estimate
Excluding OIIExcluding OII
$60
$80
are
$40
ngs
per S
h
$20Ear
ni
$02008 2009 2010 2011 2012 2013 2014 2015E
Based on First Call Actuals and Mean Estimates as of May 13, 2015
Relative EPS PerformanceTo 2008 OSX PeakRelative EPS PerformanceTo 2008 OSX PeakTo 2008 OSX PeakTo 2008 OSX Peak
150%
OII OSX w/o OII
75%
100%
125% Relative to:2008 Up ≈ 60%2014 Down ≈ 30%
25%
50%
75%
-50%
-25%
0%Relative to:2008 Down ≈ 60%2014 Down ≈ 50%
-75%
-50%
2008 2009 2010 2011 2012 2013 2014 2015E
Based on First Call Actuals and Mean Estimates as of May 13, 2015
2015 Capital Sources & Allocations
Potential Allocations
O i C E
Potential Allocations
O i C E
Current Sources
C h t M 31 2015
Current Sources
C h t M 31 2015 • Organic Cap Ex– $200 MM to $250 MM
• Organic Cap Ex– $200 MM to $250 MM
• Cash at Mar 31, 2015– $305 MM
• Cash at Mar 31, 2015– $305 MM
• Acquisitions– ≈ $230 MM & More
• Acquisitions– ≈ $230 MM & More
• Estimated 2015 EBITDA– > $680 MM
• Estimated 2015 EBITDA– > $680 MM
• Cash Dividends– ≈ $108 MM
• Cash Dividends– ≈ $108 MM
• Bank Term Loan– $50 MM Undrawn
• Bank Term Loan– $50 MM Undrawn
• Share Repurchases– $TBD MM
• Share Repurchases– $TBD MM
• Bank Revolver– $500 MM Undrawn
• Bank Revolver– $500 MM Undrawn $$$$
Long Term: Offshore is EssentialDeepwater Remains Significant
Source of Additional ~29Mm B/D
eep ate e a s S g ca t
90 Incremental Bbls Existing Fields Bbls
4.31
9 35
Additional ~29Mm B/D Crude Production
80
e
4.74
9.35
60
70
d C
onde
nsat
em
B/d
7.293.3
Ultra DeepwaterD t
50
60
Cru
de a
nd M
DeepwaterShelfUS ShaleConventional Land
40
Source: Morgan Stanley Research , Wood Mackenzie, Rystad Energy, and Company Data – June 2015
Subsea Installations - ex BRZForecast at Historically High Levels
500
Forecast at Historically High Levels
5-Yr Average, Up 60, >25% Growth
400
500
s 291
p , %
300
Inst
alla
tions 291
222282
200Tree
I
100
Source: Quest Offshore Resources – Mean Case Forecast, May 2015
Subsea Completions In Service - ex BRZ Forecast at Historically High Levels
5000
Forecast at Historically High Levels
5-Yr Average,Up 583, ~20% Growth
4000
5000
ons
p , %
3716
3000
Com
plet
io
2246
3133
2000
1000
Source: Quest Offshore Resources – Mean Case Forecast, May 2015
OII Summary
• Challenging Time• Challenging Time
– Well Positioned– Well Positioned
• Intend to Continue Investing for the Future& Returning Capital to Our Shareholders
• Intend to Continue Investing for the Future& Returning Capital to Our Shareholders
• Deepwater Focus Remains Sound• Deepwater Focus Remains Sound
– Long-Term Prospects Are Promising– Long-Term Prospects Are Promising
®®
Supplemental Financial Information
EBITDA
$1,000in millions Actual Low Estimate High Estimate
$700
$800
$900
$1,000
$400
$500
$600
$700
$100
$200
$300
$400
$0
$100
* 2015 - $680 MM-$745 MMBased on OII EPS Guidance as of April 22, 2015See Next Slide For Non-GAAP Reconciliation to Net Income
EBITDA Reconciliation to Net IncomeEarnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measurement. Oceaneering’s management uses EBITDA because we believe that this measurement is a widely accepted financial indicator used by investors and analysts to analyze and compare companies on the basis of operating performance, and that this measurement may be used by some investors and others to make informed investment decisions. You should not consider EBITDA in isolation from or as a substitute for net income or cash flow measures prepared in
Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measurement. Oceaneering’s management uses EBITDA because we believe that this measurement is a widely accepted financial indicator used by investors and analysts to analyze and compare companies on the basis of operating performance, and that this measurement may be used by some investors and others to make informed investment decisions. You should not consider EBITDA in isolation from or as a substitute for net income or cash flow measures prepared inshould not consider EBITDA in isolation from or as a substitute for net income or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. EBITDA calculations by one company may not be comparable to EBITDA calculations made by another company. The following table provides a reconciliation between net income (a GAAP financial measure) and EBITDA (a non-GAAP financial measure) for Oceaneering’s historical and projected results on a consolidated basis for the periods indicated:
should not consider EBITDA in isolation from or as a substitute for net income or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. EBITDA calculations by one company may not be comparable to EBITDA calculations made by another company. The following table provides a reconciliation between net income (a GAAP financial measure) and EBITDA (a non-GAAP financial measure) for Oceaneering’s historical and projected results on a consolidated basis for the periods indicated:
Period Ended December 31, 2010 2011 2012 2013 2014 2015E 2015E(in millions of $) LOW HIGH
Net Income 200.5 235.7 289.0 371.5 428.3 280 320
Depreciation & Amortization 153.7 151.2 176.5 202.2 229.8 245 255
Subtotal 354.2 386.9 465.5 573.7 658.1 525 575
Interest Expense/Income, Net 5.4 .2 2.3 1.6 4.4 25 25
Income Tax Expense 104.7 102.2 132.9 170.8 195.1 130 145
EBITDA 464.3 489.3 600.7 746.2 857.7 680 745
Business Segments
9% 5%
Revenue Operating Income
28%13%
9%
37%14%
7%
14%
31%19%
37%ROVSubsea ProductsSubsea Projects
37%
Asset IntegrityAdtech
March YTD 2015
Supplemental Market Information
Floating Rig Demand History
300s 275
250
300
loat
ing
Rig
s
200
ontra
cted
Fl
150
ear-E
nd C
o
Demand at March 31, 2015 - 261
100
Ye
Source: IHS-Petrodata at December 31, 2014
Rig Fleet, Non-PBR Brazil at March 31 2015at March 31, 2015
• 204 Rigs Under ContractOII 64%• OII on 64%
• OII on 76% of Drillships/6th Gen Rigs
• 57 Rigs On Order • 17 Rigs Have Operator Contracts• 17 Rigs Have Operator Contracts
– OII - 13 ROV Contracts– Competitors - 2 ROV Contracts– 2 ROV Award Opportunities
• 40 Rigs Have No Operator Contracts
Source: IHS-Petrodata Data & OII Estimates, March 31, 2015
Deepwater Fields BacklogUndeveloped DiscoveriesDeepwater Fields BacklogUndeveloped Discoveries
600Fields ≥600m
Undeveloped DiscoveriesUndeveloped Discoveries
500
600
300
400
100
200
02009 2010 2011 2012 2013 2014
Source: IHS , Petrodata
Leading Market PositionRemotely Operated VehiclesRemotely Operated Vehicles
Ownership Drill Support Market Share
OII - 336 OII – 15136% 58%
Worldwide Fleet937 Vehicles*
261 Floating Rigs Contracted**
Source: *OII Estimates - December 2014; **IHS Petrodata – March 2015
Oilfield ROV Fleet
Ownership Drill Support Market Share
OII – 15158%
OII – 33636%
OII
58%36%
Subsea 7FugroDOF SubseaSaipemC-InnovationsHelixTechnipTMTOther
Worldwide Fleet937 Vehicles*
261 Floating Rigs Contracted**
Source: *OII Estimates - December 2014; **IHS Petrodata and OII Estimates – March 31, 2015
OII ROV FleetGeographic Profile – March 2015
39
g p
9933
39
32
7855
GOM Africa Norway Brazil Asia/Pac Other
336 Vehicles
OII ROVs on Vessels March 2015
Locations Customers
2418
5138
2621
GOM Africa Norway Other Operators Contractors
89 Vehicles
OII ROV Pricing and Fleet UtilizationOII ROV Pricing and Fleet Utilization
100%$11,000Revenue / Day on Hire Fleet Utilization
90%$9,000
70%
80%
$5 000
$7,000
60%
70%
$3,000
$5,000
50%$1,000
* March YTD
Leading Market PositionSpecialty Subsea ProductsSpecialty Subsea Products
Umbilicals
Tooling & Subsea Work Systems
Installation andWorkover Control
Systems
Subsea Hardware
Subsea Products BacklogAt Period EndSubsea Products BacklogAt Period End
$1,000in millions
At Period EndAt Period End
$800
$1,000
$400
$600
$200
$400
$02009 2010 2011 2012 2013 2014 2015*
*March 2015