Earnings Presentation Second Quarter 2015 - Siem Offshoresiemoffshore.com/Admin/Public/DWSDownload.aspx?File... · presentation is subject to Norwegian law, and any dispute arising

Earnings Presentation

Second Quarter 2015 20 August 2015

Disclaimer

This presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and

uncertainties that could cause actual results to differ. Such forward-looking information and statements are based on current

expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries

that are major markets for Siem Offshore (“SIOFF”) and its subsidiaries. These expectations, estimates and projections are

generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions. Important

factors that could cause actual results to differ materially from those expectations include, among others, economic and market

conditions in the geographic areas and industries that are or will be major markets for the Siem Offshore businesses, oil prices,

market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency

exchange rates and such other factors as may be discussed from time to time. Although Siem Offshore believes that its

expectations and the information in this Presentation were based upon reasonable assumptions at the time when they were

made, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in this

Presentation. Siem Offshore nor any other company within the group is making any representation or warranty, expressed or

implied, as to the accuracy, reliability or completeness of the information in the Presentation, and neither Siem Offshore , any

other company within the group nor any of their directors, officers or employees will have any liability to you or any other persons

resulting from your use of the information in the Presentation. Siem Offshore undertakes no obligation to publicly update or revise

any forward-looking information or statements in the Presentation.

There may have been changes in matters which affect Siem Offshore subsequent to the date of this presentation. Neither the

issue nor delivery of this presentation shall under any circumstance create any implication that the information contained herein is

correct as of any time subsequent to the date hereof or that the affairs of Siem Offshore has not since changed, and Siem

Offshore does not intend, and does not assume any obligation, to update or correct any information included in this presentation.

The contents of this presentation are not to be construed as legal, business, investment or tax advice. Each recipient should

consult with its own legal, business, investment and tax adviser as to legal, business, investment and tax advice. This

presentation is subject to Norwegian law, and any dispute arising in respect of this presentation is subject to the exclusive

jurisdiction of the Norwegian courts.

2

• Second quarter 2015 operating revenue of USD 124.4 million and operating margin of USD 41.1 million (33%),

compared to USD 114.2 million in operating revenue and USD 38.2 million (33%) in operating margin in second

quarter 2014.

• Agreed a 6-month contract with options for the PSV “Siem Pilot”.

• Entered into a 5-year charter for the OSCV “Siem Marlin” commencing in September 2015.

• Reached a new agreement with Daya Materials Berhad for the sale of the OSCV “Siem Daya 1”.

• Agreed sale of the PSV “Siem Sasha” to a company owned 51% by Siem Offshore.

• Siem Offshore Contractors awarded a turnkey supply and installation contract for the inner array grid cable system

for the Veja Mate Offshore Windfarm project.

• Placed two AHTS vessels in lay-up at the end of the second quarter.

• Conducted a review of vessel valuations and elected to record impairments of an aggregate USD56 million on

certain vessels.

• The Company’s Board of Directors approved a USD100 million Rights Issue. The Company’s largest shareholder,

Siem Europe S.a r.l., has fully underwritten the Rights Issue.

• Aggregate backlog for the Company was USD1.62 billion at the end of second quarter.

3

Highlights Second Quarter 2015

• The Board of Siem Offshore Inc. appointed Idar Hillersøy as Chief Executive Officer of the Company.

• Daya paid the deposit of USD10 million for the “Siem Daya 1”.

• Extended contract for the R/V ‘JOIDES Resolution’ until 30 September 2016.

• Agreed extension of maturity for the mortgage debt financing of 6 x AHTS vessels until 2018.

• Agreed extension of maturity for USD60 million Revolving Credit Facility with largest shareholder.

• Prospectus published and subscription period in connection with the Rights Offering commenced on 19 August

2015.

4

Subsequent Events

Income Statement Second Quarter

Second Quarter First Half Twelve Months

Ended

(Amounts in USD million)

2015

Unaudited

2014

Unaudited

2015

Unaudited

2014

Unaudited

2014

Audited

Operating revenue 124.4 114.2 250.4 208.6 491.3

Operating expenses ( 72.4) ( 63.3) (149.5) (109.8) ( 250.2)

Administration expenses ( 10.9) ( 12.7) (21.1) (23.7) ( 47.0)

Operating margin [1] 41.1 38.2 79.8 75.1 194.1

Operating margin % 33 % 33 % 32% 36% 40 %

Depreciation and amortisation ( 26.4) ( 23.3) (53.2) (44.8) ( 96.9)

Impairment of vessels (56.0) 0.0 (56.0) 0.0 ( 29.0)

Gain/(Loss) on sale of fixed assets 0.0 (0.0) 0.0 6.6 18.7

Gain of sale of interest rate derivatives (CIRR) 0.1 0.1 0.2 0.2 0.4

Gain/(Loss) on currency derivative contracts [2] 10.8 3.7 (25.3) 10.1 ( 3.0)

Net financial items [3] ( 13.4) ( 6.1) (13.6) (16.1) ( 10.9)

Profit before tax ( 43.8) 12.6 (68.0) 31.2 73.4

Income tax provision ( 1.2) ( 0.5) (2.6) (1.3) ( 2.7)

Net Profit (loss) ( 45.0) 12.1 (70.6) 29.9 70.7

Net profit attributable to non-controlling interest ( 1.1) 0.4 (1.2) 3.2 12.6

Net profit attributable to shareholders ( 43.9) 11.7 (69.5) 26.7 58.1

Earnings per share [4] ( 0.11) 0.03 (0.18) 0.07 0.15

Average number of shares outstanding [5] 387 591 387 591 387 591 387 591 387 591

[1] Operating revenue less operating expenses

[2] Revaluation of off-balance sheet currency contracts entered into in order to hedge both operating expenditures and future yard instalments in foreign currencies.

[3] Including revaluation of non-USD currency balance sheet items and mark-to-market effects on interest rate derivatives

[4] Net profit / Average number of shares outstanding (diluted)

[5] Weighted average number of shares outstanding (diluted) ('000) 5

Adjusted Net Profit

Second Quarter First Half Twelve Months

Ended

(Amounts in USD million)

2015

Unaudited

2014

Unaudited

2015

Unaudited

2014

Unaudited

2014

Audited

Net Profit (loss) ( 45.0) 12.1 (70.6) 29.9 70.7

Unrealized (profit) loss on currency derivatives (20.4) 0.7 6.9 (5.7) 5.6

Unrealized (profit) loss on interest rate derivatives (1.8) 0.8 (1.2) 0.9 0.4

Other unrealized (profit) loss on currency positions 3.7 (7.6) (6.5) (8.1) (30.6)

Adjusted Net Profit (loss) (63.5) 6.1 (71.5) 17.0 46.2

Impairment of vessels 56.0 0.0 56.0 0.0 29.0

Adjusted Net Profit (loss) before impairments (7.5) 6.1 (15.5) 17.0 75.2

• Unrealised profit and loss from currency derivatives relates to financial instruments entered into in order to

hedge operational cash flows and future yard instalments in foreign currencies.

• Unrealised profit and loss from interest rate derivatives relates to mark-to-market valuations of financial

instruments entered into in order to manage interest rate risk.

• Other currency positions includes unrealized profit and loss from balance sheet items denominated in foreign

currencies.

6

• Book equity ratio of ~ 34%.

• Cash and cash equivalents of approx.

USD 75 million as of 30 June 2015.

• Net interest bearing debt as of 30 June

2015 of USD 1,083 million.

• Current cost of debt approximately 4.3%

p.a., including the effect of interest rate

derivatives.

Financial Position as of 30 June 2015

7

Current Liabilities

Non-Current Liabilities

Total Equity

Other Current Assets

Cash & Cash Equivalents

Non-Current Assets

(all in USDm)

Cash and Cash Equivalents development

• Net cash flow from operations USD 55.1 million.

• Cash flow from investing activities USD (54.4) million.

• Cash flow from financing activities USD (39.0) million.

• Net change in cash USD (38.3) million, before exchange rate differences.

• Effect of exchange rate differences USD (4.8) million.

8

Scheduled Debt Maturity Profile 06.2015 - 2019

9

• The graph reflects committed and assumed mortgage debt for all 8 vessels(1) under construction per end of 2Q

2015.

• Gross debt expected to peak in 2016 based on existing financing and estimated financing for vessels under

construction. The graph includes debt repayment in 2015 from the sale of “Siem Daya 1”.

• Agreed extension of maturity for mortgage debt financing (6 AHTS vessels) from 2015 to 2018.

• Loan to value at low ratios for balloon instalment of mortgage debt financing in 2017, i.e. low refinancing risk.

• NOK 600 million (USD 76.4 million) of unsecured bonds with maturity in 2018.

• NOK 700 million (USD 89.1 million) of unsecured bonds with maturity in 2019.

[1] Only including wholly-owned vessels under construction.

Future Yard Instalments per end 2Q 2015

• Yard instalments for shipbuilding contracts

are normally paid with 20% during

construction and 80% at delivery.

• The Company has secured mortgage debt

financing for all of its eight wholly-owned

vessels currently under construction.

• The AHTS vessel under construction for

Secunda is not included in the table.

Mortgage debt financing is also secured for

this vessel.

• Cash balance, cash from operations and

Rights Offering to cover mismatch between

future yard instalments and committed debt

facilities.

10

Amounts in USD million

Future Yard Instalments 2015 2016 Total

OSRVs 5.3 0.0 5.3

PSVs 54.6 107.5 162.1

CLV 0.0 57.8 57.8

WIV 31.8 229.4 261.2

Total 91.7 394.7 486.4

Debt facilities 2015 2016 Total

OSRVs 4.9 0.0 4.9

PSVs 45.8 107.4 153.2

CLV 0.0 55.3 55.3

WIV 0.0 217.0 217.0

Total 50.7 379.7 430.4

11

• Firm contract backlog for the OSV segment of

USD 1.35 bn.

• 6M 2015 – USD 125 million.

• 2016 – USD 270 million.

• 2017 onwards – USD 950 million.

• Approximately 65% backlog for vessels

covered for the second half of 2015 based on

both firm and option contracts.

• Firm contract backlog for the Industrial

Segment of USD 287 million.

• 6M 2015 – USD 38 million.

• 2016 – USD 173 million.

• 2017 onwards – USD 67 million.

Contract Backlog - Approximately USD 1.62bn of Firm Contract Backlog as of 30 June 2015.

Operating Margin, Vessels in Operation and Shipbuilding Contracts

OSV Segment

13

OSCV AHTS Vessels

Other

vessels

# 10

# 101)

Vessels in operation

Canadian

fleet

# 63)

1) Incl. two vessels owned by a partner

2) Incl. three 51% owned

3) 50% owned

4) Agreed sold to the charterer Daya Materials Berhad as

described in stock exchange notice in April 2015.

# 6

Average age of 5 years


Other vessels # 17


PSV (3,600 – 5,100 dwt) # 122)

Installation

support vessel

# 1

4)

OSV Segment - Currently 45 Vessels in Operation

OSV Segment - Comments to Second Quarter

• 98% utilisation of the OSCV fleet.

• Five of the vessels operated on long-term contracts during the quarter.

• Three vessels operating in the North Sea/Europe.

• Two vessels operating in the US Gulf of Mexico.

• One vessel came of a long term contract outside West Africa, and is tendering for short term

contracts prior to commencing a five year term contract in the third quarter 2015.

• 83% utilisation of the PSV fleet.

• Four PSVs are employed offshore Brazil.

• Three PSVs are employed in the North Sea region

• One PSV is employed offshore West Africa and one PSV is on a bareboat contract.

• Two vessels came off contracts in West Africa during the quarter.

• The Company has currently three PSVs in West Africa tendering for work.

• 67% utilisation of the AHTS fleet.

• One AHTS vessel is operating on a long-term contract in Brazil

• One AHTS vessel is operating for Siem Offshore Contractors.

• One AHTS vessel recorded 65 days commercial off-hire related to a 5 year scheduled dry-docking.

• Two AHTS vessels are placed in lay-up.

• The remaining AHTS vessels are operating in the North Sea/Europe spot market.

• 92% utilisation for the fleet of smaller Brazilian flagged vessels.

• All 9 vessels operated on term contracts in Brazil during the quarter.

14

15

OSV Segment - Operating Margin Second Quarter

Second Quarter 2015 Second Quarter 2014

Amounts in USD million Operating

revenue

Operating

expenses

Operating

margin

Operating

margin %

Operating

revenue

Operating

expenses

Operating

margin

Operating

margin %

PSVs [2] 21.9 ( 10.0) 11.9 54 % 21.3 ( 10.5) 10.8 51 %

OSCVs 30.6 ( 9.1) 21.5 70 % 23.3 ( 7.6) 15.7 67 %

AHTS vessels[2] 14.2 ( 16.5) ( 2.4) n.m 33.6 ( 16.8) 16.8 50 %

Smaller Brazilian flagged vessels[1] 5.9 ( 3.9) 2.0 34 % 5.4 ( 4.5) 0.9 17 %

G&A ( 7.7) ( 7.7) ( 10.4) ( 10.4)

Intercompany eliminations, other [2] ( 2.4) 4.0 1.6 ( 4.6) 6.6 2.0

Total 70.1 ( 43.3) 26.8 38 % 79.1 ( 43.3) 35.8 45 %

[1] Smaller Brazilian flagged vessels include Oil Spill Recovery Vessels and Fast Supply and Crew Boats

[2] The PSV and the AHTS segment includes I/C revenue from contracting work for the 100% owned subsidiary Siem Offshore Contractors. The offsetting

IC opex is included under the Industrial Segment for Submarine Power Cable activities.

OSV Segment - Employment for vessels in operation

16

2015 2016 2017 2018

Vessel Type Ownership 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

Siem Sasha PSV 51 %

Sophie Siem PSV 100 %

Siem Louisa PSV 100 %

Siem Hanne PSV 100 %

Siem Carrier PSV 100 %

Siem Supplier PSV 100 %

Hugin Explorer PSV 100 %

Siem Atlas PSV 100%

Siem Giant PSV 100%

Siem Symphony PSV 100%

Siem Pilot PSV 51%

Siddis Mariner 1) PSV 51%

Siem Marlin OSCV 100%

Siem N-Sea OSCV 100%

Siem Daya 1 2) OSCV 100%

Siem Daya 2 OSCV 100%

Siem Spearfish OSCV 100%

Siem Stingray OSCV 100%

Siem Pearl AHTS 100%

Siem Emerald 4) AHTS 100%

Siem Sapphire AHTS 100%

Siem Aquamarine 3) AHTS 100%

Siem Ruby AHTS 100%

Siem Topaz AHTS 100%

Siem Diamond 3) AHTS 100%

Siem Amethyst AHTS 100%

Siem Garnet 4) AHTS 0%

Siem Opal AHTS 0%

Siem Moxie 5) ISV 100%

Total order backlog in % and USD mill. 55% 90 39% 142 27% 99 11% 40

1) Employment for Siddis

Mariner includes firm time

charter for Siem Offshore

Contractors.

2) The backlog for Siem Daya 1

includes an assumption of

completion of sale in August

2015.

3) Siem Aquamarine and Siem

Diamond currently placed into

lay-up

4) Employment for Siem Garnet

and Siem Emerald includes

firm time charter for Siem

Offshore Contractors

5) The ISV Siem Moxie shall

primarily be utilized by the

subsidiary Siem Offshore

Contractors for cable

installation projects within the

offshore wind-farm segment.

Contract Contract option Spot work Contract with subsidiary

Agreed sold

OSV Segment - Employment for vessels in operation (con’t)

2015 2016 2017 2018


Big Orange XVIII WSV 41 %

Burin Sea AHTS 50%

Panuke Sea PSV 50%

Ryan Leet MPSV 50%

Trinity Sea AHTS 50%

Venture Sea AHTS 50%

Scotian Sea MPSV 50%


Siem Maragogi OSRV 100%

Parnaiba FSV 100 %

Propriá FSV 100 %

Capela FSV 100 %

Siem Piatã FCV 100 %

Siem Pendotiba FCV 100%

Siem Caetes FSP 100%

Siem Carajas FSP 100%


Contract Contract option Spot work

17

2015

1Q 2Q 3Q 4Q

2016

1Q 2Q 3Q 4Q

2017

1Q 2Q 3Q 4Q

18

OSRV, Siem Marataizes

CLV, Siem Aimery

PSV DF, Siem Pride

PSV DF, ”TBN 1”

PSV DF, ”TBN 2”

PSV DF, ”TBN 3”

WIV, Siem Helix 1

WIV, Siem Helix 2

AHTS, Avalon Sea (Note 1)

Note 1) Vessel under construction in the 50% owned entity Secunda.

OSV Segment - Vessels under Construction, including Employment

Under Construction Contract Contract option Contract with subsidiary

• Mortgage debt financing secured for all vessels under construction.

• The CLV shall primarily be utilized by the subsidiary Siem Offshore Contractors for cable installation projects

within the offshore wind-farm segment.

• Total firm backlog for vessels under construction at approximately USD 761 million as of end second quarter

2015.

7 Yrs Firm + Options


Long term contract with Subsidiary




• The North Sea spot market for AHTS vessels and PSVs continued the trend from the

first quarter with soft rates and utilization. Additional AHTS vessels and PSVs have

returned to the North Sea from various parts of the world, especially from Brazil,

leading to further increased supply of vessels. Vessel owners have continued to put

vessels into lay-up and additional lay-ups are expected if activity remains weak.

• Oil operators have continued to cancel rig contracts and several projects expected to

absorb vessels from the North Sea have been cancelled or postponed, such as

South Stream, Kara Sea and other Arctic and Russian projects.

• In Brazil, tendering activity for OSVs for the rest of 2015 is expected to be limited.

• In West Africa, the activity level and demand for PSVs and AHTS vessels have

dropped, and a large number of vessels are currently idle waiting for work. There are

few new tenders for OSVs, and we expect this trend to continue into 2016.

• The outlook for the OSV market is expected to remain challenging.

19

OSV Segment - Market Outlook

Industrial Segment Operating Margin, Investments

Industrial Segment - Operating Margin Second Quarter

Second Quarter 2015 Second Quarter 2014

Amounts in USD million Operating

revenue

Operating

expenses

Operating

margin

Operating

margin %

Operating

revenue

Operating

expenses

Operating

margin

Operating

margin %

Submarine Power Cable activities [1] 45.1 ( 32.0) 13.1 29 % 26.8 ( 25.9) 0.9 3 %

Scientific Core-Drilling 6.5 ( 2.8) 3.7 56 % 6.5 ( 2.8) 3.7 58 %

Siem WIS 1.8 ( 0.5) 1.3 n.m 0.2 ( 0.1) 0.0 n.m

Combat Management Systems 0.9 ( 1.4) ( 0.5) n.m 1.7 ( 1.7) 0.0 1 %

G&A ( 3.2) ( 3.2) (2.3) (2.3)

Total 54.3 ( 39.9) 14.4 27 % 35.1 ( 32.7) 2.4 7 %

[1] The OSV Segment included I/C revenue for PSV and AHTS vessels from contracting work for the 100% owned subsidiary Siem Offshore Contractors

The offsetting IC opex is included under the Industrial Segment for Submarine Power Cable activities.

21

22

Amrumbank West

OWF Baltic 2 OWF Nordsee One Nordsee One OWF

Project

Project phase

Vessel utilisation

Profit recognition

Awarded

Installation of 86

submarine cables

providing the inner-

array grid connecting

All contractual works

completed. Final

completion certificate

for the project during

August 2015.

PSV “Siddis Mariner”

ISV “Siem Moxie”

AHTS “Siem Garnet”

3rd Party Vessel

Positive margin

recorded in both 1Q

and 2Q 2015, and any

remaining margin will

be recorded in 3Q

2015.

Mar, 2012

Consortium EPIC

contract for the 155kV

export cable system

Nordsee One

Planning, preparation

and engineering. The

project remains on track

for mechanical

completion by 3Q 2016.

Utilising the resources

within the Siem

Offshore Group

At minimum 25%

completion. No margin

will be recorded prior to

installation activities.

(i.e no margin in 2015).

Dec, 2012

Installation of 86

submarine cables

providing the inner-

array grid connecting

As-built survey works to

be completed within 3Q

2015 and as-built

documentation shall be

submitted in 4Q 2015.

PSV “Siddis Mariner”

ISV “Siem Moxie”

AHTS “Siem Garnet”

3rd Party Vessel

A positive margin was

recorded in 2014,and in

first and second quarter

2015. The remaining

margin will be recorded

in second half of 2015.

Feb, 2013

Turnkey EPIC package

of the inner array grid

cable system for 54

wind turbine generators

Planning, preparation and

engineering expected.

Offshore installation from

3Q 2016.


within the Siem

Offshore Group

At minimum 25%



installation activities in

2016.

Apr, 2014 1)

[1] The project reached financial close in April 2015.

Veja Mate OWF

Turnkey EPIC package

of the inner array grid

cable system , 73

submarine composite

cables.

Planning, preparation

and engineering. The

project is on track for

mechanical completion

by 2Q 2017.


within the Siem

Offshore Group

At minimum 25%



installation activities.

Apr, 2015

Industrial Segment - Siem Offshore Contractors; Submarine power cable activities by main projects

• The Julius project commenced late April and Siem WIS is still onboard “Maersk Gallant”

delivering the pressure control device (“PCD”) services. The operation has been a good

success for Siem WIS and has again proven the advantages of the PCD technology.

• Siem WIS has also been awarded a contract for a managed pressure drilling (‘MPD”)

operation at Gullfaks, the mobilisation is currently ongoing and the offshore operation is

scheduled to start early September.

• The Valemon operation is still on track for start-up in November 2015. It was possible to drill

the Gudrun well without utilising MPD; however, Siem WIS has been on-call onshore during

this operation.

23

Industrial Segment - Siem WIS

• The scientific core-drilling vessel “JOIDES Resolution” recorded operating revenues

of USD 6.5 million (2014: USD 6.5 million) and an operating margin before

administration expenses of USD 3.7 million (2014: USD 3.7 million). The operating

margin as a percentage of revenue was 56% (2014: 58%).

• The client, TAMRF, has extended the contract for the “JOIDES Resolution” until 30

September 2016 and holds further options to extend the charter until 30 September

2023 on an annual basis.

24

2015 2016 2017 2018


Joides Resolution SPV 100 %

Total order backlog in % and USD mill. 100

% 13 75% 19 0% 0 0% 0

Scientific Core Drilling Vessel

# 1

Industrial Segment - Overseas Drilling Ltd. (JOIDES Resolution)

• Built: 1978 (Major Upgrade 2009)

• Length: 143 m Beam: 21 m

• Gross tonnage: 10,282 t

• Accommodation: 130 persons

• Max endurance: 75 days

• Drilling capacity: 2,000 meters

into the seafloor in water depths

of up to 7,000 meters

Vessel Specification

• SOC experienced an increased tendering activity for EPIC-based contracts for both

medium- and high-voltage power cables in the offshore windfarm (“OWF”) market

with scheduled marine installation activities in 2017, 2018 and 2019.

• SOC is also tendering for various operations and maintenance contracts.

25

Industrial Segment - Market Outlook

Documents

Earnings Presentation Second Quarter 2015 - Siem Offshoresiemoffshore.com/Admin/Public/DWSDownload.aspx?File... · presentation is subject to Norwegian law, and any dispute arising