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Boa Offshore – 3 March 2015
Full year 2014 Results presentation
Helge Kvalvik, CEO
This presentation is made by Boa Offshore (or the ”Company”). The information contained herein
include statements that are ”forward-looking” in their nature. These forward-looking statements include
all matters that are not historical facts and are based on the Company’s current intentions, believes
and expectations about among other things, the Company’s results of operations, financial condition,
prospects, growth, strategies and the industry in which the Company operates. Such forward-looking
information and statements reflect current views with respect to future events. The Company cannot
give any assurance as to the correctness of information and statements related to such future events.
Furthermore, these forward-looking statements involve known and unknown risks, uncertainties and
other factors that are in many cases beyond the Company’s control that could cause the actual results
of operations, financial condition, liquidity and the development of the industry in which the Company’s
businesses operate to differ materially from the impression created by the forward-looking statements
contained herein, because they relate to events and depend on circumstances that may or may not
occur in the future. Although the Company believes that its intentions, beliefs and expectations, and
the statements in this presentation, are based on reasonable assumptions as of today, the Company
can not give any assurance that the actual results will be as set out in this presentation. Financing the
Company involves risks, and several factors could cause the actual results, performance or
achievements of the Company to be materially different from the impression created by the forward-
looking statements contained herein. Neither the Company, nor any company within the Boa Offshore
Group, is making any representation or warranty (express or implied) as to the accuracy, reliability or
completeness of the information and statements in this presentation, and neither the Company, any
company within the Boa Group, nor any of their directors, officers or employees will have any liability
to any persons resulting from the possible use of information in the presentation.
Disclaimer
2 2
3 Boa Offshore Financials
Contents
3
2 Boa Offshore update and overview
4 Boa Offshore Business segments
5 Market Outlook
1 Boa Offshore summary
Boa Offshore Group – Summary Full Year 2014
• Boa Offshore 2014 results
EBITDA for Full Year 2014 reported at NOKm 461 vs’ NOKm 430 in 2013
Fourth quarter 2014 EBITDA of NOKm 112 - below 3Q 14, above 1H14 level
FY 2014 Net profit of NOKm 33 – negatively impacted by NOKm 91 in ekstraordinary items
- Dis-agio and OCV re-financing costs
• Balance sheet
NIBD at YE 2014 of NOKbn 3, up from NOKbn 2.7 in previous quarter
- Newbuilds (Boa Jarl, dis-agio, working capital – latter reversed in 1Q15)
NIBD/EBITDA LTM increased to 6.5x from 5.7x in 3Q14
Value adjusted Equity of 43% per YE 2014, down from 47% in 3Q14
Cash position solid at NOKm 634 per YE 2014
- Re-financing of OCV 1.pri Bond completed in October
• Market Outlook
Uncertain outlook due to lower oil prices remains, despite recovery in oil prices from January low
However many of the segments where Boa Offshore operates are exposed to less cyclical
factors
- Barges: Operating within a range of industries, outside oil & gas
- Tugs: Ports and Terminals
- OCV/BMSI: A significant part is IMR related
Main risk to 2015 EBITDA spot exposure in BMSI and AHTS
- EBITDA 2015 objective at least at 2014 level
4
3 Boa Offshore Financials
Contents
5
2 Boa Offshore update and overview
4 Boa Offshore Business segments
5 Market Outlook
1 Boa Offshore summary
Boa Offshore Group in short
• Boa Offshore AS is a Norwegian limited company owned by Ole T. Bjørnevik and his family
• Boa Offshore currently operates and manages a diversified fleet of 41 units in various segments, of which 37 owned (including newbuilds)
Subsea installation and construction (Boa OCV/BMSI)
Sea transportation and load-out and launching of heavy objects (Boa Barges/BMSI)
Rig moves (tugs/AHTS)
Seismic EM vessel operations (Boa SBL)
Harbor and costal towage and salvage operations (tugs)
• Global presence and operations, and Leading player in the global market for heavy lift barges
• Head Office in Trondheim (Norway) and offices in Houston (USA) and Gdynia (Poland), with approximately 395 employees
• Engineering and project management capacity out of Trondheim and Houston
6
Business overview – Concentrated in three segments
10 Tugs 20 Barges 11 Offshore Vessels
• 4 ASD escort tugs
• 5 harbour / towage tugs
• 1 harbour tug
• 8 semi-submersible barges
• 8 deck cargo barges
• 3 other barges
• Newbuild BB 37 initiated
• OCV – Boa Sub C
• OCV – Boa Deep C
• SBL – Boa Thalassa
• SBL – Boa Galatea
• Boa Bison
• 1/3 newbuilds
• 3 chartered subsea vessels
Mid-Norway and North Sea operations
Tugs has been the core business of Boa since inception
Revitalization of this business segment with a substantial fleet renewal and growth
World wide operations
Leading player in the global heavy lift market
Continuous new building program since 1999
World wide operations
Ongoing modernization of the fleet, including NFDS
Successfully owns and operates two of the world’s most high spec OCVs
Tonnage provider and solution/ project provider for:
• Salvage operations
• Turn key towage / transport / handling operations
Tonnage provider, also solution/ project provider for:
• All engineering related to barges. In house design
• Turn key transportation projects
• Load out and launching
• Dry docking operations
• Float over
BMS solution/ project provider for:
• SURF (subsea, umbilicals, risers and flowlines)
• IRM (inspection, repair and maintenance)
• Floater moves and installations
• Also use of 3rd party vessels
7
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1 2 3
3 Boa Offshore Financials
Contents
8
2 Boa Offshore update and overview
4 Boa Offshore Business segments
5 Market Outlook
1 Boa Offshore summary
Boa Offshore Group consolidated historical financials
• EBITDA for Full Year 2014 reported at NOKm 461 vs’
NOKm 430 in 2013
4Q14 EBITDA of NOKm 112 - down from strong
3Q14 of NOKm 147, in line with 4Q13 of NOKm
114
Improving performance in OCV, Barges, SBL,
and Parent. - USD/NOK effect
Weak performance in AHTS, BMSI and Tugs. All
negatively impacted by dockings, seasonality and
yard stays
• YE 2014 Net Interest Bearing Debt increased to
NOKbn 3 from NOKbn 2.7 in 3Q 14
Newbuilding program (Boa Jarl), working capital
(reversed in 1Q) and smaller dockings
• Fleet value of NOKbn 4.9 per YE 2014
• Remaining estimated capex < NOKm 200, down from
NOKbn 1 Q/Q in 3Q14 - excl’ MPSVs
• Relative sound key credit matrices per YE 2014
Value adjusted equity 43%
NIBD/EBITDA LTM 6.5x
• Net Debt about to stabilize, before decreasing from 2H15
9
Key financial items
Key balance sheet items
Boa Offshore initiated newbuild program – fully financed
10
• Initiated newbuild program fully financed
• Early July 2014 Boa took delivery of the AHTS Boa
Bison
• Boa Offshore , through its subsidiary Boa PSV, has
started a legal process to look into the company’s rights
to cancel the contracts for the two MPSVs in China
according to the British regulations they are subjected to.
The two vessels have in place full refund
guarantees from the yard’s banks.
• Remaining estimated capex 2015e for newbuilding
program (incl. Boa Jarl) of < NOKm 200, down from <
NOKbn 1 in 3Q14
Excl VS 495 MPSV newbuilds
Vessel Design Yard Delivery
/status Debt financing Ownership Guarantor Total cost Other
Boa Jarl VS 491 Fosen/
Chinese hull H1’15
60% guaranteed SMN/GIEK,
Eksportkreditt funding NFDS Offshore 2 AS
Boa Offshore & Det
Nordenfjeldske Dampskibsselskab
NOKm ~680
+ interests
28k bhp, 600t winch,
ROV hangar
Boa Heron VS 495 Chinese H2’15 70% bank, CDB & Sinosure Boa PSV AS Boa Offshore & Boa Holding USDm ~75 IMR/light construction
Boa Pelican VS 495 Chinese H2’15 70% bank, CDB & Sinosure Boa PSV AS Boa Offshore & Boa Holding USDm ~75 IMR/light construction
Boa Barge 37 Boa Chinese H2’15 SMN Boa Barges AS Boa Offshore & Boa Holding NOKm ~140 152m semi submersible
Boa Offshore Group – Balance Sheet comments
• NIBD/EBITDA increased to 6.5x from 5.7x Q/Q mainly on debt drawdown on newbuilds (Boa Jarl), dis-agio and dockings (Tugs and BMSI)
• NIBD about to stabilize before decreasing from 2H15
• Boa Offshore Consolidated Cash position per YE 2014 of NOKm 634, up from NOKm 445 in 3Q14
Re-financing of OCV 1.pri bond completed in early October
Dockings and yard stays
Further working capital build on accounts receivables, actions taken (NB: reversed in 1Q15)
New NOKm 50 senior unsecured bond issued in November
• Boa Offshore AS cash of NOKm 186, up from NOKm 88 in 3Q14
Re-financing of Boa OCV in 4Q14
Net debt on MPSV newbuilds reduced from USDm 28.5 to USDm 18.5 in 4Q14
OCV dividend paid in 1Q15 to Boa Offshore AS (post quarter event)
11
NIBD/EBITDA LTM and cash
BMSI – SURF Services and Capabilities
12
BMSI capable of providing wide range of offshore installation services including:
• Subsea construction, installation and WROV maintenance and modification services, and Light well
intervention support
• Engineering and design support to projects, and Project management and execution services
• Pipeline remediation services, and Pre-set moorings installation (suction pile deployment etc.)
• Abandonment and decommissioning, subsea clean-up and dive support, and Subsea Pump retrieval
• Accommodations Support – Walk to Work and Basket Transfers.
• The BMSI operating fleet comprise three external vessels and Boa Deep C
• External vessels firm periods ends 2015-2018
• Boa Offshore and BMSI looking into a newbuild vessel to be employed in BMSI as previously stated
• Lower cost, enhanced capabilities and more efficient (fuel consumption etc)
• Delivery 2017 - with Equity partner and limited equity outflow until delivery
• Market neutral exposure, or even scaled back, if global market does not improve from 2017 onwards
3 Boa Offshore Financials
Contents
13
2 Boa Offshore update and overview
4 Boa Offshore Business segments
5 Market Outlook
1 Boa Offshore summary
Boa OCV – state of the art vessels
• Boa OCV consist of the two state of the art offshore
construction vessels Boa Deep C and Boa Sub C, built in
2004 and 2007 respectively
• 2014 EBITDA of NOKm 256, down from NOKm 277 Y/Y
• 4Q14 EBITDA of NOKm 77, up from NOKm 67 in 3Q14
and NOKm 66 in 4Q13 – USD/NOK effect
• Sales down Y/Y due to Boa Deep C now on bare-boat rate
• NIBD of NOKbn 1.0, up from NOKm 784 in 3Q14
The 1 pri bond loan re-financed in October 2014, up
to NOKbn 1.2 from NOKm 956 in 3Q14
New Maturity 2019 at NIBOR + 475 (NIBOR floor
200bps) vs previous 2016/NIBOR +550
NIBD/EBITDA LTM of 4.0 per 4Q14
Shipbrokers average valuation NOKbn ~1.9 for both
vessels* per 31.12.14 - Net LTV of 54%
• Long-term outlook for subsea construction vessels remains
prospective, despite oil companies announcing lower
growth and moderation in investments in the short-term on
lower oil prices
• Short-term and long-term opportunities for Deep C and Sub
C from 2015 remains, both through BMSI and third party
users
14
Boa OCV key P&L
Tugs and
others Barges
Offshore
Vessels
* Source: According to average of two independent shipbroker valuations per 30.06.2014
Boa SBL – specialized seismic vessels
• Owns two modern seismic vessels being the world’s
first custom built vessels for “EM” seismic, built
2008/2009. On long term contracts to EMGS:
Thalassa firm until Dec’ 2015
Galatea firm until July 2016
• 2014 EBITDA of NOKm 64, up from NOKm 55 in 2013
• 4Q14 EBITDA of NOKm 20, up from NOKm 14 in
3Q14 and NOKm 17 in 4Q13
• Strong operational track record with a commercial on-
hire of > 99% last four years
• Average shipbroker values* of NOKm 590
2014 NIBD of NOKm 338 = net LTV 57%
NIBD/EBITDA of 5,3x
• Although purpose built for EMGS, vessel design is
generic (MT 6000 series) and vessels can be
converted into:
Accommodation support
Traditional 3D seismic/OBN/OBC seismic
Survey/ROV support
IMR/light construction
Offshore Wind Farm support
Boa SBL key P&L
15
Tugs and
others Barges
Offshore
Vessels
* Source: According to average of two independent shipbroker valuations per 30.06.2014
Boa Barges – world leading operator
• Boa Offshore Group today operates 20 barges of
different capabilities (incl. one newbuild) worldwide
• 2014 EBITDA of NOKm 120, up from NOKm 94 in 2013
• Strong 4Q14 positively impacted by a few larger
contracts during the quarter continuing from 3Q14
• 4Q14 EBITDA of NOKm 41, up from NOKm 40 in
3Q14 and NOKm 29 in 4Q13.
• Built up an in-house engineering and project
management capacity that is unique in the industry,
performed from Trondheim and Houston
• Boa Offshore Group has since 1998 had continuous
newbuilding program for barges at Chinese yards, and
from 2002 with its own in-house design on newbuilds
• Boa Offshore offers a unique combination of barges and
tugs to provide total turn-key projects for transportation,
launching or dry docking operations by barges
• First Jacket Launches performed in Mexico this
year
• Has been in involved in several major field developments
world wide
• Tendering activity slower through winter, but a number of
leads for 2015-16 across several industries including; Oil
& Gas, Power, Offshore Wind, Civil Construction
16
Tugs and
others Barges
Offshore
Vessels
Boa Barges AS key P&L
Tugs and others
17
Tugs and
others Barges
Offshore
Vessels
• 2014 EBITDA NOKm 22 in “other segments” including
eliminations (negative), up from NOKm 4 in 2013
• Negative in 4Q14 in isolation on dockings and yard
stays, slower markets and seasonality
• Boa Offshore AS (parent) relatively strong and
positive
• The “other segments” include 10 tugs, smaller barges,
BMSI, Boa Offshore parent activities and AHTS Boa Bison
• BMSI provides engineering, construction and contracting
services related to fixed and floating offshore platforms
and subsea field developments, based in Houston US.
Supporting vast range of offshore installation
campaigns including: IMR, SURF, and mooring
installations
• Four vessels, Olympic Boa, Boa Deep C, Polar Queen
and Topaz Captain currently chartered to support BMSI’s
strategy
• A number of short/medium term new contracts for
BMSI recently awarded in US GoM and Mexico,
only Boa Deep C now in «spot» next 1-2 quarters
• Market outlook for all of the “other” segment is mixed with
Boa Offshore Parent and Tugs stable, and BMSI and
AHTS more challenging short-term
Tugs and others key P&L
3 Boa Offshore Financials
Contents
18
2 Boa Offshore update and overview
4 Boa Offshore Business segments
5 Market Outlook
1 Boa Offshore summary
Industry Book to Bill as leading indicator for Barges, OCV,
and BMSI
Industry Book to Bill
19 Source: IHS/ODS-Petrodata, Pareto Research, company reports, Boa Offshore
• Although at a declining pace, the order intake YTD
2014 and orderbook per YE 2014 is high in a
historical context for the Big 3 Offshore Majors (Big 3:
Saipem, Subsea7, Technip).
• Lead time for the major projects awarded are in
general 1-3 years
• Indicates a certain level for subsea and offshore
construction activity in years to come, and as a result,
demand for construction vessels and also barges
• This summer Boa Offshore performed a larger
contract for Subsea7 providing a number of barges
and tugs, and engineering services West of Shetland
offshore UK
Subsea tree installations World Wide p.a.
• Despite oil companies current moderation in growth plans, the outlook for the subsea segment remains relatively robust long-term. Short-term, some projects have been postponed/stopped on lower oil prices
• With the ageing infrastructure and accumulated base growing the need for Inspection, Maintenance & Repair (IMR) services increases
• Number of tree installations likely to increase from an average of < 300 p.a. in 2010-2013 up to 400-450 within 2-4 years (all water depths)
• > 350 under construction for 2015
• Beyond 2015 we probably need to see oil prices back above USD70/bbl to see planned developments progress in general
Order intake in USD 000’
20 Source: ODS/IHS, Boa Offshore
Subsea installations US GoM
Active semis/drillship rigs as leading indicator
US GoM Subsea Market
Subsea market US GoM:
• Boa Offshore and BMSI currently operate four subsea vessels in US GoM and Mexico.
• Relatively high activity in US GoM, also from other services than equipment installation like P&A, well stimulation etc.
• Number of semis/drillships working in US GoM currently at 43, up from 38 in 2014 and 35 in 2013
• 9 rolling off in 2015 (need to secure new work), and 7-8 newbuilds entering fixed contracts
• Cost level about to adapt as UDW day rates are down 30- 50% from peak
• Total number of subsea installation campaigns for 2015 has increased to 97, of which almost 70 under construction, approximately 45 campaigns in 2014
• Likely to see some campaigns skewed to the right (as always)
• Current challenge in the US GoM market is increased competition from vessels entering the region
• Slower activity especially in North Sea
• A number of short/medium term new contracts for BMSI recently awarded in US GoM and Mexico, only Boa Deep C now in «spot» next 1-2 quarters
North Sea working rigs vs total rigs*
North Sea AHTS spot Market
North Sea AHTS Market:
• Average AHTS North Sea spot day rates for 2014
close to NOK 400,000 (same level as 2013) despite
demand side been held back by high number of drilling
rigs in yard in 2014 and no vessels needed for FPSO
installations until end October 14
• New drilling and accommodation rigs are entering
North Sea for fixed contracts and rigs have returned
from yard stays
• Current number of working rigs at 84, up from
average of 76 in 2014
• 15-20 new drilling and accommodation rigs in
total 2015-2017
• Risk to older rigs leaving North Sea (or stacked)
after contract expiry
• Net effect working rigs in 2015 Y/Y could still be
positive, adjusted for all yards stays in 2014
• Only 1 FPS installation in 2014 and 3-5 p.a. for 2015-
2017 (FPSs Under Construction/Conversion)
• Limited number of large AHTS newbuilds to enter
market next 2 years from Norwegian yards
• Risk mainly related to level of AHTS spot fleet and
vessels moving into North Sea
• Current «warm» AHTS North Sea spot fleet >
15,000bhp counts < 55 vessels - could be
adequate for decent summer season
21
North Sea FPS installations p.a.
Current
Source: IHS/ODS Petrodata, Boa Offshore, Platou Shipbrokers
* Includes Semis, Drllships and Jack-ups