Subsea 7 S.a. · OSL:SUBC
Subsea 7 — DSND — Q4 2003 Earnings Presentation
22 slides from Subsea 7's earnings presentation, Jan 29, 2004
Slide 1: Presentation 4th Quarter 2003 / Preliminary Year End Result
DSND Inc Presentation 4th Quarter 2003/ Preliminary Year End Result 29 January 2004
Slide 2: Profit and Loss Account 4Q 2003 – DSND Inc
Profit and Loss Account 4Q 2003 – DSND Inc (Unaudited figures in USD 1,000) 4 Q 2003 4 Q 2002 YTD 31.12.03 YTD 31.12.02 Operating revenues 13,166 9,127 37,964 135,244 Operating expenses -10,253 -9,200 -36,111 -119,464 Depreciation -5,316 -5,735 -8,685 -20,694 Total operating expenses -15,570 -14,935
Slide 3: Balance sheet 4Q 2003 – DSND Inc
Balance sheet 4Q 2003 – DSND Inc (Unaudited figures in USD 1,000) 31/12/2003 31/12/2002 Fixed assets Intangible fixed assets 6,540 6,271 Tangible fixed assets 8,432 18,445 Investment in affiliated companies 102,225 109,101 Other financial fixed assets 116 137 Total fixed assets 117,312 133,954 Curre
Slide 4: DSND – Other activities
DSND – Other activities 4
Slide 5: DSND – Other activities
DSND – Other activities l Olympic Princess • Cable repair and maintenance contract • Contract terminated as planned on 31 Dec. 2003. Redelivery to owner early February 2004 • Total investment in project USD 13.6 mill. including USD 11.8 mill. in equipment (ROV, cranes etc.) • Equipment demobilised.
Slide 6: DSND – Other activities
DSND – Other activities l Big Orange • 41% owned • Well maintenance vessel • Contract to Schlumberger to August 2009 (certain rights to cancel from 2005) l Supply fleet Brazil through DSND Consub • 10 owned supply-/crew vessels • 3 supply vessels on management • The owned fleet achieved a utilizatio
Slide 7: DSND – Other activities: 2003 in summary
DSND – Other activites 2003 in summary: l Operating results fairly similar in 2003 compared with 2002 l All vessels/projects with operating losses in 2003 have been sold/terminated: • Olympic Princess • Buccaneer • Atria, Helder and Taurus (sale pending) 7
Slide 8: Subsea 7
subsea 7 subses 7
Slide 9: Profit and Loss Account 4Q 2003 – Subsea 7
Profit and Loss Account 4Q 2003 – Subsea 7 Unaudited figures in USD million 4Q 2003 4Q 2002 YTD 31.12.03 23.05 - 31.12.02 Operating income 193.4 172.5 724.4 457.5 EBITDA (5.0) 7.6 34.8 43.2 Depreciation & Amortisation (15.9) (12.7) (52.9) (29.6) One time costs 0.0 (1.0) 0.0 (10.0) Gain on sale of as
Slide 10: Balance sheet 4Q 2003 – Subsea 7
Balance sheet 4Q 2003 – Subsea 7 Unaudited figures in USD million 31.12.2003 31.12.2002 Fixed Assets Intangible Assets 14.9 18.3 Tangible assets 320.0 355.3 334.9 373.6 Current Assets Other current assets 214.3 209.8 Cash in bank 34.0 30.6 248.3 240.4 Total Assets 583.2 614.0 Equity Paid-in capital
Slide 11: Subsea 7 – 4Q 2003 vs. 4Q 2002
Subsea 7 – 4Q 2003 vs. 4Q 2002 l Drop in EBITDA of USD 12.6 million Main reasons: • Several low margin jobs in Q4 2003 • Vessel utilisation approx. 13% lower in 4Q 2003 compared with 4Q 2002, with knock-on effect on equipment and personnel utilisation l Increased depreciation with USD 3.2 million du
Slide 12: Sale of Drill Rig ROV Support business
Sale of Drill Rig ROV Support business • Subsea 7 has signed an agreement to sell its Drill Rig ROV Support business to Oceaneering International Inc for USD 108 million. • The sale includes 54 work class and 28 observation class ROVs. About 500 onshore and offshore employees will transfer to Oceane
Slide 13: Backlog 4Q 2003 – Subsea 7
Backlog 4Q 2003 – Subsea 7 l Subsea 7 had at the end of 4Q a worldwide order book of approx USD 468 million l Geographical split of the Backlog: UK USD 172 million Norway USD 74 million Asia Pac USD 47 million Brazil USD 48 million GOM USD 63 million Total USD 404 million l Global subsea awards very
Slide 14: Subsea 7 – 2003 operations in summary
Subsea 7 – 2003 operations in summary l Significant off hire and cost related to maintenance, repairs and dry docking of vessels (during first four months) • Strong improvement in vessel operations in second half of 2003 l High level of activity and improved results in second quarter l Third and fou
Slide 15: Subsea 7 – 2003 financials in summary
Subsea 7 – 2003 financials in summary l Bank debt reduced from USD 184 million to USD 163 million through sale of one vessel and scheduled instalment l Financial lease obligations reduced from USD 25 million to USD 8 million through instalments and purchase of assets l Liquidity USD 34 million at ye
Slide 16: Subsea 7 – Challenges
Subsea 7 – Challenges Main challenges: l High fixed cost base (industry challenge) • Utilisation is the key • Work towards a more flexible cost base l Penetrate the West-African market with an acceptable risk profile l Continued strong focus on risk management and project execution 16
Slide 17: Subsea Market – Market outlook
Market outlook Subsea Market – Market outlook 17
Slide 18: Status of the oil market
Status of the oil market l Analysis of oil market show that the world needs more oil and needs to develop more fields: • Oil companies have spent comparably less on E&P last three years, do not believe this is a trend shift • High depletion rate from existing fields • Current demand/production equat
Slide 19: Market outlook
Market outlook • Norway • Subsea expenditure and opex expected to remain stable in 2004 and 2005. The lack of major finds and low exploration drilling activity is of concern. • Major developments are reducing in number and replaced by smaller tie backs •UK • Whilst total opex spending should remain
Slide 20: Market outlook
Market outlook • Brazil • Large investments planned not only in deeper water but also in re- development of mature fields, leading to an increasing demand for opex support. • Subsea capex expenditure expected to be at an annual level of USD 2.0 billion long-term. • Year 2004 may be hampered by proje
Slide 21: Market outlook
Market outlook • Gulf of Mexico • Subsea capex expected to fluctuate between USD 1.5 billion in 2003 and USD 1.8 billion in years 2004 – 2007. • Number of projects projected to rise, reflecting an increasing proportion of smaller projects. • West-Africa • Subsea capex expected to increase significan
Slide 22: Summary market view
Summary market view • Long term outlook for industry remains positive • Encouraged by high level of bid activity • 2004 will be an intermediate year 22