Hunting Plc · LSE:HTG
Hunting — H1 2014 Earnings Presentation
29 slides from Hunting's earnings presentation, Oct 23, 2014
Slide 1: Global Momentum – Hunting PLC 2014 Half Year Report
GLOBAL MOMENTUM Hunting PLC 2014 Half Year Report
Slide 2: Highlights
Highlights Performance* Revenue increased to $687.5m (2013 – $655.7m) +4.8% EBITDA $121.3m (2013 – $116.7m) +3.9% Operating profit $97.1m (2013 – $94.5m) +2.8% Profit before tax $93.9m (2013 – $91.5m) +2.6% Diluted EPS 44.9 cents (2013 – 42.2 cents) +6.4% Net debt $229.0m (YE 2013 – $2
Slide 3: Half Year Results Summary
Half Year Results Summary* H1) H1) 2014) Margin 2013) Margin Change $m) % $m) % % Revenue 687.5) 655.7) +4.8 EBITDA 121.3) 18 116.7) 18 +3.9 Profit from operations 97.1) 14 94.5) 14 +2.8 Finance expense 2.9) 3.3) Profit before tax 93.9) 14 91.5) 14 +2.6 Effective tax rate 27% 29% Diluted EPS 44.9c 4
Slide 4: Segmental Results
Segmental Results* H1 H1 2014 2013 Profit from Profit from) Revenue Operations Margin Revenue Operations) Margin $m $m % $m $m) % Hunting Energy Services Well Construction 182.2 24.6 14 192.1 27.8) 14) Well Completion 410.7 60.5 15 388.0 60.9) 16) Well Intervention 65.7 10.1 15 51.4 5.7) 11) 658.6 9
Slide 5: Geographical Segmental Results
Geographical Segmental Results* H1 H1 2014 2013 Profit from Profit from) Revenue Operations Margin Revenue Operations) Margin $m $m) % $m $m) % Hunting Energy Services USA 407.1 74.8 18 397.4 74.2) 19) Canada 41.5 0.8 2 30.7 (1.0) (3) UK 77.7 2.2 3 74.6 5.7) 8) Rest of Europe 15.2 1.4 9 13.2 1.5) 11
Slide 6: Amortisation & Exceptional Items – Continuing Operations
Amortisation & Exceptional Items – Continuing Operations H1 H1 2014 2013 $m $m Amortisation of intangible assets 21.9 21.7 Oil & Gas reserve impairment and dry hole cost 2.9 3.7 Inventory fair value charge ̶) 3.2 Settlement of litigation and associated legal expenses ̶) 2.9 Continuing operations 24.
Slide 7: Balance Sheet
Balance Sheet June) December) 2014) 2013) $m) $m) Property, plant and equipment 450.0) 431.8) Goodwill 495.8) 495.2) Other intangible assets 243.6) 263.0) Working capital 521.7) 467.6) Provisions (32.7) (33.4) Taxation (current and deferred) (45.1) (48.7) Other 43.3) 45.1) Net debt (229.0) (205.8) N
Slide 8: Capital Investment – by Project
Capital Investment – by Project H1 2014 $m Hunting Energy Services New drill tools and other rental equipment 11.9 Manufacturing facility – Houma, Louisiana 14.7 Premium Threading facility – Houston, Texas 5.5 Other facility expansion 1.5 Asia Pacific machinery and equipment 2.0 North American machi
Slide 9: Capital Investment – Major projects underway
Capital Investment – Major projects underway $m Capacity: Premium Threading facility – Houston, Texas 43.0 Manufacturing facility – Houma, Louisiana 36.4 Hunting Dearborn expansion – Fryeburg, Maine 18.8 New regional growth: South Africa facility – Cape Town 20.0 Saudi Arabia facility (60:40) 3.8 Ke
Slide 10: Cash Flow
Cash Flow H1) H1) 2014) 2013) $m) $m) EBITDA 121.3) 116.7) Working capital (36.8) (50.2) Interest and bank fees (2.9) (3.1) Tax paid (18.1) (5.2) Replacement capital investment (33.2) (20.9) Other 4.7) (1.5) Free cash flow 35.0) 35.8) Expansion capital investment (21.4) (11.3) Purchase / Disposal of
Slide 11: Platform Overview
Platform Overview Well Construction Excellent MWD tool sales expanding into Canada and Middle East Testing completed for new OCTG connections OCTG contracts secured in Asia Pacific and North Sea Well Completion Vacuum Insulated Tubing contracts in Canada Perforating Systems penetration in
Slide 12: Locations Worldwide
Locations Worldwide 7 127 XX 839 28 XX 3 XX XX XX 6 30 XX XX 165 1 XX XX 1 Manufacturing Distribution and Machine Locations Worldwide 42 Manufacturing (South Africa in construction) 34 Distribution 1,131 Machines Results for the half year ended 30 June 2014 12
Slide 13: Regional Update
REGIONAL UPDATE
Slide 14: United States
United States Market Overview – Fourth consecutive year of increased E&P spending. For 2014, a 10% increase in spending is forecasted. Since 2010, the US market has grown at a CAGR of 12%. Business Highlights: Hunting’s Market Presence: WEDGE-LOCK ™ SF testing completed 25 Manufacturing SEAL-LOC
Slide 15: US Macro Market Drivers
US Macro Market Drivers Impact of Horizontal Trend Offshore US Offshore Dynamics Onshore Dynamics 70% 70 $16 60 $14 Offshore Spend $B 65% $12 % Horizontal 50 No. Trees $10 40 60% $8 30 $6 55% 20 $4 10 $2 50% 0 $0 2010 2012 2014 2010 2012 2014 % Horizontal CAGR Since 2010 CAGR Since 2010 Footage +12%
Slide 16: Service Intensity and Kit Density Comparison – US Onshore
Service Intensity and Kit Density Comparison US Onshore Market Comparison, Then and Now Vertical Well Horizontal Well JUST A FEW YEARS AGO Short runs using low Almost two times the length requiring Kit cost OCTG semi-premium OCTG Low tech, limited More engineered, requires electronics, Intensity var
Slide 17: Service Intensity and Kit Density Comparison – US Offshore
Service Intensity and Kit Density Comparison US Offshore Market Then and Now Program Type Offshore Shelf Deepwater JUST A FEW YEARS AGO Simplistic, quick set up, Highly engineered, wells planned Kit however low kit consumption and constructed one at a time Common off the shelf Intensity Custom engin
Slide 18: Canada
Canada Market Overview – Canada was negatively affected by bad weather last year. This year, Canada is experiencing large increases in E&P activity. Business Highlights: Hunting’s Market Presence: Growth in Vacuum Insulated Tubing Sales 2 Manufacturing Q4 completion of heavy oil premium connecti
Slide 19: Canada Macro Market Drivers
Canada Macro Market Drivers Steep Increase in Horizontal Footage Heavy oil is only part of the mix, natural gas saturation is high 2014 Horizontal Footage Change Hunting is positioned strategically in the heart of it 70 + 17% 68 66 Million Feet 64 62 60 58 56 70% of Canada’s natural gas is 54 prod
Slide 20: UK - North Sea and Europe
UK - North Sea and Europe Market Overview – Overall, Europe’s E&P spending is expected to be flat in 2014. Fortunately, Hunting’s key business areas in the North Sea have seen E&P spending growth in the mid single digits. Business Highlights: Hunting’s Market Presence: Continued growth of OCTG con
Slide 21: UK - North Sea and Europe Macro Market Drivers
UK - North Sea and Europe Macro Market Drivers North Sea Market Growth North Sea Key Markets 100 $22 High performance OCTG 90 Pressure control equipment for the most extreme 80 $17 conditions 70 Hunting provides a premier rental fleet of drilling No. Trees No. Rigs tools Spending $b Footage M
Slide 22: Asia Pacific
Asia Pacific Market Overview – While E&P spending is increasing at a slower pace than previous years, the region is still posting high single digit expansion. Business Highlights: Hunting’s Market Presence: Awarded significant 2 year OCTG supply contract 6 Manufacturing with Pertamina 1 Distributi
Slide 23: Middle East
Middle East Market Overview – As a percentage, the Middle East has the largest increase in E&P spending (approximately 16%). Business Highlights: Hunting’s Market Presence: Increase in Thru Tubing geographical market Large contract for perforating systems to 1 Manufacturing Saudi Arabia and Abu
Slide 24: Middle East Macro Market Drivers
Middle East Macro Market Drivers Footage and Well Intervention 30 $1,200 Footage and cost per foot continue to increase 25 $1,000 Many fields are old and they must be re-entered to increase production 20 $800 Spending Per Foot Footage M 15 $600 Five Largest Fields Discovered Ghawar – Saudi Arabi
Slide 25: Mexico and South America
Mexico and South America Market Overview – In 2014, E&P spending is projected to be down 7%. In 2015, spending is expected to return to 2013’s levels. Business Highlights: Market: Increased enquiries for product shipment to This year, Mexico’s E&P spending is expected to be Mexico and South Amer
Slide 26: Sub Sahara
Sub Sahara Market Overview – Since 2010, E&P spending in the sub Sahara has more than doubled. Growth in 2015 is projected at 10%. Business Highlights: Market: Cape Town facility to be complete early The Oil and Gas Frontier 2015 The sub Sahara is large enough to hold China, The United States, I
Slide 27: Appendix
APPENDIX
Slide 28: Global Spending Onshore and Offshore ($B)
Global Spending Onshore and Offshore ($B) $600 $500 $400 $300 $200 $100 $0 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E Onshore Spending $B Offshore Spending $B Results for the half year ended 30 June 2014 28 Source: Spears
Slide 29: Global Subsea Spend
Global Subsea Spend US$75.2bn $20,000 $18,000 94% Increase $16,000 $14,000 $12,000 US$38.8bn $MM $10,000 $8,000 $6,000 $4,000 $2,000 $0 Startup Year Africa/Medit. Asia Pacific/Middle East North Sea North America South America Results for the half year ended 30 June 2014 29 Source: Quest Offshore