february13 th 2008 - agr reports other...• well management • rig campaigns •...

4th QUARTER 2007

February 13th 2008

CONFIDENTIAL DRAFT 2

Business snapshot

CoreBusiness

SpecialProjects

• Well management

• Rig campaigns

• Reservoir management

• RMR

• Well service tools

• Trenching & excavation

• Operations and maintenance

• Subsea Infrastructure

• Facilities Integrity

• Engineering and project

management

Field OperationsDrilling servicesPetroleum services

• Drill Pipe Assembly

• Deepwater RMR

• New Subsea Excavation

technology

• Integrated asset management

• CannSeal

• Turnkey Drilling

• New pipeline inspection

technology

• Multi Column Floater


Content

1. Key issues

2. Financials & Business Area Review

3. Technology update

4. Detailed financials


Three key issues

1. Q4 EBITDA

2. Financing

3. RMR roll-out


5969

8070

98

63

1. Q4 EBITDA

Q3 ’06 Q4 ’06 Q1 ’07 Q2 ’07 Q3 ’07 Q4 ’07

EBITDA evolution

Proforma, MNOK

Q4 impacts

3. Drilling Services short fall

2.Upstream underperformance*•Reversal of sales profit•Overhead cost increase

1. AED provision

* Reduction in purchase price by AU$31M January 2008


2. No short term liquidity issues

•Refinancing of debt in place–Increased short term loan facility by 300 MNOK for 1st half of 2008

•Significant cash flow from operations expected in 2008

•Ongoing initiatives to improve liquidity situation–Adjust investment program according to free cash flow situation–Sale of some non-core assets–Working capital reduction project–Overhead cost reduction plan

Liquidity status and management plan

No requirement to raise

new equity


•Strong market interest •Strong sales and business development team•First Jack-up contract

3. RMR roll-out 1/2

• 2nd half of 2007 below expectation

•Organizational short fallsincluding:- management change- weak businessdevelopment

- contractual terms

Lower RMR utilization than anticipated

110

515

28

’03 ’04 ’05 ’06 ’07

# of wells drilled with RMR fleet

’08

45+

•Next step deepwater•~20 RMRs on average in 2008•~55% utilization during 2008•45+ wells expected in 2008

Going forward


3. RMR roll-out 2/2

RMR Allocation Strong momentum

68Strong prospect

33Contract negotiations

30+30Total

96Contract,

commencement date

pending

1413Contract and agreed

commencement date

RMR No’s

At 12 02 08

RMR No’s

At 04 02 08

Client Status


Content

1. Key issues





Q4 2007 Group financials P&L

1) Excludes acquisitions and acquisition related items

2) Actual figures

Q4 2007 Q4 2006 12M 2007 12M 2006

Figures in MNOK Pro Forma Pro Forma Pro Forma Pro Forma

Operating income 567 467 2.168 1.796

EBITDA 63 59 311 296

Margin (%) 11 % 13 % 14 % 16 %

Depreciation (20) (13) (67) (43)

EBITA 43 46 244 254

Margin (%) 8 % 10 % 11 % 14 %

Amortisation (5) (8) (43) (159)

Write downs and provisions (57) (57)

EBIT (19) 38 144 95

Margin (%) -3 % 8 % 7 % 5 %

Net financial items (37) (3) (116) (65)

Profit before taxes (56) 35 28 30

Margin (%) -10 % 8 % 1 % 2 %

CAPEX(1)(2) 162 82 427 220

• EBITDA Q4 ended at MNOK 63, corresponding to an EBITDA margin of 11%

• Provisions made due to AED outstanding amount

• Slower ramp-up in RMR roll out

• Upstream

•Net financial expenses ended MNOK 37 for Q4, which includes 26 in interest expenses on senior debt, MNOK 10 in net losses on interest rate swaps and currency changes and MNOK 2 related to a loss on financial investment

Q4 key points


Petroleum Services’ Financials(Pro forma)

(1) Actual figures, excluding acquisitions

Q4 2007 Q4 2006 12M 2007 12M 2006

Figures in MNOK Proforma Proforma Proforma Proforma

Operating income 400 370 1.525 1.310

Growth (%) 8 % 16 %

EBITDA 43 46 202 202

Margin (%) 11 % 12 % 13 % 15 %

Growth (%) -6 % 0 %

Capex(1) 46 11 73 22

Q4 results:

•Strong Well Management performance in Q4 (excl. Upstream)•Strong performance by Reservoir Management; potential for further international expansion•Strong pipeline of work for 2008 – 77 firm wells (rig capacity secured for 75)


Rig

NorwayBredford Dolphin

Mærsk Giant

TunisiaOcean Spur

Ensco 85

DenmarkNoble George Sauvagneau

UKEnsco 80

Ensco 92

Byford Dolphin

Transocean Prospect

Ensco 100

Ensco 85

Ensco 80

Sedco 704

AustraliaWilcraft

Stena Clyde

2007 2008 2009 2010

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

AGR option to extend rig contractCurrently contracted

Secured rig campaigns and well prospects

•56 wells drilled in 2007

•77 firm wells for 2008(Rigs for 75)


Petroleum Services – next steps

• Sustainable well management business in NCS, UK & Australia

• Future expansion of the current model into deepwater and new geographic regions

• Integrated services

• Additional planned business models add to Petroleum Services future growth:

1. Turn Key Drilling

2. NOC campaigns

3. Field Development


25000

22500

13800

2000

800

700

500

400

320

225

230

127

73

50

87

18

6300

2008 Well Management currentclient overview (rig consortia)Market Cap per January 30th 2008, MUSD

B*

A

C

D*

E

F*

G

H

I*

J*

K*

L*

M*

N

2008 clients excluding Norway

O

P

Q*

No guarantee plans

No guarantee plans

No guarantee plans

Parent company guarantee

No guarantee plans

Letter of Credit or Escrow

No guarantee plans

Escrow

Letter of Credit

Letter of Credit

Letter of Credit

Escrow

Escrow

Letter of Credit

Escrow

Escrow

Letter of Credit

Financial guarantee**

• R*• S• T*

Private companies

• Letter of Credit



• 7 clients – all contracts direct with the rig owner – AGR has no contractual obligation to rig owner

Norway

* Companies with whom AGR has had a previous working relationship

** Client agreed to form of guarentee

AED: At time of contract for Wilcraft market cap of ~900M and trading history with AGR/Peak


Drilling Services’ Financials(Pro forma)

(1)Actual figures, excluding acquisitions

Q4 2007 Q4 2006 12M 2007 12M 2006


Operating income 62 53 242 195

Growth (%) 16 % 24 %

EBITDA 22 20 94 82

Margin (%) 36 % 37 % 39 % 42 %

Growth (%) 12 % 14 %

Capex(1) 91 60 299 172

Q4 results:

• Investment into RMR roll out – staff operator recruitment/training - major investment in training has plateaued to reach critical mass

• Client well delays deferred earnings

• RMR secured first contract on Jackup (start up February 2008)

• DPAL plus 10MNOK due to cost activation in inventory


Drilling Services – next steps

(1) Actual figures, excluding acquisitions

•Maintain RMR customer satisfaction

•Build on market penetration and increase robustness

•Deepwater RMR field trial mid 2008 with JIP partners

•Ormen Lange contract on track for new excavation technology Claycutter X (and SeaVator)

•DPAL at 60 pipes per week; controlled ramp up with aim of producing 400 per week YE ’08


RMR market expansion plans

Shallow and medium depth water drilling (<800m)

Tophole Rest of wellTophole

RMR

RMR

DWRMR

RMR

RMR

DW RMR

DWRMR

CMP

CMP

Platform rigs (890)

Offshore drilling platforms and rigs(available #s, May ’07)

Semisubmersibles (178)

Jack-ups (405)

Drillships (40)

Tenders/ barges (115)

Current market

RMR

Near term future markets

Longer term future markets

Potential but not tested

Deep water drilling (>800m)


FieldOperations’ Financials(Pro forma)(1)

(1) Excluding AGR Consultants(2) Actual figures, excluding acquisitions

Q4 2007 Q4 2006 12M 2007 12M 2006


Operating income 109 68 400 317

Growth (%) 61 % 26 %

EBITDA 15 2 61 36

Margin (%) 14 % 4 % 15 % 11 %

Growth (%) 522 % 69 %

Capex(2) 10 10 26 26

• Roll out of NCS high margin concepts and new technology globally• Pipeline project for BP Thunderhorse in US GoM started in 4Q.• Second Maintenance Management project contracted in Asia • Maintenance management team in place and in operation in Kuala Lumpur• Continuously strong growth for high margin special services.

Q4 results and future outlook:


Content

1. Key issues





Claycutter X

Ormen Lange gas field 2008

AGR a leader in excavation globally

Future prospects for Claycutter X positive:

Steep increase in global subsea activity

Move to deeper water for offshore developments

Steep increase in demandfor pipe-lay and trenchingactivity


Neptune

Phased Array

• First high resolution ROV assisted ultrasonic pipe and weld inspection solution.

• Deployment by small inspection class ROVs.

• Operating depth historically restricted by analogue technology, has been extended from metres to kilometres.

Successfully tested in Bergen with 3 oil majors

present


CannSeal

•tool for sealing off water and gas inflow in wells

What is Cannseal?

•Reduced water production •Accelerated oil production

CannSeal Impact?

•Faster, better, less expensive and less risk of damaging well

•Field trial scheduled mid 2008

Value propositions to customers?

Before using CannSeal

After using CannSeal

Water leaks between casing and well bore

CannSeal plug between casing and well bore + plug inside casing stops water flow

Oil flows from reservoir # 1

Water flows from reservoir # 2


Multi Column Floater (MCF)

•Floating drilling and production system•Deep and harsh water drilling and production

What is the MCF and what areas of use are relevant?

•Reduced drilling costs•Accelerated project development•Less weather related downtime

How will the MCF make an impact?

•Successful completion of model tests•Contracts with two individual clientsfor evaluation of the MCF for use on their fields•First request for tender

Current Status


Content

1. Key issues





12M 2007 Group financialsBalance sheet (Actual)

(1) Installments on 2006/07 interest-bearing debt

2007-12-31 2007-09-30 2006-12-31

Figures in MNOK Actual Actual Actual

Intangible assets 1.334 1.556 1.203Machinery and equipm. 600 492 299

Other fixed assets 58 54 40

Total fixed assets 1.992 2.101 1.541

Account receivables 1.357 966 515

Other current assets 90 153 220

Cash and cash eq. 137 9 148

Total current assets 1.584 1.128 883

Total assets 3.576 3.229 2.424

Total equity 920 912 902

L-T Interest-bearing debt 1.036 967 820

Other L-T liabilities 186 412 53

Total L-T liabilities 1.223 1.382 872

S-T Interest-bearing debt(1) 140 111 42

Other S-T liabilities 1.293 824 609

Total S-T liabilities 1.433 935 650

Total equity and liab. 3.576 3.229 2.424

At the end of December 2007:

• Total assets = MNOK 3 576.

• The increase in assets from 30

September relates primarily to

investments in equipment related to RMR

and increase in accounts receivables

• Intangible assets = MNOK 1 334,

consisting of MNOK 982 in goodwill and

236 in assets related to acquisitions,

MNOK 87 in patents and R&D

(amortized), and MNOK 29 in deferred

tax assets

• Total equity = MNOK 920, resulting in an

equity to total assets ratio of 26%

• Net interest bearing debt = MNOK 1040

Q4 highlights


Q4 2007 Group financialsCash Flow (Actual)

(1) WC = Inventory + Trade receivables – trade payables + other accruals

(2) Liquidity resources as per Q4 2007 of MNOK 399 including revolver facility

(2)

Q4 2007 Q4 2006 12M 2007 12M 2006

Figures in MNOK Actual Actual Actual Actual

Profit before tax -79 7 -31 47

Gain from sale of shares in subsidiary -6 - -137 -

Taxes -13 -11 -38 -11

Adj. for non-cash items 100 60 359 133Change in working capital(1) 107 -41 -10 -76

Operating cash flow 109 16 145 94

Cash flow from investments -151 -156 -543 -849

Change in debt 99 59 315 126

Issuance of shares 71 161 72 711

Cash flow from financing 170 220 388 836

Change in cash 127 79 -11 81

Cash per start of period 9 69 148 66

Cash per end of period 137 148 137 148

•Operating cash Q4 2007 ended at MNOK

109, compared to MNOK 16 in Q4 2006.

The deviation between EBITDA and cash

flow from operations is due to a decrease

in working capital in accordance with plan.

• During the third quarter of 2007, cash-flow

from investment activities was MNOK 151,

mainly related to investments in RMR and

DW RMR JIP. The number includes final

proceeds from the sale of AGR RC

Consultants

• Cash flow from financing activities was

MNOK 170.

• Capex for Q4 2007 was MNOK 162

primarily related to RMR fleet expansion

Q4 highlights


Interest-bearing debt

(1)A combination of small loans with different terms and conditions(2)Drawdown of MNOK 65 is reported net against cash in Balance

Sheet

Q4 highlights:

•Gross interest-bearing debt at the end December 2007 was MNOK

1176

• At current debt levels, the

company’s borrowing rate is 80bp

above NIBOR

• MNOK 450 fixed interest rate at

4.33% + margin (5 years), and

MNOK 84.0 fixed interest rate at

5.27% + margin (5 years)

• AGR has increased revolver facilities

with MNOK 300 in February 2008

Credit Amount Interest

Loan description available per December rate

MNOK MNOK (%)

Term Loans 710 710 6,28

Revolving credit facility 565 465 6,28

Other credit facilities (1)

5 1 NM

Multipurpose credit facility (2)

200 0 6,60

Interest bearing debt 1 480 1 176


Write Downs

Issues

1

2

3

4

DPAL Stock*

RES acquisitionintangibles

FDPSO

Pipetech

TOTAL

MNOK

31.900

10.763

8.055

6.113

56.831

*10MNOK cost costs included in inventory


In summary – market fundamentals

Strong underlying growth factorsfavor AGR’s portfolio:•More drilling•More complex drilling•More infrastructure•Older infrastructure •An emerging deepwater segment


In summary – AGR Group

2. No liquidity issues•Strong cash flow from operations in 2008•New short term financing in place•CAPEX/ investment program adapted to liquidity situation•Liquidity improving programs initiated: Working Capital reduction and sales of non-core assets

1. AED incident non recurring •Financial backbones of 2008 rig campaign customers evaluated•Financial guarantees put in place where necessary

3. 2008 outlook remains strong •Petroleum Services – a leading player in the outsourced drilling segment; excellent pipeline for 2008; capacity shortage puts AGR in a strong position

•Drilling Services – measures taken to address slowdown in 2nd half 2007•Field Operations – a mature business in a stable industry segment; unique concepts/technologies developed and proved on the NCS to be introduced in Australia, UK continental shelf and GoM

february13 th 2008 - agr reports other...• well management • rig campaigns •...

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