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TRANSCRIPT
Forward Looking Statements
This presentation includes forward looking statements. Such statements are generally not historical innature, and specifically include statements about the Company’s plans, strategies, businessprospects, changes and trends in its business and the markets in which it operates. In particular,statements regarding offshore drilling markets, the Company’s ability to make cash distributions, theexpected performance of the drilling units in the Company’s fleet, estimated duration of customercontracts, contract dayrate amounts, contract backlog, forecasts of operating income and AdjustedEBITDA and the ability of the Company and Seadrill Limited to negotiate with lenders are consideredforward-looking statements. These statements are made based upon management’s current plans,expectations, assumptions and beliefs concerning future events impacting the Company and thereforeinvolve a number of risks, uncertainties and assumptions that could cause actual results to differmaterially from those expressed or implied in the forward-looking statements, which speak only as ofthe date of this news release. Important factors that could cause actual results to differ materially fromthose in the forward-looking statements include, but are not limited to offshore drilling marketconditions including supply and demand, dayrates, customer drilling programs and effects new rigs onthe market, contract awards and rig mobilizations, contract backlog, the performance of the drillingunits in the Company’s fleet, delay in payment or disputes with customers, the outcome of any pendinglitigation, our ability to successfully employ our drilling units, procure or have access to financing,ability to comply with loan covenants, liquidity and adequacy of cash flow from operations, fluctuationsin the international price of oil, changes in governmental regulations that affect the Company or theoperations of the Company’s fleet, increased competition in the offshore drilling industry, and generaleconomic, political and business conditions globally. Consequently, no forward-looking statement canbe guaranteed. When considering these forward-looking statements, you should keep in mind therisks described from time to time in the Company’s filings with the SEC. The Company undertakes noobligation to update any forward looking statements to reflect events or circumstances after the dateon which such statement is made or to reflect the occurrence of unanticipated events. New factorsemerge from time to time, and it is not possible for us to predict all of these factors. Further, theCompany cannot assess the impact of each such factor on its business or the extent to which anyfactor, or combination of factors, may cause actual results to be materially different from thosecontained in any forward looking statement.
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Agenda
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1) Highlights 1Q 2017
2) Market Commentary & Financial Performance Overview
3) Summary & Q&A
Q1 Highlights
Revenue of $328 million
Adjusted EBITDA(1) of $261 million
Economic utilization of 99%
New contracts & dayrate changes
West Aquarius: 2 new contracts
West Capella: 1 new contract and 1 Letter of Award
West Capricorn: Returning to full operating rate
4(1) Adjusted EBITDA has been defined in the Appendix
Backlog & Utilization
5
99% economic utilization*
Current order backlog of $2.1bn
Average contract term of 1.5 years
* Economic utilization is calculated as total contract revenue
excluding bonuses for the period as a proportion of the full operating
dayrate multiplied by the number of days in the period.
9995 94
99
70
75
80
85
90
95
100
Q2 16 Q3 16 Q4 16 Q1 17
Uti
lizati
on
%
Economic utilization (floater fleet)
0
500
1000
1500
2017 2018 2019+
$ m
illi
on
Current backlog
West Leo
West Sirius $297,000
West Vencedor $115k $115,000
West Aquarius $615k$200,000$200,000 $260k
West Capella $165k UndisclosedUndisclosed
West Polaris $450,000
West Capricorn $316k $525,000
T-15 $110,000
T-16 $110,000
West Auriga $562,000
West Vela $525,000
Contracted Option Period Early Termination Fee
4Q 1Q
2017 2018
2Q 3Q 4Q 1Q 2Q 3Q
2020
1Q
2019
2Q 3Q 4Q 2Q 3Q 4Q
7(1) During October a notice of Force Majeure was received from Tullow Ghana Limited. The Company has disputed Tullow's claim for Force Majeure and has
commenced litigation proceedings
(1)
Assets & Contracts
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Volume: West Vencedor contract
commencement
Utilization: Improved uptime for
the West Auriga and West Vela,
partially offset by downtime on the
West Polaris
Idle units: Full quarter of idle time
on the West Leo
Adj. EBITDA: West Leo idle time and
West Capella offset by West Capella
termination fee received in the 1st
quarter
Costs: Lower G&A and reduced
opex on the West Leo while idle
Revenue
Adjusted EBITDA(1)
Sequential Variance Analysis
(1) Adjusted EBITDA has been defined in the Appendix
200
220
240
260
280
300
320
340
360
380
400
4Q16 Volume Dayrate Utilization Idle units 1Q17
120
140
160
180
200
220
240
260
280
300
320
4Q16 Volume Dayrate Utilization Idle units Costs 1Q17
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Unaudited accounts in USD millions 1Q17 4Q16
Net operating income 173.4 164.8
Financial items
Interest income 3.2 3.2
Interest expense (42.4) (45.4)
(Loss) / gain on derivative financial instruments (6.2) 74.3
Currency exchange (loss) / gain (0.2) 2.1
Other financial items (0.5) -
Total financial items (46.1) 34.2
Income before income taxes 127.3 199.0
Income taxes (20.4) 8.5
Net income 106.9 207.5
Net income attributable to non-controlling interests 50.1 105.6
Net income attributable to Seadrill Partners LLC Members 56.8 101.9
Income Statement – Net Income
Unaudited accounts in USD millions 1Q17 4Q16
Total current assets 1,258.3 1,214.2
Total non-current assets 5,502.3 5,566.5
Total assets 6,760.6 6,780.7
Total current liabilities 838.4 665.4
Total non-current liabilities 3,294.5 3,579.5
Total liabilities 4,132.9 4,244.9
Total equity 2,627.7 2,535.8
Total liabilities and equity 6,760.6 6,780.7
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Balance Sheet Main Movements
Insulation
Removal of Seadrill Limited as guarantor on SDLP credit facilities
Separate SDLP credit facilities from Seadrill Limited
Refinancing
Extend maturity of bank facilities by 2.5 years
Contingency planning
Seadrill Limited Restructuring – Considerations
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Second quarter 2017 adjusted EBITDA(1) expected to be around $165
million:
West Aquarius commencing new contract on lower dayrate
Lower recognition of termination fees relating to the West Capella
A full quarter of operations for the West Vencedor
Outlook
(1) Adjusted EBITDA has been defined in the Appendix
* Adjusted EBITDA refers to earnings before interest, other financial items, taxes, non-controlling interest, depreciation and
amortization and including deferred consideration payable to Seadrill Partners. Additionally, in any given period the
Company may have significant, unusual or non-recurring items which it may exclude from its Non US Generally Accepted
Accounting Principles ("US GAAP") earnings for that period.
Reconciliation of Operating income to Adjusted EBITDA
Unaudited in USD millions 1Q17
Operating income 173.4
Depreciation and amortisation 67.0
Revaluation of contingent consideration (21.3)
EBITDA 219.1
Amortization of mobilization revenue (4.3)
Amortization of favourable contracts 17.5
Standby revenue receivable 0.8
Mobilization revenue receivable 5.0
Termination fees recognised in income (34.2)
Termination fees received 62.8
Deferred consideration payable (5.4)
Adjusted EBITDA 261.3
Appendix – Non-GAAP Financial Measures
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