Sevan Marine ASA Presentation Q1 - 2005 Shippingklubben, Oslo April 28, 2005
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Contents •
Current Status
•
Sevan Stabilized Platform
•
Business Model and Strategy
•
Market Potential and Competition
•
Organization, Board and Management
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Q1 2005 - Status •
Operating profit NOK –9m (NOK –3.9m) – Provision for cost related to share based incentive plan NOK –2.5 m (NOK 0.5m)
•
Total assets NOK 949m (NOK 34m) – Construction in progress SSP 300 FPSO NOK 146m – Cash of NOK 759m (NOK 22 m payable in Q2 as bond transaction costs) – Bond Loan of net 648m
•
Petrobras board approves contract for SSP 300 FPSO – 11 years fixed term – Contract value fixed term USD 399m – Commencement mid-2006
•
Consolidation of the SSP 300 FPSO – 100% consolidation in Sevan Marine group accounts – Etesco 25% minority share of net profit will be classified as financial expenses in income statement, 25% minority share of net assets classified as liabilities in balance sheet
•
Construction project – Progress according to plan and within budget – 45% of steel has been cut – Site team from Sevan and DNV 3
Q1 2005 – Status, cntd.
•
Financing activities – Share issue of 6,610,000 shares @ NOK 16.90, gross proceeds NOK 111,7 m – Senior Secured Bond Loan 2005/2008 of NOK 670 m, net NOK 648m • Bridge loan function
•
Purchase of Kanfa AS – 48% of the shares – Process design and engineering specialist – Extensive experience nationally and internationally
•
Outlook – Floating production market remains strong – Project opportunities discussed with potential clients
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Kanfa AS has extensive process experience Selected Projects: Ormen Lange – Aker Kværner Gullfaks A/B/C – Statoil Draugen – Norske Shell Siri – Dong Borgen Dolphin/Knock Taggart – Fred Olsen Balder FPU – Aker/Esso Valhall – BP Corocoro FSO, Venezuela – Conoco Phillips
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Contents •
Current Status
•
Sevan Stabilized Platform
•
Business Model and Strategy
•
Market Potential and Competition
•
Organization, Board and Management
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SSP compared to other floating units Semi
•
Pro’s
• • •
•
Con’s
• • •
Drilling equipment (some) Deck space Large no. of risers Good motions
Limited storage capacity Costly risers Limited well access Limited deck load
Source: Sevan Marine, Enskilda Securities
FPSO
• • • •
Storage capacity Deck space Deep water Flexibility (re-use)
• • •
Costly risers Limited no. of risers No well access
TLP
• • • •
Drilling equipment Well access Traditional steel risers Track record
• • • •
No storage Expensive design Limited depth Limited deck load
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SPAR
• • • •
• • • •
Drilling equipment Well access Traditional steel risers Deep water
Limited storage Not for harsh environment Limited no. of risers Limited deck load
SSP
• • • • • • • •
Low construction cost No turret and swivel Storage capacity Drilling and well compl. Large number of risers High deck load cap. Good motions Deep water
•
Limited well access in harsh environment Pre-qualified - but no units delivered yet
•
Simplified cylinder design based on standard ship building principles • • • • •
Compact design Turret and swivel arrangements replaced by spread mooring solution Simple integration between hull and topside Standard panel and block fabrication and structural members with few dimensions Reduced cable and piping, no piping in tanks
Keeping cargo compartments
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Reduced investments and improved operation Compact design
No turret, No swivel
Reduced investment cost • • • •
20-25% less steel weight 50% less piping 50-70% less engineering cost Shorter construction time Improved operation
• High deck load capacity and stability reserves • Any number and type of risers • Excellent motion response • No global bending and reduced fatigue exposure in hull • Less piping and easy access to all equipment
Higher flexibility
Reduced maintenance
Improved reliability in demanding conditions 9
Module based concept offering a wide capacity range SSP FPSO
Design SSP 300 SSP 600 SSP 850 SSP 1000 SSP 1700 SSP 2000
SSP FSO
Storage
Displacement
Draft
Diameter
(bbl)
(mt)
(m)
(m)
300.000 600.000 850.000 1.000.000 1.700.000 2.000.000
55.000 110.000 140.000 165.000 278.000 305.000
Production capacity from 20.000 to 200.000 bbl/day
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17 20 24 28 30 33
60 75 84 84 106 106
SSP technology verification process completed •
Sevan has over the last three years invested ~NOK 50 million on the development of the SSP technology Pre-qualified by Petrobras DNV review of technical, cost and schedule risks
Generic model tests at Marintek
2001
DNV Concept Risk Analysis
Detail eng. and fabrication drawings completed
DNV Design Appraisal Patent PCT recommendation
Model tests for Haltenbanken, GoM and Brazil
Demo/Model testing LABOCEAN, Rio
2002
Main scantling appr. initiated
2003 Patent process
Quotations and construction schedules from leading Yards Co-op with ABB and Schlumberger for the design, fabrication and operation of the process plant In house hydrostatic and hydrodynamic analysis Steel design of the hull Assessment of flexibility, size variation and deck load capacity Structural design and main scantling drawings
11
Verification of riser and mooring configuration at Marintek
2004 Building of 1st unit at Yantai Raffles Shipyard
Complete verification by Det Norske Veritas 9 Classification and Statutory Requirement Status – – – – –
9
Rules and Class Notations established (+OI, FPSO) Main scantling approval Global design analysis, incl. fatigue assessment Approval in principal (AIP) Class approval of construction drawings
Assessment of Construction and Delivery Risk – Following yards have been assessed: Yantai-Raffles, Hyundai, Samsung, Keppel Fels, Jurong – “No show stoppers. The concept is simple and effective and has many advantages over other types of Mobile Production Units”
Safety case assessment for UK
9 Concept Risk Analysis (CRA)
9
– “The risk results are within the defined acceptance criteria for the North Sea, satisfying NPD requirements”
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Contents •
Current Status
•
Sevan Stabilized Platform
•
Business Model and Strategy
•
Market Potential and Competition
•
Organization, Board and Management
13
Business model focuses on core competences
Design
Engineering
Construction
Co-operation with several yards
Ownership
• May participate • Partnerships
• Proprietary technology • In-house expertise
Core area
Not a core area
14
Case by case
Operation
Patent status – all proprietary rights owned by Sevan Marine ASA
Sevan has filed for patents in Norway and all other relevant markets
Sevan has been advised that patents will be granted
• Sevan has filed patent applications in Norway in connection with the development of the SSP
• Sevan has been advised from Patentstyret that the patent applications satisfy the requirements for patentability and that patents will be granted
• Further, Sevan has filed patent applications in various countries, under the PCT convention
• All patents and proprietary rights are the ownership of the parent company Sevan Marine ASA
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Long term strategy – Maximize long term value creation Strategic priorities long term Efficient S&M through closeness to primary markets Extensive use of alliances in key areas
Maximize long term value creation
• Ensure quick market penetration through local presence • Evaluate the necessity for more locations on a continually basis
• Establish sale alliances/agents • Establish R&D alliances • Establish project alliances
Optimize business model to maximize value creation
• Ensure Sevan’s share of the cost advantage • Continued case by case approach to ownership and operation
Ensure focused organic growth
• Ensure necessary actions to attract right competence • Assess in-house / outsourcing strategy on a continually basis
Max utilization of own units through close control
• Optimize dayrates and contract lengths • Take actions to develop best in class operation management
Clarify long term value potential
• Ensure that the market value reflects the real company values
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Sevan will strive to make the company share an attractive investment object
Clarify long term value potential
Qualify for OSE-categories
• Strategy and markets conditions
• OB Match
• Important value drivers
• OB Standard
• Relevant risk factors
• OB Nye
Sound Corporate Governance routines
Open and proactive IR-work
• In accordance to generally accepted recommendations
• Available management • Best practice web site
• Proactively follow up of routines
• Investor presentation in Oslo every quarter
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Contents •
Summary
•
Sevan Stabilized Platform
•
Business Model and Strategy
•
Market Potential and Competition
•
Organization, Board and Management
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Important market drivers mostly positive
Expected development in important market drivers
Oil price
45
• Oil price expected to stabilize at a high level (30-35 USD/bbl) • Increased energy consumption in Kina • Fear of terror in the Middle East and Saudi Arabia
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15
0 2 0 00
45
2 0 01
2 0 02
2 0 03
2 0 04
R/P ratio
• Stagnation in the World oil reserves-to-production ratio (R/P) • Increased oil price in break even estimates for field development • Exploration expected to increase
30
15
0 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03
Shipyard capacity
• Constrained shipyard capacity • Significant increase in building cost over the last year
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The FPSO market is growing steadily
Demand for FPUs
FPUs planned or under study 24
200
22 22
Sevan Marine’s main focus areas
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160
18 16
16
No. of units
16
120 14 12
Acc. growth 45% 80
11
10 8
7 6
40
6 4
4
4 2
0 <90 90
91
92
93 FPSO
94
95
96
SEMI
97 98 TLP
99
00
01
02 03E 04E 05E
0
SPAR
West Africa
The FPSO market is growing by approx. 10% p.a.
Source: Enskilda Securities, Infield, FPSO contractors, Oil companies, IMA
1
Gulf of Mexico
Brazil
S-E Asia Australia Northern Europe
China
Canada
Other regions
87 floaters currently evaluated with first oil within 5-7 yrs
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Increasing share of the fragmented FPSO market is controlled by contractors • •
•
46% of FPSOs are owned and operated by contractors Contractors share of the market has increased from 30% in 1990 to 46% in 2003
•
FPSO market end 2003: 88 vessels, distributed on 42 owners Only 10 companies controlling more than 2 FPSOs (5 contractors, 5 oil companies)
FPSO Fleet by ownership - end 2003
Contractor’s share of FPSO’s
100%
120
90%
70%
52%
100
Oil companies
No. of units
80%
60% 50%
80 45% 60
40%
37
40
30%
33%
20% 10%
47
20
Contractors
14
0
0% Asia/Pacific
N. Sea
West Africa
Brazil Other
Source: Enskilda Securities, Infield, FPSO contractors, Oil companies, IMA
21
51
30% 18
6
9
1990
1995 Contractor
30
2000
2005E
Oil Company
SSP FPSO/FSO targets an attractive market – Challenging existing technology
Technologies for different depths Fixed platform Fixed Compliant tower TLP SPAR FPUs
FPSO SSP Subsea completion 0
500
1,000 1,500 2,000 2,500 3,000 Water depth (m)
Source: “Deepwater GoM; Americas Emerging Frontier”; MMS 2000-022
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Promising development in Sevan Marine’s focused markets
North America
Europe & Eurasia
• Still no FPSOs in market • Large long term potential
South & Central America
• Focused market • Weather conditions suited for SSP • Several production contracts will come out the next 3 years • Co-op. agreement with Petrobras
9
• Focused market • Rough weather conditions • Strict regulations • Marginal field growth
9
Asia Pacific
Middle East
Africa
• Currently no focus area
• Benign weather conditions • Mostly turret-less solutions
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• Focused market • Weather conditions suited for SSP • Medium/ marginal fields • Several production contracts • Strong growth
9
LOI with Petrobras on Piranema • • • • • • • • • • • • • •
For the use of SSP300 as an FPSO Unit under construction in China to be used Etesco to have a 25% equity interest in FPSO First oil mid-2006 11 year fixed term Contract value fixed term USD 399m Horizon of field 20 years+ Water depth 1,000-1,600m Light oil (40 degrees API) High gas content – no water Gas injection of 3.6 million m3 per day 300,000 bbl oil storage 30,000 bbl/d processing capacity Up to 21 risers and umbilicals
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Closure of first agreement may trigger new orders
Unit
Type
Market
Status
Contract award
Signed agreements SSP
Coop. Agr.
S America
Signed
2004/Q3
SSP FPSO
LOI
Brasil
Signed
2005/Q1
Proposals and negotiations for second unit SSP 300 (3)
FPSO
North Sea
Negotiating /Bid
2005
SSP 1000
FSO
North Sea
Bid
2005
SSP 300
FPSO
S America
Tender exp. 2005
2005
SSP 300/600 (5)
F(P)SO
SE Asia Australia
Tender exp. 2005
2005
Proposals
2005
Other proposals and negotiations SSP 300-1000 (5)
FPSO
North Sea/SE Asia/Brasil
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Contents •
Current Status
•
Sevan Stabilized Platform
•
Business Model and Strategy
•
Market Potential and Competition
•
Organization, Board and Management
26
The Sevan management has a proven track-record of creating shareholder value Commercialized technology: • Navis ASA: Deepwater drill ship
Transaction & business track-record: • Navis ASA, IPO: Sold to Fred. Olsen Energy for NOK 1.8bn • Sale/IPO of Anchor Drilling Fluids, NOK 700m and Prosafe, NOK 800m • Transocean: From NOK 300m to NOK 10bn in 6 yrs, sold to Sonat Offshore • Negotiating and managing 8 contracts worth USD 850m with Petrobras • Successful build-up and management of Angola turnkey operations for Petrobras
– From concept to delivery in 28 months – Built on time and budget at Samsung
•
APL AS: STL and STP technology – More than 15 units in operation on Shuttle tankers, FSOs and FPSOs – From 0 to NOK 325m in 3 yrs
•
MCG AS: Bow loading and offloading systems – More than 60 units in operation world wide on shuttle tankers and FPSOs – From 0 to NOK 250m in 5 yrs
•
Pusnes: Product development, commercialization and internationalization of various products
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Organization and legal structure Board of Directors Sevan Marine ASA Jan-Fr.Wilhelmsen, COB 48%
KANFA AS Sevan Marine AS Investor relamin.
100% Sevan Marine
100%
100%
Finance
Jan Erik Tveteraas, CEO
Management AS
Henriette Sandvaag
Egil Kvannli, CFO
Sevan Marine do Brasil Ltda
Sevan Production AS
Sevan Marine do Brasil Ltda
Technology Engineering Construction R&D
Marketing Conceptual Development Business Development
Raul Schmidt
Kåre Syvertsen, MSc
Arne Smedal, Msc
Engineering verification Subcontractors: • Marintek • DNV Consulting • LMG Marine • Bdr. Johnsen • Marine Tech. Con
Marine Performance • • • • • • •
Model Tests Environmental Loads Motion Response Hydrostatics Stability Mooring Analysis Riser Analysis
• • • • • • •
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Structural Analysis
Machinery & Systems
Lay-out Structural Design FEM Analysis 3-D modeling Detail Engineering Production Ass. Rules & Regulation
• • • • • • •
Piping One line diagrams F&G ESD HVAC Automation Power Management Propulsion
HSE • HSE • Risk Assessment • Risk Analysis
Board of directors Jan Fredrik Wilhelmsen (52) Chairman
Arne Smedal (57) Board member
Jean-Philippe Flament (36) Board Member
Jon Hatleskog (65) Board Member
Kåre Syvertsen (54) Board Member
Mr. Wilhelmsen graduated with a law degree from the University in Oslo in 1979. He was admitted to the Supreme Court Bar in 1992 and is now partner in the law firm Sørlie Wilhelmsen in Oslo. During his law practise he has gained extensive knowledge to the offshore industry.
Mr Smedal holds an MSc in hydrodynamics from the Norwegian institute of Technology (NTNU) in Trondheim. Mr. Smedal has previous experience as President and CEO of Navis ASA 1997-2001, Executive Vice President of Hitec ASA from 1996-1997, founder and President of Marine Consulting Group and Advanced Production Loading from 1989-1996, as well as various positions, incl. President at Pusnes from 1979 to 1989. Before this, Mr. Smedal worked for Det Norske Veritas from 1974-79. Mr. Smedal has been a board member of various companies within shipping and electronics. Mr. Flament holds a BS in Finance and International Business from New York University. Since 2003, Mr. Flament has worked as a Portfolio Manager in Cheyne Capital Management. Mr. Flament has previously served as a Managing Director of Morgan Stanley & Co Intl Ltd (1993-2002) and as Assistant Director of NatWest Financial Products plc (1993-1991).
Mr. Hatleskog graduated with an MBA from Handelshøjskolen in Copenhagen, Denmark in 1964. Mr. Hatleskog manages his own business activities through Jaco Invest AS. He is a co-owner and chairman of Belden Shipping PTE, a shipping company that specializes in the transport of cement and he has various investments in gas carriers operated by Solvang ASA. Previously, Mr Hatleskog was co-owner of Havtor ASA, which was sold to Bergesen in 1996. Mr. Hatleskog is chairman of Gard P&I, Gard Marine & Energy Ltd and Gard AS and is also a board member of Solvang ASA and various gas ship companies operated by Solvang ASA.. Mr. Syvertsen graduated with an MSc in ship construction from NTNU in Trondheim in 1973. Mr. Syvertsen was previous Vice President Technology of Navis (1997-2001); Vice President Technology of Advanced Production Loading from 1994 to 1997; Project Manager of Marine Consulting Group from 1990 to 1994 and Professor in marine technology at NTNU, Trondheim from 1976 to 1990.
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Senior management and the board have extensive experience from concept and business development, as well as the capital market Management President Jan Erik Tveteraas (44 years)
• • • • •
1998-2001: CFO of Navis 1996-1998: VP Corporate Planning in Sonat Offshore (Transocean Offshore) 1991-1996: CFO in Transocean AS Board member of various companies within offshore, landbased industry and finance Holds an MBA from NHH in Bergen 1985
VP Technology Kåre Syvertsen (54 years)
• • • •
1997-2001: Vice President Technology of Navis 1994-1997: Vice President Technology of Advanced Production Loading 1990-1994: Project Manager of Marine Consulting Group Holds an MSc in ship construction from NTNU in Trondheim 1973
• •
1998-2001: New Business Development Manager of Interoil, Brasil 1994-1998: Safety Manager and Coordinator of Procurement and Contracts of Braspetro Oil Services, Angola 1981-1994: Various management positions within Petrobras, Brazil Holds a BSc in Nautical Sciences from Centro de Instrução Almirante Graça Aranha RJ 1981
Sevan Marine do Brasil Ltda President Raul Schmidt (45 years)
VP Business dvlp Arne Smedal (57 years)
CFO Egil Kvannli (33 years)
• •
• • • • •
1997-2001: President & CEO of Navis ASA 1996-1997: Executive Vice President of Hitec ASA 1989-1996: Founder & President of MCG and APL Board member of various companies within shipping and electronics Holds an MSc in hydrodynamics from NTNU in Trondheim 1973
• • • • •
2001-2004: Financial Manager MI SWACO Scandinavia (Smith International) 1997-2001: Analyst MI Norge AS 1996-1997: Banking Board member of various companies and organizations Holds a BA: Business and Administration from Norwegian School of Management and Bishops University Canada 30
Strong shareholder base – 28% foreign ownership Shareholder Arne Smedal Aasen AS Hallingen AS Supernova AS JP Morgan Chase Bank MP Pensjon Statoils Pensjonskasse Morgan Stanley and Clients Safe Custody Ferncliff AS Tycoon Industrier AS Fidelity Funds-Nordic Enskilda Securities Egenhandelskonto Credit Agricole Indo SIS Segaintersettle Normandie Invest AS Statoil Forsikring Jaco Invest AS Bank of New York , Br S/A Equity Tri-Party Whitehorse Investing Waterman Holding Inc 20 largest shareholders
Nr of shares 3,605,687 3,114,036 3,114,035 3,114,035 2,942,074 2,555,263 1,994,273 1,925,895 1,899,190 1,797,500 1,464,900 1,322,500 1,266,700 1,129,642 1,100,000 1,022,391 1,000,000 982,396 850 000 839 170 37,039,687
% 4,95 4,28 4,28 4,28 4,04 3,51 2,74 2,65 2,61 2,47 2,01 1,82 1,74 1,55 1,51 1,4 1,37 1,35 1,17 1,15 50.88
Total no of shares: 72,778,921 Foreign ownership: 28,14 %
• Free float 73% • Listed at OSE with ticker SEVAN
Total shareholder breakdown
Private
As of April 22, 2005 31
Management
Institutional
Balance sheet & Profit and Loss statement Sevan Marine ASA accounts as of 31 March, 2005 Balance Sheet NOKm Q1 05 Total long term assets 182,1 Total current assets 767,0 Total assets 949,1
Q4 04 127,4 72,1 199,5
Q1 04 12,2 21,9 34,1
Total shareholders' equity Total long-term debt Total current liabilities Total shareholders' equity and liabilitie
287,0 648,2 13,9 949,1
182,8 0,3 16,4 199,5
26,3 0,0 7,8 34,1
Profit & Loss account NOKm Operating revenues Operating expenses Operating profit
Q1 05 0,0 8,8 -9,0
Q4 04 0,0 4,9 -5,1
0,6 -8,4
0,3 -4,8
Net financial items Profit before tax
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Q1 04 31.12.04 0,9 1,0 4,8 19,4 -3,9 -18,8 0,1 -3,8
1,1 -17,7
An attractive investment opportunity
•
Breakthrough FPSO/FSO concept
•
Technological advantages make business case superior
•
Construction underway – on time and within budget
•
LOI for first unit signed – several opportunites for second unit
•
Co-operation agreements with major industrial players
•
Senior management and board with proven track record of creating shareholder value
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