SPAREBANK1
ENERGY CONFERENCE
Jeremy Thigpen, President and Chief Executive Officer February 26, 2020
LEGAL DISCLAIMER
Forward‐Looking Statements
The statements described in this presentation that are not historical facts are forward‐looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements contain words such as "possible," "intend," "will," "if," "expect," or other similar expressions. Forward‐looking statements are based on management's current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, actual results could differ materially from those indicated in these forward‐looking statements. Factors that could cause actual results to differ materially include, but are not limited to, estimated duration of customer contracts, contract dayrate amounts, future contract commencement dates and locations, planned shipyard projects and other out‐of‐service time, sales of drilling units, timing of the company's newbuild deliveries, operating hazards and delays, risks associated with international operations, actions by customers and other third parties, the future prices of oil and gas, the intention to scrap certain drilling rigs, the success of our business following the acquisitions of Songa Offshore SE and Ocean Rig UDW Inc., and other factors, including those and other risks discussed in the company's most recent Annual Report on Form 10‐K for the year ended December 31, 2019, and in the company's other filings with the SEC, which are available free of charge on the SEC's website at: www.sec.gov. Should one or more of these risks or uncertainties materialize (or the other consequences of such a development worsen), or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or expressed or implied by such forward‐looking statements. All subsequent written and oral forward‐looking statements attributable to the company or to persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward‐looking statements. Each forward‐looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward‐looking statements to reflect events or circumstances that occur, or which we become aware of, after the date hereof, except as otherwise may be required by law. All non‐GAAP financial measure reconciliations to the most comparative GAAP measure are displayed in quantitative schedules on the company's website at: www.deepwater.com.
This presentation, or referenced documents, do not constitute an offer to sell, or a solicitation of an offer to buy, any securities, and do not constitute an offering prospectus within the meaning of the Swiss Financial Services Act ("FinSA"). Investors must rely on their own evaluation of Transocean and its securities, including the merits and risks involved. Nothing contained herein is, or shall be relied on as, a promise or representation as to the future performance of Transocean.
2
OUR LEADERSHIP POSITION
47 Floaters* - 94% UDW & HE
Unmatched UDW & HE Experience
$10.2 Billion in Backlog**
Liquidity of $3.1B
- Includes 2 newbuilds under construction and the Transocean Norge (33% JV ownership interest) ** As of February 14, 2020
3
FLEET TRANSFORMATION
DIVEST ACQUIRE UPGRADE
44
FLEET RATIONALIZATION
68 Divestitures* Since 2014
15 Ultra‐Deepwater | 15 Jackups |
* Reflects the retirement of the Discoverer Deep Seas, Discoverer Spirit, and Discoverer Enterprise | 38 Deepwater / |
Midwater |
5
VALUE-ADDED ACQUISITIONS
Songa Offshore
(5 HE Semis*)
Transocean Norge
(1 HE Semi)
- Reflects the retirement of the Songa Delta announced on 9/4/18 and the Songa Trym announced on 7/23/18 and Ocean Rig Paros on 2/8/19 and Ocean Rig Eirik Raude on 2/18/19
Ocean Rig
(8 UDW Drillships*, and
1 HE Semis)
6
STRATEGIC UPGRADES
Drilling Capabilities | Drilling Efficiency | Reduced Emissions |
Discoverer India | Transocean Enabler | Transocean Spitsbergen |
Annular BOP | Automated Drilling | Patented Hybrid |
Acoustic Backup | Control | Power System |
Controls | 3 Remaining Cat‐D | |
MPD‐Ready | Rigs + Spitsbergen + | |
DP Class 3 | Norge Scheduled for | |
ADC Upgrade | 7 | |
FLEET TRANSFORMATION TO UDW AND HE FLOATERS
January 2014
Average Age Floaters - ~21 years
January 2020*
Average Age Floaters - ~11 years
(UDW - ~8 years)
UDW & HE Floaters
15
34
~45%
UDW & HE
41
3 | Mid / Deep Water |
HS Jackups
~94%
UDW & HE
44
- Includes rigs under construction and the Transocean Norge (33% JV ownership interest); reflects the retirement of the Discoverer Deep Seas, Discoverer Spirit, and Discoverer Enterprise
8
LARGEST AND MOST CAPABLE FLOATER FLEET
50
47
Harsh Environment Floaters
# of Floaters
40
30
20
10
0
14
28
8
28
19
2
31
RIG*SDRL**
Source: Company filings
27
8
23 | 16 | |||
12 | ||||
10 | ||||
11 | ||||
2 | 5 | 1 | ||
2 | ||||
Valaris | Diamond | Noble |
Harsh Environment Under Construction
Ultra‐Deepwater Floaters
Ultra‐Deepwater Under Construction
Deepwater & Midwater Floaters
8 | 7 | 7 | ||
7 | 7 | 5 | ||
1 | ||||
1 | ||||
1 | ||||
Maersk | PACD | ODL |
- Includes the Transocean Norge (33% JV ownership interest); also reflects the retirement of the Discoverer Deep Seas, Discoverer Spirit, and Discoverer Enterprise ** Includes Seadrill Limited and Seadrill Partners
9
AUTOMATED DRILLING SYSTEM: SAFER AND FASTER
10
aShear -WELL CONTROL SYSTEM
Shear Anything Instantaneously Above the Drill Bit
- Retrofittable to any BOP
- Depth agnostic
- Ultimate reliability
aShear* is the Airbag for the Oil and Gas Industry
- Is a combination of two technologies, 1) the KBOS shear unit under development by Kinetic Pressure Control, and 2) the Transocean patented ZedSafety subsea pumping unit.
11
INDUSTRY FIRST - HYBRID POWER
Provides Ability to Run Rig Thrusters off Battery Power Currently Installed on the Transocean Spitsbergen Reduces Fuel Consumption & Emissions
12
TRANSOCEAN'S INDUSTRY-LEADING BACKLOG
Estimated $10.2 Billion* Contract Backlog **
3.0
$2.6
2.5
$2.1
94% with Investment Grade Companies
Harsh Environment
Ultra‐Deepwater***
Billions
0.8
$1.6
$1.7
USD
1.5
1.0
1.6
1.3
0.5
0.0
$1.3
0.7
0.4$0.00.9
1.7
0.9 | 0.9 | 0.9 |
2020 | 2021 | 2022 | 2023 | 2024 | 2025‐28 |
*As of February 14, 2020
**Contracted operating dayrate multiplied by the contract duration for future periods as of latest company filings
*** Ultra-Deepwater includes less than $50M of Midwater backlog
13
BACKLOG ~4x NEAREST COMPETITOR
USD Billions
$12.0
$10.0
$8.0
$6.0
$4.0
$2.0
$0.0
RIG | SDRL* | Maersk | VAL | DO | NE | ODL | PACDQ |
Source: Latest company filings
* Includes Seadrill Limited and Seadrill Partners
14
BACKLOG CONVERTED TO CASH
REVENUE EFFICIENCY | REVENUE & EBITDA |
Four‐year Average ‐ 96% | Adjusted | ||||||
100% | 7,200 | 50% | |||||
6,600 | 45% | ||||||
90% | 6,000 | ||||||
5,400 | 40% | ||||||
80% | 4,800 | 35% | |||||
Millions | 4,200 | ||||||
70% | 3,600 | 30% | |||||
USD | 3,000 | 25% | |||||
60% | 2,400 | ||||||
1,800 | 20% | ||||||
50% | 1,200 | 15% | |||||
600 | |||||||
40% | 0 | 10% | |||||
2016 | 2017 | 2018 | 2019 | 2017 | 2018 | ||
2016 | 2019 | ||||||
Adj Revenue | Adj EBITDA | Adj EBITDA Margin |
15
PRESERVING EBITDA MARGINS THROUGH THE CYCLE
USD Billions
3,500 | 60% | ||||
3,000 | 46% | 50% | |||
50% | |||||
2,500 | 46% | ||||
44% | 44% | 38% | 40% | ||
2,000 | 36% | 30% | 30% | ||
1,500 | |||||
1,000 | 18% | 20% | |||
15% | |||||
500 | 10% | ||||
0 | 0% | ||||
2015 | 2016 | 2017 | 2018 | 2019 |
Transocean Adj. EBITDA | Avg. Peers* Adj. EBITDA | |||
Transocean Adj. EBITDA Margin | Avg. Peers Adj. EBITDA Margin |
*Peers include DO, VAL, & NE Source: Bloomberg
Margins EBITDA
16
SOLID LIQUIDITY
6.0 | Estimated ~$400M secured financing | |
capacity on the Deepwater Titan | ||
5.0 | ||
~$0.8B‐$1.0B | ~$1.9B | |
Billions | 4.0 | |
~$1.3B | ||
USD | 3.0 | |
~$1.2B | ||
2.0 ~$1.8B
~$1.2B ‐$1.4B
1.0
~$0.8B‐$1.0B
0.0
Cash & Short‐ | Revolving Credit | Operating Cash | CapEx / | Debt Due through | Projected |
term Investments | Facility | Flows through | Investments | 2021 | Liquidity @ |
at 12/31/19 (1) | 2021 | through 2021 (2) | 12/31/21 (3) |
(1) Excludes Restricted Cash
(2) Includes approximately $30M investment in the Transocean Norge joint venture.
(3) Excludes an additional $200M of revolving credit facility permitted as part of the facility's $500M accordion feature.
Accomplishments since 2017
- Acquired
- Ocean Rig
- Songa Offshore
- 33% JV interest in Transocean Norge
- Placed in service
- Transocean Norge
- Deepwater Poseidon
- Deepwater Pontus
- Sold jackup fleet
- Added ~$320M in cash
- Removed ~$1B in shipyard obligations
17
OFFSHORE EXPLORATION MUST INCREASE
Discovered Barrels (Billions)
100 | 179% | 188% | |||||
90 | |||||||
80 | 133% | 137% | |||||
70 | |||||||
60 | 96%106% | 98% | |||||
50 | 90% | ||||||
78% 70% | 82% | ||||||
40 | 55% | 71% | |||||
30 | 56% | ||||||
33% | 37% | 33% 26% 35% | |||||
20 | |||||||
14% 18% 16% 13%
200%
180%
160%
140%
120%
100%
80%
60%
40%
Discovered Barrels / Production
10
0
13 23 40 45 16 25 35 33 43 86 65 93 48 70 43 38 17 14 20
8 10 10 8
20%
0%
BBL Discovered | Discovery Replacement Ratio % |
Source: Rystad Energy, Clarksons Platou Securities, 2020
Liquids only. Replacement Ratio calculated as oil discovered divided by annual oil production
1818
OFFSHORE BREAKEVENS ARE DECREASING*
breakeven
70 | Breakevens decreased by ~50% |
64 | |
60 | 52 |
50 | 46 |
43 |
USD/bbl
40
30
20
10
0
34
2016 | 2017 | 2018 | 2019 | 2020E |
Source: Rystad Energy, Clarkson Platou Securities AS, Arctic Securities
*Average breakevens of discovered but undeveloped offshore resources weighted by project size
1919
ULTRA DEEPWATER WEIGHTED AVERAGE BREAKEVEN BEATS SHALE
Estimated
2020 Break-
Even Prices
by Segment
Shale
Ultra Deepwater
Source: Arctic Securities.
20
THE GREAT SHALE FAIL
Shale Peer Group Free Cash Flow | Shale Production Growth Is Unsustainable | |
Free Cash Flow USD Millions
Source: Rystad Energy, Clarksons Platou
21
SHALE GROWTH PEAKED IN 2018 - EXPECT RAPID SLOWDOWN
Unconventional liquids production YOY growth (kb/d)
Year Over Year Growth by Shale Play in kb/d
Source: Goldman Sachs Global Investment Research.
22
FOCUS TURNING BACK OFFSHORE
Billions USD
160
140
120
100
80
60
40
20
0
Estimated Project Sanctioning Next 2 Years
$128 | $138 |
$122 | |
$103
$58 $63
Offshore | Onshore |
2019 2020 2021
Source: Rystad Energy.
23
FLOATER DEMAND BY MAJOR E&P
Contract Years
Source: Rystad Energy, RigCube
2424
FLOATER OPPORTUNITIES - START DATE NEXT 18 MO.
Trailing 15 Months
100 | |||||||||||||||||||
75 | |||||||||||||||||||
3 | 50 | ||||||||||||||||||
8 | 25 | ||||||||||||||||||
1 | 0 | ||||||||||||||||||
2 | 1 | Rig Years | # Programs | ||||||||||||||||
Q4 '18 | Q1 '19 2 | Q2 '19 | Q3 '19 | Q4 '19 | |||||||||||||||
1 | |||||||||||||||||||
7 | 1 | ||||||||||||||||||
7 | 1 | 1 | 3 | ||||||||||||||||
2 | |||||||||||||||||||
1 | 1 | 1 | 1 | 1 | |||||||||||||||
<6 months | |||||||||||||||||||
5 2 | 3 | 1 | |||||||||||||||||
6-12 months | 6 | 1 | |||||||||||||||||
1-3 years | 4 | 4 | |||||||||||||||||
6 | 5 | Other UDW | |||||||||||||||||
2 | |||||||||||||||||||
>3 years | Harsh |
# Number of programs | 59 rig years to be awarded |
86 programs |
25
Source: IHS Markit 2020: Open Floater demand incl. pre-tender, tender + Transocean Marketing
GLOBAL FLOATER MARKETABLE SUPPLY
Industry has retired 132 floaters, including 53 of Transocean's, since the start of downturn;
An additional ~45 global floaters are likely unmarketable
# of Floaters
(Estimated | (Estimated | |
Reactivation Costs: | Reactivation Costs: | Source: Fearnley Securities; Transocean |
$5M to $50M) | $25M to $100M+) | |
* Includes current and future contracted rigs | ||
26
ACTIVE FLOATER FORECAST
300 | ||||||||||||
250 | 253 | 257 | ||||||||||
235 | 222 | |||||||||||
204 | ||||||||||||
200 | 167 | 171 | 178 | 186 | 194 | |||||||
160 | 153 | 159 | 163 | 161 | ||||||||
150 | 140 | 139 | 130 | 127 | 134 | 145 | ||||||
100 |
50
0
Source: RigLogix, Clarkson Platou.
27
INCREASING UTILIZATION LEADS TO HIGHER DAYRATES
# Of Floaters
High-Spec 6th / 7th Gen Availability | UDW Dayrates on Historical Utilization | ||||||||
50 | 89% | 1 | |||||||
45 | 0.9 | ||||||||
40 | 0.8 | ||||||||
35 | 0.7 | ||||||||
30 | 0.6 | ||||||||
25 | 69% | 0.5 | |||||||
20 | 0.4 | ||||||||
15 | 0.3 | ||||||||
10 | 0.2 | ||||||||
5 | 0.1 | ||||||||
0 | 0 | ||||||||
Dec. 2018 | Dec. 2019 | ||||||||
Available
Contracted
Marketed Utilization
Source: IHS, Clarkson Platou.
28
6/7TH GEN. DRILLSHIP FIXTURE PROGRESSION
300
Reliance India: $197k/d
Seadrill West Polaris
Woodside Myanmar: $250k/d
Dhirubhai Deepwater KG2
Dayrate (Thousands)
275
250
225
200
175
150
125
100
Chevron Australia: $260k/d | Equinor USGOM: $175k/d |
Dhirubhai Deepwater KG2 | Pacific Khamsin |
Tullow Guyana: $145k/d
Stena Forth
2019 Avg Rate: $195K*
Exxon Guyana: $150k/d
Noble Tom Madden
Burullus Egypt: $150k/d | ||||
Valaris DS-7 | ||||
Petronas Mexico: $155k/d | ||||
Murphy USGOM: $165k/d | ||||
Valaris Renaissance | ||||
Deepwater Asgard | ||||
Total Angola: $185k/d
Seadrill West Gemini
Petronas Gabon: $183k/d
Seadrill West Polaris
Repsol Mexico: $195k/d
Maersk Valiant
Exxon Guyana: $185k/d
Noble Don Taylor
Burullus Egypt: $135k/d
Discoverer India
Petronas Brunei: $155k/d
Seadrill West Carina
Enven USGOM: $175k/d | ||
Noble EG: $168k/d | ||
Valaris Relentless (DS-18) | ||
Maersk Voyager | ||
Murphy USGOM: $185k/d
Deepwater Asgard
Fieldwood USGOM: $185k/d
Valaris DS-16
Murphy USGOM: $185k/d
Valaris Renaissance (DS-15)
Sonangol Angola: $202k/d
Sonangol Libongos
LLOG USGOM: $202k/d
Seadrill West Neptune
Posco Myanmar: $214k/d
Maersk Viking
Total Angola: $193k/d
Maersk Voyager
Springfield Ghana: $175k/d
Stena Forth
Eni Cyprus: $174k/d
Vantage Tungsten Explorer
Sonangol Angola: $160k/d
Deepwater Orion
Eni USGOM: $185k/d
Valaris Renaissance (DS-15)
Noble Colombia: $210k/d
-
$30k/d MPD
Maersk Valiant
Eni Oman: $190k/d
Pacific Bora
PTTEP Malaysia: $230k/d
Seadrill West Carina
Talos USGOM: $210k/d
Discoverer Inspiration
Beacon USGOM: $220k/d
Deepwater Asgard
Chevron USGOM: $185k/d
Valaris Relentless (DS-18)
Jan 19 | Feb 19 | Mar 19 | Apr 19 | May 19 | Jun 19 | Jul 19 | Aug 19 | Sep 19 | Oct 19 | Nov 19 | Dec 19 | Jan 20 |
Competitor | Transocean | New Mutual Contracts, Excludes Brazil | ||||||||||
29 | ||||||||||||
Source: Rystad RigCube, Rystad Offshore Rig Report January 2020, Transocean Marketing
OUR LEADERSHIP POSITION
47 Floaters* - 94% UDW & HE
Unmatched UDW & HE Experience
$10.2 Billion in Backlog**
Liquidity of $3.1B
- Includes 2 newbuilds under construction and the Transocean Norge (33% JV ownership interest) ** As of February 14, 2020
30
SPAREBANK1
ENERGY CONFERENCE
Jeremy Thigpen, President and Chief Executive Officer February 26, 2020
Attachments
- Original document
- Permalink
Disclaimer
Transocean Ltd. published this content on 26 February 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 February 2020 12:11:01 UTC