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UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc.

Hercules Offshore, Inc. · May 20, 2013 · 41 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 1
    World Class UBS Global Oil & Gas Conference May 20 23, 2013
  2. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 2
    World Class Overview
  3. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 3
    A Global Leader in Shallow Water Services Overview Worldwide Operations Global leader in jackup drilling and liftboat services 38 jackup rigs - third largest worldwide fleet 64 liftboats - largest worldwide fleet Operations in…
  4. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 4
    Strategic Objectives Report Card 2012 Strengthen Core Drilling Operations Leading edge dayrates in U.S. GOM up 60% year-over year (y-o-y) for 200 mat-cantilever rig Average Domestic Offshore days backlog nearly doubles y-o-y Domestic…
  5. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 5
    Strategic Objectives 2013 External Fleet Growth at a Reasonable Price Focus on shallow water assets (jackups or liftboats) Stringent return focus Internal Fleet Optimization Reactivation of stacked capacity at attractive…
  6. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 6
    Hercules 267 Rig Acquisition and Contract Key asset details Projected Return on Capital Employed ( in millions) Acquisition of Hercules 267 (formerly Ben Avon) Rig purchase price 55.0 Upgrade costs 1.0 Total investment…
  7. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 7
    Expanding Our International Liftboat Fleet Key asset details Acquisition of the White Shark (formerly Titan 2) Purchase price of 42 million Liftboat currently in West Africa Strategic rationale Strengthens position in core West…
  8. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 8
    Inland Barge Asset Sale Divestiture of Majority of Inland Barge Rigs for Cash Proceeds of 45 million Three working rigs Eight cold stacked rigs Strategic Rationale Challenging market conditions in the inland barge market…
  9. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 9
    World Class Business Outlook
  10. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 10
    Domestic Offshore Segment Overview Global recession and Macondo U.S. GOM Supply/Demand of Marketed Jackups created extreme conditions in 2009 and 2010 120 Near the trough (April 2011), 100 Hercules acquired main competitor,…
  11. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 11
    U.S. GOM Supply vs. Demand U.S. GOM Jackup Supply and Demand as of May 16, 2013 80 95% Industry Utilization Number of Rigs 62 60 of Marketed Rigs 42 39 40 37 (20) (3) 20 0 Current Less: Cold Marketed Planned Jackup…
  12. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 12
    Domestic Offshore Backlog Hercules Offshore Average Backlog per Marketed Rig U.S. GOM (1) 250 225 200 175 Average of Days 150 125 100 75 50 25 0 Strong company backlog per rig near historical high…
  13. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 13
    Leading Edge Dayrates Hercules Offshore Leading Edge Dayrates U.S. GOM 125 140 115 130 105 120 Dayrate (000 per day) Dayrate (000 per day) 95 110 85 100 75 90 65 80 55 45 70 35 60 25 50 Oct11 Oct12…
  14. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 14
    Crude Oil Driven Market in U.S. GOM Shelf Oil and condensates account for a Relationship between Oil/Gas Price to Production Mix growing percentage of US GOM Shelf production 5.0 40% % Liquids Production in US GOM Shelf 4.5 2005…
  15. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 15
    Domestic Customer Base Exposure to Crude Oil Company specific U.S. Gulf of Mexico Customers U.S. GOM Liquids Mix Shelf production shows significant liquids mix Apache 38% Crude oil from U.S. Gulf of Mexico typically priced at…
  16. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 16
    Large and Diverse Domestic Customer Base Diverse group of operators in the U.S. U.S. GOM Industry Customers Mix (1) GOM, ranging in size from mega-cap to private E&P CVX EXXI Top three operators account for 11% 8% ENI…
  17. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 17
    U.S. GOM Shelf M&A Activity (1) GOM Shelf E&P Transaction Values Closing Date Buyer Seller Deal Value (mm) % Oil Dec-10 Energy XXI ExxonMobil 1,012 55% Feb-11 EPL Oil & Gas Anglo-Suisse 201 92% May-11 Tana Exploration Maritech…
  18. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 18
    Reactivation Matrix (1) Capital Payback Analysis (m onths to payback) Dayrate Assumption 80,000 90,000 100,000 110,000 120,000 Hercules 209 Reactivation Capital Cost 14 11.4 9.3 7.9 6.8 6.0 reactivation estimate 16 13.0…
  19. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 19
    Domestic Offshore Potential Earnings Upside (1) Incremental EBITDA Analysis ( in m illions, except dayrate) Increase in Average Dayrate 5,000 10,000 15,000 20,000 25,000 19 31 62 94 125 156 Number of Rigs Working 20 49 81…
  20. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 20
    International Offshore Resilient oil prices are supportive of International Jackup Backlog and Dayrates strong growth in international capital 18.0 200 spending 16.0 175 Backlog per International Marketed Rig (Months)…
  21. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 21
    International Jackup Markets Snapshot Current international jackup rig International Jackup Supply/Demand demand above prior peak in 2008 440 Demand in most major international 420 Total Supply markets has surpassed prior peak 400…
  22. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 22
    Recent Fixture in U.S. GOM vs. International Markets U.S. GOM West Africa Middle East SE Asia Ensco 90/99 Hercules 267 Rowan California Trident 16 Fixtures (250 IC) (250 IC) (300 IC) (300 IC) Dayrate 110,000 109,000 140,000…
  23. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 23
    International Offshore Drilling Outlook FY 2013E FY 2014E Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Hercules 267 W. Africa 108-110K 108-110K Middle Hercules 266 116-118k* 116-118k* East Middle Hercules 262 79-81k 79-81k East Middle Hercules…
  24. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 24
    Discovery Offshore Investment Creative and opportunistic means to establish ownership in two newbuild top-tier rigs Rig capabilities within top 8% of global fleet Rig class commands highest dayrates among all designs, except Norway…
  25. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 25
    High Specification Rig Demand in the North Sea North Sea (ex. Norway) is a primary target High Spec Jackups in the North Sea market for Discovery rigs Year in Dayrate 2013 2014 Rig Name Location Service Available USD'/day Q1 Q2 Q3…
  26. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 26
    International Liftboats Largest liftboat provider in West Africa Long term demand growth, tempered by competition creep Recent acquisition of White Shark expands high end market opportunities Established presence in Middle East…
  27. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 27
    Domestic Liftboats Seasonally-driven demand, with activity levels higher during the summer/fall period and lower during winter period Select industry capacity movement out of the Gulf of Mexico, including Companys Kingfish vessel to…
  28. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 28
    World Class Corporate Initiatives
  29. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 29
    History of Growth August October January June August September October November February 2004 2004 2005 2005 2005 2005 2005 2005 2006 Acquired five Acquired 22 Acquired Rig 25 Acquired Rig Acquired Acquired Initial Acquired…
  30. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 30
    Successful Debt Reduction and Asset Sales Efforts Net Debt (1) Proceeds from Asset Sales 1,100 100.0 1,000 80.4 80.0 72.9 900 ( in millions) 60.0 ( in millions) 800 40.0 700 25.8 23.2 600 20.0 17.0 500…
  31. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 31
    Total Debt Summary Description Amount Coupon Maturity First Call Date (millions) Rate Convertible Senior Notes 68 3 3/8% Jun2013(1) -- Senior Secured Notes 300 7 1/8% Apr2017 Apr2014 105% Senior Unsecured Notes 300 10 1/2% Oct2017…
  32. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 32
    World Class Conclusion
  33. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 33
    Investment Highlights Positive industry trends continue in the U.S. GOM led by tight jackup rig supply and oil/liquids-rich activity demand driver International jackup fundamentals supported by expected growth in capital spending…
  34. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 34
    APPENDIX 34 World Class
  35. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 35
    Domestic Offshore Marketed Rig Data Domestic Offshore Fleet Status as of 04/24/13 Contract Est. Duration (1) Rig Name Rig Type Location Customer / Status Dayrate (000s) Days Date Hercules 120 120' - MC, TD GOM Chevron 64-66 251…
  36. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 36
    Domestic Offshore Marketed Rig Data (continued) Domestic Offshore Fleet Status as of 04/24/2013 (continued) 79-81 83 07/16/13 Hercules 214 200' - MC, TD GOM Apache 101-103 180 01/12/14 79-81 9 05/03/13 74-76 64 07/06/13 Hercules…
  37. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 37
    International Offshore Marketed Rig Data International Offshore Fleet Status as of 04/24/2013 Contract Est. Duration (1) Rig Name Rig Type Location Customer / Status Dayrate (000s) Days Date Hercules 170 170' - ILC, TD Bahrain Warm…
  38. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 38
    GOM Shallow Water Operator Data Top 20 Shallow Water (0-350ft) GOM Lease Holders Apache Corp Current % of Total Operator Jackup Current Chevron Stone Energy Apache Corp 7 19% McMoran O&G Chevron 4 11% W&T Offshore Stone…
  39. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 39
    Summary of Discovery Offshore Structure Overview Structure Discovery Offshore is a newly established Luxembourgbased company Investors Hercules Offshore Constructing two ultra highspecification Keppel FELS Super A jackup rigs…
  40. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 40
    Domestic and International Liftboats Fleet Status March 2013 Domestic Liftboat Fleet Status Leg Length/ Actively Revenue Per Liftboat Class Total Number Marketed Day Per Operating (1) (2) (3) (Feet) of Liftboats Liftboats Liftboat…
  41. UBS GLOBAL OIL AND GAS – Hercules Offshore, Inc. – slide 41
    World Class

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