Agenda Current Market Conditions Proactive Steps to Address Downturn Outlook for Offshore Drilling efficiency & cost improvements attrition of older rigs Maintain and Widen Leadership Position 1 in customer satisfaction best…
Current Market Conditions Global exploration spend of billions 18 largest E&Ps Substantial reduction in 58 E&P capex 60 50 Unprecedented decline in exploration spending 41 40 Lower rig utilization & day 29 rates 30 20…
Market Response Drillers cutting costs & stacking/retiring rigs deferring rig deliveries speculators canceling rig orders Service companies strategic combinations to invest in technological innovations and process improvements…
Capital Management Taking Decisive Fleet Restructuring Steps To Be Expense Management Resilient Through The Operational Excellence & Safety innovation Downturn process improvements 6
Proactive Capital Management Accessed the debt markets 1.25 billion offering in 3Q14 1.10 billion offering in 1Q15 to refinance 2016 maturities Increased revolver to 2.25 billion and extended to 2019 Reduced quarterly dividend…
Debt Maturity Profile millions 3,000 2,700 No debt 2,400 Increased Revolving Credit Facility to maturities 2.25B; extended to 2019 2,100 until 2Q19 1,800 2,250 1,500 1,500 1,200 1,025 900 900 700 625 600 500 300…
Credit Ratings 1.1 billion of cash and short-term investments 6.6 billion of contracted revenue backlog BBB BBB BBB- BBB- Investment Grade BB BB- B- CCC- Not Rated ESV DO NE RDC RIG ATW PACD ORIG SDRL Source: Bloomberg…
Declining Capital Expenditures millions 625* 555* 125 25 150 80 205 475 150* 55 325 30 120 150 4Q15 2016 2017 2018 New rig construction Rig enhancements Minor upgrades and improvements *Note: Preliminary…
Upgrades to Existing Floaters 2014 floater upgrades benefitting 2015 results ENSCO 5004 ENSCO 5006 Mooring upgrade for ENSCO 8503 contracted to Stone Energy and ENSCO 8505 contracted to Marubeni 3rd ENSCO 8500 Series…
Fleet Restructuring: Divestitures 20 rigs sold since 2010 generating 675 million in proceeds 6 rigs sold in the past 12 months 4 jackups sold for more than 200 million in proceeds during 3Q14, reducing exposure to Mexico jackup…
Expense Management Actions 15% reduction in offshore unit labor costs + 57 million annual savings in onshore support costs February 2015 9% unit labor cost decrease for offshore workers 15% reduction of onshore positions 27…
Improved Expense Outlook Contract Drilling Expense 2Q15A 3Q15A 4Q15E 503 million 434 million 415 420 million Prior estimate Prior estimate 450 - 455 million 435 - 440 million Expense reductions more than offset a projected…
Innovation During the Downturn Ensco Asset Management System Proprietary asset management system improve operational performance by increasing uptime reducing maintenance costs lower lifetime equipment costs Leverages…
Excellent Safety Performance Total Recordable Leading-edge safety Incident Rate management systems 1.2 Enhancing process 1.0 safety to drive further 0.8 improvements 0.6 0.4 0.2 0.0 2008 2009 2010 2011 2012 2013 2014 YTD 2015…
Net Income Margin Largest Offshore Drillers 30% 26% 25% 19% 16% 16% ESV SDRL NE RIG DO RDC Source: Thomson One; sum of trailing eight quarters of net income divided by sum of trailing eight quarters of revenue. Thomson…
High Levels of Customer Satisfaction Rated 1 Total Satisfaction Health, Safety & Environment Technology Special Applications Deepwater Drilling Shelf Wells Non-Vertical Wells Harsh Environment Wells North Sea Latin America &…
Outlook for Offshore E&P Key Points to Remember 1. Deepwater production is 7% of global supply 2. Offshore reserves are a critical part of major E&P portfolios 3. Excessive costs/inefficiencies crept into sector during the 100+ oil…
Importance of Deepwater Shell has stated that deepwater is a key driver of growth Our growth priorities follow two strategic themes: integrated gas and deepwater. These will provide our medium-term growth and we expect them to…
Importance of Deepwater Other major E&Ps have made similar comments YTD regarding the importance of deepwater projects to future growth BP: In order to deliver long-term growth, we will continue to maintain a disciplined investment…
Customers Re-Engineering Projects BP Mad Dog: Phase 2 Cost estimates reduced to less than 10 billion from previous estimate of 22 billion Project re-engineering through standardization and scope optimization, coupled with industry…
Service Sector Response Recent strategic combinations/alliances among service companies to drive greater efficiencies and lower the breakeven commodity prices for projects: Schlumberger/Cameron strategic innovation, efficiencies and…
Jackup Market Dynamics Shallow water well programs have lower breakeven commodity price points on average than deepwater projects less complex drilling requirements, shallower water depths and greater access to existing…
Global Marketed Rig Fleet Floaters Jackups Contracted 208 300 Active Idle/Other 62 93 Total 270 393 Fleet % Contracted 77% 76% Under Construction 52 29 / 41% by 107 68 / 61% by SETE Brasil Speculators On Order / Planned 19…
Newbuild Floater Order Book 13% 71 Total 9 17 24% Contracted SETE Brasil, Under Construction 26 Uncontracted, 12 Under SETE Brasil, 36% Construction 17% On Order 7 Uncontracted, On Order 10% Source: IHS-ODS Petrodata as…
Newbuild Floater Delivery Schedule 30 Under SETE Brasil by Shipyard Constr. On Order Total Estaleiro Atlantico Sul 4 3 7 25 5 Estaleiro Jurong Aracruz 4 3 7 BrasFELS, Angra dos Reis 5 1 6 Estaleiro Enseada do Paraguacu 2 4 6 20…
Floater Supply Cumulative of rigs rolling off contract 30 years old: 9 45 59 65 55 71 45 41 43 31 19 38 31 38 36 35 37 Assumes all 32 32 rigs On Order or partially completed including SETE 211 Brasil rigs are 182 195…
Attrition of Older Floaters 100 floaters could be retired by year-end 2017 if attrition continues at similar rates observed over the past 12 months Scrapped to Date Currently Idle Expiring Contracts 42 floaters scrapped 30 floaters…
Newbuild Jackup Order Book 7% 112 Total 8 Contracted, Established Zero rigs being Drillers built by speculators have been contracted 35 64 31% Uncontracted, Uncontracted, 57% Established Speculators Drillers 5 On Order,…
Newbuild Jackup Delivery Schedule Speculator Newbuilds Under 60 by Shipyard Constr. On Order Total China China Merchants Heavy Industry 12 12 50 Shanghai Waigaoqiao Shipbuilding 7 1 8 6 Yantai CIMC Raffles 5 5 Other 29 1 30…
Jackup Supply Cumulative of rigs rolling off contract 30 years old: 19 65 90 115 104 151 164 68 Assumes all 64 rigs On Order 73 28 17 or partially 105 17 19 20 completed 107 including rigs 20 built by 22 Speculators are…
Attrition of Older Jackups 100+ jackups could be retired as expiring contracts and survey costs lead to the removal of older rigs from drilling supply Retired to Date Currently Idle Expiring Contracts 5 competitive 69 competitive…
Newbuild Cancellations and Deferrals Floaters Reports suggest many of the 29 rigs in SETE Brasil program may be cancelled Seadrill and Vantage each cancel 1 drillship scheduled for 2015 delivery; 4 other newbuilds on order cancelled…
Summary We have taken proactive capital management, fleet restructuring and expense management decisions Our liquidity and balance sheet position In a very challenged gives us resilience and options market our liquidity We will…
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