McDermott today A vertically integrated offshore and subsea engineering and construction company consistently executing projects from concept to installation Strategically located fabrication yards and a versatile marine fleet…
Transformed to manage the downturn and take advantage of the upturn 1Q15 Growth initiatives, oil and gas consulting, 4Q13 1Q14 4Q14 with GE Oil and Gas, Today David Dickson Focus on talent, and ultra deep water First significant…
Today, we will focus on positioning for the future Maximize Capture Value Through Deliver Value Strategic Themes Perspective Profitable Wins Integrated Capabilities Through Execution in Action on the Future Market Customer 2016…
Maximize Profitable Wins Brian Mclaughlin Senior Vice President, Commercial
Macro-economics trends: Long-term perspective Hydrocarbon fundamentals remain Global Oil Supply by Type with an increase in demand and 120 declines in existing production Conventional and offshore fighting the 100 decline curve…
Macro-economics trends: Short term perspective Recovery shape and timing unclear Brent Outlook to 20181 115 Industry capex cuts expected to have 110 less impact on brownfield projects 105 100 Brownfield and shallow water bias 95…
Key markets Full EPCI value offering for offshore and subsea 2 Year Look Ahead: Overall Market Size 96B Engineering Solutions: Full field or single project Offshore is most significant concept, feasibility, pre FEED and FEED Fab…
Focused approach drives a two-year opportunity set of 35B1 Middle East Americas, Europe, Africa 10B 18B Asia Subsea 39% Offshore 47% Fab 14% Offshore 100% 7B 35B Bid Pipeline Subsea 40% Offshore 49% Fab 11% (36% of Market)…
Brownfield will continue to be a major part of the market Resources from New Discoveries and Existing Fields Growing through Field Growth in Prior-Year Discoveries Brownfield projects Billion BOE Greenfield Discoveries 2000…
Geographic diversity provides through cycle opportunities1 2 Year Opportunity Americas, Europe, Africa Middle East 18B Pipeline 10B Asia 7B NOC NOC 16% 21% Client Types NOC 100% IOC IOC 84% 79% Brownfield…
Geographic outlook and approach Gulf of Mexico North Sea Middle East Subsea tie-back market Capital projects slowing Maintain production Mexican oil reform Aging infrastructure OPEC market share Grow offshore market Decommissioning…
Customer relationship journey Strategic Advisor Depth of Relationship Trusted Partner Solution Provider Key Client Actions: Preferred Early Engagement through Supplier Key Account Management Solutions focus Vendor…
Maximize opportunity and manage risk Centralized Proposals & Estimating Function All proposals and estimating activity from two core centers Dubai Offshore / Large EPCI Houston SURF In-market resources focus on client engagement and…
Capturing Value Through Integrated Capabilities Jonathan Kennefick Senior Vice President, Project Execution and Delivery
Capturing value through the project lifecycle Greenfield Brownfield Decommissioning Broad Fleet Able to Support All Installation Vertically Integrated Capabilities Project Types Construction Efficient and Cost Effective…
Engineering: Transforming our value Goal: Engineering as a Differentiator Position to Focus on the Broader Picture Expertise and Capabilities: Leaders in Brownfield; Deep knowledge in Greenfield Simple installation solutions…
Engineering: Major changes resulting in real benefits Impact Competitive Cost: New work processes driving productivity improvements Expanded workshare capabilities in Chennai generate greater than 50% savings on man-hour cost…
Procurement: Transforming the approach Services Specialized Standard Effective Across the Entire Range of Buys: Scope increased to capture full spectrum of project requirements Advantaged Cost: Increase competitiveness through…
Procurement: Global Procurement Office (GPO) GPO Benefits Migrated procurement bids and PO creation into a Global Procurement Office GPO achieves: Better leverage, cultivates key / common suppliers More scale benefit on sizable…
Construction: Driving to a global standard of efficiency Altamira Jebel Ali / Dammam Batam In-house full control of cost, quality and schedule Malaysia Creating the ability to workshare Optimized processes and procedures JVs…
Our focus on productivity improvement is taking hold Construction Yards Have Improved Productivity by 20% Over the Last Year1 35 30 25 20 Productivity Improvement % 15 10 Instituted fabrication council to drive global…
Installation: Shallow to deep throughout the lifecycle Dynamically Positioned Anchored Vessel Specialist Support Equipment Vessel Efficient control of and access to the right assets A full solution of shallow water fleet…
An enabling addition to the fleet DLV 2000 Markets Provides pipelay versatility for infield and export pipelines in shallow and deep water Subsea installation large open deck allows large subsea structures (Jumpers / Manifolds) to…
Installation: Addressing cost through rationalization and outsourcing Rationalized and centralized control of all marine assets Vessel, equipment and personnel Optimized process Supported by in-market teams to manage issues…
Project certainty increased by full control of integrated capabilities Technical and Commercial Integration Aligned Delivery Schedule Engineering Schedule Control and Visibility Optimize all elements Control of Assets and…
more specifically on Karan 45 Integration Success Story: Karan 45 Situation: Original scheduled mechanical completion date for Karan 45 Project is November 22, 2015 however, client required the start-up to be advanced by at least 3…
Global and in-market capability comparison Middle Global EPCI Global EPI SURF Global PMC Asian Americas Eastern Contractor Contractor Contractor Contractor Fabricator Fabricator Fabricator Engineering Procurement…
Deliver Value Through Execution Scott Munro Vice President, Americas, Europe and Africa
We are now going to talk about delivering value through execution Maximize Capture Value Through Deliver Value Strategic Themes Perspective Profitable Wins Integrated Capabilities Through Execution in Action on the Future Market…
Taking the lead : An integrated approach as a competitive advantage Integrates the five departments: Quality Health Safety Environment Security Company-wide program launched Driving towards zero Its in Our DNA Performing…
Safety: Performance is industry leading for the last 5 years Total Recordable Incident Rate (TRIR) Over a Decade 1.20 1.00 0.80 Incident Rate Marine Competitors Average 0.60 0.40 International O&G Producers Average…
Safety: In the fabric of how we do business Worldwide Middle East 40M Mhrs 27M Mhrs (1 Year) Lost Time Asia Injury Free 18M Mhrs Americas DB27 Vessel Europe and 12M Mhrs Africa (12 Years) 8M Mhrs Taking the Lead with…
Quality: An integrated approach to improve results Step Change Close Taking Design the Lead Design and Implement Value Impact Execute Quality and Competency Assurance Plan Quick Wins and Continuous Improvement…
People: Renewed focus on core capabilities Oversight Operations Domain Knowledge Established Refreshed Filled Functional Expertise Significant Subsea Experience replacement of Top Project Asset Management Past 2 Years 3 Layers…
To establish the McDermott Way as the industry benchmark for delivering complex, offshore and subsea capital projects Created a global project management function to ensure consistent execution and control Contract across regions…
An organization designed to deliver projects Functions Areas Strategy Business Acquisition Interlocked People Project Execution Success Process QHSES Assets P&L Measures of Success Function Area Motivated, competent…
Strategic project management delivering value: PB Litoral Planned Actions Executive management focus Functional oversight, global resources mobilized New optimized processes implemented Risk and opportunity rebased to proactive…
Alliances and Partnerships: Building capability Full Field Concept and FEED Path to Ultra Deep Ownership Water NO 105 Petrofac NO 102 Text Technology High Efficiency Low Cost Geographical Reach THHE, Ghana…
Full field development early engagement with Value to Client: Increase delivery certainty in cost and schedule at initial lifecycle stage Early de-risking of development concept Enables client to focus in securing buyers for the…
INPEX Ichthys: Capabilities and Execution Come Together Hugh Cuthbertson Vice President, Asia
Ichthys: Worlds Largest Subsea EPCI Project Offshore development comprises: 40 well complex subsea layout Central Processing Facility (CPF) Production Storage and Offloading vessel (FPSO) Production 8.9 million tons LNG per year,…
Scope of work: Complete value proposition requiring innovative solutions in a challenging environment Overall project management, including quality and HSE management Full engineering to design the facilities for a 40-year field…
Engineering: Unique solutions to tackle complex requirements Large project: 500K man-hours of subsea engineering, 250 man-years Innovation: Complex seabed install and operating conditions required unique solutions Challenging…
Innovation: Riser Support Structure-Unique Differentiator Largest Subsea Structure in the World A distinctive structure, successfully designed, constructed and now installed offshore Designed to accommodate seismic conditions,…
Procurement meeting the challenge of scale and design complexity New level of excellence in Procurement Management Procured in-field equipment from specialized, global vendors Total value over 600M Connectors Umbilicals Diverless…
Construction: Depth of experience and flexibility Control over fabrication phase a strategic advantage Schedule and resource control allowed flexibility for the transport and installation phase Ability to fabricate a broad spectrum…
Offshore transportation and installation In-market extensive operating experience in Australia Components to be delivered from global locations to a remote installation location in the Timor Sea Multiple vessel construction…
Demonstrated ability to execute subsea mega project The largest subsea EPCI project 62% complete on time and profitable to date All major work scope performed by in-house teams focused in SE Asia but with global reach through…
Middle East: Maintain Market Leading Position Linh Austin Senior Director, Operations, Middle East
Saudi Aramco Lump Sum award Largest single award in McDermotts Middle East history Full scale EPCI contract utilizing specialized shallow water installation vessels and fabrication yards in Dammam and Jebel Ali Complex project…
Middle East History and Success 1964 1970 1998 2007 2013 2015 Moved the Installed the Signed the first Long Installed the worlds Signed the second Long First project in Saudi fabrication yard to Middle Easts Term Agreement longest…
Saudi Aramco Longest and heaviest subsea cable Project challenge: Electrify the Marjan field for artificial lift Specifications: Unique Solution: 115kV, 54 mile long, power and fiber optic Brownfield integration knowledge composite…
We have deep experience with the main players in each part of the Middle East market Experience: Offshore Structures and Pipelines Installed Since 1980 23 112 mi Kuwait & Neutral Zone Key Client 130 451 mi Qatar Key Clients…
Saudi Arabia Insight Saudi Arabia continues OPEC Two Year Revenue Pipeline market share strategy by Project Size1 Saudi Arabia transitioning from Brownfield a public sector led economy 100% to a private sector job creator Major…
Qatar Insight Executed multiple projects Two Year Revenue Pipeline in North Field (world largest by Project Size1 gas field) since 1997 Market returning following Brownfield 100% 5 year quiet period Major 7% Long term…
Evolving in-market capabilities Significant market changes over last few decades Reservoir development has moved from greenfield to brownfield NOCs becoming more operationally independent In collaboration, McDermott evolving…
Middle East Advantage Our deep awareness of the regional and cultural customs developed over 50+ years of being in the Middle East region Extensive field knowledge and demonstrated track record poses as a huge barrier to entry for…
Demonstrated value proposition driving current awards 2015 YTD Order Intake by Size and Country1 Significant 1 Saudi Mega Large Arabia Qatar 3 1 4 4 Sizable Neutral 2 Zone 1 McDermott holds the top position in 2015…
Maintaining the lead The Focus Deepen our customer integration, early engagement and cultural fit Broader collaboration efforts and investments to increase specific in country participation Develop more brownfield capabilities in…
Driving Financial Performance Stuart Spence Executive Vice President and Chief Financial Officer
3Q 2015 Financial highlights in millions Orders 2,096 Aramco Lump Sum and Qatar drove Backlog 4,421 2B Order Intake Revenue 806 Highest backlog since 2012 Adjusted P&L Metrics1 Gross Profit Margin 13% Adjusted margin rate up 100…
3Q 2015 backlog and roll-off in billions Details of 4.4B Backlog as of September 30, 2015 Backlog by Business Line Backlog by Segment Backlog Roll-Off by Year AEA 2.4 0.4 Subsea ASA 9% 1.2 1.2 27% 27% 1.0 Offshore 3.2…
Backlog roll-off of legacy loss making projects in millions Agile 194 PB Litoral KJO Hout 93 30 0 4Q'15 2016 2017 2018 26M recovery of Gross Profit on the active loss making projects in 2015 20% backlog…
Projects 50M - percent of completion (POC)1 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Safaniya Ph2 Karan 45 BSP INPEX Ichthys ADMA 4 GI PB Litoral AEA KJO Hout MEA Pemex Ayatsil-C ASA North Field Alpha Marjan GOSP 12…
Summary cash flow in millions Cash and Restricted Cash as of 4Q 2014 853 Year on year improvement of Cash used in Operating Activities (5) 107M (95%) vs. YTD 3Q 2014 Continued Capex Cash used in Capex (66) management in uncertain…
Capital discipline Capex in millions Maintenance & Project Capex Vessel Capex 5 5 5 19 19 13 1Q'15 2Q'15 3Q'15 180M of DLV 2000 capex has shifted from 2015 into 1Q 2016 due to shift of delivery date Moving…
Capital discipline McDermott Profitability Initiative (MPI) in millions Expected Cash Savings Workforce Reduction1 Revenue HC TTM 15,000 3,500 150 14,000 3,209 100 11,700 2,012 2015 2016 Sep14 Sep15 Headcount…
Capital discipline McDermott Profitability Initiative (MPI) Project Commercial G&A Annualized Cash Savings 115M 5M 30M (FY16) Rationalized the onshore & Centralized the strategy Resized G&A staff offshore organizations team…
Capital discipline Capital structure Proforma at 3Q 2015 Capitalization Debt Maturity Profile Cash (MM) 767 500 Tangible Equity Units (TEUs) - Notes 29 North Ocean 105 Loan 45 Term Loan B 296 286 Senior Notes (8% Bond) 500…
Example of an EPCI project Cumulative Project Revenue Installation Value Construction Typical IOC Cumulative Cashflow Procurement Engineering Year 1 Year 2 Year 3 Typical NOC Cumulative Cashflow Analysis based on a…
Historical gross profit margins AEA 13%1 MEA ASA 8% MDR (5)% 2013 2014 2015 Transition from a legacy loss portfolio to a positive portfolio MPI Initiatives and strong execution across all segments despite deteriorating…
Looking Forward: Projects 50M roll-off1,2 Project Name POC BSP 83% ADMA 4 GI 61% PB Litoral 61% AEA Karan 45 90% MEA QGEP 1% ASA Safaniya Ph2 93% North Field Alpha 5% Pemex Ayatsil-C 11% 12 Jackets 2% Yamal 1%…
Mid-term potential1 Revenue Potential dependent on cycle recovery OI Asset investment post cycle recovery Offshore Continued order increase Subsea Substantial order increase 2016 Guidance Mid-Term Potential Revenue 4.5B…
Additional Disclosures1 Reconciliation of US GAAP to Non-GAAP Financial Measures Three Months Ended September 30, 2015 Diluted Net Earnings (In millions, except share and per share amounts) Income Per Share GAAP Net Income…
Additional Disclosures1 Reconciliation of Operating Income to Adjusted EBITDA in millions Three Months Ended September 30, 2015 GAAP Operating Income 29.5 Adjustments: Non controlling interest (3.8) Depreciation, Drydock &…
Additional Disclosures1 US GAAP Reconciliation of Net Income to Covenant EBITDA in millions Quarters ended Sep 30, 2015 Jun 30, 2015 Mar 31, 2015 Dec 31, 2014 Net Income attributable to McDermott 3.7 11.5 (14.5) 8.2 International,…
Priorities David Dickson President and Chief Executive Officer
Executive committee Scott Munro Stuart Spence Brian Mclaughlin VP Americas, Europe EVP and CFO SVP Commercial and Africa Liane Hinrichs Jonathan Kennefick SVP General Counsel Tom Mackie SVP Project Execution and Corporate…
Recapping the McDermott approach Maximize Capture Value Through Deliver Value Strategic Themes Perspective Profitable Wins Integrated Capabilities Through Execution in Action on the Future Market Customer 2016 QHSES Trends…
Priorities: Near term action driven by longer term view Strengthen Through the Cycle Prepare for the Upturn Maintain Middle East market leader Pursue new markets in Europe and Africa position Leverage partnerships to secure pull…
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