Volstad Maritime AS Company update March 2016

Transcription

1 Volstad Maritime AS Company update March 2016

2 Disclaimer This presentation (the Presentation ) has been produced by Volstad Maritime AS (the Company or Volstad Maritime, and together with its subsidiaries, the Group ), the parent company of Volstad Subsea AS (the Issuer ), exclusively for information purposes for investors in the Issuer's bond issue FRN Volstad Subsea AS Senior Secured Bond Issue 2013/2016 with ISIN NO (the Bond Issue ). This Presentation is furnished by the Company, and it is expressly noted that no representation or warranty, express or implied, as to the accuracy or completeness of any information included herein is given by any advisors of the Company, and that nothing contained in this Presentation is or can be relied upon as a promise or representation by any advisors of the Company, who disclaim all and any liability, whether arising in tort or contract or otherwise. By receiving this Presentation you acknowledge that you will be solely responsible for your own assessment of the financial markets, the markets in which the Group operates (including the value of the Group's vessels) and the market position of the Group and that you will conduct your own analysis and be solely responsible for forming your own view of the current and potential future performance of the Group s business. The markets in which the Group operates are undergoing severe difficulties and all vessel values in the Presentation are uncertain. THE FUTURE DEVELOPMENT OF THE MARKETS IN WHICH THE GROUP OPERATES IS UNCERTAIN, AND SEVERAL FACTORS COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE GROUP TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAY BE EXPRESSED OR IMPLIED BY STATEMENTS AND INFORMATION IN THIS PRESENTATION, INCLUDING BUT NOT LIMITED TO RISKS OR UNCERTAINTIES ASSOCIATED WITH THE GROUP S BUSINESS, SEGMENTS, ASSETS, THE CONTRACT COVERAGE OF THE VESSELS, DEVELOPMENT, FINANCING AND RELATIONS WITH CUSTOMERS. THESE AND OTHER UNCERTAINTIES ARE CLOSELY RELATED TO THE ASSUMPTIONS USED IN THIS PRESENTATION. SHOULD SUCH UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED IN THIS PRESENTATION. 2

3 Disclaimer This Presentation contains certain forward-looking statements relating to the business, financial performance and results of the Group and/or the industry in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words believes, expects, predicts, intends, projects, plans, estimates, aims, foresees, anticipates, targets and similar expressions. The forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. Neither the Company, any advisors of the Company nor any of their parent or subsidiary undertakings or any such person s officers or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments. This Presentation is not for distribution in the United Kingdom, the United States, Canada, Japan or Australia or any other jurisdiction where the distribution of this Presentation could involve a breach of laws or regulations or involve any registration requirement or any requirement for the publication of a prospectus, registration document or similar. This Presentation does not constitute an offer to sell or a solicitation of an offer to buy any securities (including the bonds in the Bond Issue) in any jurisdiction. The contents of the Presentation are not to be construed as financial, legal, business, investment, tax or other professional advice. Each recipient should consult with its own professional advisors for any such matter and advice. This Presentation speaks as of the date set out on its front page. Neither the delivery of this Presentation nor any further discussions between any of the Group, any advisors of the Company and the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Group since such date. Neither the Company nor any advisors of the Company intend to assume or assume any obligation to update the Presentation or any of the information included herein. This Presentation is governed by Norwegian law. All disputes related to this Presentation shall be finally decided by arbitration according to the Norwegian Arbitration Act. The place for the arbitration shall be Oslo and the language for all documentation and proceedings related to the arbitration shall be Norwegian. The dispute, the arbitration proceedings and the arbitral award shall be confidential. 3

4 Contents 1. Company update 2. Market overview 3. Key focus and processes going forward 4. Appendix 4

5 Volstad Maritime in brief Volstad Maritime is a privately owned Norwegian company, headquartered in the maritime capital of the Norwegian Northwest, Ålesund Volstad Maritime is a value driven OSV owner with the ultimate goal of adding value to its charterers and their end clients, preferably on long-term charter agreements Marine and technical management is conducted in-house by the fully owned subsidiary Volstad Management AS The company owns and operates a fleet of 9 existing vessels within seismic exploration and various subsea services including IMR, construction and AUV (Autonomous Underwater Vessel) support 5 subsea construction/imr vessels including 1 diving vessel 2 seismic streamer vessels 1 seismic support vessel 1 AUV support vessel The company focuses on these niches and all vessels are ordered and built against long-term contracts to high quality counterparties The company has one subsea vessels under construction at Kleven Shipyard in Norway with expected delivery in Q The vessel was ordered against a 5-year firm charter contract, later amended to 7 years firm, to Canyon Offshore/Helix, commencing upon delivery As of year-end 2015, consolidated fleet value was NOK 4.8bn and the value weighted average vessel age was ~5.8 years (ex. newbuild) 2015 revenues of NOK 767 mill. and EBITDA of NOK 469 mill. (EBITDA margin of 61%) For more information, please see Market value of vessels based on two independent shipbroker estimates per and USDNOK Unaudited P&L figures for

6 Volstad Maritime group structure Volstad Maritime AS Owned 100% by Ola Volstad Volstad Management AS Volstad Seismic AS Grand Canyon Operations 2 AS 100% 100% 51% 100% 51% 40% 51% Geo Caspian Operation AS Deep Cygnus Operation AS Grand Canyon Operation AS Volantis Operation AS 90.1% 100% 100% 51% Volstad Offshore AS (1) Volstad Subsea AS Geo Caspian AS Deep Cygnus AS/KS (2) 51% 51% 40% Volstad Maritime DIS I/DIS I AS (3) Volstad Maritime DIS II/DIS II AS (3) Volstad Construction AS (4) 51% 100% Grand Canyon 2 AS/KS/DIS TBN GC III AS/KS/DIS Tau Subsea support Geco Bluefin Seismic Geo Caspian Seismic Deep Cygnus Subsea Volantis Subsea Oceanic Endeavour Seismic Grand Canyon Subsea Grand Canyon II Subsea Grand Canyon III Subsea Bibby Topaz Subsea/diving Vessel owning companies Other group companies To be incorporated 1) Volstad Offshore is owned 9.9% by Finn Syversen, CEO of Volstad Maritime 2) Deep Cygnus is owned 49% by Castle Lake Maritime Holding AS 3) Volstad Maritime DIS I and II are silent limited partnership companies (NO: Delt Indre Selskap) set up to finance, construct and operate the vessels Volantis and Oceanic Endeavour 4) Please note that Volstad Construction AS is not consolidated in the accounts of Volstad Maritime AS 5) Please note that the final ownership and legal structure of newbuild #377 from Kleven has not yet been decided 6

7 Company history Vessel deliveries with long-term contracts 1952: Volstad built its first fishing vessel in 1952, and was present in Norwegian and international Fisheries until : Volstad entered into Seismic Exploration with Geco Tau which was built together with Geco AS (now WesternGeco) 1999: Took delivery of Geco Bluefin after conversion to a modern DP-II Q-Seabed Seismic Exploration vessel 2003: Family company split into Volstad Maritime and Volstad Shipping 2005: Volstad took delivery of its ROV/DSV newbuilding Bibby Sapphire. The vessel was sold to Bibby Offshore Ltd. in : DSV Bibby Topaz was delivered from Fosen Shipyard. The vessel is on long-term time charter with Bibby Offshore Ltd. 2008: Delivery of multi-role subsea support vessel Volantis and seismic streamer vessel Oceanic Endeavour from Fosen Shipyard 2009: Deep Cygnus, a multi-role subsea support vessel, was delivered from Fosen Shipyard, the vessel is chartered by Canyon Offshore 2010: Seismic vessel Geo Caspian, delivered from Fosen to go on a long-term time charter with Fugro 2012: OCV Grand Canyon was delivered from Fosen Shipyard, the vessel is on a long-term charter with Canyon Offshore 2015: Grand Canyon II, a 128 x 25 metre DP III multi-role subsea construction vessel, was delivered from Kleven Myklebust Shipyard. The vessel is a sister vessel of Grand Canyon, equipped with a 250t heave compensated offshore crane, with capabilities for cable laying, trenching, ROV operations and various IMR work 2016: Grand Canyon III to be delivered from Kleven Myklebust Shipyard. The vessel is a sister vessel of Grand Canyon and Grand Canyon II Gran Canyon Oceanic Endeavour Bibby Topaz Geo Caspian Deep Cygnus 7

8 Fleet overview Subsea vessels Support vessels Seismic streamer vessels Bibby Topaz (2007) 5,331 DWT LOA 107m, beam 22m 18 man 3 chamber dive system 150 T offshore crane Volantis (2008) 6,551 DWT LOA 107m, beam 22m 150 T offshore crane 2,000 T carousel Tau (1982/2003/2014) 1,475 DWT LOA 76m, beam 19m Mothership for AUV operations Oceanic Endeavour (2008) 6,313 DWT LOA 107m, beam 27m Up to 16 streamer capacity Grand Canyon (2012) 7,500 DWT LOA 128m, beam 25m 250 T offshore crane Deep Cygnus (2009) Geco Bluefin (1980/1999) 7,877 DWT LOA 122m, beam 22m 150 T offshore crane 2,500 DWT LOA 80m, beam 19m DP II Q-Seabed vessel Geo Caspian (2010) 5,956 DWT LOA 107m, beam 23m Up to 16 streamer capacity Grand Canyon II (2015) 7,500 DWT LOA 128m, beam 25m 250 T offshore crane Grand Canyon III (2016) 7,500 DWT LOA 128m, beam 25m 250 T offshore crane 8

9 Current vessel positions Bibby Topaz Tau Geco Bluefin Main office - Ålesund Grand Canyon Grand Canyon II Geo Caspian Deep Cygnus Volantis Oceanic Endeavour Source: updated per 7 March

10 Contract coverage and historical utilization Fleet overview Built or Contract Remaining Avg. utilization Vessel name Type converted Charterer expiry options Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 (2015)* Bibby Topaz Diving 2007 Bibby Offshore Jul x 2 years 96 % Tau Subsea support 2003/2014 DeepOcean Aug x 1 year 100 % Geco Bluefin Seismic support 1999 WesternGeco Jan % Oceanic Endeavour Seismic streamer 2008 CGG Q x 5 years 100 % Geo Caspian Seismic streamer 2010 CGG Q x 2 years 100 % Volantis Subsea 2008 DeepOcean UK Q x 3 years 97 % Deep Cygnus Subsea 2009 Canyon/Helix Q % Grand Canyon Subsea 2012 Canyon/Helix Q x 1 years 100 % Grand Canyon II Subsea Q Canyon/Helix Q x 5 years 100 % Grand Canyon III Subsea Q Canyon/Helix Q x 5 years N/A = firm contract = option = under construction = conversion/lay-up Average commercial utilization rate* 2015 of 99% across all vessels Firm contract backlog estimated to approx. NOK 3.2bn, approx. NOK 11.5bn including options Except from Geco Bluefin, all vessels are currently on contract 86% contract coverage in 2016, dropping to 62% in 2017 (100% in 2016 and 77% in 2017 excluding Tau and Geco Bluefin) Tau to be idle from Q Bibby Topaz experienced more off days than normal in 2015 due to thruster issue/generator/dp instability in July, dry-docking to repair DP problems in September-October, thruster issue/tautwire problems in October, and further a DP system error in December. Current contract expires 1 July 2017 Current contract on Bibby Topaz expires 1 July 2017, option must be declared by June Bibby Topaz achieved 96% net commercial utilization in 2015 * Net commercial utilization after maintenance and insurance days where relevant 10

11 EBITDA EBITDA (2016e*) Value Value Assets and EBITDA by segment Fleet value and EBITDA 2015 Fleet value and EBITDA by segment incl. newbuild 31% 19% DSV Subsea 26% 15% DSV Subsea 50% Seismic 58% Seismic Total: NOK 4.8bn Total: NOK 5.8bn 6% 49% 45% DSV Subsea Seismic 42% 13% 45% DSV Subsea Seismic Total: NOK 469m Total: NOK 575m By value, 69% of the Volstad Maritime fleet within subsea and diving at end of 2015 After delivery of newbuild #377, 73% of the fleet will be subsea and diving vessels 51% of EBITDA generated from subsea and diving vessels in 2015, this figure is estimated to increase to 58% in 2016 after delivery of newbuild #377 Note that the subsea vessel Grand Canyon is not included above as this is owned 40% by Volstad Maritime and not consolidated Market value of vessels based on two independent shipbroker estimates per and USDNOK * EBITDA according to 2016 budget 11

12 Key financial items Volstad Maritime consolidated NOK mill Sales EBITDA Net income after tax (13) 34 Book value vessels 3,131 3,009 3,041 2,944 3,654 Market value vessels 3,396 3,653 3,786 4,147 4,802 Cash Total assets 3,469 3,375 3,609 3,616 4,449 Book equity (incl. min. interests) Market adjusted equity 782 1,229 1,576 1,986 1,991 Interest bearing debt 2,605 2,433 2,366 2,423 3,113 NIBD 2,458 2,275 2,087 2,210 2,807 Revenue growth YoY -7 % 6 % 3 % 2 % 20 % EBITDA margin 70 % 65 % 66 % 66 % 61 % NIBD/EBITDA 6.1x 5.7x 5.1x 5.3x 6.0x LTV gross 77 % 67 % 62 % 58 % 65 % Equity ratio 15 % 17 % 23 % 22 % 19 % Market adjusted equity 21 % 31 % 36 % 41 % 36 % Total revenues of NOK 767 mill. in 2015 Year on year growth in revenues of 20% from 2014 to 2015 Group EBITDA 2015 of NOK 469 mill. (61% EBITDA margin) increase from 2014 EBITDA of NOK 419 mill. by NOK 50 mill. Total assets of NOK 4.45 bn. as of end 2015 Book value of vessels of NOK 3.65 bn. and newbuild of NOK 168 mill. Book equity of NOK 844 mill., implying an equity ratio of 19% at end of 2015 Market adjusted equity ratio of 36% based on total fleet value of NOK 4.8 bn. (excluding Grand Canyon which is owned 40%, and excluding new-build Grand Canyon III) Net interest bearing debt of NOK 2.8 bn. resulting in NIBD/EBITDA at end 2015 of 6.0x As of 31 December 2015, asset coverage in the pledged structure was 156%, and the free liquidity was NOK 20.2m. Profit and loss and balance sheet statements included in appendix. Note: unaudited statements for 2015 Market value of vessels based on two independent shipbroker estimates per and USDNOK

13 Group debt maturity profile Total annual amortizations of group bank debt approximately NOK 225 mill. to 245 mill. Bank debt consists of debt financing of Deep Cygnus, Volantis, Oceanic Endeavour, Geo Caspian, Grand Canyon II, Grand Canyon III, as well as a Group facility The existing bond issue, VOLSUB01 PRO matures with a balloon of NOK 600 mill. on 5 July 2016 Gross LTV of VOLSUB01 PRO pledged structure was 64% as of 31 December 2015* The value weighted average firm contract duration of the pledged vessels will be approx. 12 months at maturity, approx. 7 years including options The diving support vessel Bibby Topaz represents 95% of the total value of vessels in the VOLSUB01 PRO pledged structure *Market value of vessels based on two independent shipbroker estimates per and USDNOK

14 Highly experienced management and board Ola Volstad (1956) Founder, owner and board member Mr Volstad is the founder and sole beneficial owner of Volstad Maritime, and a board member in all Group companies. Mr Volstad has over 35 years of experience in the marine services industry, including seafaring experience as chief engineer early in his career Ole-Reinhart Pettersen Notø (1964) Chairman of the board Mr Notø is a partner in the Norwegian law firm Schjødt, based in its Ålesund office. He holds a law degree from the University of Oslo, as well as a Master degree in Business and Economics from BI Norwegian Business School Finn Syversen (1951) CEO Volstad Management and member of the board Mr Syversen is a board member of Volstad Maritime and other Group companies, and has been with the Group since He graduated from BI Norwegian Business School as a business economist in 1981 and has gained extensive experience from the maritime and financial sectors. He also holds CEO and CFO positions in various companies of the Group Christoffer Syversen (1975) CFO Christoffer Syversen has been with the Group since He currently holds the position of Chief Financial Officer in Volstad Management. Mr C. Syversen graduated from the Norwegian school of Economics and Business Administration (NHH) in year 2003 and holds a MSc with majors in Strategy and Finance Frode Hoddevik (1976) COO Frode Hoddevik has held the position of Chief Operating Officer in Volstad Management since 2010, having already gained experience as a QHSE Manager in Volstad Management ( ). Mr Hoddevik has seafaring experience, including as Chief Officer and Master Mariner, in various maritime enterprises, and holds a BSc in Nautical Studies from the Ålesund University College Geir Vartdal (1955) Crewing Manager Geir Vartdal has been responsible for the crewing of the Group's vessels, as Crewing Manager, since Mr Vartdal has more than 25 years experience in the marine and fisheries industries from various enterprises, and holds a DH degree from Bodø in Fisheries Economics 14

15 Contents 1. Company update 2. Market overview 3. Key focus and processes going forward 4. Appendix 15

16 Significant decrease in E&P spending USDbn Global E&P spending vs the oil price USD/bbl Global E&P spending is the main driver for subsea and seismic activity -40% E&P spending has decreased significantly in the last couple of years, due to focus on cost and CAPEX discipline by oil companies and the collapse in the oil price E&P spending expected to remain weak going forward, compared to historical levels Increased oil demand driven by low prices as well as supply side adaption is expected to lead to an increase in the oil price and E&P spending growth Source: Rystad, Advisors 16

17 Decrease in subsea activity Number of global subsea tree awards Industry backlog (USDbn) Q315 Q115 Q314 Q114 Q313 Q113 Q312 Q112 Q311 Q111 Q310 Q110 Q309 Q109 SUBC TEC subsea Saipem E&C Offshore Offhsore The subsea sector is mid/late cyclical Order backlogs are down ~40% since peak in 2014 The number of subsea tree awards fell from 551 in 2013 to only 173 in 2015, future estimates are uncertain Subsea activity driver for demand of subsea vessels Source: Quest Offshore, Advisors 17

18 Substantial growth in subsea fleet in recent years Historical delivery schedule and current order book Relatively strong ordering activity over past years Current orderbook of 39 vessels equal to 14% of total fleet Relevant fleet includes all subsea vessels meters LOA with DP capacity Source: IHS 18

19 Historically low day rates achieved in seismic Estimated Ramform day rate Seismic spending is highly correlated to oil majors exploration spending and the development in the oil price Sharp oil price decline coupled with cash flow focus of oil companies has reduced the demand for seismic services, with sharply dropping day rates as the result Demand for seismic expected to come back as oil companies regain focus on replacing reserves and as the oil price recovers Decrease in streamer capacity expected to have positive effect on day rates achieved for remaining vessels Seismic is early-cycle, and is expected to be the first segment within the oil services industry to recover Source: Advisors Note: estimated day rate for PGS Ramform-vessels illustrative for day rates achieved within seismic 19

20 Seismic fleet capacity coming down expected to help balance the seismic market Seismic vessel and streamer capacity Trend remain favourable on the supply side as companies are accelerating retirement plans resulting in an improved bidding environment Source: Advisors 20

21 Contents 1. Status update 2. Market overview 3. Key focus and processes going forward 4. Appendix 21

22 Situation overview Key industry market continues to be challenging, no immediate improvement expected Older tonnage may se longer periods of unemployment Challenging services market has led to a surplus of seismic and offshore support vessels: Increasing number of offshore vessels being stacked and vessels operating at levels well below OPEX Customers actively renegotiating contract terms or cancelling contracts Bank market increasingly challenging, longer lead times and defensive terms Service market situation negatively impacting Geco Bluefin and Tau Tau (1982/2003/2014, AUV support) On a BB charter with DeepOcean with expiry in Q Geco Bluefin (1980/1999, seabed seismic) currently laid up in Ålesund No current employment for Geco Bluefin or for Tau post expiry of current contract expected to be cold-stacked DSV Bibby Topaz (built 2007) is working on a long-term contract with Bibby Offshore Current contract expires July 2017 In 2015, Bibby Topaz witnessed series of non related operational technical challenges within short time window Bibby Topaz, Tau and Geco Bluefin financed through a NOK 650 million bond, maturing July 2016 Refinancing efforts started autumn

23 Adapting to the market environment Volstad Maritime has a strong order backlog, which has increased further recently 86% contract coverage in 2016, dropping to 62% in 2017 (100% in 2016 and 77% in 2017 excluding Tau and Geco Bluefin) Volstad Maritime has three vessels contracted to Canyon Offshore Ltd, a subsidiary of Helix Energy Solutions Group Inc (HLX, NYSE) - agreements recently revised whereby charter rates reduced in return for extensions of the term of the charters M/V Grand Canyon I: originally 5 year TC contract - 2 year firm extension M/V Grand Canyon II: originally 5 year TC contract - 1 year firm extension M/V Grand Canyon III: originally 5 year TC contract - semi-cold stack period optional for 365 days, in return for a 2 year firm extension charter party extension. The vessel can be activated at any time during the cold stack period, if activated within the first 365 days a discount similar to the GC and GC II applies Volstad Maritime and Canyon Offshore Ltd believe that the recent agreements are positive steps in the current market environment providing near term cost savings, vessel supply reduction, efficiencies and future benefits as the market demand recovers Volstad Maritime continues focus on delivering strong vessel performance and high quality maritime operations to our clients Second quarter 2016: delivery of Grand Canyon III at time and cost Volstad Maritime engaged in constructive discussions to adapt to current offshore service market environment and remains well positioned for stronger markets 23

24 Key challenges and focus areas Volstad Maritime has for an extended period reviewed several commercial and financial options to secure a sustainable financial position going forward, including securing refinancing of the bond issue: Working with customers for new contracts or amendments (including extensions) of existing contracts Pursuing a broad range of financing options ABG Sundal Collier ASA and SpareBank 1 Markets AS appointed as financial advisors Bibby Topaz: Current contract expires July 2017 Bibby Offshore has 3 x 2 year options on the vessel Ongoing discussions with Bibby Offshore 2016 Bond Maturity: Bank financing is the preferred choice of capital, but access to bank funding is challenging in the current market environment Increase involvement and dialogue with bondholders and other financing providers 24

25 Contents 1. Status update 2. Market overview 3. Key focus and processes going forward 4. Appendix 25

26 P&L NOK mill Sales Operating costs (172) (212) (213) (220) (298) EBITDA Depreciation (129) (131) 31 (97) (111) EBIT Net finance (203) (166) (198) (331) (316) Earnings before tax (9) 42 Tax (20) (30) (60) (4) (9) Net income after tax (13) 34 Revenue growth YoY -7 % 6 % 3 % 2 % 20 % EBITDA margin 70 % 65 % 66 % 66 % 61 % Note: unaudited statement for

27 Balance sheet NOK mill Vessels 3,131 3,009 3,041 2,944 3,654 Newbuilds Other fixed assets Financial assets Total assets 3,234 3,124 3,193 3,260 3,925 Inventory Trade receivables Other receivables Cash Total current assets Total assets 3,469 3,375 3,609 3,616 4,449 Total equity Provisions Long term interest bearing debt 2,605 2,433 2,366 2,383 3,113 Other long term debt Total long term debt 2,669 2,468 2,391 2,404 3,125 Trade payables Shot term interest bearing debt 40 - Other short term debt Total short term debt Total debt and provisions 2,951 2,790 2,778 2,832 3,605 Total debt and equity 3,469 3,375 3,609 3,616 4,449 Net interest bearing debt 2,458 2,275 2,087 2,210 2,807 Note: unaudited statement for

28 28