Global provider of diversified services and products in all phases of the offshore oilfield life cycle

Transcription

1 Investor Presentation January 2017

2 Forward-Looking Statements Statements we make in this presentation that express a belief, expectation, or intention are forward looking. Forward-looking statements are generally accompanied by words such as estimate, project, predict, believe, expect, anticipate, plan, forecast, budget, goal, or other words that convey the uncertainly of future events or outcomes. These forward-looking statements are based on our current information and expectations that involve a number of risks, uncertainties, and assumptions. Among the factors that could cause the actual results to differ materially from those indicated in the forward-looking statements are: industry conditions, prices of crude oil and natural gas, our ability to obtain and the timing of new projects, and changes in competitive factors. Should one or more of these risks or uncertainties materialize, or should the assumptions underlying the forward-looking statements prove incorrect, actual outcomes could vary materially from those indicated. For additional information regarding these and other factors, see our periodic filings with the Securities and Exchange Commission, including our most recent Reports on Forms 10-K and 10-Q. 2

3 Why Oceaneering? Global provider of diversified services and products in all phases of the offshore oilfield life cycle Strong market positions Solid balance sheet and cash flow Return of capital to our shareholders Leveraged to deepwater - longer term, deepwater is still critical to reserve replenishment 3

4 5 Operating Segments 1. Remotely Operated Vehicles ( ROVs ) ROVs) 2. Subsea Products 3. Subsea Projects 4. Asset Integrity 5. Advanced Technologies 4

5 In All Phases of the Offshore Oilfield Life Cycle PHASE EXPLORATION DEVELOPMENT PRODUCTION DECOMMISSIONING % OII Revenue 10% 50% 35% 5% #1 Market # of Operating # of Subsea Tree # of Subsea Trees # of Field Driver Floating Drilling Rigs Installations In Service Abandonments Business Segment Product and Service Revenue Streams ROV Survey (SP) Tooling (SSP) ROV Survey (SP) Tooling (SSP) IWOCS Installation & Workover Control Systems (SSP) Subsea Hardware (SSP) Umbilicals (SSP) Vessel-based Installation Services (SP) Inspection Services (AI) ROV Tooling (SSP) IWOCS (SSP) Subsea Hardware (SSP) Vessel-based Inspection, Maintenance & Repair Services (SP) Inspection Services (AI) ROV Tooling (SSP) IWOCS (SSP) ROV = Remotely Operated Vehicles SSP = Subsea Products SP = Subsea Projects AI = Asset Integrity 5

6 Largest Exposure is in Field Development Oilfield Revenue Mix 5% 10% 35% 50% Source: OII Estimates: 2015 Exploration Development Production Decommissioning 6

7 Revenue by Business Segment First 9 Months 2016* 14% 7% 29% 12% 10% 27% 12% 13% 23% 16% 34% 20% 31% 21% 31% $3.7 Billion $3.1 Billion $1.8 Billion ROV Subsea Products Subsea Projects Asset Integrity Advanced Technologies * Nine Months Ended September 30,

8 Remotely Operated Vehicles 23% Revenue Contribution First Nine Months, 2016 Flagship of the Oceaneering Franchise 8

9 Oceaneering ROV Fleet Size 279 ROVs as of September 30, Veh hicle Count at Period End Q Q Q3* * Retired 39 ROVs in the third quarter of

10 Floating Rig Demand History Oceaneering 56% Market Share as of September 30, 2016 Floaters Contracted % with OII ROVs % Contracted Floating Rig gs at Period End Q Q Q Q Q Q Q Q Q Q Q3 75% 50% 25% 0% I ROVs % with OI Source: IHS-Petrodata, September 30,

11 Oceaneering ROV Utilization Mix 100% Drill Support ROV Utilization Vessel Based ROV Utilization Average ROV Func ction Utilizat tion 75% 50% 25% 0% * At September 30 11

12 Oceaneering ROV Pricing and Fleet Utilization 52% Fleet Utilization as of September 30, 2016 Revenue / Day on Hire Fleet Utilization $11, % $10,000 90% $9,000 80% Re evenue / Da ay on Hire $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 70% 60% 50% 40% 30% 20% ilization Fleet Ut $1,000 10% $ * 0% * YTD September

13 Subsea Products 31% Manufactured Products Production Control Umbilicals Supply electric and hydraulic power to subsea trees and inject chemicals into reservoirs and well streams. Revenue Contribution First Nine Months, 2016 Specialty Subsea Hardware Field development hardware used to connect production trees to umbilicals and flow lines. Also includes connectors and valves. Service and Rental Tooling & Subsea Work Systems Support drilling, construction, field maintenance, and plugging and abandonment activities. Installation and Workover Control Systems (IWOCS) Support drilling, construction, field maintenance, and plugging and abandonment activities. 13

14 Subsea Hardware Capex Forecast Backlog at September 30, 2016, in $ millions Subsea Capex, Quest August 2016 SS Products Backlog $1,000 $9,000 O II SS Produ ucts Backlog $800 $600 $400 $200 $7,200 $5,400 $3,600 $1,800 Su bsea Hardw ware Capex $ * 2017F 2018F 2019F 2020F $0 * At September 30, 2016 Source: Quest Offshore, August 2016; Capex: hardware costs for subsea trees/control systems, manifolds, and production umbilicals 14

15 Subsea Installations Forecast 500 Tree Installations SSProducts Revenue $1,500 Tree Insta allations $1,200 $900 $600 $300 enue, in $ Millions OII SSPro oducts Rev F 2017F 2018F 2019F 2020F $0 Source: Quest Offshore, August

16 Subsea Projects 21% Revenue Contribution First Nine Months, 2016 Change out photo and replace with AUV Consist of Project Management, Survey, Subsea Installation and IMR Services 16

17 Subsea Projects Overview Assets Available for this Market Deepwater Multi-Purpose Supply Vessels Spot or Contract Location Charter End 3 Owned Ocean Intervention Ocean Intervention II Ocean Evolution (available late 2Q 2017) Spot Spot N/A GOM GOM N/A N/A N/A 4 Chartered with Term Normand Flower Ocean Alliance Ocean Intervention III Island Pride Diving Support Vessels Survey/AUV Services Global Data Solutions Spot Contract, Shell Contract, BP Contract GOM GOM W. Africa India Dec 16 Mar 18 Apr 17 Nov 17 17

18 Strong Balance Sheet and Liquidity Capital Sources and Allocations Liquidity (at end of third quarter 2016) o $442 million of cash, $300 million in the U.S. o $500 million undrawn revolving credit facility, expiring October 2021 o First debt maturities $30 million in October 2018 Organic capital expenditures o Expect to range from $110 million to $125 million in 2016 Acquisitions o Continue to consider investments that augment our service or product offerings Dividends o Lowered to a more sustainable level Consider share repurchases 18

19 Leveraged to Deepwater Projects take years to develop Largely oil reservoirs o With high production flow rates Well capitalized customer base o ~50% revenue from E&P majors in prior 3 years Investment based on long-term commodity price expectations 19

20 Long Term: Offshore is Essential Deepwater Remains Significant Incremental Bbls Existing Fields Bbls Source of Additional ~29.3Mm B/D Liquids Production Tota al Liquids MMB/D % 29% Offshore Onshore 40 Source: Morgan Stanley Research, Wood Mackenzie, Rystad Energy, and Company Data October

21 Expect Extended Declines from Producing Fields New Production from New Fields Decline from Aging Fields lion Barrels Per Day Mil Inverting Balance presented by Bloomberg; Source data from Rystad 21

22 2016 Fourth Quarter and FY 2017 Outlook Challenging market continues Aligning our operations with anticipated level of activity Forecasting 4Q declines from each of our oilfield segments o ROV: fewer working days and lower average revenue per day o Subsea Products: lower throughput and low single digit margins o Subsea Projects: seasonal decrease in GOM diving activities and drydocking of Ocean Patriot o Asset Integrity: seasonal decrease in global demand and competitive pricing 2017 marginally profitable at the operating income level 22

23 Conclusion Longer term, deepwater is still critical to reserve replenishment Global provider in all phases of offshore oilfield life cycle, with a deepwater focus Further differentiate with integrated solutions Strong liquidity and cash flow Maintain or grow our market positions Emerge from the current cycle ready for the upturn 23

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25 EBITDA Reconciliation to Net Income (USD in millions) Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-gaap financial measurement. Oceaneering s management uses EBITDA because we believe that this measurement is a widely accepted financial indicator used by investors and analysts to analyze and compare companies on the basis of operating performance, and that t this measurement may be used by some investors and others to make informed investment decisions. You should not consider EBITDA in isolation from or as a substitute for net income or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. EBITDA calculations by one company may not be comparable to EBITDA calculations made by another company. The following table provides a reconciliation between net income (a GAAP financial measure) and EBITDA (a non-gaap financial measure) for Oceaneering s historical and projected results on a consolidated basis for the periods indicated: Period Ended T9M 2015 T9M 2016 Net Income $ $ $ $ $ $ $ 35.6 Depreciation & Amortization Subtotal Interest Expense/Income, Net Income Tax Expense EBITDA $ $ $ $ $ $ $

26 Free Cash Flow (Through the Cycle) (USD in millions, except for Earnings per Share amounts) Free Cash Flow (FCF) is a non-gaap financial measurement. FCF represents cash flow provided by operating activities less organic capital expenditures (i.e., purchases of property and equipment other than those in business acquisitions. Management believes that this is an important measure because it represents funds available to reduce debt and pursue opportunities that enhance shareholder value, such as making acquisitions and returning cash to shareholders through dividends or share repurchases T9M 2015 T9M 2016 Earnings Per Share $ 2.16 $ 2.66 $ 3.42 $ 4.00 $ 2.34 $ 2.06 $ 0.36 Net Income $ $ $ $ $ $ $ 35.6 Depreciation & Amortization Other Changes in Cash Provided by Operating Activities (98.3) (27.7) (42.3) ( 13.9) 33.2 Cash Provided by Operating Activities Purchases of Property & Equipment (235.0) (300.6) ( 382.5) (386.9) (200.0) (139.2) ( 83.4) Free Cash Flow $ 53.5 $ $ $ $ $ $

27 Oceaneering ROV Leading Market Position Remotely Operated Vehicles Ownership Drill Support Market Share Worldwide Fleet 1027 Vehicles* % 91 56% OII Subsea 7 Fugro DOF Subsea C-Innovations Helix Saipem TMT Technip IKM Group Other 162 Floating Rigs Contracted** Source: *OII Estimates - December 2015; **IHS Petrodata and OII Estimates September 30,

28 Oceaneering ROV Fleet 279 ROVs Geographic Profile September 30, 2016 RO OVs GOM Africa Norway Brazil Asia/Pac Other Other includes Canada, Mexico, United Kingdom, and the Middle East. 28

29 Oceaneering ROVs on Vessels 94 ROVs Geographic Profile September 30, Vs RO GOM Africa Norway Other Approximately 60% of Oceaneering s vessel-base customers are contractors, and 40% are operators Other includes Canada, Mexico, United Kingdom, Middle East, Asia, and Brazil. 29

30 Investor Relations Contact Suzanne Spera Director, Investor Relations