2009 Energy, Utilities & Power Conference May 27, 2009 Marvin J. Migura Sr. Vice President & CFO Oceaneering International, Inc. Safe Harbor Statement 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 forwardlooking 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 forwardlooking 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.
WHY OII? Leveraged to Deepwater Secular Growth Market Least Vulnerable to Low Commodity Prices Leading Market Positions ROVs and Specialty Products Strong Balance Sheet & Cash Flow Seasoned Management Team
Leveraged to Deepwater Projects Take Years to Develop Largely Oil Reservoirs With Relatively Low Per Barrel F&D Costs Well Capitalized Customer Base Investment Based on Long-Term Commodity Price
Ample Liquidity and Strong Cash Flow $200MM Credit Available at March 2009 Strong Cash Flow $285MM to $320MM Reducing Capital Expenditures $175MM Planned for 2009 No Liquidity Issues Cash Flow is defined as Net Income + Depreciation & Amortization
Earnings Per Share Outlook 2009 Estimate: $3.10 - $3.60 $4.00 Actual Low Estimate High Estimate $3.50 Earnings Per Share $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 2003 2004 2005 2006 2007 2008 2009E OII 2009 Guidance Range as of April 29, 2009.
2009 EPS Guidance The Big Picture SEGMENT OPERATING INCOME ROV > 2008 Subsea Products < 2008 Subsea Projects < 2008 Inspection & MOPS < 2008
Worldwide Deepwater Discoveries Over Two-Thirds to be Developed 500 425 400 300 200 276 Evaluation Development Production 100 197 149 0 Production Eval. / Dev. Source: ODS-Petrodata March 2009 Deepwater 600 Meters
Floating Rig Supply and Demand Floater Demand Floating Rigs Available 250 Average # of Rigs 200 150 215 208 At March 31 Supply 220 Demand 210 100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: ODS-Petrodata
Floating Rig Fleet Expansion: 2009-2012 98 Total New Rigs 91 Rigs On Order as of March 31, 2009 63/91 Contracted Long Term Average length 6 years 24 Expected to be Placed in Service During 2009 Source: OII Estimates Based On ODS-Petrodata Data, March 31, 2009
Historical & Future Floating Rig Demand 300 Assumes 20 Announced New Rigs Are Cancelled Or Delayed Beyond 2012 260 250 # of Rigs 200 164 204 24% Growth 27% Growth 150 Assumes 90% Fleet Utilization for the period 2009-2012 100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009F 2010F 2011F 2012F Year-End Source: OII Estimates Based On ODS-Petrodata Data
Remotely Operated Vehicles Revenue by Business Segment 36% March YTD 2009
250 200 150 100 125 101 50 233 2009 2008 2007 2006 2005 OII ROV Fleet Size Vehicle Count @ Period End 2000 2001 2002 2003 2004
ROV Operating Leverage $11,000 Revenue / Day on Hire Fleet Utilization 100% $9,000 80% $7,000 60% $5,000 40% $3,000 20% $1,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009* 0% *March YTD 2009
2009 ROV Overview Increase in Days On Hire Add 24 to 30 Systems
ROV Expansion Opportunities Both Drill Support and Construction Service Rigs on Order 91 as of March 2009 [Probably 70 by 2012] 25 ROV Contracts Have Been Let OII Has Secured 15 Contracts for 16 New ROVs Subsea Service Vessels Under Construction 145 as of March 2009
Operating Income - ROV 2009 Estimate: >2008 Actual Estimate $250 (in millions) $200 $150 $100 $50 $0 2003 2004 2005 2006 2007 2008 2009E OII 2009 Guidance as of April 29, 2009
Worldwide Subsea Completions Expected to Almost Triple This Decade Completed Estimated Number of Subsea Completions 7,500 6,000 4,500 3,000 1,500 0 7047 3236 1111 90s 00s 10s Source: Quest Offshore Resources February 2009
Subsea Tree Orders Forecasted at Historically High Levels 65% Growth Source: Quest Offshore Resources Mean Case Forecast May 2009
Subsea Products Revenue by Business Segment 26% ROV Tooling & Work Packages Umbilicals Field Development Hardware March YTD 2009
Subsea Products Required for Every Subsea Completion Subsea Hardware Umbilicals ROV Tooling IWOCS Connectors & Valves Field Development Highly Engineered Worldwide Coverage
400 350 300 250 200 150 100 50 0 $282 2009* 2008 Subsea Products Backlog At Period End $ Millions 2003 2004 2005 2006 2007 *March 2009
Operating Income Subsea Products 2009 Estimate: < 2008 Actual Estimate $120 (in millions) $100 $80 $60 $40 $20 $0 2003 2004 2005 2006 2007 2008 2009E OII 2009 Guidance as of April 29, 2009
Hurricane Path Comparison Isle Dernieres, LA Galveston, TX September 1, 2008 September 13, 2008
Subsea Completions Gulf of Mexico Historical and Projected Completed Estimated Cumulative Subsea Completions 1400 1200 1000 800 600 400 200 0 670 143 427 600 600 210 1999 2004 2009P 2014P Source: Quest Offshore Resources March 2009. Historical through 2008.
Subsea Projects Revenue by Business Segment 14% Page 16 Diving Deepwater March YTD 2009
2009 Subsea Projects Overview GOM Shallow Water Installation & IRM OII Vessels Available for this Market Ocean Project Ocean Quest Ocean Inspector Saturation Diving Systems M7 Nautilus
2009 Subsea Projects Overview GOM Deepwater Installation & IRM OII Vessels Available for this Market Ocean Intervention Term IRM Contract Ocean Intervention II Ocean Intervention III Olympic Intervention IV
2009 Deepwater Installation & IRM Ocean Intervention III & Olympic Intervention IV Larger Project Scope Capability Lower Weather Downtime Risk Reduced Operational Downtime Exposure
2009 Subsea Projects Overview International Services Expansion The Performer Contracted through Mid-September Offshore Angola
Operating Income Subsea Projects 2009 Estimate: < 2008 Actual Estimate $100 (in millions) $80 $60 $40 $20 $0 2003 2004 2005 2006 2007 2008 2009E OII 2009 Guidance as of April 29, 2009
OII Summary Diversified OFS Company Leading Market Positions in Technical Niches Leveraged to Deepwater Strong Balance Sheet & Cash Flow
Supplemental Financial Information
Net Income + Depreciation & Amortization $350 $300 Actual Low Estimate High Estimate ($ millions) $250 $200 $150 $100 $50 $0 2003 2004 2005 2006 2007 2008 2009* *$285MM - $320MM Based on OII EPS Guidance Range April 29, 2009
EBITDA Actual Low Estimate High Estimate $500 $400 ($ millions) $300 $200 $100 $0 2003 2004 2005 2006 2007 2008 2009* * $385MM - $440MM Based on OII EPS Guidance Range April 29, 2009 See Next Slide For Non-GAAP Reconciliation to Net Income
EBITDA Reconciliation to Net Income 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 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 December 31, (in millions of $) 2003 2004 2005 2006 2007 2008 2009E LOW 2009E HIGH Net Income 29.3 40.3 62.7 124.5 180.4 199.4 170.0 200.0 Depreciation & Amortization 57.0 65.6 79.6 80.5 93.8 115.0 115.0 120.0 Subtotal 86.3 105.9 142.3 205.0 274.2 314.4 285.0 320.0 Interest Expense/Income, Net 7.2 7.4 9.6 12.2 14.1 12.6 10.0 10.0 Income Tax Expense 15.8 20.6 31.8 66.4 97.1 107.8 90.0 110.0 EBITDA 109.3 133.9 183.7 283.6 385.4 434.8 385.0 440.0
OII Balance Sheet (in millions) Dec 31, 2004 Dec 31, 2005 Dec 31, 2006 Dec 31, 2007 Dec 31, 2008 Mar 31, 2009 Equity $454 $536 $697 $915 $968 $1,022 Debt 142 174 194 200 229 200 Debt/Cap 24% 25% 22% 18% 19% 16%
Capital Investments* by Type: 2004-2008 Organic Growth Acquisitions 19% 81% * Cash Flows from Investing Activities. Investment in the Medusa Spar is shown as an acquisition.
Capital Investments* by Type: 2008 Organic Growth Acquisitions 17% 83% * Cash Flows from Investing Activities. Investment in the Medusa Spar is shown as an acquisition.
Oilfield Capital Investments*: 2004-2008 > 85% on ROVs and Subsea Products ROV Subsea Products All Other 31% 55% * Capital Expenditures plus Investment in the Medusa Spar
Capital Investments*: 2009 90% on ROVs and Subsea Products ROV Subsea Products Other 10% 81% * Capital Expenditures March YTD 2009
Business Segment Revenue % of Oilfield ROV - 40% Products - 29% 85% Projects - 16% 90% Inspection - 13% MOPS - 2% Oilfield Non Oilfield March YTD 2009
Business Segment Operating Income % of Oilfield ROV - 54% Products - 17% 90% Projects - 19% 98% Inspection - 7% MOPS - 3% Oilfield Non Oilfield March YTD 2009
Supplemental Market Information
Oilfield Work Class ROV Fleet Ownership Profile December 2008 OII 227 35% OII Subsea 7 Saipem Acergy Fugro Other 653 Vehicles Source: OII Estimates December 2008
OII Work Class ROV Fleet Geographic Profile March 2009 25 13 19 82 42 52 North Am Africa Norway Brazil U.K. Asia/Pac Other 233 Vehicles March 2009
Oilfield ROV Drill Support Market March 2009 OII 60% OII Subsea 7 Fugro Saipem Other 178 Floating Rigs In Service Source: ODS-Petrodata and OII Estimates
OII Work Class ROV Fleet Construction/Field Maintenance Locations 2 2 8 20 27 North Am Africa Norway Asia/Pac Other 59 Vehicles March 2009
OII Work Class ROV Fleet Construction/Field Maintenance Customers 20 Operators 39 Contractors 59 Vehicles March 2009
Global Subsea Production Umbilicals Market Share By Length Awarded 2008 30% OII Kvaerner Duco Prysmian Other Source: Quest Offshore Resources February 2008
Worldwide Umbilical Market Overview Forecasted at Historically High Levels 1200 Umbilicals Tree Orders 5,000 Tree Orders 1000 800 600 400 65% Growth 60% Growth 4,000 3,000 2,000 Umbilical Orders - KM 200 1,000 0 '03 '04 '05 '06 '07 '08 '09F '10F '11F '12F '13F 0 Source: Quest Offshore Resources Mean Case Forecast May 2009
Umbilical Products Thermoplastic Hose Umbilicals Steel Tube Umbilicals
OIE Products ROV Tooling & Work Packages Production Control Valves Installation Workover & Control Systems Connectors & Repair Systems Field Development Hardware
Annual Price Performance OII vs. OSX [Oilfield Service Index] 90 YTD 2009 OII up 70% OSX up 36% Annual % Change 75 60 45 30 15 0-15 -30-45 -60 OII OSX * Through May 19, 2009 Source: NYSENet
Cumulative Price Performance* OII vs. OSX [Oilfield Service Index] 450 Cumulative % Change 400 350 300 250 200 150 100 50 0-50 OII OSX 2001 2002 2003 2004 2005 2006 2007 2008 2009* *Through May 19, 2009: Based on Previous Year-End Purchases