2010 Energy Conference December 7, 2010 New Orleans, LA T. Jay Collins President & CEO 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 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.
WHY OII? Leveraged to Deepwater Secular Growth Positioned to Rebound Leading Market Positions ROVs and Specialty Subsea Products Strong Earnings, Balance Sheet & Cash Flow
Leveraged to Deepwater Projects Take Years to Develop Largely Oil Reservoirs With High Production Flow Rates Well Capitalized Customer Base Investment Based on Long-Term Commodity Price
Long-Term Deepwater Outlook Invest Where the Oil Is Western IOCs Have Little Choice Restricted Access to World Class Onshore Reserves Exploration Success Bodes Well for the Future Drilling Intensity is Rising Source: Wood Mackenzie and Deutsche Bank 5
Near-Term Deepwater Outlook Pending DOI Regulations Lower Activity in the U.S. Gulf of Mexico Largest Market for ROV Services ROV Tooling & IWOCS Sole Market for Subsea Projects Operations Additional Subsea Product Opportunities ROV Tooling BOP Control Systems
Earnings Per Share Guidance 2010 Estimate $3.57 - $3.62; 2011 Estimate $3.45 - $3.75 $4.00 Actual Low Estimate High Estimate Earni ngs Per Sh hare $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 2007 2008 2009 2010E 2011E OII 2010 and 2011 Guidance Ranges as of October 26, 2010.
Combined EPS OSX Companies Excluding OII Actual Consensus Estimate $75 ngs Per Sh hare Earni $60 $45 $30 $15 $0 2007 2008 2009 2010E 2011E 2010E & 2011E Based on First Call Mean Estimates as of October 29, 2010
Relative EPS Performance To Recent 2008 Peak OII OSX w/o OII 10% 0% -10% -20% -30% -40% -50% 2008 2009 2010E 2011E Based on First Call Historical Numbers and Consensus 2010 & 2011 Estimates @ October 29, 2010
2011 EPS Guidance The Big Picture SEGMENT OPERATING INCOME ROV > 2010 Subsea Products 2010 Subsea Projects < 2010 Inspection > 2010 Advanced Tech 2010
Strong Balance Sheet & Cash Flow September 30, 2010 $148 MM in Cash No Debt $300 MM Revolving Credit Available Strong Cash Flow Over $325 MM Expected in 2011 Ample Resources to Invest in Growth Cash Flow is defined as Net Income + Depreciation & Amortization
Plans For Cash Organic Growth Q4 2010 Capex $35 MM 2010 Total $200 MM 2011 Capex $150 MM / $175 MM Acquisitions Share Repurchases
Acquisition Targets Within our Market Niches Expand Subsea Products International Focus Reasonably Priced Accretive to Earnings
Worldwide Deepwater Discoveries Over Two-Thirds Thirds to be Developed Nu umber of Fie elds 600 500 400 300 200 100 Production Development Evaluation 502 352 230 150 0 Production Eval. / Dev. Source: ODS-Petrodata September 2010 Deepwater 600 Meters
Floating Rig Supply and Demand 300 Floater Demand Floating Rigs Available Qu uarterly Ave erage # of Rigs 250 200 150 100 245 221 At Sept 30 Supply 247 Demand 222 Source: ODS-Petrodata
Floating Rig Fleet Expansion: 2010-2014 64 Rigs On Order at September 30, 2010 41 Contracted Average length 7 years Expected to be Placed In Service 30 in 2010 30 in 2011 Source: OII Estimates Based On ODS-Petrodata Data, September 30, 2010.
Remotely Operated Vehicles Revenue by Business Segment 35% September YTD 2010
OII ROV Fleet Size End 300 250 252 Veh hicle Count @ Period 200 150 100 50 0 125 September 2010
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 2010* 0% * September YTD
2010 & 2011 ROV Overview Increase in Days On Hire Add at Least 18 New Systems in 2010 Add 15 New Systems in 2011
ROV Expansion Opportunities Both Drill Support and Construction & Field Maintenance Service Rigs on Order without ROV Contracts 37 as of September 2010 Subsea Service Vessels Under Construction
Operating Income ROV 2010 Estimate 2009; 2011Estimate > 2010 (in millions) $250 $200 Actual Estimate $150 $100 $50 $0 2007 2008 2009 2010E 2011E OII 2010 and 2011 Guidance Ranges as of October 26, 2010.
Worldwide Subsea Completions This Decade Expected to Grow 45% Completed Estimated Number of Subsea Com mpletions 5,000 4,000 3,000 2,000 1,000 1111 3071 4442 0 90s 00s 10s Source: Quest Offshore Resources August 2010
Subsea Tree Orders Forecasted at Historically High Levels 1000 20% Growth Tree Order rs 800 600 400 200 0 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10F '11F '12F '13F '14F Source: Quest Offshore Resources Mean Case Forecast - September 2010
Subsea Products Revenue by Business Segment ROV Tooling & Work Packages Field eddevelopment eop e Hardware Umbilicals September YTD 2010
Subsea Products Required for Every Subsea Completion Subsea Hardware Umbilicals ROV Tooling Field Development IWOCS Connectors & Valves BOP Control Systems Highly Engineered Worldwide Coverage
Additional Subsea Product Opportunities Macondo Incident Safety Concerns ROV Tooling Hot Stabs with Higher Flow Rates Hot Stab Receptacles & Valves ROV Accumulator Reservoir Skids Backup Accumulator Bottle Skids BOP Control Systems BOP Intervention Accumulator Skid Acoustically Actuated Dead Man Control
Subsea Products Backlog At Period End $400 $308 $ Millions $300 $200 $100 $0 2006 2007 2008 2009 2010* *September 2010
Operating Income Subsea Products 2010 Estimate > 2009; 2011 Estimate 2010 (in millions) $100 Actual Estimate $75 $50 $25 $0 2007 2008 2009 2010E 2011E OII 2010 and 2011 Guidance Ranges as of October 26, 2010.
Gulf of Mexico Deepwater Discoveries 50% to be Developed 200 Production Development Evaluation Nu umber of Fie elds 150 100 154 160 109 50 51 0 Production Eval. / Dev. Source: ODS-Petrodata September 2010 Deepwater 600 Meters
Subsea Completions Gulf of Mexico Historical and Projected Completed Estimated Cu umulative Su ubsea Comp pletions 1000 800 600 400 200 0 227 725 426 210 1999 2004 2009 2014P Source: Quest Offshore Resources August 2010. Historical through 2009.
Subsea Projects Revenue by Business Segment 13% Page 16 Diving Deepwater September YTD 2010
Subsea Projects Ocean Project Replacement Vessel U.S. Flagged 200 x 46 DSV 3000 sq ft Deck Space 4-Point Mooring System Built-in in Below Deck Equipment Available Q1 2011
Subsea Projects Ocean Patriot DMT Sapphire Acquisition Acquired for $16.5 MM in June 2010 Renamed Ocean Patriot Will Be Outfitted with a new SAT System [Neptune] Available Q1 2011 Expected to be Accretive to 2011 Earnings
2011 Subsea Projects Overview GOM Shallow Water Installation & IRM OII Vessels Available for this Market Ocean Quest Ocean Inspector Ocean Project Ocean Patriot Saturation Diving Systems Nemo Nautilus Neptune
2011 Subsea Projects Overview GOM Deepwater Installation & IRM OII Vessels Available for this Market Ocean Intervention Ocean Intervention II Ocean Intervention III Olympic Intervention ention IV
Operating Income Subsea Projects 2010 Estimate < 2009; 2011 Estimate < 2010 (in millions) $120 Actual Estimate $100 $80 $60 $40 $20 $0 2007 2008 2009 2010E 2011E OII 2010 and 2011 Guidance Ranges as of October 26, 2010.
OII Summary Diversified OFS Company Leveraged eraged to Deepwater Leading Market Positions in Technical Niches Strong Earnings, Balance Sheet & Cash Flow
Supplemental Financial Information
Net Income + Depreciation & Amortization $400 Actual Low Estimate High Estimate ($ millions s) $300 $200 $100 $0 2007 2008 2009 2010* 2011* *2010 - $345MM-$350MM, *2011 - $325MM-$350MM - Based on OII EPS Guidance Range October 26, 2010.
EBITDA Actual Low Estimate High Estimate $500 $400 ($ millions s) $300 $200 $100 $0 2007 2008 2009 2010* 2011* * 2010 - $455MM-$460MM, *2011 - $425MM-$460MM, Based on OII EPS Guidance Range October 26, 2010. 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, 2007 2008 2009 2010E 2010E 2011E 2011E (in millions of $) LOW HIGH LOW HIGH Net Income 180.4 199.4 188.4 195 200 185 205 Depreciation & Amortization 93.8 115.0 122.9 150 150 140 145 Subtotal 274.2 314.4 311.3 345 350 325 350 Interest Expense/Income, Net 14.1 12.6 7.1 5 5 0 0 Income Tax Expense 97.1 107.8 101.4 105 105 100 110 EBITDA 385.4 434.8 419.8 455 460 425 460
OII Balance Sheet (in millions) Dec 31, Dec 31, Dec 31, Dec 31, Sept 30, 2006 2007 2008 2009 2010 Equity $697 $915 $968 $1,224 $1,338 Debt 194 200 229 120 0 Cash 26 27 11 162 148 Debt/Cap 22% 18% 19% 9% 0%
Capital Investments by Type: 2005-2009 Organic Growth Acquisitions 12% 88%
Oilfield Capital Investments*: 2005-2009 > 85% on ROVs and Subsea Products ROV Subsea Products All Other Oilfield Segments 27% 60% * Capital Expenditures
Capital Investments*: 2009 > 90% on ROVs and Subsea Products * Capital Expenditures - December 2009
Capital Investments*: 2010 > 75% on ROVs and Subsea Products ROV Subsea Products Subsea Projects Other 4% 19% 21% 57% * Capital Expenditures September YTD 2010
Business Segment Revenue % of Oilfield ROV - 40% Products - 32% >85% 87% Projects - 15% Inspection - 13% Oilfield Non Oilfield September 2010
Business Segment Operating Income % of Oilfield ROV - 55% Products - 26% >90% 95% Projects - 12% Inspection - 7% Oilfield Non Oilfield September 2010
Supplemental Market Information
Oilfield ROV Fleet Ownership Profile December 2009 35% OII OII Subsea 7 248 Saipem Acergy Fugro Other 706 Vehicles Source: OII Estimates December 2009
OII ROV Fleet Geographic Profile September 2010 9 27 68 GOM 18 Africa 35 Norway Brazil 44 51 U.K. Asia/Pac Other NA 252 Vehicles September 2010
Oilfield ROV Drill Support Market September 2010 OII 58% Subsea 7 Fugro Sonsub Other 167 Floating Rigs In Service Source: ODS-Petrodata and OII Estimates
OII ROV Fleet Construction/Field Maintenance Locations 7 GOM 10 15 24 Africa Norway Other 56 Vehicles September 2010
OII ROV Fleet Construction/Field Maintenance Customers 23 Operators 33 Contractors 56 Vehicles September 2010
Global Subsea Production Umbilicals Market Share By Length Awarded 2009 Source: Quest Offshore Resources February 2010
Worldwide Umbilical Market Overview Forecasted at Historically High Levels Umbilicals Tree Orders 750 20% Growth - Trees 51% Growth - Umbilicals 3,000 Tree Orde ers 500 2,000 mbilical Orde ers - KM U 250 1,000 0 0 Source: Quest Offshore Resources Mean Case Forecast - November 2010
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] 120 2010 OII up 21% OSX up 15% 100 Annu ual % Cha ange 80 60 40 20 0-20 -40-60 -80 OII OSX *Through November 9, 2010: Source NYSENet
Annual Price Performance OII vs. OSX [Oilfield Service Index] 700 2010 OII up 21% OSX up 15% 600 Annu ual % Cha ange 500 400 300 200 100 0-100 OII OSX *Through November 9, 2010: Source NYSENet