Connecting What s Needed with What s Next Alan R. Curtis Chief Financial Officer Jefferies Energy Conference November 28, 2017 Houston, TX
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 uncertainty 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 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. 2
Why Oceaneering? Global integrated technology solutions provider of diversified services and products in all phases of the offshore oilfield life cycle Strong market positions Solid balance sheet Financial flexibility to grow the company, with more focus on Opex in the production phase of the offshore oilfield life cycle Leveraged to deepwater - longer term, deepwater remains critical to reserve replenishment 3
In All Phases of the Offshore Oilfield Life Cycle PHASE EXPLORATION DEVELOPMENT PRODUCTION DECOMMISSIONING % OII Revenue 10% 50% 35% 5% #1 Market Driver # of Operating Floating Drilling Rigs # of Subsea Tree Installations # of Subsea Trees In Service # of Field 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 4
Largest Exposure is in Field Development Oilfield Revenue Mix 5% 10% 35% 50% Source: OII Estimates: 2016 Exploration Development Production Decommissioning 5
5 Operating Segments Remotely Operated Vehicles ( ROVs ) Subsea Products Subsea Projects Asset Integrity Advanced Technologies 6
Revenue by Business Segment 100% 75% 15% 13% 20% 18% 11% 13% 20% 15% 17% 50% 29% 34% 30% 25% 23% 20% 22% 0% Q3 2016, $549.3M Q2 2017, $515.0M Q3 2017, $476.1 ROV Subsea Products Subsea Projects Asset Integrity Advanced Technologies 7
Remotely Operated Vehicles 22% Revenue Contribution Q3 2017 Flagship of the Oceaneering Franchise 8
Floating Rig Demand History Oceaneering 55% Market Share as of September 30, 2017 Floaters Working Floaters Contracted % with OII ROVs 300 100% Contracted Floating Rigs at Period End 250 200 150 100 50 0 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 75% 50% 25% 0% % with OII ROVs Source: IHS-Petrodata, September 30, 2017 9
Oceaneering ROV Fleet Size 279 ROVs as of September 30, 2017 350 ROVs Added ROVs Retired OII Fleet Size 50 Vehicle Count at Period End 300 250 40 30 20 10 ROV Adds/Retires 200 2008 2009 2010 2011 2012 2013 2014 2015 2016* 2017 YTD** 0 * Retired 39 ROVs in Q3 2016. ** Nine Months ended September 30, 2017 10
Oceaneering ROV Pricing Revenue per day on hire $11,000 $10,000 Revenue per Day on Hire $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD* * Nine Months ended September 30, 2017 11
Oceaneering ROV Days on Hire Floating Rig Utilization constrains drilling support ROV days on hire DoH Drill Support DoH Vessel Based Contracted Floater Utilization ROV Fleet Utilization 100,000 100% 80,000 75% Days on Hire 60,000 40,000 20,000 50% 25% Utilization Rates 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD* 0% * Nine Months ended September 30, 2017 Approximately 50% of OII ROV fleet is utilized in Drilling Support activities; and OII averages >50% Floating Rig Market Share. 12
Oceaneering ROV Utilization Mix 100% Drill Support ROV Utilization Vessel Based ROV Utilization Average ROV Function Utilization 75% 50% 25% 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q1 2017 Q2 2017 Q3 13
More Focus on Vessel-Based Services 10 ROVs to Heerema Marine Contractors Providing ROVs and subsea tooling aboard Heerema s deepwater construction vessels and semi-submersible crane vessels on a global basis through 2020. 8 ROVs to Mærsk Supply Services Providing ROVs, survey and associated services, including subsea tooling, engineering, communication and data solutions, to support Mærsk s global operations. 14
Successfully Completed E-ROV Pilot Project for Statoil Fully stand-alone battery powered Work class ROV system, remotely piloted from onshore via a surface 4G LTE data communication buoy E-ROV concept winner 2017 World Oil New Horizons Idea Award 15
Remote Piloting and Automated Control Technology Full ROV piloting via broadband data communication link connection technologies such as 4G, fiber, or satellite link Norway Mission Support Center Revolutionizes operational efficiency and allows Subject Matter Experts and/or ROV pilots to support ROV operations by establishing control through a remote Internet link 16
Oceaneering ROV Remote Future is Here Enabling better control and video imaging, precise tool manipulation, and adherence to industry requirements Communications via 4G, Fiber and Satellite Mission Support Centers Forus, Stavanger, and Houston, TX, and Morgan City, LA E-ROV Concept Traditional ROV System Resident ROV Concept 17
Subsea Products Manufactured Products Production Control Umbilicals Supply electric and hydraulic power to subsea trees and inject chemicals into reservoirs and well streams. 30% Revenue Contribution Q3 2017 Specialty Subsea Hardware Field development hardware used to connect production trees to umbilicals and flow lines. Also includes connectors and valves - Oceaneering Grayloc, Oceaneering Pipeline Connection & Repair Systems (PCRS) and Oceaneering Rotator. Service and Rental Supports well intervention, drilling, construction, field maintenance, and plugging and abandonment activities. Tooling & Subsea Work Systems Installation and Workover Control Systems (IWOCS) 18
Subsea Hardware Capex Forecast Subsea Products backlog at the end of September 30, 2017: $284 million $1,000 Subsea Capex, Infield October 2017 SS Products Backlog $8,000 OII SS Products Backlog ($ in Millions) $800 $600 $400 $200 * $6,400 $4,800 $3,200 $1,600 Subsea Hardware Capex ($ in Millions) $0 2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F $0 Source: Infield Systems, October 2017; Capex for subsea trees, templates, manifolds, subsea boosters/compression/separation, umbilicals. * Subsea Products Backlog as of September 30, 2017. 19
Subsea Installations Forecast 500 Trees Onstream SSProducts Revenue $1,500 Trees Onstream 400 300 200 100 * $1,200 $900 $600 $300 OII SS Products Revenue ($ in Millions) 0 2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F $0 Source: Infield Systems, October 2017. * Subsea Products revenue for the nine months ended September 30, 2017 20
Oceaneering Well Intervention Delivering a one-stop-shop solution including vessel and ROV services, tooling, and well intervention solutions around the world 21
Oceaneering Proven Well Access Capabilities IRIS and BORIS - rigless, riserless light well intervention systems Reliably perform in depths to 10,000 feet and pressures to 10,000 psi Maximize production and increase the recovery rate from offshore oil and gas reservoirs or, alternatively, prepare wells to be plugged and abandoned Riserless Intervention System winner 2017 World Oil Best Well Intervention Technology Award 22
Subsea Projects 17% Revenue Contribution Q3 2017 Change out photo and replace with AUV Consist of Project Management, Survey, Data Management, Subsea Installation and IMR Services 23
Subsea Projects Overview Assets Available for this Market Spot or Contract Location Charter End Deepwater Multi-Purpose Supply Vessels** 3 Owned Ocean Intervention * Ocean Intervention II * * Ocean Evolution (delivers end of 2017) Spot Spot Spot GOM GOM GOM N/A N/A N/A 1 Chartered on Spot Market Ocean Alliance * Spot GOM Mar 18 Diving Support Vessels Survey/Autonomous Underwater Vehicles (AUV) Services Global Data Solutions * Jones Act Vessel ** Supplemented with short-term vessel charters, as necessary 24
Strong Balance Sheet and Liquidity Capital Sources and Allocations Liquidity at 3Q 2017 o $472 million of cash, over $350 million in the U.S. o $500 million undrawn revolving credit facility, maturity October 2021 o First debt maturities - $300 million in October 2019 Organic capital expenditures o Expect to range from $90 million to $110 million in 2017, and include $40 million to $50 million maintenance Acquisitions o Continue to consider investments that augment our service or product offerings, with more focus on our customers operating expenditures Dividends o Suspended until we see significant improvement in market outlook and projected free cash flow Consider share repurchases 25
Leveraged to Deepwater Projects take years to develop Largely oil reservoirs With high production flow rates Well capitalized customer base ~50% revenue from E&P majors in prior 3 years Investment based on long-term commodity price expectations 26
Long Term: Offshore Remains Essential Incremental production growth through 2020 requires significant investment in both on- and offshore 110 Total Liquids MMB/D 100 90 80 70 Shale Other Onshore Offshore Offshore is 23% of total incremental bbls to 2020 60 Current Sources of Production 50 2016 2017F 2018F 2019F 2020F Source: Morgan Stanley Research, Wood Mackenzie, Rystad Energy, and Company Data June 2017 27
2017 4Q and Full Year + 2018 Outlook Forecasting considerably lower Q4 2017 operating income on relatively flat revenue Most of the decline in our ROV and Subsea Projects Modestly lower Subsea Products and Asset Integrity Modestly higher Advanced Technologies Continuing to project marginally profitable at the operating income level on a consolidated basis for the full year 2017 2018 earnings expected to be significantly lower than 2017 28
Conclusion Challenging market continues Aligned our operations with anticipated level of activity Longer term, deepwater is still critical to reserve replenishment Looking for opportunities to grow the company Defending, or growing our market share Engaging more directly with our customers to develop value added solutions that increase their cash flow Driving efficiencies throughout the organization Controlling costs and maintaining an organization commensurate with existing business levels Maintaining a strong balance sheet 29
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 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: 2012 2013 2014 2015 2016 2016 thru Q3 2017 thru Q3 Net Income $ 289.0 $ 371.5 $ 428.3 $ 231.0 $ 24.6 $ 35.6 $ (7.2) Depreciation & Amortization 176.5 202.2 229.8 241.2 250.2 194.0 160.5 Subtotal 465.5 573.7 658.1 472.2 274.8 229.6 153.3 Interest Expense/Income, Net 2.3 1.7 4.4 23.4 20.3 15.6 16.3 Income Tax Expense 132.9 170.8 195.2 105.3 18.8 16.2 4.1 EBITDA $ 600.7 $ 746.2 $ 857.7 $ 600.9 $ 313.9 $ 261.4 $ 173.7 31
Free Cash Flow (Through the Cycle) (USD in millions) 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. Period Ended 2012 2013 2014 2015 2016 2016 thru Q3 2017 thru Q3 Net Income $ 289.0 $ 371.5 $ 428.3 $ 231.0 $ 24.6 $ 35.6 $ (7.2) Depreciation & Amortization 176.5 202.2 229.8 241.2 250.2 194.0 160.5 Other Changes in Cash Provided by Operating Activities (27.7) (42.3) 63.7 88.2 65.7 32.1 (9.3) Cash Provided by Operating Activities 437.8 531.4 721.8 560.4 340.5 261.7 144.0 Purchases of Property & Equipment (300.6) (382.5) (386.9) (200.0) (112.4) (83.4) (59.9) Free Cash Flow $ 137.2 $ 148.9 $ 334.9 $ 360.4 $ 228.1 $ 178.3 $ 84.1 32
Oceaneering ROV Leading Market Position Remotely Operated Vehicles Ownership Drill Support Market Share Worldwide Fleet 1010 Vehicles* 280 28% OII Subsea 7 Fugro DOF Subsea C-Innovations Helix Saipem TMT Technip IKM Group Other 83 55% 151 Floating Rigs Contracted** Source: *OII Estimates - December 2016; **IHS Petrodata and OII Estimates September 30, 2017 33
Oceaneering ROV Fleet 279 ROVs Geographic Profile September 30, 2017 100 ROV Count Vessel Based, 87 100 90 80 80 79 90 80 70 70 ROVs 60 50 40 30 20 52 21 31 16 60 50 40 30 20 10 0 16 21 36 4 6 4 GOM Africa North Sea Brazil Asia/Pac Other 10 0 Other includes Canada, Mexico, and the Middle East. 34
Investor Relations Contact Suzanne Spera Director, Investor Relations 713-329-4707 InvestorRelations@Oceaneering.com 35