38
Capital Markets Day 14 June 2011
Capital Markets Day
14 June 2011
Important Notice
• The information in this document has not been independently verified and no representation or warranty,
express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy,
completeness or correctness of the information or opinions contained herein. None of the Company or
any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or
otherwise) for any loss whatsoever arising from any use of this document, or its contents, or otherwise
arising in connection with this document
• This document does not constitute or form part of any offer or invitation to sell, or any solicitation of any
offer to purchase any shares in the Company, nor shall it or any part of it or the fact of its distribution
form the basis of, or be relied on in connection with, any contract or commitment or investment decisions
relating thereto, nor does it constitute a recommendation regarding the shares of the Company
• Certain statements in this presentation are forward looking statements. By their nature, forward looking
statements involve a number of risks, uncertainties or assumptions that could cause actual results or
events to differ materially from those expressed or implied by the forward looking statements. These
risks, uncertainties or assumptions could adversely affect the outcome and financial effects of the plans
and events described herein. Statements contained in this presentation regarding past trends or
activities should not be taken as representation that such trends or activities will continue in the future.
You should not place undue reliance on forward looking statements, which only speak as of the date of
this presentation
• The Company is under no obligation to update or keep current the information contained in this
presentation, including any forward looking statements, or to correct any inaccuracies which may
become apparent and any opinions expressed in it are subject to change without notice
1
1. Introduction and strategy update
Ayman Asfari, Group Chief Executive
Agenda
Q&A session
1. Introduction and strategy update
− What is our strategy for growth?Ayman Asfari, Group Chief Executive
2. Integrated Energy Services
− What is the market opportunity?
− What is our track record?
− How will we meet our customers‟ needs?
− Where is the future opportunity?
− How will we organise to manage risk?
− What will be the shape of IES?
Andy Inglis, Chief Executive
Integrated Energy Services
3. Integrated Energy Services financial impacts
− How do we account for IES contracts?
− How will we finance the IES growth plan?
− What will our earnings profile look like?
Keith Roberts, Chief Financial Officer
Summary and closing remarks Ayman Asfari, Group Chief Executive
3
Our history
4
A focused and distinctive strategy
Focus
• A clear focus on the oil & gas sector
• Prioritising resource-rich geographies
Differentiation
• World-class competency delivered locally
• A preference for organic growth with “bolt-on” acquisitions to build our capability
and geographic presence
• Ultimately our business is about the deployment of capability for our customers
• We aim to continuously expand our skill set and deploy it in new ways to create more
value for our customers and for our shareholders
5
Leveraging capability
21%
(15%)
Net income per employee 2010
US$‟000 CAGR 06-10
(4%)
Note: Based on reported total net income, year average headcount. Source: Company Data.
1 Compass, Serco, Sodexo
2 Aker Solutions, Amec, CB&I, Fluor, Saipem, Technip, Wood Group, Worley Parsons
3 Baker Hughes, Halliburton, Schlumberger, Weatherford
4 Petrofac result excludes gain on EnQuest demerger, including the one-off gain increases metric to $44,000 per employee
5 Accenture, IBM, Oracle, SAP
6 Bank of America, Deutsche Bank, Goldman Sachs, JPMorgan, Morgan Stanley
7 Allen & Overy, Clifford Chance, Freshfields, Linklaters, Slaughter and May. Source of profit per lawyer: Lawyer Magazine 2009/10 survey. Source of total employees: Company Reports
8 BP, Total and Shell‟s upstream businesses, Apache, Occidental and Talisman
3
16
24
34
40
88
Oil Field Services 3
Petrofac 4
Upstream IOC 8 >550
IT Consultants5
Engineering
Services/ EPC 2
Financial Services 6
Outsourcing
Companies 1
10%
7%
(14%)
0%
>170UK Law Firms7 N/A
10 44
6
Results to date
7
253%
226%
223%
184%
138%
114%
103%
73%
72%
49%
29%
8%
4%
737%Petrofac Ltd.
AMEC PLC
John Wood Group PLC
WorleyParsons Ltd.
Saipem S.p.A.
Tecnicas Reunidas
Fluor Corp.
Schlumberger AG
FTSE 250
Technip S.A.
Halliburton Co.
FTSE 100
Chicago Bridge & Iron Co. N.V.
Aker ASA
Revenue6 yr CAGR 24%
Net profit6 yr CAGR 42%1
• Strong earnings growth has led to sector-leading total shareholder returns
7
TSR change since PFC IPO (October 2005)
14851,864
2,440
3,3303,655
4,354
2005 2006 2007 2008 2009 2010
75.4120.3
188.7
265.0
353.6 433.0
124.9
2005 2006 2007 2008 2009 2010
557.8
1 Excluding the gain on the EnQuest demerger
2 Tecnicas Reunidas listed on June 21, 2006
TSR chart source: Datastream as of June 12, 2011
Gain
on
EnQuest
demerger
2
What is our strategy for growth?
Geographical
expansion
• Expand existing business into new geographies
• e.g. Iraq, Turkmenistan, West Africa
Offshore • Develop our EPC business offshore
Integrated
Energy
Services
• Implement our integrated services strategy
• Continue to grow „value per employee‟
Key priorities for growth
8
Integrated Energy Services
Lu
mp
-su
m t
urn
key
Co
st
plu
s K
PIs
Re
im
se
rvic
es
Pro
du
cti
on
En
ha
nc
em
en
t
Co
ntr
ac
ts
Pro
du
cti
on
Sh
ari
ng
Co
ntr
ac
ts
Ris
k S
erv
ice
s C
on
tra
cts
Reward
Contract risk9
Engineering, Procurement &
Construction, Operations &
Maintenance
Integrated Energy Services
Organisation
10
Reporting
Segments
Engineering &
Construction
Offshore
Engineering &
Operations
Engineering,
Training
Services and
Production
Solutions
Energy
Developments
Production
Solutions
Energy
Developments
Training
Services
Engineering
Services
Offshore
Engineering &
Operations
Engineering &
Construction
Ventures
Engineering &
Construction
Sharjah
Business
Units
Integrated
Energy
Services
• We will deliver integrated services
through Integrated Energy
Services
• Integrated Energy Services will
include Training Services,
Production Solutions and Energy
Developments
• Andy Inglis is the Chief Executive of
Integrated Energy Services
Growth potential
Over our 5 year planning horizon, we anticipate that:
• Engineering & Construction and Offshore Engineering & Operations will deliver double-digit
earnings growth
• Integrated Energy Services will be the part of our business growing most quickly and will
represent an increasing proportion of group earnings
• We will more than double our recurring 2010 earnings by 2015
11
Group net income
2015
Integrated Energy
Services
Group net income 2010
Integrated
Energy
Services
Integrated
Energy
Services
2. Integrated Energy Services
Andy Inglis, Chief Executive IES
NOCs will drive global oil production capacity growth
0
20
40
60
80
100
50
55
60
65
70
Perc
en
tmm
bp
d
203020202009
Majors & IndependentsNOCs
A Giant fields in decline
B Increasing complexity of new
supply sources
C Average development/
discovery size decreasing
Source: World Energy Outlook 2010, © OECD/IEA , figure 3.24, page 127; Petrofac analysis
IEA Projections of World Oil Production by Company Type NOC Supply trends
13
Share of NOCs
Reserve split by field size/complexity in NOC controlled countries1
total reserve volume ~ 2,200bn boe
Distinct market segments by field size and complexity
1 Oil & gas reserves, proved reserves based on BP reserves definition
Source: IHS Herold, 2010 BP Statistical Review, Petrofac analysis 14
HighMediumLow
Fie
ld s
ize
Technical complexity
Small
25 - 50mm boe
Large
200 - 500mm boe
Medium
50 - 200mm boe
Giant
> 500mm boe
NOC NOC/IOC
IES
Petrofac addressable market: around 2,400 fields
Reserve split by field size/complexity in NOC controlled countries1
Number, total fields ~4,500
15
HighMediumLow
IES
e.g. Chergui
Fie
ld s
ize
Technical complexity
1 Oil & gas reserves, proved reserves based on BP reserves definition
Source: IHS Herold, 2010 BP Statistical Review, Petrofac analysis
Ticleni
Berantai
Cendor
e.g.
Small
25 - 50mm boe
Large
200 - 500mm boe
Medium
50 - 200mm boe
Giant
> 500mm boe
Accelerating trend towards service contract structures
43
2020E
11
4
2010
10
200019902020E
c. 11
c. 2
2010
4
2000
0.1
1990
0.1
Countries with service contracts in place
Countries exploring service contracts
1 Only includes production from fields with international participation. Service contracts include Buybacks and Risk Service Contracts
Source: Wood Mackenzie, Petrofac analysis
Percentage of oil & gas production in NOC
countries under service contracts1
Number of countries with service-based
contracts
16
Countries with service contracts in place
Countries exploring service contracts
What is our track record for integrated service delivery?
1997 – Petrofac Resources
formed. First investment in
KPC, Kyrgyzstan
2004 – Acquired equity
as development operator
of Cendor PSC, Malaysia
2007 – Acquired
interest in Chergui
gas field, Tunisia
2005/06 – Acquired
interest as operator
of
West Don field and
Don SW, UKCS
2000 – Acquired stake in
Ohanet field development in
Algeria and pioneered
partnership business model
2010 – EnQuest
formed
following Dons
demerger
1991 – Petrofac
International
formed in
Sharjah, UAE
2010 – Signed
Ticleni Production
Enhancement
Contract, Romania
2011 – Signed
Berantai Risk
Service Contract,
Offshore Malaysia
2007 – Entered
service operator
contract with Dubai
Petroleum
17
Building our integrated service capability
18
1991 – Petrofac
International
established
Asset
management
1997 – Energy
Developments
established
Operations
Maintenance
2002 – O&M
capability
established with
acquisition of
PGS Production
Services
Asset
management
Operations
Maintenance
Well
management
2007 – SPD well
operations
management
business
acquired
Brownfield
engineering
Training
Asset
management
Production
engineering
Operations
Maintenance
Training
Well
management
2008 –
Acquisition of
Eclipse
production
engineering
Brownfield
engineering
Asset
management
Operations
Asset
management
Maintenance
Training
2003 to 2006 –
Training
businesses
acquired and
brownfield
engineering
capability
developed
Brownfield
engineering
Asset
management
How will we meet our customers’ needs?
19
Production Sharing
Contract (PSC)
Production
Enhancement
Contract (PEC)
Risk Service Contract
(RSC)
Field development/
operation
Mature field
management
Build, operate, transfer
Innovative concept
selection
Fast-track delivery
Integrated field
management
Increased production
and recovery
Improved operational
efficiency
Innovative concept
selection
Fast-track delivery
Build and transfer
operating capability
Cendor Ticleni Berantai
Business concept
How we add value
Example
Cendor, Malaysia
Jambu-Liang Anticline
20
Cendor-2
2.5 kms
Irama West
Desaru
East
Desaru
Cendor
Graben Cendor
• We entered the Cendor PSC at the development phase of the project in 2004
• We have added value through a fast-track, cost-effective early production scheme that de-risked the
Cendor fault block reservoir
• The permanent development scheme for the Cendor fault block (Cendor ph2) is planned to be on
production 2Q 2013
• Under the PSC, we are paid a share of production and hedge the commodity price risk
• Upside exists from the appraisal of the western fault blocks – appraisal wells funded from existing
cash flow
Ticleni, Romania
• We have a 15 year PEC to manage the Ticleni and satellite fields in Romania
• We are applying our subsurface capability to grow production:
– optimising pump settings
– well workovers
– bringing broken wells back on line
– waterflood programme
• Our interests are aligned as we are paid on a tariff basis for every barrel produced
• We add value for Petrom by increasing production, while allowing them to focus on Romania‟s
largest fields
21
LQ
O&G Process Utilities
WHP2WHP1
FPSO
Oil Storage
(FUTURE)
Gas export
pipeline to
Angsi
Berantai, Malaysia
Berantai full field development plan
• With local partners Kencana and Sapura, we are leading the US$1 billion+ development of the
Berantai field and will then operate it for 7 years
• We add value through our innovative concept selection and fast-track/cost-effective project
execution
• Our RSC aligns our interests – rewarding us for our operational performance
• We deliver accelerated gas for Petronas, on a build, operate, transfer basis, while they retain
ownership of their reserves
22
Where is the future opportunity?
North Sea
Caspian
Middle East and
North Africa
SE Asia
East Europe
Mexico
Nigeria
Greenfield
Brownfield
Key
Greenfield
Brownfield
Key
Focus on areas
where
• There is significant resource potential
• There are recurring opportunities
• We have relationships and capability to deliver locally
23
How will we organise to manage risk?
Chief Executive,
Integrated Energy ServicesAndy Inglis
Developments
Rob Jewkes
Production Solutions
Gordon East
Training Services
Paul Groves
Technical Directorate
External Hire
Legal & Commercial
Jeanne-Marie de Larrazabal
Finance
Carl Thompson
Human Resources
External Hire
Business Development
Gavin Graham
24
• Strategic discipline
• Rigour of capital
allocation
• Strong value assurance
process
• Continued build of
capability
Delivery teams Support teams
25
Net income evolution
Over our 5 year planning horizon, we expect that
• An increasing proportion of IES long-term cash flows and earnings will come from RSCs and PECs
• PSC contracts will become a minority of the IES portfolio (predominantly existing Cendor and Chergui)
• IES Net Income of US$200m from projects in operation or under development with the potential to
grow this by at least 50% from new projects
2015
1 Ohanet RSC expires October 2011
What will be the shape of Integrated Energy Services?
Production
Sharing
Contracts
Production
Enhancement
Contracts
Risk
Service
Contracts
2010 2015
3. Integrated Energy Services
financial impacts
Keith Roberts, Chief Financial Officer
How do we account for IES contracts?
• How we account for IES contracts will depend on whether the contract is a Production
Sharing Contract or a contract for services
27
Production Sharing
ContractPure Service Contract
High/medium1 Exploration risk None/ Low
High Development cost risk Low / Medium2
High/medium1 Reservoir risk None/ Low
Medium Commodity price risk None/ Low
Cost and profit oil Revenue Specified monetary amount
No Defined services Yes
Impairment risk Recovery of costs incurred Credit risk
1 Likely to enter after exploration / appraisal stage
2 Depends on contract structure and whether construction is fixed price contract
• In a PSC the risks and rewards come from the ability to achieve a physical entitlement to
volumes which will vary with field performance and market factors. In a service contract the
returns are preset in the contractual terms linked to the services to be performed.
28
How do we account for IES contracts?
What defines the contract type?
How do we account for IES contracts?
• Risk Service Contracts and Production Enhancement Contracts fall somewhere on the
spectrum between contracts for services and Production Sharing Contracts
29
30
Production Enhancement Contracts Risk Service Contracts
• We are responsible for providing at risk investment
capital to upgrade/improve field infrastructure phased
over life of contract
• We develop the asset on behalf of the customer, costs
are expensed as incurred. Cash spent recovered
from the resource holder over the life of the contract
• Capital investment in field infrastructure depreciated
based on barrels of production
• The fee / profit payable to us is based on a agreed set
of measureable KPIs (contract specific)
• Operating costs taken in period to which relate
• We receive payment for costs and our remuneration
fee from the proceeds of sale of customer‟s production
over life of contract
• We recover costs using a tariff per barrel of oil
produced mechanism
• Construction and operations services are unbundled:
revenue recognised by reference to % of completion
(construction) and timing of opex costs (operations)
• If reservoir fails to perform risk of impairment or
onerous contract
• Where uncertainty on outcome exists revenue
recognised to extent of costs incurred. Expected
losses accounted for immediately
• The field is owned by the licence holder and we have
no right to reserves
• We have no entitlement to reserves as they are legally
owned by the client
• Contracts fall into two broad categories with the following commercial characteristics:
30
What defines the contract type?
How do we account for IES contracts?
What will the IES earnings profile look like? Ticleni
31
• Capex, opex and return recovered through a tariff mechanism, including a higher tariff for above
baseline production
• Returns are potentially wide-ranging depending on performance: material upside achievable through
incremental production
• Cost of services may exceed tariff income earned in early stages – assuming break-even in 2011
• Relatively low capital-intensity
• Minimum capital investment obligation of c. US$20m
• Assuming successful waterflood pilot total capital investment could be c.US$250m
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Ticleni - indicative earnings and cash flow profile
Revenue - base case Net profit - stretch case Net profit - base case Annual cash flow - base case
• Remunerated based upon delivery of services (higher revenues in development phase)
• Revenues and margins will depend upon project execution/operational performance, and will reflect
confidence in delivery as project progresses
• Significant capital requirement for construction phase but cash positive thereafter
• Range of returns prescribed by contract structure
What will the IES earnings profile look like? Berantai
32
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Berantai RSC and FPSO - indicative earnings and cash flow profile
Revenue - base case Net profit - base case Annual cash flow - base case
How will we finance the IES growth plan?
33
• Currently envisage gross investment of between US$0.5 - 1.0 billion per year into IES
• Projects are typically either fast-track developments (time frame of 1 – 3 years) or already producing
(PEC contracts) so net investment is considerably less
• This level of investment activity can be financed from our own resources
• Opportunity to raise additional funding at a project/asset level e.g. Berantai
• Prioritisation of business development activity / more rigorous allocation of capital will become
increasingly important
PED IES
Oil price risk
Subsurface risk
Capital intensity
Income sustainability
As the characteristics of the business and the embedded portfolio risk changes...
...so too will the earnings profile of Integrated Energy Services
What will the IES earnings profile look like?
34
Summary and closing remarks
35
Our strategy meets the growing needs of our customers for an integrated service
With our clear strategy and commitment, we anticipate that we will more than
double our recurring 2010 earnings by 2015
The market opportunity is significant - enabling us to deliver repeatable long-term
cash flows, revenues and profits from the provision of integrated services
Continued commitment to our onshore and offshore E&C and O&M businesses -
which we expect to deliver double-digit average yearly earnings growth
Question & answer session
