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Offering Deepwater Floating Production Systems
FPSOcean Company Presentation
Pareto Oil & Offshore Conference, Holmenkollen Park Hotel, Oslo
11th September, 2008
Building on solid industry track records
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Disclaimer – forward looking statements
This presentation has been prepared by FPS Ocean AS (“FPS Ocean” or the “Company”) solely for the Company’s use in presenting its business or
marketing its services to prospective business partners, clients, investors or any other party.
The Company will not be making any representation or warranty, expressed or implied, or assurance of any kind as to the accuracy, reliability or
completeness of the Presentation. Neither the Company nor any of their respective directors, officers or employees will thus have any liability or
responsibility to the recipients of the Presentation or any other persons resulting from their use of the Presentation.
The content of this Presentation includes and is based, inter alia, upon forward-looking information and statements that are subject to risks and
uncertainties. These statements are based on current expectations, estimates and projections about global economic conditions and the economic
conditions of the regions and industries that represent major markets for the Company. Important factors that could cause actual results to differ
materially from those expectations include, among others, macro economic fluctuations, interest rates, oil prices and such other factors as may be
discussed from time to time in the Presentation. No assurance can be given that those expectations will be achieved or that future results will be as
set out in the Presentation. This Presentation represents our initial views and we reserve the right (but shall not be obliged) to revise, update or
replace any statement herein.
By relying on this Presentation you acknowledge that you will be solely responsible for your own assessment of the information contained herein and
that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the Company’s
business.
In addition, this Presentation and the analyses set out herein are not and do not purport to be an appraisal or valuation of any of the securities, assets
or businesses of the Company.
This Presentation is subject to Norwegian law, and any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of the
Norwegian courts.
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Business statement
The business model is to build, own ,lease, and operate FloatingProduction Systems
Our focus is on deep water extended well testing (EWT), early production (EP) and marginal fields production for benign deep water reservoirs and hurricane areas
FPSOcean market differentiators is production using cost effective dynamic positioning systems and dis-connectable buoys with safe, reliable and innovative technology
The company strategy has been solidified through organizational development, know-how and experiences gained from the near to be completed DeeP Producer 1 project
We have a goal of developing a fleet of 4-6 units over the next 5 - 8 years
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Execution capability with competent staff of app. 60 people
Company management
CEOE Saunes
VP Bus DevL O Aaker
CFOC Mowinckel
Project DirectorE Saunes
DPP2 Project development
VP TechnologyO Often
VP Projects & OperationsK Bruun-Olsen
HSE QAM Magnussen
Contracts AdminO Paulsen
HR ManagerH Strand
DPP1Conversion project
DPP1FPSO Operations
Bibby Offshore Ltd.Aberdeen
GreyStar CorporationHouston
SemakauLay up
FleetManagement Limited
Hong Kong
J L PhillipsRio
S HillHouston
Management Team
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Management team with relevant offshore experience from Fred. Olsen Energy / Production, Boa Offshore, Kværner, Ocean Rig, GPS, DnBNOR
New CEO with 25 years extensive management experience from offshore, energy and construction industries incl Aibel, Alstom and ABB
Site teamApprox 35 staff
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Shareholders
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Norwegian shipping/offshore cluster well represented among largest shareholders/ Board of Directors
Board of Directors:• Erland P. Bassøe, Chairman*
• Jan R. Næss, Director**
• Tone Wille, Director
• Felix H. Tschudi, Director***
• Gro Baade-Mathiesen, Director
Investor Number of shares
% of total Type Count
rySUNDT AS 1,027,550 13.58% Comp. NOR
JPMORGAN CHASE BANK 974,000 12.87% Nom. GBR
BASS INVEST AS* 525,193 6.94% Comp. NOR
MORGAN STANLEY & CO INTL PLC 458,200 6.05% Nom. GBRFAIRBANKS JONATHAN BARCROFT 412,792 5.45% Priv. USASEBASTIAN HOLDING INC 371,520 4.91% Comp. TCA
NORTHERN NAVIGATION INT.** 324,666 4.29% Comp. LBR
TITLIS AS*** 271,066 3.58% Comp. NOR
NEXUS CAPITAL AS 270,022 3.57% Comp. NOR
KLAVENESS INVEST AS 246,500 3.26% Comp. NOR
BANK OF NEW YORK, BRUSSELS BRANCH 244,700 3.23% Comp. GBR
GOLDMAN SACHS INT. - EQUITY - 204,000 2.70% Nom. GBR
CANICA AS 203,600 2.69% Comp. NOR
ODIN OFFSHORE 201,000 2.66% Comp. NOR
LEHMAN BROTHERS INTERNATL. EUROPE 177,316 2.34% Nom. GBR
GOLDMAN SACHS & CO - EQUITY 172,400 2.28% Nom. USA
BANK OF NEW YORK, BRUSSELS BRANCH 107,100 1.42% Comp. GBR
KBL EUROPEAN PRIVATE BANKERS S.A. 100,000 1.32% Comp. LUX
ING.ONSRUD AS 97,478 1.29% Comp. NOR
R AND S FAIRBANKS IRREVOCABLE TR 88,658 1.17% Comp. USA
Total number owned by top 20 6,477,761 85.60%
Total number of shares 7,567,381 100%
Shares quoted at OTC under“FPSO” ticker
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Current projects
FPSO conversion ongoing, deepwater technology being developed
“DeeP Producer 1” (DPP1); Panamax shuttle tanker “Laurita”,
built Tsuneishi Japan 1981, entered Drydocks World Dubai
May 2007 for conversion to Dynamic Positioning FPSO with
Disconnectable Riser Buoy (DRB™).
“DeeP Producer 2” (DPP2); Double sided Aframax tanker
“Semakau”, built Koyo Japan 1988, acquired July 2008.
Conversion design prepared for Dynamic Positioning FPSO.
Applications including flexible risers using own DRB™ system
or rigid riser in work-over configuration. Long lead items and
yard slot secured.
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Target market areas
FPSOcean head officeFPSOcean sales officePartner offices
Extended well testing and early production
Deepwater marginal field developments
Field developments in hurricane areas
FPSOcean head officeFPSOcean sales officesPartner offices
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FPSOcean has agreements in place with two highly credible offshore operators in order to serve
oil companies world-wide with priority to HSE and uptime
Both companies have long standing operating relationships with key clients and excellent HSE
record
FPSOcean in house operations management, systems and resources under development
Partnership with reputable offshore ship manager & process operator
FPSO technical management & operations
www.bibbygroup.co.uk www.greystar-corp.com
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DeeP Producer 1
Purpose built for ultra deep water extended well testing, early production and marginal field development
Riser systems developed for single well and multiwell appplications ranging from 250 to 2500 m.w.d.
Proven technology and components applied to meet deepwater field development challenges
Generic conversion nearing completion
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Deepwater technology applications
Disconnectable Riser Buoy (DRBTM )
DNV approvals
Extensive swivel qualification testing and FAT testing completed
All shipboard equipment installed on vessel
Technology jointly developed and owned by FPSOcean and Scana, patent pending
Multiriser (5 x 8” + 5 x umbilical) disconnectable buoy for ultra deep water
5-path high pressure swivel with improved sealing redundancy for higher availability and qualified for gas service
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Deepwater technology applications
DNV DYNPOS-AUTR (IMO DP Class 2)
Reliable and experienced suppliers, Schottel and Kongsberg
Fully redundant power supply and utilities
Thruster rooms complete, receptacles and drives installed in ship, underwater units delivered for installation during commisioning phase
Dynamic Positioning (DP)
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DeeP Producer 1 - status Sept 2008
Swivel-stack with QC/DC lifted in moon-pool 11th July
Major milestones reached
Upper DRB Gantry
From the bridge – turbines, moon pool/gantry, process
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DeeP Producer 1 - status Sept 2008
Generic Process plant for 40.000 bopd @35 API
Lifted on ship February 2008
Module mech.complete September 2008
Power plant, 2 x17 MW dual fuel Siemens Gas Turbines
Lifted on ship February 2008
Module mech.complete in October 2008
M 20 and 80/90 modules
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DeeP Producer 1 – status Sept 2008
DeeP Producer 1 Project 100 91,9
Preliminaries 14 89,1Engineering 95 %
Topside Modules 26 99,7
Dis-connectable Riser Buoy 12 94,9
Vessel Conversion 44 87,9Material deliveries 98 %
Commissioning/ sea trials 4 0,0
Overall progress - baseline March 2008
Actual progress
”sail away”under reviewOverall cost under review
% of total conversion
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DeeP Producer 1 - way forward
Overall Objective:Validate the final cost and date for completion of DPP1Structure Cash-flow and manage payments Qualify plan and activities to achieve the agreed targets
Focus Areas:Suppliers
Ensure that main critical suppliers are providing FPSOcean with continued services as per contract and to FPSOcean’s satisfactionSave on costs and optimize cash-flow
Construction work and site activitiesFinal definition of the remaining work and costs associatedImprove contract and secure completion by DWD on agreed final costs and schedule
OrganizationReview performance and implement required changes in organization and processes to make sure we have drive and focus to meet targets
Completion plan to de-risk cost and schedule
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DeeP Producer 1 - way forward
Major future milestones completion dates
Dis-connectable Buoy delivery: end September 08
Swivel stack installed and mechanical complete: mid October 08
DPP1 overall mechanical complete: Under review
Commissioning complete: Under review
Critical activities
Electrical cable pulling and terminations
Piping installations
Completing the Living Quarter and Central Control Room
Activities to secure schedule
Define schedule milestones and negotiate Construction completion
Strengthen site team
Ensure availability of construction crew
Negotiate critical suppliers commitment to Schedule
Remaining work / scope
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DeeP Producer 2 - status Sept 2008
Semakau delivered on July 28, 2008Resold to investorgroup with bareboat charter and repurchase optionLaid up in Fujairah awaiting commencement of FPSO conversion
Siemens gas turbines completed Sale and repurchase arrangement in preparationTo be stored at Siemens Finspong – SwedenDelivery extended to June 2009
Schottel thrusters near completionFabrication completion expected by Dec 2008To be stored in Hamburg – GermanyDelivery extended to June 2009
Conversion slot agreed with Dubai World Drydocks
Preparations ongoing for client reimbursable FEED study to define FPSO specific configuration, cost and schedule
Vessel and long lead items secured and financed until mid 2009
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Market fundamentals remain strong
Increased need for Extended Well TestingTo increase understanding of more complex reservoirs including sub salt, heavy oil and HPHT challengesOptimize development solutions for high cost deepwater developments
Increased need for Early ProductionBenefit from early cash flow
Improve financial viability of high capex deepwater developments
Gain additional reservoir knowledge during development phase for field life optimization
Meet challenging deadlines for “first oil” often required by governments
Marginal and hurricane field developmentAllow marginal fields with short life span to be developed
Improve financial feasability for marginal field development
Increased cost and delivery times for installations and mooringsVessel dynamic positioning can be amortized over life of vessel, not life of field
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Market drivers for DP FPSOs in the deepwater segment
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Market fundamentals remain strong
High near term demand for FPSOs resulting from a number of deepwater fields being developed
high oil prices and lower reserves driving client schedule
Few FPSO’s available for deepwater prospectsmany new FPSO conversions delayed
few FPSOs designed specifically for multiple deepwater fields
Higher capex and increasing operating costs pushing day rates upwardsEBITDA contribution and capital return multiples likely to remain intact
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Overall financial viability remains intact
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FPSOcean value propositions
Attractive schedule for “first oil”The DeeP Producer 1 is nearing completion DeeP Producer 2 is well positioned for fast track conversion/early delivery
Minimum installation cost
No mooring cost makes our DP based FPSOs cost efficient and competitive in the deepwater segment and/or for shorter assignments
Faster relocation
No mooring allow for simpler and faster hook up and decommissioning, reducing non productive time between locations
Flexible process facility
Allowing a wide spectra of well fluids to be processed, facilitating relocation of FPSO without major process plant modifications
Experienced and capable organization
Broad experience and know-how in marine and oil & gas project development and operations
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Major contract prospects in progress
Field 1 Field 2 Field 3 Field 4
Type EWT Marginal EWT/EP EP
Water Depth meters
1000-2500 350 1550 1450
Wells 1-2 3-6 1-6 2-3
Oil Prod. bbl/day
15-25.000 40.000 30.000 40.000
Mobilization 3Q 2009 3Q 2009- 1Q 2010
3Q 2011 4Q 2009
Contract terms years
4-6 4-6 and options
3-5 and options
2 and options
Customer driver
Need EWT soon
Schedule and disconnect
Schedule Schedule
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Financial situation – funding raised
Total funding raised approx. NOK 1.9 billion (about USD 330 million)
EquityNOKM 560 (approx. USD 95 mill) from equity issues (Feb, Jun, Dec 06)
NOK 332 mill (approx USD 60 mill) allocated to DP Producer AS (DeeP Producer 1)
NOK 200 mill (approx USD 35 mill) allocated to DP Offshore AS (DeeP Producer 2)
Debt financing (DPP1)USDM 75, 2nd priority 5 year bond w/ call options (Dec 06)
NOKM 210 (approx. USD 37 mill), unsecured 2 year bond w/call option (Jul 07)
USDM 50, 1st priority bank constr. loan incl USD 5 mill post completion w/c (Aug 07)
NOKM 175 (approx USDM 33), unsecured 3 year convertible bond (Feb 08)
Strike price at NOK 72 per share
Debt derivates (DPP2)USDM 20 vessel financing (Jul 08)
Sale/leaseback (bareboat) over 18 months with investor group including existing shareholders
USDM 17 turbine financing (to be completed)
Sale/repurchase transaction over 10 months with bank
USDM 10 thruster financing (Aug 08)
Seller’s credit – extended delivery to June 2009
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New funding
Completion plan being executed to de-risk schedule and cost
Discussions with lenders and equity investors are ongoing
Pareto mandated as financial advisor to assist in structuring
financial transaction(s) to raise required capital
DPP2 funding requirement significantly reduced through several
recent dept derivates transactions for core assets
Additional funding is required to complete vessel
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Summary
Deep Producer 1 near completionManageable remaining execution risk
Attractive availability for schedule driven prospects
Technical risk has been reduced substantially and is being managed
Financial viability intact as day rates are likely to reflect overall higher capex and operating cost in the market
A good completion definition of Deep Producer 1 will facilitate funding to complete the FPSO conversion
Further growth secured through ”Semakau” being well positioned for conversion to DeeP Producer 2
Strong portfolio of market leads and discussions ongoing with oil majors
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Value statement
Respect for Health, Safety, Security and Environment shall always have first priority
in all operations
All company activities shall be founded on critical corporate culture drivers
including:
Appreciation of our place in the oil field development value chain
Promote engagement in company and customer objectives
Co-operation across organisational hierarchy and professional background
Ethical behaviour in all business dealings
Deliver prime return to shareholders by developing novel technical solutions for
growth areas within global oil & gas offshore field developments
“Offshore vs. Shipping”; nurturing an organisational culture of team spirit,
inspiration by sharing success, clarity in command lines and delivery expectations,
yet keeping the entrepreneurial approach to challenges
Enjoy career development and have fun at work
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2008 Q2 financials
Consolidated profit & loss in USD Q2 30. June 31. December2008 2007
Income 0 0 0
Salary and staff costs 1 640 060 3 187 374 3 520 251Depreciation and write-downs 87 878 170 810 197 139Other operating costs 1 819 188 2 961 877 3 544 604Operating result -3 547 126 -6 320 061 -7 261 994
Financial income 2 396 066 5 143 937 8 238 075Financial costs -1 521 213 -5 245 870 -5 417 469Net financial items 874 853 -101 933 2 820 606
Result before tax -2 672 273 -6 421 994 -4 441 388Tax 43 918 43 918 0Net result -2 716 191 -6 465 912 -4 441 388
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2008 Q2 financials
Consolidated balance sheet in USD 30. June 31. December2008 2007
ASSETSFixed assetsTangible fixed assets 201 944 620 149 679 996Intangible fixed assets 245 803 287 577Pensions 268 845 0Prepaid investments 36 681 705 16 256 514Total fixed assets 239 140 973 166 224 087Current assetsReceivables 1 326 876 1 729 142Derivative contracts 1 359 746 1 894 498Cash and cash equivalents 30 656 945 65 845 546Total current assets 33 343 567 69 469 186
Total assets 272 484 540 235 693 273
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2008 Q2 financialsConsolidated balance sheet in USD 30. June 31. December
2008 2007EQUITY AND LIABILITESShareholders equityShare capital 2 978 932 2 797 036Share premium account 107 127 806 100 586 497Other paid-up capital 3 893 950 536 246Other reserves -21 974 922 -14 097 929Retained earnings (accumulated losses) -13 428 391 -6 962 479Total equity 78 597 375 82 859 371
Long-term liabilitiesBond issue 148 777 425 114 738 194Pensions and similar commitments 0 26 864Total long-term liabilities 148 777 425 114 765 058Short-term liabilitiesSupplier and other short-term liabilities 45 065 822 38 068 844Tax payable 29 524 0Deferred tax 14 394 0Total short-term liabilities 45 109 740 38 068 844
Total liabilities 193 887 165 152 833 902
Total equity and liabilities 272 484 540 235 693 273
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Corporate structureFPS Ocean AS shares quoted at OTC, Oslo under “FPSO” ticker
FPSOcean AS
DP Producer AS DP Offshore AS SPC No. 3
FPSO Management ASOslo, Rio, Houston, Dubai
MT ” Laurita””DeeP Producer 1”
MT ”Semakau””DeeP Producer 2”
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Einar Saunes (1955), acting CEO and Project Director25 years extensive management experience from offshore, energy and construction industries Aibel, Alstom, ABB
Christian Mowinckel (1954), Chief Financial Officer25 years senior management experience from offshore, energy and finance industriesOcean Rig, Kværner, Elkem, DnB NOR
Kjetil Bruun-Olsen (1956), Vice President, Projects & Operations12 years offshore and 12 years shipping experience Fred. Olsen, Star Refer, Neptun
Leif O. Aaker (1951), Vice President, Business Development30 years offshore experience Boa Offshore, Fred. Olsen Energy, Golar-Nor Offshore (Petrojarl)
Ola Often (1956), Vice President, Technology25 years offshore engineering experienceFred. Olsen, PGS, ABB
Extensive management, offshore, shipping and oil service experience from senior individuals
Company management
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Erland P. Bassøe, Co-founder & Chairman25 years offshore experienceSeajacks, Floatel International, Scorpion Offshore, Frontier Drilling, ODS-Petrodata, Bassoe Offshore
Jan R. Næss, Director25 years of shipping and offshore market research and investment experienceNorthern Navigation Intl, NFC Shipping Funds, R.S.Platou Asset Management, R.S. Platou Research
Tone Wille, Director20 years experience from industrial companiesPosten, Norfund, Elkem, Kværner
Felix H. Tschudi, Director20 years experience in shipping and offshoreTschudi & Eitzen, Tschudi Shipping Company, International Transport Contractors, Estonian Shipping Company
Gro Baade-Mathiesen, Director26 years offshore experienceAibel, ABB, Aker, Kværner
Substantial experience in founding offshore ventures, running world class shipping and oil service contractors and financial management
Board of Directors