DnB NOR Markets Oil, Offshore and Shipping Conference - PGS
DnB NOR Markets Oil, Offshore and Shipping Conference - PGS DnB NOR Markets Oil, Offshore and Shipping Conference - PGS
DnB NOR Markets Oil, Offshore and Shipping Conference Jon Erik Reinhardsen, President & CEO Oslo, 2 March 2011
- Page 2 and 3: Cautionary Statement • This prese
- Page 4 and 5: Financial Summary USD million 400 3
- Page 6 and 7: PGS - Differentiation Through Innov
- Page 8 and 9: Marine Contract Market Outlook Gree
- Page 10 and 11: Potential Growth Drivers: Gulf of M
- Page 12 and 13: Stable Bidding Activity USD million
- Page 14 and 15: Continuously Ahead of Competition 1
- Page 16 and 17: Ramforms Have the Lead in a Growing
- Page 18 and 19: Favorably Positioned on the HD3D In
- Page 20 and 21: GeoStreamer - Always Better • Acc
- Page 22 and 23: PGS MultiClient Value Proposition
- Page 24: PGS Value Drivers • Focused Marin
<strong>DnB</strong> <strong>NOR</strong> <strong>Markets</strong> <strong>Oil</strong>, <strong>Offshore</strong> <strong>and</strong> <strong>Shipping</strong><br />
<strong>Conference</strong><br />
Jon Erik Reinhardsen, President & CEO<br />
Oslo, 2 March 2011
Cautionary Statement<br />
• This presentation contains forward looking information<br />
• Forward looking information is based on management<br />
assumptions <strong>and</strong> analyses<br />
• Actual experience may differ, <strong>and</strong> those differences may<br />
be material<br />
• Forward looking information is subject to uncertainties<br />
<strong>and</strong> risks which are disclosed in <strong>PGS</strong> Annual Report<br />
2009<br />
• This presentation must be read in conjunction with the<br />
Company’s financial statements<br />
-2-
Leading Marine Geophysical Company<br />
Marine<br />
Contract<br />
t<br />
MultiClient<br />
Operations<br />
Data Processing<br />
& Technology<br />
Marine market<br />
leadership<br />
Diverse<br />
MultiClient<br />
library<br />
Productivity<br />
leadership<br />
Technology<br />
differentiation<br />
Client focus ● Global presence ● Innovation leadership<br />
-3-
Financial Summary<br />
USD million<br />
400<br />
300<br />
200<br />
100<br />
391<br />
Revenues<br />
361<br />
294 304<br />
296<br />
259<br />
215<br />
364<br />
USD million<br />
200<br />
150<br />
100<br />
50<br />
206<br />
154<br />
170<br />
EBITDA<br />
142<br />
99<br />
71<br />
131<br />
162<br />
-<br />
-<br />
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10<br />
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10<br />
USD<br />
million<br />
150<br />
100<br />
50<br />
155<br />
81<br />
105<br />
EBIT*<br />
45<br />
35<br />
52<br />
45<br />
USD million<br />
250 Cash flow from operations<br />
208<br />
200<br />
164 159<br />
145<br />
150<br />
116<br />
100<br />
64 61<br />
50<br />
104<br />
0<br />
5<br />
0<br />
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10<br />
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10<br />
Graphs show numbers for <strong>PGS</strong> continuing business.<br />
*Excluding reversal of impairment of USD 1.3 million in Q4 2010 <strong>and</strong> excluding impairments of USD 79.9 million in Q3 2010, USD 0.5 million in Q1 2010, USD<br />
2.4 million in Q4, USD 52.4 million in Q3, USD 48.2 million in Q2 <strong>and</strong> USD 50.6 million in Q1 2009.<br />
EBITDA, when used by the Company, means income before income tax expense (benefit) less, currency exchange gain (loss), other financial<br />
expense, other financial income, interest expense, income (loss) from associated companies, impairments of long-lived assets <strong>and</strong> depreciation <strong>and</strong><br />
amortization.<br />
-4-
Strongest Balance Sheet in <strong>PGS</strong> History<br />
Quarter ended December 31<br />
USD million 2010 2009<br />
Total assets 3 001.5 2 929.4<br />
MultiClient Library 310.8 293.2<br />
Shareholders' equity 1 721.8 1 449.0<br />
Cash <strong>and</strong> cash equiv. 432.6 126.0<br />
Restricted cash 71.2 18.0<br />
Liquidity reserve 777.9 472.0<br />
Gross interest bearing debt * 790.2 918.0<br />
Net interest bearing debt 286.4 774.0<br />
*Includes capital lease agreements<br />
• Net interest bearing debt materially reduced<br />
• Substantial liquidity reserve <strong>and</strong> financial headroom<br />
The accompanying unaudited financial information has been prepared under IFRS. This information should be read in conjunction with the unaudited<br />
fourth quarter 2010 results released on February 17, 2010.<br />
-5-
<strong>PGS</strong> – Differentiation Through Innovation<br />
• High Density 3D (HD3D) has become <strong>PGS</strong>’ main market<br />
– Predominantly the less cyclical Production Seismic (HD4D) segment<br />
– HD3D takes 65% of <strong>PGS</strong>’ streamer capacity in 2010<br />
– HD3D constitutes ~70% of the order book<br />
– Delivers optimum value from the Ramform vessels<br />
– Delivers maximum potential from the GeoSteamer® technology<br />
– Is the fastest growing <strong>and</strong> most sustainable seismic segment<br />
– Takes the most benefit out of the newly launched data processing<br />
technologies<br />
• MultiClient increasingly differentiates using GeoStreamer technology<br />
• Launching Ramform W-class<br />
– Optimum for the HD3D market<br />
– Increases GeoStreamer productivity further<br />
– Improves operational efficiency<br />
• Launching GeoSource<br />
– Perfect for GeoStreamer imaging<br />
-6-
Drivers for the HD3D Market<br />
• Exploration: The age of easy oil is over<br />
– Deeper water, deeper targets, more complex geology, harsher<br />
environment<br />
– Requires increased use of HD3D seismic for data quality <strong>and</strong> productivity<br />
• Enhanced <strong>Oil</strong> Recovery<br />
– Getting the most out of producing fields<br />
– Requires improved pixel density in the image (High Density)<br />
– Requires repetitive <strong>and</strong> comparable surveys through life of field<br />
• GeoStreamer allows <strong>PGS</strong> to explore frontier acreage in remote<br />
locations with harsh weather conditions more efficiently<br />
• GeoStreamer in combination with Wide- <strong>and</strong> Multi Azimuth acquisition<br />
is unique for exploring more complex reservoirs at deeper targets<br />
-7-
Marine Contract Market Outlook<br />
Greenl<strong>and</strong> <strong>and</strong><br />
Barents Sea:<br />
Dem<strong>and</strong> for 3D<br />
exploration seismic<br />
North Sea: Stable<br />
4D market,<br />
moving towards<br />
higher quality data<br />
Mediterranean:<br />
Positive attitude<br />
due to recent<br />
discoveries,<br />
growing<br />
GoM: Will revert<br />
to normality<br />
West<br />
Africa:<br />
Maintaining<br />
its position<br />
Brazil: A new<br />
era following<br />
sub-salt<br />
discoveries, in<br />
addition<br />
expecting<br />
significant<br />
growth in 4D<br />
Asia Pacific:<br />
Huge long<br />
term potential<br />
The seismic market will benefit from higher E&P spending growth<br />
-8-
Potential Growth Drivers:<br />
High Dem<strong>and</strong> for Seismic <strong>Offshore</strong> Brazil<br />
• Recent discoveries trigger need for HD3D in<br />
Brazilian basins<br />
• Growing need dfor 4D <strong>and</strong> dLife of fField seismic<br />
i<br />
over producing fields<br />
– Petrobras being key client<br />
– Jubarte optoSeis contract<br />
• <strong>PGS</strong> entered Brazil in 1995<br />
• <strong>PGS</strong> library constitutes t approximately 45% of all<br />
3D data acquired in Brazil<br />
• <strong>PGS</strong> has the largest privately owned data<br />
processing center in South America<br />
• Brazil is ~15% of <strong>PGS</strong> 2010 revenues<br />
• First 3D GeoStreamer survey in Brazil will<br />
commence in Q1 2011<br />
-9-
Potential Growth Drivers:<br />
Gulf of Mexico Market will Recover<br />
• Proven prospectivity<br />
• Over the last three years approximately 10-<br />
15% of 3D capacity has on average<br />
operated in GoM<br />
• After Macondo most of capacity was moved<br />
out of GoM <strong>and</strong> absorbed elsewhere with<br />
limited price pressure<br />
Tiber discovery<br />
• News from US Department of the Interior<br />
provides positive sentiment for industry to<br />
gradually return to normal<br />
• GeoStreamer’s unique low frequency<br />
attributes coupled with Full Waveform<br />
Inversion (FWI) can provide significant ifi uplift<br />
vs. present Wide Azimuth solutions<br />
-10-
Solid Order Book<br />
USD million<br />
1000<br />
800<br />
600<br />
400<br />
• Order book of USD 584<br />
million<br />
– Almost all capacity for H1<br />
2010 booked<br />
– Booking for Q3 is firming up<br />
– Customer dem<strong>and</strong> for<br />
GeoStreamer continues to<br />
increase<br />
200<br />
0<br />
• Vessel booking visibility<br />
above 6 months<br />
Marine order book (including DP)<br />
OptoSeis<br />
Achieving GeoStreamer price premium<br />
-11-
Stable Bidding Activity<br />
USD million<br />
3 500<br />
3 000<br />
2 500<br />
2 000<br />
1 500<br />
1 000<br />
500<br />
-<br />
• Stable bidding activity<br />
– Strong interest for<br />
GeoStreamer with pricing<br />
premium<br />
– Prices for conventional<br />
surveys still under<br />
pressure, on par with Q4<br />
2010<br />
Active Tenders<br />
All Sales Leads (Including Active Tenders)<br />
-12-
Capacity Increase Tapering Off<br />
700<br />
600<br />
# of streamers<br />
500<br />
400<br />
300<br />
200<br />
100<br />
• Expected capacity increases<br />
– 7% increase in 2011<br />
– 10% increase in 2012<br />
– 3% increase in 2013 <strong>and</strong> 2014<br />
0<br />
Q1<br />
06<br />
Q3<br />
06<br />
Q1<br />
07<br />
Q3<br />
07<br />
Q1<br />
08<br />
Q3<br />
08<br />
Q1<br />
09<br />
Q3<br />
09<br />
Q1<br />
10<br />
Q3<br />
10<br />
Q1<br />
11<br />
Q3<br />
11<br />
Q1<br />
12<br />
Total 3D volume in '000 sq.km<br />
Q3<br />
12<br />
Q1<br />
13<br />
Q3<br />
13<br />
Q1<br />
14<br />
Q3<br />
14<br />
• E&P spending surveys indicate<br />
continued growth in dem<strong>and</strong>d<br />
350<br />
300<br />
250<br />
200<br />
150<br />
100<br />
• <strong>PGS</strong>’ fleet well positioned for<br />
growth ahead<br />
– Boosted by delivery of the first<br />
Ramform W-class in 2013<br />
50<br />
0<br />
2006 2007 2008 2009 2010<br />
-13-
Continuously Ahead of Competition<br />
1992 - 1996 1998 - 1999 2007 - 2009 2012 - 2014<br />
Competition<br />
4 – 6 streamers 6 – 8 streamers 8 - 12 streamers 10 - 14 streamers<br />
10 - 14 streamers<br />
<strong>PGS</strong><br />
8 & 12 streamers 16 - 18 streamers 22 streamers 24 streamers<br />
Improved safety <strong>and</strong> cost efficiency<br />
More streamers, longer streamers <strong>and</strong> wider & denser streamer<br />
spreads<br />
HD3D market growth <strong>and</strong> GeoStreamer dem<strong>and</strong>
<strong>PGS</strong> Ordering W-Class Ramforms<br />
• Taking full advantage of GeoStreamer<br />
Conventional vessels<br />
• Reduce exposure to a cyclical seismic<br />
market by focusing on a more<br />
sustainable HD4D proposition<br />
Ramform S-Class<br />
• Strengthen <strong>PGS</strong>’ favorable position on<br />
the industry cash cost curve<br />
• Fleet renewal <strong>and</strong> expansion program<br />
on a continous basis<br />
Ramform W-Class<br />
Leadership in Safety, Productivity <strong>and</strong> Quality<br />
-15-
Ramforms Have the Lead in a Growing HD3D Segment<br />
ity in HD3D segme ent<br />
% activ<br />
70<br />
60<br />
50<br />
40<br />
30<br />
20<br />
10<br />
0<br />
• HD3D has grown significantly<br />
over the last 4 years<br />
– Both in absolute size <strong>and</strong> in share<br />
of total activity<br />
• In 2010, HD3D was around 30%<br />
of total market in sq.km. <strong>and</strong><br />
significantly more in terms of<br />
revenue<br />
• The Ramform fleet has<br />
consistently captured a large<br />
share of the HD3D segment<br />
– In 2011 Ramform capacity will be<br />
approximately 75% of <strong>PGS</strong> total<br />
2003 2004 2005 2006 2007 2008 2009 2010<br />
• HD3D market is less cyclical l than<br />
Ramform HD3D as % of total activity exploration seismic <strong>and</strong> with more<br />
attractive margins<br />
rest of industry HD3D as % of total activity<br />
-16-
Favorably Positioned on the Industry Cost Curve<br />
Excluding GeoStreamer productivity effect<br />
ative cash cost ef<br />
Rela<br />
eamer per day<br />
fficiency per stre<br />
█ <strong>PGS</strong> Ramform Vessels █ Other <strong>PGS</strong> vessels Decomissioned vessels<br />
<strong>PGS</strong> fleet is positioned to generate the industry’s best margins<br />
Source: The cash cost curve is based on <strong>PGS</strong>’ internal estimates <strong>and</strong> typical number of streamer towed, <strong>and</strong> excludes GeoStreamer productivity effect. The<br />
graph shows all seismic vessels in the market, both existing <strong>and</strong> new-builds. The Ramform W-Class is incorporated with 15 streamers, S-class with 14<br />
streamers <strong>and</strong> the V-class with 12 streamers. -17-
Favorably Positioned on the HD3D Industry Cost Curve<br />
Excluding GeoStreamer productivity effect<br />
ative cash cost ef<br />
Rela<br />
eamer per day<br />
fficiency per stre<br />
█ <strong>PGS</strong> Ramform Vessels █ Other <strong>PGS</strong> vessels Decommissioned vessels<br />
<strong>PGS</strong> fleet is well positioned to take advantage of a growing <strong>and</strong> more sustainable<br />
HD3D market<br />
Source: The cash cost curve is based on <strong>PGS</strong>’ internal estimates <strong>and</strong> typical number of streamer towed, <strong>and</strong> excludes GeoStreamer productivity effect. The<br />
graph shows all seismic vessels in the market, both existing <strong>and</strong> new-builds. The Ramform W-Class is incorporated with 20 streamers, S-class with 18<br />
streamers <strong>and</strong> the V-class with 16 streamers. -18-
Ramforms Setting new St<strong>and</strong>ards in Productivity<br />
• S-class:<br />
– 17 x 3600m str. length x 50m sep.<br />
• Largest number of streamers ever<br />
towed<br />
– 12 x 6000m str. length x 120m sep. p<br />
• Widest tow ever<br />
– 14 x 8100m str. length x 50m sep.<br />
• Largest deployment ever<br />
• 2 year operation<br />
• V-class:<br />
– First 17 streamer job scheduled for<br />
North Sea season 2011<br />
Ramform S- <strong>and</strong> V-class tow 16 streamers frequently<br />
-19-
GeoStreamer – Always Better<br />
• Accelerated GeoStreamer rollout <strong>PGS</strong> offers more customers the<br />
GeoStreamer advantages: More signal, less noise, broader b<strong>and</strong>width,<br />
higher h productivity<br />
it<br />
New<br />
Prospect<br />
S<strong>and</strong>stone<br />
GeoStreamer data<br />
Conventional data<br />
-20-
On Track Towards Full GeoStreamer Deployment<br />
Current GeoStreamer<br />
operations<br />
•3D<br />
•2D<br />
– Atlantic Explorer<br />
(6 streamers*)<br />
– Ramform Challenger<br />
(10 streamers*)<br />
– Ramform Valiant<br />
(12 streamers*)<br />
– Ramform Explorer<br />
(10 streamers*)<br />
– Sanco Spirit<br />
– Harrier Explorer<br />
Planned GeoStreamer<br />
rollout<br />
• Additional 3D vessels<br />
– Ramform Viking will get<br />
GeoStreamer in Q1 2011<br />
– <strong>PGS</strong> Apollo scheduled for<br />
GeoStreamer upgrade in Q2<br />
2011<br />
– Further upgrades at a pace of<br />
1 to 2 vessels per year<br />
– All vessels equipped with<br />
GeoStreamer around 2013<br />
* In exploration mode with 100 meter streamer separation<br />
Strong dem<strong>and</strong> drives GeoStreamer rollout<br />
-21-
<strong>PGS</strong> MultiClient Value Proposition<br />
• An up-to-date library with coverage in all major hydrocarbon provinces<br />
• Geology, geophysics <strong>and</strong> reservoir expertise combined with flexible <strong>and</strong><br />
unique business models<br />
• Strongly differentiating technologies, including GeoStreamer, HD3D<br />
fleet <strong>and</strong> high-end imaging<br />
• Local presence <strong>and</strong> network<br />
• Increased MultiClient focus to enhance value creation<br />
-22-
Data Processing &Technology: Building Momentum<br />
• Data processing growth<br />
– GeoStreamer proprietary processing<br />
– Best-in-class imaging i tools<br />
– Ultrafast velocity model building with<br />
hyperBeam<br />
• Commitment to technology development<br />
over the cycle<br />
• Efficiency leadership in marine acquisition<br />
• Towed EM: a step change in efficiency<br />
• GeoStreamer sets new st<strong>and</strong>ard<br />
throughout the seismic value chain<br />
• GeoSource: pushing seismic resolution<br />
even further<br />
-23-
<strong>PGS</strong> Value Drivers<br />
• Focused Marine seismic company<br />
• Productivity & scale<br />
– Launching Ramform W-Class<br />
• Leading edge Data Processing capabilities<br />
• Strong operational record<br />
• Technology differentiators<br />
– GeoStreamer<br />
– Launching GeoSource<br />
– Fiber-optic breakthrough<br />
– Towed EM - game changer<br />
• Proactive financial management<br />
– Value creation through the cycle<br />
– Introducing dividend<br />
Strong underlying dem<strong>and</strong> fundamentals – Unique position to<br />
benefit from dem<strong>and</strong> for advanced seismic<br />
Competitively Positioned – Performance Through the Cycle<br />
-24-