Transcript Mosvold Jackup Ltd - NFMF : OTC : Login

Mosvold Supply Plc
Company presentation, London, November 7th.2007
Roy Mosvold, Chairman, Magne Kristiansen, John Bernander
Content
1) Introduction
2) The assets
3) The market
4) Company set-up
5) Key financials
6) Summary
2
Confidential
Investment case
 Mosvold with opportunistic approach to high-end AHTS market
 Mosvold Supply Plc. (Cyprus) initiated and backed by Mosvold with substantial experience and track
record from offshore drilling, supply and shipping
 Pure and leveraged play on high-end, large AHTS vessels
 Mosvold with proven track record on opportunistic approach and shareholder value creation
 MOSU with attractive turnkey newbuild contracts and proven Vik Sandvik design
 4x AHTS (Vik Sandvik 491 Clean Design) with total USDm 358 all-in delivered price (Oct 09, Jun 10,
Des 10 and Jul 11 delivery) vs approx USDm 440 quotes from western European yards
 First right of refusal on 2 additional similar vessels
 Robust market outlook
 High-end AHTS order book balanced by strong demand (rig/FPSO/field developments), stricter safety
rules and environmental issues
 Attractive payment schedule and contract terms justifying leveraged capital structure
 Fully funded to 2009, approx 30% of capex program funded post transaction (USDm 52 equity, USDm
21 convertible, NOKm 185 bonds)
 New financing in place through fully underwritten equity issue and new convertible loan fully
subscribed by companies controlled by Arne Blystad
 Significant value potential (4 vessels)
 Equity replacement value approx NOK 25 per share based on current newbuild quotes (fully diluted)
 Asset replacement quotes suggesting >100% equity return
 3-yr historical average AHTS day rates yielding P/E 1.3x (fully diluted) and EV/EBITDA 3.7x
3
VS 491 CD: high capacity AHTS
- State-of-the art workhorses
Main features
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Design:
Overall length:
Breadth moulded:
Deadweight (7.9 m draft):
Speed at 6.0 m draft:
Total horsepower:
Min. bollard pull:
DP class:
Towing/anchor handling winch:
Crane capacity:
Fuel consumption:
Accommodation:
Prepared for ROV hangar
Vik Sandvik
91 m
22 m
4,000 t
17 knots
28,080
270 t
II
500 t
2x 6t
13.5 t diesel per day
60 persons
Well reputed equipment suppliers

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
Diesel engines:
Thrusters:
Towing winches:
DP:
MAK
Brunvoll
Hatlapa
Kongsberg
4
Mosvold Supply AHTS with high-end specifications
Mosvold Supply
Siem
Havila
Farstad
Olympic
VS 491 CD
VS 491 CD
Havyard 845
UT 731 CD
Aker AH05
Loa
91
91
87
87.4
94
Breadth
22
22
22
21
23
28080
28000
23000
25000
26500
Bollard Pull
270
300
250
240
260
Winch
500t
500t
500t
500t
500t
Triple
Triple
Triple
Triple
Na
Deck
700
750
675
760
840
Accommodation
60
60
35
40
68
Max Speed
17
18
17
18
17
Economical Speed
13
12
12
13
Na
DP
2
2
2
2
2
Shark Jaws
2 x 350t
2x350t
2x350t
Na
Na
Stern Roller
SWL 600t
SWL 750
SWL 600
Na
Na
ø4m,length 8m
ø4m, length 8m.
ø4.5m, length 6m
Na
Na
Towing Pins
4 x 350t
4x350t
2x300
Na
Na
Deadweight
4000
4250
4000
3900
4925
Fuel
1550
1450
1550
1100
2800
Fresh Water
1090
1160
500
700
800
Mud
679
670
500
850
660
Dry Bulk
306
300
250
175
180
Rig Chain
670
680
610
670
800
Oilrec
1000
870
1000
1000
Na
Prep.II
II
II
Na
Na
Oct 09/Jun 10
May.09
May.09
May.09
Apr.09
Design
BHP (horse power)
Winch Drum
Stern Roller Dimention
FIFI
Delivery
Source: Mosvold and Pareto Securities
5
Mosvold Supply to meet future requirements
New requirements focusing on environment, capacity and safety
 MARPOL Annex 1 Reg. 12a requires double hull protection of fuel tanks
 Applicable to all vessels/newbuilding with fuel tanks of total capacity of at least 600 m3 which are
ordered after Aug 2007 and delivered from Aug 2010
 Oil companies starting to ask for ROV capability during critical anchoring
 NOX tax: NOK 15 per kilo emission. Norwegian charterers expected to require modern tonnage with
catalyzer, which may reduce emissions with 90-95%
 Possible requirement for contingency tension testing of anchors up to 300 tons in the North Sea
Mosvold Supply VS 491 CD
 Double hull construction (DnV Clean Design notation)
 Safeguarding the environment from possible leakage
 Ships prepared for ROV
 Vessels with great stability and large towing and pulling capacity
 Vessels with light construction work capabilities
 Cost efficient fuel economy
 Reduces emissions of greenhouse gases
 Cost effective solution for charterers
 HYBRID propulsion system
 Straight shaft technology when steaming
 Diesel electric principles when the vessel is holding position
►The industry realized, only to late, that CD and larger vessels would be the
consequence of the new requirements
Source: R. S. Platou
6
Mosvold Supply Construction program
2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
AHTS TBN 1
AHTS TBN 2
20% payment
10% payment
20% payment
10% payment
AHTS TBN 3
20% payment
AHTS TBN 4
20% payment
70% payment
70% payment
10% payment
70% payment
10% payment
70% payment
 Favorable payment structure securing commitment from Batamec Shipyard
 20% at contract signing
 10% at key equipment delivery
 70% at final delivery
 Turnkey construction contract with parent company Otto Offshore Ltd., Labuan, Malaysia
for 2 additional vessels
 Contract price USDm 167
 All-in delivered price USDm 189 (incl. project development, supervision & interest)
 Refund guarantee from Bangkok Bank (BBB+)
7
Batamec Shipyard with relevant expertise
 PT Batamec Shipyard wholly owned subsidiary
of Otto Marine Pte Ltd
 Otto Marine Ptd Ltd started operations in 1979
 Principal activities:
 Shipbuilding
 Ship repair & conversion
 Offshore structural engineering
 Batamec is strategically located at Batam Island,
Indonesia
 6 vessels successfully delivered since embarking
 Management comprises over 45 qualified and
on shipbuilding strategy
experienced engineers, primarily from PPL and
 Order book of 30 vessels with deliveries until 2010
Keppel Fels
 Of which 10x 10,000HP AHTS
 Total workforce: 2,200
 Certified to ISO 9001:2000 with Lloyds Register
Quality Assurance as at 25 April 2005
 Major clients:
 Tidewater
 ESNAAD
 Seatrucks
 PETRA
 RK Offshore
 Marine Subsea (Africa Offshore Services)
8
Drilling and field development driving AHTS demand
- Boost in drilling activity and growing number of FPSO installations going forward
- Deepwater field development boosting AHTS vessel usage
# units
General floater activity
# units
FPSO units
200
250
%
+100%
180
+35%
160
200
140
120
150
100
80
100
60
40
50
20
0
0
2003
2003
2010E
2010E
Annual growth 2000-2005 vs. 2006-2010
Source: ODS Petrodata, Infield, Pareto estimates
9
Historical number of AHTS per rig
•
The number of vessels per rig is increasing due to:
• Other demand, for instance FPSO and construction related work
• More activity on deeper water – longer distances to tow the rigs
• High day-rates for rigs: Important that lack of vessels does not slow mob/demob
Need for more vessels per rig
0.5
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
9
7
20
0
20
0
5
3
20
0
1
20
0
9
20
0
7
19
9
19
9
5
3
19
9
1
19
9
9
19
9
7
19
8
19
8
19
8
5
0
Vessels per rig
Sources: DnB NOR Markets estimates, Clarckson and ODS - Petrodata
10
Large AHTS to be preferred going forward
- Meeting new and stricter requirements from clients and authorities
Mosvold Supply VS 491 CD
 22 m breadth
 500 t
7º tilting
Conventional / older vessel
 17 m breadth
 400 t
19º tilting
11
World AHTS fleet is old (22 years avg age)
- New vessels substantially larger and more capable than older vessels
Number of newbuilds
50
45
40
35
30
25
20
15
10
5
AHTS > 10,000 BHP
12
20
10
20
08
20
06
20
04
20
02
20
00
20
98
19
96
19
94
19
92
19
90
19
88
19
86
19
84
19
82
19
80
19
78
19
76
19
74
19
72
19
19
70
0
AHTS > 20,000 BHP
Source: Clarksons / JGO Shipbrokers / Pareto estimates
12
Rates in the AHTS market
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Day-rates are improving after a slow summer season
Quoted fixtures this week up to GBP 100,000
Day-rates below are for vessel with average size of approx 16,000 bhp vs Mosvold Supply's 28,000 bhp: Significant premium is fair
However, vessels in the spot market has significantly lower utilization, ~65%, than those on term contracts. We expect MOSU to achieve 90% utilization
Oil companies have been willing to fix new-build of the MOSU design on term contract @ ~ GBP/day 35,000
18,000+ bhp AHTS spot rates
15,000+ bhp AHTS spot rates
100,000
Estimated day-rates for the
MOSU fleet: GBP/day 28,000
100,000
90,000
90,000
80,000
80,000
70,000
60,000
GBP
60,000
50,000
40,000
50,000
40,000
30,000
30,000
20,000
ju
l.0
7
au
g.
07
se
p.
0
7
7
fe
b.
07
m
ar
.0
7
ap
r.
0
7
m
ai
.0
7
ju
n.
07
.0
ja
n
.0
de
s
no
v
t.
0
6
10,000
.0
6
20,000
0
6
10,000
ok
GBP
70,000
AHTS (+18.000 bhp)
e
0
Jan
2000
Feb
2001
Mar
Apr
2002
Mai
Jun
2003
Jul
Aug
2004
Sep
2005
Oct
Nov
2006
Dec
2007
Sources: DnB NOR Markets estimates, Clarckson and ODS - Petrodata
13
Consolidation opportunities ahead
- Fragmented market creates room for consolidation
- New, large AHTS in favor
Source: Petrodata / Platou / Farstad / Pareto
14
Investor friendly and cost-effective company set up
 Mosvold Shipping Holding owned by founders, which owns 22.9% of Mosvold Supply
 No employees in Mosvold Supply
 Corporate governance in accordance with public company guidelines (incl. 30% mandatory offer threshold
prior to listing)
 No corporate tax (pay only local tonnage tax)
 Management agreement with Mosvold Management (100% owned by Mosvold Shipping Holding )
 Fixed price mgmt contract (G&A/accounting/reporting) of USD 42,500 per vessel per month
- 12 months cancellation period
 Mosvold management responsible for construction and building supervision at estimated cost of USDm 1.2 per vessel
(may be subcontracted to reputable technical manager)
 Post-delivery commercial vessel fixture commission of 1.25%
 USDm 2 project development costs first 2 vessels + 1% commission on shipbuilding contracts
 1% commission on sale of vessel(s) or change of control in Mosvold Supply (> 30%)
Corporate set-up:
Mosvold Shipping
Holding Limited
Cyprus
22.9%
Mosvold Supply Plc
Cyprus
100%
Mosvold Supply I
Mosvold Supply II
100%
Mosvold Supply III
Mosvold Supply IV
15
Confidential
Mosvold – an experienced shipping and offshore services group
 The Mosvold family has continuously been active in shipping since 1910 .Has owned and operated
vessels in many segments (tankers,dry bulk, reefers and passenger ferries. 7 VLCCs contracted late
90 ties were successfully sold to Frontline 2001.
 First investment in offshore: Part ownership of semi early 80ies
 Acquired 3 modern J/Us from Keyes Offshore in 1989
 Mosvold Shipping was IPO‘d on the Oslo Stock Exchange in 1990
 Acquired 100% of Dual Drilling Co in 1990. Dual was a Dallas based worldwide drilling contractor
owning 3 J/Us and 10 platform rigs
 Through Dual, acquired further 3 J/Us in 1993 combined with raising new equity and listing of Dual on
NASDAQ (Mosvold Shipping retained 60% of Dual)
 Dual merged with Ensco in 1996 with payment in shares. All shares distributed to Mosvold
shareholders
 Mosvold initiated a J/U project 1H 2004 to build 2 J/U (with 4 options) at PPL Shipyard and Keppel
FELS in Singapore. The entire project sold to Awilco in 2004 and is the now the foundation of Awilco
Offshore
 Mosvold is managing the construction of two semi-submersible baredecks at the Russian yard
Sevmash. Baredecks sold to Saipem and Sea Dragon Offshore with forward delivery
 Mosvold founded Mosvold Drilling Ltd. in 2005 (2x Ultra Deep Water Drillships on order with Samsung,
acquired by Sea Drill)
 Mosvold founded Mosvold Jackup Ltd. in 2006 (2x 300 ft Jackups on order at MIS), sold to Sea Wolf
 Mosvold with innovative approach taking advantage of yard market potential, eg. MIS and Sevmash
 Mosvold with proven track record demonstrating opportunistic approach and shareholder value
creation
16
Mosvold Supply capex and funding)
 USDm 358 all-in/ready to operate cost
Capex and Funding (4x AHTS)
Yard Turnkey Contract Price
Supervision/site team/pre-del crew cost
Optional equipment
Contingency
Capitalised interest costs
All-in ready to operate cost
Project devevopment cost
SG&A/mgmt fee/legal fees/equity fee
Total Financing Requirement
 Incl. capitalised interest costs
 Total funding requirement of USDm 369
 Incl. G&A, fees and financing costs
 USDm 52 of paid-in equity
 USDm 32 from June 2007
 USDm 20 Sep 07
321
5
4
4
24
358
2
9
369
Funding
Equity
52
Convertible bond
21
2.pr Bonds (net of USD 11m repayment)
49
1.pr Senior debt (unfunded)
230
Cash from operations to delivery of 4th vessel 22
Total Funding
374
 USDm 21 convertible bond issue (Sep 07)
 Fully subscribed by companies controlled by Arne Blystad
 NOKm 185 bond issue (June 07)
 USDm 30 additional bond financing assumed in 2009
Implied cash at delivery
Net debt at delivery
 USDm 230 of take-out debt assumed upon delivery
5
295
 Take-out representing approx 62% of all-in cost
Total Capex and Funding
Vessel Capex
Optional equipment
Project development cost
Supervision etc
Capitalised interest cost
Total Capex
Equity
Convertible
Bond 1 (Vessel #1 & #2)
Bond 2 (Vessel #3 & #4)
Take-out
Accumulated cashflow pre delivery
Total Funding
Source: Mosvold Supply Ltd
USDm
"
"
"
"
"
"
"
"
"
"
"
"
2007E
64
2
1
4
72
2008E
15
2
5
22
2009E
62
1
3
7
73
2010E
120
2
3
6
131
2011E
59
2
1
62
CUM
321
4
2
9
24
360
# 1&2
154
1
2
6
9
172
# 3&4
167
3
3
15
188
Leverage
52
21
30
(1)
103
(0)
(0)
30
50
1
81
130
11
141
(11)
50
11
50
52
21
19
30
230
22
374
32
19
112
17
180
20
21
30
118
5
194
14%
6%
5%
8%
62%
6%
100%
Source: Mosvold Supply Plc
17
Confidential
Pro forma Mosvold Supply key figures (4x AHTS)
 EV USDm 350 fully invested
 2010E balance sheet
 Post-deal market cap USDm 59
 Approx 23% Mosvold ownership
 P/E 4.3x on current Pareto 2011E
estimates for similar vessels
 NOK 275k/d
 EV/EBITDA 6.9x
 P/E 1.0x on 3-yr AHTS historical
average
 NOK 450k/d
 EV/EBITDA 3.7x
Mosvold Supply Plc earnings scenarios (fully invested)
Pareto 11E
Day Rates
NOK/day
275,000
USD/day
48,246
Utilisation
96%
Daily opex
($10,000)
No of vessels
4.0
PROFORMA P&L
Vessel EBITDA
SG&A
EBITDA
Depreciation (25yr)
Operating profit
Net financials fully invested (yr1)
Net Profit (after tax)
Cash Earnings
Maintenance capex
Free cash flow (pre debt amortisation)
Free cash flow (post debt amortisation)
EPS
Share price
No of shares (fully invested)
Market capitalisation
Net debt fully invested
Enterprise Value
EV/EBITDA
P/E
RoE (on mkt cap)
FCF yield (post debt amortisation)
Net interest bearing debt/EBITDA
EBITDA/Net interest
Source: Pareto Securities ASA
3yr Avg
450,000
78,947
96%
($10,000)
4.0
Pareto 07E
550,000
96,491
96%
($10,000)
4.0
USDm
"
53
(2)
96
(2)
121
(2)
"
"
"
"
"
51
(14)
37
(23)
14
94
(14)
80
(23)
57
119
(14)
104
(23)
81
"
"
"
"
NOK
28
(2)
26
6
3.0
71
(2)
69
49
12.2
96
(2)
94
74
17.5
12.75
26.5
59
295
355
6.9
4.3
23.1 %
9%
5.8x
2.2x
12.75
26.5
59
295
355
3.8
1.0
95.7 %
23%
3.1x
4.1x
12.75
26.5
59
295
355
3.0
0.7
137.2 %
32%
2.5x
5.2x
NOK
mill
USDm
"
"
18
Confidential
Significant equity and convertible return potential
 Current asset replacement cost estimated at
NOKm 640 per vessel
Mosvold Supply equity potential (fully diluted)
 All-in delivered price based on recent quotes
 Vs. approx NOKm 525 (avg) MOSU all-in
 Mosvold fully diluted equity worth NOK
24/share on asset replacement quotes
 ~2x current share price
 >NOK 40 share price potential based on 3-yr
average earnings scenario
 EBITDA USDm 94/yr on NOK 450k/d
 Target EV/EBITDA 5.5x
 Implying P/E 3.9x on target NOK 40/share
valuation
NOK / share
delivered cost
45
40
35
30
25
20
15
10
5
0
41
24
12.75
Issue price
 USDm 21 convertible with approx 21%
ownership post conversion
 5-yr, 7.0% coupon, 30% conversion premium
Repl cost 1)
Earnings pot 1)
1) Assumption: fully diluted # of shares
Source: Pareto Securities ASA
19
Confidential
Mosvold Supply – most leveraged play in town
 Mosvold Supply strongly leveraged
 14% equity vs. committed capex
 20% equity/convertible vs. committed capex
 29% of committed capex financed post transaction (equity/convertible/bond)
 Capital structure justified based on favourable yard payment terms and Mosvold’s proven
access to additional capital
 MOSU fully financed to 2009 post transactions
 Mosvold Supply the only pure play on high-end, large AHTS
 Newbuild prices still on an upward trend (squeeze on equipment suppliers)
Leverage (Mkt Cap/EV)
40%
33%
39%
35%
30%
20%
20%
14%
10%
0%
MOSU
MOSU (incl.
Convertible)
REM
SIOFF
Peer Group
Avg
Source: Pareto Securities ASA
20
Confidential
Investment case
 Mosvold with opportunistic approach to high-end AHTS market
 Mosvold Supply Plc. (Cyprus) initiated and backed by Mosvold with substantial experience and track
record from offshore drilling, supply and shipping
 Pure and leveraged play on high-end, large AHTS vessels
 Mosvold with proven track record on opportunistic approach and shareholder value creation
 MOSU with attractive turnkey newbuild contracts and proven Vik Sandvik design
 4x AHTS (Vik Sandvik 491 Clean Design) with total USDm 358 all-in delivered price (Oct 09, Jun 10,
Des 10 and Jul 11 delivery) vs approx USDm 440 quotes from western European yards
 First right of refusal on 2 additional similar vessels
 Robust market outlook
 High-end AHTS order book balanced by strong demand (rig/FPSO/field developments), stricter safety
rules and environmental issues
 Attractive payment schedule and contract terms justifying leveraged capital structure
 Fully funded to 2009, approx 30% of capex program funded post transaction (USDm 52 equity, USDm
21 convertible, USDm 30 bonds)
 New financing in place through fully underwritten equity issue and new convertible loan fully
subscribed by companies controlled by Arne Blystad, conversion price 130% of NOK 12,75
 Significant value potential (4 vessels)
 Equity replacement value approx NOK 25 per share based on current newbuild quotes (fully diluted)
 Asset replacement quotes suggesting >100% equity return
 3-yr historical average AHTS day rates yielding P/E 1.3x (fully diluted) and EV/EBITDA 3.7x
21