petrofac operations services: presentation to analysts2 pos financials operations services...
TRANSCRIPT
1
Petrofac Operations Services:presentation to analysts
November 2007
2
POS Financials
Operations Services contribution to Petrofac Group is presented below (based upon 1H 2007 results)
54%
6%
US$428m 40% 54%
32%
US$19.7m14%
US$11.0m14%
67%
19%
Revenue EBITDA Net income
Engineering & Construction Operations Services Energy Developments
Note: percentage figures used are before corporate, consolidation and elimination adjustments
3
POS Financials
Operations Services has shown substantial growth in revenues, net income and underlying margins
358452
507
333
82
153
222
95
0
100
200
300
400
500
600
700
800
2004 2005 2006 1H 2007
US$
m
Revenue
9.6
15.6
18.1
11.0
3.4%
2.7%
3.6% 3.8%
2.2%2.6% 2.6%2.5%
0
2
4
6
8
10
12
14
16
18
20
2004 2005 2006 1H 2007
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Net income and margin
Pass-through revenue
Net revenue
Reported margin
Adjusted margin (see note below)
Note: Adjusted margin is calculated using net profits, adjusted to exclude amortisation and finance charges relating to acquisition intangibles and deferred consideration, as a percentage of revenue adjusted to exclude pass-through revenues
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POS Financials
Relative scale of Operations Services’ business units is presented below
Training13%
Atlantic Resourcing
7%
SPD4%
Brownfields10%
Operations Management
44%
Operations Support
22%
Note: Percentages based on 1H 2007 revenue before consolidation adjustments; Brownfields revenue is reported 50/50 between the Operations Services and Engineering & Construction divisions
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Petrofac Group Structure
Engineering & ConstructionMaroun Semaan
Chief Executive Officer
OperationsServices
Rob PinchbeckChief Executive Officer
EnergyDevelopments
Amjad BseisuChief Executive Officer
Facilities ManagementGordon East
Managing Director
TrainingLeigh HowarthManaging Director
Petrofac LimitedAyman Asfari
Group Chief ExecutivePetrofac LimitedKeith Roberts
Chief Financial Officer
Petrofac LimitedJohn Methven
Director of Group HSSE& Integrity Assurance
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Facilities Management Organisation
Managing DirectorManaging Director
Gordon EastGordon East
VP FinanceVP Finance
Kevin MartinKevin Martin
VP AdministrationVP Administration
Andrew GastaldelloAndrew Gastaldello
VP OperationsVP Operations
Steve BullockSteve Bullock
Operations Manager Dubai
Petroleum
Operations Manager Dubai
Petroleum
Peter LeachPeter Leach
VP Business DevelopmentVP Business
Development
Sandy ReidSandy Reid
VP Commercial
VP Commercial
RoddyMcKnightRoddy
McKnight
Managing Director SPD
Managing Director SPD
Clive SmithClive Smith
VP BrownfieldVP Brownfield
Bill BaylissBill Bayliss
VP Ops and Main SupportVP Ops and
Main Support
Paddy MallanPaddy Mallan
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Regional ManagerAmericas
Regional ManagerAmericas
Peter ConnerPeter Conner
Regional ManagerRussia & C/S Asia
Regional ManagerRussia & C/S Asia
Joe O’KaneJoe O’Kane
Regional DirectorAsia Pacific
Regional DirectorAsia Pacific
Phil CostelloePhil Costelloe
Regional ManagerMiddle East & AfricaRegional Manager
Middle East & Africa
Brian YoungBrian Young
Managing DirectorManaging Director
Leigh HowarthLeigh Howarth
Vice President Sales & Marketing
Vice President Sales & Marketing
Walter ThainWalter Thain
Finance DirectorFinance Director
Dave LomaxDave Lomax
Regional DirectorEurope
Regional DirectorEurope
Mike ComerfordMike Comerford
CommercialManager
CommercialManager
Jenny BamfordJenny Bamford
Training Organisation
VP FinanceVP Finance
Kevin MartinKevin Martin
VP AdministrationVP Administration
Andrew GastaldelloAndrew Gastaldello
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POS – Capabilities
Our 6 Business Streams
Operations Support
Manpower supply
Maintenance
Maintenance management
Operations Management
Duty Holder
Facilities management
Maintenance
Brownfield Engineering
Conceptual
Detailed design
Construction
Wells
Consultancy
Engineering
Project management
Training
Competence-led training
Consultancy services
Managed solutions
Consultancy
i-Perform
Metering
Plant Asset Management (PAM)
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POS - What’s different?
Our underpinning values
Petrofac people are:
Safe
Ethical
Innovative
Cost-conscious
Responsive to customers
and focus relentlessly on delivering results
Our unique selling points
Duty holder expertise
Track record
Commercial innovation
Strength and depth ofservice offering
Global footprint
Ability to blend capabilities to provide solutions
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Where we do business
Algeria
Novy Urengoy
BiokoIsland
RotterdamAberdeen
Dubai
Stavanger
Woking
Gabon
Oman
IranGulf of Mexico
Sakhalin
Kuala Lumpur
Singapore
AzerbaijanEgypt
Tunisia
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HSSEIA – The Importance of Safety & Integrity
Integrity Assurance:
− Ensuring no unforeseen process or operational incidents or major hazard events within the delivery business of Petrofac
Group Integrity Assurance policy encompassing:− Safety culture and performance of people
− Process Safety focus/Management Standards/Technical Assurance/Competency of people
− Behaviours driven by the core Petrofac Values
Focus:− High potential incidents
− Leading indicators
− Safeguarding our people and facilities (Assurance)
The Group and Divisional Chief Executive officers will deliver: − An enhanced reputation in the overall management of the safety of our people
− Effective safeguards for their working environment
− Business growth through an enhanced reputation for Process Safety Management
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Horizon Zero - Purpose
To ‘change the energy for safety’, encouraging Petrofac people to:
− Take personal responsibility for safety
− Consider the consequences of their actions
− Intervene where necessary to prevent accidents
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Operations Support & Maintenance
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Areas of activity
UK offshore: Armada, Britannia, Liverpool Bay, Morecambe Bay, Murchison, Ninian, Janice, Leadon, Gryphon, Beryl, Balmoral, Alwyn, Dunbar, Brae, Montrose, Arbroath
UK onshore: Point of Ayr Gas Terminal, Barrow Gas Terminal
Overseas: Kuwait, Iran, Sudan, Equatorial Guinea and Gabon
Atlantic Resourcing: provides temporary and permanent manpower solutions to the drilling and marine industries, from the provision of an individual with a specific skill set to complete operational teams
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Business streams
Three carefully defined business streams
– Supply People
– Services People + Supervision
– Performance People + Supervision + Management
Supply Services Performance
Skilled and CompetentPeople
Experienced Supervision
Management Personnel & Systems/Intellectual
Capital
Skilled and CompetentPeople
Experienced Supervision
Skilled and CompetentPeople
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Operations Management
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Schooner & Ketch
Northern Producer
Montrose & Arbroath
Kittiwake
Heather & Thistle
Dubai Petroleum
Service Operator Innovation
1997 2003 2005 2006
Bacton & Hewett
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Operations Management - Track Record
MeasureBusiness Area
Oil & Gas UK: Active member of new Contractor Council Step-Change: Active member of the Step Change Leadership TeamISO 9001 & ISO 14001 AccreditedOPITO Accredited Competency ProcessInvestors In People (IIP) Accredited
Stakeholder Engagement
5 KP3 Audits, 5 KP2 Audits (Regulator) and 1 Cross Company Occupational health Audit successfully completed in the past two years
Regulatory Assurance
24/7 dedicated location at Marine House with full time support team14 exercises in the past two years
Emergency Response Capability
Offshore Contractors Association(OCA) Award Winning campaign (2006)Horizon Zero Safety Campaign
10 years experience as a Duty Holder9 current Operational Safety Cases3 Design Safety Cases6 Combined Operations Safety Cases in past 2 years1 COMAH (onshore case for safety – Bacton)
Safety case management
Impressive safety performance LTIF < 0.08/200,000 man-hours (0.10 Industry)Safety delivery
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Operations Management - Track Record
MeasureBusiness Area
Contract management and procurement against 600 contracts (UKCS)Management of an annual £170m spend on 3rd parties on behalf of our clients
Supply Chain delivery
Over 150 trainees around the businessOver 300 Marine experienced staffStaff networks which share best practice
People Management
Complete system change-out for 5 assetsDemonstrable maintenance and Integrity infrastructureFocussed implementation of maintenance change – Risk-based
Maintenance Management
15 major transitions since 199711 new operational safety cases developedInterface with 12 diverse clients through transition
Change Management
14 Assets under Petrofac managementFacilities Management Capability
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Asset Transitions / Start-ups
Hutton, Murchison, Ninian 1995-96 Oryx Transition from Conoco & Chevron
Galley 1997 Texaco FPF Conversion and Field start up
Banff 1997 Conoco New build and Field start Up
Janice 1998 Kerr McGee Transfer from incumbent
Audrey, Ann, Alison 2001 Venture SNS Field Operatorship
Montrose, Arbroath 2003 Paladin Transition from BP
Hewett, Bacton 2003 Tullow Transition from ConocoPhillips
Kittiwake 2003 Venture Transition from Shell
Alwyn, Dunbar 2004 Total Transition for Total
Brae 2005 Marathon Transition from incumbent
Heather, Thistle 2005 Lundin Transition from Lundin
Schooner, Ketch 2005 Tullow Transition from Shell
Horne, Wren 2005 Tullow New Installation
Camelot 2006 Helix Transition from ExxonMobil
Fateh, SW Fateh, Falah, Rashid 2007 DPE Transition from ConocoPhillips
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Petrofac Transition Management - Execution
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Assets comprise four offshore fields, 70 platforms, 400 wells, 800km pipelines and 1,100 personnel
Full operating responsibility transferred to Petrofac in April 2007
Service operator contract for the provision of well and facilities management services for all offshore oil & gas assets
Alignment through profit sharing of upside
Material increase in scale for international Operations Services business
Dubai Petroleum
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Why Dubai Petroleum is important
First time a government entity has chosen to exploit its hydrocarbon resources through direct contracting with an international service provider
Dubai gets the capability it needs without relinquishing reserves or control of reserves
Though the fields are mature, because they were initially quite large considerable potential remains
In contrast to most UKCS mature-field examples therefore, there are major developments planned alongside the rejuvenation of the mature operation itself
For Petrofac - a reputation-building opportunity
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Early days yet, but…
As expected, the inherited organisation itself - its attitude to business - bore the imprint of more than 35 years of “business as usual”
Many opportunities for short-term production increase have already been identified and secured
The economics are different pre and post changeover: governments are looking at “100% economics” and this makes a lot more investment opportunities attractive
We have demonstrated that the risks of transfer of operatorship - the area of most concern to any resource owner contemplating change - are manageable
This transition activity has been carried out by Petrofac many times in UK but never before in an international context with an international workforce
The ability to carry this out - and particularly, the track record of having done it so many times - is a key Petrofac differentiator
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Brownfield
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Greenfield vs Brownfield
Commissioning / De-commissioning
Major Modifications(inc. Subsea Tie-backs)
Repair Orders / Minor Modifications
Removal ofexisting Plant
FEED / Detail Design
Shutdown Management /Coordination
Conceptual
Project Management
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Petrofac Brownfield - Where we do business
Algeria
Novy Urengoy
BiokoIsland
RotterdamAberdeen
Dubai
Stavanger
Woking
Gabon
Oman
Egypt IranTunisia
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Petrofac Brownfield - Personnel
676
259 281
3987
10Total
PersonnelOffshore
ConstructionOnshore
TechnicalProject
Managers /Engineers
SupportServices
BusinessManagement
0
100
200
300
400
500
600
700
800
No.
of
Pers
onne
l
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Client - Lundin
Project: Direct Oil Export
Scope: A diverse scope to modernise and downsize the oil export system in line with current and future predicted rates. The project also provides a new DCS and ESD for the platform
Value: Circa US$24 million
Status: Construction 75% complete
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Client - Venture
Project: Goosander
Scope: Topside modifications for subsea tie-back for Goosander field, inclusive of two caisson riser bundles and chemical injection system upgrade
Value: Circa US$20 million
Status: Completed to budget and ahead of schedule
31
Client - Marathon
Project: Equatorial Guinea
Scope: Additional Overhead gas compressor (onshore), increasing the availability of the existing compressor train
Value: Circa US$8 million
Status: Design complete, construction 85% complete, commissioningdue to commence early November 2007
Scope: Additional separation and cooling on Alba offshore
Value: Circa US$22 million
Status: Design 90% complete, fabricationand construction activities due to commence Q1 2008
32
Client - Talisman
Project: WaGE
Scope: Management of all Topsides. Modifications to support new gas export facility from Montrose
Value: Circa US$48 million
Status: Module installed, hook up complete, start up 27th October with First Oil achieved
Project: Accommodation Upgrade & Extension
Scope: Increase POB on Montrose from 92 to 127
Value: Circa US$14 million
Status: Project complete and fully commissioned
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Well Operations Management
3434
Started in Dubai in 2002
Offices in
– Dubai, UAE
– Aberdeen, UK
Operated in 40 countries
Worked for 65 Operators
51% acquired by Petrofac in January 2007
50 full time staff and 130 Consultants
SPD – Key Facts
3535
Consultancy Services
Consultants in all areas of upstream well operations
– Drilling management and engineering
– Well testing and completions
– Contracts engineering
– Logistics
– HSE
– Onsite supervision
– Geology and geophysics
130 consultants and growing
Consultancy teams based in Dubai and Aberdeen
Bespoke database assisting rapid response
Fully accredited to QMS ISO9001:2000
Provides crucial support to Well Engineering and Project Management
SPD - Consultancy
3636
Well Engineering
Drilling Engineering
– tendering and procurement, well design, documentation
Production Engineering
– tendering & procurement, completion design, testing, workover, stimulation, documentation
Risk Management
– risk assessment, DWOP/CWOP, HAZID/HAZOP, peer reviews
Specialist Well Engineering
– UBD, ERD, HPHT, deepwater
Well Integrity Management
– WIM systems and documentation, WI analysis, life-cycle management
SPD – Well Engineering
3737
Planning - Execution - Closeout
Project Turnkey Operations
- acting as prime contractor and assuming all risk
- fixed lump-sum fee for all services
Integrated Project Management Operations
- management, rig and all services
Contracted Project Management Operations
- contracted project team
- client holds contracts for rig and services
Pseudo Project Management Operations
- all or some tendering, procurement and personnel already in place
Drilling Projects & Wells Operations ManagementSPD – Project Management
3838
Global Areas of OperationSPD – Operations and Major Contracts
Operations Management for drilling programmeoffshore Mozambique
SasolOperations support for Yemen and Egypt
Oil Search Ltd.
Wells Management forall assets
Dubai PetroleumOperations Management for drilling programmeoffshore UAE
Atlantis
Operations Management for drilling programmesonshore Dubai
Government of Dubai
Global contract for drilling operations support
KNOC
By Q1 2008 managing 13 drilling operations simultaneously on behalf of 7 operators
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Training
40
Petrofac Training
A leading provider of training and consultancy solutions to the international oil & gas industry
Reputation stems from close to 30 years of experience in providing leading and innovative training solutions to meet industry needs
Extensive portfolio covering safety, emergency response & crisis management, operations, and technical training, and consultancy
Five operating regions
400 highly experienced and competent personnel
More than 40,000 delegates trained annually
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What’s different?
Track record
Global footprint – worldwide capability
Committed to developing national teams regionally
Flexibility and adaptability
Strength and depth of portfolio
Range of integrated services:
- Competence-led training services
- Consultancy development (identify, scope and design solution)
- Managed solutions
“Increasing Competence Minimising Risk”
42
Centres of Excellence
Montrose, Scotland• Fire training facilities • Training Management Solutions (TMS) headquarters• 2 emergency management simulators• Pipeline operations training facility• Well services training • Extensive classroom facilitiesAberdeen, Scotland• Survival training facilities• Small fire ground for basic extinguisher training• Extensive classroom and CBT training facilities• Emergency management simulator• Quayside facilities Dundee, Scotland• 20m high training freefall platform• Classroom and training facilities
Europe
Louisiana, USA• Water survival training, Shell
Robert Training Centre• Survival and Marine training,
Marine Survival Training Centre, University of Lafayette
• Offices and classroomsHouston, USA• Americas headquarters and
classroom facilitiesTrinidad• Emergency management
simulator and classroom facilities
Americas
Sharjah, UAE
• Regional headquarters
• Classroom training facilities
Middle East & Africa
Sakhalin• Operations simulator• Classroom and workshop
facilitiesMalaysia• Regional headquarters• Emergency management
simulator and classroom facilities
Asia Pacific
Integrated with the emergency services to provide an immediate and coordinated response
Emergency Response Service Centre (ERSC)
Baku, Azerbaijan• Lifting operations facilities• Mobile confined space trainer• Classroom facilitiesSangachal, Azerbaijan (operated by TTE Petrofac)• 3 phase separation plant• Technical training workshops• Classroom facilities
Russia, Central & Southern Asia
43
Selected Projects
Provision of HSE, technical, vendor and on site training for future operatives of the Harweel facility in Oman
Development and delivery of competence based operations and technical training programme, including Russian Federation requirements
Sakhalin Energy Investment Company
Shell EP Europe• Management of training requirements for Shell
EP Europe
Petrofac Operations Services (POS)
• Management of training requirements for POS (Europe)
TMS
• Design, set up and management of training and competence function for BP USA’s deepwater activities
BP USA
PDO, Harweel
Karachaganak Petroleum Operating B.V.
Two year contract supporting KPO to develop and enhance Emergency Response system for Karachaganak terminal
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Consultancy
45
Consultancy
3 Service lines
Plant Asset Management
− Maintenance Consultancy
− Turbo Machinery Group
− CBMnet
− Maintenance/Structural integrity
− Supply Chain Consultancy
− Expanding relationships globally with BP and BG
Metering
− Start-up Business
− Metering and allocations consultancy
− Specialist allocations software (PARIS)
46
Consultancy
iPerform
− Newly established JV with iQuantum Solutions
− Provision of Asset performance improvement consultancy leveraging
− iQuantum market leading measure and assessment software
− Petrofac Operational Performance Improvement capability and track record
Petrofac Performance Review
0%
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100%M
th4
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Ope
rati
ons
Effi
cien
cy
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People
48
People at the Core of Performance
Our ability to attract, acculturate, retain, motivate and develop our people is a key component of our ability to grow
We have always been focussed on this and have many programmes and processes geared to this, e.g.
− Graduate induction
− FutureNet
− Petrofac Academy
− Competent Person Profile
− Vibrant incentive and reward programmes
Petrofac Facilities Management achieved Investors in People in 2006
49
Strategy and opportunities for growth
50
The Marketplace
Integrated Major Oil Companies (IOCs)
Finding access to conventional oil in conventional regions, morechallenging
Increasingly focusing on long-term, multi-billion-US$ opportunities where national oil companies are daunted by scale and /or technical complexity
National Oil Companies (NOCs)
Increasingly asserting their power, disintermediating IOCs - both where NOCs have ready access to international finance and where they do not
Independent Oil Companies
Generally niche exploration, and less commonly, mature-asset focussed
Service companies
Finding therefore that the customer-base is shifting
The upstream oil & gas industry has four categories of major “actors” -and their inter-relationships are changing:
51
Development of the Oil Service Sector: 1960s
Integrated oil: the traditional modelLarge oil companies, horizontally integrated, broad skill set
Mai
nten
ance
Geo
logy
and
G
eoph
ysic
s
Pros
pect
G
ener
atio
n
Ope
rati
on a
nd
Refi
ning
and
Pr
oduc
t Sa
les
Expl
orat
ion
Dri
lling
Engi
neer
ing
Dev
elop
men
t
Upstream Downstream
Spec
ialis
t M
aint
enan
ce
Wel
l Ser
vice
s
Service Sector
Emerging
52
Development of the Oil Service Sector: by 1990
Geo
logy
and
G
eoph
ysic
s
Pros
pect
G
ener
atio
n
Ope
rati
on a
nd
Mai
nten
ance
Refi
ning
and
Pr
oduc
t Sa
les
Expl
orat
ion
Dri
lling
Engi
neer
ing
Dev
elop
men
t
Upstream Downstream
Spec
ialis
t M
aint
enan
ce
Wel
l Ser
vice
s
Service Sector
Growth of North Sea Service Sector skills
Outsourcing transforms the industry
53
Development of the Oil Service Sector: 2000s
Specialisation and the emergence of new players:
Nic
he/
Equi
tyIn
tegr
ated
More, capable Service Companies, vertical integration of services
Geo
logy
and
G
eoph
ysic
s
Pros
pect
G
ener
atio
n
Ope
rati
on a
nd
Mai
nten
ance
Refi
ning
and
Pr
oduc
t Sa
les
Expl
orat
ion
Dri
lling
Engi
neer
ing
Dev
elop
men
t
Spec
ialis
t M
aint
enan
ce
Wel
l Ser
vice
s
Service Sector
54
Taking our model Internationally
Few governments are as action-oriented as Dubai - so complete replication of our Dubai Petroleum contract will not be easy
This example however - and others where service companies are extending the boundaries of previous service provision - are beginning to catch the attention of some more forward-thinking NOCs
In many NOC operations considerable scope exists for efficiency improvement leading to increased productivity
It is possible that other regional players will conduct experiments in ring-fenced areas in the use of turn-key service provision
Against this theoretical opportunity has to be set the conservatism and “old-think” contractor relationship attitudes of the large Middle-Eastern NOCs -contracting models in the ME generally, lag UKCS by decades
55
Strategy for Growth
Vision:
− Global oil & gas industry’s premier facilities and infrastructure provider, admired by customers and employees for consistently delivering and rewarding excellence
Building on strengths:
− Long and proven track record in transitioning and operating assets
− Developing and bringing to market innovative commercial solutions
− Strengthening capability base to provide complete breadth of service offerings to customers
− Developing a growing and increasingly international workforce
− Combining capabilities to provide integrated solutions
56
Strategy for Growth
Focus on deliverable opportunities in near-term:
− Build from heartland of North Sea and Middle East
− Develop relationships with major IOCs to fill resource and capability gaps on key assets and add value
− Develop relationships with key NOCs and look at Joint Venture opportunities where appropriate
− Maintain position as the niche players (smaller independents) service company of choice
− Capture synergies with E&C and Energy Developments divisions
− Implement margin improvement programs across POS
57
In conclusion …
58
Summary and Key Messages
POS delivering year on year substantial growth
Dubai contract sets new benchmarks
Track record is growing even stronger
Enhanced capabilities
Innovative commercial offerings
Unique training capability
Strong culture and values throughout organisation
In conversation with major IOCs
Well-positioned with NOCs for significant opportunities
Contract growth on existing contracts
Improving margin
59
Glossary
HSE - Health Safety Environmental
Quality Management System
DWOP – Drill the Well on Paper (theoretical engineering review exercise)
CWOP – Complete the Well on Paper (theoretical engineering review exercise)
HAZID – HAZard Identification analysis exercise
HAZOP – HAZard OPerations analysis exercise
UBD – Under-Balance Drilling
ERD – Extended Reach Drilling
HPHT – High Pressure High Temperature (Drilling)
WIM – Well Integrity Management