presentation to the financial community 1h 2005 results · presentation to the financial community...

September 2005

Presentation to the Financial Community

1H 2005 Results

2

Forward-Looking Statements

Forward-looking statements are based on a number of assumptions and expectations that could ultimately prove inaccurate, as they are subject to risks and variables, outside the company’s control, that could cause actual results to differ materially, including currency fluctuations, the level of capital expenditure in the oil and gas industry as well as other industries, the timing of development of energy resources, construction and project risks, armed conflict or political instability in the Arabic Gulf or other regions, the strength of competition and interest rate fluctuations.

3

Presentation Outline

• Conclusions

• Market Trends & Saipem Strategy

• Saipem Strategy Extract:Focus on Local Content

• 1H 2005 Financial Results

4

1H 2005 Financial Results

5

EBIT Before G&A(Mln €)

OffshoreOffshore


OnshoreOnshore

Floating ProductionFloating Production LNG LNG

Onshore Drilling Onshore Drilling

Offshore DrillingOffshore Drilling MMO MMO

0

50

100

150

200

250

1H 20051H 20051H 20041H 2004

Net financial expenses

Net Income

0

50

100

150

200

Net Income

Income taxes

Minority Interests

103103 108*108*

1H 20051H 20051H 20041H 2004

206206

2828

3131

106106

77

1010

151599

214214

2626

3030

124124

22

1313

881111

Both 2004 and 2005 figures are IAS Compliant

222828

1515

223030

1414

(*) Including the negative effect of the introduction of IAS 39 for an amount of € 6 Mln

6

Outflows

Investments

Fleet

Project Related

FPSO

Local Content

(Mln €)


Sources and Application of Funds,Net Debt & D/E Ratio

874874942942

Net Debt @ Jun. 2005

D/E = 0.63 D/E = 0.63

203203

202202

Sources of Funds 1H 2005

141141

271271

8383

Application of Funds 1H 2005

Net Debt @ Dec. 2004

D/E = 0.55D/E = 0.55

11

Investments

Dividends & Shares Buy back

Employee Term. Benefit (TFR)

Cash Flow

Inflows2005E1H 2004 2004 1H 2005

350

160160

8080

4040

187

107107

5656

2424

87

137

70*70*

4747

(*) Following the acquisition of Golfinho II leased FPSOWorking Capital

& Others

7

0500

1000150020002500300035004000450050005500

0

500

1000

1500

2000

2500

New Contract Acquisitions

1H 2005 Contract Acquisitions & Backlog

Onshore Drilling

OnshoreOffshore DrillingOffshore

Floating Production LNG

MMO

(Mln €)

Backlog

1H 20051H 20051H 20041H 2004

19341934

3193194040

11221122

99

3737

213213194194

2242*2242*

144144139139

15051505

3*3*7979

Jun. 30, 2005Jun. 30, 2005Dec. 31, 2004Dec. 31, 2004

183183189189

53065306

296296

33033303

763763

447447

5429*5429*

575575

316316

35513551

107*107*282282

497497

317317117117

1011016363

(*) Not including Golfinho II leased FPSO contract (USD 600 Mln) acquired in Q3 2005

8

Market Trends & Saipem Strategy

9

Bil. $

Worldwide E&P Spending

Forecast @ June 2005

Source: Lehman Brothers

Short Term Outlook: E&P Spending

Bil. $North America E&P Spending

Bil. $International E&P Spending

60

80

100

120

140

160

180

200

2000A 2001A 2002A 2003A 2004A 2005E

+23.3%

+10.2%-0.8%

+13.4%

+14.1%

30

50

70

90

110

130

2000A 2001A 2002A 2003A 2004A 2005E

+9.3%

+13.3%

+10.3%

+24.4%

+12.2%

30

50

70

2000A 2001A 2002A 2003A 2004A 2005E

+18.3%-17.0%

+21.6%

+13.5%

+10.1%

10

Offshore Pipelines

0

2000

4000

6000

8000

10000

12000

14000

2002 2003 2004 2005E 2006E 2007E

Installations 2002-2004Km 15,400

Expected Installations2005-2007Km 26,500

+72%Km Laid

0

50

100

150

2002 2003 2004 2005E 2006E 2007E0

50

100

150

200

250

2002 2003 2004 2005E 2006E 2007E

Expected Growth 2007 vs. 2004

+35%

mbbl/day

GTLLNG

MM Tons/Year

OnshoreWorld Liquefaction Capacity World Production

Expected Growth 2007 vs. 2004:

+194%

Sources: Saipem elaborations based on Infield Database for Subsea Developments and FPSO, on Quest Offshore for Offshore Pipelines, on CERA for LNG; Saipem estimate for GTL.

Deepwater SubseaDevelopments

Market Segments Outlook

0

50

100

150

200

250

300

2002 2003 2004 2005E 2006E 2007E

Installations2002-2004

N. 365

Expected Installations2005-2007

N. 632

N. of Installa-tions +73%

Offshore

0

5

10

15

20

2002 2003 2004 2005E 2006E 2007E

+62%Installations2002-2004

N. 29

Expected Installations2005-2007

N. 47

FPSO

Units

11

Use Market Potential to Target Opportunities Meeting Strict Financial Criteria

Leased FPSO: Growth Opportunity

Saipem Leased FPSO StrategySaipem Leased FPSO Strategy

Exploit Group Financial synergies:

• Existing EPIC CompetenciesFPSO MYSTRAS

FPSO FIRENZE

Saipem’s 1st Standalone Leased FPSO:Golfinho II - awarded by Petrobras in July 2005

Saipem’s 1st Standalone Leased FPSO:Golfinho II - awarded by Petrobras in July 2005

Golfinho II Leased FPSOStorageStorage: : 1.6 MM barrels 1.6 MM barrels Production CapacityProduction Capacity: : 100,000 barrels per day100,000 barrels per dayWater DepthWater Depth: : 1,400 metres1,400 metresDurationDuration: : 9 years from 19 years from 1stst half 2007 + 3 extension optionshalf 2007 + 3 extension options (1 year each)(1 year each)Contract Value:Contract Value: USD 600 USD 600 MlnMln over 9 Years Firm Periodover 9 Years Firm Period

Leverage Group Operational Synergies

• Existing Fleet Management Expertise

• Financial Strength• Cash Flow generated from other Business (e.g. EPIC downpayments) exploited

in Capex Phase of Leased FPSO

Golfinho II FPSO

12

Saipem Strategy

OFFSHORE- Update -OFFSHORE- Update -

New Vessels - KashaganNew Vessels - Kashagan

Ersai 1Ersai 1

Castoro 12Castoro 12Shallow Water Post-Trenching Shallow Water Post-Trenching (50%)(50%)

Leased FPSOLeased FPSO

Golfinho II (Awarded Standalone)Other Opportunities

Fleet PrimacyFleet Primacy

Saipem 7000Saipem 7000

ROV FleetROV Fleet

Saipem 3000

Cost EffectivenessCost Effectiveness

SMS(Rijeka-Croatia)

Offshore

SIPS (Chennai - India)

On-OffShoreUp-DownStream

PT SOF(Jakarta-Indonesia)

Offshore

Local ContentLocal Content

Kurik Yard, KazakhstanKurikKurik Yard, Yard, KazakhstanKazakhstan

Soyo Base, AngolaSoyoSoyo Base, AngolaBase, Angola

SharjahBase, U.A.E.SharjahBase, U.A.E.

SPS Yard, AzerbaijanSPS Yard, SPS Yard,

AzerbaijanAzerbaijanRumuolumeni Base, NigeriaRumuolumeni Rumuolumeni Base, NigeriaBase, Nigeria

Engineering ConceptsEngineering Concepts

‘OOL’

• Kizomba A-B• Rosa• Akpo

FDSFDSFDS

‘SLOR’‘BHOR’‘SLOR’‘BHOR’

Engineering CentresEngineering Centres


Developed World

Cost Effective

Saipem People

20%20%

45%45%

35%35%

Saipem People

20%20%45%45%

35%35%

Local Content

Developed World

Cost Effective

Cost Effective

Yards /BasesYards /Bases

Golfinho II

13

Saipem Strategy


SMS(Rijeka-Croatia)

Offshore




Offshore

SMS(Rijeka-Croatia)

Offshore




Offshore

ONSHORE- Under Analysis -

ONSHORE- Under Analysis -

Boost Engineering CapacityBoost Engineering Capacity

Cost effectivenessCost effectiveness

Engineering

Saipem People

OFFSHORE- Update -

OFFSHORE- Update -

COMMON ENABLERS

COMMON COMMON ENABLERSENABLERS

• Extreme Environments• HC LD HP

Acquire /Develop TechnologiesAcquire /Develop Technologies

GTLGTL

LNG Chain Onshore-Offshore LNG Chain Onshore-Offshore

LNG Carrier

LNG FRSU

Esp. Ref. to Gas Monetisation

PipelinesPipelines

Fleet PrimacyFleet Primacy

New Vessels - KashaganNew Vessels - Kashagan

Leased FPSOLeased FPSO

Engineering ConceptsEngineering Concepts











Castoro 12Castoro 12Shallow Water Post-Trenching Shallow Water Post-Trenching

Ersai 1Ersai 1

(50%)(50%)

Golfinho II (Awarded Standalone)Other Opportunities

20%20%

45%45%35%35%


Developed World

Cost Effective

Cost Effective

GolfinhoGolfinho IIII

Yards /BasesSaipem 7000

Saipem 7000

ROV FleetROV Fleet

Saipem 3000

‘OOL’

• Kizomba A-B• Rosa• Akpo

FDSFDSFDS

‘SLOR’‘BHOR’‘SLOR’‘BHOR’

14

Saipem Strategy Extract: Focus on Local Content

15

Backlog Detail

Onshore Drilling

Onshore

Offshore Drilling

Offshore

Floating Production LNG

MMO

(Mln €)

Backlog in 3 Key Countries

Kazakhstan 14%

Nigeria 21%

Angola 9%

2388 44% of total backlog

Country % share of total backlog

LEGEND:

Backlog

0

1000

2000

3000

4000

5000

6000

35513551

June 30, 2005

316316

497497

282107

101

54295429

575575

11481148

753753

487487

June 30, 2005

16

2

3

4

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Reserves Reserves (2005):(2005): 23.89 23.89 bilbil. bbl . bbl (Liquids);(Liquids); 43.48 43.48 tcftcf (Gas)(Gas)

Production: 3.07 Production: 3.07 boeboe/day /day (Liquids + gas, 2005)(Liquids + gas, 2005)

Population: 137.3 million Population: 137.3 million

Nigeria

Production Increase Substantially Offshore/Deepwater Production Increase Substantially Offshore/Deepwater -- DrivenDriven

Country Highlights

FORECASTFORECASTMM MM bblbbl/d/d Nigeria Nigeria LiquidsLiquids Production Production

HISTORYHISTORY

Source: Wood Mackenzie

Saipem Present since late 1960s2,400 Nigerian employees14 contracts ongoingSeveral partnership with Nigerian indigenous companies

Saipem Presence

16

© 1993-2003 Microsoft Corporation. All rights reserved.

17

The PeopleThe People

Drilling: Scarabeo 7; Scarabeo 3Onshore Construction: Soku II, Gts 4, Okpai Power Plant,Cawthorne Channel Pipeline, Obiafu/ObrikomOffshore Projects: Akpo, Amenam II, Yoho B, East Area, ErhaLeased FPSO: Mystras II on Okono FieldMMO: activities for Shell, other clients

Main Operating Centre: Project management, Engineering, Administration, HR, Fabrication, Logistics

Nigeria

Port Harcourt, NigeriaPort Harcourt, Nigeria

2003: 2003: Rumuolumeni ExpansionRumuolumeni Expansion17

Saipem Rumuolumeni Main Characteristics:

460,000 sqm total area

Fabrication Capability:150,000+ fabrication man-hours per month

Jetty access:Vessel draft 7.5 m / 9.5 m Quay front 110 m

Current Activities

FABRICATION ACTIVITIESFABRICATION ACTIVITIESfor EAST AREA PROJECTfor EAST AREA PROJECT 17

• FOTO LCSkills Improvement Schemes - TrainingExposure to Industry Technology - Practical ApplicationLocal Employee Training in the Use of Advanced Application Software (SAP)

TECHNOLOGY TRANSFER & TRAINING

Local Content Investment - Rumuolumeni Base-Yard

FPSO ERHAFPSO ERHA GTS 4GTS 4

EAST AREAEAST AREAOKPAIOKPAI SOKU II SOKU II

SCARABEO 7SCARABEO 7

ERHA DrillingERHA Drilling

Nigerian

Expatriates-Cost Effective

Expatriates-Developed World 64%

26% 10%SPLIT PER NATIONALITY

18

Major Project - Example

Vessels:Vessels:• SAIBOS FDS• S 3000• S 355• Bar Protector

Nigeria

Client: TotalClient: TotalActivities:Activities:Subsea System includes:• 22 Oil production wells, 2 Gas injection wells,

20 Water injection wells, 10 Manifolds Production and Injection Network consisting of:• 4 x 10" ID, thermally insulated, production flow Ioops and steel

catenary risers - 48km• 1 x 8" ID gas injection line & steel catenary riser - 12km• 3 x 10" ID water injection lines and steel catenary risers - 34kmUmbilical Network consisting of:• 4 x production umbilical - 26km, 4 x injection umbilical -33km,

5 x infield, “short” umbilical - 9kmGas Export pipeline to Amenam AMP2 Platform (147km) 1 x 16",

internally coatedOil Loading Terminal (OLT)FPSO Mooring System

Local Content: 1.2 million manLocal Content: 1.2 million man--hourshoursmainly fabrication/assembly of mainly fabrication/assembly of FLETsFLETs & in& in--line tee structures, mooring piles, line tee structures, mooring piles, flowlineflowline anchoring piles, riser interface anchoring piles, riser interface spools, spools, subseasubsea spools and jumpers, quadspools and jumpers, quad--jointing of production jointing of production flowlinesflowlines, steel , steel catenarycatenary risers and OOLrisers and OOL

Overall Project Valueapprox. 920 Mln. USD

Overall Project Valueapprox. 920 Mln. USD

1350m WD1350m WD

Akpo - URFAkpo - URF

Saipem 3000

Saibos FDS

S 355 Bar Protector

1818

19

Angola

Production Increase Totally Offshore/Deepwater Production Increase Totally Offshore/Deepwater -- DrivenDriven

0

1

2

319

95

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

FORECASTFORECASTMM MM bblbbl/d/d

Angola Liquids Production Angola Liquids Production HISTORYHISTORY


Reserves: 10.76 Reserves: 10.76 BilBil. barrels (2005) . barrels (2005) Production: 1.29 MM bbl/d (2005, subProduction: 1.29 MM bbl/d (2005, sub--Saharan AfricaSaharan Africa’’s second s second largest oil producer behind Nigeria)largest oil producer behind Nigeria)Population: 10.98 million Population: 10.98 million

Country Highlights

Saipem PresenceSaipem (ex-BOS) present since early 1980s900 Angolan employees5 contracts ongoingPrincipal Operating Local Companies:

Petromar: JV 70% Saipem, 30% Sonangol. Kwanda: JV 49% Saipem, 30% Sonangol, 21% Other Angolan Partners Main Operating Centres: Soyo, Malongo, Luanda

19


20

Drilling: Saipem 10000 on RosaOffshore Projects: Rosa Surf, Kizomba B, DaliaLNG: Potential at SoyoMMO: activities for Total

Current Activities

The PeopleThe People

Angola

1.5 % OF ANNUAL TURNOVER SPENT IN TRAINING.RECOGNIZED WELDERS / PIPEFITTERS SCHOOL IN SOYO WITH EXPATRIATE TRAINER.BASIC MECHANICAL, ELECTRICITY & INSTRUMENTATION TRAINING CENTER IN SOYO.LANGUAGE COURSES : ENGLISH, FRENCH, PORTUGUESE.COMPUTERIZED SOFTWARE : CAD, EXCEL, WINDOWS, ETC.

TRAINING POLICY

KIZOMBAKIZOMBA DALIA FPSODALIA FPSO

Total base area 160 hectares and includes: industrial area, port, maintenance center, administration block, residential zone, clinic, restaurants, sports and recreation center, heliport and fuel storage tanks.

Local Content Investment - Soyo BaseMain Operating Centre:

Offshore FabricationLogisticsMMO

20

Angolan

Expatriates-Cost Effective

Expatriates-Developed World 63%

12%25%

SPLIT PER NATIONALITY

21

Vessels :• Saipem 10000• Saipem 3000• Saibos FDS

Flowlines System includes: • Production lines 65 km x Pipe in Pipe 8” x 12” and 17 x 8” FLETs• Water Injection lines 40 km x 10” + 14 x 10” FLETs• Flowlines spools and well jumpers – 4 Production ManifoldsRisers System includes:• Bundle Hybrid Offset Riser (BHOR) One set including 4 x 8 inch

production with Gas lift lines and 2 x 10 inch Water Injection lines

Umbilicals System includes:• Production Umbilicals: 60 km• Water Injection Umbilicals: 20 km• Installation of Flying leads • Coil Tubing Service Line : 54 km x 3,5 inchDrilling Activities:• Drillship Saipem 10000: drilling campaign of 2 years with the

option to extend it for a further two years

Major Project - ExampleRosaRosa

Angola

Overall Valueapprox. 620 Mln. USD

Overall Valueapprox. 620 Mln. USD

Client: TotalActivities:

Saipem 3000

Saibos FDS

Saipem 10000Saipem 10000

Local Content: 1 million manLocal Content: 1 million man--hourshoursmainly fabrication of pipemainly fabrication of pipe--inin--pipe quadpipe quad--joints and bundle hybrid offset riser (BHOR)joints and bundle hybrid offset riser (BHOR) 21

13001300--1400 m WD1400 m WD

22

Reserves Reserves (2005)(2005): 27.15 : 27.15 bilbil. bbl (Liquids); 53.53 . bbl (Liquids); 53.53 tcftcf (Gas)(Gas)Caspian Sea region's largest recoverable oil reservesCaspian Sea region's largest recoverable oil reservesProduction: 1.57 Production: 1.57 boeboe/day /day (2004)(2004)Population: 15.1 millionPopulation: 15.1 million

KazakhstanCountry Highlights

Production Increase Deriving from Offshore (Kashagan and others)Production Increase Deriving from Offshore (Kashagan and others) and Onshore (and Onshore (TengizTengiz, Karachaganak), Karachaganak)

0

1

2

3

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

FORECASTFORECASTMM MM bblbbl/d/d

HISTORYHISTORY

KazakhstanKazakhstan LiquidsLiquids Production Production


Saipem PresenceSaipem Present since 19921,300 Kazakh employeesMore than 10,000 people mobilised in the peak of activity for the Karachaganak Project

Karachaganak Development ProjectKarachaganak Development Project

22


23

Current Activities

Kazakhstan

Onshore Construction: Karachaganak Development Project (Completed)Offshore /Onshore: Kashagan Piles and Flares, Kashagan PipelineDrilling: Block D Kashagan field, duration of approx. 5 years - other onshore drilling activities

ERSAIERSAIFounded in 2003, 50/50 JV with ERC Holding (local) Activities: Fabrication

EngineeringMaritime/logistic support

Operation of Kuryk Yard andOffshore Construction Barge ERSAI 1

Construction Barge ERSAI 1Length/Width overall: 140.45/42.61 m - Depth 8.4 m Maximum lifting capacity: 800t @14m radAllowable load on crawler crane tracks: 140t / sqmDisplacement: 33,012 tDraft range: 1.65 m / 5.63 m

.ERSAI-Saipem Local Content Investment - Kuryk Yard

Kuryk Caspian Yard initiated in September 2003 650,000 sqm yard located south of AktauScope:

• Offshore Fabrication - Capability: 20,000 ton/year • Engineering and Procurement• Maritime/logistic Support

23

24

Major Project - Example

Kashagan - Experimental PhaseKashagan - Experimental Phase

Vessels:Vessels:

Purpose Designedand Built

Kazakhstan

ERSAI 1

Shallow Water Post-Trenching

BargeCastoro 12

Aktau

KASHAGAN

CASPIAN SEA

KURIK Operative Base

KURIK Operative Base

OVERALL AWARDED CONTRACTS AMOUNT: ~ 1 BIL. USDOVERALL AWARDED CONTRACTS AMOUNT: ~ 1 BIL. USD

Isolated Area:

Winter Freezing: temperatures below -20°C (ice scouring, stamukha)

Seasonal access to Caspian seaAccess channel limitations

Very Shallow Waterfrom 4m in Kashagan East to 0m near shore

Environmental restrictionsState Natural Reserve Zone

Harsh EnvironmentKashagan located in North Caspian Sea, 80 km South of Atyrau

Project DescriptionClient : Agip KCO

Experimental Phase Production Objective: 450,000 BOPD

Development will start from 2 artificial wellhead islands at Block A and Block D, then extend to 2 contiguous Blocks B & C and subsequently, artificial Island 5 will be developed

Oil and gas transported onshore through dedicated pipelines to a new oil and gas processing plant

Oil pipeline sized for 450,000 BOPD

PIPELINE PILES & FLARES DRILLING

Awarded Contracts

Local Content: 2.1 million manLocal Content: 2.1 million man--hourshoursmainly piles fabrication, pipeline coating, facilities fabricatimainly piles fabrication, pipeline coating, facilities fabrication on

Very Shallow Water Post-Trenching

Barges

24

Lack of infrastructureLack of vessels/barges

25

Conclusions

26

Conclusions

• Revenue Increase• Pricing and Efficiency Improvement

2005 Guidance

Good Growth Prospects Based on Existing ModelSignificant Improvement Potential

Good Growth Prospects Based on Existing ModelSignificant Improvement Potential

26

Results at Least in Line with 2004 Despite Negative Impact of USD Devaluation in Backlog

Results at Least in Line with 2004 Despite Negative Impact of USD Devaluation in Backlog

Medium Term

Compelling Indicators

Market Key Geographic Areas

Strong Saipem Position

Offshore Strategy

Convincing Progress

Onshore Strategy• Under Review

• Existing Strengths -An Important Element

presentation to the financial community 1h 2005 results · presentation to the financial community...

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