shiv-vani oil & gas exploration services limited
TRANSCRIPT
Shiv-Vani Oil & Gas Exploration Services Limited
Company Overview 3
Business Overview 7
Key Investment Highlights 15
Financial Snapshot 23
i
Table of Contents
3
Company Overview
Corporate Overview
• A leading private sector onshore Oil & Gas services provider in India with 40 onshore rigs and 10 seismic crews
• Incorporated in 1989 and promoted by the Singhee family
• Product suite includes onshore E&P services ranging from seismic, deep-drilling, coal-bed methane to integrated well services
• Strong customer relationships with major Indian national oil companies like Oil and Natural Gas Corp. Ltd. (“ONGC”), Oil India Ltd. (“OIL”) and Petroleum Development Oman (PDO)
– Projects spread across over 30 sites in India and Oman / Middle East, providing cost and time advantages
• Outstanding order book of $ 671m as of 30th Sep, 2010
• International partnerships expand capabilities
Express Drilling Systems, USA -(Executing US$200m CBM project via unincorporated JV)
KCS, Kazakhstan - (Seismic and Transit Zone technology)
TNG Group, Russia - (JV for specialised seismic jobs)
4
• Purchased first work over & drilling rig• Diversified into seismic services
• IPO in Nov 1993• Commenced operations with shot-hole drilling services
Shiv-Vani Evolution
1990-93
1994-98
1999-04
2005-08
2009
2010-11
• Deployed offshore logistics support vessel• Commenced Natural gas compression operations
• Raised $ 80 m by FCCB in July 2010• Coupon 5%, YTM 5.74%, Conversion price Rs 516
• US$20m equity investment by Franklin Templeton• Deployed 10 large drilling rigs• Commenced all the eight large Rigs for ONGC USD 354.5 m contract by July 10
• Acquired drilling rig in India with capacity of 3,000 HP• International partnerships with Schlumberger, Baker Hughes• Commenced integrated well services• Obtained US$354.5m 3-year contract from ONGC
• Commenced operations in Oman / Middle East• FCCB offering US$55.0m (converted in 2007)• Entered CBM operations• CVC invested US$25.4m• Acquired 7 seismic fleets
Growth history
5
6
• 4 Rigs
• 4 Rigs leased to SV India
• 2 Seismic sets working for Seismic Solutions in Middle east
SV Oil & Natural Gas Limited (Mauritius)
Other Subsidiaries
• Shiv-Vani Oil Services Limited (India)
• Shiv-Vani Singapore Pte Limited (Singapore)
• Onshore drilling contract with PDO Oman/Shell Group
• Commenced since 2005 - 3 Rigs (deployed)
• Total Contract Value: US$244m (15 years period)
• Evergreen contract with no expiry
• Annual turnover – US$18m
99%100%
• 8 Rigs
• Rigs leased to SV India
100% 100%
Shiv-Vani Oil & Gas Co. LLC
(Oman)
Natural Oil & Gas Services
Limited (Mauritius)
• Oil Blocks Holding Limited (Cyprus)
• SV Videsh Limited (Cyprus)
Shiv-Vani Oil & Gas Exploration Services Limited (25 Rigs, 8 Seismic sets)
100%
1% TNG Shiv Geo Oil Services
Limited (India)
51%
Organisational Structure
7
Business Overview
8
Services Revenues1
($m)% of Total Revenues
Description
117.4 42%
• Large fleet of 10 sets of seismic equipments• Shot-hole rigs (truck-mounted & portable): 350 • Well-equipped to carry out operations in varied terrains ranging from mountains to dense forests • Order book of ~US$35m1
137.1 49%
• Large fleet of 40 deep drilling and work over rigs• Fleet includes advanced drilling rigs with capacity to drill wells up-to a maximum depth of 8,000
meters, including one 3,000HP drilling rig• Robust order book of ~US$520m1
19.1 7%
• Provides multilateral inseam, horizontal directional drilling, which results in increase in flow rates• 8 sets of modern directional drilling equipment• Executing US$ 200m contract for development of 3 CBM blocks for ONGC on turn key basis in
technical collaboration with Express Drilling LLC, USA• Strong order book of US$89m1
2.3 1%
• One stop solution provider Services include well logging, cementing, mud engineering, directional drilling, well testing etc
• Technology collaboration with leading international players• Improved EBITDA margins in integrated contracts
1.5 1%
• Other E&P services include operation of 4 offshore logistics support vessels, natural gas compression, design and building of gas gathering stations, laying of pipelines etc.
• Marginal field service contract at Charaideo, Assam with ONGC• Strong order book of US$27m1
Deep Drilling
Seismic
Coal Bed Methane
Integrated Well Services
Other Services
Established Integrated Oil & Gas Services Provider
(1) As of Sep 30th , 2010 US$ INR used for all translations: 45.14 as of March 31st, 2010& 44.92 as on 30th Sep 2010
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Offering high-tech seismic services
Sourcing from world class vendorsSeismic services
• Shot-hole drilling rigs – Jacro (USA)• Seismograph – Sercel, Aram (France)• Geophones / Hydrophones – Geosensor
(Canada), Geospace (USA)• DGPS – Leica (Switzerland)• Sorting system – Pelton (USA)• Total Station – Trimble (USA), Leica
(Switzerland)• Testing Equipment - Sercel, Aram (France)• Airgun – BOLT (USA)• Uphole unit – Seistronix (USA)• Cables – Sercel, Aram (France)
• Large fleet of 10 sets of seismic equipments• Shot-hole rigs (truck-mounted & portable): 350 • Number of channels: 55,000 • Well-equipped to carry out operations in varied
terrains ranging from mountains to dense forests• Dedicated team of geophysicists, surveyors and
engineers • Order book of ~US$35m (as of 30th Sep 2010)
10
Note: Split of fleet shown in terms of capacity
Amongst the largest onshore advanced deep drilling services provider in India
Deep drilling servicesExtensive range of 40 rigs
Sourcing from world class vendors
• Large fleet of 40 deep drilling and work over rigs• Fleet includes advanced drilling rigs with capacity
to drill wells up-to a maximum depth of 8,000 meters, including one 3,000 HP drilling rig
• Long term partnership with original equipment manufacturers for equipment maintenance
• Large inventory of stores and spares; 3 workshops spread across India
• Robust order book of ~US$520m (as of 30th Sep 2010)
• Basic Rig & structure – – Top Drive System – NOV (USA) – Rotary drive system – Kelly (USA)– Blow Out Preventor (BOP) – Cameron, Hydrill
& Shaffer (USA)– Mud System – Derrick (Europe)
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10
1
6
3
-
Round III
Round I*
Round IIRound
IV
PSUs 4 5 Nil
PSU - Private JVs - - Nil
Private JVs - - 8
Other private ` 4 3 Nil
Total 8 8 8
*Including 3 awarded on nomination/FIPB routeSource: Directorate General of Hydrocarbons website
Demonstrated successful diversification into CBM services
Growth potential from largely unexplored blocksCoal bed methane
• India has 247 Billions tonnes of Coal Reserves – 4 th largest in the world.
• The CBM resource is estimated at 50 TCF
• Total Sedimentary area for CBM Exploration in India is 26,000 Sq Km
• Out of this exploration has been initiated in about 60% area by way of CBM rounds
• Target CBM production 7.4 MMSCMD by 2013-14 from the current 0.15 MMSCMD.
• Shiv Vani is pioneer and leading provider of integrated CBM development services in India
• Ability to provide multilateral inseam, horizontal directional drilling
– results in significant increase in flow rates and optimises CBM production
• Advanced simulators for production and recovery of methane from coal seam reservoirs
• Executing US$200m contract for development of 3 CBM blocks for ONGC on turn key basis
• In technical collaboration with Express Drilling LLC, USA
• Strong order book of US$89m (as of 30th Sep 2010)
12
Presence across domains enables Shiv-Vani to offer end-to-end integrated services
Other businessesIntegrated well services
• Evolving as a one stop solution provider– Services include Well logging, cementing,
mud engineering, directional drilling, well testing etc
• Technology collaboration with leading international players
• Improved EBITDA margins in integrated contracts – PSU’s increasingly prefer to allot a
consolidated contract to a vendor, who in turn selectively sub-contract to global oilfield services companies like Halliburton, Schlumberger
– Such contracts result in a higher EBITDA margins due to better cost control and sub-contracting
• Developing technical capabilities to be able to provide integrating well services instead of sub-contracting to global oilfield services companies, thus providing a further upside to EBITDA margins
• Invested into R&D to develop in-house expertise on high end value added services
• Other E&P services include – operation of 4 offshore logistics support
vessels – natural gas compression– design and building of gas gathering stations – laying of pipelines etc– Additional opportunities to be explored
wherever there are synergies of utilizing existing equipment
13
Stable business terms as well as asset base
Stable contract terms
• Long term contracts (majority three years)
• Limited credit risk as significant business with PSUs
• Fixed terms contracts – no negotiations including revision in pricing
• Majority on ‘day-rate basis’
• Contract revenues de-linked from prospecting results or oil price fluctuations
• Evergreen contract with PD Oman
Stable asset / skill base
• Asset acquisition against confirmed contracts
• Own fleet of logistics support vehicles and workshop reduces downtime
• Long term maintenance contracts with OEMs
• Large inventory of stores and spares
• Geographical spread provides flexibility to offer location choice to employees
• Advanced technical equipment and expertise that helps in retention of skilled talent
14
Expanding operations: pan India and internationally
ONGC, 2 Nos. 2000 HP Integrated Drilling Rigs at Agartala
OIL, 3 Nos. 2000 HP & 1 No. 1500 HP Drilling Rigs & 2 Nos. Work over Rigs at/near Duliajan
ONGC, 2 Nos. 2000 HP Integrated Drilling Rigs & 1 Nos. 175 Ton Work over Rigs at Rajahmundry
ONGC, 1 No. 2000 HP Integrated Drilling Rig at Itarsi, MP (Frontier Basin)
ONGC, 1 No. 5o Ton Work over Rig at Bokaro
ONGC, Integrated CBM Operation at Bokaro
ONGC, 3D Seismic Data Acquisition – Sector-I, Sibsagar
ONGC, 3D Seismic Data Acquisition – Silchar
ONGC, 3 Nos. Crew Boats – Mumbai Offshore
ONGC Charaideo Marginal Field
1 No. E&P Blocks – NELP-VI, AmgudiOIL + Shiv
ONGC, 3 Nos. 2000 HP & 1 No. 3000 HP Integrated Drilling Rigs at Sibsagar
OIL, 3D Seismic Data Acquisition – Sadiya, Jonai & Moran
ONGC, 3D & 2D Seismic Data Acquisition – Sector-III & IV, Tripura & Sector-A, Sector-B
ONGC, 3D Seismic Data Acquisition – Sector-IX, Mehsana/Patan
ONGC, 3D Seismic Data Acquisition – Dumapur
One No. E&P Block NELP-VI, OIL + Shiv+Suntera
ONGC, 2 Nos. 2000 HP Integrated Drilling Rigs & 2 No. 175 Ton Work over Rig at Ankleshwar
ONGC, 3 Sets. MWD, SDMM and Drilling Jar along with Directional Drillers at Ankleshwar
ONGC, Shot Hole Drilling & Seismic Job Services - Tura, Meghalaya
ONGC, Shot Hole Drilling & Seismic Job Services - Damoh & Zabera, MP
ONGC, Shot Hole Drilling & Seismic Job Services - Katni, MP) ONGC, Shot Hole
Drilling & Seismic Job Services - Cachar
ONGC, 2D Seismic Data Acquisition – Rajouri to Punch, Himalayan Foothills of J&K
ONGC, 2D Seismic Data Acquisition – Vindhyan Basin, MP
ONGC, 2D Seismic Data Acquisition, using Vibroseis – Duliajan
ONGC, 2D Seismic Data Acquisition – Manabum, AP
ONGC, 2D Seismic Data Acquisition –Pasighat AP
ONGC, 2D Seismic Data Acquisition – KG Basin, Across river
ONGC, Shot Hole Drilling & Seismic Job Services - Solan, HP
ONGC, Shot Hole Drilling & Seismic Job Services – Jwalamukhi, Manali and other areas in HP
ONGC, Shot Hole Drilling & Seismic Job Services - Satna, Batul, Shadol & other parts of MP
ONGC, Shot Hole Drilling & Seismic Job Services- Pondicherry, Tamil Nadu
ONGC, Reservoir Data Acquisition for two years at Ankleshwar, Bharuch in Gujarat
Work overDrillingIntegrated Services for CBM
Oil & Gas Exploration
2D/3D Seismic Data Acquisition CrewShot Hole
Reservoir Data Acquisition
PDO, Oman, Drilling & Work over evergreen contracts
Note: Above illustration covers current and recently completed projects
15
Key Investment Highlights
Key Investment Highlights
1
2
4 3
6
5
Established Management Team with Deep Domain Expertise
• Expert senior management with substantial industry experience, sole focus on oil & gas sector since the last 15 years
• High quality investors including Templeton and CVC support organic and inorganic growth strategy
Attractive Financial Profile
• Track record of consistent revenue with CAGR of 59% from FY Dec-06 to FY Mar-10
• Strong EBITDA margins with average of c.41% over 3 years
• Current book stands at ~US$671mn, which is ~4.0* FY10 revenue and ~2.5x FY10 revenue
Multiple Growth Opportunities
• Broaden end to end services from drilling and work over to further up value chain like casing, fabrication etc
• Expand geographically in Middle East and North Africa (“MENA”) region
Strong Macro Drivers
• Total Oil&Gas outlay expected to increase from US$21.8bn in 2002-07 to US$48.2bn in 2007-12
• PSU E&P outlay expected to increase from US$12.5bn in 2002-07 to US$31.8bn in 2007-12
• India’s natural gas demand is expected to increase by ~42% to ~279mmscmd in the next three years
Established Integrated Oil & Gas Services Provider
• One-stop service provider for E&P operators
• Owns young fleet of 40 onshore rigs and 10 seismic crews
• Long term fixed terms contract• Conservative capex strategy
Blue Chip Customer Portfolio• Strong relationship with leading government
controlled companies including ONGC and OIL
• High entry barriers to tap PSU segment• Evergreen contract with Petro. Dev. Oman
( Shell Int.) well positioned to tap international opportunities
16
Exploration blocks awarded to PSUs under NELP I-VII
Strong Macro Drivers : India
Seismic surveys 2D (km)
Seismic surveys 3D (sq. km)
PSU E & P Outlay (US$m)
Source: Report of working group on Petroleum & Natural Gas for XI Plan; XI Plan report for Energy sector
Source: Directorate General of Hydrocarbons website(1) Total blocks include blocks that were subsequently relinquished(2) PSUs include consortiums comprising both PSUs and private sector companies
Growth: 154%
Exploratory drilling (metreage km) Exploratory wells (No.) Development wells
(No.)
17
• Demand Supply Curve of Oil of 2011-25 suggests a gap of 315 MMTPA against a demand of 376 MMTPA
• Demand Supply Curve of Gas 2011-25 suggests a gap of 221 MMSCMD against a demand of 391 MMSCMD
• Total Oil&Gas outlay to increase from US$21.8bn in 2002-07 to US$48.2bn in 2007-12
• PSU E&P outlay to increase from US$12.5bn in 2002-07 to US$31.8bn in 2007-12
• Implementation of New Exploration Licensing Policy (“NELP”) by the Government has induced acceleration in the exploration effort
• Less controls on Petroleum product pricing to encourage investments
• Emphasis on CBM - Coal Gas Methane, Gas Hydrates, UCG – Underground Coal Gasification , Shale Gas etc.
2002-07 2007-12
PSUs awarded147 blocks out of total no. of 239 blocks between 2000-2009
18
Indian Oil & Gas Industry Scenario• Total Sedimentary basins in India are 3.14 Mill Sq Km.
•Onland & Shallow water (upto200 m): 1.79 M SQKM
•Deep water : 1.35 M SQKM
• Explored 22%
• Exploration Initiated 44%
•Partly Explored / Unexplored 34%
•India is Vth largest primary energy consumer with a CAGR of 4.5%
•However per capita Energy consumption is only 0.51 TOE : 28% of global Average
•Huge gap in Oil and Gas Demand Curve of 2011-25 prompting nation to strive for exploration
Rising Domestic Energy Consumption CAGR 6.4%
WORLD : Energy Source
INDIA : Energy Source
India’s Oil and Gas Energy Source is 42% against World’s average of 58%
Established Integrated Oil & Gas Services Provider
Business Segment wise Historical Order book
Shiv-Vani
JE1 DR1 AlphageoAsian
Oilfields
Seismic
Onshore Drilling
Directional Drilling
Well Logging
Mud Logging
Cementation
CBM Services
• One of the few companies in India to provide integrated oil & gas services
• Owned equipment – with average age of c.1 year and estimated remaining life of c.20 years
• Growing integrated oil services business expected to yield higher EBITDA margins
– Increasingly sub-contracting to global oilfield services companies including Halliburton, Schlumberger
• Conservative capex strategy – Typically the company procures rigs post successfully winning a contract from its customers
• Long term contracts (majority 3 years) with usually no negotiations including revisions in pricing
(1) JE – John Energy, DR – Dewanchand Ramsaran
19
US$ INR used for 2008 – 39.41, 2009 – 50.95, 2010 – 45.14
Business Segment wise Historical Revenue
Source: Respective company websites
69 85117
5063
141
2723
19
146171
277
0
100
200
300
2008 2009 2010
US
$ m
n
Seismic & Shot Hole Drilling & Integrated Services CBM Projects
69 85117
5063
141
2723
19
146171
277
0
100
200
300
2008 2009 2010
US
$ m
n
Seismic & Shot Hole Drilling & Integrated Services CBM Projects
20
Blue Chip Customer Portfolio
• Low counterparty risk due to strong relationship with ONGC and OIL
• Obtained US$354.5m contract from ONGC in 2009
• Evergreen contract with PD Oman, well positioned to tap international opportunities
US$ INR used for all translations: 45.14
Key Customers (US$ mn) ONGC OIL
Market Capitalisation1 62,664 7,584
Government Ownership2 74.1% 78.4%
Revenues2 22,915.1 1,751.3
EBITDA Margin2 44.5% 46.9%
Planned E&P Expenditure 3 16,826.7 2,977.5
(1) As of Nov 15th 2010(2) As of FY ended March 31st, 2010(3) For 2007-2012, Source: Planning Commission of the Government of India, Eleventh Five-Year Plan Report dated June 2008
US$ INR used for 2008 – 39.41, 2009 – 50.95, 2010 – 45.14
Customer wise Historical Order book Customer wise Historical Revenue
High Entry Barriers to Tap PSU segment
• Pre qualification for PSU bids on the basis of technical expertise– Minimum networth criteria– Past track record
• 10% price preference over a foreign company for a contract bid
• Ability to offer advanced functionalities helps reduce operator’s cost
• Ability to participate in complex operations/contracts
• Tie-ups with subcontractors for offering various services
• Tie-ups with vendors key for efficient rig procurement
• Mobility of equipment and employees
• Integrated offerings provide an efficient alternative to operators
74 65
12716 59
80
1817
18
2830
53
136171
277
0
100
200
300
2008 2009 2010
US
$ m
n
ONGC OIL PD Oman Others
74 65
12716 59
80
1817
18
2830
53
136171
277
0
100
200
300
2008 2009 2010
US
$ m
n
ONGC OIL PD Oman Others
Multiple Growth Opportunities
Invest in technology, training and development
Build in-house technical expertise in areas currently dependent upon technical sub-contractors
Invest in R&D and training:
Keep pace with technological changes
Introduce new complementary service
Continue building order book of quality contractsPursue new contracts in India and abroad backed by:
Demonstrated expertise and experience
Established track record
Concentrate on key customers
Offers integrated business services:
Improves quality of contract portfolio and generates higher profit margins
Explore opportunities to diversity Grow via international expansion and
acquisitions
Invest in businesses aligned with strategic objectives
Middle East and North Africa (“MENA”) region due to increased E&P activity and better margins
Expand business lines in specialised servicesIdentify, evaluate and enter new business lines that offer services to complement existing operations
Expand CBM development services in India and abroad
Expand technical capabilities in integrated well services
Continue to collaborate with reputable third party suppliers and contractors to deliver additional product and service offerings
1
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Experienced & Professional Management Team
Prem Singhee Chairman & Managing Director
• Associated with the company since its inception
• Over 21 years of experience in oil & gas industry
Padam Singhee Joint Managing Director • Associated with the company since 1990
• Over 20 years of experience with more than 15 years in oil & gas industry
Prakash Chiman Lal Singhee President • Joined the company in Jul-2008
• Previously employed at Infotat International in Houston, USA
Rajan Gupta CFO • Joined the company in Apr-1996
• Qualified Chartered Accountant, Company Secretary
J Swain CEO (Technical Overseas)
• Joined the company in Apr-2006
Pradip Kumar Chaudhary Senior Vice President (Drilling and WO)
• Over 35 years of experience
• Joined the company in Oct-2005
• Previously served at Jindal Drilling & Industries
• Holds a B.E. (Mechanical) Degree
Gopal Mohta Senior Vice President (Commercial)
• Joined the company in Jan-1996
Strong Leadership Team with Deep Industry Knowledge and Experience…
P.K. Gupta Vice President (Finance)
S.K. Chandak Vice President (Technical)
S.M. Kaushik Vice President (Operations)
Dr. D.S.Mathur General Manager - Contracts
A.K. Vasudeva General Manager (HSE)
Clinton Miller General Manager (Directional Drilling)
S. Roy Chowdhury General Manager (Geophysical Services)
Vimal Chadha Company Secretary
…With a Deep Bench…
23
Financial Snapshot
24
Strong Operating Profile
Improving EBITDA marginsRevenue growth boosted by new contracts & higher tariffs
Strong earnings growth
CAGR: 59%
21 56 69
124
35%38% 40%
45%
0%
10%
20%
30%
40%
50%
0 20 40 60 80
100 120 140
FY 2006 FY 2008(15 Months)
FY 2009 FY 2010
Mar
gin (%
)
EB
ITD
A (U
S$m
)
EBITDA EBITDA Margin
US$ INR used for 2006 – 45.07, 2008 – 39.41, 2009 – 50.95, 2010 – 45.14
Increasing asset base
6x growth
Net Fixed Assets
25
Shiv-Vani: Significant competitive advantages
*Order book as on 30 th Sep’10
A leading player in onshore oilfield
services
Significant cost advantage
Good working history with key customers
and suppliers
Own asset base
Experienced senior management and
well-trained employees
Domestic bid advantage
• Order book* of close to US$ 671m• Fleet size includes 40 on-land rigs and latest technology seismic crews – 10 sets• Offering integrated services model, towards which industry is moving• Well positioned to capitalise on large potential for growth
• Economies of scale leading to cost advantage• Lower manpower costs, including cost of rotation• Pan-India presence• Strategic global sourcing• Own engineering workshops resulting in significant cost advantages and reduction in dependencies
• Successful track record with large upstream players in India and abroad • Well positioned to strengthen and grow these relationships• Good relationship with equipment suppliers leading to timely and economic procurement
• Ownership resulting in lower costs • Full control over deployment of assets• Ownership of majority of logistics support vehicles reduces cost of movement of equipment
• Indian PSUs provide 10% price preference to domestic players in bidding• Substantial portion of Company’s contracts with Indian PSUs• Well positioned to compete against potential foreign entrants, given track record and expertise
• Expert senior management with substantial industry experience • Well qualified team of technical professionals• Over 1,000 well trained and skilled labour• Extensive in-house training program• Technological up-gradation from international JVs