Offshore Support Vessels Marine Money, 11th Annual Marine Finance Forum, New York, Nov 9th 2010 Geir K. Sandnes, Equity Research, RS Platou Markets
Contents
FIX 01. Supply & Demand of Offshore Support Vessels
Page 3
02. Current Valuations
17
03. Projected IRRs from investments in OSVs
22
2
Offshore Supply Vessel fleet
Total offshore supply vessel fleet
AHTS
• • • •
PSV
Accumulated
500
50
AHTS
PSV
2013
0
2012
0
2011
0
1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
0
1000
100
2010
500
50
150
2009
1000
100
1500
200
2008
150
250
2007
1500
200
2000
2006
250
300
2005
2000
2500
350
2004
300
400
2003
2500
350
3000
2002
400
450
2001
3000
2000
450
Total offshore supply vessel fleet
Accumulated
Fleet in operation is 2,385 vessels – 1,385 AHTS and 1,000 PSVs Further 400 vessels under construction – fleet growth of 17% (230 AHTS, 190 PSVs) 275 vessels delivered in 2009 – 180 vessels delivered as of Aug/Sept 2010 Hence, deliveries continue to be pushed to the right – growth will be smoothed
Source: ODS-Petrodata
3
Transition
Idle / laid up vessels
PSV > 4,000 DWT
300
200
350
60
300
50
250
40
200
150
30
150
100
20
100
10
50
50
0 0 April 09
June 09
Nov 09
Jan 10
Mar 10
May 10
PSV > 2,000 DWT
AHTS > 10,000 BHP
PSV < 2,000 DWT
AHTS < 10,000 BHP
• Reduction of idle/laid up vessels only related to PSV < 2,000 DWT • 2/3 of the vessels that constitute the reduction since May are not part of fleet statistics anymore Source: ODS-Petrodata
Aug 10
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
# of vessels
250
70
Delivered
Newbuild
Accumulated
• Fleet growth of 320% since 2000 • Further growth of 60% going forward
AHTS > 10,000 BHP
AHTS > 10,000 BHP
AHTS delivery schedule
100 90 80 70 60 50 40 30 20 10 0
600 500
16 14 12
400
10
300
8
200 100 0
6 4 2 0 SO ND J FM AM J J A SO ND J FMAM J J A SO ND J FMAM J 2011
Delivered
Newbuild
Accumulated
10-15,999 BHP
2012
2013
16,000+ BHP
• Fleet consists of about 530 vessels (excl. AHT) • About 110 vessels under construction • Fleet increase ca 20%
Source: ODS-Petrodata
5
Larger PSVs
PSV > 3,000 DWT
PSV delivery schedule
120
700
14
100
600
12
500
10
400
8
300
6
200
4
100
2
0
0
80 60 40 20 0
SO ND J F M AM J J A SO ND J F M AM J J A SO ND J F M AM J J A 2010
Delivered
Newbuild
Accumulated
2011 500-749m2
2012 750-899m2
2013
900+m2
• Fleet consists of about 660 vessels • About 160 vessels under construction • Fleet increase ca 25%
Source: ODS-Petrodata
6
Time working for vessel owners
Fleet constructed => 1985
Vessels ordered 250
700 600
200 # of vessels
500 400 300 200 100
150 100 50
0 0 2005 AHTS < 10,000 BHP
AHTS > 10,000 BHP
PSV < 3,000 DWT
PSV > 3,000 DWT
2006
2007
PSV > 2,000 DWT
2008
2009
May 2010
2010 YTD
AHTS > 10,000 BHP
Source: ODS-Petrodata
7
Subsea support vessels
DSV fleet - min 50 LOA with DP
ROV fleet - min 50 LOA with DP 100 90 80 70 60 50 40 30 20 10 0
16 14 12 10 8 6 4 2
Delivered
Newbuild
2013
2011
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
1971
1969
1967
0
Accumulated
25
250
20
200
15
150
10
100
5
50
0
0
1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
18
Delivered
Newbuild
Accumulated
• ROVSV fleet growth 19% (down from 25%) • DSV fleet growth 14% (down from 25%)
Source: RS Platou
8
Demand Drillship and semis under construction and accumulated # units
Jack-ups under construction and accumulated # units 80
35
600
350 30
70
30
500
60
30
25
250
40
Units
400
50
300
20
200 14
15
150
27
200
5
Upgrade
Upgrade
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1970
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
0
New Builds
Series2
50
2
0
0
1970
0
100
100
1978
10
10
1976
13 9
1974
20
1972
30
Accumulated # of f loaters
Accumulated # of JU
Source: ODS Petrodata, RS Platou Markets
Source: ODS Petrodata, RS Platou Markets
Historic and forecasted subsea tree awards
FPSO deployments 2000-2013 Planned / Possible
25
Under Construction
800 700
Number of subsea trees
30
20
300
23
Redeployment New deployments
15 10 5 0
600
500 400 300 200 100 0 2005
Source:ODS Petrodata, RS Platou Markets
'06
'07
'08
'09
Actual (Quest Of f shore)
'10E
'11E
'12E
'13E
'14E
Quest f orecast
Source: Quest Offshore Resources
9
UDW - Supply - only 17 units available in 2011 Rig Name
Manager
Rig Type
ENSCO 7500 Pacific Bora Ocean Rig Olympia Pacific Scirocco Songa Eclipse Sedco Energy Deepsea Metro I Pacific Mistral Ocean Endeavor SeaDragon II Noble Amos Runner Maersk Deliverer Ocean Rig Poseidon Stena Tay ENSCO 8504 La Muralla IV Ocean Rig Mykonos Eirik Raude Noble Clyde Boudreaux Deepsea Metro II West Capricorn Stena DrillMAX ICE Stena DrillMAX Deepwater Nautilus
Ensco Pacific Drilling Services Ocean Rig Pacific Drilling Services Songa Offshore Transocean Odfjell Drilling Pacific Drilling Services Diamond Offshore Vantage Drilling Noble Maersk Drilling Ocean Rig Stena Ensco IPC Ocean Rig Ocean Rig Noble Odfjell Drilling Seadrill Stena Stena Transocean
SS DS DS DS SS SS DS DS SS SS SS SS DS SS SS SS DS SS SS DS SS DS DS SS
Rig WD (ft)
Region
8000 10000 10000 10000 7500 7500 10000 10000 8000 10000 8000 10000 10000 8100 8500 10000 10000 10000 10000 10000 10000 7500 7500 8000
SE Asia Far East Far East Far East SE Asia W Africa Far East Far East Med/Black Sea SE Asia US GOM W Africa Far East W Africa SE Asia Far East Far East W Africa US GOM Far East SE Asia Far East S America US GOM
Operator
Chevron
Burullus LLOG AGR Total
Tullow Oil Noble Energy
Shell Shell
DP
Free Date
Y Y Y Y Y Y Y Y N Y N Y Y Y Y Y Y Y N Y Y Y Y N
12.01.2011 29.01.2011 07.04.2011 08.04.2011 07.05.2011 01.06.2011 06.06.2011 07.06.2011 25.06.2011 07.07.2011 15.07.2011 25.07.2011 07.08.2011 31.08.2011 08.09.2011 07.10.2011 07.10.2011 08.10.2011 27.11.2011 06.12.2011 08.12.2011 08.12.2011 31.12.2011 31.12.2011
2010
2011
2012
Rig on contract Mobilization Rig under construction
Source: ODS-Petrodata, RS Platou Markets
• No units available for 2010 following Deepsea Stavanger contract with BP • Only 17 units available in 2011, this is matching demand • Excess supply will quickly become undersupply changing the picture from a ”supply” to a ”demand” driven market pushing the dayrates upwards!
10
Ultra deep water backlog is peaking in 2011/12 Ultra-deepwater backlog by E&P company 500 ExxonMobil
450
Reliance
Annual rig months
400
Anadarko
350
Eni
300
PEMEX
250
Total Chevron
200
BP
150
Shell
100 50 0 2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Source: ODS-Petrodata, RS Platou Markets
• IOC and NOC’s ultra deepwater backlog peaks in 2011/12 • With continued stable commodity prices, new discoveries and shift from exploration to development drilling we expect them to secure new deepwater capacity during 2011
11
Ultra-deepwater fleet in full utilization and dayrates are bottoming out Semi/drillships (7500ft +) supply demand & utilization 90
110 %
80
100 %
# Units
Supply (LHS)
80 %
Utilization rate (RHS)
70 %
50
60 %
40
50 % 40 %
30
30 %
20
• • • •
500 000 400 000 300 000
Worldwide - Drillship >7500 - Average (US$) Worldwide - Semi >7500 Average (US$)
200 000
20 %
10 0 Jan-00
Utilization rate %
60
600 000
90 %
Demand (LHS)
USD/day
70
700 000
Semi/drillship (7500 ft+) average dayrates
10 % Jun-01 Nov-02 Apr-04 Sep-05 Feb-07
Jul-08
0% Nov-09
100 000 0 Mar-01 Aug-02
Jan-04
Jun-05
Nov-06
Apr-08
Sep-09
Full utilization and no units available for 2010 Utilization will not drop below 95% before Q4/2011 – strong foundation for a rebound in dayrates Latest fixtures indicates a bottoming of dayrates at USD 420K – USD 440 level Several units from the 2011 availability list have secured contracts and 2011 supply/demand is currently in balance
12
Day rates
North Sea PSV spot rates
North Sea AHTS spot rates
45 000
140 000
40 000
120 000
35 000
100 000
30 000 25 000
80 000
20 000
60 000
15 000
40 000
10 000 20 000
5 000 0
0 2000
2001 2002
2003
2004
2005
900+ m2
2006
2007
500-899 m2
2008
2009
2010
2000
2001
2002
2003
2004
16000+ BHP
2005
2006
2007
2008
2009
2010
10-15999 BHP
Source: RS Platou
13
Term rates – bull sign!
North Sea: PSV term rates
45 000 40 000 35 000 30 000 25 000 20 000 15 000 10 000 5 000 0
30 000 25 000
GBP/day
20 000 15 000 10 000 5 000
8-10,000 BHP
10,001+ BHP
16-19,999 BHP
20,000+ BHP
10-15,999 BHP
2,200 - 3,099 DWT
3,100+ DWT
500-749 m2 deck area
750-899 m2 deck area
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
0 1996
GPB/day
North Sea: AHTS term rates
900+ m2 deck area
Source: RS Platou
14
Second-hand values Second-hand value large AHTS
90 80
70 60 USDm
70 60 50
50
40 30 20
40
10
30
2006
2007
2008
2009
UT 712 / KMAR 404 - built '98
2010
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
UT 712-L/Havyard 842 or similar - built '06-> UT 722-L - built '98 240t BP+/20m beam+ / 500t winch - built 2000->
UT 705 or similar 3,100+ DWT built '90 ->
UT 745 - built '96 ->
MT 6000 - resale
UT 745 or similar 4,000 DWT - built '95 ->
Ulstein P101/UT 776 or similar - Resale
Second hand-value medium-sized PSVs 45 40 35 30
USDm
USDm
Second-hand value large PSVs
80
25 20 15 10 5 2006
Source: RS Platou
2007
2008
UT 706 - built
UT 755-L /VS 470 MKII - resale
15
Contents
FIX 01. Supply & Demand of Offshore Support Vessels
Page 3
02. Current Valuations
17
03. Projected IRRs from investments in OSVs
22
16
Valuation
Company
Last
M.Cap
EV
NAV
P/
USDm
NOK
NAV
EV/EBITDA adj
local
USDm
OSV Deep Sea Supply
11,1
241
687
13
0,9
12,4
5,7
5,4
3,3
2,3
DOF
44,2
688
3 287
76
0,6
10,2
7,9
6,9
3,8
3,5
149,5
1 002
1 872
247
0,6
7,7
6,2
5,8
0,8
56,5
153
725
155
0,4
10,0
6,5
5,6
41,0
143
464
57
0,7
10,6
7,8
106,5
686
2 051
214
0,5
10,9
7,5
0,6
9,7
7,0
Farstad Shipping Havila Shipping Rem Offshore Solstad Offshore Weighted average
2010
2011
Net debt/equity
2012
2010
2011
TP
2012
Rec.
NOK
1,8
Buy
14,6
2,7
Buy
60,0
0,6
0,5
Buy
200,0
1,9
1,8
1,4
Buy
90,0
5,4
1,5
1,8
1,4
Buy
54,0
6,3
1,8
1,7
1,2
Buy
145,0
6,1
2,0
1,8
1,4
Source: RS Platou Markets
• P/NAV rock bottom • EV/EBITDA multiple pricing improves 37% from 2010E to 2012E • Interestingly, shares trade far below book values (”all” asset sales last 10 yrs have resulted in book gain)
17
Norwegian High Yield Market
12
9,8
10
8
USDbn
• This market is a very good proxy for global risk appetite for offshore and shipping assets in the credit markets • Total market size ca USD 13bn + ca USD 4bn in convertible bonds • Oil, Offshore and Shipping account for 82% of volume • Many bonds are secured with either 1st or 2nd lien mortgages • Higher quality names able to fund themselves on an unsecured basis • Global institutional investor base • Activity in 2010 set to reach pre-crisis levels in 2006
5,7
6
4,2 4
3,9
2,8 2 0,9
0,8
0,5 0
2003
2004
2005
2006
2007
2008
2009
YTD 2010
Source: RS Platou Markets
18
Norwegian High Yield Market What risks will market buy today?
What risks are harder to finance still?
• Pure asset risk for modern offshore equipment (i.e. without contract) such as ultra deepwater drilling units and jack ups
• Construction risk at unproven yards
• Cash flow and operational risk on old assets
• Pure asset risk on non-generic projects or older units (i.e. without contract)
• Political risk with the right structure • Issue size ranging from USD 50-500m
19
OSV – A unique Norwegian High Yield Market
Supply & Support Total issues of NOK 3bn / USD 500m YTD 2010
900 HAVI03
800
700
DOFSUB 10/14
DOFSUB03
DOF ASA 10/13
SWAP spread (bps)
600
HAVI01
REM02
DOF04 500 SOFF02
400
Farstad 300
DOFSUB01
DOF06
SOFF01 200 SORE01
100
0
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
5,0
Time to maturity (yrs)
20
Contents
FIX 01. Supply & Demand of Offshore Support Vessels
Page 3
02. Current Valuations
17
03. Projected IRRs from investments in OSVs
22
21
IRRs from the past • Many projects syndicated in the previous bull cycle from 2005 and onwards • Newbuild prices (ship equipment prices) grew rapidly • Second-hand prices also increased tremendously on the back of a fantastic (North Sea spot) market • Huge credit availability; ~ 80% gearing, NIBOR/LIBOR + ~ 100bps • RS Platou Finans: IRR 17-22% • Pure speculative newbuild placement projects: IRRs of several hundreds of percentages
IRR?
WHAT NOW?
Picture: www.volstad.no
22
Estimated IRR – “Base case” • Order a high-spec PSV of about 4,000 DWT at reputable Asian yard. Secure options! • Excellent cost-benefit ratio (USD/DWT) • Price USD 32m (you cannot get it cheaper than now!) • Day rate assumptions: year 1: low day rate of USD 20,000; year 2-5: USD 30,000 • Further assumptions: 65% loan to construction price; interest rate 5%, vessel value of USD 32m after 5 years in operation, opex per day USD 13,000 (Norwegian crew) • Value assumption reasonable due to history and construction price (Norwegian yard price in the area of USD 43-47m) • All vessel sales (above 80) of Oslo listed OSV companies last 10 years have generated gains. Many sales above or in line with shipbrokers’ valuation. IRR of 22% if vessel value follows 30 years linear depreciation. Residual vessel value of USD 20m required (after 5 years) to obtain IRR of 15%.
IRR 26%
Picture: Geir K. Sandnes
23
Cost benefit ratios
Source: RS Platou
24
Resilience in values – Farstad example
Values peaked summer 2008, bottomed out winter 2010. Average increase in values of Farstad fleet in 2007: 18.1% Average decrease in values of Farstad fleet in 2008: 2.5% Average decrease in values of Farstad fleet in 2009: 15.4% Average increase in values of Farstad fleet in 1H2010: 1.7%
Average values, based upon estimates from 3 shipbrokers per year-end / 1H-end.
Source: Farstad Shipping
25
Long term shareholder value creation DOF share price
Annual return last 10 years:
80
DOF: FAR: SOFF:
60
70
19% 19% 13%
NOK
50 40 30 20 10 0 des. des. des. des. des. des. des. des. des. des. des. des. des. 97 98 99 00 01 02 03 04 05 06 07 08 09
Farstad share price
Solstad share price
180
180
160
160
140
140 120
NOK
100
80 60
100
80 60
40
40
20
20
Source: Bloomberg
feb. 10
feb. 09
feb. 08
feb. 07
feb. 06
feb. 05
feb. 04
feb. 03
feb. 02
feb. 01
feb. 00
feb. 99
feb. 98
feb. 97
feb. 96
feb. 95
feb. 94
feb. 93
feb. 92
feb. 91
0 feb. 90
NOK
120
0 okt. okt. okt. okt. okt. okt. okt. okt. okt. okt. okt. okt. okt. okt. 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Farstad NAV
Farstad P/NAV 0,9 0,8 0,7 0,6 0,5 0,4
0,3 0,2 0,1 0
Source: Farstad Shipping
Current IRR - “Special case” • AHTS newbuild Njord Viking awarded a 4 years charter party from ENI Norway for operation in the Barents Sea valued at NOK 425m • Complete support services (incl. ROV) to the MODU Scarabeo 8 • Particulars: de-icing system, latest (Norwegian) oil recovery rules (NOFO 2009), ROV hangar and launching system • Assumptions: construction cost NOK 425m, 70% mortgage financing, 5% interest rate, linear depreciation profile based upon 30 years life time of the vessel
IRR 21% IRR of 26 % if vessel value keeps up during charter period. Residual vessel value of NOK 320m required (after 4 years) to obtain IRR of 15%.
Picture: www.vikingsupply.com
28
HSE in focus
• • • • • •
“Far Star”, delivered 1999 Length 84 meter Fuel cons. 12 knot – 16 t/d (3.6 kg/DWT) Fuel cons. DP2 – 10 t/d No exhaust gas cleaning Direct mechanical propulsion, all engines normally engaged and running • Fuel tanks against outer hull
• • • • • •
UT 751 CD, delivered 2009 Length 94 meter Fuel cons. 12 knot – 10 t/d (1.8 kg/DWT) Fuel cons. DP2 – 6 t/d Cathalytic cleaners remove min 95% Nox Diesel electric power plant. Only min. number of generator sets running at any one time. • Clean design class. • Additional “environmental” investments NOK 40m
• Higher construction costs • Offset by daily fuel savings of approx. NOK 25,000
Source: Farstad / RS Platou
29
Conclusion • Construction prices at bottom – will not get any cheaper!
• Second-hand prices have come down significantly, however turned up somewhat
• P/NAV 0.6
• Market: short term challenges, very promising long term outlook
• 20-25% of fleet approaching 30 years within the next 5 years
• Newbuild placements at very low levels
Shares up 30-50% 30
Appendices
Deep Sea Supply – BUY – TP USD 2.5 Share price in Deep Sea Supply relative to key indices 13
Description of business Deep Sea Supply controls a fleet of 29 offshore service vessels whereas 6 of the vessels are under construction.
12 11
10 9
Market view The large order book of offshore support vessels as the financial turmoil hit the world, and the subsequent lower demand with high influx of vessels to the market put pressure on vessel rates and utilization. The last months the market has improved. Spot rates in the North Sea spot market, being the predominant yardstick for the state of the high-end vessel market, has improved significantly. For the first time since the financial turmoil we also see increasing asset prices. The market improvement is likely to continue into 2011. Valuation 2011 EV/EBITDA 5.7 Investment thesis Market improvement implies repricing momentum for a geared and spot exposed company like Deep Sea Supply Risks Oil price Vessel ordering
8 7 nov. 09
f eb. 10
mai. 10
Deep Sea Supply
aug. 10
OSE Benchm ark Index (Rebased) OSE Energy (Rebased)
C o mp any d at a ( 2 0 10 E) Share price (NOK) No. of shares (m) M arket cap. (USDm) Net debt YE (USDm) Enterprise value (USDm)
Ke y f igure s To tal revenue (USDm) EBITDA (USDm) EBITDA , adj. (USDm) EBIT, adj. (USDm) P re-tax pro fit, adj. (USDm) Net inco me, adj. (USDm) EPS, adj. (USD) OCFP S (USD) FCFP S (USD) B VPS (USD) Net asset value (NA V) (USD) Dividend (USD) EV/EBITDA , adj. (x) EV/EBIT, adj. (x) P /E, adj. (x) P /OCF (x) EV/FCF (x) P /B o o k (x) P /NA V (x) Dividend yield (%)
11,10 126,9 241 533 687
2006 87 55 42 32 27 26 0,25 0,4 -1,2 2,7
2007 148 102 101 84 67 54 0,43 0,5 -0,7 1,3
2008 220 152 122 92 53 56 0,44 1,0 0,4 0,9
2009 176 103 94 57 30 38 0,30 0,7 0,2 1,3
0,13 10,2 13,4 12,3 6,9 n.m. 1,1
1,71 8,7 10,4 10,5 8,2 n.m. 3,5
0,32 4,4 5,8 2,3 1,0 10,5 1,1
0,00 6,4 10,5 4,5 1,9 20,6 1,1
4,2
38,2
32,1
0,0
2 0 10 E 144 61 55 20 -9 -9 -0,07 0,2 -0,4 1,3 2,2 0,00 12,4 34,3 n.m. 8,7 n.m. 1,5 0,9 0,0
2 0 11E 218 126 120 86 55 54 0,43 0,7 0,2 1,7
2 0 12 E 227 126 120 86 53 52 0,41 0,7 0,2 2,2
0,00 5,7 7,9 4,5 2,8 26,7 1,1
0,00 5,6 7,8 4,6 2,7 25,3 0,9
0,0
0,0
32
Time to buy tonnage! OSQ 1Q OSQ 2Q OSQ 3Q
33
DOF – BUY – TP NOK 60 Share price in DOF relative to key indices
Description of business
48 46 44 42 40 38 36 34 32 30
DOF controls a fleet of 67 offshore vessels including newbuilds. With 23 different subsea vessels the group owns one of the largest fleet within the area. Market view The large order book of offshore support vessels as the financial turmoil hit the world, and the subsequent lower demand with high influx of vessels to the market put pressure on vessel rates and utilization. The last months the market has improved. Spot rates in the North Sea spot market, being the predominant yardstick for the state of the high-end vessel market, has improved significantly. For the first time since the financial turmoil we also see increasing asset prices. The market improvement is likely to continue into 2011. Valuation NAV of NOK 76 Investment thesis Market improvement implies repricing momentum for a geared company like DOF. Furthermore, vessel import possibilities to Brazil give resilience to values. Risks Oil price Vessel ordering
nov. 09
f eb. 10
DOF
mai. 10
aug. 10
OSE Benchm ark Index (Rebased) OSE Energy (Rebased)
C o mp any d at a ( 2 0 10 E) Share price (NOK) No. of shares (m) M arket cap. (NOKm) Net debt YE (NOKm) Enterprise value (NOKm)
Ke y f igure s To tal revenue (NOKm) EBITDA (NOKm) EBITDA , adj. (NOKm) EBIT, adj. (NOKm) P re-tax pro fit, adj. (NOKm) Net inco me, adj. (NOKm) EPS, adj. (NOK) OCFP S (NOK) FCFP S (NOK) B VPS (NOK) Net asset value (NA V) (NOK) Dividend (NOK) EV/EBITDA , adj. (x) EV/EBIT, adj. (x) P /E, adj. (x) P /OCF (x) EV/FCF (x) P /B o o k (x) P /NA V (x) Dividend yield (%)
44,20 91,0 4 024 15 171 19 195
2006 3 011 1292 1078 661 485 547 6,61 8,7 -13,7 39,8 70,4 1,50 8,2 13,3 10,3 7,8 n.m. 1,7 1,0 2,2
2007 3 454 1229 1060 531 181 -52 -0,62 9,1 -47,0 55,0 93,0 0,00 10,5 21,1 n.m. 6,8 n.m. 1,1 0,7 0,0
2008 4 340 1556 1186 542 -21 405 4,90 8,7 -11,2 66,4 98,0 0,00 10,1 22,2 6,9 3,9 n.m. 0,5 0,3 0,0
2009 4 327 1234 1165 328 117 13 0,14 6,6 -29,3 74,8 81,0 0,00 12,2 43,3 n.m. 5,9 n.m. 0,5 0,5 0,0
2 0 10 E 5 439 1880 1880 756 328 335 3,68 20,1 -36,5 73,9 75,8 0,00 10,2 25,4 12,0 2,2 n.m. 0,6 0,6 0,0
2 0 11E 6 357 2 651 2 651 1402 1024 819 9,00 21,7 -18,7 81,8
2 0 12 E 6 802 2 890 2 890 1607 1241 993 10,90 24,9 12,4 91,3
0,00 7,9 15,0 4,9 2,0 n.m. 0,5
0,00 6,9 12,4 4,1 1,8 17,7 0,5
0,0
0,0
34
Farstad Shipping – BUY – TP NOK 200 Share price in Farstad Shipping relative to key indices 165 160 155 150 145 140 135 130 125 120
Description of business Major global player within the market for high-end offshore supply vessels. Farstad has a fleet of 58 vessels, however no vessels under construction. Market view The large order book of offshore support vessels as the financial turmoil hit the world, and the subsequent lower demand with high influx of vessels to the market put pressure on vessel rates and utilization. The last months the market has improved. Spot rates in the North Sea spot market, being the predominant yardstick for the state of the high-end vessel market, has improved significantly. For the first time since the financial turmoil we also see increasing asset prices. The market improvement is likely to continue into 2011. Valuation NAV of NOK 258 Investment thesis Cheap on NAV, cheap on EV/EBITDA, cheap on cash flow. FCF per share of NOK 54 in 2011E and 2012E. Liquid assets of about NOK 2 bn. Risks Oil price Vessel ordering
nov. 09
f eb. 10
mai. 10
aug. 10
Farstad Shipping
OSE Benchm ark Index (Rebased) OSE Energy (Rebased)
C o mp any d at a ( 2 0 10 E) Share price (NOK) No. of shares (m) M arket cap. (NOKm) Net debt YE (NOKm) Enterprise value (NOKm)
Ke y f igure s To tal revenue (NOKm) EBITDA (NOKm) EBITDA , adj. (NOKm) EBIT, adj. (NOKm) P re-tax pro fit, adj. (NOKm) Net inco me, adj. (NOKm) EPS, adj. (NOK) OCFP S (NOK) FCFP S (NOK) B VPS (NOK) Net asset value (NA V) (NOK) Dividend (NOK) EV/EBITDA , adj. (x) EV/EBIT, adj. (x) P /E, adj. (x) P /OCF (x) EV/FCF (x) P /B o o k (x) P /NA V (x) Dividend yield (%)
149,50 39,0 5 831 5 081 10 911
2006 1941 987 978 692 521 498 12,77 19,5 -8,4 90,6 170,9 3,00 8,6 12,2 10,6 6,9 n.m. 1,5 0,8 2,2
2007 2 514 1377 1155 819 639 -154 -3,95 3,2 -15,0 88,0 218,1 4,00 7,6 10,8 n.m. 46,5 n.m. 1,7 0,7 2,7
2008 3 020 1729 1653 1287 1066 1458 37,39 31,6 -1,9 113,8 248,1 5,00 3,7 4,8 1,8 2,1 n.m. 0,6 0,3 7,4
2009 3 258 1736 1716 1261 1035 1563 40,08 29,2 -35,3 160,3 249,5 3,00 5,6 7,6 3,2 4,4 n.m. 0,8 0,5 2,3
2 0 10 E 3 232 1444 1422 900 547 528 13,54 30,4 2,7 167,6 246,7 4,00 7,7 12,1 11,0 4,9 n.m. 0,9 0,6 2,7
2 0 11E 3 455 1637 1618 1076 705 688 17,65 31,6 27,2 180,7
2 0 12 E 3 456 1588 1568 1015 669 655 16,81 31,0 26,6 192,0
5,00 6,2 9,3 8,5 4,7 9,5 0,8
5,00 5,9 9,1 8,9 4,8 8,9 0,8
3,3
3,3
35
Havila Shipping – BUY – TP NOK 90 Description of business
Share price in Havila Shipping relative to key indices 75
Havila Shipping controls a fleet of 24 PSVs, AHTS vessels, subsea support vessels and rescue recovery vessels. 3 of the vessels are under construction.
70
65 60 55
Market view The large order book of offshore support vessels as the financial turmoil hit the world, and the subsequent lower demand with high influx of vessels to the market put pressure on vessel rates and utilization. The last months the market has improved. Spot rates in the North Sea spot market, being the predominant yardstick for the state of the high-end vessel market, has improved significantly. For the first time since the financial turmoil we also see increasing asset prices. The market improvement is likely to continue into 2011.
Valuation 2011 EV/EBITDA 6.5 NAV equals NOK 154 per share Investment thesis Huge discrepancy between asset values and pricing. Above 80% of asset values relates to vessel built/tbd 2008-2011, whereas new and modern assets historically have showed high value resilience. Risks Oil price Vessel ordering
50 45 40 nov. 09
f eb. 10
mai. 10
Havila Shipping
aug. 10
OSE Benchm ark Index (Rebased) OSE Energy (Rebased)
C o mp any d at a ( 2 0 10 E) Share price (NOK) No. of shares (m) M arket cap. (NOKm) Net debt YE (NOKm) Enterprise value (NOKm)
Ke y f igure s To tal revenue (NOKm) EBITDA (NOKm) EBITDA , adj. (NOKm) EBIT, adj. (NOKm) P re-tax pro fit, adj. (NOKm) Net inco me, adj. (NOKm) EPS, adj. (NOK) OCFP S (NOK) FCFP S (NOK) B VPS (NOK) Net asset value (NA V) (NOK) Dividend (NOK) EV/EBITDA , adj. (x) EV/EBIT, adj. (x) P /E, adj. (x) P /OCF (x) EV/FCF (x) P /B o o k (x) P /NA V (x) Dividend yield (%)
56,50 15,8 893 3 337 4 230
2006 721 457 403 309 275 223 14,50 21,3 -10,0 64,6
2007 675 478 331 250 162 56 3,49 28,1 -30,7 67,8
2008 1122 740 428 330 208 245 16,38 14,3 5,4 75,4
2009 901 454 448 315 195 186 12,19 23,4 -84,8 111,5
2,00 5,5 7,2 5,8 3,9 n.m. 1,3
3,50 10,5 13,9 34,1 4,2 n.m. 1,8
16,50 5,8 7,5 2,1 2,4 30,6 0,5
0,00 8,8 12,5 4,9 2,5 n.m. 0,5
2,4
2,9
47,8
0,0
2 0 10 E 1249 579 424 244 19 -41 -2,57 23,2 -33,7 111,7 155,0 0,00 10,0 17,3 n.m. 2,4 n.m. 0,5 0,4 0,0
2 0 11E 1559 713 713 500 302 283 17,88 23,8 -28,1 129,5
2 0 12 E 1604 733 733 514 325 304 19,25 32,1 32,1 148,8
0,00 6,5 9,3 3,2 2,4 n.m. 0,4
0,00 5,6 8,0 2,9 1,8 8,2 0,4
0,0
0,0
36
Rem Offshore – BUY – TP NOK 54 Description of business
Share price in Rem Offshore relative to key indices 50
Rem Offshore controls a fleet of 14 offshore vessels, whereas 13 are majority owned and one is minority owned. 5 vessels are under construction with delivery 2011/12.
45 40
35
Market view The large order book of offshore support vessels as the financial turmoil hit the world, and the subsequent lower demand with high influx of vessels to the market put pressure on vessel rates and utilization. The last months the market has improved. Spot rates in the North Sea spot market, being the predominant yardstick for the state of the high-end vessel market, has improved significantly. For the first time since the financial turmoil we also see increasing asset prices. The market improvement is likely to continue into 2011. Valuation 2012 EV/EBITDA 5.4 Investment thesis Brand new fleet – oldest vessel from 2007 Cash flow and NAV corresponds Best business sense Risks Huge new building activity Further drop in term rates and asset values
30 25 20 nov. 09
f eb. 10
mai. 10
aug. 10
Rem Offshore
nov. 10
OSE Benchm ark Index (Rebased) OSE Energy (Rebased)
C o mp any d at a ( 2 0 10 E) Share price (NOK) No. of shares (m) M arket cap. (NOKm) Net debt YE (NOKm) Enterprise value (NOKm)
Ke y f igure s To tal revenue (NOKm) EBITDA (NOKm) EBITDA , adj. (NOKm) EBIT, adj. (NOKm) P re-tax pro fit, adj. (NOKm) Net inco me, adj. (NOKm) EPS, adj. (NOK) OCFP S (NOK) FCFP S (NOK) B VPS (NOK) Net asset value (NA V) (NOK) Dividend (NOK) EV/EBITDA , adj. (x) EV/EBIT, adj. (x) P /E, adj. (x) P /OCF (x) EV/FCF (x) P /B o o k (x) P /NA V (x) Dividend yield (%)
41,00 20,3 833 1 878 2 711
2006 190 116 116 112 90 91 6,62 5,4 -52,9 62,6
2007 532 349 286 275 213 175 4,61 3,8 -28,2 34,6
2008 779 487 437 401 268 275 6,96 5,7 -23,9 38,7
2009 804 574 305 267 203 204 6,82 8,5 21,9 40,3
0,00
0,00 12,5 13,1 11,4 14,0 n.m. 1,5
1,50 10,6 11,5 8,0 9,8 n.m. 1,4
5,00 5,7 6,5 5,9 4,7 2,7 1,0
0,0
2,7
12,5
2 0 10 E 465 255 255 201 112 113 5,57 7,7 -65,9 66,7 57,0 1,50 10,6 13,5 7,4 5,4 n.m. 0,6 0,7 3,7
2 0 11E 722 432 432 358 224 221 10,88 12,4 -39,7 84,5 68,0 1,50 7,8 9,4 3,8 3,3 n.m. 0,5 0,6 3,7
2 0 12 E 982 599 599 508 344 339 16,69 19,8 5,0 102,9 1,50 5,4 6,4 2,5 2,1 31,6 0,4 3,7
37
Solstad Offshore – BUY – TP NOK 145 Share price in Solstad Offshore relative to key indices 130
Description of business Total fleet of 50 vessels, including the JV Nor Offshore in Asia. 4 vessels under construction. Especially strong position within (ultra)large AHTS and construction vessels.
125
120 115 110
Market view
105
The large order book of offshore support vessels as the financial turmoil hit the world, and the subsequent lower demand with high influx of vessels to the market put pressure on vessel rates and utilization. The last months the market has improved. Spot rates in the North Sea spot market, being the predominant yardstick for the state of the high-end vessel market, has improved significantly. For the first time since the financial turmoil we also see increasing asset prices. The market improvement is likely to continue into 2011.
100
Valuation NAV of NOK 214 Investment thesis Very attractive high-end / deepwater fleet at a discount Risks Oil price Vessel ordering
95 nov. 09
f eb. 10
mai. 10
Solstad Offshore
aug. 10
OSE Benchm ark Index (Rebased) OSE Energy (Rebased)
C o mp any d at a ( 2 0 10 E) Share price (NOK) No. of shares (m) M arket cap. (NOKm) Net debt YE (NOKm) Enterprise value (NOKm)
Ke y f igure s To tal revenue (NOKm) EBITDA (NOKm) EBITDA , adj. (NOKm) EBIT, adj. (NOKm) P re-tax pro fit, adj. (NOKm) Net inco me, adj. (NOKm) EPS, adj. (NOK) OCFP S (NOK) FCFP S (NOK) B VPS (NOK) Net asset value (NA V) (NOK) Dividend (NOK) EV/EBITDA , adj. (x) EV/EBIT, adj. (x) P /E, adj. (x) P /OCF (x) EV/FCF (x) P /B o o k (x) P /NA V (x) Dividend yield (%)
106,50 37,8 4 025 7 970 11 994
2006 1883 1025 929 592 473 520 13,75 31,4 2,9 84,0 156,0 4,00 8,0 12,5 10,0 4,4 67,6 1,6 0,9 2,9
2007 2 219 1386 1275 838 697 383 10,12 26,4 -38,0 98,4 227,0 4,00 6,8 10,4 15,3 5,9 n.m. 1,6 0,7 2,6
2008 2 209 1277 1203 682 320 584 15,45 27,6 -4,6 97,8 232,0 2,00 5,0 8,7 3,8 2,1 n.m. 0,6 0,3 3,4
2009 2 529 1160 1149 500 243 415 10,99 35,6 15,6 122,5 227,0 2,50 8,4 19,2 9,8 3,0 16,3 0,9 0,5 2,3
2 0 10 E 2 658 1105 1105 505 111 38 1,01 11,1 -64,0 118,8 214,0 2,50 10,9 23,7 n.m. 9,6 n.m. 0,9 0,5 2,3
2 0 11E 3 310 1630 1630 972 620 639 16,90 30,6 -10,0 135,3
2 0 12 E 3 536 1761 1761 1103 739 746 19,75 34,3 31,4 154,2
3,00 7,5 12,7 6,3 3,5 n.m. 0,8
4,00 6,3 10,0 5,4 3,1 9,3 0,7
2,8
3,8
38
UT 755 – most popular offshore supply vessel design First vessel delivered 1996 – construction price NOK 95-100m Although the design is now 14 years old it has continually evolved to incorporate all the latest technological solutions - Prolonged from 67m to 73m (UT 755L) - Bulb (UT 755 LN) - DP - Methanol tanks - FiFi
Northern Supporter (prev. Suffolk Supporter) – UT 755 - built 1996
Rem Star – UT 755 LN – delivered June 2009
Dec 2004: Rem Supplier ordered – delivered 2006 – cost NOK 120-125m Construction prices peaked 2008 around NOK 200-220m Construction price believed to be around NOK 190-200m today Rem Server (UT 755 LN) sold October 2008 (del. 1Q09) for NOK 243,5m Market value today: about NOK 170m
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