presentation to the financial community 2005 results … · presentation to the financial community...
TRANSCRIPT
February 2006
Presentation to the Financial Community
2005 Results and Snamprogetti Acquisition
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
• FY 2005 Financial Results
• Offshore Construction and Drilling
• Saipem-Snamprogetti Combination
4
FY 2005 Financial Results
5
Financials
0
100
200
300
400
500
2005200520042004
294294
485485
44
2828
6565
5555
25251414
444444
5959
6262
244244
1111
2121
28281919
0
50
100
150
200
250
300
350
400
235235255255
2005200520042004
336767
2323
44
7676
3030328328365365
0
1000
2000
3000
4000
500043064306
27072707
4747289289
609609158158
208208288288
45284528
26212621
302302
748748
299299321321
2727210210
2005200520042004
EBIT Before G&A(Mln €) EBIT and Net Income
Net Income
Income taxes
Minority Interests
Net financial expensesBoth 2004 and 2005 figures are IAS Compliant
Onshore Drilling
OnshoreOffshore DrillingOffshore
Floating Production LNG
MMO
Revenues
Proposed dividend per share € 0.19 (dividend ref. FY04 € 0.15) +26.7% Y/Y
6
Financials
Depreciation
Net Income
2005
Fleet
Project Related
FPSO
Local Content
(Mln €)
680
292292
198198
2006E
Saipem Capex
Snamprogetti Acquisition
130130
200200
6060
190190
892
190
490
Large 2006 Capex and Acquisition Commitments significantly offset by expected strong Cash Flow
Equity Purchase
Price
2006 Total Cash Out
Flow
Net Cash Enterprise Value
Additional Cash from
NWC
Cash out
580
No Planned Capital IncreaseNo Planned Capital Increase
Cash Flow
255255
199199
1012
454
Financial Debt @ Dec. 2005
Snamprogetti Capex
7
New Contract Acquisitions
2005 Contract Acquisitions & Backlog
Onshore Drilling
OnshoreOffshore DrillingOffshore
Floating Production LNG
MMO
(Mln €)
Backlog
0
1000
2000
3000
4000
5000
6000
0
1000
2000
3000
4000
5000
6000
2005200520042004 Dec. 31, 2005Dec. 31, 2005Dec. 31, 2004Dec. 31, 2004
53065306
33033303
317317
763763
6363
117117
296296
447447
55135513
31043104
382382
555555
155155
589589
298298
430430
24222422
47354735
367367
540540212212
282282413413
27382738
43874387
2222
596596275275 107
344344305305
499499
8
Saipem-Snamprogetti Combination
9
Saipem to acquire Snamprogetti for € 680 Mln in cash (*) (Enterprise Value € 490 Mln)
Effective end March ‘06 (upon approval of 2005 financials)
No regulatory approvals
Saipem-Snamprogetti Combination
(*) to be adjusted according to approved consolidated equity (no material impact expected)
Transaction’s highlightsTransaction’s highlights
10
Enhance competitive position in a growing market through:Complementary business portfolio
Wider client base and geographical presence
First class technology and proven competence
Expected cost synergies of € 30 Mln by 2008
Transaction immediately eps accretive
Saipem-Snamprogetti Combination
Strong industrial and financial rationaleStrong industrial and financial rationale
Creating a Global Leader for Design and Execution of Very Large Complex On-shore and Off-shore Projects for the O&G Industry
11
0
2
4
6
8
10
12
2002
2003
2004
2005
2006
2007
2008
2009
E&P Spending Trends - Onshore
Saipem Current Position (pre-acquisition)
LNG Liquefaction + GTL
Sources: Douglas-Westwood for LNG and GTL; UBS for Oil Sands
Total Capex12.9 Bil.US$ +135%+135%
2006-2009Total Capex
30.4 Bil.US$
2002-2005
Oil Sands (Canada)
GTS 4GTS 4OKPAI OKPAI SOKU II SOKU II
Execution of Big Projects in Frontier Areas as ‘Constructor Only’ (Karachaganak, CPC…)Execution of Big Projects in Frontier Areas as ‘Constructor Only’ (Karachaganak, CPC…)
Undertake Medium EPC Projects up to US$ 500 Mln.(Gbaran, Soku II, Gts 4, Okpai Power Plant, Rod…)Undertake Medium EPC Projects up to US$ 500 Mln.(Gbaran, Soku II, Gts 4, Okpai Power Plant, Rod…)
Engineering Capacity and Track Record limit access to Large EPC Projects esp. Gas MonetizationEngineering Capacity and Track Record limit access to Large EPC Projects esp. Gas Monetization
CPC PIPELINES & TERMINAL CPC PIPELINES & TERMINAL KARACHAGANAKKARACHAGANAK
Bil. C$
2002-2005Total Capex
23.4 Bil.C$ +48%
2006-2009Total Capex
34.5 Bil.C$
11
3.3
6.0
2.51.1
11.5
6.75.4
2.62.2
2.0
Africa Asia PacificMiddle East Latin America
FSU & Eastern Europe Western Europe
12
28%
72%
2005 Revenues ~ 2,000 Mln €
Oil & Gas
Others (mainly High Speed Train project)
Snamprogetti is a Leading International E&C Contractor for the design and implementation of large-onshore projects in the Oil & Gas Industry
Founded in 1956, 100% owned by Eni
Participated in the design and construction of:70 grass-root plants (refining, petrochemical & gas processing)Over 1,400 process unit74,500 km of onshore pipelines 21,500 km of subsea pipelines
Recent years profitability depressed by a few loss-making projects completed in 2005
Strong backlog and first-class engineering competences
4,300 employees out of which ~ 2,800 engineers
31.12. 2005 Backlog ~ 4,400 Mln €
79%
21%
Saipem-Snamprogetti Combination
Snamprogetti at a glanceSnamprogetti at a glance
13
SAUDI ARABIA- Saudi AramcoKhursaniyah Oil Production Facilities
SAUDI ARABIA- Saudi AramcoHawiyah NGL Recovery Program
Major Snamprogetti Projects OngoingMajor Snamprogetti Projects Ongoing
Saipem-Snamprogetti Combination
CANADA- Canadian Natural Resources Ltd.
Oil Sands treatment plants
NIGERIA – Nigeria LNG Limited Fourth, Fifth and Sixth LNG trains
ABU DHABI- GascoThird NGL Train
ABU DHABI- AdcoBu Hasa Oil Facilities Development
NIGERIA- Chevron Nigeria Ltd.Escravos Gas-to-Liquids Complex
QATAR – Ras Laffan Liquefied Natural Gas CompanyFifth LNG train
14
60%
26%14%
Americas
1%1%
59%
5%8%
26%
Saipem-Snamprogetti Combination
New/Wider Client BaseNew/Wider Client BaseMiddle East PresenceMiddle East Presence
Upstream/Midstream (plants & pipelines)Gas monetisation (LNG,NGL,GTL)Downstream (Oil Sands, Refining/Deep Conversion)
Upstream/Midstream (plants & pipelines)Gas monetisation (LNG,NGL,GTL)Downstream (Oil Sands, Refining/Deep Conversion)
Proven CompetencesProven Competences
Increased Resilience ref. Business Cycle
Increased Resilience ref. Business Cycle
Complementary Capital Requirement
Complementary Capital Requirement
First-Class TechnologyFirst-Class Technology
Proprietary
Affiliates - owned (i.e. Haldor Topsøe)
Licensed
Proprietary
Affiliates - owned (i.e. Haldor Topsøe)
Licensed
RationaleRationale
MAJOR & SUPERMAJOR NATIONAL OTHERS
Snamprogetti O&G Backlog 31.12.2005
34%55%
11%
Saipem Backlog 31.12.2005
Middle EastAsia and Far EastAfrica Italy
Europe
Snamprogetti O&G Backlog 31.12.2005
15
4%6%
44%
10%
8%
3%
18%
11%12%
56%100%
7% 6% 2%
31%
54%
Group BusinessGroup Business
Balanced exposure to Oil & Gas Industry
Saipem-Snamprogetti Combination
SnamprogettiSnamprogetti
Strong “E” & “P”~2,800 engineersTrack record in liquefactionTechnology base
SaipemSaipem
Strong “C”Significant Offshore-oriented Engineering CapacityDecentralisedLocal contentLow cost
CombinationCombination
Powerful EPCMega projects (>500 Mln US$)Access to liquefactionInternationalTechnology base
++
SnamprogettiSnamprogetti SaipemSaipem CombinationCombination
Onshore - Combined strengthsOnshore - Combined strengths
DrillingOnshore Leased FPSOBacklog @ 31.12.2005 Offshore MMO
Onshore
LNG
OnshoreLNG
Snamprogetti++
16
30
-3-10
5158
25
-10
0
10
20
30
2006 2007 2008
Saipem-Snamprogetti Combination Synergies
Expected cost synergies of € 30 Mln by 2008Improved efficiency potential, mainly as results of combining:
• “E” & “P” Competences (Snamprogetti) with • Decentralised “C” Competences (Saipem)
Revenue synergies potential
Sources of cost synergiesSources of cost synergies
Staff (Milan and RoW)
Group reorganisation
Procurement
Bidding and Commercial
SAP & IT
Facility management
R&D
€ Mln
Gross cost synergiesNet cost synergies
Reorganisation Costs
17
€ Mln 2006ERevenues ~ 2800
Ebit before G&A
Net Income
Snamprogetti ~ 90
~ 30
Net impact after taxes 18
Synergies before taxes 5
Tax impact on interests and synergies 4
Interests on acquisition price before taxes (*) (21)
Saipem-Snamprogetti Combination
Transaction immediately eps accretivePurchase consideration exceeding the underlying net assets (~ 460 Mln €) deducted from Saipem Equity (**) Gearing ~ 110% at time of acquisition(**) according to the International Accounting Standards
Acquisition financial impactsAcquisition financial impacts
(*) Net interests accrued on 9 months only
18
Offshore Construction and Drilling
19
2002-2005Total Capex
36.1 Bil.$
+ 39%
2006-2009Total Capex
50.2 Bil.$
E&P Spending Trends - Offshore
Saipem Current Position
Nigeria Angola Kazakhstan
Frontier Areas - ExamplesDeepwater
Sources: Douglas-Westwood for Deepwater; Wood MacKenzie for Frontier Areas
2002-2005Total Capex
48.5 Bil.$
+ 51%
2006-2009Total Capex
73.0 Bil.$
Africa Asia PacificNorth America Latin AmericaOthersWestern Europe
Fleet PrimacyFleet Primacy
New Vessels - Kazakhstan
New Vessels - Kazakhstan
Engineering Concepts
Engineering Concepts Cost EffectivenessCost Effectiveness
Saipem 7000Saipem 7000
ROV FleetROV Fleet
TRBTRBErsai 1Ersai 1Castoro 12Castoro 12
• Kizomba A-B• Rosa• Akpo
‘SLOR’‘BHOR’‘SLOR’‘BHOR’
‘‘OOLOOL’’
Saipem10000
Local ContentLocal Content
Kurik, Kazakhstan
Soyo, AngolaSharjahU.A.E.
SPS, Azerbaijan
Rumuolumeni, Nigeria
SMSRijeka-Croatia
SIPS Chennai - India
PT SOFJakarta
IndonesiaBatam, Indonesia
Hassi Messaoud,
Algeria
Kurik, Kazakhstan
Soyo, AngolaSharjahU.A.E.
SPS, Azerbaijan
Rumuolumeni, Nigeria
SMSRijeka-Croatia
SIPS Chennai - India
PT SOFJakarta
IndonesiaBatam, Indonesia
Hassi Messaoud,
Algeria
Saipem 3000
Yards/BasesYards/BasesLEGEND
Cost-Effective Engineering Centres
18.7
21.1
15.1
22.07.1
2.3
20.8
17.2
8.3
1.2 1.018.6
29.5
14.6
8.6
1.5 0.2
20
Best-in-Class Vessels - Continuous Improvement Best-in-Class Vessels - Continuous Improvement
Offshore
Saipem Worldwide Offshore Fleet Saipem Worldwide Offshore Fleet
Currently Evaluating Investment in a New Offshore VesselCurrently Evaluating Investment in a New Offshore Vesselto Reinforce Saipem Leadership in Core Areas
~ 200 Mln € Maintenance Capex - 2003-2005~ 200 Mln € Maintenance Capex - 2003-2005 ~ 80 Mln € Capex - To Date~ 80 Mln € Capex - To Date
Ersai 1Ersai 1 Castoro 12Castoro 12
TRB TRB
Semac 1Semac 1
Saipem 3000Saipem 3000
Castoro10Castoro10
Saibos FDSSaibos FDS
Castoro SeiCastoro Sei
Saipem 7000Saipem 7000 Bar ProtectorBar Protector
Castoro OttoCastoro Otto
‘Caspian Fleet’ Investment- Already in Place -
‘Caspian Fleet’ Investment- Already in Place -
21
Drilling
Shifted Impact on P/LShifted Impact on P/LExploiting Current Favourable Cycle
for Medium Term AdvantageExploiting Current Favourable Cycle
for Medium Term AdvantageImmediate Impact on BacklogImmediate Impact on Backlog
Booming Market
2003 2004 2005 2006 2007
Sharp Increase in Market DayratesConcerns over Rig Availability beyond ‘07
Sharp Increase in Market DayratesConcerns over Rig Availability beyond ‘07
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
High End Vessels* ExampleIntermediate Vessels** Example
AVG Dayrates
LOCKING IN HIGH DAYRATES
LOCKING IN HIGH DAYRATES
??
??
Negotiations Already OngoingNegotiations Already Ongoing
Long-Term Contracting
Policy
Positive Effects of current market felt when Ongoing Contracts Expire
Positive Effects of current market felt when Ongoing Contracts Expire
500
250
0
US$
*Worldwide Competitive Floaters >5001ft** North Sea Heavy Duty Jackups
Source: ODS-Petrodata
22
Jackup Semisub Drillship
45 14 2
Only if backed by Long-term Contract (according to Saipem’s policy)Only if backed by Long-term Contract (according to Saipem’s policy)
- conditions -- conditions -
Onshore: Saudi Arabia* Offshore: West Africa Floaters**
Saipem High-Quality Niches in Selected Areas - Examples:
13%20%
Offshore Rigs Presently Under Construction
Currently Evaluate Investment:Currently Evaluate Investment:2 Land Rigs1 state-of-the-art deepwater Offshore Rig
Drilling Market Expanding
High-Quality FleetMarket Share in Selected Areas
Maintaining:Saipem Drilling Rationale
** Competitive Semisub and Drillship considered
Drilling
to exploit Synergies with Construction activities leveraging on Cost Effectiveness and Local Content
* Based on Number of Active Rigs in the Country Source: ODS-Petrodata, Saipem
Source: ODS-Petrodata
23
Conclusion
24
Conclusions
Entry in the A-class onshore contractors
Slight Revenue Increase
15% Net Income Improvement2006 Guidance
Enhanced Industrial Model for Strong Market Prospects Significant Improvement
Enhanced Industrial Model for Strong Market Prospects Significant Improvement
Medium Term
RobustIndicators
Market Key Geographic Areas
Wider Saipem Exposure
Offshore Strategy
Further Reinforcement
Onshore Strategy
Saipem stand alone
Acquisition expected to be € 18 Mln Net Income accretive
Snamprogetti stand alone
From Q1 20065 Business Units:
• Onshore (incl. Snamprogetti*, Saipem Onshore and LNG)• Offshore • Drilling• Leased FPSO • MMO (*) Separate Report Through Q4 ‘06