Arbeidsmetode analytikere. Kristian Tunaal 3. april 2006

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1 Arbeidsmetode analytikere Kristian Tunaal 3. april 2006

2 Overblikk Markedssyn Offensivt/defensivt => sektorvalg Selskapsvalg Endelig resultat: KJØP: SELG: MELLOMCASE: gode selskaper i gode sektorer dårlige selskaper i dårlige sektorer individuell vurdering 2

3 Markedsanalyse Makrobilde Rente Vekst Generell uro Selskapsprising Karakteristika i markedet Offensive vs. defensive sektorer Oljeprissyn 3

4 Selskapsanalyse Kilder: Regnskaper Selskapet Konkurrenter Kunder NB: alle har sin agenda... Generell lærdom "Stol aldri på et regnskap" Gode regnskaper gjerne bedre enn de ser ut...og motsatt 4

5 Selskapsanalyse Soliditet Lønnsomhet Risiko Investeringsbehov Vekstmuligheter Eiere/eieres agenda 5

6 Selskapsanalyse Soliditet: Balanse Kontantstrøm Likviditet Andre forpliktelser (pensjonsforpliktelser, capitalized lease) Lønnsomhet Kontantstrøm Fortjeneste Avkastning på eiendeler/avkastning på egenkapital 6

7 Soliditet Risiko Finansiell risiko Operasjonell risiko Investeringsbehov For vedlikehold For vekst Vekst kan kjøpes for dyrt Investeringsbehov påvirker både kontantstrøm tilgjengelig for selskapet, fremtidig avkastning på eiendeler og soliditet Eiere/eieres agenda 7

8 Fundamental analyse Kontantstrøm Relativ prising Fordeler Teoretisk korrekt Viser investorers valgmuligheter Forutsetter sektor ev. int. sammenlikning Ulemper Baserer seg på lang horisont => vanskelig å forutsi Forutsetter at investorer har valgmuligheter Grunn til rabatt? Sum-of-the-parts Viser selskapets muligheter Relevant for konglomerater Er det aktuelt for selskapet? (Norsk Hydro) Net Asset Value Hva kan selskapets eiendeler selger for? Shipping og eiendom Forutsetter lett omsettelige aktiva Er salg av eiendeler aktuelt? 8

9 Selskapsanalyse Valg av verdsettelsesgrunnlag Selskapstype Omsettelighet av eiendeler Hvor rendyrket virksomheten er Hvor lett det er å finne sammenliknbare selskaper (Ref. Tomra) Hvilken fase i utviklingen selskapet er i F.eks. Oppstart vs. modent Fortjeneste Gjeldsgrad 9

10 Sentimentanalyse Ikke kun analytikeres ansvar... Meglere og kunder har egne oppfatninger Teknisk analyse Generell markedsindikatorer 10

11 Oljerelaterte - aksjekursutvikling Return last 12 month. - vs. The S&P 500 (%) S&P 500 OSEBX Index Energy Materials Industrials Consumer Discr Consumer Staples Health Care Financials Info Tech Telecom 11

12 Norge prising vs. internasjonale peers Forward P/B PHLX Oil Service Norsk oil service nå like dyr som amerikanske Q Q Q Q Q Q Q Q Forward P/B OSEBX Oil Service Q Q Q Q Q Svært uvanlig i historisk perspektiv 12

13 Norge prising vs. internasjonale peers Forward P/E S&P 500 Oil Forward P/E OSEBX Oil Tilsvarende gjelder innen oljeaksjer 8 Jan 2005 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2005 Jan

14 Norge - oljeprisforventninger Forventninger til oljepris (future-kurve Brent Blend) Current 1 Year Ago Oljemarkedet tror på fortsatt høye oljepriser Oljeselskapene har underinvestert i flere år 14

15 Chinese crude imports in February still above last year's average after strong January CHINA Imports of Crude Oil 12.5 February: 11.2 (Av. 2005: 10.6) 10.0 Ton (millions) Source: Reuters EcoWin 15

16 Non-OPEC tilbudsvekst synker 53 Total non-opec supply estimate changes (IEA) Million barrels per day Months from end of estimated year Source: IEA 16

17 Oljeprisforventninger 70 Forward Curve Brent (IPE) / / / / / / / / / / / / / / / / / DnB NOR BASE CASE 17 DnB NOR Markets tror på fallende priser

18 Forventet økt ledig kapasitet fremover Source: IEA 18. million barrels per day USD/barrel Q1'01 Q3'01 Q1'02 Q3'02 Q1'03 Q3'03 Q1'04 Q3'04 Q1'05 Q3'05 Q1'06E Q3'06E Q1'07E Q3'07E Spare capacity, IEA estimates Spare capacity, DnB NOR Markets estimates Oil price, Brent

19 Inventories on the up Days forward cover, OECD days forward cover 70 Q1'93 Q1'94 Q1'95 Q1'96 Q1'97 Q1'98 Q1'99 Q1'00 Q1'01 Q1'02 Q1'03 Q1'04 Q1'05 Distillates inventory now high gasoline moving upwards and crude has been high for a while 19

20 Oljepris andre forhold Olje er politikk! Nigeria Oljeproduksjon ledd i intern maktkamp Venezuela Chavez sterkt anti-amerikansk Iran Opptrapping rundt atomprogrammet Russland Relativt stabilt Irak Kommentar overflødig... Vil være usikkerhet rundt oljetilbudet i lang tid fremover 20

21 Viktige parametre - oljepris Høy oljepris Norge tjener Statoil/NHY m.m. tjener Sterk norsk konsum Sterk norsk valuta Positivt for Oslo Børs 21

22 Utvalgte aksjer - avkastning (20) (40) Avkastning utvalgte aksjer (siste 12 mnd.) 22

23 Oil service - verdikjeden Seismic Sampling Utforskning Boring Exploration Drilling Production Drilling Accomodatio Subsea services n Felt utvikling Engineering Fabrication/ Construction Subsea construction market Innstallering Produksjon Avvikling Products & Technologi es Assembly Heavy Lift Subsea Construction Platform Supply & Anchor Handling Productio n & Operation Maintenance & Modification s Heavy Lift De - commissioni ng 23

24 Verdikjede Offshore Utforskning Utbygging Drift Avvikling Seismikk PGS TGS GGS Leteborring Fred. Olsen Energy Smedvig Ocean Rig M.m. Aker Kværner Acergy Subsea 7 Prosafe Bjørge Technor Corrocean Supply Drift & Vedlikehold: Aker Kværner Acergy Subsea 7 Prosafe Bjørge Technor Corrocean Borring Supply Farstad Havila District Offshore Eidesvik Solstad Drift & Vedlikehold: Aker Kværner Acergy Subsea 7 Prosafe Bjørge Technor Corrocean Borring Supply 24

25 Verftene er bortbestilt 1,000 CGT Hyundai Samsung Daewoo Mitsubishi Universal Mitsui STX Shippbuild. Imabari Capacity Years Average years Dalian Hanjiin H.I Years Asiatiske verft fullbooket i flere år fremover Europeiske verft ikke på banen Kinesiske verft har store konverteringskost nader Source: Lorentzen Stemoco and Clarkson 25

26 Etterspørselsoverskudd for flytende rigger number of rigs Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Demand Supply Source: ODS 26

27 Kapasitetsutnyttelse grundtvannsrigger 115 % 110 % 105 % 100 % 95 % Kapasitetsutnyttelsen allerede rundt 100% 90 % 85 % 80 % 75 % 70 % 65 % jan.91 aug.91 mar.92 okt.92 mai.93 des.93 jul.94 feb.95 sep.95 apr.96 nov.96 jun.97 jan.98 aug.98 mar.99 okt.99 mai.00 des.00 jul.01 feb.02 sep.02 apr.03 nov.03 jun.04 jan.05 aug.05 mar.06e okt.06e Source: ODS 27

28 Almost no ultra-deepwater availability until 2008 WaterDepth Name Bingo Cajun Express Stena Drill Max Discoverer Enterprise Ocean Confidence ENSCO Aker Semi Tbn SeaDrill SeaDrill West E-Drill GSF Development Driller I Eirik Raude Mosvold Drillship Tbn Deepwater Frontier Maersk Semi Tbn Deepwater Pathfinder Aker Semi Tbn Deepwater Expedition Deepwater Discovery SeaDrill West Navigator GSF Development Driller II Sedco Energy Discoverer Deep Seas Ocean Endeavor Noble Clyde Boudreaux GSF Explorer Maersk Semi Tbn GSF C.R. Luigs Saipem Deepwater Nautilus Noble Paul Wolff Petromena Semi Tbn Belford Dolphin Discoverer Seven Seas GSF Jack Ryan Stena Tay Deepwater Millennium Sedco Express Leiv Eiriksson Discoverer Spirit Deepwater Horizon Ocean Clipper Noble Danny Adkins Noble Dave Beard ENSCO Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Almost no rigs available until the newbuilds enter the market Expect contracts on several of the newbuilds during the first half of 2006 Eastern Drilling has been marketed for a while and SeaDrill have stated that they will achieve a contract on one semi during Q1/06 Contract Option Yard/upgrade/enroute Source: ODS and DnB NOR Markets 28

29 Også dypvannsmarkeded er stramt for rigger Worldwide Supply and Demand for Ultra Deepwater Rigs (>7500 feet) jan-99 jun-99 nov-99 apr-00 sep-00 feb-01 jul-01 des-01 mai-02 okt-02 mar-03 aug-03 jan-04 jun-04 nov-04 apr-05 sep-05 feb-06 jul-06 des-06 mai-07 okt-07 mar-08 aug-08 Existing contract Options Requirements Possibles Supply Source: Fearnleys Offshore, ODS and DnB NOR Markets Må også ta høyde for mulige nye prosjekter

30 ...or deepwater Worldwide Supply and Demand for Deepwater Rigs (>3000 feet) Source: Fearnleys Offshore, ODS and DnB NOR Markets 30 Tight market in the foreseeable future Remember the backlog of projects! nov-07 number of rigs number of rigs jan-97 jun-97 nov-97 apr-98 sep-98 feb-99 jul-99 des-99 mai-00 okt-00 mar-01 aug-01 jan-02 jun-02 nov-02 apr-03 sep-03 feb-04 jul-04 des-04 mai-05 okt-05 mar-06 aug-06 jan-07 jun-07 Existing contract Options Requirements Possibles Supply Development drilling

31 jan.05 jan.04 Ratene i sterk oppgang Day-rates for ft floaters USD/day jan.94 jan.95 jan.96 jan.97 jan.98 jan.99 jan.00 jan.01 jan.02 jan.03 Average Low High Source: ODS and DnB NOR Markets 31

32 Ownerships Independent Oil Tools (699 NOKm) 20.0% 34.4% Petrojack (1 231 NOKm) 5.4% 29.0% Petrolia Drilling (1 767 NOKm) 14.2% Petromena (507 NOKm) 19.3% 50% 19.8% Awilco Offshore (5 333 NOKm) Mosvold Drilling (1 880 NOKm) 38% Offshore Rig Services (1 507NOKm) 1.8% (Geveran) 39.5% 50% SeaDrill ( NOKm) ~40% Smedvig ( NOKm) Venture Drilling (joint venture) Premium Drilling (joint venture) 39.8% 50% 50% Eastern Drilling (2 160 NOKm) Sinvest (5 078 NOKm) 6.27% Ocean Rig (8 376 NOKm) 32

33 33

34 SeaDrill (BUY) The Consolidator 3-month Target: 65 NOK Analyst: Martin Huseby Karlsen /

35 The Company SeaDrill started as John Fredriksens' investment vehicle in the offshore rig sector. The Company was founded in May in 2005 based at Bermuda. The goal is to create a world leading drilling contractor with focus on Asia/West Africa and worldwide deepwater areas within five years. SeaDrill aims to both own and operate offshore drilling units. Growth from new-building activity, second-hand, M&A and strategic ownership positions 35

36 A Busy Summer 8 private placements since May Market cap. from 203 USDm to 1.4 USDbn since May 2005 Date Shares Price (USD) Total (USDm) ,000, ,000, ,000, ,212, ,131, ,695, ,000, ,000, Total 220,039, Source: SeaDrill 36

37 The Fleet Operating units in the fleet include: 3 jack-ups 2 FPSOs Assets in order: 4 jack-ups 3 semi-submersibles Options: 1 jack-up 3 semi-submersibles Source: SeaDrill 37

38 Strategic financial assets 33% in Apexindo Indonesian based Drilling contractor 5 offshore, 11 onshore rigs and 1 high spec jack-up in order (delivery January 2007) Joint venture Agreement Access to "Software" Administrative/Drilling personnel 24.5% stake in Ocean Rig recently sold Holds 40% of Mosvold Drilling and has a bid for the company which is likely to fail at the current bid level Has a small stake in Smedvig and is currently bidding for the Company at 205 NOK for A-shares and 165 NOK for the B-shares, only condition is above 50% acceptance. Pre-acceptance from 40% of the votes. Deadline Wednesday next week Source: SeaDrill and DnB NOR Markets research 38

39 SeaDrill (BUY) Summary Assessment Our best pick within the new-building companies. Also holds an interesting position in Mosvold Drilling acquired at an attractive price. Incorporation of Mosvold into SeaDrill would make SeaDrill control even more of the new-builds. Remember than SeaDrill also is a take-over target for US companies that would 'do something big'. Actionable management in which we have high confidence. Risk related to establishing an operating organization, but we are confident that SeaDrill management will solve this. Currently holds interesting positions in Apexindo, Smedvig and Mosvold Triggers going forward: Contracts on the units in order, contract on the first semi to be in place Q1/06 Consolidation Execution of options/ordering of more units Target price gives 2009 EV/EBITDA and P/E of 4.0x and 5.1x, respectively. Conclusion BUY recommendation and 3-month target of 65 NOK. 39

40 Ocean Rig (HOLD) News Assessment Potential refinancing ' P/E multiple power' and change of shareholders Sinvest sold 4 million shares in NOK and now owns 5.9 millions shares or 6.27%. SeaDrills 24.5% stake tried placed after close y'day to financial investors. Outcome currently unknown. Open shareholder structure in Ocean Rig, a take-over candidate again? but why did not industrial players take the shares y'day: Rapid development, Industrial players usually need time Pricing? Ocean Rig has previously announced a buy-back program and capital repayment program. Likely to increase debt through long contracts on the rigs and return capital to shareholders when the strong cash-flow generation starts. Must find ways of return capital avoid to get negative equity, should be possible through finance technicalities. Will improve P/E multiples and increase risk (and upside potential) in the case. No changes in free cash flow and slightly increasing EV/EBITDA mult. We currently have a HOLD recommendation with target 90 NOK on Ocean Rig. Due to the potential shareholder friendly repayment program, we will revaluate our recommendation and target price. Conclusion Potential shareholder friendly repayment program. Target and rec. under revaluation, but still buts & ifs. Also upside to our est. day-rates Analyst: Martin Huseby Karlsen, ; martin.huseby.karlsen@dnbnor.no 40

41 Ocean Rig now Ocean Rig HOLD Ticker code (OSE): OCR.OL Price target (NOK) 90 Upside potential -2% Share price 14.2 USD Market capitalisation 1,264 MUSD USD/NOK 6.5 Share price 92.0 NOK Market capitalisation 8,217 MNOK (MUSD) Income statement E 2006E 2007E 2008E 2009E Revenues EBITDA EBIT Net financial items Pre tax results Net income EPS (reported) EBITDA margin 48% -1% 44% 66% 71% 73% 74% EBIT margin -170% -51% 17% 46% 54% 58% 61% Net result margin -199% -121% -20% 30% 42% 46% 50% Long term debt Net interest-bearing debt Multiples E 2006E 2007E 2008E 2009E P/E n.m. n.m. n.m P/CF n.m. n.m EV/EBIT n.m. n.m EV/EBITDA 15.0 n.m EV/SALES P/BOOK Source: DnB NOR Markets (estimates) and Ocean Rig 41

42 Aker Drilling Description: 2 x 2 contract for 6th generation, ultra-deepwater, harsh environment, winterised semi-submersible rigs Aker H-6e rig design The most advanced rigs in the current market Turn-key contract with Aker Kværner (Stord) Ready-to-drill: February 2008 and October 2008 Option to be declared by June 2006 Rig price currently 640 USDm including the 2 options and 691 excluded Pros State of the art drilling rig Sponsor with capital market track record Reputable yard with strong track record Competitive delivery dates Fully funded Cons No rig manager in place High rig price requires premium day rates Limited cash investment by Sponsor 42

43 Estimates Aker Drilling Ticker code (OSE): N/A Shareprice 39 NOK Market cap 3,655 NOKm (USDm) Income statement 2005E 2006E 2007E 2008E 2009E 2010E Revenues EBITDA EBIT Net financial items Pre tax results Net income EBITDA margin n.m. n.m. n.m. 73% 73% 73% EBIT margin n.m. n.m. n.m. 63% 62% 62% Net result margin n.m. n.m. n.m. 47% 46% 47% Multiples 2005E 2006E 2007E 2008E 2009E 2010E P/E n.m n.m n.m EV/EBIT n.m n.m n.m EV/EBITDA n.m n.m n.m EV/SALES n.m n.m n.m Assumes bond to be converted in 2008, representing 17.4 million new shares Source: DnB NOR Markets (estimates) and Aker Drilling Source: DnB NOR Markets 43

44 Main regions Gulf of Mexico (GoM) Strong market Highly segmented Deepwater (> 1,000m) High tech, lower comp. Shallow rim Low tech, high comp. Decomm. projects forward Europe / North Sea Mature market Turnkey (EPIC) contracts Decomm. projects forward Caspian Sea Land-locked BP dominated Still export pipeline dependent Subsea construction market Latin America / Brazil Mega / EPIC projects Deepwater 1,000-1,500m High tech. & flexibles, flowline West Africa Strong growth 2-3 large projects per year Segmented EPICs Deepwater > 1,000m Strong IOC players Asia Pacific Growth market area Today low tech, shallow water Future deepwater Remote locations Source: Subsea 7 / DSND 44

45 Subsea players: 30 starters, 3/4 majors remaining Subsea construction players < Technip Coflexip Technip Perry CSO Stena Duco Aker Deepwater Wellstream Wellstream 2W Rockwater Halliburton Smit Subsea Subsea 7 Subsea Int'l Ugland Offshore Seateam Siem Offshore Oceaneering Stolt ROV drill support ops. Stolt Offshore SNI Stolt-Comex Seaway Comex Stolt Offshore --> 2006: Ceanic Acergy Litwin ETPM Paragon Eng. Stolt GoM ops. Cal Dive IPO Aquatica Inc. Cal Dive Canyon Offshore Saipem Micoperi Saipem Sonsub EMC Bouygues Brown & Root Source: Strategic Offshore Research, DnB NOR Markets research 45

46 Acergy Subsea construction players Ill.: Stolt Offshore Hyperflow TM > 5,000 employees Turnkey subsea contractor Project Management Conceptual and detailed design Fabrication Installation and commissioning Flow-line / pipeline Lay Trunk-line Installation Inspection, repair and maintenance (IRM) Decommissioning services Major areas: AfMed, NEC 46

47 Acergy e 2007e Salgsinntekter USDm 1,437 1,482 1,112 1,483 1,770 2,050 EBIT USDm (124) (380) EPS USD (1.76) (4.71) P/E Justert X nm nm EV/EBIT justert X 5.2 nm EBIT margin X nm nm 2.6 % 10.2 % 13.0 % 12.6 % CMPR(OSEBX&OS.Last) CMPR(STO&OS.Last)

48 Subsea e 2007e Salgsinntekter USDm ,297 1,505 1,761 EBIT USDm 0 (26) (11) EPS USD P/E Justert X nm nm nm EV/EBIT justert X nm nm EBIT margin X nm nm nm 7.8 % 10.9 % 13.8 % CMPR(OSEBX&OS.Last) CMPR(SUB&OS.Last)

49 Hvorfor aktiviteten vil øke: Subsea construction outlook Source: Cambridge Energy Research Ass., Cera Advisory Services 49

50 In the news Schlumberger, 20 January 2006 (4Q results) "Shortages of people and equipment across the industry are likely to result in cost inflation and project delays, placing a high premium on reliable suppliers of both technology and skilled personnel." Chevron, 8 December 2005: Appendix 2006 exploration and spending budget increasing 35% over 2005 to USD 14.8bn "impact from [ ] increased industry-wide costs for materials and services." 50

51 Offshore generelle faktorer Positivt Fortsatt høy oljepris Kontrakter Negativt Oljeprisfall Kostnadsoverskridelser Særlig farlig på slutten av et prosjekt Bekreftelse om prosjekter i rute 51

52 Disclaimer This report is issued subject to the General Business Terms for DnB NOR Markets. The report is based on information believed to be reliable, but DnB NOR Markets does not represent that the information in the report is accurate or complete, and it should not be relied upon as such. Confidentiality rules and internal rules restricting the exchange of information between different parts of DnB NOR Bank ASA may prevent employees of DnB NOR Markets who are preparing this report from utilising or being aware of information available in DnB NOR Bank ASA and/or affiliated companies and which may be relevant to the recipients decisions. Any opinions expressed reflect DnB NOR Markets' judgment at the time the report was prepared and are subject to change without notice. The report is not to be construed as a representation or solicitation to buy or sell any financial instrument or participate in any investment strategy. No liability whatsoever is accepted for any direct or indirect (including consequential) loss or expense arising from the use of this report. DnB NOR Bank ASA and/or its affiliated companies and/or its officers, directors and employees may be a market maker or hold a position in any instrument or related instrument discussed in this report, and may perform or seek to perform financial advisory and investment banking services related to such instruments. DnB NOR Markets may act as manager or co-manager for this company in private and/or public placement and/or resale not publicly available or commonly known (equity and/or debt financial instruments). For further details contact DnB NOR Markets at Distribution of analyses is in certain jurisdictions restricted by law. Persons into whose possession this analysis may come are required to inform themselves about and to observe such restrictions. Any U.S. recipient of this report (other than a registered broker-dealer or a bank acting in a broker-dealer capacity) that would like to effect any transaction in any security discussed herein should contact and place orders in the United States with DnB NOR Markets, Inc., which, without in any way limiting the foregoing, accepts responsibility (solely for the purposes of and within the meaning of Rule 15a-6 of the U.S. Securities Exchange Act of 1934) for this report and its dissemination in the United States. Information on the General Business Terms for DnB NOR Markets is available at This report is for clients only, and not for publication. DnB NOR Markets - a division of DnB NOR Bank ASA registered in Norway number NO (the Register of Business Enterprises), under supervision of the Financial Supervisory Authority of Norway (Kredittilsynet). DnB NOR Markets. 52