Shiv-Vani Oil & Gas
Exploration Services Limited
i
Table of Contents
Company Overview
3
Business Overview
7
Key Investment Highlights
15
Financial Snapshot
23
Company Overview
3
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, coalbed 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
Shiv-Vani Evolution
Growth history
• 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
•
•
•
•
•
•
•
•
•
2010-11
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
2009
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
2005-08
• Deployed offshore logistics support vessel
• Commenced Natural gas compression operations
1999-04
• Purchased first work over & drilling rig
• Diversified into seismic services
1994-98
• IPO in Nov 1993
• Commenced operations with shot-hole drilling services
1990-93
5
Organisational Structure
Shiv-Vani Oil & Gas Exploration Services Limited (25 Rigs, 8 Seismic sets)
100%
100%
• Oil Blocks
Holding Limited
(Cyprus)
• SV Videsh
Limited
(Cyprus)
SV Oil & Natural
Gas Limited
(Mauritius)
• 4 Rigs
• 4 Rigs leased
to SV India
• 2 Seismic sets
working for
Seismic
Solutions in
Middle east
99%
1%
Shiv-Vani Oil &
Gas Co. LLC
(Oman)
• Onshore drilling
contract with
PDO
Oman/Shell
Group
100%
Natural Oil &
Gas Services
Limited
(Mauritius)
• 8 Rigs
• Rigs leased to
SV India
100%
51%
Other
Subsidiaries
TNG Shiv Geo
Oil Services
Limited (India)
• Shiv-Vani Oil
Services
Limited (India)
• Shiv-Vani
Singapore Pte
Limited
(Singapore)
• Commenced
since 2005 - 3
Rigs (deployed)
• Total Contract
Value:
US$244m (15
years period)
• Evergreen
contract with no
expiry
• Annual turnover
– US$18m
6
Business Overview
7
Established Integrated Oil & Gas Services Provider
Services
Seismic
Deep
Drilling
Coal Bed
Methane
Revenues1
($m)
117.4
137.1
% of Total
Revenues
42%
49%
Description
•
•
•
•
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
•
•
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$520m1
•
19.1
7%
•
•
•
•
Integrated
Well
Services
•
2.3
1%
•
•
•
Other
Services
(1) As of Sep 30th , 2010
1.5
1%
•
•
Provides multilateral inseam, horizontal directional drilling, which results in increase in flow rates
8 sets of modern directional drilling equipment
Executing US$ 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
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
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$27m1
US$ INR used for all translations: 45.14 as of March 31st, 2010
& 44.92 as on 30th Sep 2010
8
Offering high-tech seismic services
Seismic services
•
•
•
•
•
•
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)
Sourcing from world class vendors
•
•
•
•
•
•
•
•
•
•
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)
9
Amongst the largest onshore advanced deep drilling
services provider in India
Extensive range of 40 rigs
Deep drilling services
•
•
•
•
•
Note: Split of fleet shown in terms of capacity
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)
Sourcing from world class vendors
•
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)
10
Demonstrated successful diversification into CBM
services
Coal bed methane
•
•
•
•
India has 247 Billions tonnes of Coal Reserves – 4th
largest in the world.
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
•
Round
Round
Round II
I*
III
The CBM resource is estimated at 50 TCF
•
•
Growth potential from largely unexplored blocks
Ability to provide multilateral inseam, horizontal
directional drilling
– results in significant increase in flow rates and
optimises CBM production
Round
IV
PSUs
4
5
-
Nil
PSU - Private JVs
-
-
3
Nil
Private JVs
-
-
6
8
Other private `
4
3
1
Nil
Total
8
8
10
8
*Including 3 awarded on nomination/FIPB route
Source: Directorate General of Hydrocarbons website
•
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)
Advanced simulators for production and recovery of
methane from coal seam reservoirs
11
Presence across domains enables Shiv-Vani to offer
end-to-end integrated services
Integrated 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 subcontracting
Developing technical capabilities to be able to
provide integrating well services instead of subcontracting to global oilfield services companies,
thus providing a further upside to EBITDA
margins
Other businesses
•
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
12
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
13
Expanding operations: pan India and internationally
ONGC, Shot Hole
Drilling & Seismic Job
Services – Jwalamukhi,
Manali and other areas
in HP
ONGC, Shot Hole
Drilling & Seismic Job
Services - Solan, HP
ONGC, Shot Hole
Drilling & Seismic Job
Services - Katni, MP)
PDO, Oman,
Drilling & Work
over
evergreen
contracts
ONGC, Shot Hole
Drilling & Seismic Job
Services - Satna,
Batul, Shadol & other
parts of MP
ONGC, Shot Hole
Drilling & Seismic Job
Services - Damoh &
Zabera, MP
ONGC, 3D
Seismic Data
Acquisition –
Sector-IX,
Mehsana/Patan
ONGC, 2D Seismic
Data Acquisition –
Rajouri to Punch,
Himalayan Foothills of
J&K
OIL, 3 Nos. 2000
HP & 1 No. 1500
HP Drilling Rigs
& 2 Nos. Work
over Rigs at/near
Duliajan
ONGC
Charaideo
Marginal Field
ONGC, 1 No. 2000
HP Integrated
Drilling Rig at Itarsi,
MP (Frontier Basin)
ONGC, 2D Seismic
Data Acquisition –
Vindhyan Basin, MP
1 No. E&P
Blocks –
NELP-VI,
Amgudi
OIL + Shiv
ONGC, 2D
Seismic Data
Acquisition,
using Vibroseis –
Duliajan
ONGC, 3D Seismic ONGC, 2D Seismic
Data Acquisition – Data Acquisition –
Sector-I, Sibsagar Pasighat AP
ONGC, 3D
Seismic Data
Acquisition –
Dumapur
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, 2 Nos.
2000 HP
Integrated Drilling
Rigs & 2 No. 175
Ton Work over Rig
at Ankleshwar
ONGC, 2 Nos. 2000
HP Integrated
Drilling Rigs at
Agartala
ONGC, Reservoir Data
Acquisition for two years
at Ankleshwar, Bharuch in
Gujarat
Oil & Gas Exploration
2D/3D Seismic Data Acquisition
Crew
Shot Hole
Reservoir Data Acquisition
ONGC, Shot Hole
Drilling & Seismic Job
Services - Cachar
ONGC, Shot Hole
Drilling & Seismic
Job Services Tura, Meghalaya
ONGC, 3 Sets.
MWD, SDMM and
Drilling Jar along
with Directional
Drillers at
Ankleshwar
Work over
Drilling
Integrated Services for CBM
ONGC, 2D Seismic
Data Acquisition –
Manabum, AP
ONGC, 3D
Seismic Data
Acquisition –
Silchar
ONGC, 2 Nos. 2000
HP Integrated
Drilling Rigs & 1
Nos. 175 Ton Work
over Rigs at
Rajahmundry
ONGC, 3 Nos.
Crew Boats –
Mumbai Offshore
ONGC, 1 No. 5o
Ton Work over
Rig at Bokaro
One No. E&P Block
NELP-VI,
OIL + Shiv+Suntera
ONGC, Integrated
CBM Operation at
Bokaro
ONGC, 2D Seismic
Data Acquisition – KG
Basin, Across river
ONGC, Shot Hole Drilling
& Seismic Job ServicesPondicherry, Tamil Nadu
Note: Above illustration covers current and recently completed projects
14
Key Investment Highlights
15
Key Investment Highlights
Strong Macro Drivers
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
6
• 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
1
Established Integrated Oil & Gas
Services Provider
Attractive Financial Profile
• Track record of consistent revenue
with CAGR of 59% from FY Dec06 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
5
2
Blue Chip Customer Portfolio
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
• 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
4
3
• 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
Strong Macro Drivers : India
•
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$31.8bn
in 2007-12
•
Implementation of New Exploration Licensing Policy (“NELP”) by the
Government has induced acceleration in the exploration effort
•
Less controls
investments
•
on
Petroleum
product
pricing
to
Seismic surveys 3D
(sq. km)
PSUs awarded147 blocks out of total no. of 239 blocks between 2000-2009
encourage
Emphasis on CBM - Coal Gas Methane, Gas Hydrates, UCG –
Underground Coal Gasification , Shale Gas etc.
Seismic surveys 2D
(km)
Exploration blocks awarded to PSUs under NELP I-VII
Exploratory drilling
(metreage km)
Source: Directorate General of Hydrocarbons website
(1) Total blocks include blocks that were subsequently relinquished
(2) PSUs include consortiums comprising both PSUs and private sector companies
Exploratory wells (No.)
Development wells
(No.)
PSU E & P Outlay
(US$m)
2002-07
2007-12
Source: Report of working group on Petroleum & Natural Gas for XI Plan; XI Plan report for Energy sector
17
Indian Oil & Gas Industry Scenario
• Total Sedimentary basins in India are 3.14 Mill Sq Km.
INDIA : Energy Source
•Onland & Shallow water (upto200 m): 1.79 M SQKM
•Deep water : 1.35 M SQKM
Coal 52%
• Explored
22%
Crude Oil 32%
• Exploration Initiated
44%
NaturalGas 10%
Hydro 5%
•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
•
Nuclear 1%
WORLD : Energy Source
Huge gap in Oil and Gas Demand Curve of 2011-25
prompting nation to strive for exploration
Rising Domestic Energy Consumption CAGR 6.4%
Coal 29%
Crude Oil 34%
mmtoe
500
NaturalGas 24%
400
Hydro 5%
300
Nuclear 6%
200
100
0
1997
2000
2004
2006
2008
2009
India’s Oil and Gas Energy Source is 42% against World’s average
of 58%
18
Established Integrated Oil & Gas Services Provider
•
•
•
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
ShivVani
JE1
DR1
Alphageo
Asian
Oilfields
Seismic





Onshore
Drilling





Directional
Drilling





Well
Logging





Mud
Logging





Cementation





CBM
Services





Source: Respective company websites
Business Segment wise Historical Order book
Business Segment wise Historical Revenue
277
300
277
300
200
100
146
27
50
171
141
23
63
200
100
146
69
85
2008
2009
2010
Drilling & Integrated Services
CBM Projects
171
141
23
27
50
63
69
85
2008
2009
2010
Drilling & Integrated Services
CBM Projects
117
0
117
0
Seismic & Shot Hole
(1)
19
US$ mn
US$ mn
19
JE – John Energy, DR – Dewanchand Ramsaran
Seismic & Shot Hole
US$ INR used for 2008 – 39.41, 2009 – 50.95, 2010 – 45.14
19
Blue Chip Customer Portfolio
High Entry Barriers to Tap PSU segment
•
Low counterparty risk due to strong relationship with ONGC and
OIL
•
Obtained US$354.5m contract from ONGC in 2009
•
Evergreen contract with PD Oman, well positioned to tap
international opportunities
•
Pre qualification for PSU bids on the basis of technical
expertise
– Minimum networth criteria
– Past track record
•
10% price preference over a foreign company for a contract
bid
•
Ability to offer advanced functionalities helps reduce
operator’s cost
•
Ability to participate in complex operations/contracts
•
Tie-ups with subcontractors for offering various services
Key Customers (US$ mn)
ONGC
OIL
Market Capitalisation1
62,664
7,584
74.1%
78.4%
22,915.1
1,751.3
•
Tie-ups with vendors key for efficient rig procurement
44.5%
46.9%
•
Mobility of equipment and employees
16,826.7
2,977.5
•
Integrated offerings provide an efficient alternative to
operators
Government
Ownership2
Revenues2
EBITDA Margin2
Planned E&P Expenditure 3
US$ INR used for all translations: 45.14
Customer wise Historical Order book
Customer wise Historical Revenue
277
300
277
300
136
100
28
30
18
16
17
59
74
65
2008
2009
80
127
0
136
100
18
171
200
30
28
18
16
17
59
74
65
2008
2009
80
127
0
ONGC
(1)
(2)
(3)
53
18
171
200
US$ mn
US$ mn
53
OIL
PD Oman
2010
Others
ONGC
OIL
PD Oman
2010
Others
US$ INR used for 2008 – 39.41, 2009 – 50.95, 2010 – 45.14
As of Nov 15th 2010
As of FY ended March 31st, 2010
For 2007-2012, Source: Planning Commission of the Government of India, Eleventh Five-Year Plan Report dated June 2008
20
Multiple Growth Opportunities
Invest in technology, training and development
 Build in-house technical expertise in areas currently
Continue building order book of quality
contracts
 Pursue new contracts in India and abroad backed by:
dependent upon technical sub-contractors
 Invest in R&D and training:
 Demonstrated expertise and experience
 Keep pace with technological changes
 Established track record
 Introduce new complementary service
 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
Expand business lines in specialised services
 Identify, evaluate and enter new business lines that offer
acquisitions
services to complement existing operations
 Invest in businesses aligned with strategic
 Expand CBM development services in India and abroad
objectives
 Expand technical capabilities in integrated well services
 Middle East and North Africa (“MENA”) region
 Continue to collaborate with reputable third party
suppliers and contractors to deliver additional product
and service offerings
due to increased E&P activity and better
margins
1
Experienced & Professional Management Team
Strong Leadership Team with Deep Industry Knowledge and Experience…
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
President
CFO
Pradip Kumar Chaudhary
CEO (Technical
Overseas)
Senior Vice President
(Drilling and WO)
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
• Joined the company in Apr-1996
• Qualified Chartered Accountant, Company
Secretary
J Swain
Vice President (Finance)
• Joined the company in Jul-2008
• Previously employed at Infotat International
in Houston, USA
Rajan Gupta
P.K. Gupta
• Associated with the company since 1990
• Over 20 years of experience with more than
15 years in oil & gas industry
Prakash Chiman Lal Singhee
…With a Deep Bench…
• Joined the company in Apr-2006
• 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
22
Financial Snapshot
23
Strong Operating Profile
Revenue growth boosted by new contracts & higher
tariffs
Improving EBITDA margins
120
100
45%
35%
38%
40%
40%
30%
80
124
60
40
20
56
69
20%
10%
21
0
0%
FY 2006
Strong earnings growth
50%
Margin (%)
EBITDA (US$m)
140
FY 2008
FY 2009
(15 Months)
EBITDA
EBITDA Margin
FY 2010
Increasing asset base
Net Fixed Assets
US$ INR used for 2006 – 45.07, 2008 – 39.41, 2009 – 50.95, 2010 – 45.14
24
Shiv-Vani: Significant competitive advantages
A leading player in
onshore oilfield
services
•
•
•
•
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
Significant cost
advantage
•
•
•
•
•
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
Good working history
with key customers
and suppliers
Own asset base
Domestic bid
advantage
Experienced senior
management and
well-trained
employees
• 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
*Order book as on 30 th Sep’10
25