PT ELNUSA Tbk Delivering Strong Integrated Oil & Gas Services Performance

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1 Company In Brief: PT ELNUSA Tbk Delivering Strong Integrated Oil & Gas Services Performance PT Elnusa Tbk. (ELSA) is the only national company offering an integrated, one stop solution, of upstream oil & gas services. Elnusa has 3 business pillars, namely: (1) oil & gas services, (2) asset based, and (3) supporting services & competency based. In its oil and gas services business pillar, besides the integrated upstream oil & gas services, the company also provides supporting upstream services and downstream services. Elnusa owns two oil and gas fields: Bangkanai Block (Central Kalimantan) and Ramba Block (South Sumatera). Moreover, Elnusa s subsidiaries and affiliates are engaged in the last pillar, which consists of data management, information technology, and telecommunications business. ELSA has been listed in IDX since February 2008 and utilized the capital market fund to finance its growth and expansion in integrated upstream services, by focusing on investment in deep-well drilling and offshore equipments, the strategic assets for future opportunity. Outlook: Elnusa booked a 34% growth in 2008 net income to IDR133.8 billion compared to IDR100.1 billion in In 2008, the company s contract value was USD297.6 million in core businessintegrated upstream services. Those consist of 1-6 months short term and 1-5 years long term contracts. Financial Highlight (As in Unaudited Q Report): ELSA targets a revenue growth of 19% in 2009, or IDR3.02 trillion. Meanwhile, by strong support from the company s segments, the net income is targeted to grow by 61% to IDR216 billion. For 2009, the company targets contract values of USD346.5 million. Revenue : Rp698 Bn Recent Developments: The company has recently collected the new contracts from one of the major clients with value of USD53 million. Elnusa will also follow another USD160 million projects tender. Net Income : Rp40 Bn The company is seeking a wider oil and gas market by expanding to India for the integrated upstream services projects. Previously, in 2008 the company has also expanded its market to Brunei Darussalam. Pertamina, Northstar & Saratoga are in the negotiation with PT Tri Daya Esta to take over ownership up to 37.15% ELSA s share. Current Ratio : 1.46x DER : 1.17x ROE : 2.42% ROA : 1.11% EPS : Rp 22/shr (annualized) PER : 17.3x (@ Rp380) The Leading Integrated Oil & Gas Services Company 1

2 FINANCIAL SUMMARY HIGHLIGHT OF ELSA INCOME STATEMENT For the Period Ended of December 31 and March 31 (in Rp Bn) Unaudited Financial Statement Audited Financial Statement for for the Year Ended the Quarter Ended % YoY Q Q %QoQ Operating Revenue 2,543,913 2,103,690 21% 698, ,325 51% COGS 2,149,039 1,704,945 26% 559, ,949 40% Gross Profit 394, ,745-1% 138,186 63, % Operating Expense 214, ,391-16% 42,154 49,593-15% Operating Income 180, ,354 25% 96,031 13, % Financing Cost (58,987) (42,392) 39% (20,490) (14,553) 41% Interest Income 12,472 2, % 2,267 3,261-30% Other Income (Expenses) (23,310) (11,611) 101% (24,141) (8,920) 171% Equity in Net Earnings of ass. Company 62,968 47,908 31% (4,949) (6,132) 19% Pretax Income 173, ,621 23% 66,950 (1,360) 5023% Income Tax (33,503) (37,831) -11% (22,080) (6,555) 237% Net Income 133, ,009 34% 40,098 (10,185) 494% The Leading Integrated Oil & Gas Services Company 2

3 HIGHLIGHT OF ELSA BALANCE SHEET For the Period Ended of December 31 and March 31 (in Rp Bn) Audited Financial Statement for the Year Ended Unaudited Financial Statement for the Quarter Ended % YoY Q Q % QoQ Cash and Equivalents 401, , % 454, ,266 18% Trade Receivables 792, ,520 25% 912, ,147 36% Inventories 74,609 48,100 55% 85,034 49,838 71% Total Current Assets 1,621, ,492 63% 1,900,008 1,448,952 31% Fixed Assets 1,213, ,951 64% 1,210, ,934 49% Total Non Current Asset 1,696,251 1,164,913 46% 1,714,812 1,232,387 39% TOTAL ASSETS 3,317,816 2,159,405 54% 3,614,820 2,681,339 35% Short Term Loans 351, ,599 18% 314, ,826 47% Trade Payables 276, ,476 38% 154, ,339-37% Current Maturity of Long Term debt 104, ,466-3% 162,418 82,633 97% Total Current Liabilities 1,163, ,095 27% 1,302, ,875 55% Total Non Current Liabilities 522, ,169 88% 635, , % Total Equity 1,613, ,901 70% 1,653,902 1,505,759 10% Performance Q1 Full Year 2008 and 2009F in terms of 2009F 2009F 2008A % YoY Q % Operating Revenue 3,023,006 2,543,913 19% 698,171 23% COGS 2,474,330 2,149,039 15% 559,986 23% Gross profit 548, ,874 39% 138,186 25% Operating Income 374, , % 96,031 26% Net Income 215, ,772 61% 40,098 19% The Leading Integrated Oil & Gas Services Company 3

4 HIGHLIGHT OF ELSA Ratio For the Period Ended of December 31 and March 31 Unaudited Financial Statement Audited Financial Statement for for the Year Ended the Quarter Ended % YoY Q Q % QoQ Current Ratio % % Debt to Equity Ratio % % Collection Period (Days) % % Payable Period (Days) % % Return on Equity 8.29% 10.54% % 2.42% -0.68% % Return on Assets 4.03% 4.63% % 1.11% -0.38% % Gross Margin 15.52% 18.95% % 19.79% 13.69% 44.59% Operating Margin 7.09% 6.86% 3.34% 13.75% 2.96% % Profit Before Tax Margin 6.82% 6.68% 2.05% 9.59% % % Net Margin 5.26% 4.75% 10.61% 5.74% -2.20% % Total Asset Turnover 76.67% 97.42% % 19.31% 17.24% 12.02% The Leading Integrated Oil & Gas Services Company 4

5 Business Segments Elnusa s portfolios consist of 3 business pillars: the oil and gas services, asset based management, and supporting & competency based. The business pillars owned by ELSA are well-reflected in the structure below. Oil & Gas Services Integrated Upstream Oil & Gas Services Upstream Supporting Oil & Gas Services Downstream Oil & Gas Services Asset Based Management of Oil & Gas Field Supporting Services & Competency Based Data Management Information Technology Telecommunication The revenue composition is dominated by oil and gas services pillar. Upstream segment contributes the biggest portion; followed by downstream segment; then upstream supporting services; and data management, information technology, and telecommunication segment. The One Stop Solution Services has pushed ELSA s upstream revenues. In 2008, integrated upstream services contributed 66% to the overall revenues. In the 1 st quarter of 2009, the segment contributed 75% to revenue. The company targets this segment would contribute to 68% in The Leading Integrated Oil & Gas Services Company 5

6 Business Pillar A: Oil & Gas Services Integrated Upstream Services The Integrated upstream services unit provides one-stop-solution services for customers, from exploration to production and maintenance. Integrated geosciences services. The company provides full-range seismic services from geodata acquition land & marine to data processing. ELSA Geosains is the pioneer of geosciences services provider in Indonesia, and controls 80% market share in the onshore geophysics. Integrated drilling services. The services include drilling management, drilling rig, drilling support, wireline logging, cementing & well testing, drilling and production support, to drilling evaluation services. Integrated oilfield production services. Elnusa offers well-services, oilfield services (EPC-M and O&M pipeline & production facilities), to production enhancement. ELSA Oilfield Service is the market leader for well-services in Indonesia with 81% of market share. In term of performances, the integrated upstream services are contributing around 75% of st quarter consolidated revenue. Integrated upstream services segment provides higher gross margin, about 24-29% annually. The CAGR = 31% company booked a lower gross margin of 16.8% from this business segment in The gross margin decline in 2008 was due to vertical merger of Geosciences Division, Drilling Division, and Oilfield Division into the holding company that has resulted in the changing of expenses posting. In 2008, some of the operating expenses were posted in Cost Operating The Leading Integrated Oil & Gas Services Company 6

7 Revenue account. After business restructuring in 2008, the company starts to improve the segment s margin to 16.8% in the 1 st quarter of For the 1 st quarter of 2009 revenue was booked of IDR533 billion, or has reached 26% of 2009 target, which is targeted around IDR2.05 trillion. Integrated Geosciences contributed 53% to total revenue, followed by Integrated Drilling at 26%, and Integrated Oilfield at 21%. ELSA is focusing on developing the upstream services, both onshore and offshore through focused investment in varieties of equipment and technology. Most of Elnusa s contracts come from the biggest oil and gas companies that empower 90% of domestic production, such as: Exxon, Petrochina, Chevron, Vico, Total E&P Indonesie, Pertamina, to Medco Energy. ELSA s clients include overseas operating companies, such as Nation Loon Brunei. Supporting Upstream Services The supporting upstream services provide threading and OCTG trading services (oil country tubular good) which is used for drilling activities. The threading process is using metric ton/year capacity-machine. The machine maximum capacity is metric ton/year. The segment contributed 4% to consolidated revenue in For the 1 st quarter-2009, this segment posted IDR4.2 billion of revenue. Downstream Services Downstream unit activities include management of fuel station and fuel distribution. Downstream services contribute around 20% to total revenue. ELSA has long term contracts with Pertamina for these services. It offers stable margin at 2-4% per year. The company has decided to change its accounting method for this segment to improve margin, from gross revenue to net revenue. This has resulted in 2008 segment s revenue decline. However, the company managed to book a better gross margin of 5.1% in 1st quarter The company is targeting IDR553 billion from The Leading Integrated Oil & Gas Services Company 7

8 the segment, meanwhile its 1 st quarter of 2009 result showed IDR102 billion contribution to total revenue. Business Pillar B: Asset Based Field Asset Management For asset based business, Elnusa has working interest in 2 oil and gas blocks, Bangkanai PSC and Ramba TAC. In Bangkanai PSC ELSA has 50.01% participating interest through Elnusa Bangkanai Energy Ltd. ELSA has 100% of ownership in Elnusa Bangkanai Energy Ltd. Meanwhile in Ramba TAC ELSA has 60% participating interest through Elnusa Tristar Ramba Ltd. ELSA has 25% of ownership in Elnusa Tristar Ramba. Ramba block produced around 4,384of oil in 2008, increased 12.3% from Elnusa acquired Ramba TAC in The potential oil reserves equals to 5.33 million bbl. Ramba has contributed IDR6.88 billion, or 4% to the company s pre-tax income in Meanwhile, Bangkanai with gas reserves of 256 bscf is in exploration and development process. The company targets IDR22 billion contribution of revenue from Bangkanai. Business Pillar C: Supporting & Competency Based Data Storage & Management, Information Technology, and Telecommunication Data management provides oil & gas data management; and oil & gas acquisition & management. ELSA has specific contracts with the government to manage the country s oil & gas data. The segment s contribution is 6% to consolidated revenue by offering gross margin around 30-40%. Information Technology activities consist of integrated IT system services and phone directory/contact centre. This segment has 2% contribution of total revenue. Telecommunication unit is a provider satellite network & telecommunication, and radio trunking as well. ELSA has 25 years experience in this business and also supported by the biggest telecommunication company in Indonesia, PT Telkom. Total contribution of the 3 segments in this business pillar was IDR67 billion in 1 st quarter 2009 revenue. The Leading Integrated Oil & Gas Services Company 8

9 The Revenue Structure (as of 1 st quarter of 2009) *Before Elimination Associate Company Contribution (as of 1 st quarter of 2009) Recent Development ELSA s Ongoing and New Contracts Elnusa s has secured a strong orderbook in 2009, of which is USD186.2 million contract value, consist of USD130.8 million carryover contracts and USD87.5 million new contracts. The company is following some integrated upstream services tenders to complete its 2009 new contracts target of USD In 1 st quarter of 2009, several contracts accomplished by the company were: Loon Brunei project in Tutong, Brunei Darussalam, with contract value of USD15.3 million. The 3D-land data acquisition has been started in March 2008 and scheduled to be finished in May Kamojang geothermal energy project in January 2009, which was finished earlier than schedule. The geothermal project in West Java was to increase the steam supply for Kamojang power plant. The Leading Integrated Oil & Gas Services Company 9

10 The Integrated Upstream Services Contracts in 2009 Business Unit Value 2009 Prospect 2009 (USD (USD Mn) Mn) Main Contracts Integrated Geoscience serv GDL Petrochina, Anadarko, Pertamina GDM 23.6 Conoco, Total E&P Indonesia, Amerada Hess GDP 2.9 Total E&P Indonesie, Amerada Hess, Exxon Mobil Integrated Drilling serv RDE Pertamina, Petrochina WLT Pertamina, Chevron Pacific Indonesia IDS 7 Pertamina Geothermal,ODIRA DRS 7.5 Integrated Oilfield Serv Well Service Pertamina, Total E&P Indonesie, Vico, Chevron EPF Pertamina, Pertagas Total GDL : Geodata Acquisition Land RDE : Reservoir & Drilling Evaluation GDM : Geodata Acquisition Marine WLT : Well Testing Services GDM : Geodata Processing IDS : Integrated Drilling Services DRS : Drilling Rig Services EPF : Enhancement & Production Facility Following the USD160.3 Projects Tender The company s prospect projects are USD160.3 million up to the end of In the beginning of May, 2009 the government will announce the winners of 12 oil and gas blocks. The blocks offered are: South Block A, East Pamai, West Belida, Terumbu, South East Madura, Pasir, South Sesulu, Kofiau, Kumawa, Cendrawasih, Northern Papua, and Lampung. The firms commitment for the first 3 years is USD million. Elnusa will also follow the tenders from those field working. Expansion to Offshore and International Markets For international market, in 2008 ELSA obtained land data acquition contract from Loon Brunei in Tutong, Brunei Darussalam, with contract value of USD15.3 million for a year. The company is seeking a wider oil and gas market in India for the integrated upstream services. ELSA also has secured USD40 million contracts from seismic marine segment. Going forward, ELSA will invest in seismic transition zone equipment-40 ULS to strengthen its competences in this market. Ramba and Bangkanai On Ramba TAC, ELSA and its partners are maintaining the output of around 4,384 bopd in Elnusa will start to explore its gas field at Bangkanai Block, South Kalimantan in February Bangkanai has 256 bcf of gas reserve. Elnusa ownership is 50.01% with operational periods of 30 years. The company has a commitment that 133 bcf of the block s gas has to be delivered to the local power plant. The Bangkanai has 5000 meters of depth and needs 2000 Horse Power drilling rig. Investment cost needed is estimated around USD350 million. The Leading Integrated Oil & Gas Services Company 10

11 Exploration activities include land settlement to well-drilling preparation in Sungai Lahe and Jupoi. As of Q Elnusa has completed to build the stagging area, site office, helipad and jetty, as well as completion of seismic explosive warehouse. The company is in the negotiation with PT Perusahaan Listrik Negara (PLN) for the gas sales. Strategic Alliances and International Cooperation For Competency In order to response the increasing market demand and complete the production equipments, Elnusa has implemented strategic alliances through joint operation cooperation with Schlumberger (drilling), CGG Veritas & Wavefield Inseis (seismic transition and marine zone), and Qserve (Coiled Tubing). In 2009, the company will also implement an alliance with Bergen Oilfield Services (BOS) to catch wider seismic marine markets. Shareholders Information Update: The Selling of Tri Daya Esta s Share Several investors are interested to buy 37.15% ELSA shares owned by PT Tri Daya Esta. Pertamina, Northstar & Saratoga-United States, Nippon Oil-Japan, Petronas-Malaysia, and Ciptadana Private Equity as in media report, have stated their interests to bid Tri Daya s shares on ELSA. Northstar and Saratoga have prepared fund worth of USD150 million to take over the 2.72 billion shares. Previously, PT Pertamina, the majority shareholder of ELSA has also proposed USD92 million to add its ownership in Elnusa. Those investors are in the due diligence process and considering that ELSA is a prospective oil and gas services company. The Leading Integrated Oil & Gas Services Company 11

12 Outlook The Energy Information Administration (EIA) in April 2009 estimated that world oil consumption will be reduced by 1.6% to million barrels per day. However, consumption would be recovered in 2010 which is projected to be million barrels per day. The world production is estimated down by 2.4% to million barrels per day in Oil industry will still be prospective in the long run as oil is the main energy, both for retail and industry consumption. Engaging in integrated oil and gas services, Elnusa s growth is affected by oil and gas price movement. Recently, oil price starts to recover at stable level at USD50/barrel, a response to economic recovery signal. Global multinational companies are mostly continuing its investment in oil and gas for long term view, especially for production enhancement. This leads to the increase of demand on oil and gas services provided by Elnusa. In Indonesia, oil and gas industry is also very prospective. The government targets the oil and condensate average production will be lifted to 960,000 barrels per day. Meanwhile, domestic gas consumption in 2009, according to the Executive Agency for Upstream Oil & Gas Activities, has increased to 63% after government oil to gas conversion program. The investment for energy sector for this year is forecasted around USD20 billion. The high necessity of domestic oil and gas becomes an interest for domestic and foreign investors to invest in upstream and downstream sectors. The government has determined 24 new fields to be tendered in May Those fields include Eastern Indonesia offshore areas, Java, Kalimantan, Sulawesi, to Papua. The increase in offshore exploration demand will be used by Elnusa to add its revenue, besides onshore market dominated by the company. The One Stop Solution concept implemented by Elnusa has resulted in long term integrated upstream service contracts. Varieties of international cooperation and investment since 2007 will strengthen the company s performance this year. Another diversified portfolio by the 2 oil and gas blocks owned by the company becomes the following contribution to consolidated income. The Leading Integrated Oil & Gas Services Company 12

13 Any question is welcomed and to be sent to: CORPORATE SECRETARY- Heru Samodra PT Elnusa Tbk. Jl. T.B. Simatupang Kav. 1 B Jakarta 12560, INDONESIA Ph.: Fax.: hsamodra@elnusa.co.id Please also visit our website on: Disclaimer: This report is prepared by PT. Elnusa Tbk independently and is circulated for the purpose of general information only. It is not intended to the specific person who may receive this report. No warranty (expressed or implied) is made to the accuracy or completeness of the information. Some of the statements contained in this document contain forward looking statements with respect to the financial conditions, results of operations and businesses, and related plans and objectives. These Statements do not directly or exclusively relate to historical facts and reflect the Company s current intentions, plans, expectations, assumptions and beliefs about future events. The Statements involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those in the statements as originally made. Such statements are not, and should not be construed as a representation to future performance of the Company. Readers are urged to view all forwardlooking statements contained herein with caution. The Leading Integrated Oil & Gas Services Company 13