Delaware (State or other jurisdiction of incorporation) | 1-10945 (Commission File Number) | 95-2628227 (IRS Employer Identification No.) |
11911 FM 529 Houston, TX (Address of principal executive offices) | 77041 (Zip Code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
• | Our estimates of our relative business exposures to each of the phases of the offshore life cycle; |
• | Our projection that all of our oilfield business segments will have lower operating income in 2015 than in 2014; |
• | Our expectations that our 2015 earnings per share will be in the range of $2.80 to $3.20, including the impact of: |
▪ | our acquisition of C & C Technologies, Inc. ("C&C"); |
▪ | our right-sizing and cost cutting initiatives we have underway; and |
▪ | our intent to take further measures if demand falls short of our expected levels; |
• | Our belief that the precipitous declines in demand and pricing taking place within the oilfield markets we serve are unrivaled in recent history; |
• | Our expectation that our earnings for the last three quarters of 2015 will largely be determined by vessel-based inspection, maintenance and repair, or IMR, work and floating rig use; |
• | Our belief that the majority of IMR activity is performed on a "call out" or "spot market" basis, and it impacts the results of our ROV, Subsea Products, particularly tooling, and Subsea Projects segments; |
• | Our belief that IMR jobs normally have low visibility, but in 2015, when most of our customers are curtailing operating expense spending, the risks associated with this work materializing are higher than normal; |
• | Our belief that our results will continue to be dependent on floating rig use, and our anticipation of follow on work for about half our approximately 7,000 uncontracted ROV days on 50 rigs with contracts expiring in 2015; |
• | The major considerations for our earnings outlook for 2015 compared to 2014, for our oilfield business operations including the following: |
▪ | ROVs on: |
◦ | lower service demand for drilling support and vessel-based projects: |
◦ | less fleet days on hire and lower utilization; |
◦ | reduced average pricing; and |
◦ | no material change in overall fleet size; |
▪ | Subsea Products on the expectation that our short cycle businesses, such as tooling, will experience lower demand and our expectation of lower demand to support field abandonment projects and BOP control system replacements; |
▪ | Subsea Projects on lower vessel pricing in the Gulf of Mexico and reduced use of a third dynamically positioned vessel by BP on their Angola project, with the operating income decline in Subsea Projects somewhat mitigated by the expected income contributions from: |
◦ | Angola diving services, and |
◦ | our data solutions group, including our acquisition of AIRSIS in 2014; |
▪ | Asset Integrity on a lower level of activity as a result of planned maintenance deferrals by our customers and generally lower pricing; |
• | Our anticipation that, due to depressed offshore activity levels, C&C operations will be neutral to our 2015 earnings and accretive to our 2015 cash flow; |
• | Our expectation that demand for subsea asset integrity services will grow, and our belief that we are in a leadership position to take advantage of this developing market as it materializes; |
• | Our belief that our four primary subsea asset integrity tools offer us a growth opportunity in a developing market and complement our already extensive range of subsea inspection, maintenance, and repair offerings; |
• | Our belief that our ability to develop and apply new technologies subsea helps us maintain our leadership position in the deepwater services universe; |
• | Our expectation that our liquidity and projected cash flow in 2015 will provide us with ample resources to continue investing in our future and continue returning capital to our shareholders; |
• | Our anticipated 2015 EBITDA of at least $680 million in 2015; |
• | Our intent to be fairly conservative with our leverage ratio; |
• | Our expectation to reduce our 2015 organic Capex to between $200 million and $250 MM, largely on lower ROV spending; |
• | Our anticipation that the number of acquisition opportunities that come to market may escalate in a lower oil price environment and our belief that we are financially positioned to make additional investments; |
• | Our intent to continue to pursue acquisitions that augment our service and product offerings, or add technologies; |
• | Our intent to allocate capital, in order of priority, as follows: |
▪ | organic capital expenditures; |
▪ | acquisitions; |
▪ | cash dividends, which for 2015 at $0.27 per quarter equates to approximately $108 million based on around 100.0 million shares outstanding; and |
▪ | share repurchases; |
• | Our intent to continue our practice of announcing share repurchases after they occur on a quarterly basis; |
• | Our expectation that our 2015 EPS will be lower than our 2014 EPS; |
• | Our belief that we are well positioned to make the most of this challenging time ; |
• | Our belief that our commanding competitive position, technology leadership, and strong balance sheet and cash flow enable us to continue investing in the company's future as opportunities arise and continue returning capital to our shareholders and our intent to do so; |
• | Our expectation that deepwater will continue to play a critical role in global oil supply growth despite its large capital commitments, technological challenges, and current commodity price environment; and |
• | Our anticipation that demand for our deepwater services and products will rebound and rise over time, and that our long-term business prospects remain promising. |
• | worldwide demand for oil and gas; |
• | general economic and business conditions and industry trends; |
• | delays in deliveries of deepwater drilling rigs; |
• | delays in deepwater development activities; |
• | the ability of the Organization of Petroleum Exporting Countries, or OPEC, to set and maintain production levels; |
• | the level of production by non-OPEC countries; |
• | the ability of oil and gas companies to generate funds for capital expenditures; |
• | domestic and foreign tax policy; |
• | laws and governmental regulations that restrict exploration and development of oil and gas in various offshore jurisdictions; |
• | technological changes; |
• | the political environment of oil-producing regions; |
• | the price and availability of alternative fuels; and |
• | overall economic conditions. |
OCEANEERING INTERNATIONAL, INC. | |||
Date: | May 29, 2015 | By: | /S/ ROBERT P. MINGOIA |
Robert P. Mingoia | |||
Vice President and Treasurer |