Archer Fourth Quarter 2018 John Lechner CEO Dag Skindlo CFO 27 - PowerPoint PPT Presentation

Archer Fourth Quarter 2018 John Lechner CEO Dag Skindlo CFO 27 February 2019

Disclaimer – forward looking statements Cautionary Statement Regarding Forward-Looking Statements In addition to historical information, this press release contains statements relating to our future business and/or results. These statements include certain projections and business trends that are “forward - looking.” All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including statements preceded by, followed by or that include the words “estimate,” pro forma numbers, “plan,” project,” “forecast,” “intend,” “expect,” “predict,” “anticipate,” “believe,” “think,” “view,” “seek,” “target,” “goal” or similar expressions; any projectio ns of earnings, revenues, expenses, synergies, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations, including integration and any potential restructuring plans; any statements concerning proposed new products, services, developments or industry rankings; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements do not guarantee future performance and involve risks and uncertainties. Actual results may differ materially from projected results/pro forma results as a result of certain risks and uncertainties. Further information about these risks and uncertainties are set forth in our most recent annual report for the Year ending December 31, 2017. These forward-looking statements are made only as of the date of this press release. We do not undertake any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements in this report are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in our records and other data available from Fourth parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies, which are impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. 2

Best quarterly operating result since 2015 - Well Services revenue up 38% compared to same quarter last year - Platform Drilling and Engineering increased revenue by 20% from third quarter - Land Drilling has delivered two consecutive quarters with EBITDA margin above 13% 3

Archer – Fourth quarter highlights 2018 • Revenue of $233.2 million, an increase of 9% from third quarter. • EBITDA before exceptional items of $26.9 million, an increase of 63% from Q4 2017. • EBITDA of $24.3 million, an increase of 65% from Q4 2017. • EBIT of $10.7 million or 4.6% of revenue. • Net Interest Bearing Debt reduced to $585.8 million. Revenue [$m] EBITDA [$m] EBIT [$m] 250 233.2 30 12 10.7 223.7 213.7 10 8.6 24.3 25 22.4 200 8 20 6 150 14.7 4 15 2 100 10 0 Q4-17 Q3-18 Q4-18 -2 50 5 -4 -3.5 0 0 -6 Q4-17 Q3-18 Q4-18 Q4-17 Q3-18 Q4-18 4

We delivered on our promises for 2018 Status All business units in the Eastern Hemisphere experiencing increased 18% above 1 demand with combined expected revenue growth of 15% over 2017. 2% points Average EBITDA margin before restructuring expected to improve 1- 2 2% points over 2017. improvement Improved EBITDA in second half of year on the back of higher activity, 46% higher 3 reduced cost and incentive terms in Land Drilling. Capex below 3% of revenue. 2.7% of revenue 4 Completed Strategic process for onshore US ongoing. 5 5

Platform Drilling & Engineering Increase in revenue driven by additional active rigs in portfolio Platform Drilling Revenue and EBITDA [$m and %] • Successful October operational start up of Revenues ($m) EBITDA pre exceptional items (%) 150 12% Gullfaks A, B, C and Grane platforms as part of 120.3 10% 101.4 99.7 97.4 96.0 new Equinor contract. 100 8% 6% • Number of active rigs increased by four during 50 4% the quarter. 2% 0 0% • Two platforms in the UK wound down during Q4 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 2018 and will provide minimal revenue going $m Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 forward until permanently de-commissioned. 8.6 1) EBITDA pre except. items 7.9 9.1 9.5 10.0 • Have received three separate expressions of Capex 0.0 0.1 0.3 1.0 3.8 interest for projects with possible deployment of Modular Drilling Rigs in 2020. Platform Drilling contracted rigs [nr of rigs] • EBITDA in the quarter negatively impacted by 47 50 45 45 45 44 one-off costs of $1.2 million. 45 40 35 27 29 30 30 30 28 Engineering 25 20 • Flat quarter, but with good profitability on quality 15 10 20 project execution. 16 16 15 15 5 0 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Active Drilling Rigs Maintenance mode rigs 1) Less addition of internal allocation of group costs of $2.3m in Q4-17 previously reported 6

Well Services Revenue growth of 38% over same quarter last year Oiltools Revenue and EBITDA [$m and %] • Q4 with highest number of runs in 2018. New Revenues ($m) EBITDA pre exceptional items (%) 40 20% activity record for plugs & plugs solutions in 30.4 26.9 26.5 30 15% 2018. 24.7 22.0 20 10% • Core products (Plugs and Cflex) continued 10 5% stronger momentum internationally as well programs picked up in key regions. 0 0% Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 • New MCAP tool initially designed for onshore $m Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 market is attracting interest in offshore market. EBITDA pre except. items 2.7 2.4 4.0 3.4 5.0 Capex 2.0 0.3 0.4 0.9 3.2 Wireline • Temporary slow down on Mechanical wireline in Norway in November. Picked up again in December. “Archer completes record breaking • Record breaking horizontal perforation job with horizontal perforation job with ComTrac ComTrac carbon composite rod on Gullfaks. carbon composite rod” • Final settlement from TAQA JV in Saudi, with a net payout of $5.4 million to Archer. • Capex for Q4 related to new logging tools and upgrade of auxiliary equipment. 7

Land Drilling Another strong quarter with EBITDA margins above 13% • All business units with positive EBITDA. Revenue and EBITDA [$m and %] Revenues ($m) EBITDA pre exceptional items (%) • Operational improvement initiatives implemented 120 20% 97.6 during 2018 yielding positive results in Q4 2018. 89.2 100 86.2 82.3 79.4 15% 80 • For the full year 2018, Argentina headcount 60 10% was reduced by approximately 8%. 40 5% 20 • In the South of Argentina, we delivered18% 0 0% Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 more wells drilled per rig in 2018 vs. 2017. $m Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 • Oil price drop during Q4 2018 had no immediate EBITDA pre except. items 6.0 8.1 5.6 14.1 13.9 Capex 3.4 1.8 3.8 2.5 4.9 impact on drilling activity levels. • Uncertainty around application of gas subsidies Archer active rigs [nr of rigs] in Vaca Muerta is reducing visibility for certain 70 operators. 60 52 51 51 51 49 • The Argentinian Peso stabilized during the 50 40 quarter. 32 32 33 33 32 30 • Additional rig mobilized in Bolivia in Q4 2018, 20 increasing the total active units to 52 in the 10 19 19 18 19 17 quarter. 0 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Drilling rigs Workover & Pull units 8

Archer Group – financial highlights fourth quarter 2018 Revenue [$m] EBITDA before exceptional items [$m] 250 233 30 224 224 26.9 218 214 25.7 25 200 20 18.1 18.0 16.5 150 15 100 10 50 5 0 0 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Capex [$m] Net Interest Bearing Debt [$m] 14 700 630 620 12.2 603 601 586 12 600 10 500 8 400 6.5 6 300 4.8 4.5 4 200 2.9 2 100 0 0 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 9