Investor Presentation Fourth Quarter 2014 KCA Deutag is a leading - PowerPoint PPT Presentation

Investor Presentation Fourth Quarter 2014 KCA Deutag is a leading international drilling and engineering company working onshore and offshore with a focus on safety, quality and operational performance www.kcadeutag.com

Disclaimer The distribution of this presentation in certain jurisdictions may be restricted by law. Persons into whose possession this presentation comes are required to inform themselves about and to observe any such restrictions. This presentation contains forward-looking statements concerning KCA Deutag. These forward- looking statements are based on management’s current expectations, estimates and projections. They are subject to a number of assumptions and involve known and unknown risks, uncertainties and other factors that may cause actual results and developments to differ materially from any future results and developments expressed or implied by such forward-looking statements. KCA DEUTAG has no obligation to periodically update or release any revisions to the forward-looking statements contained in this presentation to reflect events or circumstances after the date of this presentation. 1

Agenda Q4 Key Highlights 1 Business Update 2 Business Unit Financials 3 Group Results 4 Summary 5 2

Q4 Key highlights KCA Deutag is a leading international drilling and engineering company working onshore and offshore with a focus on safety, quality and operational performance 2014 Group revenue of $2.1bn (2013: $2.1bn) and EBITDA of $314.7m 1 (2013: $301.2m) with growth from 3 of the 5 business segments 2 Q4 2014 Group revenue and EBITDA of $536.2m (Q4 2013: $596.6m) and $71.4m (Q4 2013: $108.8m) respectively Contract backlog of $8.1bn (as at 1 February 2015) across a blue chip 3 customer base 4 Cost savings and business efficiency measures implemented to offset impact of difficult market conditions Shareholders have committed to additional funding of up to $100m to 5 support growth capex with $50m being received in Q1, 2015 3

Market conditions - business update Integrated land drilling Offshore drilling services & design $150m / 42% of total ¹ $32m / 9% of total ¹ $46m / 13% of total ¹ $98m / 28% of total ¹ Land drilling Bentec Platform services RDS Bentec • • • • Reasonably stable to Strong backlog in H1 Working with clients to Completion of major date 2015 for external and provide operational projects had led to lower • Utilisation continues to be internal rigs and top efficiencies activity since H2 2014 • • softer in Nigeria and drives Main volume impact is in Reduced capex spend by • Europe More difficult market for the UK North Sea (3 oil majors has impacted • Russia remains strong Bentec to secure H2 platforms moving to on activity but Ruble devaluation backlog but some stacking mode) • makes this challenging success coming through Some projects ramping • New builds coming online up in activity throughout 2015 1 Full year EBITDA, % split of total including MODUs, before corporate costs/ other of $38m. 4 Note: MODUs full year EBITDA $27m represented 8% of total EBITDA.

Responding to the challenging market environment • Major cost saving initiative well underway • 5% salary reduction implemented 1 March 2015, along side c.450 proposed redundancies worldwide • All suppliers are being approached for discounts • Business wide efficiency drive with location / BU specific cost saving initiatives • Maintaining high focus on working capital • A reduction in our capital expenditure programme with no new growth capex commitments expected during 2015 5

2015 committed and contracted growth capex New build land rig contracts • All ongoing capex projects were initiated in 2014 and Rig Client Country Cost ($m) 1 Contract length are supported by long term contracts Rig 1 BP Khazzan Oman c.31 5yrs + 2x1yr options • Up front contributions of $40m received from clients Rig 2 BP Khazzan Oman c.31 5yrs + 2x1yr options Rig 3 BP Khazzan Oman c.31 5yrs + 2x1yr options • Shareholders have committed to additional funding Rig 4 Lukoil Russia c.30 3yrs + 3x1yr options of up to $100m to support the committed growth capex with $50m being received in Q1, 2015 Rig 5 Shell Brunei Brunei c.37 3yrs + 3x1yr options Rig 6 Bashneft Russia c.29 3yrs • No new growth capex commitments in 2015 currently proposed Rig 7 BP Khazzan Oman c.31 5yrs + 2x1yr options Rig 8 BP Khazzan Oman c.31 5yrs + 2x1yr options New build land rigs schedule PO 2014 2015 • Total 2015 capex spend on ongoing new build Rig R'cd Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 construction projects c.$130m 1 2014 2 2014 • EBITDA run rate attributable to all 8 new rigs c.$65- 3 2014 75m per annum 4 2014 5 2014 • EBITDA contribution from those rigs that will start up 6 2014 in 2015 is c.$45m 7 2014 8 2014 All new build capital expenditure is targeted at a minimum 18% IRR Construction 6 Operational 1 Excludes cost of mobilisation given this is reimbursed by client

A diversified portfolio of assets PRESENCE IN KEY AREAS 150 127 120 90 Years 56 51 41 60 16 30 0 Europe North Middle North Sea Russia Africa East Russia North Sea St. 16 Rigs /Norway Johns 27 Plat. Russia Sakhalin Bergen 3 Plat. Tyumen Stavanger Aberdeen (HQ) Europe & 7 Caspian Caspian Houston Plat. 7 Rigs London Bad Ben Loyal Bentheim jack-up rig Middle East Baku 14 Rigs Myanmar 1 Plat. Africa 14 Rigs LTM Q4 2014 EBITDA split by region Brunei Dubai 1 Rig Nizwa Angola 3 Plat. Ben Rinnes jack-up rig Regional offices Land Drilling Platform Services RDS offices MODUs Bentec Map excludes work over land rigs, defined as being below 900HP. 7

Health, safety and environmental performance KCAD TRIR at end of Q4 2014 was 0.35 1 injuries Total recordable incident rate improvement per 200,000 man hours 1.60 worked 1.40 TRIR per 200,000 man hours 1.20 IADC industry average 0.75 2 for 2014 1.00 0.80 0.60 0.40 0.20 TRIR 0.00 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 • Sustained progress made on improving TRIR performance, which is well below IADC industry average • Achieved the best annual safety performance in company history 1 Total Recordable Incident Rate per 200,000 man hours. This is a rolling 12 month average. 2 KCAD Total Recordable Incident Rate is directly comparable with IADC’s Total Recordables (RCRD) statistic. 8 Note: IADC stands for International Association of Drilling Contractors.

Despite market environment, backlog remains strong Total contract backlog as at 1 October 2014 Total contract backlog as at 1 February 2015 $487m $1,261m $1,098m $5,998m $8,844m $1,182m $1,062m $5,882m $8,125m 10,000 10,000 8,000 8,000 $4,875 6,000 6,000 $4,609 4,000 4,000 $4,377 $4,232 2,000 2,000 $3,969 $3,516 $374 $333 $121 $45 $1,622 $1,650 $4 $1,140 $1,137 $724 $729 $483 0 0 2014 2015 2016 2017+ Total 2014 2015 2016 2017+ Total $m $m Contract Option Contract Option Contract backlog by BU as at 1 October 2014 Contract backlog by BU as at 1 February 2015 $281m $224m $104m $90m Land drilling Land drilling $2,080m $2,030m Bentec Bentec Platforms $203m Platforms $144m RDS RDS $5,636m $6,176m MODUs MODUs NB: Backlog figures exclude revenue generated in the year to date. 9

Land Drilling Financial Performance to 31 December 2014 Q4 1 2013 1 Q4 2014 Variance Variance 2014 2013 YTD YTD $m $m $m % $m $m $m % Revenue 167.6 185.7 (18.1) (9.8)% 680.6 684.8 (4.2) (0.6)% EBITDA pre support costs 34.6 46.4 (11.8) (25.4)% 161.6 160.7 0.9 0.5% allocation 1 Support costs allocation (3.4) (3.0) (0.4) 13.3% (12.1) (10.9) (1.2) 11.0% EBITDA 31.2 43.4 (12.2) (28.0)% 149.5 149.8 (0.3) (0.2)% post support costs allocation 1 18.6% 23.3% 22.0% 21.9% Margin % • Revenue and EBITDA for Q4, 2014 decreased on Q4, 2013 principally because of bad debt provisions booked against certain receivables in Nigeria and Russia • Activity and EBITDA in Q4, 2014 was also down on Q4, 2013 due to lower utilisation in Nigeria and Europe plus contract start up activities in Algeria • Russia remains strong with high utilisation levels and the new Lukoil rig, which spudded in October, now fully operational • The Middle East remains a good market with a year on year EBITDA increase, and we expect this to continue with the new BP Khazzan rigs coming on line in 2015 and beyond • Utilisation softened slightly in the quarter to 72%, down from 74% in the prior quarter primarily due to Nigeria and Europe 1 EBITDA by segment for 2013 has been re-presented to reallocate support costs which were previously shown as central 10 overheads (such as HR, Supply Chain and IT costs) to the operational business segments. 2014 figures are presented on the same basis.