Investor Presentation First Quarter 2017 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 Q1 Key Highlights 1 Business Update 2 Business Unit Financials 3 Group Results 4 Summary 5 2
Q1 and Full Year 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 Q1 2017 Group revenue of $269.1m (Q1 2016: $357.3m) and Q1 2017 1 EBITDA of $50.1m (Q1 2016: $71.2m) respectively Increased tendering activity with a number of rig contracts and equipment 2 orders secured Contract backlog of $5.4bn (at 1 May 2017) across a blue chip customer 3 base 4 Available liquidity of $257m at 31 March 2017 Successful closing of offering of $535 million 9 7 / 8 % Senior Secured Notes 5 due 2022 3
Market Overview KCAD operates in low breakeven oil price environments Weighted Average Breakeven Oil Price ($/bbl) Oil Sands 80 KCAD core markets Ultra Deepwater 70 Deepwater Russia Row 56 60 Onshore Onshore Current Brent price 55 50 Shelf 48 40 43 42 42 41 30 32 North Onshore Middle East 20 Extra American 15 10 Heavy Oil Shale 0 0 10 20 30 40 50 60 70 80 90 100 Cumulative Liquids Production in 2020 (MMbpd) Source Rystad Energy (May-16) International vs. North American drilling markets International markets North America • • Commodity price Less dependency on commodity prices High dependency on commodity prices • Gas heavy market with depressed/volatile Henry Hub prices • • Volatility Low operating cost base High operating cost base • • Rig count largely inelastic to price downturns High sensitivity to price downturns • • Supply growth Supply critical to national economy and often driven by Supply of less significance to government revenue drivers NOCs • • Contract duration Customers willing to ensure rig availability through long Contract durations and terms more favourable to term contracts customers 4
Business update Integrated land drilling Offshore drilling services & design $181.7m / 69.5% of total ¹ $(3.5)m / (1.3)% of total ¹ $4.1m / 1.6% of total ¹ $79.0m / 30.2% of total ¹ Land drilling Bentec Offshore services RDS Bentec • • • • Strong activity in Oman Tendering activity Long term stable A focus on continued cost and Russia with continuing continues to increase backlog continues to be savings to preserve low ongoing opportunities within the Bentec maintained with some level positive EBITDA • • Utilisation in Nigeria, business recent contract Diversification in to non • Kurdistan and Algeria 9 Top Drive orders extensions oil and gas areas • • remains weaker secured during Q1 2017 Activity levels remain Tendering activity overall • Europe activity continues lower in the North Sea continues to be low to increase and Angola • CAT J and Hebron contracts continue to ramp up activity 1 The % split of LTM EBITDA is calculated using total group EBITDA of $261.3m (before corporate costs of $18.8m). 5
Group margin performance 6
KCAD operations are diversified across global markets PRESENCE IN KEY AREAS 150 129 120 90 Years 58 53 43 60 18 30 0 Canada Europe North Middle North Sea Russia 1 Plat. Africa East Russia North Sea St. 16 Rigs /Norway Johns 26 Plat. Russia Sakhalin Bergen 3 Plat. Tyumen Aberdeen (HQ) Europe & Caspian Caspian Houston 7 Plat. 8 Rigs London Bad Bentheim Middle East Baku 17 Rigs Africa 11 Rigs LTM Q1 2017 EBITDA split by region Brunei Dubai 1 Rig Nizwa Angola 2 Plat. Regional offices Land Drilling Offshore Services RDS offices Bentec Map excludes work over land rigs, defined as being below 900HP. 7 Map shows position at 1 May 2017.
Health, safety and environmental performance IADC industry average 0.45 2 for 2016 KCAD TRIR at • Won both the "Best Safety Performance Platforms" and the "Chairman's Award for Best Safety Performance for a Platform Drilling Unit" for our operations on the Scott at the International Association of Drilling end of Q1 2017 Contractors, North Sea Chapter Annual Safety Awards was 0.26 1 injuries per 200,000 man • In Sakhalin we have obtained the internationally recognised OHSAS 18001:2007 accreditation for our health hours worked and safety management system following a successful DNV audit in February this year • In addition, KCAD won on "The Best Drilling Contractor" award at the 5th Annual Russian Drilling Roundtable (RDCR) which was held in April 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.
Backlog Status Total contract backlog as at 1 February 2017 Total contract backlog as at 1 May 2017 Contract backlog by BU as at 1 February 2017 Contract backlog by BU as at 1 May 2017 Backlog figures exclude revenue generated in the year to date. 9
Land fleet utilisation Historical and forecast utilisation 10
Robust platform services contract backlog @ 1 May 2017 2018 2019 Contract Platform Client Country Assets Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 end date status # Exxon Canada Hebron M ar-46 Under Construction 1 Statoil Norway CAT J (2) M ay-36 Under Construction 2 Exxon Angola Kizomba (2) Apr-27 Stacked 2 AIOC Azerbaijan Azeris, SD, DWG, Cop & Chirag Dec-24 Operating 7 Nexen UK Scott Feb-23 Operating 1 Statoil Norway Oseberg's (4) & Gulfaks (3) Oct-22 Operating / Stacked 6/1 Statoil Norway Pipe pool management Oct-22 Active mgmt. contract Statoil Norway Kvitebjorn Oct-22 Operating 1 CNR UK Ninian's (3) Tiffany Nov-21 Operating / Stacked 1 /3 SEIC Russia LA, PA & PB M ay-21 Operating 3 Total UK Alwyn Dec-20 Stacked 1 Total UK Dunbar Dec-20 Stacked 1 Exxon Norway Ringhorne Dec-1 7 Stacked 1 COP UK Britannia Jul-1 7 Stacked 1 Taqa UK Cormorant A & N, Tern, Eider & Harding Jul-1 7 Stacked 5 Enquest UK Thistle & Heather Apr-1 7 Operating / Stacked 1 /1 Contracts have been extended or renewed since last call 11
Land Drilling Financial Performance to 31 March 2017 Q1 2017 Q4 2016 Q1 2016 Q1 2017 Q1 2016 Result Result Result YTD YTD $m $m $m $m $m Revenue 122.2 133.6 150.3 122.2 150.3 EBITDA (post support allocation) 43.0 46.7 47.8 43.0 47.8 Margin 35.2% 35.0% 31.8% 35.2% 31.8% • The land business although slightly down on the prior quarter and year has delivered strong financial results in tough market conditions • Activity levels remain robust in Russia and Oman • Ongoing weaker market conditions in Nigeria, Kurdistan and Algeria due to softer utilisation • Significant increase in tendering activities • Utilisation for the quarter of 60%, an increase on the prior quarter 12
Bentec Financial Performance to 31 March 2017 Q1 2017 Q4 2016 Q1 2016 Q1 2017 Q1 2016 Result Result Result YTD YTD $m $m $m $m $m Revenue 15.6 16.5 29.7 15.6 29.7 EBITDA (post support allocation) 0.3 (2.0) 2.9 0.3 2.9 Margin 1.7% -12.2% 9.7% 1.7% 9.7% • EBITDA has improved slightly compared to Q4 2016, but has lower revenue, improvement reflects the cost savings made during 2016 • Improved activity during Q1 with a marked increase in tender activity • Increase in After Sales and 9 Top Drive orders secured in Q1 • Successfully awarded first order for customer in North American market 13
Offshore Services Financial Performance to 31 March 2017 Q1 2017 Q4 2016 Q1 2016 Q1 2017 Q1 2016 Result Result Result YTD YTD $m $m $m $m $m Platform Services Revenue 119.0 131.0 144.6 119.0 144.6 EBITDA (post support allocation) 11.3 19.2 19.8 11.3 19.8 Margin 9.5% 14.6% 13.7% 9.5% 13.7% MODUs Revenue 0.0 0.0 12.9 0.0 12.9 EBITDA (post support allocation) (0.0) (0.2) 4.1 (0.0) 4.1 Margin n/a 0.0% 31.8% n/a 31.8% Offshore Services Revenue 119.0 131.0 157.5 119.0 157.5 EBITDA (post support allocation) 11.3 19.0 23.9 11.3 23.9 Margin 9.5% 14.5% 15.2% 9.5% 15.2% • Reduction in revenue and EBITDA compared to Q4 2016, primarily due to lower activity levels in Norway • Cat J and Hebron projects ramping up and to commence operations in 2017 14
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