Investor Presentation Second Quarter 2015 KCA Deutag is a leading - PowerPoint PPT Presentation

Investor Presentation Second Quarter 2015 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 Q2 Key Highlights 1 Business Update 2 Business Unit Financials 3 Group Results 4 Summary 5 2

Q2 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 2015 YTD Group revenue and EBITDA of $874.3m (Q2 2014 YTD: $1,054.7m) and $141.3m (Q2 2014 YTD: $169.8m) respectively. 1 Q2 2015 Group revenue of $408.1m (Q2 2014: $540.9m) and Q2 2015 EBITDA of $65.2m (Q2 2014: $89.0m) respectively Contract backlog of $7.6bn (at 1 August 2015) across a blue chip customer 2 base A further new build rig spudded ahead of schedule in Russia on 16 April. 3 Three remaining new build rigs in Oman and Brunei remain on track for delivery in 2015 completing our new rig delivery programme $50m of committed funding from KCAD Holdings I limited shareholders still 4 available for draw down if required Cost reduction programme continues to deliver an ongoing benefit to EBITDA with further initiatives to improve efficiency and reduce costs being 5 implemented 3

Business update Integrated land drilling Integrated land drilling Offshore drilling services & design Offshore drilling services & design $140.7m / 43.3% of total ¹ $40.0m / 12.3% of total ¹ $27.8m / 8.6% of total ¹ $94.0m / 28.9% of total ¹ Land drilling Bentec Platform services RDS Bentec • International markets much • Strong H1 backlog • No further change to • Reduced capex spend by less volatile than US, continues from previous Platforms portfolio activity oil majors continues to however certain markets orders since Q1 impact activity have been more heavily • Good capacity usage for • A slight increase in • Significant reductions in impacted 2015 activity in Norway headcount implemented • Continuing strong activity • Tendering activity equipment rental to counteract the reduced in Middle East, Russia and continuing to secure 2016 business, but still below revenue levels Algeria capacity previous results • Lower activity in Nigeria and Europe where utilisation is very soft 1 LTM EBITDA, % split of total including MODUs, before corporate costs/ other of $38.4m. 4 Note: MODUs LTM EBITDA $22.1m represented 6.8% of total EBITDA before corporate costs.

Cost saving initiatives continue 1. A drive to reduce staff costs and discretionary spending which has delivered significant savings a) Salary reduction and salary freezes across the business b) c.250 redundancies worldwide in overhead positions c) Significant reduction in discretionary spending 2. Reducing costs in supply chain delivered through a companywide initiative across all operations and business units 3. Significant senior management focus on working capital and the full delivery of the various cost reduction initiatives a) Bi-weekly 13 week cash forecasting process b) Monthly BU review meetings with KPI & forecasting updates 5

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. 17 Rigs /Norway 27 Plat. Johns 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 Q2 2015 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. 6

Health, safety and environmental performance IADC industry average 0.75 2 for 2014 • Sustained progress made on improving TRIR performance, which is KCAD TRIR at well below IADC industry average end of Q2 2015 was 0.32 1 injuries • Maintaining good annual safety performance per 200,000 man hours worked 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. 7 Note: IADC stands for International Association of Drilling Contractors.

Despite market environment, backlog remains strong Total contract backlog as at 1 May 2015 Total contract backlog as at 1 August 2015 Contract backlog by BU as at 1 May 2015 Contract backlog by BU as at 1 August 2015 $M $M NB: Backlog figures exclude revenue generated in the year to date. 8

Land Drilling Financial Performance to 30 June 2015 Q2 2015 Q2 2014 Variance Q2 2015 Q2 2014 Variance Result Result YTD YTD % % $m $m $m $m $m $m Revenue 157.5 188.9 (31.4) -16.6% 304.2 356.9 (52.7) -14.8% EBITDA 36.6 48.4 77.0 86.9 pre support allocation (11.8) -24.4% (9.9) -11.4% Support cost allocation (2.0) (2.8) (4.5) (5.6) 0.8 -29.8% 1.1 -18.8% EBITDA post support allocation 34.6 45.6 (11.0) -24.1% 72.4 81.3 (8.9) -10.9% margin 22.0% 24.1% 23.8% 22.8% • Lower revenues and EBITDA compared to Q2 2014 and Q1 2015 • Successfully delivered and spudded a new build rig in Russia • Our operations in Russia, Algeria and Oman continue to enjoy high levels of utilisation and EBITDA • Our European, Nigerian and Kurdistan businesses continue to see weakening utilisation, largely due to the wider market environment • Overall our utilisation for the quarter was 74%, in line with the prior quarter 1 EBITDA is shown before and after allocation of central support costs (such as HR, Supply Chain and IT costs) to the operational 9 business segments. 2014 and 2015 are presented on the same basis.

Bentec Financial Performance to 30 June 2015 Q2 2015 Q2 2014 Variance Q2 2015 Q2 2014 Variance Result Result YTD YTD % % $m $m $m $m $m $m Revenue 50.2 63.7 140.5 90.0 (13.5) -21.2% 50.5 56.1% EBITDA pre support allocation 4.7 6.9 (2.3) -32.9% 16.0 7.8 8.2 NM Support cost allocation (0.5) (0.7) 0.3 -37.0% (1.0) (1.4) 0.4 -31.4% EBITDA 4.2 6.2 15.0 6.4 post support allocation (2.0) -32.4% 8.6 NM margin 8.4% 9.8% 10.7% 7.1% • Revenues and EBITDA lower than Q2 2014 • Bentec maintains a reasonable backlog which will ensure that the business has a good level of utilisation through to the end of the year • Currently in final stages of completion of 7 rigs for a client in Algeria and 3 rigs for KCAD in Oman and Brunei • Now ramping up the work on the 3 rigs for a customer in Russia and 1 rig for a customer in Azerbaijan • Tendering activity ongoing to secure order backlog for 2016 1 EBITDA is shown before and after allocation of central support costs (such as HR, Supply Chain and IT costs) to the operational 10 business segments. EBITDA is also shown before eliminations. 2014 and 2015 are presented on the same basis.

Platform Services Financial Performance to 30 June 2015 Q2 2015 Q2 2014 Variance Q2 2015 Q2 2014 Variance Result Result YTD YTD % % $m $m $m $m $m $m Revenue 172.2 208.2 (36.0) -17.3% 362.0 396.9 (34.9) -8.8% EBITDA 21.3 25.7 45.8 50.8 pre support allocation (4.4) -17.1% (5.0) -9.8% Support cost allocation (1.4) (2.0) 0.6 -28.9% (3.2) (3.9) 0.7 -17.6% EBITDA post support allocation 19.9 23.7 (3.8) -16.1% 42.6 46.9 (4.3) -9.2% margin 11.6% 11.4% 11.8% 11.8% • Continued good performance given current market conditions • Our Angola, Myanmar and Canada operations experienced flat activity quarter on quarter, whereas Azerbaijan and Sakhalin saw lower EBITDA due to currency devaluation and the impact of client contract adjustments • Our Norway business saw a small improvement on Q1 2015 due to stronger equipment rental activity 1 EBITDA is shown before and after allocation of central support costs (such as HR, Supply Chain and IT costs) to the operational 11 business segments. 2014 and 2015 are presented on the same basis.