Investor Presentation September 2016 1
Forward-Looking Statements Statements contained in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include words or phrases such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “could,” “may,” “might,” “should,” “will” and similar words and specifically include statements involving expected financial performance, effective tax rate, day rates and backlog, estimated rig availability; rig commitments and contracts; contract duration, status, terms and other contract commitments; letters of intent or letters of award; scheduled delivery dates for rigs; the timing of delivery, mobilization, contract commencement, relocation or other movement of rigs; our intent to sell or scrap rigs; and general market, business and industry conditions, trends and outlook. Such statements are subject to numerous risks, uncertainties and assumptions that may cause actual results to vary materially from those indicated, including commodity price fluctuations, customer demand, new rig supply, downtime and other risks associated with offshore rig operations, relocations, severe weather or hurricanes; changes in worldwide rig supply and demand, competition and technology; future levels of offshore drilling activity; governmental action, civil unrest and political and economic uncertainties; terrorism, piracy and military action; risks inherent to shipyard rig construction, repair, maintenance or enhancement; possible cancellation, suspension or termination of drilling contracts as a result of mechanical difficulties, performance, customer finances, the decline or the perceived risk of a further decline in oil and/or natural gas prices, or other reasons, including terminations for convenience (without cause); the cancellation of letters of intent or letters of award or any failure to execute definitive contracts following announcements of letters of intent or letters of award; the outcome of litigation, legal proceedings, investigations or other claims or contract disputes; governmental regulatory, legislative and permitting requirements affecting drilling operations; our ability to attract and retain skilled personnel on commercially reasonable terms; environmental or other liabilities, risks or losses; debt restrictions that may limit our liquidity and flexibility; our ability to realize the expected benefits from our redomestication and actual contract commencement dates; cybersecurity risks and threats; and the occurrence or threat of epidemic or pandemic diseases or any governmental response to such occurrence or threat. In addition to the numerous factors described above, you should also carefully read and consider “Item 1A. Risk Factors” in Part I and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II of our most recent annual report on Form 10-K, as updated in our subsequent quarterly reports on Form 10-Q, which are available on the SEC’s website at www.sec.gov or on the Investor Relations section of our website at www.enscoplc.com. Each forward- looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements, except as required by law. 2
• Market Conditions • Decisive actions to persevere through the downturn – capital & expense management – fleet restructuring – investments in engineering and innovation to improve operational & safety performance • Outlook for offshore drilling – efficiency & cost improvements – attrition of older rigs & deferral/cancellation of newbuild deliveries – catalyst markets 3
Market Conditions Major & European IOCs’ Upstream • Substantial reduction in Capital Spending Outlook $ billions upstream capex among $250 Major & European IOCs’ $218 since 2013 $208 $200 − unprecedented decline in $181 exploration spending - 45% $150 $126 • 2016 upstream capex for $120 Major & European IOCs’ $100 expected to decline ~30% year-over-year, but bottoming in 2017 $50 • Significant pullback in $0 spending will affect supply in the future Source: IHS Energy Notes: Group of Major & European integrated oil companies includes BP, Chevron, Eni, ExxonMobil, OMV, Repsol, Shell/BG, Statoil and Total; 4 historical years include acquisitions; 2016 and 2017 estimates exclude acquisitions
• Capital management Decisive Actions To • Expense management Persevere • Fleet restructuring Through The Downturn • Investments to improve operational & safety performance – engineering & innovation – process improvements 5
Proactive Capital Management • Accessed the debt markets twice to bolster liquidity and refinance near- term debt maturities • Increased revolver to $2.25 billion and extended to 2019 • Reduced capital expenditures and dividend to preserve cash • Delayed delivery of newbuilds, postponing ~$500 million of final milestone payments • Repurchased debt in 2Q16 at substantial discounts resulting in ~$500 million of pre-tax cash savings • Raised equity to further enhance liquidity position • Significantly reduced leverage 6
Benefits of Recent Capital Management Actions Liquidity Net Debt-to-Capital Ratio $ billions $4.05 41% $1.5 billion $3.55 reduction in 1.8 net debt 1.3 28% 2.25 2.25 4Q15 2Q16 4Q15 2Q16 Revolver Cash + Short-term investments Note: Net debt is a non-GAAP financial measure defined as long-term debt less cash and short-term investments. Non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures prepared in accordance with GAAP. 4Q15 net debt-to- capital is calculated as follows: long-term debt of $5.9 billion, less $1.3 billion of cash and short-term investments, divided by the sum of long-term debt of $5.9 billion plus shareholders’ equity of $6.5 billion, minus $1.3 billion of cash and short-term investments. 2Q16 net debt-to-capital is calculated as 7 follows: long-term debt of $4.9 billion, less $1.8 billion of cash and short-term investments, divided by the sum of long-term debt of $4.9 billion plus shareholders’ equity of $7.9 billion, minus $1.8 billion of cash and short-term investments.
Debt Maturity Schedule $ millions $2 billion of debt maturities $1,025 over next eight years $778 $760 $669 $623 $454 $300 No debt $150 maturities until 2019 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2027 2044 2040 8
Capital Expenditure Outlook Newbuild Capital Expenditures Other Capital Expenditures $ millions $ millions $375 $225 $100 $100 $75 $65 50 25 10 $0 55 50 50 2H16E 2017E 2018E 2019E 2H16E 2017E 2018E New rig construction Rig enhancements Minor upgrades & improvements Note: Estimates for 2016, 2017, 2018 and 2019; final capex estimates to be determined upon completion of annual budget process and subject to change based on rig contracting; new rig construction represents contractual commitments plus anticipated capex associated with rig construction; 2016 rig enhancements capex is specific to a mooring upgrade for an additional ENSCO 8500 Series rig, while 2017, 2018 and 2019 rig enhancements are estimates and not earmarked for any specific projects at this time; capex for minor upgrades and improvements are based on the 9 currently active fleet.
Expense Management Actions 2015 Actions • 15% reduction in offshore unit labor cost • $60+ million of annual savings from 27% reduction in onshore support headcount – consolidated business unit reporting structure from five to three – centralized certain functions • $100+ million of additional contract drilling and G&A expense savings – repair and maintenance rate reductions and lower rig insurance premiums – other savings through negotiated discounts with vendors Recent Actions • Recently instituted a lower base salary structure for new hire offshore crews • Further streamlining organizational structure: shore-based operational support, offshore labor pool and additional corporate staff department centralization 10
Fleet Management Strategy • Leverage record uptime/safety performance to negotiate extensions for contracted rigs • Maintain warm stacked rig availability in each region in order to bid into new opportunities, examples include: – West Africa: ENSCO DS-7 – U.S. Gulf of Mexico: ENSCO 8503 & ENSCO 68 – Asia: ENSCO DS-9, ENSCO 8504* & ENSCO 106 – Middle East: ENSCO 140 – North Sea: ENSCO 120/1* • Preservation stack excess high-spec rig capacity to prudently reduce expenses, yet maintain high-spec capacity that may be reactivated within 90 – 120 days • Retire older, less capable rigs as they roll off contract as part of continuous high-grading/expense management 11 *Note: Current contract expires in October 2016.
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