Investor Presentation FOURTH QUARTER 2017 KCA Deutag is a leadinginternational drilling and engineering company working onshore and offshore with a focus on safety, quality and operational performance
Disclaimer Fourth Quarter Investor Presentation 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 These forward-looking statements are based on management’s current Deutag. 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 Fourth Quarter Investor Presentation Q4 and Full Year Key Highlights 1 Business Update 2 Business Unit Financials 3 Group Results 4 Dalma Acquisition 5 Summary 6 2
Q4 and Full Year Key Highlights Fourth Quarter Investor Presentation KCA Deutag is a leading international drilling and engineering company working onshore and offshore with a focus on safety, quality and operational performance Q4 2017 EBITDA of $65.8m (Q4 2016: $60.1m) giving full year EBITDA of 1 $221.5m (2016: $262.9m) Good tendering activity for Land, with a number of significant contract 2 awards for Bentec, and increased activity on the new Cat J and Hebron contracts for Offshore Contract backlog of $5.2bn (at 1 February 2018) across a blue chip 3 customer base 4 Available liquidity of $230m at 31 December 2017 Announcement of acquisition of the Omani and Saudi Arabian businesses 5 of Dalma Energy LLC 3
Business Update Fourth Quarter Investor Presentation Integrated land drilling Offshore drilling services & design $164.4m / 68.6% of total¹ $0.0m / 0.0% of total¹ $73.2m / 30.5% of total¹ $2.1m / 0.9% of total¹ Land Drilling Bentec Offshore Services RDS • • • • Strong activity in Oman Two new rig build First CAT J has Increased activity due to and Russia contracts for a total of 6 commenced operations new greenfield contract • • Improved performance in rigs secured in Norway Brownfield work remains • • Algeria and Europe Component sales Reactivation work relatively steady • • Improving outlook in revenue remain steady continues in the UK Developing diversification • • Nigeria After Sales remains Efficient start to Hebron opportunities into non-oil stable platform operations and gas sectors 1 The % split of LTM EBITDA is calculated using total group EBITDA of $239.7m (before corporate costs of $18.2m) 4
KCAD Operations Are Diversified Across Global Markets Fourth Quarter Investor Presentation Russia North Sea 17 Rigs /Norway 21 Plat. Russia Caspian Canada 7 Plat. Sakhalin 1 Plat. 3 Plat. Bergen Tyumen Aberdeen (HQ) London Bad Bentheim Middle East St. Johns 17 Rigs Baku Europe & Brunei Caspian Houston 8 Rigs 1 Rig Dubai Nizwa Africa 10 Rigs Angola LTM Q4 2017 EBITDA split by region 2 Plat. PRESENCE IN KEY AREAS 150 130 120 90 Years 59 54 44 60 19 30 0 Europe North Africa Middle East North Sea Russia Regional offices Land Drilling Offshore Services RDS offices Bentec Map excludes 1 workover land rig in Nigeria, defined as being below 900HP Map shows position at 1 February 2018 5
Health, Safety and Environmental Performance Fourth Quarter Investor Presentation IADC industry average 0.54 2 for 2017 KCAD TRIR at end of Q4 2017 was 0.19 1 injuries • Sustaining low TRIR levels in a range which are the best in the company’s history per 200,000 man • KCAD achieved the lowest ever TRIR of 0.18 in October and November 2017 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 6 Note: IADC stands for International Association of Drilling Contractors
Backlog Status Fourth Quarter Investor Presentation Total contract backlog as at 1 November 2017 Total contract backlog as at 1 February 2018 Contract backlog by BU as at 1 November 2017 Contract backlog by BU as at 1 February 2018 Note: Backlog is an estimate and may change over time depending on certain factors; Backlog reflects business that is considered to be firm, this calculation is based on assumptions deemed appropriate at the time and is subject to change. Backlog 7 is not necessarily indicative of our future revenue or earnings. KCAD backlog amounts are our estimates as of Feb-2018
Robust platform services contract backlog @ 1 February 2018 Fourth Quarter Investor Presentation 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 Mar-46 Operating 1 Statoil Norway CAT J (2) May-36 Operating 2 Exxon Angola Kizom ba (2) Jan-28 Stacked 2 AIOC Azerbaijan Azeris, SD, DWG, Cop & Chirag Dec-24 Operating 7 Nexen UK Scott Feb-23 Operating 1 COP UK Britannia Nov-22 Stacked 1 Statoil Norway Oseberg's (4) & Gulfaks (3) & Kvitebjorn Oct-22 Operating / Stacked 7/1 Statoil Norway Pipe pool m anagem ent Oct-22 Active m gm t. contract CNR UK Ninian's (3) Tiffany Nov-21 Operating / Stacked 1 /3 SEIC Russia LA, PA & PB May-21 Operating 3 Total UK Alwyn / Dunbar Dec-20 Operating / Stacked 1 /1 Enquest UK Thistle & Heather May-20 Operating / Stacked 1 /1 Exxon Norway Ringhorne Dec-1 8 Stacked 1 8
Land Drilling Financial Performance to 31 December 2017 Q4 2017 Q3 2017 Q4 2016 Q4 2017 Q4 2016 Result Result Result YTD YTD $m $m $m $m $m Revenue 126.8 122.8 133.6 499.7 569.6 EBITDA (post support allocation) 42.3 35.5 46.7 164.4 186.5 Margin 33.4% 28.9% 35.0% 32.9% 32.7% • Higher EBITDA compared to the prior quarter, largely due to improved performance in Russia • Activity levels remain strong in Russia and Oman • Improving prospects in Europe and Algeria • Signs of improvement in Nigeria where we are pursuing several tendering opportunities • Utilisation for the quarter of 61% 1 1 Utilisation is calculated on a bi-monthly basis 9
Bentec Financial Performance to 31 December 2017 Q4 2017 Q3 2017 Q4 2016 Q4 2017 Q4 2016 Result Result Result YTD YTD $m $m $m $m $m Revenue 19.2 22.1 16.5 73.3 75.4 EBITDA (post support allocation) (0.5) (0.0) (2.0) 0.0 (0.8) Margin -2.4% -0.1% -12.2% 0.0% -1.1% • EBITDA has remained around breakeven • Two new contracts awarded for a total of 6 new build rigs • Active tendering market across after sales, components and new build rigs • Continued pursuit of diversification opportunities outside the oil and gas sector 10
Offshore Services Financial Performance to 31 December 2017 Q4 2017 Q3 2017 Q4 2016 Q4 2017 Q4 2016 Result Result Result YTD YTD $m $m $m $m $m Platform Services Revenue 145.2 153.1 131.0 549.2 524.2 EBITDA (post support allocation) 26.4 22.1 19.2 72.6 74.8 Margin 18.2% 14.4% 14.6% 13.2% 14.3% MODUs Revenue 0.0 0.0 0.0 0.0 29.4 EBITDA (post support allocation) 0.1 0.5 (0.2) 0.6 16.6 Margin n/a n/a n/a n/a 56.5% Offshore Services Revenue 145.2 153.1 131.0 549.2 553.5 EBITDA (post support allocation) 26.6 22.6 19.0 73.2 91.4 Margin 18.3% 14.7% 14.5% 13.3% 16.5% • Significantly higher EBITDA compared to Q3, primarily due to strong performance in Norway • Both of the Cat J jack up rigs have now arrived in Norway and the first has commenced operations • Post-year end settlement reached with a client in Angola resulting in cash payment of $41.9m in February 2018 As detailed above EBITDA relating to MODUs in 2017 was $0.6m and $16.6m in 2016. The equivalent figure in 2015 was $22.3m 11
RDS Financial Performance to 31 December 2017 Q4 2017 Q3 2017 Q4 2016 Q4 2017 Q4 2016 Result Result Result YTD YTD $m $m $m $m $m Revenue 15.3 13.8 14.5 57.5 75.3 EBITDA (post support allocation) 1.7 (0.0) (0.3) 2.1 5.1 Margin 11.0% -0.2% -2.4% 3.7% 6.8% • Higher EBITDA than the prior quarter due to new Greenfield project • Continuing to pursue diversification opportunities outside of the oil and gas sector • Strengthened leadership team with appointment of new business unit leader 12
Group Results Financial Performance to 31 December 2017 Q4 Q3 Q4 2017 2016 2017 2017 2016 YTD YTD Revenue and EBITDA ($m) $m $m $m $m $m Revenue from business units 306.4 311.9 295.7 1,180.3 1,274.4 Eliminations (2.9) (2.5) (8.0) (10.8) (22.2) Total third party revenue 303.5 309.4 287.6 1,169.5 1,252.2 EBITDA from business units 70.0 58.1 63.4 239.7 282.4 Eliminations 0.0 0.0 0.2 0.0 (0.3) Corporate costs/other (4.4) (4.8) (4.6) (18.8) (18.9) Exchange 0.2 1.5 1.1 0.6 (0.3) Total EBITDA 65.8 54.8 60.1 221.5 262.9 13
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