Investor Presentation Fourth Quarter 2016 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 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 2016 full year revenue and EBITDA of $1,252.2m (2015: $1,668.8) and 1 $262.9m (2015: $289.8m) respectively Q4 2016 Group revenue of $287.6m (Q4 2015: $396.0m) and Q4 2016 2 EBITDA of $60.1m (Q4 2015: $79.1m) respectively Contract backlog of $5.3bn (at 1 February 2017) across a blue chip 3 customer base Positive cash generation of over $100m with available liquidity of $262m at 4 31 December 2016 3
Market Overview KCAD operates in low breakeven oil price environments Weighted Average Breakeven Oil Price ($/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 $186.1m / 66.1% of total ¹ $(1.2)m / (0.4)% of total ¹ $5.1m / 1.8% of total ¹ $74.8m / 26.6% of total ¹ Land drilling Bentec Offshore services RDS Bentec • • • • Strong activity in Oman After sales remains Most of our International Reduced capex spend by and Russia stable with a large operations continue to E&P companies • Utilisation in Nigeria, increase in component perform well despite continues to impact Kurdistan and Algeria activity market conditions activity • • • remains weaker 21 Top Drives now Activity levels remain A focus on continued cost • Utilisation now picking up secured for 2017 backlog lower in the North Sea savings to preserve low • in Europe Continued focus on cost and Angola level positive EBITDA • • savings Recent contract wins All activity now brownfield provides for long term with few opportunities in stable backlog greenfield 1 The % split of LTM EBITDA is calculated using total group EBITDA (including MODUs) of $281.4m (before corporate costs 5 of $18.5m). Note: MODUs LTM EBITDA of $16.6m represented 5.9% of total EBITDA.
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 Q4 2016 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 February 2017.
Health, safety and environmental performance IADC industry average 0.60 2 for 2015 KCAD TRIR at end of Q4 2016 • KCA Deutag has continued to achieve satisfactory safety results was 0.26 1 injuries • The group continues to perform ahead of industry peers in the International Association of Drilling per 200,000 man Contractors (IADC) hours worked • Maintaining high safety and operational standards is a key priority for the business 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 November 2016 Total contract backlog as at 1 February 2017 Contract backlog by BU as at 1 November 2016 Contract backlog by BU as at 1 February 2017 Backlog figures exclude revenue generated in the year to date. 9
Land fleet utilisation Historical and forecast utilisation Contracted utilisation as of 1st February 2017, adjusted to include additional potential contribution from 5 new Russian rig 10 contracts (additional 0.4%, 6.6%, 9.2% and 8.8% contracted utilisation in H1 2017, H2 2017, H1 2018 and H2 2018)
Robust platform services contract backlog @ 15 February 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) Jan-27 Stacked 2 AIOC Azerbaijan Azeris, SD, DWG, Cop & Chirag Nov-24 Operating 7 Nexen UK Scott Feb-23 Operating 1 Statoil Norway Oseberg's (4) & Gulfaks (3) Oct-22 Operating 7 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 M ar-20 Stacked 1 Total UK Dunbar M ar-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 December 2016 Q4 2016 Q3 2016 Q4 2015 Q4 2016 Q4 2015 Result Result Result YTD YTD $m $m $m $m $m Revenue 133.6 135.2 157.7 569.6 600.7 EBITDA (post support allocation) 46.7 43.8 55.4 186.5 164.2 Margin 34.7% 32.4% 35.1% 32.7% 27.3% • Despite tough market conditions the land business has delivered strong financial results and is significantly ahead of the prior year EBITDA • Activity levels remain robust in Russia and Oman • We continue to experience weaker market conditions in Nigeria, Kurdistan and Algeria due to weaker utilisation • Significant increase in tendering activities • Utilisation for the quarter of 58%, which is consistent with the prior quarter 12
Bentec Financial Performance to 31 December 2016 Q4 2016 Q3 2016 Q4 2015 Q4 2016 Q4 2015 Result Result Result YTD YTD $m $m $m $m $m Revenue 16.5 12.4 43.3 75.4 235.4 EBITDA (post support allocation) (2.0) (2.2) 2.3 (0.8) 20.7 Margin -12.2% -17.8% 5.2% -1.1% 8.8% • Revenues and EBITDA significantly lower than Q4 2015, but has improved revenue compared to the prior quarter • Improved activity during Q4 with a marked increase in tender activity • Increase in After Sales and 21 Top Drives now secured for 2017 backlog • Continued focus on cost savings 13
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