Seadrill Partners LLC Fourth quarter 2016 Results February 28, 2017 - PowerPoint PPT Presentation

Seadrill Partners LLC Fourth quarter 2016 Results February 28, 2017

Forward Looking Statements This presentation includes forward looking statements. Such statements are generally not historical in nature, and specifically include statements about the Company’s plans, strategies, business prospects, changes and trends in its business and the markets in which it operates. In particular, statements regarding offshore drilling markets, the Company’s ability to make cash distributions, the expected performance of the drilling units in the Company’s fleet, estimated duration of customer contracts, contract dayrate amounts, contract backlog, forecasts of operating income and Adjusted EBITDA and the ability of the Company and Seadrill Limited to negotiate with lenders are considered forward-looking statements. These statements are made based upon management’s current plans, expectations, assumptions and beliefs concerning future events impacting the Company and therefore involve a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, which speak only as of the date of this news release. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to offshore drilling market conditions including supply and demand, dayrates, customer drilling programs and effects new rigs on the market, contract awards and rig mobilizations, contract backlog, the performance of the drilling units in the Company’s fleet, delay in payment or disputes with customers, the outcome of any pending litigation, our ability to successfully employ our drilling units, procure or have access to financing, ability to comply with loan covenants, liquidity and adequacy of cash flow from operations, fluctuations in the international price of oil, changes in governmental regulations that affect the Company or the operations of the Company’s fleet, increased competition in the offshore drilling industry, and general economic, political and business conditions globally. Consequently, no forward-looking statement can be guaranteed. When considering these forward-looking statements, you should keep in mind the risks described from time to time in the Company’s filings with the SEC. The Company undertakes no obligation to update any forward looking statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, the Company cannot assess the impact of each such factor on its business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward looking statement. 2

Agenda 1) Highlights 4Q 2016 2) Market Commentary & Financial Performance Overview 3) Summary & Q&A 3

Q4 Highlights  Revenue of $353 million  Adjusted EBITDA (1) of $210 million  Economic utilization of 94%  Distribution maintained at $0.10 per common unit  New contract West Aquarius secured a two well contract  Backlog of ~$14 million.  (1) Adjusted EBITDA has been defined in the Appendix 4

Backlog & Utilization Current backlog 1500 1000  Current order backlog of $2.2bn $ million  Average contract term of 1.8 500 years 0 2017 2018 2019+ Economic utilization (floater fleet) 100 95 Utilization % 90 85  94% economic utilization* 99 99 95 94 80 75 70 Q1 16 Q2 16 Q3 16 Q4 16 * Economic utilization is calculated as total contract revenue excluding bonuses for the period as a proportion of the full operating dayrate multiplied by the number of days in the period. 5

Market Commentary & Financial Performance 6

Assets & Contracts 2017 2018 2019 2020 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q West Capella $62.8 milion West Vencedor $115k $115,000 West Aquarius $615k $200,0 $200,000 West Sirius $297,000 West Polaris $450,000 (1) West Leo T-15 $110,000 (2) West Capricorn $316,000 T-16 $110,000 West Auriga $562,000 West Vela $525,000 Contracted Option Period Early Termination Fee (1) During October a notice of Force Majeure was received from Tullow Ghana Limited. The Company has disputed Tullow's claim for Force Majeure and has 7 commenced litigation proceedings (2) During July 2016, an agreement was reached to remain on an extended standby rate with expected recommencement of work in late 2017 at the full operating rate

Sequential Variance Analysis Revenue 400  Dayrate : Force Majeure rate on 380 the West Leo for 2 months in the 360 quarter 340 320 300  Utilization : West Auriga 280 downtime, partially offset by improved uptime on the West Vela 260 and West Polaris 240 220 200 3Q16 Volume Dayrate Utilization Idle units Other 4Q16  Idle units : West Leo termination Adjusted EBITDA (1) and full quarter of idle time on the West Vencedor 320 300  Adj. EBITDA: No West Capella termination fee received in the 3 rd 280 quarter 260 240 220  Costs: Higher G&A reflecting severance costs and IT spend, 200 partially offset by lower opex on 180 the West Vencedor while idle 160 140 120 3Q16 Volume Dayrate Utilization Idle units Costs Other 4Q16 (1) Adjusted EBITDA has been defined in the Appendix 8

Income Statement – Net Income Unaudited accounts in USD millions 4Q16 3Q16 Net operating income 164.8 204.0 Financial items Interest income 3.2 2.8 Interest expense (45.4) (44.3) Gain / (loss) on derivative financial instruments 74.3 5.7 Currency exchange gain / (loss) 2.1 (1.5) Total financial items 34.2 (37.3) Income before income taxes 199.0 166.7 Income taxes 8.5 (13.9) Net income 207.5 152.8 Net income attributable to non-controlling interests 105.6 69.6 Net income attributable to Seadrill Partners LLC Members 101.9 83.2 9

Balance Sheet Main Movements 4Q16 3Q16 Unaudited accounts in USD millions Total current assets 1,214.2 1,217.7 Total non-current assets 5,566.5 5,646.7 Total assets 6,780.7 6,864.4 Total current liabilities 665.4 782.0 Total non-current liabilities 3,579.5 3,739.2 Total liabilities 4,244.9 4,521.2 Total equity 2,535.8 2,343.2 Total liabilities and equity 6,780.7 6,864.4 10

Seadrill Limited Restructuring – Considerations  Insulation  Removal of Seadrill Limited as guarantor on SDLP credit facilities  Separate SDLP credit facilities from Seadrill Limited  Refinancing  Extend maturity of bank facilities by 2.5 years  Contingency planning 11

Outlook  First quarter 2017 adjusted EBITDA (1) expected to be around $245 million:  Receipt of the final $62.8 million West Capella termination payment  Improved operations on the West Auriga  West Vencedor commencing operations (1) Adjusted EBITDA has been defined in the Appendix 12

Q&A 13

Appendix – Non-GAAP Financial Measures * Adjusted EBITDA refers to earnings before interest, other financial items, taxes, non-controlling interest, depreciation and amortization and including deferred consideration payable to Seadrill Partners. Additionally, in any given period the Company may have significant, unusual or non-recurring items which it may exclude from its Non US Generally Accepted Accounting Principles ("US GAAP") earnings for that period. Reconciliation of Operating income to Adjusted EBITDA Unaudited in USD millions 4Q16 Operating income 164.8 Depreciation and amortisation 67.2 EBITDA 232.0 Amortization of mobilization revenue (5.2) Amortization of favourable contracts 17.6 Standby revenue receivable 0.8 Mobilization revenue receivable 5.1 Termination fees recognised in income (34.6) Termination fees received - Deferred consideration payable (5.3) Adjusted EBITDA 210.4 14