Shelf Drilling Presentation May 2017
Disclaimer This presentation does not constitute or form part of, and should not be construed as, any offer, invitation or recommendation to purchase, sell or subscribe for any securities in any jurisdiction and neither the issue of the presentation nor anything contained herein shall form the basis of or be relied upon in connection with, or act as an inducement to enter into, any investment activity. This presentation does not purport to contain all of the information that may be required to evaluate any investment in the Company or any of its securities and should not be relied upon to form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. This presentation is intended to present background information on the Company, its business and the industry in which it operates and is not intended to provide complete disclosure upon which an investment decision could be made. The merit and suitability of an investment in the Company should be independently evaluated and any person considering such an investment in the Company is advised to obtain independent advice as to the legal, tax, accounting, financial, credit and other related advice prior to making an investment. Any decision to purchase securities in any offering the Company may make in the future should be made solely on the basis of information contained in any prospectus or offering circular that may be published by the Company in final form in relation to any such proposed offering and which would supersede this presentation and information contained herein in its entirety. To the extent available, the industry and market data contained in this presentation has come from official or third party sources. Third party industry publications, studies and surveys generally state that the data contained therein have been obtained from sources believed to be reliable, but that there is no guarantee of the accuracy or completeness of such data. While the Company believes that each of these publications, studies and surveys has been prepared by a reputable source, the Company has not independently verified the data contained therein. In addition, certain of the industry and market data contained in this presentation come from the Company's own internal research and estimates based on the knowledge and experience of the Company's management in the market in which the Company operates. While the Company believes that such research and estimates are reasonable and reliable, they, and their underlying methodology and assumptions, have not been verified by any independent source for accuracy or completeness and are subject to change without notice. This presentation includes forward-looking statements. The words "expect", "anticipate", "intends", "plan", "estimate", "aim", "forecast", "project" and similar expressions (or their negative) identify certain of these forward-looking statements. These forward-looking statements are statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which the Company operates. The forward-looking statements in this presentation are based on numerous assumptions regarding the Company’s present and future business strategies and the environment in which the Company will operate in the future. Forward-looking statements involve inherent known and unknown risks, uncertainties and contingencies because they relate to events and depend on circumstances that may or may not occur in the future and may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied by such forward looking statements. Many of these risks and uncertainties relate to factors that are beyond the Company's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behavior of other market participants, the actions of regulators and other factors such as the Company's ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which the Company operates or in economic or technological trends or conditions. Past performance should not be taken as an indication or guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance. 2 Shelf Drilling Presentation (May 2017)
Shelf Drilling Overview Experienced Management Team David Mullen Kurt Hoffman Ian Clark Greg O’Brien CEO Executive VP & COO Executive VP Executive VP & CFO • 30+ years in the global oil • 30+ years in the global oil • 30+ years in the global • Nearly 10 years in oil and gas and gas industry and gas industry offshore drilling business corporate finance • 12 years with Transocean, • CEO of Wellstream Holdings • COO of Seahawk Drilling • Previously in charge of including: PLC (formerly UK listed; sold corporate development at • 18 years at Noble Drilling to GE) ‒ VP of Human Resources Shelf Drilling as Director, ‒ VP of Worldwide Strategic Planning • CEO of Ocean Rig ASA ‒ Manager for operations in Marketing, Noble Drilling (formerly Norway listed; • 3 years with Lime Rock Nigeria and North East ‒ VP of Western acquired by DryShips) Partners, specializing in Asia Hemisphere Operations, oilfield service and E&P • SVP of Global Marketing, • 20 years with Schlumberger Noble Drilling investment opportunities Business Development and across Europe and Africa ‒ President of Triton M&A, Transocean • Investment Banker with J.P. Engineering Services, Morgan and SunTrust • President of Oilfield Services Noble’s engineering Robinson Humphrey for North and South services division America, Schlumberger Lean and cost-efficient management set-up with extensive industry experience 3 Shelf Drilling Presentation (May 2017)
Shelf Drilling Overview Shelf Drilling is the World’s Largest Jackup Contractor Company Overview Fleet Size International “Pure - Play” Jackup Drilling Contractor 37 shallow water drilling rigs • World’s largest contractor of ILC jackup rigs (1) 36 ILC jackups and 1 swamp barge • Leading market position in all core operating regions (1) • Sole focus on shallow water drilling Operating Regions • Headquarters centrally located in Dubai • Operations in 11 countries across four regions Key Operating Statistics • Uptime of >= 98.5% since 2012 • TRIR consistently below industry average since 2012 (2) Key Financials • Robust full cycle performance – Adjusted EBITDA margins consistently in 40% range • Current backlog of US$ 1.6 billion (February 2017) – over US$ 5.0 billion of new contract awards since inception Brief History of Shelf Drilling 5-year contracts with Seamless, on-time US$ 225 million Nov Establishment of Shelf May Dec Apr Chevron for 2 and on-budget SDC equity raise to acquire 2012 Drilling 2014 2016 2017 newbuilds start-up 3 premium jackup rigs Dec Independence – majority June Expansion in Middle Jan Completed refinancing May Registered on the 2013 of rigs transferred to SD 2015 East (4 to 10 rigs) 2017 transaction 2017 Norwegian-OTC list 1 Source: IHS PetroData and Company Information as of January 2017 2 Total recordable incident rate (incidents per 200,000 man-hours) 4 Shelf Drilling Presentation (May 2017)
Shelf Drilling Overview Exposure to Short-Cycle, Low-Cost Oil Supply Cost of Supply 2020 (1) • Shallow water production represents ~65% of global offshore oil supply Breakeven oil price (US $/barrel) • Full-cycle break-even oil prices are among the 90 lowest globally, with many shallow water projects economic at current commodity prices 80 • Shallow water developments typically have 70 Oil sands shorter cycle times relative to deepwater and tend to have lower absolute cost relative to North American Extra heavy oil 60 Shale deepwater • Historically the jackup market has turned 50 Ultra deepwater before the floater market Shallow Water 40 Pre-tender Activity Russia onshore 30 Outstanding rig days in pre-tenders 18,000 Row onshore Onshore Middle East 16,000 20 Deepwater ~65% increase YoY 14,000 Arctic 12,000 10 10,000 0 8,000 0 10 20 30 40 50 60 70 80 90 100 6,000 Cumulative liquids production in 2020 (Million barrels per day) 4,000 Jan-15 Jan-16 Jan-17 Shallow water activity expected to increase in 2017/18 driven by existing and new developments Source: Rystad Energy, IHS Petrodata, DNB Markets 1 75% break-even price confidence interval for each category. Breakeven price as defined by the E&P companies as the oil price needed to make the NPV at 10 % discount rate = 0 5 Shelf Drilling Presentation (May 2017)
Shelf Drilling Overview Investment Highlights 1 Fit-For-Purpose Strategy 2 Leading Position in Key Markets 3 Best in Class Operational Platform 4 Strong Customer Relationships and Industry Leading Backlog 5 Differentiated performance Full-Cycle Financial Resilience through the cycle 6 Well Positioned for Growth 6 Shelf Drilling Presentation (May 2017)
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