Archer Second Quarter 2019 Executive Chairman Kjell-Erik Østdahl and CFO Dag Skindlo 8 August 2019
Disclaimer – forward looking statements Cautionary Statement Regarding Forward-Looking Statements In addition to historical information, this press release contains statements relating to our future business and/or results. These statements include certain projections and business trends that are “forward-looking.” All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including statements preceded by, followed by or that include the words “estimate,” pro forma numbers, “plan,” project,” “forecast,” “intend,” “expect,” “predict,” “anticipate,” “believe,” “think,” “view,” “seek,” “target,” “goal” or similar expressions; any projections of earnings, revenues, expenses, synergies, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations, including integration and any potential restructuring plans; any statements concerning proposed new products, services, developments or industry rankings; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements do not guarantee future performance and involve risks and uncertainties. Actual results may differ materially from projected results/pro forma results as a result of certain risks and uncertainties. Further information about these risks and uncertainties are set forth in our most recent annual report for the Year ending December 31, 2018. These forward-looking statements are made only as of the date of this press release. We do not undertake any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements in this report are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in our records and other data available from Fourth parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies, which are impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. 2
Key highlights • Fourth quarter in a row with EBITDA margin above 10% • Awarded contract for the Modular Rig “Archer Emerald” • Renewed Platform Drilling contract for Chevron in UK • New technology in Oiltools continue to gain traction 3
Archer – second quarter financial results • Revenue of $235.6 million • EBITDA of $23.5 million, or 10% of revenue • EBIT of $11.3 million or 5% of revenue versus a loss in same period last year • Net Income of $3.5 million • Net Interest Bearing Debt further reduced to $580 million Revenue [$m] EBITDA [$m] EBIT [$m] 235.6 23.5 11.3 250 25 12 224.4 10 200 20 8 6 150 15 12.3 4 100 10 2 0 50 5 Q2-18 Q2-19 -2 -2.3 0 0 -4 Q2-18 Q2-19 Q2-18 Q2-19 4
Platform Drilling & Engineering Financial highlights Revenue and EBITDA [$m and %] Revenues ($m) EBITDA (%) • 24% increase in Revenue compared to Q2 2018 150 12% 125.9 120.3 115.5 • 10% increase in EBITDA relative to Q2 2018 10% 101.4 99.7 100 8% • Capex spend in the quarter of $1.1m 6% 50 4% 2% 0 0% Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Operational highlights $m Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 9.1 9.5 10.0 10.9 10.0 EBITDA • Signed contract for Modular Rig Emerald to be Capex 0.3 1.0 3.8 0.2 1.1 deployed in New Zealand, with drilling expected to commence in March 2020 Platform Drilling contracted rigs [nr of rigs] • Tender process ongoing for Modular Rig Topaz with potential for drilling starting Q2 2020 47 50 46 45 45 44 45 • Renewed contract with Chevron in the UK 40 35 27 • Contract with Energean in Greece expired at the 27 27 29 30 28 end of May - one less contracted rig during the 25 20 quarter 15 10 20 19 18 • Shell decided on a different technical solution for 16 16 5 final P&A on Brent Charlie – Archer personnel on 0 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 board will be minimal as of August 2019 Active Drilling Rigs Maintenance mode rigs 5
Awarded contract for the modular drilling rig Archer Emerald in New Zealand • Archer has been awarded a contract with OMV Taranaki Limited for the provision of drilling services using the modular drilling rig ("MDR") Archer Emerald, including associated services, materials, equipment and personnel • The contract is for a firm five well contract with two one well options on OMV's Maui A platform located in the Tasman Sea in New Zealand • The firm contract commitment is estimated at 11 months, with a further 5 months for the optional wells Projected timeline: Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Demobili- Rig preparation Mobilization Fixed term zation Demobili- Optional term zation 6
Well Services Financial highlights Revenue and EBITDA [$m and %] Revenues ($m) EBITDA (%) • 10% increase in Revenue compared to Q2 2018 40 20% 30.4 29.7 29.5 • 18% increase in EBITDA relative to Q2 2018 26.9 26.5 30 15% • New technology in Oiltools accounts for 21% of 20 10% revenue in the quarter, up from previous quarter 10 5% • Strong cash flow generation 0 0% Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 $m Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 EBITDA 3.9 3.3 5.0 4.4 4.7 Operational highlights Capex 0.4 0.9 3.2 1.1 1.0 • Stable good quarter with Oiltools, with good development across all product lines Number of runs • P&A and Slot Recovery solutions gaining interest internationally through several new first client trials in the Middle East and North Africa • Wireline experienced a soft Q2 due to shutdown of client platforms for maintenance in Norway for Wireline Logging runs the month of June. Start-up of normal operations Oiltool runs in July, albeit with less active units deployed Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 7
Land Drilling Financial highlights Revenue and EBITDA [$m and %] Revenues ($m) EBITDA (%) • Revenue down ~7% relative to same quarter last 100 20% 86.2 82.3 80.4 80.3 year following a 32% depreciation of the Argentine 79.4 80 15% Peso during the last 12 months 60 10% • $10 million increase in EBITDA relative to Q2 40 5% 2018, primarily to due to strong drilling 20 0 0% performance and lower cost base Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 • The quarter was negatively impacted by high R&M $m Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 cost, excessive standby as rigs were waiting on -0.3 10.9 11.4 12.0 9.7 EBITDA location and unfavorable macroeconomics where Capex 3.8 2.5 4.9 1.0 3.1 inflation outpaces depreciation of the currency Archer active rigs [nr of rigs] Operational highlights 70 • Lower activity levels in Bolivia leading to 2 less 60 52 52 active rigs in the quarter 51 51 50 50 • Number of active drilling rigs expected to be lower 40 33 32 33 33 33 in Q3 and Q4 as clients are cutting back on some 30 drilling programs in Argentina 20 10 19 19 18 19 • We expect that ongoing tendering activity, 17 0 including a letter of intent, will result in some rigs Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 being contracted long term following rig upgrades Drilling rigs Workover & Pull units to meet the new well design in Vaca Muerta 8
Archer Group – financial highlights second quarter 2019 Revenue [$m] EBITDA [$m, %] 236 250 233 30 226 224 14% 214 25.0 24.3 23.5 25 22.4 200 12% 20 10% 150 8% 15 12.4 100 6% 10 4% 50 5 2% 0 0 0% Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Capex [$m] Net Interest Bearing Debt [$m] 14 700 630 12.2 601 586 581 580 12 600 10 500 8 400 5.5 6 300 4.8 4.5 4 200 2.4 2 100 0 0 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 9
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