Barclays CEO Energy-Power Conference September 2016 1
Forward-Looking Statements Statements contained in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include words or phrases such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “could,” “may,” “might,” “should,” “will” and similar words and specifically include statements involving expected financial performance, effective tax rate, day rates and backlog, estimated rig availability; rig commitments and contracts; contract duration, status, terms and other contract commitments; letters of intent or letters of award; scheduled delivery dates for rigs; the timing of delivery, mobilization, contract commencement, relocation or other movement of rigs; our intent to sell or scrap rigs; and general market, business and industry conditions, trends and outlook. Such statements are subject to numerous risks, uncertainties and assumptions that may cause actual results to vary materially from those indicated, including commodity price fluctuations, customer demand, new rig supply, downtime and other risks associated with offshore rig operations, relocations, severe weather or hurricanes; changes in worldwide rig supply and demand, competition and technology; future levels of offshore drilling activity; governmental action, civil unrest and political and economic uncertainties; terrorism, piracy and military action; risks inherent to shipyard rig construction, repair, maintenance or enhancement; possible cancellation, suspension or termination of drilling contracts as a result of mechanical difficulties, performance, customer finances, the decline or the perceived risk of a further decline in oil and/or natural gas prices, or other reasons, including terminations for convenience (without cause); the cancellation of letters of intent or letters of award or any failure to execute definitive contracts following announcements of letters of intent or letters of award; the outcome of litigation, legal proceedings, investigations or other claims or contract disputes; governmental regulatory, legislative and permitting requirements affecting drilling operations; our ability to attract and retain skilled personnel on commercially reasonable terms; environmental or other liabilities, risks or losses; debt restrictions that may limit our liquidity and flexibility; our ability to realize the expected benefits from our redomestication and actual contract commencement dates; cybersecurity risks and threats; and the occurrence or threat of epidemic or pandemic diseases or any governmental response to such occurrence or threat. In addition to the numerous factors described above, you should also carefully read and consider “Item 1A. Risk Factors” in Part I and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II of our most recent annual report on Form 10-K, as updated in our subsequent quarterly reports on Form 10-Q, which are available on the SEC’s website at www.sec.gov or on the Investor Relations section of our website at www.enscoplc.com. Each forward- looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements, except as required by law. 2
• Market Conditions • Decisive actions to persevere through the downturn – capital & expense management – fleet restructuring – investments in engineering and innovation to improve operational & safety performance • Outlook for offshore drilling – efficiency & cost improvements – attrition of older rigs & deferral/cancellation of newbuild deliveries – catalyst markets 3
Market Conditions Major & European IOCs’ Upstream • Substantial reduction in Capital Spending Outlook $ billions upstream capex among $250 Major & European IOCs’ $218 since 2013 $208 $200 − unprecedented decline in $181 exploration spending - 45% $150 $126 • 2016 upstream capex for $120 Major & European IOCs’ $100 expected to decline ~30% year-over-year, but bottoming in 2017 $50 • Significant pullback in $0 spending will affect supply in the future Source: IHS Energy Notes: Group of Major & European integrated oil companies includes BP, Chevron, Eni, ExxonMobil, OMV, Repsol, Shell/BG, Statoil and Total; 4 historical years include acquisitions; 2016 and 2017 estimates exclude acquisitions
• Capital management Decisive Actions To • Expense management Persevere • Fleet restructuring Through The Downturn • Investments to improve operational & safety performance – engineering & innovation – process improvements 5
Proactive Capital Management • Accessed the debt markets twice to bolster liquidity and refinance near- term debt maturities • Increased revolver to $2.25 billion and extended to 2019 • Reduced capital expenditures and dividend to preserve cash • Delayed delivery of newbuilds, postponing ~$500 million of final milestone payments • Debt tender offer and open market purchases in 2Q16 at substantial discounts • Equity offering to further enhance liquidity position • Significantly reduced leverage 6
Benefits of Recent Capital Management Actions Liquidity Net Debt-to-Capital Ratio $ billions $4.05 41% $3.55 1.8 1.3 28% 2.25 2.25 4Q15 2Q16 4Q15 2Q16 Revolver Cash + Short-term investments Note: Net debt is a non-GAAP financial measure defined as long-term debt less cash and short-term investments. Non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures prepared in accordance with GAAP. 4Q15 net debt-to- capital is calculated as follows: long-term debt of $5.9 billion, less $1.3 billion of cash and short-term investments, divided by the sum of long-term debt of $5.9 billion plus shareholders’ equity of $6.5 billion, minus $1.3 billion of cash and short-term investments. 2Q16 net debt-to-capital is calculated as 7 follows: long-term debt of $4.9 billion, less $1.8 billion of cash and short-term investments, divided by the sum of long-term debt of $4.9 billion plus shareholders’ equity of $7.9 billion, minus $1.8 billion of cash and short-term investments.
Debt Maturity Schedule $ millions $940 million of debt repurchased $1,025 $778 $760 $669 $623 $454 $300 No debt $150 maturities until 2019 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2027 2044 2040 8
Capital Expenditure Outlook Newbuild Capital Expenditures Other Capital Expenditures $ millions $ millions $375 $225 $100 $100 $75 $65 50 25 10 $0 55 50 50 2H16E 2017E 2018E 2019E 2H16E 2017E 2018E New rig construction Rig enhancements Minor upgrades & improvements Note: Estimates for 2016, 2017, 2018 and 2019; final capex estimates to be determined upon completion of annual budget process and subject to change based on rig contracting; new rig construction represents contractual commitments plus anticipated capex associated with rig construction; 2016 rig enhancements capex is specific to a mooring upgrade for an additional ENSCO 8500 Series rig, while 2017, 2018 and 2019 rig enhancements are estimates and not earmarked for any specific projects at this time; capex for minor upgrades and improvements are based on the 9 currently active fleet.
Expense Management Actions 2015 Actions • 15% reduction in offshore unit labor cost • $60+ million of annual savings from 27% reduction in onshore support headcount – consolidated business unit reporting structure from five to three – centralized certain functions • $100+ million of additional contract drilling and G&A expense savings – repair and maintenance rate reductions and lower rig insurance premiums – other savings through negotiated discounts with vendors Recent Actions • Recently instituted a lower base salary structure for new hire offshore crews • Further streamlining organizational structure: shore-based operational support, offshore labor pool and additional corporate staff department centralization 10
Disciplined Expense Management Contract Drilling • ~25% rate reduction for offshore Expense labor costs $ millions $543 • ~25% rate reduction in repair and -36% maintenance expense $350 • ~25% rate reduction for other expenses including insurance premiums and discounts with vendors • Proactive fleet management • Fewer rig operating days 2Q14 2Q16 11
Stacking & Reactivation Costs Average Estimated Daily Upfront Cost Operating Expenses to Estimated Cost Rig Type Preservation to Reactivate Warm Preservation Stack Stack Stack $40k $15k Drillship $5 million $25 - $35 million per day per day 8500 Series $32k <$10k $5 million $25 - $35 million Semi per day per day High-Spec $20k <$5k $1 million $5 million Jackup per day* per day *Note: ENSCO 140 daily stacking costs covered by shipyard for up to two years. 12
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