Investor Presentation FIRST QUARTER 2019 KCA Deutag is a - - PowerPoint PPT Presentation

KCA Deutag is a leadinginternational drilling and engineering company working onshore and offshore with a focus on safety, quality and

• perational performance

Investor Presentation

FIRST QUARTER 2019

Disclaimer

1

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

• r

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.

Agenda

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First Quarter Investor Presentation

1

Q1 Key Highlights

2

Operational Highlights

3

Business Update

4

Business Unit Financials

5

Group Results

6

Summary

Q1 Key Highlights

3

KCA Deutag is a leading international drilling and engineering company working onshore and

• ffshore with a focus on safety, quality and operational performance

1 Q1 2019 revenue of $321.3m (Q1 2018: $291.1m) and EBITDA of $67.7m (Q1 2018: $69.0m) 2 Operational integration of the former Dalma business now complete, with further synergies identified 3 Several contract extensions and awards for the Land and Offshore Business Units 4 Increase of 18% firm contract backlog to $2.7bn (at 1 May 2019) across a blue chip customer base

Financial results noted above include results from the Dalma business which was acquired 30 April 2018 2018 results restated in compliance with IFRS 16

1 2 3 4

KCA Deutag Operations are Diversified Across Global Markets

Baku London Bad Bentheim Tyumen Nizwa

• St. Johns

Bergen Dubai

Land Drilling Offshore Services RDS offices Bentec Regional offices

Aberdeen (HQ)

North Sea /Norway 18 Plat Europe & Caspian 7 Rigs Caspian 7 Plat Russia 17 Rigs Middle East 41 Rigs Angola 2 Plat Africa 11 Rigs Brunei 1 Rig Canada 1 Plat

Map shows position at 1 May 2019 (1) The % split of LTM EBITDA is calculated using total KCAD group Q1 2019 LTM Proforma EBITDA of $295m (after corporate costs of $17m)

Russia Sakhalin 3 Plat

PRESENCE IN KEY AREAS

131 60 55 45 20 30 60 90 120 150 Europe North Africa Middle East North Sea Russia Years

4

Geographical EBITDA Split(1)

Market Outlook by Business Unit

5 Business Units Outlook Land Drilling Europe New contract awards and extensions in Russia, Algeria and the Middle East High levels of tendering continue across most markets Pricing remains competitive Utilisation levels steadily increasing Russia / Kazakhstan Africa Middle East Bentec Tendering activity continues in a competitive market Offshore Services North Sea Activity remains steady with further contract awards International RDS New Greenfield and Brownfield tendering opportunities however very slow conversion rates Greater investment in the industry required to provide meaningful uptick

A well of innovation

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Integration of Dalma Energy LLC

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Target synergies ($27m EBITDA & $2m capex) EBITDA synergies by type Integration plan complete

• Expectation of run rate EBITDA synergies increased further

from $24.5m (Q4 2018) to $27.4m (Q1 2019)

• Synergy target more than double original estimate of c.$11m
• Monthly run rate achievement in March 2019 of $1.9m, being

81% of total savings identified

• Close to full run rate synergy realisation on track for end of

Q2 2019

• Additional supply chain synergies identified in both Oman

and Saudi Arabia

(1) Run rate synergy achievement based on 31 March 2019 actual achievement

Strong HSSE Performance Continues

8

Note: IADC stands for International Association of Drilling Contractors

Q1 2019 0.281,2 IADC industry average 0.683 for 2018

Offshore awarded two Best Safety Performance Awards by the IADC Performance awards received from key international customer

Stable Backlog Providing Excellent Visibility

Note: Backlog is an estimate and may change over time depending on certain factors; Backlog reflects business that is considered to be firm, this calculation is based on assumptions deemed appropriate at the time and is subject to change. Backlog is not necessarily indicative of our future revenue or earnings. KCAD backlog amounts are estimates as of 1-May-2019

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Total contract backlog as at 1 May 2019 Total contract backlog by BU as at 1 May 2019 Total contract backlog as at 1 March 2019 Total contract backlog by BU as at 1 March 2019

Contract Platform Client Country Assets

end date status # Exxon Canada Hebron Mar-46 Operating 1 Equinor (Statoil) Norway CAT J (2) May-36 Operating 2 Equinor (Statoil) Norway Oseberg's (4) & Kvitebjorn Oct-28 Operating / Stacked 3/2 BP Azerbaijan Azeris, SD, DWG, Cop & Chirag Apr-26 Operating 7 Vår Energi Norway Ringhorne Dec-25 Operating 1 Enquest UK Thistle, Heather & Magnus Dec-25 Operating / Stacked 1 /2 CNOOC UK Scott Feb-25 Operating 1 Total UK Alwyn / Dunbar May-23 Operating / Stacked 1 /1 COP UK Britannia Nov-22 Stacked 1 Equinor (Statoil) Norway Pipe pool m anagem ent Nov-22 Active m gm

• t. contract

CNR UK Ninian's (2) Tiffany Nov-21 Operating / Stacked 1 /2 SEIC Russia LA, PA & PB May-21 Operating 3 Exxon Angola Kizom ba (2) Stacked 2 2019 2020 2021

Robust Offshore Services Contract Backlog(1)

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Denotes change since last earnings call (1) Contract and rig status shown as at 1 May 2019 Firm Options

Not Disclosed

Utilisation includes 29 Dalma Rigs on a proforma basis from 2017, and is shown after the retirement of 6 rigs on 1 November 2018 (including 5 Dalma rigs) Historical utilisation represents actual utilisation calculated on a bi-monthly basis Forward contracted utilisation represents the current contracted position

Continued Focus on Building Land Utilisation

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Historical and Forward Contracted Utilisation

Utilisation in Q1 2019 was 70%

Source: Company information. EBITDA shown after corporate overhead allocations. Notes: (1) 2 months of Dalma only (includes $0.7m synergies) (2) Includes $1.8m synergies (3) Includes $3.0m synergies (4) Includes $5.1m synergies (5) Bentec results shown before intercompany eliminations

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Land & Bentec Financial Performance

Land Quarterly EBITDA ($m) Bentec Quarterly EBITDA ($m) (5)

= EBITDA Margin

Land YTD Revenue & EBITDA ($m) Bentec YTD Revenue & EBITDA ($m) (5)

39% 30% (10)%

(1) (2) (3) (4)

6%

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Offshore & RDS Financial Performance

Offshore Services Quarterly EBITDA ($m)

(1)

RDS Quarterly EBITDA ($m)

Source: Company information. EBITDA shown after corporate overhead allocations. Notes: (1) Q1 2018 EBITDA shows $12m relating to MODUs, margin for Offshore Services only

Offshore Services YTD Revenue & EBITDA ($m) RDS YTD Revenue & EBITDA ($m)

11% 17% 3% 7%

= EBITDA Margin

KCAD LTM 204 Ex-Dalma LTM 107 Corporate Costs (17) Subtotal 295 Holdco Equity Contribution 25 Total 320 Q1 2019 LTM Pro Forma EBITDA ($m) KCAD LTM 203 Ex-Dalma (May - March) 83 Corporate Costs (17) Total 270 Q1 2019 LTM EBITDA ($m)

KCA Deutag Group Full Year EBITDA and Pro Forma EBITDA(1)

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Q1 2019 LTM EBITDA LTM EBITDA $270m Q1 2019 Pro Forma LTM EBITDA(2) LTM EBITDA $295m

(1) Q1 2019 LTM figures include restated 2018 figures in compliance with IFRS 16 (2) Business Unit proportions calculated based on group EBITDA, before corporate overheads, of $286m. (3) Q1 2019 LTM EBITDA includes $10.6m of actualised synergies. (4) Q1 2019 KCAD Pro Forma LTM EBITDA includes unaudited pre-acquisition EBITDA of the acquired IDTEC business of $1.3m for Apr-Sep 2018. (5) Q1 2019 Pro Forma LTM EBITDA includes $16.8m of additional Pro Forma synergies, Dalma pre-acquisition EBITDA of $6.4m for Apr 2018.

(3) (4) (5)

Q1 2019 Q4 2018 Q1 2018 2019 YTD 2018 YTD $'m $'m $'m $'m $'m Cash generated from operations 26.0 89.3 65.7 26.0 65.7 Tax paid (12.5) (3.2) (8.1) (12.5) (8.1) Cash flow from operating activities 13.5 86.1 57.6 13.5 57.6 Capital expenditure (18.2) (10.5) (9.4) (18.2) (9.4) Acquisition of Holdco rig (25.0) (25.0) 0.0 Proceeds from sale of Fixed Assets 0.1 1.2 0.8 0.1 0.8 Interest received 6.6 5.8 6.0 6.6 6.0 Other 0.4 0.0 0.0 0.4 0.0 Cash flow from investing activities (36.1) (3.5) (2.6) (36.1) (2.6) Interest paid (18.8) (78.2) (13.9) (18.8) (13.9) Foreign exchange 0.2 (2.2) (4.4) 0.2 (4.4) Dividend paid to minority shareholders (0.3) 0.0 (0.3) (0.3) (0.3) Lease payments (5.8) (4.9) (4.2) (5.8) (4.2) (47.3) (2.7) 32.2 (47.3) 32.2 (5.4) 105.2 (5.3) (5.4) (5.3) Increase in loan from parent company 25.0 0.0 0.0 25.0 0.0 Net cash flow (27.7) 102.5 26.9 (27.7) 26.9 Net Cash flow before debt drawdown/(repayment) Drawdown/(repayment) of debt and debt redemption/issuance costs

Cash Flow and Working Capital

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9

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(1) 2018 results restated in compliance with IFRS 16 (2) Denotes the effect of foreign exchange rate changes on cash and bank overdrafts (3) Deltas denote quarterly working capital movement

(2)

Free Cash Flow (1) Working Capital (3)

Capital Structure

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Net leverage as at 31 March 2019

(1) PF LTM EBITDA adjusted for unaudited LTM EBITDA of the acquired Dalma businesses of $6.4m and synergies of $16.8m, plus unaudited LTM EBITDA of the acquired IDTEC business of $1.3m. (2) Q1 2018 LTM EBITDA includes the first $25m Holdco equity contribution and Q1 2019 LTM EBITDA includes the second, as defined in the Amended Credit Agreement. (3) In addition to the $230m Revolver Cash facility, we also have $115m of guarantee facilities. (4) $15m of this matures in May 2019.

Net Debt Evolution

295 237

(1)

25 25

(3) (2) (3)

Amount Utilised Coupon Maturity Facility Rating Leverage Revolver Cash ($230m) 165 L+400 Mar-22 Caa1/B- 0.51x Senior Secured Term Loan 412 L+675 Feb-23 Caa1/B- 1.28x Oman Term Loan 28 L+400 Dec-20

• 0.09x

Total Bank Debt 604 1.89x Senior Secured Notes 2021 375 7.250% May-21 Caa1/B- 1.17x Senior Secured Notes 2022 535 9.875% Apr-22 Caa1/B- 1.67x Senior Secured Notes 2023 400 9.625% Apr-23 Caa1/B- 1.25x Total Institutional Debt 1,914 5.98x Other debt 2 Gross Debt 1,917 5.98x Cash 146 0.46x Net Debt 1,771 5.53x Finance lease liabilites 49 0.15x Net Debt per balance sheet 1,820 5.68x

(3) (4)

Closing Remarks

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• Operational integration of the Omani and Saudi Arabian businesses of Dalma Energy LLC now

complete with further synergies identified

• Increase in firm backlog to $2.7 billion across a blue chip company base
• Q1 revenue $321.3m and EBITDA $67.7m
• Multiple contract awards within the Land, Offshore and RDS Business Units

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Q & A

investor.relations@kcadeutag.com