Investor Presentation FIRST QUARTER 2018 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 2018

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

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KCA Deutag is a leading international drilling and engineering company working

• nshore and offshore with a focus on safety, quality and operational performance

1

Q1 2018 Group revenue of $291.1m (Q1 2017: $269.1m) and Q1 2018 EBITDA of $65.8m (Q1 2017: $50.1m) respectively (1)

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Acquisition of the Omani and Saudi Arabian businesses of Dalma Energy LLC completed on 30 April 2018

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Successful contract awards in Offshore and Bentec

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Combined contract backlog of $6.3bn (at 1 May 2018) across a blue chip customer base

5

Available liquidity of $260m at 31 March 2018

(1) Financial results noted above do not include any results from the newly acquired Dalma businesses

Successful acquisition of Dalma’s Omani and Saudi Arabian businesses on 30 April 2018

4 Highlights Entrance into new market in Saudi Arabia and expansion of existing presence in Oman KCA Deutag is now one of the largest International Drilling Contractors in the Middle East Acquired 20 rigs in Oman and 9 rigs in Saudi Arabia Significant boost to backlog of $993m at 1 May 2018 Enterprise Value of $660m

Significant synergies identified from acquisition of Dalma

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Target synergies ($11m EBITDA & $2m capex) EBITDA synergies by type Focus on integration Early adoption of KCA Deutag Way – Senior management communication at all offices and rig locations in week 1 Delivering cost synergies – Full run rate synergy realisation targeted for Q3 2019 – Integration team in place to oversee consolidation and focus

• n synergy realisation

Unlocking further revenue synergies – Actively engaged with customers – Opportunities for collaboration between business units Enhancement of capital structure – Deleveraging effect – Extended maturity date

KCA Deutag Operations are diversified across global markets with an increased Middle Eastern presence

Baku London Bad Bentheim Tyumen Nizwa

• St. Johns

Bergen Dubai

Land Drilling Offshore Services RDS offices Bentec Regional offices

Aberdeen (HQ)

North Sea /Norway 20 Plat Europe & Caspian 8 Rigs Caspian 7 Plat Russia 17 Rigs Middle East 46 Rigs Angola 2 Plat Africa 11 Rigs Brunei 1 Rig Canada 1 Plat

Map shows position at 1 May 2018

Russia Sakhalin 3 Plat

PRESENCE IN KEY AREAS

130 59 54 44 19 30 60 90 120 150 Europe North Africa Middle East North Sea Russia Years

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Enlarged Middle East Profile Country KCAD Dalma Total Kurdistan 2 2 Oman 8 20 28 Pakistan 2 2 Saudi Arabia 9 9 South Iraq 3 3 UAE 2 2 Total 17 29 46

Middle East Onshore Rig Count – International Players (1)

Notes: (1) Source: Douglas Westwood. Middle East includes rigs in, KSA, Oman, Iraq, UAE and Pakistan. (2) Includes 32 ZP Arabia rigs. (3) Includes 22 ADC rigs, a Schlumberger and Taqa Joint Venture. (4) The % split of LTM EBITDA is calculated using total KCAD group LTM EBITDA of $255.7m (before corporate costs of $18.4m) plus Dalma business unaudited LTM EBITDA of $131.5m (before corporate costs of $28m). (5)The % split of Geographical LTM EBITDA is calculated using total KCAD group LTM EBITDA of $296.3m (before overheads of $22.1m and corporate costs of $18.4m) plus Dalma business unaudited LTM EBITDA of $131.5m (before corporate costs of $28m).

(2) (3)

Enlarged KCA Deutag group is now one of the largest International drilling contractors in the Middle East

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LTM EBITDA (4) Geographical EBITDA Split (5)

Improved overall market sentiment driven by sustained increase in oil price, however not yet delivering increased international drilling activity

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Outlook refers to medium term activity outlook

Activity Medium Term Market Outlook Europe / Kazakhstan Russia Africa Middle East Good tendering activity in a competitive

• market. New build rig awards provide a

positive backdrop North Sea Steady activity and recent contract re- awards International Stable activity Limited tendering; seeking diversification

• pportunities

Business Units Offshore Services RDS High levels of tendering across most

• markets. Slower than expected conversion

to contract awards. Pricing remains under pressure as utilisation levels are yet to increase Bentec Land Drilling

Strong HSSE performance continues

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Note: IADC stands for International Association of Drilling Contractors

IADC industry average 0.542 for 2017 KCAD TRIR at end of Q1 2018 was 0.191 injuries per 200,000 man hours worked

The UK’s Scott Platform wins IADC North Sea 2017 Industry Safety Award Land Business Unit achieved lowest ever TRIR of 0.12 in March 2018

Increased 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 and Dalma backlog amounts are estimates as of 1-May-2018

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KCAD contract backlog as at 1 May 2018 Ex-Dalma contract backlog as at 1 May 2018 Total contract backlog as at 1 May 2018 Total contract backlog by BU as at 1 May 2018

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 4/1 Exxon Angola Kizomba (2) Apr- 28 Stacked 2 Point Resouces Norway Ringhorne Dec- 25 Stacked 1 AIOC Azerbaijan Azeris, SD, DWG, Cop & Chirag Dec- 24 Operating 7 Nexen UK Scott Feb- 23 Stacked 1 COP UK Britannia Nov- 22 Stacked 1 Equinor (Statoil) Norway Pipe pool management Oct- 22 Active mgmt. contract CNR UK Ninian's (2) Tiffany Nov- 21 Operating / Stacked 1 /2 SEIC Russia LA, PA & PB May- 21 Operating 3 Total UK Alwyn / Dunbar Dec- 20 Stacked 2 Enquest UK Thistle & Heather May- 20 Operating / Stacked 1 /1 Equinor (Statoil) Norway Gulfaks (3) Oct- 1 8 Operating 3 2018 2019 2020

Robust Offshore Services contract backlog

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Contract and rig status shown as at 1 May 2018 Denotes change since last earnings call

Utilisation includes 29 Dalma Rigs on a proforma basis from 2017 onwards

Continued focus on building utilisation

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Historical and forecast utilisation

Land Drilling

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• Higher EBITDA compared to the prior quarter and prior year, assisted by receipt of

early termination fee in Oman

• Reasonable performance in the quarter in core markets of Russia and Oman
• Tendering activity continues in Algeria and Europe
• Dalma Q1 2018 EBITDA of $25.6m
• Utilisation for the quarter of 68%(1)

Q1 2018 Q4 2017 Q1 2017 Q1 2018 Q1 2017 Result Result Result YTD YTD $m $m $m $m $m Revenue 120.4 126.8 122.2 120.4 122.2 EBITDA (post support allocation) 45.7 42.4 43.0 45.7 43.0 Margin 38.0% 33.5% 35.2% 38.0% 35.2%

(1) Utilisation figure for Q1 includes 29 Dalma Rigs on a proforma basis Financial results noted above do not include any results from the newly acquired Dalma businesses

Bentec

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• Lower EBITDA during Q1 2018 due to timing of delivery of component sales
• Revenue recognition for new build rigs will commence with delivery from Q3 2018
• Continued active tendering market across after sales, components and new build rigs

Q1 2018 Q4 2017 Q1 2017 Q1 2018 Q1 2017 Result Result Result YTD YTD $m $m $m $m $m Revenue 15.1 19.2 15.6 15.1 15.6 EBITDA (post support allocation) (1.6) (0.5) 0.3 (1.6) 0.3 Margin

• 10.6%
• 2.6%

1.9%

• 10.6%

1.9%

Offshore Services

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• Strong Offshore Services EBITDA result in Q1 primarily due to collection of overdue

MODUs receivable resulting in $12m upside

• Both of the Cat J jack-up rigs have now commenced operations
• Weaker results in North Sea but steady performance in Angola, Azerbaijan, Sakhalin and

Canada

Q1 2018 Q4 2017 Q1 2017 Q1 2018 Q1 2017 Result Result Result YTD YTD $m $m $m $m $m Platform Services Revenue 145.4 145.2 119.0 145.4 119.0 EBITDA (post support allocation) 14.6 26.4 11.3 14.6 11.3 Margin 10.0% 18.2% 9.5% 10.0% 9.5% MODUs Revenue (1.2) 0.0 0.0 (1.2) 0.0 EBITDA (post support allocation) 12.0 0.1 (0.0) 12.0 (0.0) Margin n/a n/a n/a n/a n/a Offshore Services Revenue 144.2 145.2 119.0 144.2 119.0 EBITDA (post support allocation) 26.6 26.5 11.3 26.6 11.3 Margin 18.5% 18.3% 9.5% 18.5% 9.5%

RDS

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• Maintained breakeven EBITDA in the quarter
• Limited new opportunities in greenfield
• Continuing to pursue diversification opportunities outside of the oil and gas sector

Q1 2018 Q4 2017 Q1 2017 Q1 2018 Q1 2017 Result Result Result YTD YTD $m $m $m $m $m Revenue 14.5 15.3 14.2 14.5 14.2 EBITDA (post support allocation) 0.4 1.6 0.6 0.4 0.6 Margin 2.8% 10.5% 4.2% 2.8% 4.2%

Q1 2018 Q4 2017 Q1 2017 2018 YTD 2017 YTD $'m $'m $'m $'m $'m Cash generated from operations 62.5 93.5 21.4 62.5 21.4 Tax paid (8.1) (5.3) (8.5) (8.1) (8.5) Cash flow from operating activities 54.4 88.2 12.9 54.4 12.9 Capital expenditure (9.4) (10.9) (6.8) (9.4) (6.8) Proceeds from sale of Fixed Assets 0.8 0.9 0.2 0.8 0.2 Interest received 6.0 5.7 5.4 6.0 5.4 Other 0.0 0.0 0.0 0.0 0.0 Cash flow from investing activities (2.6) (4.3) (1.2) (2.6) (1.2) Interest paid (13.9) (53.3) (14.9) (13.9) (14.9) Foreign exchange (4.4) 2.9 (2.6) (4.4) (2.6) Dividend paid to minority shareholders (0.3) 0.0 (0.3) (0.3) (0.3) Acquisition of non-controlling interests 0.0 0.0 0.0 0.0 0.0 Net Cash flow before debt drawdown/(repayment) 33.2 33.5 (6.1) 33.2 (6.1) Drawdown/(repayment) of debt and debt redemption/issuance costs (6.3) (5.8) (6.6) (6.3) (6.6) Net cash flow 26.9 27.7 (12.7) 26.9 (12.7)

Cash Flow and Working Capital

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9

Working Capital2

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Free Cash Flow

Financial results noted above do not include any results from the newly acquired Dalma businesses

Revised capital structure now shows no significant maturities until 2021

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Capital Structure at 31 March 2018 Rating: Caa1/CCC+ Pro Forma Capital Structure at 31 March 2018 Rating(4): B3/B-

PF Leverage 4.4x PF net debt 1,667m PF LTM EBITDA(3) 377m Cash 100m

Notes: (1) Q1 2018 LTM EBITDA of $262m includes the $25m Holdco equity contribution as defined in the Amended Credit Agreement; (2) Revolver usage shown represents the utilisation of the cash facility only; (3) PF LTM EBITDA adjusted for unaudited LTM EBITDA of the acquired Dalma businesses of $103.5m plus $10.9m PF synergies (4) Facility ratings shown as at May 2018 $m $m

Closing Remarks

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• Improved market sentiment driven by sustained increase in oil price, however not yet delivering

increased international drilling activity

• Q1 2018 results of $291.1m revenue and $65.8m EBITDA
• Several contract awards in Offshore Services and Bentec
• Backlog position of $6.3 billion across a blue chip company base
• Strong HSE and operational performance sustaining low group incident rate
• Acquisition of the Omani and Saudi Arabian businesses of Dalma Energy LLC completed on 30

April 2018

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Q & A

investor.relations@kcadeutag.com