Investor Presentation July 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
• Current Market Conditions • Proactive Steps to Address Downturn • Outlook for Offshore Drilling – attrition of older rigs – efficiency & cost improvements • Maintain and Widen Leadership Position – #1 in customer satisfaction – innovation – efficient/cost-effective driller 3
Current Market Conditions Total Corporate Capex of • Substantial reduction in Majors & Large IOCs E&Ps total capex since $ billions 2013 $350 $292 $300 • Expect E&Ps total capex $262 for 2016 to be ~30% lower $250 year over year $212 $200 • Unprecedented decline in $149 $150 exploration spending $100 • Lower rig utilization & day rates $50 • $0 The significant pullback in spending will affect supply in the future Source: IHS Upstream Competition Service Notes: Majors and Large IOCs peer group includes 15 international oil companies; 2015 and 2016 based on estimates and initial guidance, 4 respectively.
Market Response • Customers – reducing capex – deferring projects – early terminations/concessions for existing rig contracts – re-engineering to increase efficiencies/reduce costs – testing economics for future programs based on lower costs and streamlined project management • Drillers – cutting costs & stacking/retiring rigs – deferring rig deliveries – speculators canceling rig orders • Service companies – strategic combinations to invest in technological innovations and process improvements that increase efficiencies and drive out costs 5
• Capital Management Taking Decisive • Fleet Restructuring Actions To Persevere • Expense Management Through The • Operational Excellence & Safety Downturn – innovation – process improvements 6
Proactive Capital Management • Accessed the debt markets – $1.25 billion offering in 3Q14 – $1.10 billion offering in 1Q15 to refinance 2016 maturities • Increased revolver to $2.25 billion and extended to 2019 • Reduced dividend twice to improve liquidity and capital management flexibility • Deferred delivery of ENSCO DS-10 to 1Q17 postponing ~$300 million in capex, and ENSCO 123 to 1Q18 postponing ~$200 million in capex • Tender offer and open market purchases in 2Q16 for certain debt maturities at a discount • Equity offering to bolster liquidity position 7
Benefits of 2Q16 Capital Management Actions Liquidity Net Debt-to-Capital $ billions 4.05 3.65 3.55 1.8 1.4 1.3 41% 40% 2.25 2.25 2.25 28% 4Q15 1Q16 2Q16 4Q15 1Q16 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. We review net debt as part of our overall liquidity, financial flexibility, capital structure and leverage, and believe that this measure is useful to investors as part of their assessment of our business. Non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, 8 financial measures prepared in accordance with GAAP.
Balance Sheet Information $ millions $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 9
Capital Expenditure Outlook New Rig Construction Other Capital Expenditures $ millions $ millions 375 100 225 75 65 50 125 50 55 0 50 25 10 3Q16E - 2017E 2018E 2019E 3Q16E - 2017E 2018E 4Q16E 4Q16E 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 currently active fleet. 10
Fleet Restructuring: Divestitures & Scrapping • 28 rigs sold since 2010 generating ~$690 million in proceeds – 14 rigs sold since September 2014 • 4 jackups sold for more than $200 million in proceeds during 3Q14, reducing exposure to Mexico jackup market • 8 floaters and 2 jackups sold for scrap value • 7 rigs to be retired – 5 jackups in continuing operations – 2 rigs in discontinued operations – 1 jackup and 1 floater Note: As of 27 July 2016 11
Expense Management Actions 15% reduction in offshore unit labor costs + $60+ million annual savings in onshore support costs • February 2015 – 9% unit labor cost decrease for offshore workers – 15% reduction of onshore positions • $27 million in annualized savings – full run-rate savings beginning 2Q15 • August 2015 – +6 ppt improvement in offshore unit labor cost savings to 15% compared to 2014 levels; full run-rate savings beginning 1Q16 – 14% incremental reduction of onshore positions • $33+ million additional annualized savings from 2014 levels; full run-rate beginning 4Q15 • consolidated business unit reporting structure from five to three, centralizing certain functions and rationalizing office space 12
Stacking & Reactivation Costs Avg Daily Operating Upfront Cost 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 13
Improved Expense Outlook Contract Drilling Expense $ millions 434 398 364 350 295 - 300 3Q15 4Q15 1Q16 2Q16 3Q16E Note: 4Q15A contract drilling expense figure excludes $17 million provision for doubtful accounts related to ENSCO DS-5 drilling services contract 14
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