Investor Presentation SECOND QUARTER 2020 KCA Deutag is a - - PowerPoint PPT Presentation

KCA Deutag is a leadinginternational drilling, engineering and technology company working onshore and

• ffshore with a focus on safety,

quality and operational performance

Investor Presentation

SECOND QUARTER 2020

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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Second Quarter Investor Presentation

1

COVID-19 update

2

Safety & #enhancethebrand

3

5 year restructuring business plan and capital structure

4

Backlog & utilisation

5

Business unit & group financials

6

Market update

7

Summary

Q2-2020 key highlights

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Staying focused on proactively managing what we can control during this pandemic Successfully entered into a binding lock-up agreement Q2-20 revenue of $292.3m (Q2-19: $395.1m) and EBITDA of $65.5m (Q2-19: $74.4m) Land Drilling division commences operations on one of the new build Kuwait rigs Offshore Drilling division awarded a contract amendment to manage procurement, maintenance and warehousing activities (through the Turan Drilling JV) in Azerbaijan Contract backlog stable at $4.9bn (at 1 August 2020) across a blue chip customer base

1 2 3 4 5 6

COVID-19 updates

4

• Response teams and guidelines established early.
• Country teams have executed effectively to maintain
• verall safety and integrity of our field operations.

− THANK YOU to all our employees!

• Guidance issued on remote working and wellbeing.
• Conducted several Virtual rig visits to maintain contact

with field operations teams.

• Guidance developed on safely returning to office.
• Ongoing review of blended/flexible working plans.

Company has proactively responded to the pandemic.

Safety performance continues to outperform industry average

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(1) Total Recordable Incident Rate per 200,000 man hours. This is a rolling 12 month average (2) Dalma business has been incorporated from May 2018 (3) KCAD Total Recordable Incident Rate is directly comparable with IADC’s Total Recordables (RCRD) statistic Note: IADC stands for International Association of Drilling Contractors

Q2 2020 0.271,2 IADC industry average 0.633 for 2019

Rig App CheckIt upgraded to enhance our field crews’ ability to follow procedures, assess operational risk and submit compliance data KCAD tool to prevent dropped objects has been shared with the wider industry to improve safety with maintenance at height

#enhancethebrand improvement initiatives

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• Teams and individual employees have

continued to contribute:

− 653 documented ideas. − 84 implemented projects. − Over $3m of annualized benefits achieved.

The organization continues to deliver significant contributions.

Bottom up contributions: What was achieved in H1-2020:

• Annualized savings and cost avoidance
• f over $50m achieved in H1 2020:

− Hundreds of letters sent to suppliers and many new agreements signed. − Tens of bidding campaigns completed. − Sharing stock across many locations. > $3m > $50m

From focused execution to strategic tactics

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Designing our Growth Strategy.

Execute a focused growth strategy to build a resilient and smart platform that thrives in the face of change, delivers value to all stakeholders, and that will last another 130 years

Restructuring business plan assumptions

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• Pre-pandemic market backdrop

− ‘Lower for longer’ accepted while oil demand was peaking − E&P cash flows improving but Oilfield Services oversupplied − Investors & customers focusing on ESG and Energy Transition − KCA Deutag business activity fundamentals were improving

• Impact of OPEC+ and COVID-19

− Unprecedented and historic Supply/Demand divergence − E&P companies aggressively cut CAPEX and Opex − OPEC+ declare historic oil production cuts − KCA Deutag takes action to preserve cash and control costs

• Plan developed in May during the standstill period

− Uncertainty with near-term oil demand and price recovery − Length of lockdowns to shape economic normalization − A ‘return to a new normal’ was used for the Base case − Upside and Downside Scenarios were also developed

• Market Outlook Observations at the time:

− Demand destruction may drive industry consolidation − Acceleration of Energy Transition investments to be expected − Activity may recover in time but day rates and pricing to lag

Market backdrop and Scenario planning

More Information available in the LUA document on our website

192 203 170 169 200 211 227 91 89 74 70 73 76 77 (16) (13) (14) (15) (15) (15) (15) 273 299 236 231 265 288 319 (40) 60 160 260 360 2018 A 2019 A 2020 E 2021 E 2022 E 2023 E 2024 E

5 year business plan forecast

Consolidated Revenues and EBITDA

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LAND | OFFSHORE | RDS | BENTEC | CORPORATE

Consoli Consolida dated EB EBITD TDA(1)(2) Consoli Consolida dated For

• recast Ca

Cash sh Fl Flow Consoli Consolida dated Revenue(1)(2) Ca Cape pex x - cas ash h pr profile ile

602 669 553 534 616 648 672 512 480 450 420 409 432 428 96 159 71 92 90 114 174 1,263 1,360 1,122 1,094 1,168 1,267 1,359 500 1000 1500 2018 A 2019 A 2020 E 2021 E 2022 E 2023 E 2024 E

$m

52 52 48 48 51 72 85 1 1 1 1 1 1 1 4 16 3 3 3 9 19 10 8 4 4 4 5 3

$m

$m 2020 2021 2022 2023 2024 EBITDA 236.4 230.8 265.3 288.0 318.6 Exceptional items (3.7) (4.6) (3.6) (3.6) (3.6) Working capital (48.9) 2.4 (18.7) (24.3) (5.5) Other (18.8) (2.3) (2.4) (2.5) (2.5) Capex (45.4) (57.8) (62.2) (63.0) (65.1) Tax (32.9) (27.4) (27.5) (32.6) (35.5) Lease payments (36.9) (45.3) (45.3) (42.3) (42.1) Dividends to non-controlling interest (3.7) (6.3) (8.7) (11.1) (10.8) Pre-financing cash flow 46.0 89.4 96.9 108.7 153.4

$m

Successfully entered into a binding lock-up agreement

• Pro forma for the proposed capital structure, the Company would have net

leverage of 1.4x(1) and cash on hand / operating liquidity of $117m(4)

KCAD has achieved a comprehensive and holistic solution for its capital structure

1) Based on LTM Jun-2020 EBITDA of $293m, pro forma total debt of c.$510m, and current cash at 30-Jun-2020 of $100m (which excludes $80m of transaction costs)) 2) Based on LTM Jun-2020 EBITDA of $293m, total debt at 30-Jun-2020 of c.$1.9bn (SSNs, TLB, RCF/ WCF, Oman debt, and IDTEC debt), and current cash at 30- Jun-2020 of $100m (which excludes $80m of transaction costs)) 3) Based on the cash interest on the 2021, 2022 and 2023 SSNs and the cash interest and scheduled amortisation on the TLB 4) Based on forecast Q3 FY2020 cash of $117m (after deducting $80m of transaction costs while including $52m of overseas cash estimated at Q3 FY2020)

Pre Restructuring Post Restructuring

Total Debt $1.9bn Total Debt $510m Equitisation $1.4bn

Pro Forma Capitalization

Net Leverage: 6.3x(2) Net Leverage: 1.4x(1)

 $117m(4) of day-one cash  Adequate and growing liquidity forecast

• ver the course of the business plan

 Excess liquidity will provide Company with a range of potential investment

• ptions

 Run-way until the next debt maturity

Liquidity & Extended Maturity

 Significant de-leveraging to net leverage of 1.4x(1)  Reduction of annual debt service cost from $155m(3) to $49m  Further deleveraging forecast over business plan through EBITDA growth and cash flow generation

De-leveraging

 Shareholder group is committed to the long-term success of the business  Alignment with management on strategy and long-term value creation  New Board of Directors to be appointed by Shareholders in consultation with management

Supportive Shareholders

 Improved operational flexibility to:

• Re-invest in the business
• Capitalise on appealing acquisition /

strategic opportunities such as acquisition of rig assets  Maintains access to WCF and guarantee facilities  $225m of super senior basket capacity; could be used to raise RCF and Guarantee facilities

Operating Flexibility 10

Cost savings have significant impact in Q2

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Target savings vs previous business plan

LAND | OFFSHORE | RDS | BENTEC | CORPORATE

Consoli Consolida dated Revenue Consoli Consolida dated EB EBITD TDA(1)

$m $m

Backlog evolution to 1 August 2020

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-August-2020

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Total contract backlog as at 1 August 2020 Total contract backlog by BU as at 1 August 2020 Total contract backlog as at 1 June 2020 Total contract backlog by BU as at 1 June 2020

Historical utilisation represents actual utilisation calculated on a bi-monthly basis Forward contracted utilisation represents the current contracted position Utilisation pro-forma for the inclusion of rigs suspended under contract as of 1 August 2020

Land utilisation

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Historical and Forward Contracted Utilisation

Operating Utilisation in Q2 2020 was 68%

Offshore services contract backlog(1)

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(1) Contract and rig status shown as at 1 August 2020 Firm Options

Contract Platform Client Country Assets

end date status # Exxon Canada Hebron M ar-46 Operating 1 Equinor (Statoil) Norway CAT J (2) M ar-38 Operating 2 Equinor (Statoil) Norway Oseberg's (4) & Kvitebjorn Oct-28 Operating / Stacked 4/1 AIOC Azerbaijan Azeris, SD, DWG, Cop & Chirag Apr-26 Operating / Stacked 5/2 Vår Energi Norway Ringhorne Dec-25 Stacked 1 Enquest UK Thistle, Heather & M agnus Dec-25 Stacked 3 CNOOC UK Scott Feb-25 Stacked 1 CNR UK Ninian's (2) Tiffany Nov-24 Stacked 3 Exxon Angola Kizomba (2) Jan-24 Operating / Stacked 1 /1 Total UK Alwyn / Dunbar M ay-23 Stacked 2 Chrysaor (COP) UK Britannia Nov-22 Stacked 1 Equinor (Statoil) Norway Pipe pool management Nov-22 Active mgmt. contract SEIC Russia LA, PA & PB M ay-21 Operating / Stacked 2/1 2020 2021 2022

1) Adjusted to remove the one off Revenue increase in Q2 2019 of $14.3m relating to IFRS 15 2) Bentec results shown before intercompany eliminations

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Land & Bentec financial performance

Land Quarterly EBITDA ($m) Bentec Quarterly EBITDA ($m) (2)

= EBITDA Margin

Land YTD Revenue & EBITDA ($m) Bentec YTD Revenue & EBITDA ($m) (2)

30% 30% 11% 6%

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Offshore & RDS financial performance

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

17% 16% 10% 3%

= EBITDA Margin

Q2 2020 Q1 2020 Q2 2019 2020 YTD 2019 YTD $'m $'m $'m $'m $'m Cash generated from operations 59.1 19.2 102.1 78.3 128.1 Tax paid (11.2) (11.4) (6.4) (22.6) (18.9) Cash flow from operating activities 47.9 7.8 95.7 55.7 109.2 Capital expenditure (9.5) (14.7) (13.0) (24.2) (31.2) Acquisition of Holdco rig 0.0 0.0 0.0 0.0 (25.0) Proceeds from sale of Fixed Assets 0.3 0.7 0.0 1.0 0.1 Interest received 2.5 5.1 6.5 7.6 13.1 Dalma acquistion 0.0 0.0 0.0 0.0 0.0 Other 0.0 0.0 (0.1) 0.0 0.3 Cash flow from investing activities (6.7) (8.9) (6.6) (15.6) (42.7) Interest paid (7.2) (15.7) (83.8) (22.9) (102.6) Foreign exchange 2.5 (7.4) 0.6 (4.9) 0.8 Dividend paid to minority shareholders (0.1) (0.4) (0.2) (0.5) (0.5) Lease payments (7.9) (7.3) (3.6) (15.2) (9.4) 28.5 (31.9) 2.1 (3.4) (45.2) (2.2) (1.7) (19.3) (3.9) (24.7) Increase in loan from parent company 0.0 0.0 0.0 0.0 25.0 Net cash flow 26.3 (33.6) (17.2) (7.3) (44.9) 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) Interest paid includes some fees from the standstill agreement (2) Denotes the effect of foreign exchange rate changes on cash and bank overdrafts (3) Deltas denote quarterly working capital movement

Free Cash Flow Working Capital (3)

Market updates

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a hi-level brief from our point of view.

Short Term Pandemic risk

Potential secondary COVID-19 waves as lockdowns are eased in multiple locations.

Medium Term Oil Demand

Slow economic recovery may keep oil demand low and further impact OFS activity and prices.

Longer Term Energy Transition

Investments are growing in Tech, Renewables like Wind, in ESG, in carbon capture and hydrogen.

Closing remarks

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• Q2-20 revenue of $292.3m (Q2-19: $395.1m) and EBITDA of $65.5m (Q2-19: $74.4m)
• Successfully entered into a binding lock-up agreement
• Land Drilling division commences operations on one of the new build Kuwait rigs
• Staying focused on proactively managing what we can control during this pandemic
• Offshore Drilling division awarded a contract amendment to manage procurement,

maintenance and warehousing activities (through the Turan Drilling JV) in Azerbaijan

• Contract backlog stable at $4.9bn (at 1 August 2020) across a blue chip customer base

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Q & A

investor.relations@kcadeutag.com

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Appendix

KCA Deutag operations are diversified across global markets

London Bad Bentheim Tyumen Nizwa

• St. Johns

Bergen Dubai

Land Drilling Offshore Services RDS offices Bentec Regional offices

Aberdeen (HQ)

Map shows position at 1 August 2020 (1) The % split of LTM EBITDA is calculated using total KCAD group Q2 2020 LTM Proforma EBITDA of $309m (after corporate costs of $13m)

PRESENCE IN KEY AREAS

Geographical EBITDA Split(1)

Baku

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