Q1 2018 Presentation Contents Highlights and material events - - PowerPoint PPT Presentation

Q1 2018 Presentation

Contents

• Highlights and material events
• Segment reporting
• Financial information
• Summary

Page 2

Q1 18 - key summary

• Purchase of Deepsea Nordkapp
• Strong operational performance

across the fleet

• Drilling & Technology continues its

positive trend

• Well Services increases turnover,

but still pressured on margins

• Clear signs of market improvement

Page 3

Page 4

Highlights and material events in/after Q1 2018

USD 175 million Private Placement successfully completed

• On 19 April 2018, Odfjell Drilling Ltd., successfully completed a private placement of NOK 1.368

billion, equivalent to approximately USD 175 million, through issuance of 38,000,000 new common shares at a subscription price of NOK 36.00 per share. The proceeds will be used to finance growth and for general corporate purposes. A subsequent offering directed towards shareholders not participating, and who were not wall crossed, will follow at a later stage. Purchase of “Deepsea Nordkapp” and award of drilling contract by Aker BP

• On 27 April 2018, the Company announced the purchase of “Deepsea Nordkapp”, an enhanced Moss

Maritime CS-60 unit winterized and purposely built for harsh environment areas. The Company further entered into a new 2 year drilling contract plus 1+1 year options with Aker BP. Odfjell Drilling estimates delivery of Deepsea Nordkapp to be in Q1 2019 and commencement of operations for Aker BP in Q2/Q3 2019.

• In addition, Odfjell Drilling signed a preference share investment agreement and a warrant

investment agreement with an affiliate of Akastor ASA (“Akastor”) to carry out a USD 75 million preference share issue and an issuance of warrants for 5,925,000 common shares in Odfjell Drilling to such affiliate. The proceeds from Akastor shall be used to partly finance Deepsea Nordkapp.

Page 5

Highlights and material events in/after Q1 2018 cont.

Drilling & Technology

Equinor awarded contract for Platform Drilling services

• On 3 April 2018, Equinor awarded Odfjell Drilling a Fixed Platform Drilling Services contract for

Heidrun, located on the Norwegian Continental Shelf. Odfjell Drilling will operate both Grane and Heidrun until October this year and will thereafter continue only on Heidrun. The firm contract is for 4 years with 3 x 2 years optional periods. MODU Equinor awarded a letter of intent to Deepsea Atlantic

• On 16 April 2018, Equinor awarded a conditional Letter of Intent (“LOI”) to Deepsea Atlantic for 6

firm wells with an estimated total duration of 18 months, scheduled to commence in early first quarter 2019. The LOI contains the option to continue operations for Equinor after the firm period and such options shall be based on market pricing.

Mobile Offshore drilling Units (MODU)

• Strong operations with high utilization

Q1 2018 Financial Utilization

Page 6

1) Financial Utilisation is measured on a monthly basis and comprises the actual recognised revenue for all hours in a month, expressed as a percentage of the full day rate for all hours in a month. Financial Utilization, by definition, does not take into account periods of non-utilisation when the units are not under contract.

Financial Utilization1 Q1 18 Q1 17 FY 17 Deepsea Stavanger 98,6 % 96,7 % 98,4 % Deepsea Atlantic 98,9 % 96,3 % 97,6 % Deepsea Bergen 99,7 % 98,5 % 97,6 % Deepsea Aberdeen 97,0 % 95,2 % 95,5 %

Page 7

Mobile Offshore drilling Units (MODU)

• Contract status and day rates

* Rates may include mix of currencies and fluctuate based on exchange rates.

Firm MODU contract backlog at 31 March 2018 of USD 1.3 billion with additional priced options valued at USD 0.2 billion

Contract Option

Location /operator day rate (USDk/day)* 2022 2023 2024 2018 2019 2020 2021

Deepsea Bergen Norway OMV/Equinor 120/135-200 Deepsea Nordkapp Norway Aker BP TBD 431 Deepsea Atlantic Norway Equinor 295/296

Drilling unit Contract status

Deepsea Stavanger Norway Wintershall/ Aker BP/Total/Aker BP 305/250/305/279 Deepsea Aberdeen UK BP Exploration

1) Clair, Andrew, Bruce, Clair Ridge 2) Harding, Eider, Tern Alpha, Cormorant A, North Cormorant

Platform Drilling and Technology

• Portfolio secured by medium to long-term contracts

Page 8

2017 2018 2020 2021 2019 2022 2023 2024 2025 2026 2027

Contract Option

2028

Firm contract backlog of USD 0.4 billion at 31 March 2018 Value of priced optional periods of USD 0.8 billion

2029 2030

Customer Platforms Contract status Heidrun (NO) Grane (NO) Johan Sverdrup (NO) Mariner (UK) Bressay (UK) Brage (NO) 4 UK platforms1 5 UK platforms2 Magnus (UK)

Page 9

Well Services

• Pricing pressure offset by cost efficiency measures

Key service offerings

Tubular Running Services Drill Tool Rental Services Well Intervention Services ̶ Conventional and remote-operated casing running tools ̶ Remote-operated and conventional power tongs ̶ Casing / tubing running and recovery ̶ Drill tools (drill pipe, drill collars and tubing) ̶ Tubular handling equipment ̶ Stablisers, subs and valves ̶ Downhole tools ̶ Wellbore clean-up tools and services ̶ Casing exits ̶ Fishing services ̶ Well abandonment ̶ Slot recoveries

Odfjell Well Services in numbers

400+

Employees

Services from

10+

bases

Operation in

20+

countries

395 515 444 342 17 36 26 885 411 551 470

• 200

400 600 800 1 000 2018 2019 2020 After Firm Options

Total revenue backlog per year1

1) Estimates at 31 March 2018. Revenue from frame agreements and call-off contracts in Well Services and revenue from Technology and MODU Management is not included in the backlog.

Earnings visibility through USD 2.7 billion order backlog

Page 10

USD million

Firm contracts USD 1.7 billion Priced options USD 1.0 billion Total backlog USD 2.7 billion

General

• Oil price development in a positive trend
• Successful efficiency programs carried out by E&P and service industry

=> Increasing E&P activity MODU

• Still significant oversupply in the global rig market
• Harsh environment markets are closer to supply/demand balance
• Preference by E&P companies for high-spec and efficient 6 gen units
• Substantial scrapping of mature units

=> Increasing demand for ODL fleet Well Services

• Still over-supply of available resources and equipment
• Observe an increased tender activity in the European and Middle East markets
• Well Services has maintained its low capital expenditures to enhance utilisation of the existing equipment base
• Turning point in activity level has passed

=> Time-lag effect on bottom line improvement Platform Drilling & Technology

• Low volatility in the platform drilling market
• North Sea modification market still at low level, but likely to increase in the medium to long term

=> Stable market conditions and scale effects to be materialized

Market outlook

Page 11

Financial information

Page 12

P&L - (USD million) Q1 18 Q1 17 FY 17 Operating revenue 175 148 662 Other gains/losses 11 Personnel expenses

• 84
• 61
• 261

Other operating expenses

• 35
• 33
• 139

EBITDA 56 55 274 Depreciation

• 40
• 41
• 161

Operating profit (EBIT) 16 14 112 Share of profit (loss) from other joint ventures

• 1
• 1

Net financial items

• 23
• 19
• 74

Profit/(loss) before tax

• 7
• 5

37 Income taxes

• 2
• 1

Profit/(loss) for the period

• 7
• 7

35

Group summary financials

Condensed consolidated income statement

Page 13

Condensed P&L - (USD million) Q1 18 Q1 17 FY 17 Operating revenue 119 111 481 EBITDA 53 54 244 Depreciation and impairments

• 33
• 33
• 132

EBIT 20 22 111 Book value rigs 1 669 1 782 1 699 EBITDA-margin 44,2 % 48,9 % 50,7 % EBIT-margin 16,4 % 19,4 % 23,2 % Share of group revenue 1 65,8 % 73,0 % 70,4 % Share of group EBITDA1 88,1 % 91,5 % 83,9 % Share of group EBIT1 95,8 % 114,4 % 86,3 %

1) Before group eliminations and corporate overheads

MODU

Page 14

Key Financials (USD million)

Segment reporting

• MODU financials

Figures above do not include pro-rata 40% of Deep Sea Metro.

119 111 481 Q1 18 Q1 17 FY 17

Revenues

53 54 244 Q1 18 Q1 17 FY 17

EBITDA

Condensed P&L - (USD million) Q1 18 Q1 17 FY 17 Operating revenue 34 21 105 EBITDA 1

15 Depreciation and impairments

• 1

EBIT 1

14 EBITDA-margin 2 %

• 0,2 %

14,2 % EBIT-margin 2 %

• 1,3 %

13,4 % Share of group revenue1 19 % 13,6 % 15,4 % Share of group EBITDA1 1 %

• 0,1 %

5,2 % Share of group EBIT1 4 %

• 1,4 %

10,9 %

1) Before group eliminations and corporate overheads

Drilling & Technology

Page 15

Key Financials (USD million)

Segment reporting

• Drilling & Technology financials

34 21 105 Q1 18 Q1 17 FY 17

Revenues

1 15 Q1 18 Q1 17 FY 17

EBITDA

Condensed P&L - (USD million) Q1 18 Q1 17 FY 17 Operating revenue 28 20 97 EBITDA 6 5 32 Depreciation and impairments

• 6
• 8
• 28

EBIT

• 2

4 Book value of equipment 78 99 82 Cost price for equipment in use 386 376 380 EBITDA-margin 22,6 % 24,8 % 32,6 % EBIT-margin 0,3 %

• 12,0 %

3,8 % Share of group revenue1 15,4 % 13,4 % 14,2 % Share of group EBITDA1 10,5 % 8,5 % 10,9 % Share of group EBIT1 0,4 %

• 13,0 %

2,8 %

1) Before group eliminations and corporate overheads

Well Services

Page 16

Key Financials (USD million)

Segment reporting

• Well Services financials

28 20 97 Q1 18 Q1 17 FY 17

Revenues

6 5 32 Q1 18 Q1 17 FY 17

EBITDA

(USD million) Q1 18 Q1 17 FY 17 Operating revenue

• 6
• 4
• 21

EBITDA

• 3
• 5
• 17

EBIT

• 4
• 5
• 17

EBIT for reportable segments 20 19 129 Corporate / eliminations

• 5
• 5
• 19

Accounting differences 2 Group EBIT 16 14 112 Share of profit from other joint ventures

• 1
• 1

Net financial items

• 23
• 19
• 74

Group profit before tax

• 7
• 5

37

Group – Eliminations & Reconciliation

Page 17

Group

• Eliminations & Reconciliation

Summary statement of financial position

Group statement of financial position

• Group’s gross interest bearing debt was USD 1,224

million (net of capitalized financing fees) at 31 March 2018.

• USD 194 million in cash and cash equivalents at 31

March 2018.

• Equity-ratio of 36% at 31 March 2018.

Page 18

Assets (USDm) 31.03.18 31.03.17 31.12.17 Deferred tax asset 4 2 4 Intangible assets 35 32 33 Property, plant and equipment 1 748 1 882 1 782 Financial fixed assets 1 8 1 Total non-current assets 1 787 1 926 1 819 Trade receivables 129 115 137 Contract assets 1

• Other current assets

17 21 15 Cash and cash equivalents 194 174 166 Total current assets 342 310 319 Total assets 2 129 2 235 2 138 Equity and liabilities (USDm) 31.03.18 31.03.17 31.12.17 Total paid-in capital 329 329 329 Other equity 440 387 438 Total equity 769 716 767 Borrowings 1 058 1 183 1 076 Post-employment benefits 19 17 18 Non-current contract liabilities 5

• Other non-current liabilities
• 6

5 Total non-current liabilities 1 082 1 205 1 100 Borrowings 166 205 157 Contract liabilities 23

• Trade payables

30 21 35 Other current liabilities 60 87 79 Total current liabilities 278 314 272 Total liabilities 1 360 1 519 1 371 Total equity and liabilities 2 129 2 235 2 138

Cash Flow - (USDm) Q1 18 Q1 17 FY 17 Profit before income tax

• 7
• 5

37 Cash from operations 58 52 245 Interest paid

• 14
• 15
• 65

Income tax paid

• 9
• 15

Net cash from operations 43 27 166 Net cash used in investing activities

• 5
• 10
• 1

Net cash from financing activities

• 13
• 27
• 184

Net change in cash and cash equivalents 25

• 9
• 19

Cash and cash equivalents at period start 166 182 182 FX gains/(losses) on cash and cash equivalents 3 1 4 Cash and cash equivalents at period end 194 174 166

Summary statement of cash flow

Group statement of cash flow

Page 19

Summary Q1 2018

Page 20 MODU:

• Fleet secured by medium to long-term contracts
• Purchase of Deepsea Nordkapp backed by a 2+1+1 contract with AkerBP
• The market is improving and we observe an increasing demand for the ODL fleet

Drilling & Technology:

• Continued positve financial performance
• Platform portfolio secured with medium to long-term contracts - mobilisation of Johan

Sverdrup and Mariner in 2nd half 2018 Well Services:

• Increased tender activitiy in the European and Middle East markets
• Over-supply of equipment keeping prices at low levels, however turning point has passed

Key Financials:

• Earnings visibility through USD 2.7 billion order backlog
• Book equity ratio of 36% and cash position of USD 194 million at 31 March 2018

CEO & President Simen Lieungh EVP & CFO Atle Sæbø Investor relations Eirik Knudsen, eikn@odfjelldrilling.com +47 934 59 173 Next event: Q2 2018 results scheduled to be published 29 August 2018 For more information see: www.odfjelldrilling.com