Seadrill Partners LLC Fourth Quarter 2017 Results February 22, 2018 - - PowerPoint PPT Presentation

Seadrill Partners LLC

Fourth Quarter 2017 Results February 22, 2018

Forward Looking Statements

This presentation includes forward looking statements. Such statements are generally not historical in nature, and specifically include statements about the Company’s plans, strategies, business prospects, changes and trends in its business and the markets in which it operates. In particular, statements regarding offshore drilling markets, the Company’s ability to make cash distributions, the expected performance of the drilling units in the Company’s fleet, estimated duration of customer contracts, contract dayrate amounts, contract backlog, forecasts of operating income and Adjusted EBITDA and the ability of the Company and Seadrill Limited to negotiate with lenders are considered forward-looking statements. These statements are made based upon management’s current plans, expectations, assumptions and beliefs concerning future events impacting the Company and therefore involve a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, which speak only as of the date of this news release. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to offshore drilling market conditions including supply and demand, dayrates, customer drilling programs and effects new rigs on the market, contract awards and rig mobilizations, contract backlog, the performance of the drilling units in the Company’s fleet, delay in payment or disputes with customers, the outcome of any pending litigation, our ability to successfully employ our drilling units, procure or have access to financing, ability to comply with loan covenants, liquidity and adequacy of cash flow from operations, fluctuations in the international price of oil, changes in governmental regulations that affect the Company or the

• perations of the Company’s fleet, increased competition in the offshore drilling industry, and general

economic, political and business conditions globally. Consequently, no forward-looking statement can be guaranteed. When considering these forward-looking statements, you should keep in mind the risks described from time to time in the Company’s filings with the SEC. The Company undertakes no

• bligation to update any forward looking statements to reflect events or circumstances after the date
• n which such statement is made or to reflect the occurrence of unanticipated events. New factors

emerge from time to time, and it is not possible for us to predict all of these factors. Further, the Company cannot assess the impact of each such factor on its business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward looking statement.

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Agenda

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1) Highlights 4Q 2017 2) Financial Performance Overview 3) Summary & Q&A

Q4 Highlights & Subsequent Events

➢ Revenue of $256 million ➢ Adjusted EBITDA(1) of $138 million ➢ Economic utilization of 95% ➢ Lender consent received for TLB leverage covenant waiver ➢ Distribution maintained at 10 cents per unit 4

(1) Adjusted EBITDA has been defined in the Appendix

Backlog & Utilization

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➢ 95% economic utilization* ➢Current order backlog of $1.5bn ➢Average contract term of 1.5 years

* Economic utilization is calculated as total contract revenue excluding bonuses for the period as a proportion of the full operating dayrate multiplied by the number of days in the period. 99 96 98 95 70 75 80 85 90 95 100 Q1 17 Q2 17 Q3 17 Q4 17 Utilization %

Economic utilization

250 500 750 1,000 2018 2019 2020 $ million

Current backlog

Financial Performance

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▪ Volume: New contract for the West Capella at a lower dayrate ▪ Dayrate: No dayrate changes to current contracts ▪ Utilization: Downtime on the West Capella and West Auriga ▪ Idle units: The West Sirius termination payments concluded in Q3 and the West Aquarius was idle for a full quarter ▪ Costs: Increase in G&A costs as Q3 reclassifications did not re-

• ccur, partially offset by lower
• perating costs for idle units

Revenue Adjusted EBITDA(1)

Sequential Variance Analysis

(1) Adjusted EBITDA has been defined in the Appendix

200 220 240 260 280 300 3Q17 Volume Dayrate Utilization Idle units 4Q17 100 120 140 160 180 200 3Q17 Volume Dayrate Utilization Idle units Costs 4Q17

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Unaudited accounts in USD millions

4Q17 3Q17 Net operating income 60.1 148.5 Financial items Interest income 4.7 4.0 Interest expense (45.1) (47.0) Gain/(Loss) on derivative financial instruments 12.8 (3.8) Currency exchange gain

• 0.5

Other financial items

• (10.5)

Total financial items (27.6) (56.8) Income before income taxes 32.5 91.7 Income taxes 0.6 (12.9) Net income 33.1 78.8 Net income attributable to non-controlling interests 6.6 32.5 Net income attributable to Seadrill Partners LLC Members 26.5 46.3

Income Statement – Net Income

Unaudited accounts in USD millions

4Q17 3Q17 Total current assets 1,213.7 1,188.9 Total non-current assets 5,317.1 5,387.2 Total assets 6,530.8 6,576.1 Total current liabilities 545.5 570.9 Total non-current liabilities 3,283.5 3,323.5 Total liabilities 3,829.0 3,894.4 Total equity 2,701.8 2,681.7 Total liabilities and equity 6,530.8 6,576.1

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Balance Sheet Main Movements

10 ➢ First quarter 2018 adjusted EBITDA(1) expected to be around $80 million: ➢ A full quarter of idle time on the West Polaris and West Vencedor ➢ Downtime on the West Auriga related to a planned classing survey ➢ Partially offset by the West Aquarius commencing operations

Outlook

(1) Adjusted EBITDA has been defined in the Appendix

Q&A

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* Adjusted EBITDA represents earnings before interest, other financial items, taxes, non-controlling interest, depreciation and amortization and including deferred consideration payable to Seadrill Limited. Additionally, in any given period Seadrill Partners may have significant, unusual or non-recurring items which it may exclude from Adjusted EBITDA for that period. When applicable, these items are fully disclosed and incorporated into the reconciliation provided below. The table below reconciles operating income to Adjusted EBITDA. Reconciliation of Operating income to Adjusted EBITDA

Unaudited in USD millions

4Q17 Operating income 60.1 Depreciation and amortization 68.9 Revaluation of contingent consideration (4.6) Amortization of favorable contracts 21.7 Mobilization fees recognized in income (1.9) Mobilization fees billed during the quarter 2.6 Deferred consideration falling due in the quarter (8.9) Adjusted EBITDA 137.9

Appendix – Non-GAAP Financial Measures

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