Investor Presentation

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1 Investor Presentation FOURTH QUARTER 2017 KCA Deutag is a leadinginternational drilling and engineering company working onshore and offshore with a focus on safety, quality and operational performance

2 Disclaimer Fourth Quarter Investor Presentation 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 or 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. 1

3 Agenda Fourth Quarter Investor Presentation 1 Q4 and Full Year Key Highlights 2 Business Update 3 Business Unit Financials 4 Group Results 5 Dalma Acquisition 6 Summary 2

4 Q4 and Full Year Key Highlights Fourth Quarter Investor Presentation KCA Deutag is a leading international drilling and engineering company working onshore and offshore with a focus on safety, quality and operational performance Q EBITDA of $65.8m (Q4 2016: $60.1m) giving full year EBITDA of $221.5m (2016: $262.9m) Good tendering activity for Land, with a number of significant contract awards for Bentec, and increased activity on the new Cat J and Hebron contracts for Offshore Contract backlog of $5.2bn (at 1 February 2018) across a blue chip customer base 4 Available liquidity of $230m at 31 December Announcement of acquisition of the Omani and Saudi Arabian businesses of Dalma Energy LLC 3

5 Business Update Fourth Quarter Investor Presentation Integrated land drilling Offshore drilling services & design $164.4m / 68.6% of total¹ $0.0m / 0.0% of total¹ $73.2m / 30.5% of total¹ $2.1m / 0.9% of total¹ Land Drilling Bentec Offshore Services RDS Strong activity in Oman and Russia Improved performance in Algeria and Europe Improving outlook in Nigeria Two new rig build contracts for a total of 6 rigs secured Component sales revenue remain steady After Sales remains stable First CAT J has commenced operations in Norway Reactivation work continues in the UK Efficient start to Hebron platform operations Increased activity due to new greenfield contract Brownfield work remains relatively steady Developing diversification opportunities into non-oil and gas sectors 1 The % split of LTM EBITDA is calculated using total group EBITDA of $239.7m (before corporate costs of $18.2m) 4

6 Years KCAD Operations Are Diversified Across Global Markets Fourth Quarter Investor Presentation Canada 1 Plat. St. Johns Aberdeen (HQ) London North Sea /Norway 21 Plat. Bergen Bad Bentheim Baku Caspian 7 Plat. Middle East 17 Rigs Tyumen Russia 17 Rigs Russia Sakhalin 3 Plat. Houston LTM Q EBITDA split by region Africa 10 Rigs Europe & Caspian 8 Rigs Angola 2 Plat. Dubai Nizwa Brunei 1 Rig PRESENCE IN KEY AREAS Europe North Africa Middle East North Sea Russia Regional offices Land Drilling Offshore Services RDS offices Bentec Map excludes 1 workover land rig in Nigeria, defined as being below 900HP Map shows position at 1 February

7 Health, Safety and Environmental Performance Fourth Quarter Investor Presentation IADC industry average for 2017 Sustaining low TRIR levels in a range which are the best in the company s history KCAD achieved the lowest ever TRIR of 0.18 in October and November 2017 KCAD TRIR at end of Q was injuries per 200,000 man hours worked 1 Total Recordable Incident Rate per 200,000 man hours. This is a rolling 12 month average 2 KCAD Total Recordable Incident Rate is directly comparable with IADC s Total Recordables (RCRD) statistic Note: IADC stands for International Association of Drilling Contractors 6

8 Backlog Status Fourth Quarter Investor Presentation Total contract backlog as at 1 November 2017 Total contract backlog as at 1 February 2018 Contract backlog by BU as at 1 November 2017 Contract backlog by BU as at 1 February 2018 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 our estimates as of Feb

9 Robust platform services contract 1 February 2018 Fourth Quarter Investor Presentation Client Country Assets Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 end date status # Exxon Canada Hebron Mar-46 Operating 1 Statoil Norway CAT J (2) May-36 Operating 2 Exxon Angola Kizomba (2) Jan-28 Stacked 2 AIOC Azerbaijan Azeris, SD, DWG, Cop & Chirag Dec-24 Operating 7 Nexen UK Scott Feb-23 Operating 1 COP UK Britannia Nov-22 Stacked 1 Statoil Norway Oseberg's (4)& Gulfaks (3)& Kvitebjorn Oct-22 Operating / Stacked 7/1 Statoil Norway Pipe pool management Oct-22 Active mgmt. contract CNR UK Ninian's (3) Tiffany Nov-21 Operating / Stacked 1 /3 SEIC Russia LA, PA & PB May-21 Operating 3 Total UK Alwyn / Dunbar Dec-20 Operating / Stacked 1 /1 Enquest UK Thistle & Heather May-20 Operating / Stacked 1/1 Exxon Norway Ringhorne Dec-18 Stacked 1 Contract Platform 8

10 Land Drilling Financial Performance to 31 December 2017 Q Q Q Q Q Result Result Result YTD YTD $m $m $m $m $m Revenue EBITDA (post support allocation) Margin 33.4% 28.9% 35.0% 32.9% 32.7% Higher EBITDA compared to the prior quarter, largely due to improved performance in Russia Activity levels remain strong in Russia and Oman Improving prospects in Europe and Algeria Signs of improvement in Nigeria where we are pursuing several tendering opportunities Utilisation for the quarter of 61% 1 1 Utilisation is calculated on a bi-monthly basis 9

11 Bentec Financial Performance to 31 December 2017 Q Q Q Q Q Result Result Result YTD YTD $m $m $m $m $m Revenue EBITDA (post support allocation) (0.5) (0.0) (2.0) 0.0 (0.8) Margin -2.4% -0.1% -12.2% 0.0% -1.1% EBITDA has remained around breakeven Two new contracts awarded for a total of 6 new build rigs Active tendering market across after sales, components and new build rigs Continued pursuit of diversification opportunities outside the oil and gas sector 10

12 Offshore Services Financial Performance to 31 December 2017 Q Q Q Q Q Result Result Result YTD YTD $m $m $m $m $m Platform Services Revenue EBITDA (post support allocation) Margin 18.2% 14.4% 14.6% 13.2% 14.3% MODUs Revenue EBITDA (post support allocation) (0.2) Margin n/a n/a n/a n/a 56.5% Offshore Services Revenue EBITDA (post support allocation) Margin 18.3% 14.7% 14.5% 13.3% 16.5% Significantly higher EBITDA compared to Q3, primarily due to strong performance in Norway Both of the Cat J jack up rigs have now arrived in Norway and the first has commenced operations Post-year end settlement reached with a client in Angola resulting in cash payment of $41.9m in February 2018 As detailed above EBITDA relating to MODUs in 2017 was $0.6m and $16.6m in The equivalent figure in 2015 was $22.3m 11

13 RDS Financial Performance to 31 December 2017 Q Q Q Q Q Result Result Result YTD YTD $m $m $m $m $m Revenue EBITDA (post support allocation) 1.7 (0.0) (0.3) Margin 11.0% -0.2% -2.4% 3.7% 6.8% Higher EBITDA than the prior quarter due to new Greenfield project Continuing to pursue diversification opportunities outside of the oil and gas sector Strengthened leadership team with appointment of new business unit leader 12

14 Group Results Financial Performance to 31 December 2017 Revenue and EBITDA ($m) Q $m Q $m Q $m 2017 YTD $m 2016 YTD $m Revenue from business units , ,274.4 Eliminations (2.9) (2.5) (8.0) (10.8) (22.2) Total third party revenue , ,252.2 EBITDA from business units Eliminations (0.3) Corporate costs/other (4.4) (4.8) (4.6) (18.8) (18.9) Exchange (0.3) Total EBITDA

15 Cash Flow and Working Capital Financial Performance to 31 December 2017 Free Cash Flow Working Capital 3 Q Q Q YTD 2016 YTD $'m $'m $'m $'m $'m Cash generated from operations Tax paid (5.3) (5.0) (6.4) (30.0) (38.6) Cash flow from operating activities Capital expenditure (10.9) (10.2) (15.1) (62.9) (105.6) Proceeds from sale of Fixed Assets Interest received Other Cash flow from investing activities (4.3) (4.5) (8.7) (38.7) (22.9) 9 Interest paid (53.3) (14.3) (50.5) (132.5) (127.3) 2 Foreign exchange 2.9 (8.3) 10.0 (12.6) 20.4 Dividend paid to minority shareholders (0.3) (0.5) Acquisition of non-controlling interests Net Cash flow before debt drawdown/(repayment) (37.8) Drawdown/(repayment) of debt and 2 debt redemption/issuance costs (5.8) (6.2) (8.1) (15.8) 51.4 Net cash flow (53.6) YTD includes $25m relating to the rig acquired by Alpha Group 2 Denotes the effect of foreign exchange rate changes on cash and bank overdrafts 3 Deltas denote current quarter working capital movement 14

16 Capital Structure Net leverage as at 31 December 2017 Utilisation 31 st Dec 2017 Coupon Maturity Facility Rating 3 Recovery Rating 3 Net Leverage 1 Revolver ($275m) L+400 Mar-22 Caa1/CCC+ 3/3 0.00x Senior Secured Term Loan L(100)+525 May-20 Caa1/CCC+ 3/3 1.46x HSBC Oman Term Loan 48.0 L+400 Dec x Total Bank Debt x UK Finance Senior Secured Notes % May-21 Caa1/CCC+ 3/3 1.52x UK Finance Senior Secured Notes % Apr-22 Caa1/CCC+ 3/3 2.17x Total Institutional Debt 1, x Finance lease & other debt Aug x Gross Debt 1, x Cash x Net Debt 1, x 1 Q LTM EBITDA of $246m includes the $25m Holdco equity contribution as defined in the Amended Credit Agreement 2 Revolver is split $75/$200m non cash/cash, the amount shown represents the cash element utilised. $25m of the cash RCF expires May Facility and Recovery ratings shown as at December

17 Proposed Acquisition of Dalma Energy & Co. LLC s Omani and Saudi Arabian Businesses

18 Executive Summary KCA Deutag ( KCAD or the Company ), a leading global drilling and engineering onshore and offshore contractor, has agreed to acquire the Omani and Saudi Arabian businesses of Dalma Energy & Co. LLC ( Dalma or the Target ) The transaction values Dalma at an EV of $660m, 6.0x LTM December 2017E EBITDA of c.$110m 1 Dalma is a leading provider of onshore drilling services to oil & gas companies in the Middle East The KCAD Dalma combination will create a local onshore drilling services champion which combines Dalma s regional expertise and leading positions in Oman and the Kingdom of Saudi Arabia (KSA) with KCAD s leading international standards through leveraging KCAD s global network Combined Entity will be one of the Largest International Drilling Contractors in the Middle East Strengthens our Leading Position across the Eastern Hemisphere Strengthens position in Resilient Markets Enhances Diversified Blue Chip Customer Base Increased Backlog Providing Excellent Visibility Enhanced Utilisation Profile Value Creation from Significant Synergies Diversified Shareholder Base Combined With a Highly Experienced Senior Management Team 1 Dalma EBITDA is before exceptional items and is based on preliminary unaudited information and subject to change 17

19 1 Combined Entity will be one of the Largest International Drilling Contractors in the Middle East Middle East Onshore Rig Count International Players (1) (2) (3) + Source: Douglas Westwood. Notes: (1) 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 18

20 2 Strengthens our Leading Position Across the Eastern Hemisphere Business Overview (1) Combined Operations (3) KCAD Dalma Combined Rigs 54 rigs/ 34 platforms 29 rigs 83 rigs/ 34 platforms Backlog (2) $5.2bn $1.1bn $6.2bn Business Segments (EBITDA Breakdown) (1) Geographic Focus (EBITDA breakdown) (1) Middle East 100% Headquarters Aberdeen, UK Muscat, Oman Aberdeen, UK Canada North Sea Europe & Caspian Africa Angola Caspian KSA Oman Middle East Russia Brunei Russia Sakhalin Location Rigs Plat. Canada 1 North Sea 21 Europe and Caspian 8 Africa (4) 11 Angola 2 KSA 9 Oman 20 Middle East (5) 17 Brunei 1 Caspian 7 Russia 17 Russia Sakhalin 3 Total Land Drilling Offshore Dalma Notes: (1) KCAD EBITDA is 2017A. Dalma EBITDA is before exceptional items and is based on preliminary unaudited information and subject to change (2) Backlog as of 1 February (3) Position at 1 February (4) Includes 1 workover land rig in Nigeria, defined as being below 900HP. (5) Includes 8 KCAD rigs in Oman. 19

21 3 Strengthens Position in Resilient Markets Global Land Rig Count International vs. North America (No. of rigs) Onshore E&P Capital Spend Middle East vs. North America ($USDm) Source: Douglas Westwood; Baker Hughes. 20

22 4 Enhances Diversified Blue Chip Customer Base Key customers by division (1) 2017E Revenue (2) Split by Top 5 Clients Integrated Land Drilling c.48% of revenue Offshore Drilling Services & Design + Notes: (1) Petroleum Development Oman (PDO) partially owned by Shell (34%). (2) Dalma Revenue is based on preliminary unaudited information and subject to change. 21

23 Dalma KCAD 5 Increased Backlog Providing Excellent Visibility $18m $156m $1,969m $4,096m Offshore Services Land RDS Bentec $6,238m 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 Feb

24 Dalma (1) KCAD (1) 6 Enhanced Utilisation Profile Notes: (1) Contracted utilisation is calculated on a daily basis as of 1st of February 2018 for KCAD and Dalma. 23

25 7 Value Creation from Significant Synergies KCAD Dalma Acquisition Estimated Synergies, $m 24

26 8 Diversified Shareholder Base Combined With a Highly Experienced Senior Management Team Target Shareholder Overview Gulfcap Energy LLC 16% KCAD Shareholder Overview Others 5.1% 8.3% 27% 57% Al Qahtani & Sons 22.0% 42.3% Al Nasser Investments Pro Forma Shareholder Overview 22.3% Highly Experienced Management Team Target Shareholders (1) 22.0% Name Title Industry Experience Norrie McKay CEO KCAD 35+ Years 33.0% Neil Gilchrist CFO KCAD 20+ Years Others 4.0% Simon Drew President Land Drilling 20+ Years 6.5% Rune Lorentzen President Offshore 35+ Years Dirk Schulze CEO Bentec 20+ Years 17.2% 17.4% Albert Allan SVP RDS 25+ Years Notes: (1) Subject to final adjustment under the terms of the acquisition 25

27 Financial Terms of the Acquisition Consideration The transaction values Dalma at an EV of $660m, 6.0x LTM December 2017E EBITDA of c.$110m (1) The transaction consideration for the acquisition of Dalma includes a cash payment and an equity shareholding in KCAD Cash component: $100m cash consideration to Dalma s shareholders Equity component: Following completion, the current shareholders of Dalma will own approximately 22% (2) of the enlarged share capital of KCAD Dalma shareholders will have board representation and customary minority protection rights Timing Completion of the acquisition expected to occur before the end of Q2 2018, subject to the fulfilment of certain conditions precedent, including finalising financing for the acquisition Finalisation of $425 million acquisition financing Financing This may include raising new debt in the loan or bond markets and/or amendments/extensions to existing financing. $84 million of cash consideration from balance sheet 22% of equity in Enlarged KCAD Group valued at $220m (1) Dalma EBITDA is before exceptional items and is based on preliminary unaudited information and subject to change (2) Subject to final adjustment under the terms of the acquisition 26

28 Pro-Forma Capital Structure (as of 31-Dec-2017) Pro-forma at 31 December 2017 Projected Capital Structure Sources & Uses (1) Sources $m Uses $m Debt Financing 425 Existing Debt Refinancing/Rollover 362 Cash on balance sheet 84 Consideration payable in cash 100 Transaction fees 41 Transaction VAT 6 Total Cash Sources 509 Total Cash Uses 509 Shares issued by KCAD to sellers 220 Shares issued by KCAD to sellers 220 Total Transaction Sources 729 Total Transaction Uses 729 Capitalisation Table if Existing Dalma Facilities refinanced with New debt As of 31-Dec-2017 As of 31-Dec-2017E Adjustment USD millions KCA Deutag xebitda 5 Wave xebitda PF Combined xebitda 5 Cash and Cash Equivalents (31-Dec-17) x 1 0.0x (84) x Revolver ($275m Capacity) Dalma Guarantee Facility ($20m Capacity) $375m Sr. Secured TLB due HSBC Oman Term Loan Dalma Senior Facilities (357) - Total Bank Debt x x (357) x $375m 7.250% Sr. Secured Notes due $535m 9.875% Sr. Secured Notes due Acquisition financing $425m Finance Lease & Other Debt Total Debt, Gross 1, x x 68 1, x Total Debt, Net 1, x x 1, x 31 December 2017 KCAD: EBITDA before exceptional items 222 KCAD: Adjusted EBITDA Dalma: 31-Dec-2017E EBITDA before exceptional items PF Synergies and Combined EBITDA Notes: (1) Shares issued by KCAD to sellers based on 31 March transaction close and subject to fulfilment of certain conditions (2) Q LTM EBITDA of $246m includes the $25m Holdco equity contribution as defined in the Amended Credit Agreement and also removes EBITDA of $0.6m relating to MODUs (3) Dalma EBITDA is before exceptional items and is based on preliminary unaudited information and subject to change (4) Combined EBITDA includes estimated synergies of >$10m on a run rate basis (5) Leverage shown based on adjusted EBITDA of $246m for KCAD and combined EBITDA of $366m 27

29 Closing Remarks Fourth Quarter Investor Presentation Full year 2017 EBITDA $221.5m and Q results of $65.8 million EBITDA Good tendering activity for Land, with a number of significant contract awards for Bentec Increased activity on the new Cat J and Hebron contracts for Offshore Backlog position of $5.2 billion across a blue chip company base Strong liquidity position at $230 million Acquisition of the Omani and Saudi Arabian businesses of Dalma Energy LLC 28

30 Q & A investor.relations@kcadeutag.com 29