Maersk Drilling Q1 2016 6 May 2016
page 2 Legal notice This presentation contains certain forward looking statements (all statements that are not entirely based on historical facts, among others expectations to future financial performance, developments, resources growth and production levels). Those forward looking statements reflect current views on future events and are by their nature subject to significant risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. We consider such forward looking statements reasonable based on the information available to us at this time, but the actual results etc. may differ materially from our expectations because of external factors as well as changes to APMM s goals and strategy. Thus, no undue reliance should be placed on such statements. Neither APMM, nor any other person, shall assume responsibility for the accuracy or completeness of the forward looking statements and do not undertake any obligation to update such statements except as required by law. This Legal Notice shall be governed by Danish Law. Any dispute arising out of or in relation to this Legal Notice which can not be solved amicably shall be decided by the Danish Courts.
Result positively impacted by solid operational performance, cost savings and a termination fee but negatively affected by increased idle time page 3 Financial Highlights (USDm) Highlights Q1 2016 Q1 2015 Revenue 654 630 Profit/loss before depreciation, amortisation and impairment losses etc. (EBITDA) Depreciation, amortisation, and impairment losses 407 343 145 141 Gain on sale of non-current assets, etc., net - - Share of profit/loss in joint ventures -1 13 Profit/loss before financial items (EBIT) 261 215 Tax 39 47 Net operating profit/loss after tax (NOPAT) 222 168 Cash flow from operating activities 427 280 Cash flow used for capital expenditure -11-686 Invested capital 7.792 8.220 ROIC 11,2% 8,5% Operational uptime 97% 97% Maersk Drilling result Maersk Drilling delivered a profit of USD 222m (USD 168m) Maersk Drilling s underlying profit increased 14% to USD 223m (USD 195m) positively impacted by USD 60m due to the early termination of the Maersk Deliverer contract ROIC was 11.2% (8.5%) Operating cost level was reduced 12% compared to Q4 2014 baseline excluding FX impact The average operational uptime was 96% (98%) for the jack-up rigs and 98% (95%) for the floating rigs Forward contract coverage is 72% for the rest of 2016, 54% for 2017 and 43% for 2018. Revenue backlog was USD 4.7bn (USD 5.9bn) end of Q1 2016 The contract for Mærsk Gallant was cancelled, but a new contract in direct continuation was signed. The cancellation and new contract are financially neutral Mærsk Deliverer received early contract termination, with Maersk Drilling receiving compensation for the remaining contract period. The cancellation is expected to be neutral for FY 2016 Four rigs were available end of Q1 2016, of which one will go on contract later in 2016. Six rigs will come off contract during 2016
Continued strong operational performance page 4 Operational uptime, Q1 2016 vs. Q1 2015 Operational uptime, 5 years 100% 97% 97% 98% 94% 99% 96% 100% 96% 93% 97% 97% 97% 97% 80% 80% 60% 60% 40% 40% 20% 20% 0% Maersk Drilling Floating rigs Jack-up rigs 0% 2011 2012 2013 2014 2015 Q1 2016 Q1 2015 Q1 2016
Forward coverage reduces near term exposure page 5 Maersk Drilling forward contract coverage 100% 80% 60% 72% 40% 54% 43% 20% 0% 2016 RoY 2017 2018 Note: As per end Q1 2016
Revenue backlog of USD 4.7bn with quality customers Page 6 Revenue backlog by year, end Q1 2016, USDbn Revenue backlog by customer, end Q1 2016 2,5 Others BP 2,0 1,5 1,0 1,3 1,4 1,0 1,0 Maersk Oil ExxonMobil Total ConocoPhillips 7% 8% 5% 7% 6% USD 4.7bn 36% 0,5 0,0 2016 RoY 2017 2018 2019+ ENI Ghana 9% 10% 12% Statoil Det Norske
Cost savings program Our commitment to enhancing resiliency has enabled a 12% cost reduction since the launch in Q4 2014 page 7 OPERATIONAL EXPENDITURES YARD STAYS ADMINISTRATIVE & OVERHEAD, LOCATION COSTS STRATEGIC APPROACH TO STACKING Leaner maintenance & project management, procurement savings, travel expense reductions, general efficiency programmes Optimisation of yardstays, rolling maintenance evaluation, predictive maintenance & real-time monitoring Refitting the head office, expat position localisation, lay-off of rig crews, consultants, travel & benefits efficiencies realised Evaluate on a case-bycase basis, aggressively pursue new contracts & extensions, rigorously re-evaluate stacking cost levels
XLE-4 Customer: BP page 8 Country: Norway Contract value: USD 812m Duration: Five years Newbuild programme Maersk Drilling will take delivery of its last ultra harsh environment jack-up, XLE-4, from Daewoo Shipbuilding and Marine Engineering (DSME) shipyard in South Korea in 2016
Maersk Drilling Rig fleet overview North West Europe 8 ultra harsh jack-up rigs 3 premium jack-up rigs page 9 US Gulf of Mexico 2 ultra deepwater floaters Ghana 1 ultra deepwater floater Caspian Sea 1 midwater floater South East Asia 1 premium jack-up rig Uruguay 1 ultra deepwater floater Under construction 1 ultra harsh jack-up rig Available 2 ultra deepwater floater 1 ultra harsh jack-up rig* 1 premium jack-up rig Egypt 1 ultra deepwater floater Egyptian Drilling Company 50/50 Joint Venture Note: As per end Q1 2016 * Maersk Guardian converted to accommodation rig. Rig will go on contract with Maersk Oil in Denmark in Sep 2016
page 10 Market The offshore drilling industry is facing significant challenges over the medium-term, due to the on-going low oil price environment and the continued need for resolution of the structural imbalance in global rig supply and demand. The offshore drilling space is responding by undertaking large headcount reductions through operational and financial efficiency programs, as well as delaying scheduled newbuild rig deliveries and stacking an increasing number of rigs. Tendering activity continues to be very limited, and day rates are approaching cash operating costs in certain cases due to the significant oversupply of available rigs. The challenges emphasise the need for further scrapping and cold stacking of rigs to resolve the imbalance between demand and supply in the market. Maersk Drilling remain confident in the long term, as clients will demand high-spec and younger rigs who through efficient and safe operations can lower the total system cost.
Maersk Drilling Moving boundaries within offshore drilling page 11