SEB Nordic Seminar CFO - Rune Magnus Lundetrae Copenhagen, January 2014
Forward Looking Statements The statements described in this presentation that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements which could be made include, but are not limited to, statements involving prospects for the Company, expected revenues, capital expenditures, costs and results of operations and contingencies and other factors discussed in the Company's most recent annual report on the Form 20-F for the year ended December 31, 2012 and in the Company's other filings with the SEC, which are available free of charge on the SEC's website at www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated. All subsequent written and oral forward-looking statements attributable to the Company or to persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements. All non-gaap financial measure reconciliations to the most comparative GAAP measure are displayed in quantitative schedules on the company s web site at seadrill.com. 2
Seadrill Limited Overview US$ Billions Most modern fleet of all the major offshore drillers $25 Diverse asset base of 69 (1) units $20 34 drillships & semi-submersibles (11 Under Construction) 32 jack-up rigs (10 Under Construction) 3 tender rigs Global reach including harsh environment $15 $10 Current market capitalization ~ US$19 bn Broad customer base with contract backlog ~ US$20 bn $5 Dividend annualized ~ US$1.8 bn $0 Equity Issuance Dividends Current Market Cap Value Creation Market Leading Track Record of Value Creation (1) Includes rigs contributed to Seadrill Partners. 3
Financial Performance Highlights Seadrill generated EBITDA of US$663 million for the third quarter 2013 Quarterly EBITDA Economic utilization for our floaters was 94 percent and 97 percent for jack-ups Reported third quarter 2013 net income of US$315 million and earnings per share of US$0.61 Increased quarterly cash dividend by 4 cents to US$0.95 per share Dividend distribution per share Ultra-Deepwater Economic Utilization 4
Recent Developments Investments Fleet development Fleet has developed significantly over the past few months: Ordered four ultra-deepwater drillships with delivery expected H2 2015 H1 2016 Ordered four jack-ups with delivery expected Q2 Q3 2016 Reached 50.1% ownership in Sevan Drilling and launched mandatory offer for all outstanding shares Completed the sale of the tender rig T-16 to Seadrill Partners Jun-13 Announced agreement to acquire newbuild high specification jackup rig Prospector 3 Completed the sale of semi-submersible rigs West Leo and West Sirius to Seadrill Parnters New Contracts Contract backlog development (US$bn) Continued to lock in material contract extensions and sign new contracts: (1) (1) Contract extensions include West Vigilant, West Aquarius and West Leda Contract awards include West Tellus, West Freedom and West Navigator Entered into a Heads of Agreement with PEMEX for 5 jackup contracts totaling 30 rig years and $1.8 billion in backlog Jun-13 (1) Excludes PEMEX backlog 5
Key Investment Highlights 6
Key Investment Highlights Global Operational Footprint Modern Fleet with Exposure to Premium Segments Significant Contracted Backlog Providing Dividend Visibility Innovative Capital Structure and Funding Strategy Dividend Growth a Priority While Maintaining Earnings Growth Profile Culture of Safe and Efficient Operations 7
Global Operational Footprint North Atlantic North Atlantic 7 units Americas 7 units London - 4 HE Semis - 2 HE Jack-ups - 1 Drillship - 2 Drillships - 4 Semis - 1 jack-up Gulf of Mexico Middle East Asia Pacific Brazil 5 units - 5 Semis Brazil West Africa Africa Middle East 13 units Asia Pacific 12 units - 3 Drillships - 2 Semis - 1 Semi-tender - 7 Jack-ups - 2 Tender rigs - 9 Jack-ups - 1 Drillship Newbuilds 21 units - 8 Drillships - 3 Semis - 1 HE jack-up - 9 BE jack-ups Presence in all important oil and gas regions Note: 4 units in Transit not included on the map above. 8
Strategic Focus on Premium Asset Classes One of the largest Offshore Drillers Ultra-Deepwater Units with a Modern Fleet Average Floater Age and Exposure to Premium Segments % Ultra-Deepwater of Total Floaters % of Total Floaters Jack-Up Units Average Jack-Up Age % of Jack-Up fleet >350 Water Depth Number of units % of Total Floaters Number of units Source: ODS Petrodata. Note: Data as of January 01, 2014 9
Longstanding Relationships with Leading Oil & Gas Companies 7,000 6,000 5,000 4,000 3,000 US$ Millions 2.9 5.6 Current backlog 4.1 3.2 4.7 2,000 1,000 1.4 0 2014 2015 2016 Remaining 10
Financial Flexibility Dec-2013 Actual 2015 Illustrative 2013 Financing Summary Capex Per Year (US$ Millions) Floaters Jack-ups Unsecured Financing NOK 1,800m bond NOK 1,500m bond (NADL) US$ 500m bond Secured Financing 8 new facilities Total of US$ 5,310m 4,000 3,500 3,000 2,500 2,000 MLP US$ 356m contribution to SDRL though the sale of Sirius and Leo 1,500 1,000 500 0 2014 2015 2016 11
Dividend Growth Continues to be a Priority Key objective to grow quarterly dividends Quarterly cash dividend raised from 91 cents to 95 cents per share in Q3 Increase reflects improved free cash flow and newbuilds commencing operation in 2H 2013 Future dividends depend on: Contract coverage Market outlook Leverage capacity Future earnings The Q1 2013 dividend was paid in Q4 2012 12
while Maintaining Growth Profile ~$4.5 Billion in 2016 Annualized EBITDA 13
Culture of Safe & Efficient Operations Quality of operations Recognized for providing highest quality operations, in the most challenging sectors of offshore drilling Key focus on procedures to control, measure and improve performance and risk management Competence assurance and on-hire testing High performance Flat organizational structure and personal accountability Stable and high average long term economic utilization above 95% High reliability Daily downtime reporting and routine technical audits Focus on health & safety One of the most ridged safety control systems in the drilling space with clear objectives and procedures Full internal investigations of near-misses to personnel or to the environment Overall goal of no-one gets hurt Economic utilization 100 80 94 96 96 94 95 92 82 88 94 95 95 Utilization (%) 60 40 20 0 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 14
Upstream Market Outlook Market Outlook 15
Increased Service Intensity 25 700 Million Barrels per Day 24 23 600 500 Number of Rigs Contracted 22 2005 2006 2007 2008 2009 2010 2011 2012 2013 400 Total Offshore Production Total Offshore Rigs More Rigs Working, but Declining Oil Production Source: IEA, IHS, Wood Mackenzie, EIA, ODS Petrodata. 16
Recent Discoveries to Become Produced Volumes 140 120 100 80 60 40 20 - Discovered resources 1980 to 2013 (Billion boe) 1980 1985 1990 1995 2000 2005 2013 Shelf Deep Water Ultra deepwater Resources discovered and produced 2000-2012 (Billion boe) 17 Source: Rystad Energy research and analysis; UCube 17
Ultra-Deepwater Production Growth Accelerating Global liquids production, by land and water depth Global offshore production by water depth 1960-2040 Million bbl/d 2012-2030 CAGR = 1.3% 2012-2020 CAGR 19% 2% Replacement Ratio 16.4 2.5 Thousand boe/d 80000 70000 60000 Offshore ultra deep 0% 0.5 50000 5 mbbl/d 40000 30000 16 mbbl/d 1% 0.9 20000 10000 Onshore 30 mbbl/d 0 1960 1970 1980 1990 2000 2010 2020 2030 2040 Shelf (to 400 ft) Deep water (400-5000 ft) Ultra deepwater (5000+ ft) 18 Source: Rystad Energy. 18
The Golden Triangle lives on Source: Pareto 19
Drilling Market Outlook 20
Global Rig Supply & Demand Imbalance Favors Contractors Significant Newbuilds Required to Bridge Expected Demand Gap 500 450 400 350 Supply Demand 189 300 250 200 150 100 256 60 (50) 316 455 50 0 Current Fleet Newbuilds 2014-2016 Potential Supply Possible Retirements Additional Rig Requirements 1 2020 Demand Ultra-Deep Water Deliveries 30 25 20 21 21 28 17 18 25 23 15 12 10 8 5 0 3 0 1 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1 Includes Brazil rigs Source: Rystad Energy, DNB 21
UDW Replacing Aging Deepwater Fleet Newbuild water depth Operating water depth Less than 4500 8% 4500 7500 7% Greater than 7500 12% Greater than 7500 85% 4500 7500 54% Less than 4500 34% Total floater utilization 100% Seadrill 90% 80% Ensco Noble Diamond Transocean 70% Nov-10 Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Source: ODS Petrodata
Robust Jack-up Fundamentals Age Development of Contracted Jack-up Fleet # of rigs 250 232 220 208 215 220 200 150 100 90 90 67 51 50 10 17 26 0 2013 2014E 2015E 2020E 40 years or more 35 years or more 30 years or more Jack-ups Removed from the Market # of rigs 16 15 14 12 12 12 11 10 10 9 8 8 8 7 6 6 6 4 4 4 4 3 3 2 2 2 2 2 1 1 1 1 1 1 1 1 1 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 In 2015 more than 220 of the currently contracted Jack-up fleet will be more than 30 years old 90 of the units will be more than 35 years old Scrapping & Conversion of older units increased in 2011 and 2012 with trend expected to continue Source: Pareto 23
New Equipment Commanding Higher Dayrates Ultra-Deepwater Floaters Jack-ups >300 Water Depth Customers Demand Better Performance and Safety of New Equipment Source: ODS Petrodata 24
Conclusion 25
In Excess of 15% EBITDA Growth in Q4 Gain on sale Gain on sale 26
What can you expect from Seadrill Next 2 years Ultra-Deepwater Economic Utilization Dividend distribution per share 27
Core Assets 32 Ultra-deepwater units built after 2000 2 Midwater semi-submersible rigs 29 High-specification jack-up rigs built after 2005 3 Harsh environment Jack-ups 3 Tender Rigs Financial Investments 12% of SapuraKencana Market Value ~US$1,015mm 50.11% of Sevan Drilling Market Value ~US$230mm 39.9% of Archer Market Value ~US$180mm 28