SEB Enskilda Nordic Seminar CFO Esa Ikäheimonen Copenhagen, January 11, 2012
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. Forwardlooking 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, 2010 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 forwardlooking 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 www.seadrill.com. 2
Contents Company profile Market outlook Rig fleet Financial gearing Value creation Summary 6 th gen. semi-submersible rig West Pegasus 6 th gen. semi-submersible rig West Capricorn 3
Company profile World s largest offshore driller ~ US$16.1 bn market cap. Diverse fleet of quality rigs 2 nd largest fleet of ultra-deepwater rigs Largest and most modern fleet of jack-up and tender rigs EBITDA annualized ~ US$2.4 billion * Premium wide customer base Contract backlog ~ US$12.6 billion ** Cash dividend annualized ~ US$1.4 billion * Strong shareholder involvement Industry leader with presence in all key markets 4 * Based on 3Q2011 ** As of December 31, 2011
Seadrill growth story $113 bbl $40 bbl Growth Performance Scale benefits 5
Newbuild Orders & Acquisitions Ultra-deepwater (5 rigs, $3bn worth of investment) 3 ultra-deepwater drillships at Samsung @ US$600m per unit ordered 2 Seadragon ultra-deepwater units @ US$600m per unit acquired Acquired 28.5 percent ownership in Sevan Drilling ASA Shallow water (added 9+3 rigs, sold 3, $1.9 bn worth of investment) 1 x CJ70 HE jack-up rig ordered @ US$530 m against 5-year contract 4 benign environment jack-up rigs @ US$200 m 3 tender rigs @ US$120m 1 semi-tender @ US$200m 33.75% shareholding acquired in the 3 jack-up rig company Asia Offshore Drilling Divested 2 older jack-ups, retired 1 old tender barge and sold 1 new jack-up rig Growth in modern assets cash dividend 6
Rig investment economics UDW floaters Jack-ups Tender rigs Dayrate US$500,000 US$145,000 US$170,000 Opex incl. G&A US$170,000 US$60,000 US$60,000 Tax (of revenues) 3.5% 3.5% 3.5% 5Y cash-flow US$526 million US$133 million US$175 million Investment US$600 million US$200 million US$200 million Repaid in 5.7Y 7.5Y 5.7Y Right purchase price and timing superior return 7
Leading player in our markets Largest modern fleet in our industry 8
Jan-10 Jan-11 Jan-12 Sep-10 Jan-11 May-11 Sep-11 Jan-12 Market fundamentals Oil prices remain at historically high levels Higher growth in E&P spending 160 140 120 100 80 60 Brent Spot Price Industry focused on new equipment continues in all markets segments 40 20 0 Utilization is increasing for all asset classes Significant increase in tenders and requests from customers Market poised to see higher daily rates for ultra-deepwater units Strong demand for quality equipment 9 US$ per barrel Jan-04 May-04 Sep-04 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 700 Low/High range Average Historical dayrates for Ultra-deepwater rigs 600 500 400 300 USDk/day 200 100 0 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Low/High range Average
Recent drilling contracts Unit Dayrate Term Area Ultra-deepwater floaters West Leo US$510-570,000 1.0yr Ghana West Aquarius US$535,000 2.0yr Canada West Hercules US$500,000 4.0yr Norway West Capricorn US$477,500 5.0yr US GoM Jack-ups West Triton US$145,000 3.0yr Arabian Gulf Offshore Resolute US$140,000 3.0yr Arabian Gulf West Ariel US$129,000 1.0yr Southeast Asia West Prospero US$129,000 1.0yr Southeast Asia West Callisto US$135,000 0.5yr Southeast Asia Tender rigs West Berani US$170,000 1.0yr Indonesia West Esperanza US$235,000 1.5yr Equatorial Guinea Quality equipment command premium daily rates 10
Major deepwater regions Deepwater Discoveries Discovered reserves in 2010, by water depth Strong combination of exploration success and new areas 11 Source: DnB NOR Markets, PCF Energy, Pareto, Woodmac, OGX
Ultra-deepwater market development UDW FLEET WILL GROW TO 165 UNITS BY 2014 UDW FIXTURES US GoM INCREASINGLY ABSORBING THE PREMIUM ASSETS UDW CONTRACT COVERAGE AND RIG AVAILABILITY 160 Contract Status & Expected Demand 2005-2013: Ultra Deepwater Drilling Units (>7,500feet) -Worldwide 140 120 100 80 60 40 20 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 Existing contracts Options Requirements Possibles Supply Development Development forecast 08.11.2011 12 Source: SEB Enskilda, Fearnley Offshore
Only 12% of UDW rigs drill wells in ultradeep waters UDW newbuilds are replacing older rigs 13 Source: Pareto
Global floater fleet including newbuilds Uncontracted floaters 11% of the total fleet which has an average age of 25 years 14 Source: Pareto
Ultra-deepwater daily rates development UDW dayrates reflect tighter market 15 Source: Morgan Stanley
US$8.6 billion contract backlog Floaters * Staggered contract portfolio offers flexibility 16 * As of year-end 2011
Jack-up market development JACK-UP FLEET EXPANSION DEVELOPMENT IN # of JACK-UPs AVERAGE DAILY RATES JACK-UPS AVERAGE UTILIZATION RATES JACK-UPS 300,000 250,000 200,000 150,000 100,000 50,000 % utilization 100 95 90 85 80 75 70 65 0 60 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 17 >350ft Source: SEB Enskilda, Pareto, ODS Petrodata <350ft WDR > 350ft WDR < 350ft
US$2.4 billion contract backlog - Jack-ups * A strong mix of short and long-term contracts 18 * As of year-end 2011
Tender rig market outlook Drilling concept focused on production drilling only Main operational areas are shallow water Southeast Asia and West Africa Market expanding to Central and South America Concept also being applied in deepwater in combination with mini TLPs and Spars Cost-effective and versatile concept Niche market with Seadrill as the only major driller participating Limited availability of quality units pushes daily rates higher 19
US$1.6 billion contract backlog Tender rigs * Unit Customer 2011 2012 2013 2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2015 1Q 2Q 3Q 4Q Tender barges T7 Chevron US$64,000 US$88,000 T17 - Newbuild T11 Chevron US$132,500 T4 Chevron US$106,000 T12 Chevron US$85' US$120,000 US$120,000 04.2016 T15 Chevron Newbuild US$115,500 03.2018 T16 Chevron Newbuild US$115,500 06.2018 Semi-tenders West Setia 1 Chevron US$167,000 West Berani ConocoPhillips/Chevron US$164,000 US$170,000 West Menang Murphy US$160,000 West Jaya BP Transit US$165,000 US$173,000 US$178,000 West Esperanza - Newbuild Transit US$235,000 West Alliance Shell US$171,000 West Pelaut Shell US$138,500 US$120,000 West Vencedor 1 Chevron US$210,000 Contract Option Yard plus transit period 1 Dayrate is partly in Euros (EUR/USD 1.40) Long-term visibility improved margins 20 * As of year-end 2011
Broad customer base ~ US$12.6 bn contract backlog Quality customers. superb visibility 21 * As of year-end 2011
US$12.6 bn revenue backlog #units Average Average Current term dayrate market rate Floaters 19 2.5Y US$527,000 US$500,000+ HE Jack-up rigs 3 4.4Y US$340,000 US$360,000 Jack-up rigs 18 0.8Y US$147,000 US$135,000 Semi-tenders 8 1.8Y US$167,000 US$200,000+ Tender barges 7 2.3Y US$116,000 US$115,000 Strong visibility locked in at favorable rates market for open position strengthening 22
Newbuild delivery schedule 2011 2012 2013 Name Rig type 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Contract status West Capricorn Semi-submersible Contracted until 2Q/2017 West Leo Semi-submersible Contracted until 2Q/2013 West Tucana High spec jack-up Uncontracted West Telesto High spec jack-up Uncontracted West Castor High spec jack-up Uncontracted West Oberon High spec jack-up Uncontracted T15 Tender barge Contracted until 1Q/2018 West Auriga Drillship Uncontracted T17 Tender barge Uncontracted West Esperanza Semi-tender Contracted until 4Q/2014 West Vela Drillship Uncontracted T16 Tender barge Contracted until 2Q/2018 West Tellus Drillship Uncontracted West Linus HE Jack-up Contracted until 4Q/2018 Newbuild portfolio provides growth and market exposure 23
EBITDA* development 10% CAGR 52% 24 * EBITDA earnings before interest, tax, depreciation and amortization
Net interest bearing debt and dividend Daily rates assumed: UDW floaters $500 BE Jack-ups $135 Semi-tenders $170 Tender barges $115 Debt refinanced at similar terms No conversion has been assumed for the US$650m convertible bonds Dividend level is sustainable 25
Net interest bearing debt in deepwater unit equivalents Relative gearing significantly reduced per unit Assumptions: 76 cent quarterly dividend, UDW dayrates US$500, jack-up dayrates US$135 and tender rig dayrates US$115-170 26
US$950 million senior secured bank facilities New West Capricorn facility New Jack-up facility Loan amount: US$550 mill. Tenor: 5 years Profile: 10 years Security: UDW rig West Capricorn Margin: In line with previous credit facilities Covenants: In line with previous credit facilities Loan amount: US$400 mill. Tenor: 5 years Profile: 10 years Security: 4 jack-ups Margin: In line with previous credit facilities Covenants: In line with previous credit facilities Attractive long-term financing in place 27
Leverage peer group NR 59% Baa3/BBB 39% Baa3/BBB- 34% Baa1/BBB+ 32% Baa1/A- 26% SDRL RIG NE ESV DO Debt cost < < 4.5% 6.3% 4.7% 5.7% 5.5% Secured leverage caters for cheap financing 28 Source: Bloomberg, DnBNOR Markets, Moody s and Standard & Poor ratings
Dividend policy Dividend resolved at US$0.76 per share Reflects improved earnings visibility and functional debt markets related to the financing of our operations Future dividends depend on: Debt leverage Contract coverage Capital expenditures Business outlook Cash dividend an important objective 29
Value creation and dividends Share price Share price Jan-11 Jan-12 Seadrill 34 34 Ensco 51 48 Rowan 33 31 Diamond 65 56 Noble 36 30 Transocean 70 39 Total dividend Share price Dividend paid (US$ mill) increase* Yield 1,437 11% 8.9% 231-3% 2.9% - -6% - 487-8% 6.2% 141-13% 2.2% 505-42% 8.1% Consistently outperforming peers top dividend yield globally 30
Seadrill is uniquely positioned Industry leader with diverse versatile fleet of brand new rigs Strong operational performance and rig utilization Increased geographical footprint Superb market conditions for ultra-deepwater rigs and semi-tenders Record high order backlog and earnings visibility Access to debt financing for premium assets funds growth Favorable prospects support cash dividends 31
Asset portfolio Core fleet 50 units built after Y2000 10 built before Y2000 17 Ultra-Deepwater Units + 1 Mid-water semi 1 Mid-water Semi 20 High Specification Jack-ups 2 Jack-ups 13 Tender Rigs 7 Tender Rigs Shareholdings 3.5% of Ensco (MV - US$391m) 39.9% of Archer (MV - US$355m) 23.6% of Sapura Crest (MV - US$438m) 33.75% of AOD (MV - US$50m) 28.5% of Sevan Drilling (MV US$85m) 32