NORTH ATLANTIC DRILLING LTD Pareto Oil & Offshore Service Conference, Oslo CFO Esa Ikaheimonen August 31, 2011
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. The forward-looking statements contained in this presentation, including assumptions, opinions and views of the company or cited from third party sources are solely opinions and forecasts which are subject to risks and uncertainties. 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. 2
Contents Company profile Rig fleet Contract backlog Market view Growth opportunities Valuation Summary 3
Company profile Leading operator in the North Atlantic Modern fleet of 6+1 harsh environment drilling units 1,050 employees, 40 years of experience in operating in the North Atlantic Profitable order backlog of US$3.6 bn Dividend yield target of minimum 7% per annum Seadrill owns 75% and provides corporate management and support services OTC listed in Norway targeting Oslo Stock Exchange listing November 2011 Top class harsh environment drilling contractor 4
North Atlantic Drilling Ltd (NADL) 100% focused on harsh environment operations in the North Atlantic Basin Agreement with SDRL included: 6 harsh environment drilling rigs 1 harsh environment jack-up rig under construction All relevant contracts, spares, stores and offshore personnel related to the rigs Acquisition cost: US$4,100 million Bank debt: US$2,000 million @ Libor+2% Bond: US$500 million @ 7.75% Equity: US$1,700 million (including US$100 million cash retained in NADL) Number of shares: 1,000,015,000 A leading harsh environment driller 5
League Table North Sea Drilling 8 Supply side Norway 7 6 5 3 # of units 4 3 2 1 4 6 5 5 3 3 2 2 2 1 1 1 0 North Atlantic Drilling Maersk Drilling Transocean Songa Fred Olsen Energy COSL Aker Drilling * Odfjell Drilling Floaters Jack Ups Saipem Diamond Offshore Rowan Stena A leading harsh environment fleet and focus Source: ODS-Petrodata, RS Platou Markets Equity Research. * Note: On August 15, 2011, Transocean announced a voluntary offer for Aker Drilling. 6
US$3.6 billion revenue backlog * Unit Customer 2011 2012 2013 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2014 2Q 3Q 4Q 2015 1Q 2Q 3Q 4Q Semi submersibles West Alpha 1, BG Consortium US$503,000 US$477,500 US$477,500 West Phoenix 1 Total US$547,000 US$445,000 West Venture 1 Statoil US$440,000 Drillships West Navigator 1 Shell US$610,000 HE Jack ups West Epsilon 1, 2 Statoil US$284,000 12.2016 West Elara 1, 3 Statoil Newbuild Transit US$359,000 11.2016 West Linus 1, 4 ConocoPhillips Newbuild Transit US$362,000 12.2018 Contract Option Yard plus transit period 1 Dayrate is partly in Norwegian kroner (USD /NOK 5.50). 2 Customer has the option to extend the contract for two years at the current contract terms. 3 Customer has the option to extend the contract for 1x2 year period and 2x1 year periods. The first option is fixed at the current contract terms. 4 Customer has the option to extend the contract for 3x2 years at the current contract terms. Average contract length 3.5 years per rig 7
Strong earnings visibility EBITDA (US$ million) Contract coverage (%) 700 100 % 600 90 % 80 % 500 70 % 400 300 200 568 589 572 641 60 % 50 % 40 % 30 % 100 % 100 % 72 % 71 % 100 20 % 10 % * 2011 2012 2013 2014 0 % 2011 2012 2013 2014 US$3.6 bn contract backlog with quality customers Source: RS Platou Markets Equity Research estimates. * Annualized figures for 2011. Please note that the HE Jack-up West Linus is included in the figures. 8
Net debt development US$ Millions 2,500 US$ Millions 2,500 2,000 2,000 1,500 1,500 1,000 1,000 500 500 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2011 2012 2013 2014 2015 Net Debt w/ 3.5 cent dividend Net Debt without dividend Strong cash-flow reducing debt 9
Second quarter performance Excellent operational performance and cost control 10
Major upward trend in uptime 100 98 93,1 91,9 98,8 97,3 97,1 99,5 99,2 90 80 78,5 81,3 87,5 82,4 70 60 50 Q2 11 40 30 20 10 0 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Tech. Uptime Acc. Uptime Goal 11
Arctic areas will be the next frontier Focus Areas: North Sea Norwegian Sea Barents Sea Arctic Russia Greenland North-western Canada Arctic areas estimated to hold 7% of proven oil reserves Source: CARA, USGS, NPD, Statoil, RS Platou Markets. 12
Future floaters demand in Norway 35 Contract Status & Expected Demand: Floaters Norway: 2001 2013 30 25 20 15 10 5 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Existing contracts Options Requirements Possibles Supply Development, W. injection, Workover Updated: 24.08.11 Units older than 30 years Units older than 35 years 13
Dayrates and utilization in Norway Dayrates (US$k) - Floaters Dayrates (US$k) - Jack-ups 600 600 500 500 450 450 500 500 400 400 400 400 350 300 350 300 300 300 250 250 200 200 200 200 150 150 100 100 100 50 100 50 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Avg. MW, DW, UDW excl. Norway Average floaters Norway Modern premium jack ups HE jack ups Norway Utilization (%) - Floaters Utilization (%) - Jack-ups 100 % 98 % 96 % 94 % 92 % 90 % 88 % 86 % 84 % 82 % 80 % 100 % 98 % 96 % 94 % 92 % 90 % 88 % 86 % 84 % 82 % 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Marketed utilization Norway Marketed utilization floaters excl. Norway Utilization Norway Utilization modern jack ups excl. Norway Fully utilized fleet, average duration 41 months Source: RS Platou Offshore Research, RS Platou Markets. 14
Age profile rigs in Norwegian waters 12 40 10 35 35 8 29 24 30 25 # of units 6 4 7 8 7 11 10 11 20 15 10 2 4 5 0 1 3 2 2. gen 3. gen 4. gen 5. gen 6. gen* 1 0 Semis Drillships Jack ups # units Average age 50% of the fleet older than 24 years Source: RS Platou Markets. *Songa Offshore s CAT D rigs included in 6 th generation count. 15
EV/EBITDA 2012 valuation peer group 9,0x 8,4x 8,0x 7,0x 6,9x 6,5x 6,0x 5,8x 5,5x 5,4x 5,3x 5,0x 4,4x 4,0x 3,0x 2,0x 1,0x 0,0x Seadrill Songa Offshore Ocean Rig North Atlantic Drilling Diamond Offshore Rowan Companies Transocean Fred. Olsen Energy Compelling valuation of NADL Source: RS Platou Markets Equity Research. 16
Dividend yield peer group 12,0 % 10,9 % 10,0 % 9,9 % 9,8 % 8,0 % 6,0 % 5,9 % 5,7 % 4,0 % 2,0 % 0,0 % Fred. Olsen Energy Seadrill North Atlantic Drilling Transocean Diamond Offshore 0,0 % 0,0 % 0,0 % Rowan Companies Ocean Rig Songa Offshore NADL offers attractive dividend yield Source: RS Platou Markets Equity Research. Note: Dividend yield calculated using latest announced dividend annualized. 17
North Atlantic Drilling Management Structure SEADRILL CEO Alf C Thorkildsen CFO Esa Ikäheimonen COO Per Wullf North Atlantic COO/SVP Sveinung Lofthus Accounting Controlling Commercial Finance Rig Operations Marketing HR 18
North Atlantic Drilling - Summary Leading operator with pure focus on the North Atlantic Basin Premium harsh environment fleet Positive market outlook with barriers to entry Excellent contract backlog and earnings visibility Use of leverage supports sound dividends Majority shareowner has a unique track record of accretive investments and M&As NADL already delivering growth and has a structure for more in a vibrant market Attractive assets in an attractive market 19