Pride International, Inc. Howard Weil Energy Conference Louis A. Raspino President & CEO March 25, 2009 New Orleans, LA
Forward Looking Statements Certain statements in the following presentation regarding Pride International s business operations may constitute forward looking statements as defined by the Securities and Exchange Commission. Such statements are not historical facts, but are predictions about the future, which inherently involve risks and uncertainties, and these risks and uncertainties could cause our actual results to differ from those contained in the forward looking statements. We urge investors to read the descriptions and discussions of these risks that are contained under the section Risk Factors in the Company s SEC filings. Also, the presentation will use various numerical measures which are or may be considered non-gaap financial measures under Regulation G. You will find the required supplemental financial disclosure for the measures including the most directly comparable GAAP measure and an associated reconciliation on the website. 2
Major Achievements in 2008 and Early 2009 Continued Record Financial Performance 3
Record Financial Performance Revenue (in millions) 4 yr. CAGR = 22% Adjusted EBITDA (in millions) 4 yr. CAGR = 35% (1) $1,077 (1) Adjusted EBITDA, as defined, consists of income (loss) from continuing operations before interest expense (net), income taxes, depreciation and amortization, impairment charges, (gain) loss on sale of assets, minority interest, and special investigation costs. Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles. You should not consider it in isolation from, or as a substitute for, net income or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. Additionally, Adjusted EBITDA, as defined, may not be comparable to other similarly titled measures of other companies. See final page of this presentation for Non GAAP Reconciliation Statement. 4
Increasing Contribution of Floating Rig Fleet Adjusted EBITDA (1) 2005 47% 2008 63% Other 2% Mat Jackups 33% Other 7% Indep Leg Jackups 33% Deepwater 38% Mid- Water 9% Indep Leg Jackups 14% Mat Jackups 21% Mid- Water 18% Deepwater 45% $342 Million $1,077 Million (1) Adjusted EBITDA, as defined, consists of income (loss) from continuing operations before interest expense (net), income taxes, depreciation and amortization, impairment charges, (gain) loss on sale of assets, minority interest, and special investigation costs. Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles. You should not consider it in isolation from, or as a substitute for, net income or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. Additionally, Adjusted EBITDA, as defined, may not be comparable to other similarly titled measures of other companies. See final page of this presentation for Non GAAP Reconciliation Statement. 5
Major Achievements in 2008 and Early 2009 Continued Record Financial Performance Significant Progress in Strategic Execution and Transformation Growth in Ultra-Deepwater Fleet Deepwater Contract Awards Ultra-Deepwater Expansion Gulf of Mexico Sale of Non-Strategic Assets Further Balance Sheet Improvement Progress Toward Divestiture of Mat-Jackup Segment Upgraded to Investment Grade BBB- by S&P 6
PDE Activity Map - Discussion Purpose 8 Offshore Strategic Position 7 6 RDC SDRL Asset Spec. 5 4 ESV GSF NE RIG RIG PDE Ex-Mats Future Pride 3 ATW DO 2 1 HERO Spinco THE PDE 2003 PDE 2008 EV = $5B 0 0 2250 4500 6750 9000 Water Depth (ft) (1) Note: Based on revenue generated by water depth for JU and floater assets PDE current position includes four newbuild drillships
Dramatic Transition of Revenues to Pure Offshore Focus 2004 25% 57% 94% 2008 2012 Other 6% E&P Services 9% Land Drilling 23% Deepwater 18% Midwater 7% Other 8% Independent Leg 12% Jackups 36% Deepwater 38% Midwater 16% Jackups 6% Other Offshore 14% Jackups 23% Mat-Supported 24% Midwater 18% Deepwater 78% Actual Actual Projection 8
Strong Customer Content in Revenue Backlog $8.8 Billion (Incl. Bonus Opportunities) Independents 5% IOCs 38% - TOTAL - BP - ExxonMobil - Chevron NOCs 57% - Petrobras - Pemex - ONGC - Saudi Aramco - ENI - PetroSA 9
Revenue Backlog at February 28, 2009 $1.5 $0.1 $1.4 $0.1 $1.6 $0.1 $8.8 Million Total Backlog Firm Backlog $8.2 Billion Bonus Backlog $633 Billion $1.4 $0.1 $1.1 Backlog ($Billions) $0.1 $1.4 $1.3 $1.5 $1.3 $1.0 $0.8 $0.1 $0.7 $0.7 $0.1 $0.6 $0.3 $0.3 (Remaining) 10
Conservative Financial Philosophy $2.5B Total Debt Net Debt Net Debt / Cap Debt / Cap $2.0B 60% 50% $1.5B 40% 30% $1.0B 20% $0.5B 10% 0% 2003 2004 2005 2006 2007 2008 $0.0B 2003 2004 2005 2006 2007 2008-10% Net debt equals total long term debt less cash and cash equivalents 11
Simple Debt Structure $600 $500 $500 S&P S&P Moody s Moody s Credit Credit Rating Rating BBB- BBB- (Stable (Stable Outlook) Outlook) Ba1 Ba1 (Positive (Positive Outlook) Outlook) $ in Millions $400 $300 $227 $300 $200 $100 7 3/8% Senior Notes Due 2014 MARAD Notes Revolver (Undrawn) 12
Avg. Crude Price Improvement Supportive of Future Offshore Activity $120 $100 $80 $60 $40 $20 $- Source: Bloomberg $51 13 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Trend $17.76 $19.55 $25.92 $17.64 $12.09 $26.47 $26.08 $19.84 $31.20 $32.52 $43.45 $61.04 $61.05 $96.00 $44.60
Market Comments Deepwater Most resilient sector of contract drilling market Customers have long-term commodity price horizons High customer quality (IOC s/noc s) Customer s value established infrastructure and expertise Proven geology with numerous new basins Favorable access for IOC s Continued high utilization with few opportunities to re-price contracts in 2009 Average contract length of approximately 4 years High spec rigs still in short supply in 09-10 Most rigs committed to longer-term development projects Client needs expanding 14
Deepwater Drilling Success Remains Strong Partial List of Announced Discoveries Since 2007 US Gulf of Mexico Isabella Kodiak Freedom Diamond Chuck Heidelberg Shenandoah Brazil Carioca Tupi Wahoo Golfinho e Canupu Lara Jupiter Guará Ogum Israel Tamar Equatorial Guinea Lykos Congo Cassiopee Persee Nord Angola Miranda Terra Cordelia Cominhos Louro Portio Dione Ngome India Dhirubai 31 Dhirubia 34 Source: ODS-Petrodata
Projects Planned and Under Construction 4,500 Feet and Greater Water Depth Source: ODS-Petrodata
Source: ODS-Petrodata Additional Projects Under Study 4,500 Feet and Greater Water Depth
Gulf of Mexico Undrilled Leases Expiring By Year Water Depths =>5,000' Undrilled Leases Operator Rank Undrilled Leases 521 Major and Independent Oils National Oils 88 81 217 150 168 165 182 175 1. Chevron 2. Anadarko 3. BP 4. Shell 5. ExxonMobil 6. ConocoPhillips 10. Devon 7. Eni 8. StatoilHydro 9. Petrobras 19. Repsol 48 Expiration Year 18
Brazil Holds Tremendous Opportunities Pre-salt discoveries will create demand faster pace of development Five year capex program of $174 billion (est. 60% upstream) includes development of pre-salt play Petrobras has additional deepwater rig needs Pre-salt resources present substantial organizational and technical challenges Regulatory and development plans are still being formulated Petrobras examining possibility of early production Pride well positioned to participate in future expansion Sao Paulo Rio Chart created using PetroView Jupiter Tupi Carioca Petrobras Interests Operated Non-Operated 19
Contract Status of Ultra Deepwater Rigs Floaters with 7,000 Feet > WD 160 140 120 100 80 60 40 20 Available Existing Rigs Available New Builds Rigs Contracted Rigs 103 80 3 77 10 6 128 22 16 87 90 137 31 3 103 0 2009 2010 2011 2012 % under contract 96% 84% 70% 75% In 2009, 2010, 2011, and 2012 there are 26, 23, 25, and 9 new build floaters entering the market. Source ODS-Petrodata 20
Expected Incremental Deepwater Rig Supply Non-Traditional Parties Hold Majority of Available Capacity 35 30 25 20 15 10 5 0 29 Non-Traditional Non-Traditional 25 2 5 5 29 11 18 10 2009 2010 2011 2012 26 9 3 6 Contracted Available (Non T raditional) Available (T radtional) Source: ODS-Petrodata 21
Market Comments Midwater Sector Utilization remains above 90%, but expected to decline 140 Worldwide Midwater Utilization Semis with less than 4,499 ft. WD 100 Average contract length of approximately 2 years # of Rigs 120 100 80 60 40 20 0 95 90 85 80 75 70 65 60 55 50 Utilization % Farm-out activity on the rise Largest and most mature region is UK North Sea Market benefiting from consolidation Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Total Supply Utilization % Jul-07 Jan-08 Jul-08 Jan-09 Client base includes small, undercapitalized E&P players Source: ODS-Petrodata Expect any weakness in sector to be met by disciplined marketing approach 22
Market Comments Int l Jackup Rig Sector # of Rigs 200 180 160 140 120 100 80 60 40 20 0 Jackup Utilization (excluding GOM) 250-300 ft. WD 100 95 90 85 80 75 70 65 60 55 50 Utilization % Utilization declining along with average contract duration Recent bids for work indicate 20% to 50% decline from peak dayrates in 2008 New, uncontracted capacity additions contributing to difficult environment Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Total Supply Utilization % Jul-07 Jan-08 Jul-08 Jan-09 Some expected new capacity to be cancelled Source: ODS-Petrodata Incremental needs in Mexico expected to range from 10 to 15 units in 2009 23
2009 Focus Completion of Mat-Jackup Spin-off 24
Mat Jackup Business Spin-Off Rationale Expect go public transaction to be a tax free spin-off Allows management of Pride to focus on the deepwater business Positions both companies as focused choices for investors Balance sheet to have limited to no debt Consolidation of low spec. Gulf of Mexico jackups to be a key element of Seahawk strategy Expect separation of businesses to create value for shareholders and strengthen the two businesses Status Senior management team named Filed Form 10 with Securities & Exchange Commission in December, 2008 Filed IRS in February 2009 Expectations remains mid-2009 separation Current market conditions do not dictate timing of separation
2009 Focus Completion of Mat-Jackup Spin-off Execution of ultra-deepwater construction projects PS4 Contract opportunities 26
Status of Drillship PS 4 Expected shipyard delivery Fourth Quarter 2011 Rig to offer leading-edge capabilities required for increasing number of geologic structures Customer interest has slowed in 2009 Needs expected in several regions, including established and emerging markets Interests could range from 3 to 10 years Water depths range from 8,500 feet to 12,000 feet 27
2009 Focus Completion of Mat-Jackup Spin-off Execution of ultra-deepwater construction projects PS4 Contract opportunities Operational Excellence Maintain Financial Strength / Liquidity Pursue Targeted / Smart Growth Opportunities Employer of Choice 28
Expected Capital Expenditures $984 Investment in Pride Fleet Dollars in Millions $1,115 $865 $700 $660 Mat Jackup Capital Expenditures Excluded Post 2009 29
In Conclusion Near the End of Our Strategic Transformation We Are a Proven Leader in Deepwater Operations, Engineering and Project Management Long-Term Industry Secular Trend Remains in Place Deepwater Expected to Display Resilience in Current Environment, Growth Over Long-Term Strong Revenue Backlog in Place With Quality Customers and Contracts We Expect Continued Expansion of Our Premium Deepwater Asset Base Financial Strength, Liquidity and Discipline Poised For Industry Leading Long-Term Growth A Unique Investment Alternative in Offshore Drilling 30
Pride International, Inc. Howard Weil Energy Conference Louis A. Raspino President & CEO March 25, 2009 New Orleans, LA
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) We use adjusted EBITDA (as defined below), which is a "non-gaap financial measure" under Regulation G of the Securities Exchange Act of 1934, as a supplemental disclosure because our management believes that it provides investors an additional measure of operating cash flow and ability to service debt. It may also be useful for comparing our operating performance with the performance of other companies that have different financing and capital structures and tax rates. Adjusted EBITDA, as defined, consists of income (loss) from continuing operations before interest expense (net), income taxes, depreciation and amortization, impairment charges, (gain) loss on sale of assets, minority interest, and special investigation costs. Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles. You should not consider it in isolation form, or as a substitute for, net income or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. Additionally, Adjusted EBITDA, as defined, may not be comparable to other similarly titled measures of other companies. The following tables reconcile Adjusted EBITDA, as defined, with our income (loss) from continuing operations and net cash flows from operating activities, as derived from our audited financial information. Year Ended December 31, 2008 2007 2006 2005 2004 (In millions) Income (loss) from continuing operations $ 666.4 $ 423.8 $ 170.6 $ 46.9 $ 19.5 Plus: Interest expense, net 1.0 58.9 74.0 85.9 100.5 Plus: Income taxes 217.2 172.3 117.4 45.6 35.2 Plus: Depreciation and amortization 206.6 215.3 188.0 174.3 181.0 EBITDA 1,091.2 870.3 550.0 352.7 336.2 Plus: Special investigation 10.0 27.4 20.0 - - Plus: (Gain) loss on sale of assets (24.1) (30.5) (28.6) (31.5) (48.2) Plus: Impairment charges - - 0.5 1.0 8.1 Plus: Minority interest - 3.5 4.1 19.7 24.5 Adjusted EBITDA $ 1,077.1 $ 870.7 $ 546.0 $ 341.9 $ 320.6 Year Ended December 31, 2008 2007 2006 2005 2004 Adjusted EBITDA $ 1,077.1 $ 870.7 $ 546.0 $ 341.9 $ 320.6 Less: Interest expense, net 1.0 58.9 74.0 85.9 100.5 Less: Income taxes 217.2 172.3 117.4 45.6 35.2 Less: Stock-based compensation (24.8) (23.0) (17.2) (4.1) (0.2) Less: Increase (decrease) in assets and liabilities 26.9 152.0 (14.4) 71.6 (74.1) Less: Deferred gain on asset sales and retirements 12.3 - - - - Less: Gain on sale of equity method investment 11.4 - - - - Less: Increase (decrease) in deferred revenue 8.7 (35.3) 14.5 (7.0) 34.9 Less: Decrease (increase) in deferred expenses (6.3) (25.0) (7.3) 18.7 (12.3) Less: Special investigation 10.0 27.4 20.0 - - Less: Impact of discontinued operations (5.6) (145.3) (208.4) (160.0) (91.1) Plus: Amortization and write-offs of deferred financing costs 5.2 4.0 4.0 7.2 20.7 Plus: Amortization of deferred contract liabilities (59.0) (57.3) (12.4) (0.1) - Plus: Excess tax benefit from stock-based compensation (7.7) (7.2) (14.0) 21.8 1.7 Plus: Deferred income taxes 78.6 53.0 65.4 8.3 2.4 Plus: (Gain) loss on mark-to-mark derivatives - 3.9 1.3 (5.1) (15.7) Plus: Other, net 0.7 (0.1) - (1.4) 0.1 Plus: Amortization of SFAS No. 133 transition adjustment - - - - 0.2 Net cash flows from operating activities $ 844.1 $ 685.0 $ 611.7 $ 321.9 $ 337.1
Pride International, Inc. Reconciliation of Earnings before Interest, Taxes and Depreciation and Amortization (EBITDA) (In millions) We believe that this non-gaap financial measure for EBITDA is meaningful information that our management considers when making investment decisions. We believe it also provides supplemental information regarding our operating results with respect to both the performance of our fundamental business activities and our ability to meet our future debt service, capital expenditures and working capital requirements. We also believe investors and analysts commonly use EBITDA as a widely accepted financial indicator to analyze and compare companies on the basis of operating performance that have different financing and capital structures and tax rates. EBITDA is not a substitute for the U.S. GAAP measures of earnings or of cash flow and is not necessarily a measure of the company s ability to fund its cash needs. Q3 2008 Q2 2008 Q3 2007 Deepwater Income (loss) from continuing operations $ 127.9 $ 106.1 $ 80.1 Plus: Total interest expense, net - - - Plus: Income tax provision - - - Plus: Depreciation and amortization 18.1 18.4 18.7 EBITDA 146.0 124.5 98.8 Midwater Income (loss) from continuing operations 48.8 20.1 42.9 Plus: Total interest expense, net - - - Plus: Income tax provision - - - Plus: Depreciation and amortization 11.2 10.9 7.6 EBITDA 60.0 31.0 50.5 Jackups Income (loss) from continuing operations 88.4 85.9 88.4 Plus: Total interest expense, net - - - Plus: Income tax provision - - - Plus: Depreciation and amortization 20.8 20.7 18.6 EBITDA 109.2 106.6 107.0 Other & Corporate Income (loss) from continuing operations (85.4) (58.7) (93.0) Plus: Total interest expense, net (0.9) 0.9 14.9 Plus: Income tax provision 66.0 43.5 42.9 Plus: Depreciation and amortization 2.0 2.1 3.1 EBITDA (18.3) (12.2) (32.1) Total Pride International Inc. Income (loss) from continuing operations 179.7 153.4 118.4 Plus: Total interest expense, net (0.9) 0.9 14.9 Plus: Income tax provision 66.0 43.5 42.9 Plus: Depreciation and amortization 52.1 52.1 48.0 EBITDA $ 296.9 $ 249.9 $ 224.2 33
Supplemental Charts Pride International, Inc. Howard Weil Energy Conference Louis A. Raspino President & CEO March 25, 2009 New Orleans, LA
International Business Focus with Strong Floating Rig Exposure 2008 Total Revenues $2,310 Million US Gulf 14 Jackups Mexico Gulf 8 Jackups Mediterranean 1 Deepwater Semi Middle East/ India 4 Jackups Brazil 4 Deepwater Semis 3 Midwater Semis West Africa 2 Deepwater Drillships 1 Deepwater Semi 3 Midwater Semis 1 Jackup 35
Geographically Diversified Revenues 2008 Total Revenues $2,310 Million 1 US Gulf 14 Jackups Mediterranean 1 Deepwater Semi Mexico Gulf 8 Jackups Middle East/ India 4 Jackups Brazil 4 Deepwater Semis 3 Midwater Semis West Africa 2 Deepwater Drillships 1 Deepwater Semi 3 Midwater Semis Note: Fleet listing excludes three rigs with deepwater drilling management activities (1) Primarily Egypt, Mid East, Asia 1 Jackup 36
Summary Balance Sheet At Dec. 31, 2007 Assets Other PP&E (1%) (72%) Cash (16%) At Dec. 31, 2008 Assets Other Current Assets 4% Receivables 7% Cash 12% Dollars in Millions $ 5,614 MM Liabilities Other Current Assets (5%) Receivables (6%) PP&E 76% Dfd. Tax 15% Other 9% $ 6,065 MM Liabilities AP 8% Other 1% Other Current Liabilities 26% LT Debt Net of Current Portion 42% $ 2,144 MM $ 1,668 MM 37