Citi MLP/Midstream Infrastructure Conference Las Vegas August 2014
Forward Looking Statements This presentation includes forward looking statements. Such statements are generally not historical in nature, and specifically include statements about the Company s plans, strategies, business prospects, changes and trends in its business and the markets in which it operates. In particular, statements regarding the Company s ability to make cash distributions, the expected performance of the drilling rigs in OPCO s fleet, estimated duration of customer contracts, contract dayrate amounts and the Company s ability to purchase drilling rigs from Seadrill Limited in the future are considered forward-looking statements. These statements are made based upon management s current plans, expectations, assumptions and beliefs concerning future events impacting the Company and therefore involve a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, which speak only as of the date of this news release. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to the performance of the drilling rigs in the Company s fleet, delay in payment or disputes with customers, fluctuations in the international price of oil, changes in governmental regulations that affect the Company or the operations of the Company s fleet, increased competition in the offshore drilling industry, and general economic, political and business conditions globally. Consequently, no forward-looking statement can be guaranteed. When considering these forward-looking statements, you should keep in mind the risks described from time to time in the Company s filings with the SEC. The Company undertakes no obligation to update any forward looking statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, the Company cannot assess the impact of each such factor on its business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward looking statement. 2
Company Snapshot Number of assets 9 6 UDW floaters 3 tender rigs Hemen Holding (Fredriksen Group) Average Contract Duration Contract Order Backlog 3.7 years $5.4bn 22.9% Seadrill Limited (NYSE: SDRL) 67.3 MM Common Units 16.5 MM Subordinated Units 51.1% 48.9% Public Unit Holders Annualized Distribution Per Unit Current $2.17 Seadrill Partners LLC (NYSE: SDLP) Issuer Q1 2014 EBITDA & Distributable Cash Flows (DCF) (2) $163m EBITDA $30m Distributable Cash Flow Seadrill Partners Operating LLC 100% 58.0% 51.0% Seadrill Operating LP OPCO (1) Seadrill Capricorn Holdings LLC Market Capitalization $2.8bn T-15 T-16 West Aquarius West Capella (56%) West Capricorn West Sirius Attractive 1099 structure (1) Remaining ownership interests in each of OPCO subsidiaries held by Seadrill Limited. (2) After distribution to non-controlling interest holders West Vencedor West Leo West Auriga 3
Significant Progress Since IPO More Growth to Come 40% increase since IPO 7% increase for West Auriga aquisition Major Events to Date Tender rig T-15 acquired for US$210 million 2.25 Tender rig T-16 acquired for US$200 million 2.17 Completed 5 year classing on West Aquarius, West Sirius, and West Capella 2.03 West Sirius and West Leo acquired for a total consideration of US$2.3 billion on a 100% basis Annualized Distributions per Unit ($) 2.00 1.75 1.67 1.78 US$1.8 billion term loan B and US$100 million revolver executed, creating a more efficient capital structure West Auriga acquired for a US$1.24 billion on a 100% basis US$1.1 billion add-on term loan B Public offering of 6,100,000 common units for approximate net proceeds of $192 million, and private placement to Seadrill Limited of $100 million of common units 1.50 1.55 IPO T-15 T-16 Sirius / Leo Auriga Acquired an additional 28% interest in Seadrill Operating LP for approximately $373 million, taking the ownership in Seadrill Operating LP to 58% 4
Acquisition of 28% Interest in Seadrill Operating LP Seadrill Operating LP West Aquarius West Leo USD millions Total SDLP Share Purchase Price $2,872 $804 (1) West Capella (56%) West Vencedor Financed by: (2) Seadrill Operating LP Debt $1,540 $431 Equity Portion $1,332 $373 SDLP Acquisition 28% SDLP Equity Share $373 Previously 30% owned by Seadrill partners 58% ownership following acquisition Diversified Fleet Enables Acquisition of Operating Company Units (1) Net of NCI in West Capella (2) Net of term loan debt applicable to West Capricorn, West Auriga and West Sirius 5
Add-on Term Loan B Refinancing Term Loan B Refinances existing debt facilities at Seadrill Partners Issued an additional $1.1bn as an add-on to the existing $1.8bn Term Loan B facility Structure creates a more efficient capital structure at Seadrill Partners with 1% annual amortization profile Frees additional funds to reinvest in fleet growth Debt maturity profile staggered against contract rollovers and extends maturity profile Priced at existing rate of Libor plus 3%, swapped to fixed of ~5.5% Seadrill Partners Operating LLC T-15 T-16 Seadrill Limited (NYSE: SDRL) 51.1% Seadrill Partners LLC (NYSE: SDLP) Seadrill Operating LP (Borrower) 48.9% 100% 58.0% 51.0% West Aquarius* West Capella* (56%) West Vencedor West Leo* Borrower Group Public Unit Holders Seadrill Capricorn Holdings LLC (Guarantor (3) ) West Capricorn* West Auriga* West Sirius* * Represents pledged collateral vessels 6
Assets & Contracts 2014 2015 2016 2017 2018 2019 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q West Vencedor US$213,931 West Aquarius US$540,000 US$615,000 West Capella US$627,500 West Capricorn US$495,650 US$495,650 T-15 US$122,723 T-16 US$121,268 West Leo US$605,000 West Sirius US$490,173 US$535,000 West Auriga US$565,000 10.2020 Contracted Option Period Average remaining contract term: 3.7 years - Order backlog: $5.4bn 7
Operational highlights SeadrillPartners economic utilization 100.0% 98.4% 100.0% 99.6% 97.4% 100.0% 100.0% 100.0% 94.8% 95.0% 94.8% 94.1% 95.2% 90.4% 91.0% 88.2% 80.0% 75.5% 60.0% 40.0% 20.0% 0.0% Semi-submersible rigs Drillship Tender rigs 2010 2011 2012 2013 Q1 2014 Q1 2014 excluding West Aquarius Strong operational performance with economic utilization on average greater than 95% High renewal rate with existing customers who prefer high-specification rigs 8
Robust industry fundamentals World oil demand and oil price (1) by scenario Tight supply demand balance going forward (mb/d) 110 100 90 80 70 60 50 0 1980 1990 2000 2010 2020 2030 2035 150 100 50 Dollars per barrel (2011) Oil demand: Current policies scenario New policies scenario 450 scenario Oil price (right axis): Current policies scenario New policies scenario 450 scenario (mb/d) 100 80 60 40 20 0 27 mbbl/d needed 2012 2020 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018 2021 2024 2027 2030 2035 New policy 450 scenario Current status of total production potential Undiscovered Discovered Under development Producing Abandoned Seasonal (other liquids) Commercial volumes at forward curve (mb/d) 105 100 95 90 85 80 75 70 65 (1) Average IEA crude oil import price Global change of supply of liquids from 2012 to 2020 89.6 20.3 Production Decline 2012 conventional 8.0 New Onshore 4.3 New Shale/ tight 4.0 New Oil sands/extra heavy New offshore Supply potential 2020 Projects performing under expectations 16.5 101.9 100 Likely supply 2020 New NGLs +bio+other Not sanctioned Sanctioned Producing Brent equivalent breakeven price(us$) 90 80 70 60 50 40 30 20 10 0 Deep and ultra-deep well positioned on cost curve Onshore Middle East 27 Offshore Shelf 41 Onshore Russia 50 Heavy Oil 47 Onshore RoW 0 10 20 30 40 50 60 70 80 90 100 Total liquids production (mb/d) 51 Nam Shale Deep Water 52 Ultra deepwater 56 Arctic 75 65 Oil sands 70 9
Recent Discoveries to Become Produced Volumes Discovered resources 1980 to 2013 (billions boe) 140 120 100 80 60 40 20 0 1980 1985 1990 1995 2000 2005 2013 Shelf Deep Water Ultra deepwater Resources discovered and produced 2000-2012 Group Waterdepth Produced (bn boe) Discovered (bn boe) Replacements(ratio) Ultra Deepwater: 7,500 ft 1 8 16.4 Off-shore Deep: 500-2,499 ft 63 154 Shelf: 400 ft 163 77 0.5 2.5 Total 227 239 1.1 On-shore On-shore 485 456 0.9 On-shore Off-shore Source: Rystad Energy research and analysis, UCube Global 712 695 1.0 10
Preferential demand for newer rigs Industry trends Contract Backlog UDW & DW Challenges of remote drilling sites 14,000 Drilling deeper wells with longer offsets Greater drilling efficiency to reduce total well costs Advances in well construction techniques Backlog months 12,000 10,000 8,000 6,000 4,000 More demanding downhole environments (e.g., high pressure and high temperature drilling) 2,000 10 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Increasingly demanding regulatory climate DW UDW Total DW Spread between UDW & DW backlog leading to bifurcation in dayrates Source: Fearnley Offshore 11
Global rig supply and demand imbalance favors contractors 500 Significant newbuilds required to bridge expected demand gap 400 300 73 (50) 157 200 100 275 348 455 0 (1) Current Floater Fleet Newbuilds 2014-2016 Potential Supply Possible Retirements Additional Rig Requirements 2020 Demand (2) Ultra-Deep water deliveries 35 30 28 29 25 20 15 10 8 21 21 17 18 22 14 12 9 5 0 3 0 1 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (1) Current fleet figure includes all currently delivered semisubmersibles and drillships, excluding any hot, warm or cold stacked rigs and rigs in the shipyard for maintenance (2) Includes Brazil rigs Source: IHS Petrodata, all rights reserved, Rystad Energy 12
Growth - Additional UDW rigs from Seadrill Unit Customer 1Q 2014 2015 2016 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2017 2Q 3Q 4Q Floaters West Vela BP US$565,000 11.2020 West Auriga BP US$565,000 10.2020 West Mira Husky Newbuild Transit US$590,000 06.2020 West Jupiter Total Newbuild US$567,000 11.2019 West Sirius BP US$490,173 US$535,000 07.2019 Sevan Brasil Petrobas US$398,559 07.2018 West Leo Tullow Oil US$605,000 06.2018 West Polaris ExxonMobil US$655,736 03.2018 West Capricorn BP US$495,650 US$495' West Saturn ExxonMobil Newbuild US$610,000 03.2018 West Hercules Statoil US$497,000 US$497,000 West Neptune LLOG Newbuild Transit US$570,000 West Gemini Total US$656,000 West Alpha ExxonMobil US$535,000 US$547,000 Rosneft West Capella ExxonMobil US$627,500 West Aquarius ExxonMobil US$540,000 US$615,000 Sevan Louisiana LLOG Transit US$505,000 West Eclipse Total US$450,000 US$455,000 West Pegasus PEMEX US$555,000 Market rate West Orion Petrobras US$624,460 Sevan Driller Petrobas US$419,817 West Phoenix Total US$464,000 West Venture Statoil US$441,000 West Eminence Petrobras US$624,460 West Taurus Petrobras US$656,662 West Navigator Shell / Centrica Energi NUF US$589,000 US$621' Rosneft West Tellus Chevron US$635,000 West Dorado - Newbuild West Aquila - Newbuild West Libra - Newbuild West Draco - Newbuild West Rigel - Newbuild Rosneft West Carina - Newbuild Sevan Developer - Newbuild Option Yard plus transit period SDLP Rigs 13
Growth - Other Acquisition of Additional OPCO Ownership Interests from Seadrill Ltd. - 42% of three UDW rigs and one tender rig - 49% of three UDW rigs Long-Term Contracted Jack-ups - E.g. 5 Jack-ups with long-term contracts to PEMEX - Total of 30 rig years 14
Summary & Outlook Significant progress made since IPO More than doubled fleet size with the acquisition of five rigs Diversified fleet Making acquisition of OPCO units an option Strong track record - Distribution growth of 40% since IPO in October 2012 More efficient capital structure following two successful Term Loan B transactions Headwinds in the broad offshore drilling market Seadrill Partners is protected No exposure to 2014 dayrates, only West Vencedor available in 2015 Pause in fundamentals limiting newbuild activity in 2016 Medium / Long term fundamentals intact Potential for re-contracting rigs into a rising market Visible growth opportunities via acquisitions from Seadrill Strong distribution growth potential Acquisition of additional rigs Acquisition of OPCO units 15