Q1 2018 Presentation
Contents Highlights and material events Segment reporting Financial information Summary Page 2
Q1 18 - key summary - Purchase of Deepsea Nordkapp - Strong operational performance across the fleet - Drilling & Technology continues its positive trend - Well Services increases turnover, but still pressured on margins - Clear signs of market improvement Page 3
Highlights and material events in/after Q1 2018 USD 175 million Private Placement successfully completed On 19 April 2018, Odfjell Drilling Ltd., successfully completed a private placement of NOK 1.368 billion, equivalent to approximately USD 175 million, through issuance of 38,000,000 new common shares at a subscription price of NOK 36.00 per share. The proceeds will be used to finance growth and for general corporate purposes. A subsequent offering directed towards shareholders not participating, and who were not wall crossed, will follow at a later stage. Purchase of Deepsea Nordkapp and award of drilling contract by Aker BP On 27 April 2018, the Company announced the purchase of Deepsea Nordkapp, an enhanced Moss Maritime CS-60 unit winterized and purposely built for harsh environment areas. The Company further entered into a new 2 year drilling contract plus 1+1 year options with Aker BP. Odfjell Drilling estimates delivery of Deepsea Nordkapp to be in Q1 2019 and commencement of operations for Aker BP in Q2/Q3 2019. In addition, Odfjell Drilling signed a preference share investment agreement and a warrant investment agreement with an affiliate of Akastor ASA ( Akastor ) to carry out a USD 75 million preference share issue and an issuance of warrants for 5,925,000 common shares in Odfjell Drilling to such affiliate. The proceeds from Akastor shall be used to partly finance Deepsea Nordkapp. Page 4
Highlights and material events in/after Q1 2018 cont. Drilling & Technology Equinor awarded contract for Platform Drilling services On 3 April 2018, Equinor awarded Odfjell Drilling a Fixed Platform Drilling Services contract for Heidrun, located on the Norwegian Continental Shelf. Odfjell Drilling will operate both Grane and Heidrun until October this year and will thereafter continue only on Heidrun. The firm contract is for 4 years with 3 x 2 years optional periods. MODU Equinor awarded a letter of intent to Deepsea Atlantic On 16 April 2018, Equinor awarded a conditional Letter of Intent ( LOI ) to Deepsea Atlantic for 6 firm wells with an estimated total duration of 18 months, scheduled to commence in early first quarter 2019. The LOI contains the option to continue operations for Equinor after the firm period and such options shall be based on market pricing. Page 5
Mobile Offshore drilling Units (MODU) - Strong operations with high utilization Q1 2018 Financial Utilization Financial Utilization 1 Q1 18 Q1 17 FY 17 Deepsea Stavanger 98,6 % 96,7 % 98,4 % Deepsea Atlantic 98,9 % 96,3 % 97,6 % Deepsea Bergen 99,7 % 98,5 % 97,6 % Deepsea Aberdeen 97,0 % 95,2 % 95,5 % 1) Financial Utilisation is measured on a monthly basis and comprises the actual recognised revenue for all hours in a month, expressed as a percentage of the full day rate for all hours in a month. Financial Utilization, by definition, does not take into account periods of non-utilisation when the units are not under contract. Page 6
Mobile Offshore drilling Units (MODU) - Contract status and day rates Drilling unit Location /operator day rate (USDk/day)* Contract status Deepsea Stavanger Norway Wintershall/ Aker BP/Total/Aker BP 305/250/305/279 Deepsea Atlantic Norway Equinor 295/296 Deepsea Aberdeen UK BP Exploration 431 Deepsea Bergen Norway OMV/Equinor 120/135-200 Deepsea Nordkapp Norway Aker BP TBD 2018 2019 2020 2021 2022 2023 2024 Contract Option Firm MODU contract backlog at 31 March 2018 of USD 1.3 billion with additional priced options valued at USD 0.2 billion * Rates may include mix of currencies and fluctuate based on exchange rates. Page 7
Platform Drilling and Technology - Customer Portfolio Platforms secured Contract by status medium to long-term contracts Heidrun (NO) Grane (NO) Johan Sverdrup (NO) Mariner (UK) Bressay (UK) Brage (NO) 4 UK platforms 1 5 UK platforms 2 Magnus (UK) 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Contract 2028 2029 2030 Option Firm contract backlog of USD 0.4 billion at 31 March 2018 Value of priced optional periods of USD 0.8 billion 1) Clair, Andrew, Bruce, Clair Ridge 2) Harding, Eider, Tern Alpha, Cormorant A, North Cormorant Page 8
Well Services - Pricing pressure offset by cost efficiency measures Key service offerings Tubular Running Services Drill Tool Rental Services Well Intervention Services Conventional and remote-operated casing running tools Remote-operated and conventional power tongs Casing / tubing running and recovery Drill tools (drill pipe, drill collars and tubing) Tubular handling equipment Stablisers, subs and valves Downhole tools Wellbore clean-up tools and services Casing exits Fishing services Well abandonment Slot recoveries Odfjell Well Services in numbers Services from 10+ bases 400+ Employees Operation in 20+ countries Page 9
Earnings visibility through USD 2.7 billion order backlog Total revenue backlog per year 1 USD million Firm Options Firm contracts USD 1.7 billion 1 000 Priced options USD 1.0 billion Total backlog USD 2.7 billion 800 885 600 551 400 411 17 36 470 26 200 395 515 444 342-2018 2019 2020 After 1) Estimates at 31 March 2018. Revenue from frame agreements and call-off contracts in Well Services and revenue from Technology and MODU Management is not included in the backlog. Page 10
Market outlook General Oil price development in a positive trend Successful efficiency programs carried out by E&P and service industry => Increasing E&P activity MODU Still significant oversupply in the global rig market Harsh environment markets are closer to supply/demand balance Preference by E&P companies for high-spec and efficient 6 gen units Substantial scrapping of mature units => Increasing demand for ODL fleet Well Services Still over-supply of available resources and equipment Observe an increased tender activity in the European and Middle East markets Well Services has maintained its low capital expenditures to enhance utilisation of the existing equipment base Turning point in activity level has passed => Time-lag effect on bottom line improvement Platform Drilling & Technology Low volatility in the platform drilling market North Sea modification market still at low level, but likely to increase in the medium to long term => Stable market conditions and scale effects to be materialized Page 11
Financial information Page 12
Group summary financials Condensed consolidated income statement P&L - (USD million) Q1 18 Q1 17 FY 17 Operating revenue 175 148 662 Other gains/losses 0 0 11 Personnel expenses -84-61 -261 Other operating expenses -35-33 -139 EBITDA 56 55 274 Depreciation -40-41 -161 Operating profit (EBIT) 16 14 112 Share of profit (loss) from other joint ventures - -1-1 Net financial items -23-19 -74 Profit/(loss) before tax -7-5 37 Income taxes -0-2 -1 Profit/(loss) for the period -7-7 35 Page 13
Segment reporting - MODU financials MODU Key Financials (USD million) Condensed P&L - (USD million) Q1 18 Q1 17 FY 17 Operating revenue 119 111 481 EBITDA 53 54 244 Depreciation and impairments -33-33 -132 EBIT 20 22 111 Book value rigs 1 669 1 782 1 699 Revenues 119 111 481 EBITDA-margin 44,2 % 48,9 % 50,7 % EBIT-margin 16,4 % 19,4 % 23,2 % Share of group revenue 1 65,8 % 73,0 % 70,4 % Share of group EBITDA 1 88,1 % 91,5 % 83,9 % Share of group EBIT 1 95,8 % 114,4 % 86,3 % 1) Before group eliminations and corporate overheads EBITDA Q1 18 Q1 17 FY 17 244 53 54 Q1 18 Q1 17 FY 17 Figures above do not include pro-rata 40% of Deep Sea Metro. Page 14
Segment reporting - Drilling & Technology financials Drilling & Technology Key Financials (USD million) Condensed P&L - (USD million) Q1 18 Q1 17 FY 17 Operating revenue 34 21 105 EBITDA 1-0 15 Depreciation and impairments -0-0 -1 EBIT 1-0 14 Revenues 34 21 105 EBITDA-margin 2 % -0,2 % 14,2 % EBIT-margin 2 % -1,3 % 13,4 % Share of group revenue 1 19 % 13,6 % 15,4 % Share of group EBITDA 1 1 % -0,1 % 5,2 % Share of group EBIT 1 4 % -1,4 % 10,9 % 1) Before group eliminations and corporate overheads Q1 18 Q1 17 FY 17 EBITDA 15 1 0 Q1 18 Q1 17 FY 17 Page 15
Segment reporting - Well Services financials Well Services Key Financials (USD million) Condensed P&L - (USD million) Q1 18 Q1 17 FY 17 Operating revenue 28 20 97 EBITDA 6 5 32 Depreciation and impairments -6-8 -28 EBIT 0-2 4 Revenues 97 Book value of equipment 78 99 82 Cost price for equipment in use 386 376 380 28 20 Q1 18 Q1 17 FY 17 EBITDA-margin 22,6 % 24,8 % 32,6 % EBIT-margin 0,3 % -12,0 % 3,8 % Share of group revenue 1 15,4 % 13,4 % 14,2 % Share of group EBITDA 1 10,5 % 8,5 % 10,9 % Share of group EBIT 1 0,4 % -13,0 % 2,8 % 1) Before group eliminations and corporate overheads EBITDA 32 6 5 Q1 18 Q1 17 FY 17 Page 16
Group - Eliminations & Reconciliation Group Eliminations & Reconciliation (USD million) Q1 18 Q1 17 FY 17 Operating revenue -6-4 -21 EBITDA -3-5 -17 EBIT -4-5 -17 EBIT for reportable segments 20 19 129 Corporate / eliminations -5-5 -19 Accounting differences 0 0 2 Group EBIT 16 14 112 Share of profit from other joint ventures - -1-1 Net financial items -23-19 -74 Group profit before tax -7-5 37 Page 17
Summary statement of financial position Group statement of financial position Assets (USDm) 31.03.18 31.03.17 31.12.17 Deferred tax asset 4 2 4 Intangible assets 35 32 33 Property, plant and equipment 1 748 1 882 1 782 Financial fixed assets 1 8 1 Total non-current assets 1 787 1 926 1 819 Trade receivables 129 115 137 Contract assets 1 - Other current assets 17 21 15 Cash and cash equivalents 194 174 166 Total current assets 342 310 319 Total assets 2 129 2 235 2 138 Group s gross interest bearing debt was USD 1,224 million (net of capitalized financing fees) at 31 March 2018. Equity and liabilities (USDm) 31.03.18 31.03.17 31.12.17 Total paid-in capital 329 329 329 Other equity 440 387 438 Total equity 769 716 767 Borrowings 1 058 1 183 1 076 Post-employment benefits 19 17 18 Non-current contract liabilities 5 - - Other non-current liabilities - 6 5 Total non-current liabilities 1 082 1 205 1 100 Borrowings 166 205 157 Contract liabilities 23 - Trade payables 30 21 35 Other current liabilities 60 87 79 Total current liabilities 278 314 272 Total liabilities 1 360 1 519 1 371 Total equity and liabilities 2 129 2 235 2 138 USD 194 million in cash and cash equivalents at 31 March 2018. Equity-ratio of 36% at 31 March 2018. Page 18
Summary statement of cash flow Group statement of cash flow Cash Flow - (USDm) Q1 18 Q1 17 FY 17 Profit before income tax -7-5 37 Cash from operations 58 52 245 Interest paid -14-15 -65 Income tax paid -0-9 -15 Net cash from operations 43 27 166 Net cash used in investing activities -5-10 -1 Net cash from financing activities -13-27 -184 Net change in cash and cash equivalents 25-9 -19 Cash and cash equivalents at period start 166 182 182 FX gains/(losses) on cash and cash equivalents 3 1 4 Cash and cash equivalents at period end 194 174 166 Page 19
Summary Q1 2018 MODU: - Fleet secured by medium to long-term contracts - Purchase of Deepsea Nordkapp backed by a 2+1+1 contract with AkerBP - The market is improving and we observe an increasing demand for the ODL fleet Drilling & Technology: - Continued positve financial performance - Platform portfolio secured with medium to long-term contracts - mobilisation of Johan Sverdrup and Mariner in 2nd half 2018 Well Services: - Increased tender activitiy in the European and Middle East markets - Over-supply of equipment keeping prices at low levels, however turning point has passed Key Financials: - Earnings visibility through USD 2.7 billion order backlog - Book equity ratio of 36% and cash position of USD 194 million at 31 March 2018 Page 20
CEO & President Simen Lieungh EVP & CFO Atle Sæbø Investor relations Eirik Knudsen, eikn@odfjelldrilling.com +47 934 59 173 Next event: Q2 2018 results scheduled to be published 29 August 2018 For more information see: www.odfjelldrilling.com