NorAm Drilling AS

Investor Presentation • Aug 23, 2024

Q2 2024 Presentation

A u g u s t 2 3 , 2 0 2 4

Disclaimer

This presentation contains forward looking statements. These statements are based upon various assumptions, many of which are based, in turn, upon further assumptions, including NorAm management's examination of historical operating trends, data contained in the Company's records and other data available from third parties. Although NorAm believes that these assumptions were reasonable when made, because assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond its control, NorAm cannot give assurance that it will achieve or accomplish these expectations, beliefs or intentions. The Company has not taken any steps to verify any of the information contained herein. No representation or warranty (express or implied) is made as to any information contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements. The Company does not accept any liability whatsoever arising directly or indirectly from the use of the materials.

The Presentation may contain certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes", "expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. Any such forward-looking statements are solely opinions and forecasts reflecting views as of the date set out on the cover of these materials, which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. No liability for such statements, or any obligation to update any such statements or to conform such statements to actual results, is assumed. Furthermore, information about past performance given in this Presentation is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance.

This presentation and related materials speaks only as of the date set out on the cover, and the views expressed are subject to change based on a number of factors. The Company does not undertake any obligation to amend, correct or update the materials or to provide any additional information about any matters described herein, but reserves the right to amend, correct or update the materials and provide additional information.

Q2 2024 Highlights

Revenue

EBITDA

Net results

• \$24.9 million including reimbursables
• Clean day rate(1) of \$25,600
• Utilization 85.9% utilization vs. 87.5% in Q1 2024
  • Adj. EBITDA of \$4.8 million
  • Operating costs impacted by increases in major equipment repair and maintenance, expected to be transitory over time
  • Profit after tax of -\$0.3 million
  • EPS of -\$0.01

Backlog • Backlog of \$25.4 million as of August 22, 2024

Recent Events and Outlook

Monthly cash distributions

• 21 consecutive monthly distributions, totaling \$62m or NOK ~15.1 per share
• Latest distribution of \$0.04/sh implies ~13% dividend yield p.a.(1)

Fleet status

• 10 out of 11 rigs contracted
• Pursuing opportunities for the idle rig
• Still affected by reduced drilling demand following M&A and consolidation activities
• Permian rig counts expected to have reached or is near a bottom
• E&Ps with persistent operational discipline
• Weak natural gas prices weighing on US rig counts
• Productivity gains seen in Permian

Modest Permian Rig Count Increases Possible In Late 2024 and 2025

• E&P operators showing strong capital discipline
• M&A transactions putting a lid on activity (rig counts)
• Resulting in fewer operating days for drilling rigs

Well completions continuing to drop in Permian… Leading to declining Permian oil production growth rate

Y/Y oil production change in Permian,

• Production growth rate slowing with fewer well completions
• More rigs are required to complete more wells in Permian as DUC inventory is 70% down since beginning of 2021

Key Operational Figures

Selected operational and financial data

(All amounts in USD per day) unless noted	2Q 2024	1Q 2024	4Q 2023	3Q 2023
Available rig days	1,001	1,001	1,012	1,012
Rig utilization	85.9%	87.5%	82.3%	77.3%
Rig metrics per day:
Dayrate	25,589	26,341	26,875	30,302
Operating costs (1)	15,710	14,850	14,278	14,157
Direct margin	9,879	11,491	12,597	16,145
Operation and SG&A allocation	2,374	2,231	2,218	2,046
Maintenance and capex allocation	379	1,457	559	186
Net cash flow	7,126	7,803	9,820	13,913
Cash break even, working rigs (2)	18,463	18,538	17,055	16,389
Direct stacked cost per day	10,250	10,560	9,698	10,453
Reimbursements of "out-of-pocket" expenses (000's)	2,723	1,966	930	2,645

(1) Excludes reimbursements for "out-of-pocket" expenses

(2) Excludes reimbursements for "out-of-pocket" expenses. Excludes operating costs of rigs not active

• Dayrate down 3% Q/Q
• Utilization down 1.6 percentage points due to whitespace in May

Income statement

(All amounts in USD 1000s)	2Q 2024	1Q 2024	4Q 2023	3Q 2023
Total Operating Income	24,930	25,036	24,034	26,609
Payroll Expenses	7,952	7,955	8,124	8,039
Depreciation of Tangible and Intangible Assets	4,915	4,850	4,796	4,711
Rig Mobilization, Service and Supplies	8,524	7,478	6,540	7,678
Insurance Rigs and Employees	1,300	1,170	1,819	1,347
Other Operating Expenses	2,392	1,768	2,237	2,792
Total Operating Expenses	25,083	23,222	23,519	24,568
Operating Profit (+)/ Loss (-)	-153	1,815	515	2,041
Net Financial Items	126	-2	258	3
Profit (+)/Loss(-) before Income Tax	-27	1,812	773	2,044
Income Tax Expense	250		2,990
Net Profit (+)/Loss (-)	-277	1,812	-2,216	2,044

• Total operating income flat from Q1 due to higher reimbursables
• Higher OPEX in Q2 due to equipment repair and maintenance related to mud tanks, top drives, engines and BOP certifications

Balance Sheet And Cash Flow Statement

(All amounts in USD 1000s)	2Q 2024	1Q 2024	4Q 2023	3Q 2023
Non current assets
Rigs and Accessories	63,867	68,368	72,061	76,089
Vehicles and Office Equipment	653	722	553	611
Current assets
Accounts Receivable	11,223	11,405	11,297	9,867
Other Receivable	2,483	764	1,367	1,564
Bank Deposits/Cash	10,579	10,544	12,139	15,321
Total Assets	88,805	91,804	97,418	103,452
Equity
Issued Capital	12,547	12,547	12,547	12,547
Share Premium	105,542	107,223	107,163	118,818
Other Shareholder Contribution	369	369	369	369
Other Equity	-46,723	-46,446	-48,258	-46,321
Total Equity	71,735	73,694	71,822	85,414
Non current liabilities
Deferred Tax	4,881	4,881	4,881	2,139
Current Liabilities
Bond Loan
Accounts Payable	5,126	5,228	4,388	6,293
Tax Payable	287	326	326	254
Public Duties Payable	163	160	268	266
Other Current Liabilities	6,614	7,514	15,838	9,087
Total Liabilities	16,362	16,362	20,275	18,039
Total Equity & Liabilities	88,805	91,804	97,418	103,452

Balance sheet Cash flow statement

(All amounts in USD 1000s)	2Q 2024	1Q 2024	4Q 2023	3Q 2023
Net Profit (+)/Loss (-)	-277	1,812	773	2,044
Tax paid for the period	-39
Depreciation of fixed assets	4,915	4,850	4,796	4,711
Change in accounts receivable	182	-108	-1,697	7,393
Change in accounts payable	-103	840	-1,904	2,365
Change in other current balance sheet items	906	-1,258	840	-1,820
Net cash flow from operational activities	5,584	6,136	2,807	14,693
Purchase of tangible fixed assets	-345	-1,326	-711	-1,438
Net cash flow from investing activities	-345	-1,326	-711	-1,438
Repayment of long term debt
Issued capital
Dividends	-5,204	-6,406	-5,279	-9,828
Net cash flow from financing activities	-5,204	-6,406	-5,279	-9,828
Net change in cash and cash equivalent	35	-1,595	-3,182	3,427
Cash and cash equivalents opening balance	10,544	12,139	15,321	11,894
Cash and cash equivalents closing balance	10,579	10,544	12,139	15,321

NorAm Drilling - Summary

Q&A

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