NorAm Drilling AS

Investor Presentation • May 22, 2024

Q1 2024 Presentation

M a y 2 2 , 2024

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.

Q1 2024 Highlights

Revenue

Utilization • 87.5% utilization, up from 82.3% in Q4 2023

EBITDA

• \$25.0 million including reimbursables

• Clean day rate(1) of \$26,300, down 2% from Q4 2023

• • Adj. EBITDA of \$6.7 million
• Operating costs impacted by ad hoc increases in repair and maintenance

Net results

• Profit after tax of \$1.8 million

  • EPS of \$0.04
• Backlog Backlog of \$24.5 million as of May 21, 2024

Recent Events and Outlook

Monthly cash distributions

• 18 consecutive monthly distributions, totaling \$57m or NOK ~13.8 per share
• Latest distribution of \$0.04/sh implies ~13% dividend yield p.a.(1)

Fleet status

• 9 out of 11 rigs contracted
• A 10th rig will commence operations end of May after release early May

• Pursuing opportunities for the idle rig

• Stable near term outlook

• Still affected by reduced drilling demand following M&A and consolidation activities
• Permian rig counts expected to have reached or is near a bottom
• US shale oil production growth in question at current rig count
• Expect increasing Permian rig counts later in 2024 and into 2025

Rig Count Expected To Increase Later In 2024

of wells completed per month, 3-month moving average

Jan-25

Key Operational Figures

Selected operational and financial data

(All amounts in USD per day) unless noted	1Q 2024	4Q 2023	3Q 2023	2Q 2023
Available rig days	1,001	1,012	1,012	1,004
Rig utilization	87.5%	82.3%	77.3%	98.9%
Rig metrics per day:
Dayrate	26,341	26,875	30,302	31,567
Operating costs (1)	14,850	14,278	14,157	14,463
Direct margin	11,491	12,597	16,145	17,104
Operation and SG&A allocation	2,231	2,218	2,046	1,765
Maintenance and capex allocation	1,457	559	186	180
Net cash flow	7,803	9,820	13,913	15,159
Cash break even, working rigs (2)	18,538	17,055	16,389	16,408
Direct stacked cost per day	10,560	9,698	10,453
Reimbursements of "out-of-pocket" expenses (000's)	1,966	930	2,645	3,962

(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 2% Q/Q
• Utilization up 5.2 percentage points with rigs reactivated
• Increase in capex driven by drill pipe and vehicle purchases

Income statement

(All amounts in USD 1000s)	1Q 2024	4Q 2023	3Q 2023	2Q 2023
Total Operating Income	25,036	24,034	26,609	34,966
Payroll Expenses	7,955	8,124	8,039	8,423
Depreciation of Tangible and Intangible Assets	4,850	4,796	4,711	4,671
Rig Mobilization, Service and Supplies	7,478	6,540	7,678	7,317
Insurance Rigs and Employees	1,170	1,819	1,347	1,441
Other Operating Expenses	1,768	2,237	2,792	3,550
Total Operating Expenses	23,222	23,519	24,568	25,402
Operating Profit (+)/ Loss (-)	1,815	515	2,041	9,564
Net Financial Items	-2	258	3	148
Profit (+)/Loss(-) before Income Tax	1,812	773	2,044	9,712
Income Tax Expense		2,990		200
Net Profit (+)/Loss (-)	1,812	-2,216	2,044	9,512

• Total operating income up 4% Q/Q due to higher utilization
• Costs in line with expectations except for higher ad hoc repair and maintenance expenses in the quarter

Balance Sheet And Cash Flow Statement

(All amounts in USD 1000s)	1Q 2024	4Q 2023	3Q 2023	2Q 2023
Non current assets
Rigs and Accessories	68,368	72,061	76,089	79,304
Vehicles and Office Equipment	722	553	611	669
Current assets
Accounts Receivable	11,405	11,297	9,867	17,260
Other Receivable	764	1,367	1,564	2,185
Bank Deposits/Cash	10,544	12,139	15,321	11,894
Total Assets	91,804	97,418	103,452	111,311
Equity
Issued Capital	12,547	12,547	12,547	12,547
Share Premium	108,971	108,911	118,818	124,314
Other Shareholder Contribution	369	369	369	369
Other Equity	-46,446	-48,258	-46,321	-48,365
Total Equity	75,441	73,569	85,414	88,866
Non current liabilities
Deferred Tax	4,881	5,055	2,139	2,139
Current Liabilities
Bond Loan
Accounts Payable	5,228	4,388	6,293	3,927
Tax Payable	326	326	254	254
Public Duties Payable	160	268	266	268
Other Current Liabilities	5,766	10,237	9,087	15,857
Total Liabilities	16,362	20,275	18,039	22,446
Total Equity & Liabilities	91,804	97,418	103,452	111,311

Balance sheet Cash flow statement

(All amounts in USD 1000s)	1Q 2024	4Q 2023	3Q 2023	2Q 2023
Net Profit (+)/Loss (-)	1,812	773	2,044	9,512
Tax paid for the period				30
Depreciation of fixed assets	4,850	4,796	4,711	4,671
Change in accounts receivable	-108	-1,697	7,393	-2,858
Change in accounts payable	840	-1,904	2,365	-211
Change in other current balance sheet items	-1,258	840	-1,820	2,981
Net cash flow from operational activities	6,136	2,807	14,693	14,126
Purchase of tangible fixed assets	-1,326	-711	-1,438	-689
Net cash flow from investing activities	-1,326	-711	-1,438	-689
Repayment of long term debt
Issued capital
Dividends	-6,406	-5,279	-9,828	-14,239
Net cash flow from financing activities	-6,406	-5,279	-9,828	-14,239
Net change in cash and cash equivalent	-1,595	-3,182	3,427	-802
Cash and cash equivalents opening balance	12,139	15,321	11,894	12,696
Cash and cash equivalents closing balance	10,544	12,139	15,321	11,894

NorAm Drilling - Summary

Lean management team, skilled labor and low employee turnover leads to optimized costs and operations

Debt free and full payout strategy

13%

Monthly dividends with total cash distributions of ~NOK13.8 per share since December 2022. Latest monthly distribution implies annualized yield of 13%

Top quality customer portfolio

The Permian holds the largest energy reserves in the U.S

Q&A

Please use the raise hand function to ask a question. Thanks