NorAm Drilling AS

Investor Presentation • Nov 15, 2023

Q3 2023 Presentation

N o v e m b e r 1 5 , 2 0 2 3

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.

Q3 2023 Highlights

Revenue

Utilization

EBITDA

• \$26.6 million including reimbursables
• Clean day rate(1) of \$30,300, down 4% from Q2
• 77.3% utilization
• Three rigs partly stacked during the quarter
• Adj. EBITDA of \$6.9 million
• Operating and maintenance expenses in line with expectations
• \$2.0 million
• EPS of \$0.05

Net income

Backlog • Backlog of \$17.4 million as of November 14, 2023

Recent Events and Outlook

Monthly cash distributions

• 12 consecutive monthly distributions, totaling USD45m or NOK ~11 per share
• Latest distribution of \$0.04/sh implies 12% dividend yield p.a.(1)

Reactivating idle rigs

• One idle rig reactivated in mid October
• Expect to reactivate another idle rig before year end
• \$2m of working capital requirement upon re-entry to market
• Anticipate stable Permian rig activity through the end of 2023
• Expect Permian rig demand to pick up in 2024
• DUCs continue to decline
• Spot day rates appear to have bottomed
• Improving near term outlook

Strong Performance Ahead Of Expected Market Pick Up

Top US Land Drillers by average drill rate(1) DUC inventory almost run out = more drilling needed ahead

Key Operational Figures

Selected operational and financial data

(All amounts in USD 1000s per day) unless noted	3Q 2023	2Q 2023	1Q 2023	4Q 2022
Rig operating days	1,012	1,004	990	1,005
Rig utilization (1)	77.3%	98.9%	99.3%	99.3%
Rig metrics per day:
Dayrate (2)	30,302	31,567	30,846	28,006
Operating costs (3)	14,157	14,463	15,067	14,366
Direct margin	16,145	17,104	15,779	13,640
Operation and SG&A allocation (4)	2,046	1,765	1,812	1,936
Maintenance cap ex allocation (4)	186	180	103	203
Net cash flow	13,913	15,159	13,864	11,501
All in OPEX and maintenance capex (3)	16,389	16,408	16,982	16,505
Direct stacked cost per day	10,453
Reimbursements of "out-of-pocket" expenses (000's)	2,645	3,962	2,286	1,252

(1) Excludes 10 days of downtime in Q1 2023 related to rig upgrades

(2) Per rig operating day and excludes reimbursements for "out-of-pocket" expenses.

(3) Per active rig available and excludes reimbursements for "out-of-pocket" expenses. Excludes operating costs of rigs not active. (4) Per available days

• Dayrate down 4% Q/Q, net
• Stacked cost of ~\$10,500 p.d. on three rigs partly idle during Q3
• Reimbursements predominantly affected by drill pipe rebills

Income statement

(All amounts in USD 1000s)	3Q 2023	2Q 2023	1Q 2023	4Q 2022
Total Operating Income	26,609	34,966	32,684	29,541
Payroll Expenses	8,039	8,423	6,897	8,496
Depreciation of Tangible and Intangible Assets	4,711	4,671	4,759	4,771
Rig Mobilization, Service and Supplies	7,678	7,317	6,972	6,276
Insurance Rigs and Employees	1,347	1,441	1,644	1,617
Other Operating Expenses	2,792	3,550	2,391	1,721
Total Operating Expenses	24,568	25,402	22,663	22,881
Operating Profit (+)/ Loss (-)	2,041	9,564	10,022	6,660
Net Financial Items	3	148	-49	1,544
Profit (+)/Loss(-) before Income Tax	2,044	9,712	9,972	8,204
Income Tax Expense		200	393	-1,097
Net Profit (+)/Loss (-)	2,044	9,512	9,579	9,301

• Total operating income affected by lower utilization

Balance Sheet And Cash Flow Statement

(All amounts in USD 1000s)	3Q 2023	2Q 2023	1Q 2023	4Q 2022
Non current assets
Rigs and Accessories	76,089	79,304	83,521	86,312
Vehicles and Office Equipment	611	669	434	258
Current assets
Accounts Receivable	9,867	17,260	14,402	14,802
Other Receivable	1,564	2,185	855	1,336
Bank Deposits/Cash	15,321	11,894	12,696	13,098
Total Assets	103,452	111,311	111,908	115,806
Equity
Issued Capital	12,547	12,547	12,547	12,547
Share Premium	118,818	124,314	136,701	136,472
Other Shareholder Contribution	369	369	369	369
Other Equity	-46,321	-48,365	-57,877	-67,456
Total Equity	85,414	88,866	91,740	81,932
Non current liabilities
Deferred Tax	2,139	2,139	2,139	1,746
Current Liabilities
Bond Loan
Accounts Payable	6,293	3,927	4,138	4,607
Tax Payable	254	254	224	250
Public Duties Payable	266	268	245	267
Other Current Liabilities	9,087	15,857	13,421	27,004
Total Liabilities	18,039	22,446	20,168	32,128
Total Equity & Liabilities	103,452	111,311	111,908	115,806

Balance sheet Cash flow statement

(All amounts in USD 1000s)	3Q 2023	2Q 2023	1Q 2023	4Q 2022
Net Profit (+)/Loss (-)	2,044	9,512	9,972	8,204
Tax paid for the period		30	-26
Depreciation of fixed assets	4,711	4,671	4,759	4,771
Change in accounts receivable	7,393	-2,858	400	-4,166
Change in accounts payable	2,365	-211	-469	800
Change in other current balance sheet items	-1,820	2,981	257	-2,350
Net cash flow from operational activities	14,693	14,126	14,894	7,258
Purchase of tangible fixed assets	-1,438	-689	-2,144	-926
Net cash flow from investing activities	-1,438	-689	-2,144	-926
Repayment of long term debt				-80,000
Issued capital				72,004
Dividends	-9,828	-14,239	-13,152	-4,375
Net cash flow from financing activities	-9,828	-14,239	-13,152	-12,371
Net change in cash and cash equivalent	3,427	-802	-402	-6,040
Cash and cash equivalents opening balance	11,894	12,696	13,098	19,138
Cash and cash equivalents closing balance	15,321	11,894	12,696	13,098

• Working capital reduction due to lower rates and utilization

• Higher capex in Q3 related to final ultra SS rig upgrades

NorAm Drilling - Summary

Fully upgraded with state-of-the-art walking systems and racking capacity, with a track record of drilling the longest wells in the Permian

Permian focus

Strategically positioned to unlock untapped oil reserves by employing the latest horizontal drilling technology

Top quality customer portfolio

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

Industry low cost break-even

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

Debt free and full payout strategy

>20%

11

100%

Monthly dividends with total cash distributions of ~NOK11 per share since December 2022. Latest monthly distribution implies annualized yield of 12%

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