NorAm Drilling AS

Investor Presentation • Aug 23, 2023

Q2 2023 Presentation

A u g u s t 2 3 , 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.

Q2 2023 Highlights

Revenue

EBITDA

• \$35.0 million including reimbursables
• Clean day rate(1) of \$31,500, up 6% from Q1
• Utilization 98.9% utilization

• Adj. EBITDA of \$14.4 million

• Operating and maintenance expenses in line with expectations
• \$9.5 million
• EPS of \$0.22

Net income

Backlog • Backlog of \$18.0 million as of August 22, 2023

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Recent Events and Outlook

Dividends

Idle rigs

Near term outlook

• Nine consecutive monthly distributions, totaling USD39.4m or NOK ~9.50 per share
• Latest distribution of \$0.09/sh implies 24% dividend yield p.a.(1)
• Several leads being explored with start up in Q4 2023
• OPEX reduction of ~30% when stacked
• Working capital requirement upon re-entry to market to normalize after two months of operation
• Customer budget and production discipline
• Large scale operator M&A temporarily reducing rig demand
• Signs of willingness for private operators to add rigs in Q4 based upon current WTI pricing
• Most analysts are projecting a bottom in rig counts in Q3

Outperforming In Strong Market Fundamentals

DUCs has hit a floor at the lowest level since 2014(1) NorAm continues to outperform in 2023(2)

Permian, # of wells drilled per rig per month

Key Operational Figures

Selected operational and financial data

(All amounts in USD 1000s per day) unless noted	2Q 2023	1Q 2023	4Q 2022	3Q 2022
Rig operating days	1,004	990	1,005	1,001
Rig utilization	98.9%	99.3%	99.3%	98.9%
Rig metrics per day:
Dayrate (1)	31,567	30,846	28,006	25,201
Operating costs (2)	14,463	15,067	14,366	14,794
Direct margin	17,104	15,779	13,640	10,407
Operation and SG&A allocation (3)	1,765	1,812	1,936	1,920
Maintenance cap ex allocation (3)	180	103	203	430
Net cash flow	15,159	13,864	11,501	8,058
All in OPEX and maintenance capex (3)	16,408	16,982	16,505	17,143
Reimbursements of "out-of-pocket" expenses (000's)	3,962	2,286	1,252	1,189

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

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

• Dayrates up 6% Q/Q
• All rigs fully employed through Q2
• Reimbursements predominantly affected by drill pipe rebills

Income statement

(All amounts in USD 1000s)	2Q 2023	1Q 2023	4Q 2022	3Q 2022
Total Operating Income	34,966	32,684	29,541	26,535
Payroll Expenses	8,423	6,897	8,496	7,007
Depreciation of Tangible and Intangible Assets	4,671	4,759	4,771	4,769
Rig Mobilization, Service and Supplies	7,317	6,972	6,276	7,205
Insurance Rigs and Employees	1,441	1,644	1,617	1,750
Other Operating Expenses	3,550	2,391	1,721	2,101
Total Operating Expenses	25,402	22,663	22,881	22,833
Operating Profit (+)/ Loss (-)	9,564	10,022	6,660	3,703
Net Financial Items	148	-49	1,544	-1,759
Profit (+)/Loss(-) before Income Tax	9,712	9,972	8,204	1,944
Income Tax Expense	200	393	-1,097	408
Net Profit (+)/Loss (-)	9,512	9,579	9,301	1,536

• Total operating income affected by higher rebillable income
• Payroll expenses up vs. previous quarter due to ERTC credit of \$1.4m in Q1 was applied as a reduction of expenses
• Other operating expenses affected by higher reimbursements

Balance Sheet And Cash Flow Statement

(All amounts in USD 1000s)	2Q 2023	1Q 2023	4Q 2022	3Q 2022
Non current assets
Rigs and Accessories	79,304	83,521	86,312	90,132
Vehicles and Office Equipment	669	434	258	282
Current assets
Accounts Receivable	17,260	14,402	14,802	10,636
Other Receivable	2,185	855	1,336	1,686
Bank Deposits/Cash	11,894	12,696	13,098	19,138
Total Assets	111,311	111,908	115,806	121,873
Equity
Issued Capital	12,547	12,547	12,547	8,839
Share Premium	124,314	136,701	136,472	94,860
Other Shareholder Contribution	369	369	369	369
Other Equity	-48,365	-57,877	-67,456	-76,663
Total Equity	88,866	91,740	81,932	27,405
Non current liabilities
Deferred Tax	2,139	2,139	1,746	3,093
Current Liabilities
Bond Loan				80,000
Accounts Payable	3,927	4,138	4,607	3,807
Tax Payable	254	224	250
Public Duties Payable	268	245	267	30
Other Current Liabilities	15,857	13,421	27,004	7,537
Total Liabilities	22,446	20,168	32,128	94,468
Total Equity & Liabilities	111,311	111,908	115,806	121,873

Balance sheet Cash flow statement

3Q 2022 1,944
4,769
-1,241
1,298
2,415
9,185
-496
-496
0
8,689
10,449
19,138

• Increase in accounts receivables due to higher dayrates and timing effects and expected to reverse in Q3

NorAm Drilling - Summary

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