Awilco Drilling PLC

Investor Presentation • May 15, 2019

Q1 2019 PRESENTATION

Oslo, 15th of May 2019

DISCLAIMER

This presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated («relevant persons»). Any person who is not a relevant person should not act or rely on these presentations or any of its contents. Information in the following presentations relating to price at which relevant investments have been bought or sold in the past or the yield on such investments cannot be relied upon as a guide to future performance of such investments. This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in Awilco Drilling PLC or any affiliated company thereof. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions.

This presentation may include certain forward-looking statements, estimates, predictions, influences and projections with respect to anticipated future performance and as to the market for products or services which may reflect various assumptions made by the management of the Company. These assumptions may or may not prove to be correct and no representation is made as to the accuracy of such statements, estimates, projections, predictions and influences. These statements and forecasts involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. The information and opinions contained in this presentation are subject to change without notice and the Company assumes no responsibility or obligation to update publicly or review any of the forward-looking statements contained herein.

AGENDA

1. Highlights

2. Q1 2019 Financial Results

3. Operational Update 4. Newbuild Update

5. Market Outlook

6. Summary

7. Q&A

1. HIGHLIGHTS

HIGHLIGHTS

• Option for the second newbuild exercised 8 March
• Equity issue of USD 20 million in relation to the option exercise
• New CEO started 1 May
• Shell exercised options on WilPhoenix, extending firm period to end of 2019
• Total Q1 2019 Revenue USD 9.1 million, EBITDA loss USD 0.3 million, Net Loss of USD 2.4 million

2. Q1 2019 FINANCIAL RESULTS

Q1 2019 INCOME STATEMENT

Condensed statement of comprehensive income

in USD thousands, except earnings per share

	Q1 2019	Q1 2018
	(unaudited)	(unaudited)
Contract revenue	8,972	33,759
Reimbursables	(23)	343
Other revenue	113	1
	9,062	34,103
Rig operating expenses	6,253	7,223
Reimbursables	2	141
General and administrative expenses	3,133	2,782
Depreciation	2,651	3,402
	12,039	13,548
Operating (loss)/profit	(2,977)	20,555
Interest income	533	550
Interest expense	-	(1,642)
Other financial items	142	358
Net financial items	675	(734)
(Loss)/Profit before tax	(2,302)	19,821
Tax expense	(50)	(706)
Net (loss)/profit	(2,352)	19,115
Total comprehensive (loss)/income	(2,352)	19,115
Attributable to shareholders of the parent	(2,352)	19,115
Basic and diluted earnings per share	(0.05)	0.62

Q1 2019 BALANCE SHEET

Condensed statement of financial position

in USD thousands

	31.03.2019	31.03.2018
	(unaudited)	(unaudited)
Rigs, machinery and equipment	227,470	217,935
Deferred tax asset	410	1,483
	227,880	219,418
Trade and other receivables	6,317	73,837
Prepayments and accrued revenue	4,082	13,173
Inventory	4,809	4,809
Cash and cash equivalents	42,900	92,472
Current tax	340	5,903
	58,448	190,194
Total assets	286,328	409,612
Paid in capital	218,905	194,060
Retained earnings	60,319	114,177
	279,224	308,237
Long-term interest-bearing debt	-	80,000
	-	80,000
Current portion of long-term debt	-	10,000
Trade and other creditors	1,287	926
Accruals and provisions	5,751	10,449
Current tax payable	66	0
	7,104	21,375
Total equity and liabilities	286,328	409,612

3. OPERATIONAL UPDATE

SHELL EXTENDED WILPHOENIX CONTRACT UNTIL END OF 2019

• Operational uptime was 100% in Q1 2019
  • WilPhoenix performs well but experienced considerable 'waiting-on-weather' during this quarter
• 2 options covering 5 P&A wells exercised by Shell UK, taking the firm part of the contract until end of 2019
• Total contract backlog as of today is approximately USD 26 million

4. NEWBUILD UPDATE

CONTINUING TRANSFORMATION OF THE COMPANY THROUGH EXERCISING OF FIRST OPTION

ENVIRONMENTAL FOCUS FROM OPERATORS

BUILDING TO MEET CUSTOMERS' REQUIREMENTS GREEN BY DESIGN – ESTABLISHING A NEW STANDARD

• Estimated saving on fuel consumption and CO₂ taxes is USD 10,000 – 40,000 per day compared to peers due to:
  • Hybrid battery technology
  • Optimised power systems
  • Energy efficient drilling system
  • Waste heat recovery
  • Energy storage and regeneration
• With Tier III engines and NOₓ scrubbers NOₓ emissions are reduced by 95%

BUILDING TO MEET THE VERY HIGHEST DEMANDS FOR OPERATIONAL PERFORMANCE IN THE FUTURE

• Automated Drilling Control (ADC) designed and built into the unit – not an upgrade. Equinor quote well duration reductions of 10% on units with ADC
• Faster riser running and recovery speeds deploying MH QTR riser
• Increased weather uptime by maximising useable length of the telescopic joint by matching it to longer MRT rods as well as proven 6 column hull design
• Highly automated and efficient offline capabilities
• High degree of digitalization

SIGNIFICANT EFFICIENCIES GAINED THROUGH DESIGN AND FEATURES

Estimated well durations* are reduced by:

• approx. 12 % compared to 5th generation units
• approx. 40% compared to 4th generation units

NEWBUILD UPDATE

• Newbuild status
  • Rig #1 construction progress on schedule and budget
  • Steel cut for Rig #2 scheduled for Q4 2019

Building a Norwegian organisation

• Recruitment for key positions in Norway ongoing
• Norwegian office to be established by Q4 2019
• Increased focus on marketing activities towards NCS oil companies

· Leder for Helse, Miljø, Sikkerhet og Kvalitetssikring	· Leder for Personell og Organisasjon
· Teknisk Leder	· Plattformsjef
· Operasjonsleder	· ICT Leder

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5. MARKET OUTLOOK

CRUDE PRICING REMAINS INVESTMENT SUPPORTIVE

TOTAL NORWEGIAN SEMI-SUBMERSIBLE MARKET

MODERN HE SEMIS PREFERRED BY NCS OPERATORS – DETACHED UTILISATION INCREASE DRIVES DAYRATE UPTICK

Clear market preference for modern high spec rigs demonstrated in utilisation bifurcation

WHY MODERN HE SEMIS ARE PREFERRED OVER VINTAGE RIGS

Deck capacity	· Better logistics on deck which has a significant efficiency gain · Less dependent on supply vessels, reducing the spread cost
Motions	· Significant better rig motion characteristics ensuring optimized uptime · Ability to operate in all locations worldwide
Winterization	· Capability to work year-around in the Barents Sea · Few rigs can operate year around in the Barents Sea
Digitalization/ Integration	· Infrastructure, software and sensors allowing oil service company (i.e. SLB or BHGE) to link their system to the rig · AutoDrill capability allowing real time downhole information

Source: Arctic Securities

*Total days includes downtime when applying uptime efficiency

**The drilling cost to E&Ps for vintage HE semi will in reality be higher as they historically have paid for waiting on weather which is a significant part of the lower uptime vs a modern semi

CONTRACT STATUS & EXPECTED DEMAND FLOATING DRILLING UNITS – NCS¹

UK MARKET

6. SUMMARY

"WE HAVE ALL THE FLEXIBILITY WE NEED"

• The Awilco Drilling CS60 ECO rig design will prove itself as a Harsh Environment mid-water game changer
• New rig build on schedule and budget
• Optionality and Flexibility in both new rig financing and contract timing
• Establishing a Norwegian organisation and engaging with NCS customers
• WilPhoenix contracted to Shell for 24 firm wells + 5 option wells
• The market is improving

Q&A