Awilco Drilling PLC

Earnings Release • Aug 15, 2018

Q2 2018 PRESENTATION

Oslo, 15th of August 2018

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. Q2 2018 Financial Results
• 3. Operational Update
• 4. Market Outlook
• 5. Summary
• 6. Q&A

TRANSFORMING THE COMPANY THROUGH A NEWBUILDING PROGRAMME

1. HIGHLIGHTS

HIGHLIGHTS

• Total Q2 Revenue USD 9 million; EBITDA loss of USD 1.9 million, Net Loss of USD 7.6 million
• Q2 Opex average for WilPhoenix approx. USD 80 300 per day
• Shell exercised an option, increasing the firm contract backlog from approx. 330 days to 380 days
• Exercised call option and settled the secured bond
• Announcement of dividend suspension
• Applied for transfer from the Oslo Axess to the Oslo Stock Exchange main list

2. Q2 2018 FINANCIAL RESULTS

Q2 2018 INCOME STATEMENT

Condensed statement of comprehensive income

in USD thousands, except earnings per share		YTD
	Q2 2018	30.06.18	Q2 2017	30.06.17
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Contract revenue	8,927	42,686	33,149	64,796
Reimbursables	67	411	336	632
Other revenue	2	2	6	12
	8,996	43,099	33,491	65,440
Rig operating expenses	7,440	14,663	6,319	12,440
Reimbursables	30	172	86	128
General and administrative expenses	3,445	6,228	2,484	3,496
Depreciation	3,146	6,548	3,913	7,762
	14,061	27,611	12,802	23,826
Operating (loss)/profit	(5,065)	15,488	20,689	41,614
Interest income	506	1,056	66	98
Interest expense	(3,025)	(4,667)	(1,687)	(3,504)
Other financial items	19	378	(191)	(5)
Net financial items	(2,500)	(3,233)	(1,812)	(3,411)
(Loss)/profit before tax	(7,565)	12,255	18,877	38,203
Tax expense	(50)	(756)	(3,807)	(7,331)
Net (loss)/profit	(7,615)	11,499	15,070	30,872
Total comprehensive (loss)/income	(7,615)	11,499	15,070	30,872
Attributable to shareholders of the parent	(7,615)	11,499	15,070	30,872
Basic and diluted earnings per share	(0.16)	0.29	0.50	1.03

Q2 2018 BALANCE SHEET

Condensed statement of financial position

in USD thousands

	30.06.2018	31.12.2017
	(unaudited)	(audited)
Rigs, machinery and equipment	215,182	178,808
Deferred tax asset	1,435	1,372
	216,617	180,180
Trade and other receivables	-	17,168
Prepayments and accrued revenue	1,021	6,905
Inventory	4,958	4,809
	75,787	119,286
Cash and cash equivalents Current tax	5,995	3,551
	87,761	151,719
Total assets	304,378	331,899
Paid in capital	198,719	130,142
Retained earnings	97,035	101,068
	295,754	231,210
Long-term interest-bearing debt	-	80,000
	-	80,000
Current portion of long-term debt	-	10,000
Trade and other creditors	1,068	1,170
Accruals and provisions	7,556	9,519
	8,624	20,689
Total equity and liabilities	304,378	331,899

3. OPERATIONAL UPDATE

WILPHOENIX CONTRACTED UNTIL AT LEAST SEPT. 2019

CONTRACT STATUS
	2018						2019
	Aug	Sept	Oct	Nov	Dec	Jan	Feb	March	April	May	June	July	Aug	Sept	Oct	Nov	Dec
WILHUNTER :
Cold Stacked
WILPHOENIX:
TBC
Shell		USD 116,000

OPERATIONS AND NEWBUILD UPDATE

• Apache contract successfully completed on 25th April
• WilPhoenix subsequently hot stacked in Invergordon
• Preparations for the Shell contract ongoing

• Shell exercised one option, extending the firm part of the contract to approximately 380 days

• Newbuild project site team continuing to ramp-up

• Marketing activities towards NCS oil companies ongoing
• Building an Awilco Drilling organisation in Norway

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DIVIDEND DISTRIBUTION SUSPENDED

• The companys dividend policy has been to pay a quarterly dividend in support of its main objective to maximize returns to shareholders. All of the Companys free cash flow was distributed subject to maintaining a robust cash buffer to support working capital requirements, planned capital expenditure and uncertain future market prospects
• Since June 2013 Awilco Drilling has consistently paid a quarterly dividend and during this time has distributed USD 12.00 (NOK 83.22) per share in this respect.
• With the ordering of one new-build high-end semi submersible rig in March this year, plus an agreement for a further three independent rig options, the Company is now in a growth and investment phase.
• The Board of Directors has, therefore, decided to suspend the dividend and will resume same when the Company again reaches an appropriate free cash flow situation.

4. MARKET OUTLOOK

IMPROVED GLOBAL FLOATER TENDER ACTIVITY AND FURTHER INCREASE ANTICIPATED

Demand for floating rigs, June/16 – June/18

THE NORWEGIAN FLOATER MARKET HAS BOTTOMED OUT…

…HOWEVER, THERE IS DIFFERENCE BETWEEN SEGMENTS

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

THE UK MARKET ALSO IMPROVING, BUT STILL SEASONAL

INCREASED MARKET ACTIVITY IN BOTH UK AND NORWAY

• Global rig supply has reduced through continued attrition, helping to rebalance the market
• Overall rig demand outlook continues to improve
• Fleet contract utilization is improving
• Seasonality is still, however, likely to prevail in UK through to 2019/2020
• Rig dayrates improving, especially in the high-end segment
• The financial markets continue to support the funding of new asset acquisitions

5. SUMMARY

AWILCO DRILLING WELL POSITIONED TO CAPITALISE ON A RECOVERING MARKET IN THE NORTH SEA

• · Transforming the Company at the bottom of the cycle through newbuild programme
• · Dividend payments suspended due to the Company moving into a growth and investment phase
• · WilPhoenix contracted to Shell until at least September 2019
• · The market is improving
• · Evaluating further growth opportunities on a case-by-case basis