Awilco Drilling PLC

Investor Presentation • Feb 15, 2018

Q4 2017 PRESENTATION

Oslo, 15th of February 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. Q4 2017 and Preliminary Full-Year 2017 Financial Results
• 3. Operational Update
• 4. Market Outlook
• 5. Summary
• 6. Q&A

1. HIGHLIGHTS

HIGHLIGHTS

• · Announcement of USD 0.20 dividend
• · Total Q4 Revenue USD 33.9 million; EBITDA of USD 24.5 million, Net Loss of USD -23.8 million after impairment charge of USD 45 million
• · Q4 Opex average for WilPhoenix approx. USD 78 100 per day
• · Total contract backlog at end of Q4 2017 was USD 41 million

SUBSEQUENT EVENTS

• · Yesterday, Awilco Drilling announced that following revisions to the project schedule the Letter of Award from Alpha Petroleum Resources Limited did not result in an agreed contract for WilPhoenix.
• · At the same time, Awilco Drilling announced that it has signed a Letter of Intent with an undisclosed operator for the provision of WilPhoenix. The program is expected to commence around 1st September 2018, with an estimated duration of 450 days for an undisclosed dayrate.

2. Q4 2017 AND PRELIMINARY FULL-YEAR 2017 FINANCIAL RESULTS

Q4 2017 INCOME STATEMENT

Condensed statement of comprehensive income

in USD thousands, except earnings per share	Q4 2017 (unaudited)	Full Year 2017 (unaudited)	Q4 2016 (unaudited)	Full Year 2016 (audited)
Contract revenue	33,525	130,403	34,823	94,582
Reimbursables	343	1,306	298	704
Other revenue	1	22	-	10
	33,869	131,731	35,121	95,296
Rig operating expenses	7,222	27,751	7,290	36,726
Reimbursables	137	357	74	187
General and administrative expenses	1,975	8,818	2,380	8,909
Depreciation	3,963	15,686	3,729	15,579
Impairment	45,000	45,000	-	-
	58,297	97,612	13,473	61,401
Operating (loss)/profit	(24,428)	34,119	21,649	33,895
Interest income	609	792	21	631
Interest expense	(1,615)	(6,919)	(1,805)	(7,658)
Other financial items	1,010	818	(1,125)	(2,479)
Net financial items	4	(5,309)	(2,909)	(9,506)
(Loss)/profit before tax	(24,424)	28,810	18,740	24,390
Tax benefit/(expense)	585	(7,555)	(3,823)	(3,364)
Net (loss)/profit	(23,839)	21,255	14,917	21,026
Total comprehensive (loss)/income	(23,839)	21,255	14,917	21,026
Attributable to shareholders of the parent	(23,839)	21,255	14,917	21,026
Basic and diluted earnings per share	(0.79)	0.71	0.50	0.70

Q4 2017 BALANCE SHEET

Condensed statement of financial position

in USD thousands

	31.12.2017	31.12.2016
	(unaudited)	(audited)
Rigs, machinery and equipment	178,808	238,868
Deferred tax asset	1,954 180,762	3,058 241,926
Trade and other receivables	17,168	17,269
Prepayments and accrued revenue	6,905	7,213
Inventory	4,809	4,844
Cash and cash equivalents	119,286	70,070
Current tax	227	22,079
	148,395	121,475
Total assets	329,157	363,401
Paid in capital	130,142	130,142
Retained earnings	94,156	96,926
	224,298	227,068
Deferred tax liability	-	1,129
Long-term interest-bearing debt	80,000	90,000
	80,000	91,129
Current portion of long-term debt	10,000	10,000
Trade and other creditors	1,170	573
Accruals and provisions	9,519	10,708
Current tax payable	4,170	23,923
	24,859	45,204
Total equity and liabilities	329,157	363,401

3. OPERATIONAL UPDATE

CURRENT FIRM CONTRACT BACKLOG USD 25 MILLION* AND WILPHOENIX COMMITTED UNTIL AT LEAST NOVEMBER 2019

OPERATIONAL UPDATE

• · Operational uptime in Q4 was 99.6%
• · Continued positive customer feedback
• · Contract negotiations with undisclosed LOI client 1 ongoing
• · Secured new LOI with undisclosed client 2 and contract negotiations process started

DIVIDEND DISTRIBUTION

• · Announcement of dividend payable of USD 0.20 per share
• · Dividend payable on or around 23 March 2018
• · Shares will trade ex-dividend on 20th of February 2018, the record date will be 21st of February
• · The Company's dividend policy remains unchanged:

"The Company intends to distribute all free cash flow above a robust cash buffer to support operational working capital requirements and capital expenditure, including SPS."

4. MARKET OUTLOOK

THE UK MARKET HAS BOTTOMED OUT…

…AND TENDERING ACTIVITY IS INCREASING, ALTHOUGH WINTER WORK IS STILL SCARCE

UK FLOATER MARKET
CONTRACT STATUS
		2018									2019
Company	Rig name	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
Transocean	Sedco 711
	Sedco 714
	Sedco 712		on contract
	Paul B. Loyd, Jr		on contract								options
	Transocean Leader		on contract															options
Diamond Offshore	Ocean Guardian			on contract
	Ocean Valiant			yard			on contract
	Ocean Patriot			on contract			on contract
Dolphin Drilling	Blackford Dolphin					on contract			options
Awilco Drilling	WilHunter
	WilPhoenix		on contract		LOI
Stena Drilling	Stena Spey		on contract
Paragon Drilling	Paragon MSS1			on contract																		options
North Atlantic Drilling	West Hercules				on contract
	West Phoenix				on contr.
Odfjell	Deepsea Aberdeen		on contract
COSL Drilling Europe	COSLPioneer			on contract
				ON CONTRACT			LOA		OPTIONS			YARD		HOT/WARM STACKED						COLD STACKED

INCREASING SIGNS OF MARKET IMPROVEMENT

• · Attrition is starting to have a positive effect on market balance
• · Summer demand in 2018 is exceeding supply, however, winter work opportunities are slim
• · As a consequence, start up of programs are being delayed and pushed into 2019
• · 2019 demand seems stronger than 2018
• · Overall outlook continues to improve
• · M&A activity and stranded asset acquisitions have been seen in the market

5. SUMMARY

• · Announcement of dividend payable of USD 0.20
• · Current firm contract backlog of USD 25 million, and WilPhoenix committed until at least November 2019
• · Continued signs of market improvement
• · Evaluating growth opportunities on a case-by-case basis
• · Awilco Drilling's fundamentals are good