Awilco Drilling PLC

Investor Presentation • Aug 17, 2016

Q2 2016 Presentation

Oslo, 17th of August 2016

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
• 1. Q2 2016 Financial Results
• 1. Operational Update
• 1. Market Outlook
• 1. Summary
• 1. Q&A

1. Highlights

• Announcement of USD 0.10 dividend
• Total Q2 Revenue USD 24.4 ; EBITDA of USD 12.2 million, net profit of USD 6.9 million
• Q2 Opex average per rig approx. USD 53,600 per day
• Total contract backlog at end of Q2 was USD 231 million
• WilHunter stacking costs further reduced during the quarter

2. Q2 2016 Financial Results

Q2 2016 Income Statement

Condensed statement of comprehensive income

in USD thousands, except earnings per share		YTD
	Q2 2016	30.06.16	Q2 2015	30.06.15
	(unaudited)	(unaudited)	(unaudited)
Contract revenue	24,436	24,436	68,366	136,205
Reimbursables	17	50	584	1,213
Other revenue	(4)	10	34	62
	24,449	24,496	68,984	137,480
Rig operating expenses	9,753	21,304	15,999	30,352
Reimbursables	-	-	206	474
General and administrative expenses	2,504	4,379	2,474	4,163
Depreciation	3,444	8,366	4,527	9,046
	15,702	34,049	23,206	44,035
Operating profit/(loss)	8,747	(9,553)	45,778	93,445
Interest income	180	467	19	90
Interest expense	(1,892)	(3,906)	(2,066)	(4,244)
Other financial items	(186)	(700)	385	(58)
Net financial items	(1,898)	(4,139)	(1,662)	(4,212)
Profit/(loss) before tax	6,850	(13,692)	44,116	89,233
Tax benefit/(expense)	80	1,940	(8,771)	(14,651)
Net profit/(loss)	6,929	(11,752)	35,345	74,582
Total comprehensive income/(loss)	6,929	(11,752)	35,345	74,582
Attributable to shareholders of the parent	6,929	(11,752)	35,345	74,582
Basic and diluted earnings per share	0.23	(0.39)	1.18	2.48

Q2 2016 Balance Sheet

Condensed statement of financial position

in USD thousands

	31.06.2016	31.12.2015
	(unaudited)	(audited)
Rigs, machinery and equipment	245,316	234,336
Deferred tax asset	3,932	2,002
	249,248	236,338
Trade and other receivables	0	7,352
Prepayments and accrued revenue	27,240	2,682
Inventory	4,878	5,015
Cash and cash equivalents	37,867	135,257
Current tax	44,016	68,899
	114,001	219,205
Total assets	363,249	455,543
Paid in capital	130,142	130,142
Retained earnings	91,872	114,135
	222,014	244,277
Deferred tax liability	0	0
Long-term interest-bearing debt	95,000	100,000
	95,000	100,000
Current portion of long-term debt	10,000	10,000
Trade and other creditors	1,857	5,990
Accruals and provisions	13,236	17,702
Current tax payable	21,142	77,574
	46,235	111,266
Total equity and liabilities	363,249	455,543

3. Operational Update

Contract Status – Current Backlog USD 214 million*

• The process of cold stacking WilHunter will be initiated shortly due to lack of attractive work opportunities in the short term

• WilPhoenix re-commenced drilling operations on the 26th of June
• Operational uptime whilst working in Q2 was 97.8 %

• In dialogue with Apache about the standby period between the 21st of April and the 22nd of June

• Announcement of dividend payable of USD 0.10 per share

• Dividend payable on or around the 23rd of September 2016
• Share will trade ex-dividend on 23rd of August 2016, the record date will be 24th of August
• 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

Decreasing UK Day Rates and Limited Number of New Opportunities…

…Leads to a Large Number of Idle Rigs in 2016 and 2017

UK FLOATER MARKET
CONTRACT STATUS
				2016								2017						2018
Company	Rig name	Aug	Sep	Oct	Nov	Dec	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
	Transocean Prospect
	Sedco 711
	Sedco 714
Transocean	Sedco 704
	Sedco 712		warm stacked									on contract
	Paul B. Loyd, Jr		on contract										options
	Transocean Spitsbergen		on contract
	Transocean Leader		on contract
	Ocean Nomad
	Ocean Princess
Diamond	Ocean Vanguard
Offshore	Ocean Guardian		on contract
	Ocean Valiant	options
	Ocean Patriot																	options
	Borgny Dolphin
Dolphin Drilling	Byford Dolphin
	Blackford Dolphin								options
Awilco Drilling	WilHunter
	WilPhoenix																						options
Stena Drilling	Stena Spey
Paragon Drilling	Paragon MSS1					options
Odfjell	Deepsea Aberdeen
				ON CONTRACT			EN ROUTE		YARD				WARM STACKED					COLD STACKED

The UK Market is Becoming Increasingly Seasonal

• Continued rig attrition is positive for future rebalancing of the rig market
• More discussions and enquiries for decommissioning work
• The number of active rigs in the UK expected to fluctuate between summer and winter
• Recent contract awards are at low day rates as rigs continue to roll off contracts

5. Summary

• Announcement of dividend payable of USD 0.10
• Initiating the process of cold stacking WilHunter
• Contract backlog of USD 214 million
• Market uncertainty continues with respect to the timing and shape of recovery
• Evaluating market opportunities on a case-by-case basis

Q&A