Awilco Drilling PLC

Investor Presentation • Nov 19, 2015

Q3 2015 Presentation

Oslo, 19th of November 2015

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. Q3 2015 Financial Results
• 1. Operational Update
• 1. Market Outlook
• 1. Summary
• 1. Q&A

1. Highlights

• Announcement of USD 0.50 dividend
• Total Q3 Revenue USD 90.4 million; EBITDA USD 74.0 million
• Q3 Opex per rig approx. USD 78,700 per day
• Total contract backlog at end of Q3 was USD 276 million
• Revenue efficiency during Q3 was 90.3%
• Contract utilisation during Q3 was 60.2 %

2. Q3 2015 Financial Results

Q3 2015 Income Statement

Condensed statement of comprehensive income

in USD thousands, except earnings per share		YTD		YTD
	Q3 2015	30.09.15	Q3 2014	30.09.14
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Contract revenue	38,797	175,002	74,568	201,854
Reimbursables	316	1,530	1,578	3,270
Other revenue	51,308	51,370	69	143
	90,421	227,902	76,215	205,267
Rig operating expenses	14,483	44,835	16,857	48,490
Reimbursables	107	581	306	874
General and administrative expenses	1,817	5,981	3,527	13,572
Other expense	-	-	(482)	(201)
Depreciation	4,535	13,581	4,507	13,369
	20,942	64,978	24,715	76,104
Operating profit	69,479	162,924	51,500	129,163
Interest income	19	110	59	114
Interest expense	(2,126)	(6,370)	(2,304)	(9,640)
Other financial items	(152)	(210)	-
Net financial items	(2,259)	(6,470)	(2,245)	(9,526)
Profit before tax	67,220	156,454	49,255	119,637
Tax (expense)	(9,546)	(24,197)	(11,115)	(21,091)
Net profit	57,674	132,257	38,140	98,546
Total comprehensive income	57,674	132,257	38,140	98,546
Attributable to shareholders of the parent	57,674	132,257	38,140	98,546
Basic and diluted earnings per share	1.92	4.40	1.27	3.28

Q3 2015 Balance Sheet

Condensed statement of financial position

in USD thousands

	30.09.2015	31.12.2014
	(unaudited)	(audited)
Rigs, machinery and equipment	254,969	251,165
Deferred tax asset	455	2,486
	255,424	253,651
Trade and other receivables	18,403	12,116
Prepayments and accrued revenue	7,834	28,938
Inventory	4,914	4,800
Cash and cash equivalents	151,549	75,951
Current tax	68,939	82,594
	251,639	204,399
Total assets	507,063	458,050
Paid in capital	130,142	130,142
Retained earnings	150,405	78,211
	280,547	208,353
Deferred tax liability	7,817	0
Long-term interest-bearing debt	105,000	110,000
	112,817	110,000
Current portion of long-term debt	10,000	10,000
Trade and other creditors	5,291	3,233
Accruals and provisions	16,657	17,942
Current tax payable	81,751	108,522
	113,699	139,697
Total equity and liabilities	507,063	458,050

3. Operational Update

Contract Status – Current Backlog USD 257 million*

• Timing of WilHunter SPS will depend on when sufficient follow-on work is secured
• Warm stack status on WilHunter to be continuously reviewed

Operational Performance Remains Good

• Operational performance in Q2 was 92.5 %
• WilPhoenix experienced some downtime in July and August
• Opex in Q2 in accordance with guidance
• Some saving on WilHunter opex compared to WilPhoenix due to hot stacking mode
• Customer feedback remains positive

Upcoming SPS Yard Stay Projects

• WilPhoenix currently on its way to the yard. Timing of yard stay to accommodate customer's operational preference
• WilPhoenix yard stay still scheduled for 60 days duration, but potentially an additional 10 days due to festive period
• WilHunter yard stay timing dependent on sufficient follow-on work being secured
• Total budget for SPS project remains unchanged at USD 20 million per rig
• Total budget for new BOP's remains unchanged at USD 22.5 million per rig

Assumptions for 2016

• Opex expected to be approximately USD 85,000 per day (assumes both rigs operating)
• SG&A expected to be approximately USD 2.5 million per quarter
• Total Capital/SPS expenditure expected to be around USD 48 million (full year, both rigs – USD 17 million if WilHunter yard stay deferred to 2017)
• BOP commitments USD 10 million (5 million if WilHunter yard stay deferred to 2017)
• Routine Capex USD 12 million (6 million if WilHunter yard stay deferred to 2017)

• Special Periodic Survey USD 26 million (6 million if WilHunter yard stay deferred to 2017)

• Announcement of dividend payable of USD 0.50 per share

• Dividend payable on or around the 18th December 2015
• Share will trade ex-dividend on 24th November 2015, the record date will be 25th November
• 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."

• Current levels of dividends will continue to be challenged by upcoming capital expenditure and future market prospects

4. Market Outlook

Continued low contracting activity and dayrates in the UK market…

…and only 5 out of 18 rigs have firm contracts beyond Q1 2017

Uncertainty Continues with Respect to the Timing and Shape of Market Recovery

• Operators continue with reductions in current and planned E&P expenditure
• Increased number of available rigs expected to continue through 2016 and beyond
• Lack of new contract opportunities currently leading to rig cold-stacking
• Continued rig attrition is key to rebalancing the future rig market

5. Summary

• Announcement of dividend payable of USD 0.50
• Revenue efficiency during Q3 was 90.3 %, continued focus on cost discipline
• Contract backlog of USD 257 million, focus on securing new work for WilHunter
• Market uncertainty continues with respect to the timing and shape of recovery
• Evaluating market opportunities on a case-by-case basis

Q&A