Q3 2014 Presentation

Oslo, 12th of November 2014

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 2014 Financial Results
1. Operational Update
1. Market Outlook
1. Summary
1. Q&A

1. Highlights

Announcement of USD 1.15 dividend
Total Q3 Revenue USD 76.2 million; EBITDA USD 56.0 million
Q3 Opex per rig approx. USD 91,600 per day
Total contract backlog at end of Q3 was USD 582 million
Revenue efficiency during Q3 was 99.3%

2. Q3 2014 Financial Results

Q3 2014 Income Statement

Condensed statement of comprehensive income

in USD thousands, except earnings per share		YTD		YTD
	Q3 2014	30.09.14	Q3 2013	30.09.13
	(unaudited)	(unaudited)	(unaudited)	(unaudited)

Contract revenue	74,568	201,854	61,429	172,419
Reimbursables	1,578	3,270	825	2,679
Other revenue	69	143	12	37
	76,215	205,267	62,266	175,135
Rig operating expenses	16,857	48,490	13,516	40,256
Reimbursables	306	874	272	1,035
General and administrative expenses	3,527	13,572	4,286	15,199
Other (income)	-	-	(2,132)	(2,200)
Other expense	(482)	(201)	-	1,900
Depreciation	4,507	13,369	4,405	13,194
	24,715	76,104	20,347	69,384
Operating profit	51,500	129,163	41,919	105,751
Interest income	59	114	38	100
Interest expense	(2,304)	(9,640)	(2,354)	(7,141)
Other financial items	-	-		(128)
Net financial items	(2,245)	(9,526)	(2,316)	(7,169)
Profit before tax	49,254	119,637	39,603	98,583
Tax (expense)	(11,115)	(21,091)	(2,986)	(7,882)
Net profit	38,140	98,546	36,617	90,701
Other comprehensive income	-	-	-
Total comprehensive income	38,140	98,546	36,617	90,701

Attributable to minority interests	-	-	-
Attributable to shareholders of the parent	38,140	98,546	36,617	90,701
Basic and diluted earnings per share	1.27	3.28	1.22	3.02

Q3 2014 Balance Sheet

Condensed statement of financial position

in USD thousands

	30.09.2014	31.12.2013
	(unaudited)	(audited)

Rigs, machinery and equipment	251,477	245,279
Deferred tax asset	1,260	2,763
	252,737	248,042
Trade and other receivables	30,676	14,417
Prepayments and accrued revenue	22,171	25,835
Inventory	4,800	4,800
Cash and cash equivalents	60,399	52,347
Current tax	75,819	42,317
	193,865	139,716

Total assets	446,602	387,758

Paid in capital	130,142	130,142
Retained earnings	73,810	77,370
	203,952	207,512
Deferred tax liability	13	554
Long-term interest-bearing debt	115,000	87,098
	115,013	87,652

Current portion of long-term debt	10,000	11,000
Trade and other creditors	2,483	3,140
Accruals and provisions	20,777	25,182
Current tax payable	94,377	53,272
	127,637	92,594
Total equity and liabilities	446,602	387,758

3. Operational Update

Contract Status – Current Backlog USD 550 million*

Operational Performance

Very good operational performance in Q3 with 99.6 % operational uptime
Successful start-up with new customer Apache (Marathon Oil)
Continued positive customer feedback
Opex in Q3 slightly lower than guidance
Continued Yard Stay projects planning and preparations
Announcement of dividend payable in Q4 of USD 1.15 per share
Dividend payable on or around the 19th December 2014
Share will trade ex-dividend on 18th November 2014, the record date will be 19th November
Future quarterly dividend payments will be in line with the Company's intent of distributing all free cash flow above a robust cash buffer to support operational working capital requirements and planned capital expenditure including SPS

Assumptions for 2015

Opex expected to be approximately USD 100,000 per day
SG&A expected to be approximately USD 3 million per quarter
Total Capex expected to be around USD 60 million (full year, both rigs)
BOP commitments USD 25 million
Routine Capex USD 20 million
Special Periodic Survey USD 15 million

4. Market Outlook

Low Contracting Activity in the Quarter

Shorter Contracts and Lead Times Anticipated in the UK Market

UK FLOATER MARKET
CONTRACT STATUS
								2015					2016
Company	Rig name	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
	J.W.McLean
	GSF Arctic III	yard
	Sedco 704	on contract
	Sedco 712	on contract
Transocean	Sedco 714	on contract													options
	Transocean John Shaw	on contract
	Sedco 711	on contract
	Transocean Prospect	on contract
	Paul B. Loyd, Jr	on contract
	Transocean Leader						on contract
	Ocean Nomad	on contract
	Ocean Princess	on contract
Diamond Offshore	Ocean Guardian	on contract
	Ocean Patriot	on contract
	Ocean Vanguard
	Byford Dolphin	en route														options
	Bollsta Dolphin										en route		on contract
Dolphin Drilling	Blackford Dolphin	on contract
	Borgny Dolphin
	WilHunter	on contract										yard			option
Awilco Drilling	WilPhoenix	on contract														yard
Stena Drilling	Stena Spey					on contract
Noble Drilling	Paragon MSS1	on contract							options
Seadrill	West Phoenix	on contract
Odfjell	Deepsea Aberdeen			en route		on contract
Odfjell	Songa Dee	on contract
			EN ROUTE		YARD			MOVING		WARM STACKED				COLD STACKED

UK Market Anticipated to Return to Higher Activity Levels 2016/2017

Increased operator financial discipline anticipated to lead to upturn in global investments longer term
Seasonal rig availability expected and potentially beyond
UK Government has set out a new vision to maximise the recovery of hydrocarbon reserves
Major Operators continuing to undertake exploration and appraisal drilling, development drilling, and well decommissioning activity throughout the North Sea
Independent Operators continuing to exploit marginal fields
UK market has barriers to entry

5. Summary

Announcement of dividend payable in Q4 of USD 1.15
Revenue efficiency during Q3 was 99.3 %, continued focus on operational efficiency
Solid current contract backlog of USD 550 million, with 100 % contract coverage through 2015
Long term rig demand fundamentals remain positive
Evaluating growth opportunities on a case-by-case basis

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