Awilco Drilling PLC

Investor Presentation • Aug 13, 2014

Q2 2014 Presentation

August 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. Q2 2014 Financial Results
• 1. Operational Update
• 1. Market Outlook
• 1. Summary
• 1. Q&A

1. Highlights

• Announcement of USD 1.15 dividend
• Total Q2 Revenue USD 66.3 million; EBITDA USD 42.4 million
• Q2 Opex per rig approx. USD 94,600 per day
• Total contract backlog at end of Q2 was USD 642 million
• Revenue efficiency during Q2 was 99.7%

2. Q2 2014 Financial Results

Q2 2014 Income Statement

Condensed statement of comprehensive income

in USD thousands, except earnings per share		YTD		YTD
	Q2 2014	30.06.14	Q2 2013	30.06.13
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Contract revenue	65,075	127,286	58,698	110,990
Reimbursables	1,189	1,692	794	1,854
Other revenue	41	74	19	24
	66,305	129,052	59,511	112,868
Rig operating expenses	17,212	31,634	13,190	26,740
Reimbursables	373	568	263	763
General and administrative expenses	6,010	10,045	5,533	10,913
Other expense	269	281	1,900	1,900
Depreciation	4,462	8,862	4,398	8,789
	28,326	51,390	25,284	49,105
Operating profit	37,979	77,662	34,227	63,764
Interest income	17	56	46	62
Interest expense	(4,847)	(7,336)	(2,365)	(4,788)
Other financial items	-	-	57	(59)
Net financial items	(4,830)	(7,280)	(2,262)	(4,785)
Profit before tax	33,149	70,382	31,965	58,979
Tax (expense)	(7,224)	(9,976)	(2,596)	(4,896)
Net profit	25,925	60,406	29,369	54,083
Other comprehensive income	-	-	-
Total comprehensive income	25,925	60,406	29,369	54,083
Attributable to minority interests	-	-	-
Attributable to shareholders of the parent	25,926	60,406	29,369	54,083
Basic and diluted earnings per share	0.86	2.01	0.98	1.80

Q2 2014 Balance Sheet

Condensed statement of financial position

in USD thousands

	30.06.2014	31.12.2013
	(unaudited)	(audited)
Rigs, machinery and equipment	252,796	245,279
Deferred tax asset	3,363	2,763
	256,159	248,042
Trade and other receivables	35,852	14,417
Prepayments and accrued revenue	24,047	25,835
Inventory	4,800	4,800
Cash and cash equivalents	44,684	52,347
Current tax	55,368	42,317
	164,751	139,716
Total assets	420,910	387,758
Paid in capital	130,142	130,142
Retained earnings	70,205	77,370
	200,347	207,512
Deferred tax liability	554	554
Long-term interest-bearing debt	115,000	87,098
	115,554	87,652
Current portion of long-term debt	10,000	11,000
Trade and other creditors	3,159	3,140
Accruals and provisions	26,867	25,182
Current tax payable	64,983	53,272
	105,009	92,594
Total equity and liabilities	420,910	387,758

3. Operational Update

Contract Status – Current Backlog USD 616 million*

CONTRACT STATUS
			2014			2015
	Aug	Sept	Oct	Nov	Dec	Jan	Feb	March	April	May	June	July	Aug	Sept	Oct	Nov	Dec
WILHUNTER :
Hess							\$385,000										Yard
WILPHOENIX:
Premier Oil
Apache					\$387,500

							2016
	Jan	Feb	March	April	May	June	July	Aug	Sept	Oct	Nov	Dec
WILHUNTER :
Hess				Max 275 days option
WILPHOENIX:
Apache					Yard					Firm until 2H2017 + 27 months options

*as of 12 August 2014

Operational Performance

• Very good operational performance in Q2 with 99.5% operational uptime
• Continued positive customer feedback
• Opex in Q2 in line with 2014 guidance
• Social tax for offshore crew payable effective from 1 April 2014
• Good progress of planned maintenance projects

• Planning for Yard Stay Projects ongoing

• Announcement of dividend payable in Q3 of USD 1.15 per share

• Dividend payable on or around the 19th September 2014
• Share will trade ex-dividend on 19th August 2014, the record date will be 21st August
• 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

4. Market Outlook

Attractive UK Dayrates, but 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	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
	J.W.McLean
	GSF Arctic III		on contract warm stck				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
	Ocean Nomad	on contract															options
	Ocean Princess	on contract
Diamond Offshore	Ocean Guardian	on contract													options
	Ocean Patriot	yard			on contract
	Ocean Vanguard
	Byford Dolphin	on contract																					options
	Bollsta Dolphin															en route			on contract
Dolphin Drilling	Blackford Dolphin	on contract
	Borgny Dolphin		en routewstckyard
	WilHunter	on contract																yard			option
Awilco Drilling	WilPhoenix	on contract																		yard
Stena Drilling	Stena Spey	on contract
Paragon Drilling	Paragon MSS1	on contract											options
Seadrill	West Phoenix	on contract
Odfjell	Deepsea Aberdeen				en route				on contract
				OPTIONS				EN ROUTE		YARD			MOVING				WARM STACKED				COLD STACKED

UK Market Anticipated to Return to Higher Activity Levels in 2016

• Sustained "high" oil price and increased operator financial discipline anticipated to increase global operator investments from 2016 onwards
• Potential for short term seasonal rig availability
• 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 Q3 of USD 1.15
• Revenue efficiency during Q2 was 99.7%, continued focus on operational efficiency
• Solid current contract backlog of USD 616 million, with 100 % contract coverage through 2015
• Long term rig demand fundamentals remain positive
• Evaluating growth opportunities on a case-by-case basis

Q&A