Awilco Drilling PLC

Investor Presentation • Feb 11, 2016

Q4 2015 Presentation

Oslo, 11th of February 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.

• 1. Highlights
• 1. Q4 2015 and Preliminary Full Year 2015 Financial Results
• 1. Operational Update
• 1. Market Outlook
• 1. Summary
• 1. Q&A

1. Highlights

• Announcement of USD 0.25 dividend
• Total Q4 Revenue USD 19.1 million; EBITDA USD 3.7 million, net loss of USD 32.9 million after an impairment charge of USD 30 million
• Q4 Opex per rig approx. USD 69,600 per day
• Total contract backlog at end of Q4 was USD 258 million
• Revenue efficiency whilst operational during Q4 was 97.7%
• Contract utilisation during Q4 including unpaid shipyard time was 50.0 % and 26.1 % excluding unpaid shipyard time

2. Q4 2015 and Preliminary Full Year 2015 Financial Results

Q4 2015 Income Statement

Condensed statement of comprehensive income

in USD thousands, except earnings per share		Full Year
	Q4 2015	Full Year 2015	Q4 2014	2014
	(unaudited)	(unaudited)	(unaudited)	(audited)
Contract revenue	18,946	193,949	70,116	271,971
Reimbursables	181	1,711	699	3,969
Other revenue	15	51,385	55	198
	19,142	247,045	70,870	276,138
Rig operating expenses	12,797	57,632	15,687	64,178
Reimbursables	64	645	283	1,157
General and administrative expenses	2,597	8,578	2,134	15,706
Other (income)	-	-	(2,485)	(2,485)
Other expense	-	-	382	180
Depreciation	4,427	18,008	4,542	17,912
Impairment	30,000	30,000	-	-
	49,885	114,863	20,543	96,648
Operating (loss)/profit	(30,743)	132,182	50,326	179,490
Interest income	20	130	46	161
Interest expense	(1,979)	(8,349)	(2,221)	(11,861)
Other financial items	(235)	(445)	-
Net financial items	(2,194)	(8,664)	(2,175)	(11,700)
(Loss)/profit before tax	(32,937)	123,518	48,151	167,790
Tax benefit/(expense)	26	(24,171)	(9,215)	(30,306)
Net (loss)/profit	(32,911)	99,347	38,935	137,484
Total comprehensive (loss)/income	(32,911)	99,347	38,935	137,484
Attributable to shareholders of the parent	(32,911)	99,347	38,935	137,484
Basic and diluted earnings per share	(1.10)	3.31	1.30	4.58

Q4 2015 Balance Sheet

Condensed statement of financial position

in USD thousands

	31.12.2015	31.12.2014
	(unaudited)	(audited)
Rigs, machinery and equipment	234,336	251,165
Deferred tax asset	903	2,486
	235,239	253,651
Trade and other receivables	7,352	12,116
Prepayments and accrued revenue	2,682	28,938
Inventory	5,015	4,800
Cash and cash equivalents	135,257	75,951
Current tax	68,899	82,594
	219,205	204,399
Total assets	454,444	458,050
Paid in capital	130,142	130,142
Retained earnings	102,479	78,211
	232,621	208,353
Deferred tax liability	7,517	0
Long-term interest-bearing debt	100,000	110,000
	107,517	110,000
Current portion of long-term debt	10,000	10,000
Trade and other creditors	5,990	3,233
Accruals and provisions	17,702	17,942
Current tax payable	80,614	108,522
	114,306	139,697
Total equity and liabilities	454,444	458,050

3. Operational Update

Contract Status – Current Backlog USD 258 million*

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

Operational Performance Remains Good

• Operational performance in Q4 was 97.9 %
• Only WilPhoenix operational and only half of the quarter
• Opex in Q4 below guidance
• Some WilHunter crew used on the WilPhoenix yard stay project reducing opex
• Savings on WilHunter opex due to hot stacking mode
• Favourable foreign exchange rates
• Successful drilling discoveries "lucky rig"

SPS Yard Stay Projects

• WilPhoenix demobilised from location on 17th November, arrived at the yard on 24th November 2015
• Yard work scope substantially complete, final project acceptance remaining
• Total yard stay cost below the budget of USD 42.5 million

Main Workscope Completed during the Yard Stay

• DNV undertaken Hull and Machinery Inspection
• No significant findings
• Certified for 5 further years of operations
• Installed new 5 ram 15,000 psi Blow Out Preventer (BOP) and new BOP control system
• Upgraded Normar Carrier
• Renewed and upgraded the Choke and Kill Mainfold – High pressure, high temperature (HP/HT) capable
• Installed new Air Compressors
• Replaced Vent Lines

• Overhauled all major Drilling Equipment

• Announcement of dividend payable of USD 0.25 per share

• Dividend payable on or around the 18th March 2016
• Share will trade ex-dividend on 23rd February 2016, the record date will be 24th 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."

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

4. Market Outlook

Limited Contract Opportunities and Decreasing UK Dayrates…

…Results in Increased Rig Surplus in 2016

UK FLOATER MARKET
CONTRACT STATUS
		2016							2017
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	Transocean Prospect
	Sedco 711
	Transocean John Shaw		wrm stckd
	Sedco 714
	Sedco 704		on contract
	Sedco 712		on contract
	Paul B. Loyd, Jr		on contract																options
	Transocean Leader		on contract
	Ocean Nomad
	Ocean Princess
Diamond	Ocean Vanguard
Offshore	Ocean Guardian	warm on contract
	Ocean Valiant			options
	Ocean Patriot		on contract																					options
	Borgny Dolphin
Dolphin Drilling	Byford Dolphin		on contract
	Blackford Dolphin		on contract												options
Awilco Drilling	WilHunter		wrm stckd yard
	WilPhoenix	yard			on contract
Stena Drilling	Stena Spey		on contract
Paragon Drilling	Paragon MSS1		yard
Seadrill	West Phoenix		wrm stckd		on contract
Odfjell	Deepsea Aberdeen		on contract
	Deepsea Stavanger		warm stacked							warm stacked
ON CONTRACT EN ROUTE WARM STACKED COLD STACKED YARD

Market Recovery seems to be Pushed even Further Out in Time

• Due to continued low oil price, operators have reduced 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 0.25
• Yard stay for WilPhoenix taking longer than expected but expected to be completed below budgeted cost
• Contract backlog of USD 258 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