Borr Drilling — Investor Presentation 2017

Oct 6, 2017

Content Content World's leading premium jack-up player in the making 6 October 2017 - Acquiring nine premium jack-up newbuilds from PPL

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This presentation has been prepared by representatives of Borr Drilling Limited (the "Company") and is general background information about the Company's activities current as at the date of this presentation. Information in this presentation, including forecast financial information, should not be considered as advice or a recommendation to investors or potential investors in relation to holding, purchasing or selling securities or other financial products or instruments and does not take into account your particular investment objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information having regard to these matters, any relevant offer document and in particular, you should seek independent financial advice. All securities and financial product or instrument transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or political developments and, in international transactions, currency risk.

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The deal

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Acquiring nine premium¹ jack-ups at USD139.5m per rig

Proven design² & drilling packages

Uniform fleet of premium jack-ups

Scalable crew training and logistics

Optimise inventories and supply chain

Premium drilling packages from strategic partner³

Three rigs are Mexico compliant

Source: DNB Markets, IHS Petrodata

1: "Premium jack-ups" defined as rigs built after 2000, earlier built rigs defined as "standard jack-ups"

2: 11 premium jack-ups delivered from yard

3: Seven out of nine rigs have drilling packages from Cameron (a Schlumberger company); all nine rigs have BOPs from Cameron

Yard transaction terms

 Numbers in USDm construction Equity capital to be raised 650 - implying avg. cost per rig of USD139.5m Take-out financing secured 753 - formal closing procedures Total capital raised 1,403  payment of USD502m to PPL - Cash payment to PPL 502  Cash available for newbuilds 901 - - USD753m available under the facility  Newbuild commitments 2017e –2020e 753	Sources and uses	Signed master agreement with PPL
		Signed a master agreement with PPL for the acquisition of nine premium jack-up rigs, six of which have been completed and three which are under
		Total consideration for the transaction is expected to be USD1,256m,
		The transaction is subject to equity financing and the satisfaction of
		Upon closing of the transaction Borr has agreed to make an up-front
		The remaining amounts are payable upon delivery of each individual rig
		Borr has secured take-out financing for all remaining payments to the yard The financing is non-amortising with 5-year tenor at attractive terms1
		Staggered delivery schedule, with delivery of the first of the nine rigs in Q4 2017, and the last of the nine rigs expected to be delivered in Q1 2019
Working capital/excess cash 148

Favourable forward delivery with rigs delivered as market picks up

1: The lender is entitled to 25% of the increase in the market value of the relevant PPL rig from mid-October 2017 until the repayment date less the cost of equity and financing with respect to the rig. No fee is expected to be paid to seller unless the rig value exceeds USD190m after 5 years.

Building a world leading drilling contractor

1: Excl. four standard jack-up rigs from the Transocean transaction

The company

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A bombed out industry

Source: DNB Markets, Bloomberg 1: Peer group includes large US listed drillers: ATW, DO, ESV, NE, RDC, RIG, SDRL; net debt is adjusted for market value

You need to drill to get oil

Disproportionate number of rigs needed to grow production¹ Activity needs to increase fourfold to meet demand

Content Content Active jack-up rig count by country (top 20) Country 2010 2014 Today Saudi Arabia 22 46 43 India 26 31 33 United Arab Emirates ^{14 24 31} China 30 29 29 Mexico 26 45 27 Iran 15 27 17 United Kingdom 11 17 15 Egypt 17 14 13 Qatar 17 14 11 Norway 7 9 8 Thailand 4 11 7 United States 38 31 9 Vietnam 12 18 10 Ukraine 2 5 5 Malaysia 8 14 10 Denmark 4 5 4 Turkmenistan 3 3 4 Netherlands 8 7 4 Trinidad and Tobago 2 3 3 Venezuela 3 2 3 0 1,000 3,000 4,000 2,000 2014 Kbbl/d 2010 2017 2,922 3,520 3,761 +29% 500 1,500 0 1,000 2,000 2010 2014 Kbbl/d 2017 1,408 1,480 1,701 +21% 2,195 2,125 1,834 0 500 1,000 1,500 2,000 2,500 2014 2017 Kbbl/d 2010 -16% 3.2 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Billion barrels of liquid resources Saudi Arabia United Arab Emirates Mexico

Source: DNB Markets, IHS Petrodata, Clarksons Platou Securities AS, Rystad Energy

1: Liquids only

Footer Footer 2: Forecasted offshore production requires that "call on offshore" is met

If history repeats itself, more newbuildings will be needed

Source: DNB Markets, IHS Petrodata, Fearnley Securities

1: Reputable yards, having successfully delivered jack-ups for western contractors that have worked in the international market

Utilisation has historically recovered quickly from the bottom

Offshore driller utilisation versus E&P spending growth

E&P spending expected to grow 9% annually into 2019

Source: SEB

Activity already recovering sharply

Outstanding jack-up rig-years, pre-tender and tenders

Source: DNB Markets, IHS Petrodata

Best assets acquired at rock-bottom prices

Source: DNB Markets, IHS Petrodata 1: Jack-ups built after 2000; listed owners only; Seadrill excl. Chinese newbuilds and non-consolidated entities

Best balance sheet – lowest cost

Source: DNB Markets, Bloomberg

1: NIBD based on Q2 2017 net interest bearing debt plus present value of remaining capex; Borr is post yard transaction and subsequent capital raise

Footer Footer 2: Avg. per day jack-up operating cost for peers are DNB Markets' estimate for working jack-ups based on reported P&L segment data including G&A cost, and assumptions include among others USD 7k/day for stacked/idle jack-ups for peers

Proven track record – strong industrial partner

Sponsor and key partner ownership of ~USD530m¹

1: Expected post yard transaction and subsequent capital raise

Jack-ups are good business

Key assumptions - 22 premium jack-ups in operation EV / EBITDA³& FCFE yield

		Current market day	Avg. cash break-even	Avg. historical	Avg. historical	Last 10 year			EV/EBITDA (x)		FCFE yield (Pct.)
Dayrate scenario		rate	for peers	10yrs	5yrs	peak	19	18.4				76%	80%
Historical day rates	USD/d	70,000	102,000	145,000	150,000	250,000	7		7.1
Earnings utilisation	Pct.	98 %	98 %	98 %	98 %	98 %
							6						60%
Opex & G&A1	"	49,000	49,000	49,000	49,000	49,000
							5
Number of rigs		22	22	22	22	22				3.9
							4			34%	3.7		40%
P&L
Revenue	USDm	551	803	1,141	1,180	1,967	3				36%
Opex	"	-369	-369	-369	-369	-369			17%
G&A	"	-24	-24	-24	-24	-24	2					1.8	20%
EBITDA	"	157	409	748	787	1,574
Interest2	"	-49	-49	-49	-49	-49	1	5%
Tax2	"	-22	-32	-46	-47	-79
Amortization2	"	0.0	0.0	0.0	0.0	0.0	0	Current market	Avg. cash	Avg. historical	Avg. historical	Last 10	0%
Free cash flow	"	86	328	653	691	1,446			break-even	10yrs	5yrs	year peak

Generating positive cash flow already at current depressed dayrates Cash-burn from the PPL transaction assuming no rigs working: USD48m per year⁴

Source: DNB Markets

1: Illustrative - Assuming opex and G&A 25-30% below peers, using mid-range

Footer Footer 2: Assumed total debt of USD 1.0bn at LIBOR+350bps with no amortization; tax assumed at 4% of revenue

3: Estimated fully invested enterprise value post transaction of USD 2.9bn

4: Assuming stacking cost for nine PPL rigs of USD 3,500 per rig per day, and additional debt of USD 753m at LIBOR+350bps with no amortization

Significant upside potential from investing at cycle trough

Change in price for drillers from cycle trough to next peak¹

Significant upside in current pricing to avg. cycle price increase

Source: DNB Markets, Bloomberg, FactSet

Footer Footer 1: Cycles periods based on drilling peers price index trough and to next peak: 1980s – 1986 to 1990, 1990s –1992 to 1997, 2000s – 2002 to 2008

Appendix

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Why Borr prefers premium jack-ups ahead of floaters

Source: DNB Markets, IHS Petrodata, Wood Mackenzie

Footer Footer 1: Cost of supply: 75% break-even price confidence interval for each category; break-even price as defined by the E&P companies as the oil price needed to make 10 % IRR 2: Avg. monthly increase in number of contracted rigs from where the jack-up cycle bottomed out

Premium jack-ups are a better investment than standard jack-ups

55 85 0 75 95 65 Avg. total utilisation (Pct.) 5 years 6 months Current 71% 79% 55% 2 years 73% 66% 51% From YE2000 3 years 91% 51% 86% 69% 61% 78% Standard Premium

Premium jack-ups have higher utilisation

Rig		Baug	USDk/d	Premium jack-ups
Design		KFELS Mod V	80	70
Build		1991
Current Status		Cold Stacked, UK	60
Est. reactivation assumptions			40	46
G&A Costs	USDm	8.2

Est. total project cost	"	40.2
Drilling equipment & BOP	"	14.3
Hull & machinery	"	12.0
Audits (ready to drill remedials)	"	0.7
Accommodation	"	5.1

Estimated cost of ~USD40m to reactivate an old rig Premium rigs have cash flow advantage over standard rigs¹

Source: DNB Markets, IHS Petrodata

Footer Footer 1: Assuming standard jack-ups have 35% discount on dayrate to premium jack-ups; premium jack-ups - dayrate USD 70k/d, opex USD 46k/day, capex USD 5m per 5 year survey; standard jack-ups - dayrate USD 45k/d, opex USD 40k/day, capex USD 40m per 5 year survey

Pricing power increasing

Historical jack-up margin and utilisation

Source: DNB Markets, IHS Petrodata

Footer Footer 1: Premium jack-ups working calculation: current contracted premium jack-ups, plus 67% (portion of jack-up fixtures done by premium jack-ups LTM) multiplied by 36 month rig count increase from trough (avg. of downturns 1987, 1999, and 2011), plus 67% multiplied by standard jack-ups working today but idle at SPS date next 36 months

Premium and modern fleet

						2017			2018		2019
Country	Oil Company	Delivered	Design	Water depth	Name	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
UAE		2003	F&G JU-2000	400	Atla
Cameroon		2004	F&G JU-2000	400	Balder
Gabon	BW Energy	2011	PPL Pacific Class 400	400	Norve
Nigeria	Total1	2013	KFELS Super A	400	Frigg2
Netherlands		2013	KFELS Super A	400	Ran2
Singapore		2013	KFELS Super B	350	Idun
Thailand	BBC to RIG	2013	KFELS Super B	350	Mist
Thailand	BBC to RIG	2013	KFELS Super B	350	Odin
Singapore		2017	PPL Pacific Class 400	400	Rig TBN 1
Singapore		2018	KFELS Super B	400	Saga
Singapore		2018	PPL Pacific Class 400	400	Rig TBN 2
Singapore		2018	PPL Pacific Class 400	400	Rig TBN 3
Singapore		2018	PPL Pacific Class 400	400	Rig TBN 4
Singapore		2018	PPL Pacific Class 400	400	Rig TBN 5
Singapore		2018	KFELS Super B	400	Skald
Singapore		2018	PPL Pacific Class 400	400	Rig TBN 6
Singapore		2018	PPL Pacific Class 400	400	Rig TBN 7
Singapore		2018	PPL Pacific Class 400	400	Rig TBN 8
Singapore		2019	PPL Pacific Class 400	400	Rig TBN 9
Singapore		2019	KFELS Super B	400	Tivar
Singapore		2020	KFELS Super B	400	Vale
Singapore		2020	KFELS Super B	400	Var
Country	Oil Company	Delivered	Design	Water depth	Name	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
UK		1986	F&G L-780 Mod V	361	Fonn2
UK		1991	F&G Universe	394	Baug2
UK		1998 1999	F&G Universe F&G Universe	394 394	Brage2 Eir2

Fleet composition

Source: DNB Markets, IHS Petrodata

1: Signed letter of commitment; the drilling contract is currently being negotiated

2: HD/HE capable

Key events since inception