Borr Drilling — Investor Presentation 2019

Feb 28, 2019

Borr Drilling Limited Company presentation Q4 2018 Results 28 February 2019

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This presentation (the "Presentation") has been prepared by Borr Drilling Limited (the "Company") and sets forth general background information about the Company's activities current as at the date hereof. 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 transactions in securities and financial product or instrument involve risks, such risks include (among others) the risk of adverse or unanticipated market, financial or political developments and, in international transactions, currency risk.

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Highlights

• Operating revenues of US\$53.5 million, EBITDA of negative US\$18.7 million and net loss of US\$110.7 million for the fourth quarter of 2018
• Operating revenues of US\$164.9 million, EBITDA of negative US\$65.8 million and net loss of US\$190.9 million for the year ended December 31, 2018
• Added total backlog of 108 months in the fourth quarter of 2018 with estimated total revenue of US\$257 million
• Technical utilisation for the operating rigs was 99.6% in the fourth quarter of 2018
• Took delivery of the premium jack-up rig "Natt" in October 2018 from PPL Shipyard
• Realised US\$16.1 million in cash proceeds from sale of forward contracts in a listed offshore drilling company and recorded a mark to market loss on existing position of US\$32.2 million in the fourth quarter of 2018. The market value of the securities portfolio has increased by US\$15 million since the balance sheet date
• Secured US\$160 million revolving credit and guarantee facility in the first quarter 2019

The Comany uses certain financial information calculated on a basis other than in accordance with accounting principles generally accepted in the United States (US GAAP) including EBITDA. EBITDA as used herein represent net loss less: depreciation and impairment of non-current assets, amortisation of contract backlog, net financials, gain from bargain purchase and income tax expense. EBITDA is included as a supplemental disclosure because the Company believes that the measure provides useful information regarding the Company's operational performance.

Key Financials Q4 2018

Income Statement

USDm	FY 2018	Q4 2018	Q3 2018
Operating revenues	164.9	53.5	49.7
Gain on disposals	18.8	1.3	-
Rig operating and maintenance expenses	(180.1)	(59.5)	(45.7)
Depreciation and impairments	(79.5)	(23.8)	(21.5)
Amortisation of contract backlog	(24.2)	(8.5)	(9.7)
G&A	(38.7)	(10.8)	(9.7)
Restructuring costs	(30.7)	(3.2)	(4.6)
Total operating expenses	(353.2)	(105.8)	(91.2)
Operating loss	(169.5)	(51.0)	(41.5)
Net financial items	(57.0)	(59.2)	4.5
Gain from bargain purchase	38.1	-	-
Loss before tax	(188.4)	(110.2)	(37.0)
Tax	(2.5)	(0.5)	(2.0)
Net (loss) attributable to non-contr. interests	(0.4)	(0.2)	0.1
Net loss for the period attributable to shareholders of Borr Drilling Limited	(190.5)	(110.5)	(39.1)
Basic loss per share (\$/share)	(0.371)	(0.210)	(0.073)

Comments Q4 2018

• Revenues: on average 8.6 operating rigs in the fourth quarter. Mist and Prospector 1 entered operation in the quarter.
• Rig operating and maintenance expenses affected by certain one offs in Q4:
• US\$4.6 million release of tax accrual in Q3 not repeated in Q4.
• incremental costs related to software licenses of US\$2.2 million
• higher operating expenses related to the contract preparation, mobilisation and start-up of operations for the "Mist" in the fourth quarter 2018
• Net financial items includes:
• mark-to-market loss on forward contracts of US\$32.2 million
• mark-to-market loss on the Call Spread derivative related to the convertible bonds of US\$16.9 million
• gross interest expense of US\$14.8 million, offset by capitalised interest of US\$6.3 million.
• Based on signed contracts, the Company expects positive cash from operations from end Q2 2019

Key Financials Q4 2018

Balance Sheet Key Numbers

USDm	Q4 2018	Q3 2018	Q4 2017
Total assets		2,913.7 2,790.5 1,672.3
Total liabilities		1,380.2 1,138.5	179.4
Total equity		1,533.5 1,652.0 1,492.9
Cash and cash equivalents	27.9	40.6	164.0
Restricted cash	63.4	21.2	39.1

Movements from Q3 2018

• Total assets increased by US\$123.2 primarily due to
• delivery of the newbuilding "Natt",
• capital expenditures from the activation of the "Gerd" and "Groa" and the reactivation of "Odin" and "Ran".
• Total liabilities increased by US\$241.7 million, mainly attributable to
• US\$87.0 million in long-term debt related to the delivery financing for the newbuilding "Natt",
• US\$100.0 million drawdown on the revolving credit facility with DNB
• US\$ 35.1 million liability related to unrealised loss on forward contracts
• increase in accrued expenses and other current liabilities.
• Total available free liquidity at the end of the fourth quarter was US\$97.9 million, incl. undrawn amounts under the revolving credit facility of US\$70 million. This compares to US\$210.6 million in Q3 2018.

Fleet Status Report February 2019

Fleet Summary

		Operating / Committed	Available	Cold Stack	Under Construction
Premium Jack-Ups	29	9	10	2	8
Standard Jack-Ups	6	4		2
Total Jack-Ups	35
Semi - Submersible	1	1
Total Fleet	36	14	10	4	8

	Contractual Developments		Other Fleet Updates
o Gerd:	Firm contract for 2yr program starting in March 19	o Gerd:	Activation completed successfully and rig undergoing
o Groa:	Firm contract for 2yr program starting in April 19		preparations to commence contract
o Natt:	Firm contract for 2yr program starting in March 19
o Mist:	Firm contract for ~4 months starting in Nov 18	o Natt:	Activation completed successfully and rig in transit to Nigeria
o Norve:	Firm contract for ~11 months program starting in late June 19	o Odin:	Activation completed successfully and in transit to Mexico
o C20051:	Exercised 2 optional wells (~60 days)
o MSS1:	Secured ~60 days extension	o Njord:	Took delivery from yard
o P5:	Secured LOI for ~180 days program starting in April 19
o Frigg:	Secured 10 months extension
o Odin:	Firm contract for ~9 months program starting in March 19

Fleet Update

Contracted and Future Contracted Rigs (14)

	Location	2018				2019				2020		2021
Rig Name		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
							Premium Jack-Ups
Odin	In Transit / Mexico						Mobilization PanAmerican
Frigg 1	Nigeria	Total				Total		Shell (via Assignment)	Option
Prospector 1 1	Netherlands					Tulip
Prospector 5 1	United Kingdom / Netherlands			Nexen			LOI - Undisclosed
Gerd	Nigeria	Un der			Mobilization		Exxon									2 x 1 Year Optional Period
Groa	Singapore / Nigeria				Activation & Mobilization		Exxon									2 x 1 Year Optional Period
Ran 1	Netherlands / United Kingdom				Activation & Mobilization		Spirit Energy
Norve	Gabon / Cameron	BW Energy Dussafu			Perenco			Available - Warm Stacked BW Energy Dussafu
Natt	In Transit / Nigeria				Mobilization		First E&P								1 Year Optional Period
							Standard Jack-Ups
C20051	Netherlands		Perenco		Total
Dhabi II	United Arab Emirates	NDC (ADOC)
B152	United Arab Emirates	NDC (ADOC)
B391	United Kingdom		Spirit Energy								Up to 13 option wells (425 days)
							Semi-Submersible
MSS1	United Kingdom	TAQA								Up to 5 option wells (375 days)
			Contract				Option				Available				Under Construction

Fleet Update continued

Available (10), Under Construction (8) and Cold Stacked (4)

	Location		2018	2019				2020		2021
Rig Name		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
							Premium Jack-Ups
Galar	Singapore	Available - Warm Stacked
Gersemi	Singapore	Available - Warm Stacked
Grid	Singapore	Available - Warm Stacked
Gunnlod	Singapore	Available - Warm Stacked
Gyme	Singapore	Available - Warm Stacked
Idun	Singapore	Available - Warm Stacked
Saga	Singapore	Available - Warm Stacked
Skald	Singapore	Available - Warm Stacked
Njord	Singapore	Available - Warm Stacked
Mist	Singapore							Kris Energy Available - Warm Stacked
								Jack-Ups Under Construction
Hild	KFELS shipyard, Singapore	Rig Delivery in October - 2019
Heimdal	KFELS shipyard, Singapore	Rig Delivery in January - 2020
Hermod	KFELS shipyard, Singapore	Rig Delivery in April - 2020
Huldra	KFELS shipyard, Singapore	Rig Delivery in July - 2020
Tivar	KFELS shipyard, Singapore	Rig Delivery in July - 2020
Heidrun	KFELS shipyard, Singapore	Rig Delivery in October - 2020
Vale	KFELS shipyard, Singapore	Rig Delivery in October - 2020
Var	KFELS shipyard, Singapore	Rig Delivery in December - 2020
							Cold Stacked Jack-Ups
Atla	United Arab Emirates
Balder	Cameron
Baug 1	United Kingdom	Not Marketed
Eir 1	United Kingdom	Not Marketed
		Contract					Option				Available				Under Construction
1 HD/HE Capability

Market Update

Why modern assets?

Large part of the fleet is old - Old rigs are not qualified for key tenders

Delivered Newbuilds

"Modern rigs are 15-25% more efficient than standard rigs"

Marketed Utilization and Fleet Size in key jack-up markets

Source: IHS Petrodata Modern rigs = built between 2000 or after Includes Independent Leg Cantilever units only

Offshore spending is recovering

155,590	Total capex 140,250	11%
27,500	Shell 25,000	10%
20,000	20,100 Cheveron	0%
30,000	26,000 Exxon	15%
11,050	CNOOC 9,700	14%
305	335 Cairn	$-9%$
1,650	Woodside 1,500	10%
2,250	Aker BP 1,800	25%
475	Talos 440	8%
570	Tullow 425	34%
2,700	Husky 2,180	24%
1,840	PTTEP 1,300	42%
10,400	8,200 Pemex	27%
6,100	Conoco Philips 6,100	0%
2,900	2,100 Hess	38%
13,550	Petrobras 14,200	$-5%$
3,750	EcoPetrol 3,000	25%
16,000	Rosneft 13,600	18%
550	300 Kosmos	83%
4,000	Anadarko 3,970	1%
2019e	2018 Company	Change

"In the international markets… this means that after four years of underinvestment and focus on maximizing short-term cash flow, the NOCs and independents are starting to see the need to invest in their resource base simply to maintain production at current levels." Schlumberger CEO, Paal Kibsgaard at Q4 report

Capex increases have started Oil Companies under estimate capex growth

"There is a tremendous amount of growth required in a depletion business just to stand still"

Exxon CEO, Darren Woods in Economist Feb 2019

Jack up tenders at highs 25 35 45 55 65 75 85 95 01/2010 01/2011 01/2012 01/2013 01/2014 01/2015 01/2016 01/2017 01/2018 Day-rate improving 25 75 125 175 225 275 06/2000 06/2002 06/2004 06/2006 06/2008 06/2010 06/2012 06/2014 06/2016 06/2018 # jack-up tenders Dayrate USDk/day Jan 18 – Dayrates USD50k – share price NOK35 Jan 19 – Dayrates USD100k – share price NOK23

Tender activity is normalising and day rates are moving

Soruce: Fearnley, Borr Drilling

Market can be "sold out" in 2019

Incremental demand in 2019 set to outstrip available rigs

Source: Borr Drilling

Jack-up dayrates gone from USD60k/day to >USD100k/day last year

New bank financing secured – received term sheet for long-term solution

Borr Drilling will based on current contracts be cash-flow positive from end of Q2

Contracting environment positive