Dolphin Drilling AS — Investor Presentation 2017

Sep 13, 2017

Pareto Oil and Offshore Conference 2017

CEO Ivar Brandvold

Disclaimer

This presentation has been produced by Fred. Olsen Energy ASA (the "Company") based on information which is publicly available. This presentation is for information purposes only. Further to the aforementioned, this presentation is the result of an effort of the Company to present certain information which the Company has deemed relevant in an accessible format. The presentation is not intended to contain an exhaustive overview of the Company's present or future financial condition and there are several other facts and circumstances relevant to the Company and its present and future financial condition that has not been included in the this presentation. No representation or warranty (express or implied) is made or intended to be made as to the accuracy or completeness of any or all of the information contained herein and it should not be relied upon as such. The recipient of this presentation acknowledges that it will be solely responsible for its own assessment of the information.

This presentation contains forward-looking statements. Such forward-looking statements give the Company's current expectations and projections relating to its financial condition, the market in which it operates and the future performance of the Company. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the Company's actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which it will operate in the future.

Neither the Company's nor any of its affiliates (nor any department in any of those entities), nor any such person's directors, officers, employees, advisors or representatives (collectively the "Representatives"), in any capacity, shall have any liability whatsoever arising directly or indirectly from the use of this presentation, including (but not limited to) as a result of any liability for errors, inaccuracies, omissions or misleading statements in this presentation.

AGENDA

THE COMPANY

THE MARKET

SUMMARY

Setting the scene

The market

• Continued growth in energy and oil demand
• The oil and gas downturn has bottomed out, with increased E&P spending in 2017 vs 2014-2016
• The requirement for offshore drilling units is materializing later in the upturn

• Strong increase in requests and tender activity

• 2017 believed to be the most difficult year marking the trough in this cycle

• Adjusted to market reality since 2014 with strong cash discipline and continued cost reductions
• Introduced smart stacking to preserve the units ready for operation and extend class certificates

Fred. Olsen Energy ASA – at a glance

• One of the most experienced harsh environment rig contractors
• Entered the drilling industry in Norway in 1965
• International drilling contractor
• Frontier, development and infield well operations
• Fit for purpose units
  • UK and Norwegian midwater is our main market
  • Frontier operations through ultra deepwater projects
• Headquartered in Oslo, with operations through Dolphin Drilling in Aberdeen and Stavanger
• Bonheur ASA is the main shareholder of 51.9%
• Majority owner of the Harland & Wolff shipyard, Belfast

EBITDA development through this cycle

Development of cash and net debt position during the downturn

• Solid cash position through strong cost control and capital discipline
• Termination fee for Bolette Dolphin of USD 96 million paid in 3Q 2017
• Net debt approximately USD 530 million as per 2Q 2017

Positioning the company for a recovering market

Operational excellence	Deliver consistent high performance and efficient operations Focus on continued cost discipline and low opex Prioritize capital expenditures to support high regularity
New contracts	Pursue new contract opportunities for core units Secure contracts for the units at acceptable dayrates and commercial value
Maintaining units ready for operations	Smart Stacked rigs are preserved and maintained with regular system integration testing DNV GL regime of prolonged survey intervals - Validity of Class and Statutory certificates are extended equal to the smart stacking period Delayed capex and renewal of the class certificate
Preserving cash and waiver approval	Solid cash position with USD 350 million at 2Q 2017 (before termination fee for Bolette Dolphin) Waiver of market value and EBITDA related covenants approved until end of June 2018

Fleet and contracting strategy

• Positioning the company for a recovering market
• Conserve class certificates on core units to benefit from expected recovery in dayrates
• Our Aker H3 units are well suited for cost effective smart stacking
• Bolette Dolphin is laid up in hot mode, contract opportunities are pursued aggressively

Main focus on the core fleet

Ready when the market returns

Smart stacking proves to be effective

• Lay-up teams with operational experience on regular rotation
• Team living on-board carrying out maintenance and extensive system integration testing
• Maintain competence an experienced core crew is essential to restart operations efficiently
• Using social media to stay "In touch" with previous crew
• Technical condition is improved during smart stacking period
• Planned for 2 years, may be extended to 3 years if necessary

Bideford Dolphin returned to operation

• Bideford Dolphin mobilized for the Statoil contract end of May after 2 months of smart stacking
• Re-hired 145 of 150 crew members
• Full restart process carried out according to established procedures
• Confirms that the procedure for smart stacking and restarting is working as planned
• Top operational and HSE performance

AGENDA

THE COMPANY

• THE MARKET
• SUMMARY

Macro fundamentals

• Continued growth in energy and oil demand
• Market turnaround seen in 2017
• A total increase in E&P spending of approx. 12% expected in 2017, driven by onshore
• A further decline of approx. 15% in offshore E&P spending expected in 2017
• However, E&P companies are now also directing spending to short cycle and higher return activity offshore as well as robust green field projects
• Prudence is seen in the US shale sphere, with producers and investors focusing on full cycle economics
• Prolonged OPEC agreement is having a positive effect on the demand/supply balance
• Main market driver will be production decline of mature fields

The main market driver; Production decline of mature fields

Oil market scenario 2020: 12 million b/d new developments needed

Source: SB1 Markets E&P research team

UK and Norway combined is expected to be the largest market

Top 10 offshore markets 2018-2021 by service segment

USD billion

Source: Rystad Energy

Global market – floating units

• The market is turning in 2017 and longer term indicators are positive
• The requirement for offshore drilling units is materializing later in the upturn
• Strong increase in requests and contract activity in the North Sea market
• A high number of new development projects to be sanctioned in Norway from 2017
• Contract awards in the UDW market has also increased in 2017
• The pressure on day-rates is expected to be reduced, however contract durations will continue to be of shorter term nature

Source: DNB

Earlier recovery expected in the midwater

• A reduction of more than 50% of the purpose built mid-water fleet since 2014 due to fleet attrition
• Whereas more than 30% increase in the UDW fleet due to newbuilds entering the market in the same period
• The demand in the midwater North Sea market is resuming earlier than the ultra deepwater market in general
• Borgny Dolphin, Borgholm Dolphin (accommodation) and Borgsten Dolphin (TSV) have been retired from our fleet

Source: Kepler Cheuvreux / ODS Petrodata

AGENDA

• THE COMPANY
• THE MARKET
• SUMMARY

Summary

The company

• Earlier recovery of the harsh environment mid-water market is materializing
• Scrapping of midwater and HE rigs is supportive
• High tender and request activity in Norway and UK
• A high number of new development projects to be sanctioned in Norway from 2017

Strong cash discipline and continued cost reductions Smart stacking and delay of capex for core rigs

Fred. Olsen Energy units well positioned in a recovering market in the North Sea