Goldman Sachs Global Energy Conference January 5, 2017 Rob Saltiel President & CEO
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Goldman Sachs Global Energy
ConferenceJanuary 5, 2017
Rob SaltielPresident & CEO
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Forward-Looking Statements
Statements contained in this report with respect to the future are forward-looking statements. Thesestatements reflect management’s reasonable judgment with respect to future events. Forward-lookingstatements are subject to numerous risks, uncertainties and assumptions and actual results could differmaterially from those anticipated as a result of various factors including: uncertainties related to the level ofactivity in offshore oil and gas exploration and development; oil and gas prices; competition and marketconditions in the contract drilling industry; the risks inherent in the construction of a rig; delays in thecommencement of operations of a rig following delivery; our ability to enter into and the terms of futurecontracts; possible cancelation or suspension of drilling contracts; the availability of qualified personnel; laborrelations; operating hazards and risks; terrorism and political and other uncertainties inherent in foreignoperations (including risks of war, civil disturbances, seizure or damage to equipment, and exchange andcurrency fluctuations); the impact of governmental and industry laws and regulations; and environmentalmatters. These factors and others are described and discussed in our most recently filed annual report onForm 10-K, in our Forms 10-Q for subsequent periods and in our other filings with the Securities andExchange Commission which are available on the SEC’s website at www.sec.gov. The information containedin this presentation is subject to change without notice, is a summary, and as such does not contain allmaterial information concerning the Company. Each forward looking statement speaks only as of the date ofthis presentation and we undertake no duty to update the content of this presentation or any forward-lookingstatement contained herein to conform the statement to actual results or to reflect changes in ourexpectations.
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Well-Positioned to Weather the DownturnModern, high-quality rig fleet High-specification fleet averages only 5.5 years age* Newer rigs will survive downturn and capitalize on market recovery
Industry-leading performance and cost control Superior safety and operational results Significant onshore and offshore cost reduction
Improving capital structure and financial flexibility No debt maturities until May 2019 March 2016: Revolving credit facility (“RCF”) amended to address
covenant risks and ensure access to funding during downturn February - July 2016: De-levering through purchase of $201 million
face value ATW bonds at a $67 million discount December 2016: Delayed delivery dates for Atwood Admiral
(September 30, 2019) and Atwood Archer (June 30, 2020) and financed $250 million at 5% through December 2022
Navigating the Downturn and Increasing Financial Flexibility
*Excludes one older deepwater rig and two drillships under construction
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Young, High-Specification Fleet
* Excludes rigs under constructionNote: Fleet also includes a deepwater semisubmersible, Atwood Eagle
• Atwood Advantage• Atwood Achiever• Atwood Admiral• Atwood Archer
• Atwood Condor• Atwood Osprey
• Atwood Aurora• Atwood Beacon • Atwood Mako• Atwood Manta• Atwood Orca
Average Age: 3 Years*
Average Age: 7 Years
Average Age: 5 Years
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Recent Steps to Improve LiquidityAtwood Osprey Migrated 5-month term with Woodside Energy to Atwood Osprey fromAtwood Eagle Secured 20+ month Greater Enfield development program with Woodside starting
January 2018 Signed two 2017 “gap-filling” contracts with ConocoPhillips and Woodside
Atwood Condor Completed two P&A wells with Noble Energy originally assigned to Atwood Advantage Growing potential for follow-on work
Atwood Advantage Mobilized rig to Israel for Noble Energy to advance recent gas discoveries Potential for follow-on work on Leviathan Development
Atwood Achiever Discoveries by Kosmos Energy in Mauritania and Senegal and subsequent
participation by BP increase potential for expanded drilling program Atwood Admiral Premier Oil reaffirmed our exclusive negotiation position for their exploration drilling
program in Brazil in 2018Jackup (TBD) Expect one idle jackup to return to work for a one-year program in mid-2017
Recent Marketing Successes and Opportunities
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84%
86%
88%
90%
92%
94%
96%
98%
100%
Q1FY15
Q2FY15
Q3FY15
Q4FY15
Q1FY16
Q2FY16
Q3FY16
Q4FY16
Total Fleet Revenue Efficiency Average
The Atwood Advantage = Superior Performance
Reliable Operator
HSE Leader
• More than 2 years and 9.5 million man-hours without a Lost Time Injury
• FY2016 marked 2 years without a reportable environmental incident
• Process Safety Incident Rate reduced by 43% in calendar 2016 vs. 2015
Atwood Achiever and Condor at standby rates (95%)
Australia cyclone event downtime
Efficient Driller
• Modern rigs offer significant off-line capabilities that reduce non-productive time for clients
• Standardized equipment lowers inventory, capital spares, training and technical support costs
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Significant Cost Reductions - Onshore and Offshore2015 2017 Cost Improvements
$95
$75$65
2015A 2016A 2017E
Onshore Support Cash Costs*$ Millions
Fiscal Year
Rig Operating Cash Cost Reductions (%)
31% Reduction
* Onshore support costs include G&A and operational support provided from the corporate office including operations support, engineering, supply chain, and HSE.
11%5%
14%21%
0%
5%
10%
15%
20%
25%
30%
Jackup Average Ultra-deepwater Average
2015 -> 2016 2016 -> 2017
25% 26%
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Recent Steps to Improve LiquidityAmended RCF to relax covenants and ensure access to funds Leverage covenant ratio removed and interest coverage covenant ratio removed for
the next 2 years (reinstated at 4Q FY 2018) $700 million of liquidity as of December 31, 2016
Repurchased $201 million face value of bonds at a $67 million discount Cash outlay of approximately $134 million for tax-efficient retirement of debt $449 million remaining balance of original $650 million issuance
Reduced total debt from $1.7 billion to $1.2 billion in FY2016 (27% reduction) $201 million bond repurchase $250 million in RCF payments
Reduced onshore support cash costs by 30+% over past two years
Delayed latest delivery dates for Atwood Admiral and Atwood Archer By two years each to September 30, 2019 and June 30, 2020, respectively
Delayed remaining drillship milestone payments of $250 million until December 30, 2022 Interest expense will be accrued at 5% and not paid until December 30, 2022 Reduced shipyard holding costs by $10K/day ($5K/day per rig)
Significant Progress in Improving Financial Flexibility
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$155
$545
$240
$55
$55$68
$762
$0
$200
$400
$600
$800
$1,000
Cash on hand RevolvingCredit Facility
Availability
Backlog After-tax cashflow*
CAPEX OnshoreSupport Costs
Debt Service RemainingLiquidity
Expect Ample Liquidity into FY 2018Assumes only current contract backlog*
$ Millions
* FY2017 cashflow from backlog assumes increased dayrate and $49 million one-time payment from Kosmos Energy for not exercising one-year extension option
Source: Atwood internal analysis as of 12/31/16; unaudited
$10$45
Atwood Admiral Milestone PaymentMaintenance / OFE
FY2018 Liquidity Impacts
• RCF Capacity reduced from $1.395 billion to $1.12 billion in May 2018
• $15 million milestone payment on Atwood Archer in June 2018
• Idling of rigs not on contract
• Rig start-ups
Liquidity at 12/31/16:$700 million
Through FY 2017
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Ample Time for Further Balance Sheet Improvement Conservative stewardship of the balance sheet provides 2+ years of runwayNo debt maturities until May 2019Amended RCF covenants and bond indenture debt baskets provide flexibility to improve the balance sheetAccess to public debt markets, bank debt and/or equity markets with limited restrictions
* Not currently classified as debt - DSME debt agreement becomes effective upon deliveries of the two drillships under construction
$0$100$200$300$400$500$600$700$800$900
2017 2018 2019 2020 2021 2022
Debt & DSME Payment Maturities / Current Balances
Bon
ds
DS
ME
*
RC
F$850
$ Millions
$449
$250
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Visible Catalysts for Offshore Rig Market Recovery
Drivers for increasing rig demandRising oil priceImproved drilling economics (as costs decrease)More attractive fiscal terms in international markets
Opportunities for re-balancing supplyDelays / cancellations of newbuildsContinued rig cold-stacking and retirements? Consolidation among offshore rig contractors
Catalysts are materializing for recovery in offshore drilling market in 2018
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0
20
40
60
80
100
120
Sep
-14
Oct
-14
Nov
-14
Dec
-14
Jan-
15
Feb-
15
Mar
-15
Apr
-15
May
-…
Jun-
15
Jul-1
5
Aug
-15
Sep
-15
Oct
-15
Nov
-15
Dec
-15
Jan-
16
Feb-
16
Mar
-16
Apr
-16
May
-…
Jun-
16
Jul-1
6
Aug
-16
Sep
-16
Oct
-16
Nov
-16
Dec
-16
Jan-
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Scrapping Cold-stacking
Floater Rig Attrition ContinuesScrapping and Cold-Stacking September 2014 –January 2017
Source: IHS Petrodata and Atwood Analysis
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11344 UDW Rigs ExitScrapped – 5Cold Stacked – 39
45
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67
4647
65
112
13
40
21
22
9
62
30
0
10
20
30
40
50
60
70
2017 2018
Calendar Year
Under 25 Years Old 25+ Years Old
Extensive Rig Attrition Expected Over Next Two Years
*Idle floaters with no contracts in placeSources: Atwood Research, IHS Energy (Jan 2017)
More Than 5 Months,
37
3-5 Months,
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Up to 3 Months,
22
Idle Duration of Presently Idle Floaters*
(68)
Contracted Floaters Rolling Over
2017 - 2018 (92)
68 Very Vulnerable Rigs Through 2018
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Is 90% Floater Utilization Possible by End of 2018?
Current: January 2017 December 2018?
How to Meet Attrition Requirement?
68 Floaters currently idle with no future work92 Floaters will roll off (31 are 25+ years old)
* Assumes 10 newbuilds enter market
Demand: 138Marketed Supply: 153
Marketed Utilization: 90%
Source: Atwood Internal Analysis
Demand: 138Marketed Supply: 219
Marketed Utilization: 63%
Net Supply Reduction: 66Gross Supply Reduction: 76*
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Operational excellence and cost control mitigate the impacts of a very challenging market Opportunities to extend work with existing clients Significant cost reduction without impacting safety or service
Improving capital structure Excellent progress in 2016 in de-levering and improving
liquidity Continued focus on balance sheet improvements prior to
maturity of RCFHigh-quality rig fleet poised for post-recovery success Atwood’s high-specification rigs survive this downturn Built-in growth potential as market improves
Navigating the Downturn and Increasing Financial Flexibility
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Thank You!
www.atwd.com
www.atwd.comAtwood Advantage – currently in the Mediterranean Sea