Investor Presentation - KCA DEUTAG 2020 KCA Deu… · 2 Second Quarter Investor Presentation 1 COVID-19 update 2 Safety & #enhancethebrand 3 5 year restructuring business plan and

KCA Deutag is a leading international

drilling, engineering and technology

company working onshore and

offshore with a focus on safety,

quality and operational performance

Investor Presentation

SECOND QUARTER 2020

0

Disclaimer

1

The distribution of this presentation in certain jurisdictions may be restricted by law.Persons into whose possession this presentation comes are required to informthemselves about and to observe any such restrictions.

This presentation contains forward-looking statements concerning KCADeutag. These forward-looking statements are based on management’s currentexpectations, estimates and projections. They are subject to a number ofassumptions and involve known and unknown risks, uncertainties and other factorsthat may cause actual results and developments to differ materially from any futureresults and developments expressed or implied by such forward-lookingstatements. KCA Deutag has no obligation to periodically update or release anyrevisions to the forward-looking statements contained in this presentation to reflectevents or circumstances after the date of this presentation.

Agenda

2

Second Quarter Investor Presentation

1 COVID-19 update

2 Safety & #enhancethebrand

3 5 year restructuring business plan and capital structure

4 Backlog & utilisation

5 Business unit & group financials

6 Market update

7 Summary

Q2-2020 key highlights

3

Staying focused on proactively managing what we can control during this pandemic

Successfully entered into a binding lock-up agreement

Q2-20 revenue of $292.3m (Q2-19: $395.1m) and EBITDA of $65.5m (Q2-19: $74.4m)

Land Drilling division commences operations on one of the new build Kuwait rigs

Offshore Drilling division awarded a contract amendment to manage procurement,

maintenance and warehousing activities (through the Turan Drilling JV) in Azerbaijan

Contract backlog stable at $4.9bn (at 1 August 2020) across a blue chip customer base

1

2

3

4

5

6

COVID-19 updates

4

• Response teams and guidelines established early.

• Country teams have executed effectively to maintain

overall safety and integrity of our field operations.

− THANK YOU to all our employees!

• Guidance issued on remote working and wellbeing.

• Conducted several Virtual rig visits to maintain contact

with field operations teams.

• Guidance developed on safely returning to office.

• Ongoing review of blended/flexible working plans.

Company has proactively responded to the pandemic.

Safety performance continues to outperform industry average

5

(1) Total Recordable Incident Rate per 200,000 man hours. This is a rolling 12 month average

(2) Dalma business has been incorporated from May 2018

(3) KCAD Total Recordable Incident Rate is directly comparable with IADC’s Total Recordables (RCRD) statistic

Note: IADC stands for International Association of Drilling Contractors

Q2 2020

0.271,2

IADC industry

average 0.633 for

2019

Rig App CheckIt upgraded

to enhance our field crews’

ability to follow procedures,

assess operational risk and

submit compliance data

KCAD tool to prevent

dropped objects has been

shared with the wider

industry to improve safety

with maintenance at height

#enhancethebrand improvement initiatives

6

• Teams and individual employees have

continued to contribute:

− 653 documented ideas.

− 84 implemented projects.

− Over $3m of annualized benefits achieved.

The organization continues to deliver significant contributions.

Bottom up contributions:

What was achieved in H1-2020:

• Annualized savings and cost avoidance

of over $50m achieved in H1 2020:

− Hundreds of letters sent to suppliers and

many new agreements signed.

− Tens of bidding campaigns completed.

− Sharing stock across many locations.

> $3m

> $50m

From focused execution to strategic tactics

7

Designing our Growth Strategy.

Execute a focused growth strategy to build a resilient and smart platform that thrives in the

face of change, delivers value to all stakeholders, and that will last another 130 years

Restructuring business plan assumptions

8

• Pre-pandemic market backdrop

− ‘Lower for longer’ accepted while oil demand was peaking

− E&P cash flows improving but Oilfield Services oversupplied

− Investors & customers focusing on ESG and Energy Transition

− KCA Deutag business activity fundamentals were improving

• Impact of OPEC+ and COVID-19

− Unprecedented and historic Supply/Demand divergence

− E&P companies aggressively cut CAPEX and Opex

− OPEC+ declare historic oil production cuts

− KCA Deutag takes action to preserve cash and control costs

• Plan developed in May during the standstill period

− Uncertainty with near-term oil demand and price recovery

− Length of lockdowns to shape economic normalization

− A ‘return to a new normal’ was used for the Base case

− Upside and Downside Scenarios were also developed

• Market Outlook Observations at the time:

− Demand destruction may drive industry consolidation

− Acceleration of Energy Transition investments to be expected

− Activity may recover in time but day rates and pricing to lag

Market backdrop and Scenario planning

More Information available in the LUA document on our website

192 203 170 169 200 211 227

91 8974 70

73 76 77

(16) (13) (14) (15) (15) (15) (15)

273 299 236 231 265 288 319

(40)

60

160

260

360

2018 A 2019 A 2020 E 2021 E 2022 E 2023 E 2024 E

5 year business plan forecast

Consolidated Revenues and EBITDA

9

LAND | OFFSHORE | RDS | BENTEC | CORPORATE

Consolidated EBITDA(1)(2)

Consolidated Forecast Cash Flow

Consolidated Revenue(1)(2)

Capex - cash profile

1 2018 figures include 8 months of Dalma operations 2 Revenue and EBITDA include Eliminations on Consolidations and General Corporate Overhead Costs

602 669 553 534 616 648 672

512 480450 420

409 432 428

96 159

71 9290 114 174

1,263 1,360 1,122 1,094 1,168 1,267 1,359

0

500

1000

1500

2018 A 2019 A 2020 E 2021 E 2022 E 2023 E 2024 E$m

5252

48 48 5172 85

11

111

11

416

3 33

91910

84

44

53

$m

$m 2020 2021 2022 2023 2024

EBITDA 236.4 230.8 265.3 288.0 318.6

Exceptional items (3.7) (4.6) (3.6) (3.6) (3.6)

Working capital (48.9) 2.4 (18.7) (24.3) (5.5)

Other (18.8) (2.3) (2.4) (2.5) (2.5)

Capex (45.4) (57.8) (62.2) (63.0) (65.1)

Tax (32.9) (27.4) (27.5) (32.6) (35.5)

Lease payments (36.9) (45.3) (45.3) (42.3) (42.1)

Dividends to non-controlling

interest(3.7) (6.3) (8.7) (11.1) (10.8)

Pre-financing cash flow 46.0 89.4 96.9 108.7 153.4

Net finance costs (11.7) (0.3) (0.2) (0.2) (0.2)

Drawdown/(repayment) excl. RCF (18.0) (1.0) 0.0 0.0 0.0

Net cash flow 16.3 88.1 96.6 108.5 153.2

$m

Successfully entered into a binding lock-up agreement

• Pro forma for the proposed capital structure, the Company would have net leverage of 1.4x(1) and cash on hand / operating liquidity of $117m(4)

KCAD has achieved a comprehensive and holistic solution for its capital structure

1) Based on LTM Jun-2020 EBITDA of $293m, pro forma total debt of c.$510m, and current cash at 30-Jun-2020 of $100m (which excludes $80m of transaction costs))

2) Based on LTM Jun-2020 EBITDA of $293m, total debt at 30-Jun-2020 of c.$1.9bn (SSNs, TLB, RCF/ WCF, Oman debt, and IDTEC debt), and current cash at 30-

Jun-2020 of $100m (which excludes $80m of transaction costs))

3) Based on the cash interest on the 2021, 2022 and 2023 SSNs and the cash interest and scheduled amortisation on the TLB

4) Based on forecast Q3 FY2020 cash of $117m (after deducting $80m of transaction costs while including $52m of overseas cash estimated at Q3 FY2020)

Pre Restructuring

Post Restructuring

Total Debt$1.9bn

Total Debt$510m

Equitisation $1.4bn

Pro Forma Capitalization

Net Leverage:

6.3x(2)

Net Leverage:

1.4x(1)

$117m(4) of day-one cash

Adequate and growing liquidity forecast

over the course of the business plan

Excess liquidity will provide Company

with a range of potential investment

options

Run-way until the next debt maturity

Liquidity & Extended Maturity

Significant de-leveraging to net

leverage of 1.4x(1)

Reduction of annual debt service cost

from $155m(3) to $49m

Further deleveraging forecast over

business plan through EBITDA growth

and cash flow generation

De-leveraging

Shareholder group is committed to the

long-term success of the business

Alignment with management on

strategy and long-term value creation

New Board of Directors to be appointed

by Shareholders in consultation with

management

Supportive Shareholders

Improved operational flexibility to:

• Re-invest in the business

• Capitalise on appealing acquisition /

strategic opportunities such as

acquisition of rig assets

Maintains access to WCF and guarantee

facilities

$225m of super senior basket capacity;

could be used to raise RCF and Guarantee

facilities

Operating Flexibility

10

Cost savings have significant impact in Q2

11

Target savings vs previous business plan

LAND | OFFSHORE | RDS | BENTEC | CORPORATE

1 Before non-recurring items

Consolidated Revenue

Consolidated EBITDA(1)

$m

$m

Backlog evolution to 1 August 2020

Note: Backlog is an estimate and may change over time depending on certain factors; Backlog reflects business that is considered to be firm, this calculation is based on assumptions deemed appropriate at the time and is subject to change. Backlog is not necessarily indicative of our future revenue or earnings. KCAD backlog amounts are estimates as of 1-August-2020 12

Total contract backlog as at 1 August 2020

Total contract backlog by BU as at 1 August 2020

Total contract backlog as at 1 June 2020

Total contract backlog by BU as at 1 June 2020

Historical utilisation represents actual utilisation calculated on a bi-monthly basisForward contracted utilisation represents the current contracted position Utilisation pro-forma for the inclusion of rigs suspended under contract as of 1 August 2020

Land utilisation

13

Historical and Forward Contracted Utilisation

Operating Utilisation in Q2 2020 was 68%

Offshore services contract backlog(1)

14

(1) Contract and rig status shown as at 1 August 2020

Firm

Options

Not Disclosed

Contract Platform

Client Country Assets Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 end date status #

Exxon Canada Hebron M ar-46 Operating 1

Equinor (Stato il) Norway CAT J (2) M ar-38 Operating 2

Equinor (Stato il) Norway Oseberg's (4) & Kvitebjorn Oct-28 Operating / Stacked 4/1

AIOC Azerbaijan Azeris, SD, DWG, Cop & Chirag Apr-26 Operating / Stacked 5/2

Vår Energi Norway Ringhorne Dec-25 Stacked 1

Enquest UK Thistle, Heather & M agnus Dec-25 Stacked 3

CNOOC UK Scott Feb-25 Stacked 1

CNR UK Ninian's (2) Tiffany Nov-24 Stacked 3

Exxon Angola Kizomba (2) Jan-24 Operating / Stacked 1/1

Total UK Alwyn / Dunbar M ay-23 Stacked 2

Chrysaor (COP) UK Britannia Nov-22 Stacked 1

Equinor (Stato il) Norway Pipe pool management Nov-22 Active mgmt. contract

SEIC Russia LA, PA & PB M ay-21 Operating / Stacked 2/1

2020 2021 2022

1) Adjusted to remove the one off Revenue increase in Q2 2019 of $14.3m relating to IFRS 15

2) Bentec results shown before intercompany eliminations15

Land & Bentec financial performance

Land Quarterly EBITDA ($m)

Bentec Quarterly EBITDA ($m) (2)

= EBITDA Margin

Land YTD Revenue & EBITDA ($m)

Bentec YTD Revenue & EBITDA ($m) (2)

30% 30%

11%

6%

(1)(1)(1)

16

Offshore & RDS financial performance

Offshore Services Quarterly EBITDA ($m)

RDS Quarterly EBITDA ($m)

Offshore Services YTD Revenue & EBITDA ($m)

RDS YTD Revenue & EBITDA ($m)

17%16%

10% 3%

= EBITDA Margin

Q2 2020 Q1 2020 Q2 2019 2020 YTD 2019 YTD

$'m $'m $'m $'m $'m

Cash generated from operations 59.1 19.2 102.1 78.3 128.1

Tax paid (11.2) (11.4) (6.4) (22.6) (18.9)

Cash flow from operating activities 47.9 7.8 95.7 55.7 109.2

Capital expenditure (9.5) (14.7) (13.0) (24.2) (31.2)

Acquisition of Holdco rig 0.0 0.0 0.0 0.0 (25.0)

Proceeds from sale of Fixed Assets 0.3 0.7 0.0 1.0 0.1

Interest received 2.5 5.1 6.5 7.6 13.1

Dalma acquistion 0.0 0.0 0.0 0.0 0.0

Other 0.0 0.0 (0.1) 0.0 0.3

Cash flow from investing activities (6.7) (8.9) (6.6) (15.6) (42.7)

Interest paid (7.2) (15.7) (83.8) (22.9) (102.6)

Foreign exchange 2.5 (7.4) 0.6 (4.9) 0.8

Dividend paid to minority shareholders (0.1) (0.4) (0.2) (0.5) (0.5)

Lease payments (7.9) (7.3) (3.6) (15.2) (9.4)

28.5 (31.9) 2.1 (3.4) (45.2)

(2.2) (1.7) (19.3) (3.9) (24.7)

Increase in loan from parent company 0.0 0.0 0.0 0.0 25.0

Net cash flow 26.3 (33.6) (17.2) (7.3) (44.9)

Net Cash flow before debt

drawdown/(repayment)

Drawdown/(repayment) of debt and debt

redemption/issuance costs

Cash flow and working capital

17

9

9

(1) Interest paid includes some fees from the standstill agreement

(2) Denotes the effect of foreign exchange rate changes on cash and bank overdrafts

(3) Deltas denote quarterly working capital movement

(2)

Free Cash Flow Working Capital (3)

(1)

Market updates

18

a hi-level brief from our point of view.

Short Term

Pandemic risk

Potential secondary

COVID-19 waves as

lockdowns are eased in

multiple locations.

Medium Term

Oil Demand

Slow economic recovery

may keep oil demand low

and further impact OFS

activity and prices.

Longer Term

Energy Transition

Investments are growing

in Tech, Renewables like

Wind, in ESG, in carbon

capture and hydrogen.

Closing remarks

19

• Q2-20 revenue of $292.3m (Q2-19: $395.1m) and EBITDA of $65.5m (Q2-19: $74.4m)

• Successfully entered into a binding lock-up agreement

• Land Drilling division commences operations on one of the new build Kuwait rigs

• Staying focused on proactively managing what we can control during this pandemic

• Offshore Drilling division awarded a contract amendment to manage procurement,

maintenance and warehousing activities (through the Turan Drilling JV) in Azerbaijan

• Contract backlog stable at $4.9bn (at 1 August 2020) across a blue chip customer base

20

Q & [email protected]

21

Appendix

KCA Deutag operations are diversified across global markets

London Bad Bentheim

Tyumen

Nizwa

St. Johns

Bergen

Dubai

Land Drilling Offshore Services RDS offices BentecRegional offices

Aberdeen (HQ)

North Sea

/Norway

18 Plat

Europe &

Caspian

6 Rigs

Caspian

7 Plat

Russia

17 Rigs

Middle

East

45 Rigs

Angola

2 Plat

Africa

10 Rigs

Canada

1 Plat

Map shows position at 1 August 2020

(1) The % split of LTM EBITDA is calculated using total KCAD group Q2 2020 LTM Proforma EBITDA of $309m (after corporate

costs of $13m)

Russia

Sakhalin

3 Plat

PRESENCE IN KEY AREAS

132

61 5646

21

0

30

60

90

120

150

Europe North Africa Middle East North Sea Russia

Ye

ars

Geographical EBITDA Split(1)

Baku

22