KCA Deutag is a leading international
drilling and engineering company
working onshore and offshore with
a focus on safety, quality and
operational performance
Investor Presentation
FOURTH QUARTER 2017
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.
Fourth Quarter Investor Presentation
Agenda
2
1 Q4 and Full Year Key Highlights
2 Business Update
3 Business Unit Financials
4 Group Results
5 Dalma Acquisition
6 Summary
Fourth Quarter Investor Presentation
Q4 and Full Year Key Highlights
3
KCA Deutag is a leading international drilling and engineering company working
onshore and offshore with a focus on safety, quality and operational performance
1Q4 2017 EBITDA of $65.8m (Q4 2016: $60.1m) giving full year EBITDA of
$221.5m (2016: $262.9m)
2Good tendering activity for Land, with a number of significant contract
awards for Bentec, and increased activity on the new Cat J and Hebron
contracts for Offshore
3Contract backlog of $5.2bn (at 1 February 2018) across a blue chip
customer base
4 Available liquidity of $230m at 31 December 2017
5Announcement of acquisition of the Omani and Saudi Arabian businesses
of Dalma Energy LLC
Fourth Quarter Investor Presentation
Business Update
4
RDSOffshore Services
Integrated land drilling Offshore drilling services & design
• First CAT J has
commenced operations
in Norway
• Reactivation work
continues in the UK
• Efficient start to Hebron
platform operations
• Increased activity due to
new greenfield contract
• Brownfield work remains
relatively steady
• Developing diversification
opportunities into non-oil
and gas sectors
• Strong activity in Oman
and Russia
• Improved performance in
Algeria and Europe
• Improving outlook in
Nigeria
• Two new rig build
contracts for a total of 6
rigs secured
• Component sales
revenue remain steady
• After Sales remains
stable
$164.4m / 68.6% of total¹ $0.0m / 0.0% of total¹ $73.2m / 30.5% of total¹ $2.1m / 0.9% of total¹
Land Drilling Bentec
1 The % split of LTM EBITDA is calculated using total group EBITDA of $239.7m (before
corporate costs of $18.2m)
Fourth Quarter Investor Presentation
KCAD Operations Are Diversified Across Global Markets
5
PRESENCE IN KEY AREAS
Houston
Baku
London Bad Bentheim
Tyumen
Nizwa
St. Johns
Bergen
Dubai
Land Drilling Offshore Services RDS offices BentecRegional offices
Aberdeen (HQ)
North Sea
/Norway
21 Plat.
Europe &
Caspian
8 Rigs
Caspian
7 Plat.
Russia
17 Rigs
Middle
East
17 Rigs
Angola
2 Plat.
Africa
10 Rigs
Brunei
1 Rig
LTM Q4 2017 EBITDA split by region
Canada1 Plat.
Map excludes 1 workover land rig in Nigeria, defined as being below 900HP
Map shows position at 1 February 2018
Russia
Sakhalin
3 Plat.
Fourth Quarter Investor Presentation
130
59 5444
19
0
30
60
90
120
150
Europe North Africa Middle East North Sea Russia
Ye
ars
Health, Safety and Environmental Performance
6
• Sustaining low TRIR levels in a range which are the best in the company’s history
• KCAD achieved the lowest ever TRIR of 0.18 in October and November 2017
1 Total Recordable Incident Rate per 200,000 man hours. This is a rolling 12 month average2 KCAD Total Recordable Incident Rate is directly comparable with IADC’s Total Recordables (RCRD) statistic
Note: IADC stands for International Association of Drilling Contractors
IADC industry average
0.542 for 2017
KCAD TRIR at
end of Q4 2017
was 0.191 injuries
per 200,000 man
hours worked
Fourth Quarter Investor Presentation
Backlog Status
7
Total contract backlog as at 1 November 2017
Contract backlog by BU as at 1 November 2017
Total contract backlog as at 1 February 2018
Contract backlog by BU as at 1 February 2018
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 our estimates as of Feb-2018
Fourth Quarter Investor Presentation
Robust platform services contract backlog @ 1 February 2018
8
Fourth Quarter Investor Presentation
Contract Platform
Client Country Assets Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 end date status #
Exxon Canada Hebron Mar-46 Operating 1
Statoil Norway CAT J (2) May-36 Operating 2
Exxon Angola Kizomba (2) Jan-28 Stacked 2
AIOC Azerbaijan Azeris, SD, DWG, Cop & Chirag Dec-24 Operating 7
Nexen UK Scott Feb-23 Operating 1
COP UK Britannia Nov-22 Stacked 1
Statoil Norway Oseberg's (4) & Gulfaks (3) & Kvitebjorn Oct-22 Operating / Stacked 7/1
Statoil Norway Pipe pool management Oct-22 Active mgmt. contract
CNR UK Ninian's (3) Tiffany Nov-21 Operating / Stacked 1 /3
SEIC Russia LA, PA & PB May-21 Operating 3
Total UK Alwyn / Dunbar Dec-20 Operating / Stacked 1 /1
Enquest UK Thistle & Heather May-20 Operating / Stacked 1/1
Exxon Norway Ringhorne Dec-18 Stacked 1
2017 2018 2019
Land Drilling
9
Financial Performance to 31 December 2017
• Higher EBITDA compared to the prior quarter, largely due to improved performance in
Russia
• Activity levels remain strong in Russia and Oman
• Improving prospects in Europe and Algeria
• Signs of improvement in Nigeria where we are pursuing several tendering
opportunities
• Utilisation for the quarter of 61%1
Q4 2017 Q3 2017 Q4 2016 Q4 2017 Q4 2016
Result Result Result YTD YTD
$m $m $m $m $m
Revenue 126.8 122.8 133.6 499.7 569.6
EBITDA (post support allocation) 42.3 35.5 46.7 164.4 186.5
Margin 33.4% 28.9% 35.0% 32.9% 32.7%
1 Utilisation is calculated on a bi-monthly basis
Bentec
10
Financial Performance to 31 December 2017
• EBITDA has remained around breakeven
• Two new contracts awarded for a total of 6 new build rigs
• Active tendering market across after sales, components and new build rigs
• Continued pursuit of diversification opportunities outside the oil and gas sector
Q4 2017 Q3 2017 Q4 2016 Q4 2017 Q4 2016
Result Result Result YTD YTD
$m $m $m $m $m
Revenue 19.2 22.1 16.5 73.3 75.4
EBITDA (post support allocation) (0.5) (0.0) (2.0) 0.0 (0.8)
Margin -2.4% -0.1% -12.2% 0.0% -1.1%
Offshore Services
11
Financial Performance to 31 December 2017
• Significantly higher EBITDA compared to Q3, primarily due to strong performance in
Norway
• Both of the Cat J jack up rigs have now arrived in Norway and the first has commenced
operations
• Post-year end settlement reached with a client in Angola resulting in cash payment of
$41.9m in February 2018
As detailed above EBITDA relating to MODUs in 2017 was $0.6m and $16.6m in 2016. The equivalent figure in 2015 was $22.3m
Q4 2017 Q3 2017 Q4 2016 Q4 2017 Q4 2016
Result Result Result YTD YTD
$m $m $m $m $m
Platform Services
Revenue 145.2 153.1 131.0 549.2 524.2
EBITDA (post support allocation) 26.4 22.1 19.2 72.6 74.8
Margin 18.2% 14.4% 14.6% 13.2% 14.3%
MODUs
Revenue 0.0 0.0 0.0 0.0 29.4
EBITDA (post support allocation) 0.1 0.5 (0.2) 0.6 16.6
Margin n/a n/a n/a n/a 56.5%
Offshore Services
Revenue 145.2 153.1 131.0 549.2 553.5
EBITDA (post support allocation) 26.6 22.6 19.0 73.2 91.4
Margin 18.3% 14.7% 14.5% 13.3% 16.5%
RDS
12
Financial Performance to 31 December 2017
• Higher EBITDA than the prior quarter due to new Greenfield project
• Continuing to pursue diversification opportunities outside of the oil and gas sector
• Strengthened leadership team with appointment of new business unit leader
Q4 2017 Q3 2017 Q4 2016 Q4 2017 Q4 2016
Result Result Result YTD YTD
$m $m $m $m $m
Revenue 15.3 13.8 14.5 57.5 75.3
EBITDA (post support allocation) 1.7 (0.0) (0.3) 2.1 5.1
Margin 11.0% -0.2% -2.4% 3.7% 6.8%
Group Results
13
Financial Performance to 31 December 2017
Revenue and EBITDA ($m)
Q4
2017
$m
Q3
2017
$m
Q4
2016
$m
2017
YTD
$m
2016
YTD
$m
Revenue from business units 306.4 311.9 295.7 1,180.3 1,274.4
Eliminations (2.9) (2.5) (8.0) (10.8) (22.2)
Total third party revenue 303.5 309.4 287.6 1,169.5 1,252.2
EBITDA from business units 70.0 58.1 63.4 239.7 282.4
Eliminations 0.0 0.0 0.2 0.0 (0.3)
Corporate costs/other (4.4) (4.8) (4.6) (18.8) (18.9)
Exchange 0.2 1.5 1.1 0.6 (0.3)
Total EBITDA 65.8 54.8 60.1 221.5 262.9
Q4 2017 Q3 2017 Q4 2016 2017 YTD 2016 YTD
$'m $'m $'m $'m $'m
Cash generated from operations 93.5 45.4 87.1 176.3 281.5
Tax paid (5.3) (5.0) (6.4) (30.0) (38.6)
Cash flow from operating activities 88.2 40.4 80.7 146.3 242.9
Capital expenditure (10.9) (10.2) (15.1) (62.9) (105.6)
Proceeds from sale of Fixed Assets 0.9 0.4 1.0 1.6 61.6
Interest received 5.7 5.3 5.4 22.6 21.1
Other 0.0 0.0 0.0 0.0 0.0
Cash flow from investing activities (4.3) (4.5) (8.7) (38.7) (22.9)
Interest paid (53.3) (14.3) (50.5) (132.5) (127.3)
Foreign exchange 2.9 (8.3) 10.0 (12.6) 20.4
Dividend paid to minority shareholders 0.0 0.0 0.0 (0.3) (0.5)
Acquisition of non-controlling interests 0.0 0.0 0.0 0.0 0.0
Net Cash flow before debt
drawdown/(repayment)33.5 13.3 31.5 (37.8) 112.6
Drawdown/(repayment) of debt and
debt redemption/issuance costs(5.8) (6.2) (8.1) (15.8) 51.4
Net cash flow 27.7 7.1 23.4 (53.6) 164.0
Cash Flow and Working Capital
14
Financial Performance to 31 December 2017
9
Working Capital3
9
Free Cash Flow
2
1 2017 YTD includes $25m relating to the rig acquired by Alpha Group2 Denotes the effect of foreign exchange rate changes on cash and bank overdrafts3 Deltas denote current quarter working capital movement
1
2
Capital Structure
15
Net leverage as at 31 December 2017
1 Q4 2017 LTM EBITDA of $246m includes the $25m Holdco equity contribution as defined in the Amended Credit Agreement 2 Revolver is split $75/$200m non cash/cash, the amount shown represents the cash element utilised. $25m of the cash RCF
expires May 20193 Facility and Recovery ratings shown as at December 2017
Utilisation
31st Dec 2017Coupon Maturity
Facility
Rating3
Recovery
Rating3
Net
Leverage1
Revolver ($275m)2 0.0 L+400 Mar-22 Caa1/CCC+ 3/3 0.00x
Senior Secured Term Loan 358.7 L(100)+525 May-20 Caa1/CCC+ 3/3 1.46x
HSBC Oman Term Loan 48.0 L+400 Dec-20 0.19x
Total Bank Debt 406.7 1.65x
UK Finance Senior Secured Notes 375.0 7.250% May-21 Caa1/CCC+ 3/3 1.52x
UK Finance Senior Secured Notes 535.0 9.875% Apr-22 Caa1/CCC+ 3/3 2.17x
Total Institutional Debt 1,316.7 5.34x
Finance lease & other debt 2.8 - Aug-18 - - 0.01x
Gross Debt 1,319.5 5.35x
Cash 108.3 0.44x
Net Debt 1,211.2 4.91x
Proposed Acquisition of
Dalma Energy & Co. LLC’s
Omani and Saudi Arabian
Businesses
• KCA Deutag (“KCAD” or the “Company”), a leading global drilling and engineering onshore and offshore contractor, hasagreed to acquire the Omani and Saudi Arabian businesses of Dalma Energy & Co. LLC (“Dalma” or the “Target”)
• The transaction values Dalma at an EV of $660m, 6.0x LTM December 2017E EBITDA of c.$110m1
• Dalma is a leading provider of onshore drilling services to oil & gas companies in the Middle East
• The KCAD – Dalma combination will create a local onshore drilling services champion which combines Dalma’s regionalexpertise and leading positions in Oman and the Kingdom of Saudi Arabia (KSA) with KCAD’s leading internationalstandards through leveraging KCAD’s global network
− Combined Entity will be one of the Largest International Drilling Contractors in the Middle East
− Strengthens our Leading Position across the Eastern Hemisphere
− Strengthens position in Resilient Markets
− Enhances Diversified Blue Chip Customer Base
− Increased Backlog Providing Excellent Visibility
− Enhanced Utilisation Profile
− Value Creation from Significant Synergies
− Diversified Shareholder Base Combined With a Highly Experienced Senior Management Team
Executive Summary
1
2
3
4
5
6
7
17
1 Dalma EBITDA is before exceptional items and is based on preliminary unaudited information and subject to change
8
1
Middle East Onshore Rig Count – International Players(1)
+
Source: Douglas Westwood. Notes: (1) Middle East includes rigs in, KSA, Oman, Iraq, UAE and Pakistan (2) Includes 32 ZP Arabia rigs (3) Includes 22 ADC rigs, a Schlumberger and Taqa Joint Venture
(2) (3)
Combined Entity will be one of the Largest International Drilling Contractors in the Middle East
18
KCAD Dalma Combined
Rigs54 rigs/ 34
platforms29 rigs
83 rigs/ 34
platforms
Backlog(2) $5.2bn $1.1bn $6.2bn
Business
Segments
(EBITDA
Breakdown) (1)
Geographic
Focus
(EBITDA
breakdown) (1)
Headquarters Aberdeen, UK Muscat, Oman Aberdeen, UK
2
Business Overview(1) Combined Operations(3)
Canada
Africa
North Sea
Europe & Caspian Caspian
Oman
KSA
Angola
Middle East
RussiaRussiaSakhalin
Brunei
Location Rigs Plat.
Canada 1
North Sea 21
Europe and Caspian 8
Africa(4) 11
Angola 2
KSA 9
Oman 20
Middle East(5) 17
Brunei 1
Caspian 7
Russia 17
Russia Sakhalin 3
Total 83 34
DalmaOffshoreLand Drilling
Middle East
100%
Notes: (1) KCAD EBITDA is 2017A. Dalma EBITDA is before exceptional items and is based on preliminary unaudited information and subject to change (2) Backlog as of 1 February 2018. (3) Position at 1 February 2018. (4) Includes 1 workover land rig in Nigeria, defined as being below 900HP. (5) Includes 8 KCAD rigs in Oman.
Strengthens our Leading Position Across the Eastern Hemisphere
19
3
Global Land Rig Count – International vs. North America (No. of rigs)
Strengthens Position in Resilient Markets
Source: Douglas Westwood; Baker Hughes.
20
Onshore E&P Capital Spend – Middle East vs. North America ($USDm)
4
Key customers by division(1) 2017E Revenue(2) Split by Top 5 Clients
Integrated
Land Drilling
Offshore
Drilling
Services &
Design
c.48% of
revenue
Notes: (1) Petroleum Development Oman (PDO) partially owned by Shell (34%). (2) Dalma Revenue is based on preliminary unaudited information and subject to change.
+
Enhances Diversified Blue Chip Customer Base
21
Dalm
a5
KC
AD
Increased Backlog Providing Excellent Visibility
$4,096m$1,969m
$18m $156m
Offshore Services Land RDS Bentec
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 and Dalma backlog amounts are estimates as of Feb-2018
$6,238m
22
Dalm
a(1
)K
CA
D(1
)
Notes: (1) Contracted utilisation is calculated on a daily basis as of 1st of February 2018 for KCAD and Dalma.
Enhanced Utilisation Profile6
23
7 Value Creation from Significant Synergies
KCAD – Dalma Acquisition Estimated Synergies, $m
24
33.0%
17.4%17.2%
6.5%
4.0%
22.0%
8Diversified Shareholder Base Combined With a Highly Experienced Senior Management Team
Others
Al Nasser
Investments
Gulfcap Energy LLC
Al Qahtani & Sons
57%27%
16%
Target
Shareholders(1)
Others
Pro Forma Shareholder Overview Highly Experienced Management Team
42.3%
22.3%
22.0%
8.3%
5.1%
Notes: (1) Subject to final adjustment under the terms of the acquisition
Target Shareholder Overview KCAD Shareholder Overview
Name Title Industry Experience
Norrie McKay CEO – KCAD 35+ Years
Neil Gilchrist CFO – KCAD 20+ Years
Simon DrewPresident – Land
Drilling20+ Years
Rune Lorentzen President – Offshore 35+ Years
Dirk Schulze CEO – Bentec 20+ Years
Albert Allan SVP – RDS 25+ Years
25
Financial Terms of the Acquisition
Consideration
• Completion of the acquisition expected to occur before the end of Q2 2018, subject to the
fulfilment of certain conditions precedent, including finalising financing for the acquisition
• Finalisation of $425 million acquisition financing
• This may include raising new debt in the loan or bond markets and/or amendments/extensions
to existing financing.
• $84 million of cash consideration from balance sheet
• 22% of equity in Enlarged KCAD Group valued at $220m
• The transaction values Dalma at an EV of $660m, 6.0x LTM December 2017E EBITDA of
c.$110m(1)
• The transaction consideration for the acquisition of Dalma includes a cash payment and an
equity shareholding in KCAD
− Cash component: $100m cash consideration to Dalma’s shareholders
− Equity component: Following completion, the current shareholders of Dalma will own
approximately 22%(2) of the enlarged share capital of KCAD
• Dalma shareholders will have board representation and customary minority protection rights
Financing
Timing
26
(1) Dalma EBITDA is before exceptional items and is based on preliminary unaudited information and subject to change(2) Subject to final adjustment under the terms of the acquisition
Projected Capital Structure
Pro
-Fo
rma
Cap
ita
l S
tru
ctu
re (
as
of
31
-Dec
-20
17
)P
ro-f
orm
a a
t 3
1 D
ec
em
be
r 2
01
7
So
urc
es
& U
se
s (1
)
27
Notes: (1) Shares issued by KCAD to sellers based on 31 March transaction close and subject to fulfilment of certain conditions (2) Q4 2017 LTM EBITDA of $246m includes the $25m Holdco equity contribution as defined in the Amended Credit Agreement and also removes EBITDA of $0.6m relating to MODUs (3) Dalma EBITDA is before exceptional items and is based on preliminary unaudited information and subject to change (4) Combined EBITDA includes estimated synergies of >$10m on a run rate basis (5) Leverage shown based on adjusted EBITDA of $246m for KCAD and combined EBITDA of $366m
Sources $m Uses $m
Debt Financing 425 Existing Debt Refinancing/Rollover 362
Cash on balance sheet 84 Consideration payable in cash 100
Transaction fees 41
Transaction VAT 6
Total Cash Sources 509 Total Cash Uses 509
Shares issued by KCAD to sellers 220 Shares issued by KCAD to sellers 220
Total Transaction Sources 729 Total Transaction Uses 729
As of 31-Dec-2017 As of 31-Dec-2017E Adjustment
USD millions KCA Deutag xEBITDA5 Wave xEBITDA PF Combined xEBITDA5
Cash and Cash Equivalents (31-Dec-17) 108 0.5x 1 0.0x (84) 25 0.1x
Revolver ($275m Capacity) - - - -
Dalma Guarantee Facility ($20m Capacity) - - - -
$375m Sr. Secured TLB due 2020 359 - - 359
HSBC Oman Term Loan 48 - - 48
Dalma Senior Facilities - 357 (357) -
Total Bank Debt 407 1.8x 357 3.3x (357) 407 1.1x
$375m 7.250% Sr. Secured Notes due 2021 375 - - 375
$535m 9.875% Sr. Secured Notes due 2022 535 - - 535
Acquisition financing $425m - - 425 425
Finance Lease & Other Debt 3 - - 3
Total Debt, Gross 1,320 5.4x 357 3.3x 68 1,745 4.8x
Total Debt, Net 1,212 4.9x 356 3.2x 1,720 4.7x
31 December 2017
KCAD: EBITDA before exceptional items 222
KCAD: Adjusted EBITDA2 246
Dalma: 31-Dec-2017E EBITDA before exceptional items3 110
PF Synergies and Combined EBITDA4 11 366
Capitalisation Table if Existing Dalma Facilities refinanced with New debt
Closing Remarks
28
Fourth Quarter Investor Presentation
• Backlog position of $5.2 billion across a blue chip company base
• Full year 2017 EBITDA $221.5m and Q4 2017 results of $65.8 million EBITDA
• Increased activity on the new Cat J and Hebron contracts for Offshore
• Strong liquidity position at $230 million
• Acquisition of the Omani and Saudi Arabian businesses of Dalma Energy LLC
• Good tendering activity for Land, with a number of significant contract awards for Bentec
