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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
THIRD QUARTER 2018
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
Third Quarter Investor Presentation
1 Q3 Key Highlights
2 Operational Highlights
3 Business Update
4 Business Unit Financials
5 Group Results
6 Summary
7 Appendix
Q3 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
1Q3 2018 Group revenue of $346m(1) (Q3 2017: $309m) and Q3 2018 EBITDA of $71m(1)
(Q3 2017: $55m) respectively
2Ongoing integration of the Omani and Saudi Arabian businesses of Dalma Energy LLC
progressing on plan
3 Several contract awards within the Land Business
4Combined contract backlog of $6.0bn (at 1 November 2018) across a blue chip customer
base
5 Available liquidity of $174m at 30 September 2018
(1) Financial results noted above include results from the Dalma business which was acquired 30 April 2018
1
2
3
5
4
KCA Deutag Operations are Diversified Across Global Markets
Baku
London Bad Bentheim
Tyumen
Nizwa
St. Johns
Bergen
Dubai
Land Drilling Offshore Services RDS offices BentecRegional offices
Aberdeen (HQ)
North Sea
/Norway
17 Plat
Europe &
Caspian
7 Rigs
Caspian
7 Plat
Russia
17 Rigs
Middle
East
41 Rigs
Angola
2 Plat
Africa
11 Rigs
Brunei
1 Rig
Canada
1 Plat
Map shows position at 1 November 2018
(1) The % split of LTM EBITDA is calculated using total KCAD group LTM Proforma EBITDA of $321m (after corporate costs of
$19m)
Russia
Sakhalin
3 Plat
PRESENCE IN KEY AREAS
130
59 5444
19
0
30
60
90
120
150
Europe North Africa Middle East North Sea Russia
Ye
ars
4
Geographical EBITDA Split(1)
Market Outlook by Business Unit
5
Business Units Outlook
Land
Drilling
Europe / Kazakhstan High levels of tendering continues across most markets
Conversion to contract awards remains slow and highly
competitive
Pricing remains under pressure
Utilisation levels are slowly increasing
New contract awards across Europe, Russia and the Middle
East
Russia
Africa
Middle East
BentecReasonable tendering activity in a competitive market
Further Top Drive wins in Q3
Offshore
Services
North Sea Activity remains steady with one contract extension
International Stable activity and new Joint Venture with Socar AQS
RDSLimited activity but tendering increasing; seeking
diversification opportunities
Ongoing Integration of the Omani and Saudi Arabian Businesses of Dalma Energy LLC
6
Target synergies ($16m EBITDA & $2m capex)
EBITDA synergies by type
Focus on integration
Continued adoption of KCA Deutag Way
• Integration proceeding as planned and on time
• SAP system has now been successfully rolled out in Oman
and Saudi
Delivering cost synergies
• We have further increased our expectation of run rate
EBITDA synergies from $11.8m (Q2) to $15.7m (Q3)
• Full run rate synergy realisation still targeted for Q2 2019
• One third of synergies secured after of 5 months of operation
• This equates to an annual run rate per year of c. $5m per
annum
Unlocking further revenue synergies
• Actively engaged with customers
• Opportunities for collaboration between business units
Strong HSSE Performance Continues
7
1 Total Recordable Incident Rate per 200,000 man hours. This is a rolling 12 month average2 Dalma business have been incorporated from May 20183 KCAD Total Recordable Incident Rate is directly comparable with IADC’s Total Recordables (RCRD) statistic
Note: IADC stands for International Association of Drilling Contractors
Offshore Services alongside our client
CNRI and other strategic partners win
two awards at The Oil and Gas UK
Awards ceremony
Q3 2018
0.231,2
3
IADC industry
average 0.693 for
Q2 2018
Stable Backlog Providing Excellent Visibility
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-November-2018 8
Total contract backlog as at 1 November 2018
Total contract backlog by BU as at 1 November 2018
Total contract backlog as at 1 August 2018
Total contract backlog by BU as at 1 August 2018
Contrac t Platform
Client Country Assets Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 end date status #
Exxon Canada Hebron Mar-46 Operat ing 1
Equinor (Statoil) Norway CAT J (2) May-36 Operat ing 2
Equinor (Statoil) Norway Oseberg's (4) & Kvitebjorn Oct-28 Operat ing / Stacked 3/2
Exxon Angola Kizomba (2) Oct-28 Stacked 2
Point Resouces Norway Ringhorne Dec-25 Stacked 1
AIOC Azerbaijan Azeris, SD, DWG, Cop & Chirag Dec-24 Operat ing 7
Total UK Alwyn / Dunbar May-23 Operat ing / Stacked 1/1
Nexen UK Scott Feb-23 Operat ing 1
COP UK Britannia Nov-22 Stacked 1
Equinor (Statoil) Norway Pipe pool management Oct-22 Active mgmt. contrac t
CNR UK Ninian's (2) Tiffany Nov-21 Operat ing / Stacked 1 /2
SEIC Russia LA, PA & PB May-21 Operat ing 3
Enquest UK Thist le & Heather May-20 Operat ing / Stacked 1/1
2 0 18 2 0 19 2 0 2 0
Robust Offshore Services Contract Backlog
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Contract and rig status shown as at 1 November 2018
Denotes change since last earnings call
Firm
Options
Utilisation includes 29 Dalma Rigs on a proforma basis from 2017 Historical utilisation represents actual utilisation calculated on a bi-monthly basisForward contracted utilisation represents the current contracted position
Continued Focus on Building Utilisation
10
Historical and Forward Contracted Utilisation
Utilisation in Q3 2018 was 59% and 62% in Q4 2018
Several contract wins in Europe, Russia, Oman, Iraq and UAE
Source: Company information. EBITDA shown after corporate overhead allocations. Notes: (1) 2 months of Dalma only (includes $0.6m synergies)
(2) Includes $1.6m synergies(3) Bentec shown before eliminations
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Land & Bentec Financial Performance
Land Quarterly EBITDA ($m)
Bentec Quarterly EBITDA ($m)(3)
= EBITDA Margin
Land YTD Revenue & EBITDA ($m)
Bentec YTD Revenue & EBITDA ($m) (3)
33%30%
1% 0%
(1) (2)
33%29% 38% 23% 31%34%35%
(3%)0% 11% (6%) 6%1%2%
= EBITDA Margin
12
Offshore & RDS Financial Performance
Offshore Services Quarterly EBITDA ($m)(1)
RDS Quarterly EBITDA ($m)
18%15% 10% 13% 16%
Source: Company information. EBITDA shown after corporate overhead allocations.
Notes: (1) Q1 2018 EBITDA shows $12m relating to MODUs
Offshore Services YTD Revenue & EBITDA ($m)(1)
RDS YTD Revenue & EBITDA ($m)
9%16%
1% 4%
10%9%
11%0% 3% 10% 1%(1%)4%
KCA Deutag Group LTM EBITDA and Pro Forma LTM EBITDA
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Q3 2018 LTM EBITDA
LTM
EBITDA
$248m
Q3 2018 LTM Pro Forma EBITDA
LTM
EBITDA
$321m
(1) Q3 2018 LTM EBITDA includes $2.2m of actualised synergies(2) Q3 2018 LTM Pro Forma EBITDA includes $15.7m of Pro Forma synergies
240
28
(19)
248
Q3 2018 LTM EBITDA ($m)
KCAD LTM
Corporate Costs
Total
Ex-Dalma (May - September)
240
101
(19)
321
Q3 2018 LTM Pro Forma EBITDA ($m)
KCAD LTM
Ex-Dalma LTM
Corporate Costs
Total
(1) (2)
Q3 2018 Q2 2018 Q3 2017 2018 YTD 2017 YTD
$'m $'m $'m $'m $'m
Cash generated from operations 2.4 10.5 45.4 75.4 82.8
Tax paid (6.3) (9.7) (5.0) (24.1) (24.7)
Cash flow from operating activities (3.9) 0.8 40.4 51.3 58.1
Capital expenditure (13.7) (12.4) (10.2) (35.5) (52.0)
Proceeds from sale of Fixed Assets 0.1 (0.1) 0.4 0.8 0.7
Interest received 6.0 5.7 5.3 17.7 16.9
Dalma acquistion 0.0 (440.2) 0.0 (440.2) 0.0
Other (0.5) 0.0 0.0 (0.5) 0.0
Cash flow from investing activities (8.1) (447.0) (4.5) (457.7) (34.4)
Interest paid (16.7) (62.8) (14.3) (93.4) (79.2)
Foreign exchange (2.5) (3.5) (8.3) (10.4) (15.5)
Dividend paid to minority shareholders 0.0 0.0 0.0 (0.3) (0.3)
Net Cash flow before debt
drawdown/(repayment)(31.2) (512.5) 13.3 (510.5) (71.3)
Drawdown/(repayment) of debt and
debt redemption/issuance costs(6.2) 431.0 (6.2) 418.5 (10.0)
Net cash flow (37.4) (81.5) 7.1 (92.0) (81.3)
Cash Flow and Working Capital
14
9
9
(1) Denotes the effect of foreign exchange rate changes on cash and bank overdrafts
(2) Deltas denote current quarter working capital movementFinancial results noted above do include results from the newly acquired Dalma businesses for May and June 2018
(1)
Free Cash Flow Working Capital (2)
Capital Structure
15
Net leverage as at 30 September 2018
(1) PF LTM EBITDA adjusted for unaudited LTM EBITDA of the acquired Dalma businesses of $86m and synergies of $15.7m
(2) Q3 2017 to Q1 2018 LTM EBITDA includes the $25m Holdco equity contribution as defined in the Amended Credit Agreement
(3) Facility ratings shown as at August 2018
(4) $15m increase to occur in Q4 2018 (included for PF purposes)
Net Debt Evolution
215 221 237
(1)
25 25 25
(3)
Capital Structure at 30 September 2018 Rating(3): B3/B-
TLB 1Oman 4
TLB 4Oman 16Revolver (Cash) 15IDTEC 1
TLB 4Oman 16Revolver (Guarantees)4 15IDTEC 1
TLB 4IDTEC 1
Closing Remarks
16
• Ongoing integration of the Omani and Saudi Arabian businesses of Dalma Energy LLC
progressing on plan
• Stable backlog position of $6.0 billion across a blue chip company base
• Q3 2018 results of $345m revenue and $71m EBITDA
• Several contract awards within the Land Business
• Strong HSE performance sustaining low group incident rate
Utilisation includes 29 Dalma Rigs on a proforma basis from 2017 to 31 October 2018, 24 rigs included from 1 November 2018Rig Total changes from 83 rigs to 77 rigs from 1 NovemberHistorical utilisation represents actual utilisation calculated on a bi-monthly basisForward contracted utilisation represents the current contracted position
Appendix 1 - Post Rig Retiral Utilisation position
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Historical and Forward Contracted Utilisation - Post Rig Retiral position
Utilisation in Q3 2018 was 59% and 65% in Q4 2018
