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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
THIRD QUARTER 2019
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
Q3 Key Highlights
3
Q3 2019 revenue of $318.2m (Q3 2018: $345.9m) and EBITDA of $74.5m (Q3 2018: $75.7m)
Land Drilling secures $460m of new contracts in the Middle East, Africa and Europe
Bentec awarded a multi-million dollar contract for seven cluster slider drilling rigs in Russia
4 Offshore services awarded contract extensions on two of their existing contracts
Contract backlog increased by 7% to $5.8bn (at 1 November 2019) across a blue chip customer base
Launched #enhancethebrand Well of Innovation campaign and several operating improvement initiatives
Financial results noted above include results from the Dalma business which was acquired 30 April 2018
2018 results restated in compliance with IFRS 16
1
2
3
4
5
6
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
7 Rigs
Caspian
7 Plat
Russia
17 Rigs
Middle
East
42 Rigs
Angola
2 Plat
Africa
11 Rigs
Canada
1 Plat
Map shows position at 1 November 2019
(1) The % split of LTM EBITDA is calculated using total KCAD group Q3 2019 LTM Proforma EBITDA of $316m (after corporate
costs of $16m)
Russia
Sakhalin
3 Plat
PRESENCE IN KEY AREAS
131
60 5545
20
0
30
60
90
120
150
Europe North Africa Middle East North Sea Russia
Ye
ars
4
Geographical EBITDA Split(1)
Baku
Market Outlook By Business Unit
5
Business Units Outlook
Land DrillingNew contract awards and extensions in Middle East, Africa and Europe
Utilisation levels steadily increasing despite the competitive pricing environment
BentecNew seven cluster slider rig contract award
Tendering activity continues in a difficult market
Offshore ServicesMarket remain stable with increased activity coming from reactivation
Continue to explore ways to expand into adjacent services
RDSNew tendering opportunities but very slow conversion rates
Targeting diversification in existing markets and the energy transition space
• Continued lower oil price and volatility driven by concerns around a global slowdown
• Customers continue to challenge suppliers for lower pricing
• Despite the competitive pricing environment we continue to improve utilisation and backlog
HSSE Performance Continues To Out Perform Industry Average
6
(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
Q3 2019
0.271,2
IADC industry
average 0.683 for
2018
KCA Deutag Nigeria Wins
Best HSE Performance Award
at the IADC Nigeria Chapter’s
2018 Safety Awards
Promoting increased
awareness through
safety campaigns to
drive to zero incidents
#enhancethebrand ‘Well Of Innovation’ Initiative
7
+veDRILLTM
Maintain
+veDRILLTM
Insight
+veDRILLTM
Design
+veDRILLTM
TurnRight
+veDRILLTM
Future
+veDRILLTM
Enhance
Go to www.wellofinnovation.com for more information, including case studies
Software products to significantly improve drilling efficiency, reduce downhole
problems and help drive towards full remote rig operations.
A digital approach to address human factors, enhance procedural compliance and
support rig personnel in making the right choices with the right information.
Innovations in maintenance, such as remote and condition based monitoring to
improve performance, equipment overhaul and repair replacement schedules.
Advanced data analytics tools to evaluate and analyse performance using a library of
years of historical drilling data to create continuous improvement cycles.
State of the art technology to design and upgrade rigs, and lead the drilling digital
transformation to reduce the man-hours required to complete projects.
Leadership in drilling innovation driven by the combination of our KCAD operational
expertise and Bentec rig and equipment manufacturing experience.
#enhancethebrand Improvement Initiatives
8
SKORE
Supply
Management
Functional
Support
Digitalisation
Customer
Centricity
Energy
Transition
Encourage a bottoms up approach where all employees can contribute ideas to
eliminate wasted time and spend and preserve cash.
Improve supply and inventory management to drive local spend efficiencies, cost
avoidance, strategic sourcing and stock optimization.
Review all support structures to ensure we can deliver more effective functional
support and operate at optimum performance.
Evaluate digital work streams from going paperless, building operational platforms to
identifying smarter technologies that allow us to deliver value to our customers.
Continue to deliver safe and incident-free services and further understand tough
customer challenges so we can invent innovative products and solutions.
Identify and implement internal carbon reduction projects and aggressively pursue
revenue generating opportunities in this space.
Improved Backlog With An Uptick In Land And 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 backlog amounts are estimates as of 1-November-2019 9
Total contract backlog as at 1 November 2019
Total contract backlog by BU as at 1 November 2019
Total contract backlog as at 1 August 2019
Total contract backlog by BU as at 1 August 2019
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 ay-36 Operating 2
Equinor (Stato il) Norway Oseberg's (4) & Kvitebjorn Oct-28 Operating / Stacked 3/2
AIOC Azerbaijan Azeris, SD, DWG, Cop & Chirag Apr-26 Operating 7
Vår Energi Norway Ringhorne Dec-25 Operating 1
Enquest UK Thistle, Heather & M agnus Dec-25 Operating / Stacked 1/2
CNOOC UK Scott Feb-25 Operating 1
CNR UK Ninian's (2) Tiffany Nov-24 Operating / Stacked 1/2
Exxon Angola Kizomba (2) Jan-24 Operating / Stacked 1/1
Total UK Alwyn / Dunbar M ay-23 Operating / Stacked 1/1
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 3
2019 2020 2021
Long Term Offshore Services Contract Backlog(1)
10
(1) Contract and rig status shown as at 1 November 2019
Firm
Options
Not Disclosed
Denotes change since last earnings call
1 Utilisation includes 29 Dalma Rigs on a proforma basis from 2017, and is shown after the retirement of 6 rigs on 1 November 2018 (including 5 Dalma rigs)Historical utilisation represents actual utilisation calculated on a bi-monthly basisForward contracted utilisation represents the current contracted position
Land Utilisation Shows Steady Increase
11
Historical and Forward Contracted Utilisation1
Utilisation in Q3 2019 was 73%
(1) 2 months of Dalma only (2) Adjusted to remove the one off Revenue increase of $14.3m relating to IFRS 15 (3) Bentec
results shown before intercompany eliminations12
Land & Bentec Financial Performance
Land Quarterly EBITDA ($m)
Bentec Quarterly EBITDA ($m) (3)
= EBITDA Margin
Land YTD Revenue & EBITDA ($m)
Bentec YTD Revenue & EBITDA ($m) (3)
32% 30%
0%
(1)
10%
(2)
(2)(2)
13
Offshore & RDS Financial Performance
Offshore Services Quarterly EBITDA ($m)(1)
RDS Quarterly EBITDA ($m)
(1) Q1 2018 EBITDA shows $12m relating to MODUs, margin for Offshore Services only
Offshore Services YTD Revenue & EBITDA ($m)
RDS YTD Revenue & EBITDA ($m)
14% 18%
4%
8%
= EBITDA Margin
Q3 2019 Q2 2019 Q3 2018 2019 YTD 2018 YTD
$'m $'m $'m $'m $'m
Cash generated from operations 40.1 102.1 7.4 168.2 87.9
Tax paid (5.6) (6.4) (6.3) (24.5) (24.1)
Cash flow from operating activities 34.5 95.7 1.1 143.7 63.8
Capital expenditure (16.2) (13.0) (13.7) (47.4) (35.5)
Acquisition of Holdco rig 0.0 0.0 0.0 (25.0) 0.0
Proceeds from sale of Fixed Assets 0.2 0.0 0.1 0.3 0.8
Interest received 5.9 6.5 6.0 19.0 17.7
Dalma acquistion 0.0 0.0 0.0 0.0 (440.2)
Other 0.0 (0.1) (0.5) 0.3 (0.5)
Cash flow from investing activities (10.1) (6.6) (8.1) (52.8) (457.7)
Interest paid (15.1) (83.8) (16.7) (117.7) (93.4)
Foreign exchange (5.1) 0.6 (2.5) (4.3) (10.4)
Dividend paid to minority shareholders (1.2) (0.2) 0.0 (1.7) (0.3)
Lease payments (7.4) (3.6) (5.3) (16.8) (14.9)
(4.4) 2.1 (31.5) (49.6) (512.9)
(3.4) (19.3) (5.9) (28.1) 420.9
Increase in loan from parent company 0.0 0.0 0.0 25.0 0.0
Net cash flow (7.8) (17.2) (37.4) (52.7) (92.0)
Net Cash flow before debt
drawdown/(repayment)
Drawdown/(repayment) of debt and debt
redemption/issuance costs
Cash Flow and Working Capital
14
9
9
(1) 2018 results restated in compliance with IFRS 16 (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 (1) Working Capital (3)
Capital Structure
15
Net leverage as at 30 September 2019
(1) PF LTM EBITDA adjusted for synergies of the acquired Dalma businesses of $7.2m. (2) Q1,Q2 & Q3 2019 LTM EBITDA includes
the second $25m Holdco equity contribution, as defined in the Amended Credit Agreement. (3) In addition to the $215m Revolver Cash
facility, we also have $115m of guarantee facilities
Net Debt Evolution
306
(1)
(3)
(2)
(3)
295
2525
(2)
25300
(2)
Amount Utilised Coupon Maturity Facility Rating Leverage
Revolver Cash ($215m) 150 L+400 Mar-22 Caa1/CCC+ 0.46x
Senior Secured Term Loan 411 L+675 Feb-23 Caa1/CCC+ 1.27x
Oman Term Loan 20 L+400 Dec-20 - 0.06x
Total Bank Debt 582 1.79x
Senior Secured Notes 2021 375 7.250% May-21 Caa1/CCC+ 1.15x
Senior Secured Notes 2022 535 9.875% Apr-22 Caa1/CCC+ 1.65x
Senior Secured Notes 2023 400 9.625% Apr-23 Caa1/CCC+ 1.23x
Total Institutional Debt 1,892 5.82x
Other debt 3
Gross Debt 1,895 5.83x
Cash 121 0.37x
Net Debt 1,774 5.46x
Finance lease liabilites 55 0.17x
Net Debt per balance sheet 1,829 5.63x
Closing Remarks
16
• Bentec awarded a multi-million dollar contract for seven cluster slider drilling rigs in Russia
• Land Drilling secures $460m of new contracts in the Middle East, Africa and Europe
• Offshore services awarded contract extensions on two of their existing contracts
• Q3 2019 revenue of $318.2m and EBITDA of $74.5m
• Contract backlog of $5.8bn (at 1 November 2019) across a blue chip customer base
• Launched #enhancethebrand Well of Innovation campaign and several operating improvement initiatives
KCA Deutag Group LTM EBITDA and Pro Forma EBITDA(1)
18
Q3 2019 LTM EBITDA(2)
LTM
EBITDA
$293m
Q3 2019 Pro Forma LTM EBITDA
LTM
EBITDA
$300m
(1) Q3 2019 LTM figures include restated 2018 figures in compliance with IFRS 16 (2) Business Unit proportions calculated basedon group EBITDA, before corporate overheads, of $308m. (3) Q3 2019 LTM EBITDA includes $21.1m of actualised synergies.(4) Q3 2019 Pro Forma LTM EBITDA includes $7.2m of additional Pro Forma synergies.
(3) (4)
KCAD LTM 204
Ex-Dalma LTM 104
Corporate Costs (16)
Total 293
Q3 2019 LTM EBITDA ($m)
KCAD LTM 204
Ex-Dalma LTM 112
Corporate Costs (16)
Subtotal 300
Holdco Equity Contribution 25
Total 325
Q3 2019 LTM Pro Forma EBITDA ($m)
Integration of Dalma Energy LLC
19
Target synergies ($28m EBITDA & $3m capex)
EBITDA synergies by type
Integration plan complete
• Expectation of run rate EBITDA synergies increased slightly
from $27.6m (Q2 2019) to $28.3m (Q3 2019)
• Monthly run rate achievement in September 2019 of $2.3m,
being 97%1 of total savings identified
• Close to full run rate synergy realisation
(1)
(1) Run rate synergy achievement based on 30 September 2019 actual achievement
