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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 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
Third Quarter 2020 Investor Presentation
1 Market Update & Safety Performance
2 Financial Restructuring Update
3 Growth Strategy & #enhancethebrand Initiatives
4 Cost Savings & Business Unit Financials
5 Backlog & Utilisation
6 Cashflow
7 Summary
Q3-2020 key highlights
3
Staying focused on proactively managing what we can control during this pandemic
Financial restructuring expected to close next week
Delivering quick wins with Growth Strategy & #enhancethebrand initiatives
Q3-20 revenue of $261.2m (Q3-19: $318.2m) and EBITDA of $55.7m (Q3-19: $74.5m)
A number of contract extensions and an award in Land drilling
Contract backlog stable at $4.7bn (at 1 November 2020) across a blue chip customer base
1
2
3
4
5
6
Market updates
4
a hi-level brief from our point of view
Short Term
Pandemic risk
Further COVID-19 waves
impacting the business as
lockdowns are re-introduced
in multiple locations.
Longer Term
Energy Transition
Investments are growing in
Technology and Automation,
ESG, Wind and Solar,
Decarbonisation, Hydrogen...
Medium Term
Oil Demand
Slow economic recovery will
keep oil demand lower and
further impact OFS and
Drilling activity and prices.
Safety performance better than 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
Q3 2020
0.291,2
IADC industry
average 0.633 for
2019
Reminding all employees
they can and should stop
all questionable activities
and improper behaviours
to Drive to Zero incidents.
Continuing to monitor the
situation in Azerbaijan. An
agreement has now been
signed to end the military
action in disputed regions.
Total Recordable Incident Rate
From focused execution to strategic tactics
6
The organization continues to deliver quick wins with the #enhancethebrand initiatives
Ann. Savings achieved YTD Q3-2020
Growth Strategy of the Group
c. $68m
Functional Support
• Introduced Shared Services & Middle East Ops Hubs
• c.$68m annualized savings & cost avoidance achieved
Digitalization
• Analytics and Team collaboration delivers $1.8m in
transport optimization costs in Russia.
• Piloting AI model to differentiate Rig from Well related
problems with unstructured text contained in database.
Reduction of Carbon Footprint
• 30% reduction in plastic waste achieved in one year.
• Using the Electric grid to power drilling operations.
Leveraging our Group DNA
• Piloting a reliable Battery Energy Storage System.
• Presented a Modular Offshore Wind Substation concept.
Q3-2020 Results
7
Cost savings have significant impact in Q3
YTD Q3-2020 Actual vs. Target Savings
LAND | OFFSHORE | RDS | BENTEC | CORPORATE
1 Before non-recurring items
Consolidated Revenue
Consolidated EBITDA (1) Target Savings Split
1) Adjusted to remove the one off Revenue increase in Q2 2019 of $14.3m relating to IFRS 15
2) Bentec results shown before intercompany eliminations8
Land & Bentec financial performance
Land Quarterly EBITDA ($m)
Bentec Quarterly EBITDA ($m) (2)
= EBITDA Margin
Land YTD Revenue & EBITDA ($m)
Bentec YTD Revenue & EBITDA ($m) (2)
30% 31%
10%
3%
(1)(1)(1)
9
Offshore & RDS financial performance
Offshore Services Quarterly EBITDA ($m)
RDS Quarterly EBITDA ($m)
Offshore Services YTD Revenue & EBITDA ($m)
RDS YTD Revenue & EBITDA ($m)
18% 17%
8% 3%
= EBITDA Margin
Backlog evolution to 1 November 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-November-2020 10
Total contract backlog as at 1 November 2020
Total contract backlog by BU as at 1 November 2020
Total contract backlog as at 1 August 2020
Total contract backlog by BU as at 1 August 2020
KCA Deutag operations are diversified across global markets
London Bad Bentheim
Tyumen
Nizwa
St. Johns
Bergen
Land Drilling Offshore Services RDS offices BentecRegional offices
Aberdeen (HQ)
North Sea
/Norway
18 Plat
Europe &
Caspian
5 Rigs
Caspian
7 Plat
Russia
17 Rigs
Middle
East
43 Rigs
Angola
2 Plat
Africa
10 Rigs
Canada
1 Plat
Map shows proforma position for year end 2020
(1) The % split of LTM EBITDA is calculated using total KCAD group Q3 2020 LTM Proforma EBITDA of $287m (after corporate
costs of $12m)
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
11
Historical utilisation represents actual utilisation calculated on a bi-monthly basisForward contracted utilisation represents the current contracted position and is shown after the retirement of 3 rigs on 1 December 2020Utilisation pro-forma for the inclusion of rigs suspended under contract as of 1 November 2020
Land utilisation
12
Historical and Forward Contracted Utilisation
78 77 76 76
= Average Number of Rigs
7777777782
Offshore services contract backlog(1)
13
(1) Contract and rig status shown as at 1 November 2020
Denotes change since last earnings call
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
Q3 2020 Q2 2020 Q3 2019 2020 YTD 2019 YTD
$'m $'m $'m $'m $'m
Cash generated from operations 24.4 59.1 40.1 102.8 168.2
Tax paid (7.9) (11.2) (5.6) (30.4) (24.5)
Cash flow from operating activities 16.5 47.9 34.5 72.4 143.7
Capital expenditure (14.1) (9.5) (16.2) (38.4) (47.4)
Acquisition of Holdco rig 0.0 0.0 0.0 0.0 (25.0)
Proceeds from sale of Fixed Assets 0.2 0.3 0.2 1.0 0.3
Interest received 0.0 2.5 5.9 7.6 19.0
Other 0.0 0.0 0.0 0.0 0.3
Cash flow from investing activities (13.9) (6.7) (10.1) (29.8) (52.8)
Interest paid (23.4) (7.2) (15.1) (46.2) (117.7)
Foreign exchange 2.5 2.5 (5.1) (2.4) (4.3)
Dividend paid to minority shareholders (2.7) (0.1) (1.2) (3.1) (1.7)
Lease payments (7.5) (7.9) (7.4) (22.8) (16.8)
(28.5) 28.5 (4.4) (31.9) (49.6)
(5.5) (2.2) (3.4) (9.4) (28.1)
Increase in loan from parent company 0.0 0.0 0.0 0.0 25.0
Net cash flow (34.0) 26.3 (7.8) (41.3) (52.7)
Net Cash flow before debt
drawdown/(repayment)
Drawdown/(repayment) of debt and debt
redemption/issuance costs
Cash flow and working capital
14
9
(1) YTD standstill agreement fees of $45m included within interest paid and cash generated from operations – 2020 YTD includes
$26m within interest paid and $19m within cash generated from operations
(2) Denotes the effect of foreign exchange rate changes on cash and bank overdrafts
(3) Deltas denote quarterly working capital movement – Q2 and Q3 2020 contain $9m and $10m of restructuring fees respectively
(2)
Free Cash Flow Working Capital (3)
(1)
(1)
Proforma capital structure
PF leverage 1.4x
PF gross debt $505m
PF cash $113m
PF net debt $392m
LTM EBITDA $274m
Pro Forma Capital Structure at 30 September 2020
Capital Structure at 30 September 2020
Proforma Cash takes in to account the remaining $35m transaction fees ($45m of the estimated $80m total transaction fees have
already been paid by 30 September 2020)
$225m of Super Senior Basket Capacity partially utilised by $81m of guarantee facilities
$225m Super Senior
Basket Capacity
$m
$m
15
PF leverage 6.6x
Gross debt $1,935m
PF cash $113m
PF net debt $1,822m
LTM EBITDA $274m
Closing remarks
16
• Delivering quick wins with Growth Strategy & #enhancethebrand initiatives
• Financial restructuring expected to close next week
• Q3-20 revenue of $261.2m (Q3-19: $318.2m) and EBITDA of $55.7m (Q3-19: $74.5m)
• Staying focused on proactively managing what we can control during this pandemic
• A number of contract extensions and an award in Land drilling
• Contract backlog stable at $4.7bn (at 1 Nov 2020) across a blue chip customer base
