2
Disclaimer
The materials contained herein (the “Materials”) have been prepared by Eurasia Drilling Company Limited (the “Company”) and its subsidiaries and associates (the “Group”) solely for use at the presentation on 26 and 27 March 2008. By accepting the Materials or attending such presentation, you are agreeing to maintain absolute confidentiality regarding the information disclosed in the Materials and further agree to the following limitations and notifications.The information contained in the Materials has not been independently verified. The information set out herein is subject to updating, completion, revision, verification and amendment and such information may change materially. The Company is under no obligation to update or keep current the information contained in the Materials or in the presentation to which it relates and any opinions expressed in them are subject to change without notice. The Company and its affiliates, advisors and representatives shall have no liability whatsoever (in negligence or otherwise) for any loss whatsoever arising from any use of the Materials.The Materials are strictly confidential and do not constitute or form part of, and should not be construed as, an offer, solicitation or invitation to subscribe for, underwrite or otherwise acquire, any securities of the Company or any member of the Group nor should they or any part of them form the basis of, or be relied on in connection with, any contract to purchase or subscribe for any securities of the Company or any member of the Group or global depositary receipts representing the Company’s shares nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. This document is not an advertisement and not a prospectus. The Materials have been provided to you solely for your information and background and are subject to amendment. The Materials (or any part of them) may not be reproduced or redistributed, passed on, or the contents otherwise divulged, directly or indirectly, to any other person or published in whole or in part for any purpose without the prior written consent of the Company. Failure to comply with this restriction may constitute a violation of applicable securities laws.No representation or warranty, expressed or implied, is made by the Company and any of its affiliates as to the fairness, accuracy, reasonableness or completeness of the information contained herein and no reliance should be placed on it. Neither the Company nor any other person accepts any liability for any loss howsoever arising, directly or indirectly, from a reliance on the Materials.The Materials may include forward-looking statements. These forward-looking statements are statements regarding the Group’s intentions, estimates, forecasts, projections, beliefs or current expectations concerning, among other things, the Group’s results of operations, financial condition, liquidity, prospects, growth, strategies and the oil field services industry. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward-looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which it operates may differ materially from those expressed, implied or suggested by the forward-looking statements contained in the Materials. In addition, even if the Group’s results of operations, financial condition and liquidity and the development of the industry in which it operates are consistent with the forward-looking statements contained in the Materials, those results or developments may not be indicative of results or developments in future periods. Neither the Company nor any other member of the Group undertake to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise after the date of the Materials. In particular, we note that, unless indicated otherwise, the market and competitive data in these Materials have been prepared by Douglas-Westwood Limited (“Douglas-Westwood”), a global consulting and services organization focused on the energy and marine industries. Douglas-Westwood compiled the historical data presented in these Materials from a variety of published and in-house sources, including interviews and discussions with market participants, market research, web-based research and competitor annual accounts. Douglas-Westwood compiled their projections for the market and competitive data beyond 2006 in part on the basis of such historical data and in part on the basis of their assumptions and methodology. In light of the absence of publicly available information on a significant proportion of participants in the industry, many of whom are small and/or privately owned operators, the data on market sizes and projected growth rates should be viewed with caution.The Materials are not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction. The Materials are not for publication, release or distribution in Australia, Canada, Japan or the United States.
4
EDC at a Glance
Financial Highlights
US$m 2005 2006 1H06 1H07 Sales 677 1,088 501 673 growth (%) — 60.7% — 34.4% EBITDA 80 166 86 136 margin (%) 11.9% 15.3% 17.2% 20.2% Net income 34 91 50 79 margin (%) 5.0% 8.3% 10.1% 11.7%
The largestindependent
onshore driller in Russia
Exposureto high growth
markets
Highly qualified personnel &
leading management team
1
2
3
4
5
6
Established track record of profitable
growth and cash flow generation
Broad, powerful and growing
production base
Mutually beneficial relationship with LUKOIL
and successful growth with other IOCs/E&Ps and
geographies
Operational Highlights
2005 2006 2007 Drilling Crews 77 96 111
Drilling Rigs 180 178 195
Meters drilled (thousands)
1,699 2,495 3,268
growth (%) – 46.9% 31%
Source: Company data
5
The Largest Independent Drilling Contractor in Russia
Market share by drilling volume
Source: Douglas-Westwood1 Owned by Soyuzneftegaz2 Owned by Schlumberger
Estimated total drilling volume in Russia (2006):
12.3 million metres
Present in all key regions
EDC expansion area
Exposureto high growth
markets
The largestindependent
onshore driller in Russia
Highly qualified personnel &
leading management team
1
2
4
5
6
Established track record of profitable
growth and cash flow generation
Broad, powerful and growing
production base
Mutually beneficial relationship with LUKOIL
and successful growth with other IOCs/E&Ps and
geographies
3
Exposureto high growth
markets
The largestindependent
onshore driller in Russia
Highly qualified personnel &
leading management team
1
2
4
5
6
Established track record of profitable
growth and cash flow generation
Broad, powerful and growing
production base
Mutually beneficial relationship with LUKOIL
and successful growth with other IOCs/E&Ps and
geographies
3
Caspian Sea
KAZAKHSTANUZBEKISTAN
Moscow (Headquarters)
Perm
Zhirnovsk
Kogalym
Naryan-Mar
WESTERN SIBERIA
VOLGA-URALS
TIMAN-PECHORA
Astrakhan
TURKMENISTAN
EASTERN SIBERIA
Kaliningrad2
VankorUsinsk
ASTRA1
EDC presented area
6
Competitive Positioning Drilling services Workover services Logging Geographic coverage
Dril
ling
Dire
ctio
nal D
rillin
g
Cem
entin
g
Com
plet
ions
Rus
sia
Dril
ling
Rig
s in
O
pera
tion
Rus
sia
Dril
ling
Rig
s O
wne
d
Met
ers
Dril
led
2006
(0
00s)
Wor
kove
r
Rem
edia
l Cem
entin
g
Frac
turin
g
Sid
etra
ckin
g
MW
D -
Side
track
ing
Rus
sia
W/O
Rig
s O
pera
tiona
l
Rus
sia
Wor
kove
r Rig
s O
wne
d
(re) P
erfo
ratio
n
Pro
duct
ion
Logg
ing
Mud
Log
ging
Tim
an-P
echo
ra
Vol
ga-U
rals
Eas
tern
Sib
eria
Wes
tern
Sib
eria
Oth
er
178¹ 178¹ 2,495 58¹ 58¹
70 910 15 20 492 44 59 474 43 7 7
35 40
SSK2
SGK3
Source: Douglas-Westwood, Company data as of January 1, 20071 195 drilling rigs as of 31 December 20072 Owned by Soyuzneftegaz3 Siberian Geophysika owned by Schlumberger4 Part of the Abbot Group
4
EDC are the largest independent drilling company in Russia, with 195 operational drilling rigs (as of December 31 2007) performing in excess of 3.2 million metres of drilling.
7
Exposure to High Growth Markets
Russian onshore OFS market size¹ Russian E&P drilling outlook
Outstanding oilfield services growth in Russia, led by the drilling segment
Source: Douglas-Westwood, in real 2007 terms1 Excluding equipment manufacturing and formation evaluation services (production, logging, perforation and seismic acquisition services)2 Completion, fishing/milling, drilling and completion fluids, bit programme, cementing, casing, tubing and directional drilling3 Licences, insurance, miscellaneous transport and other
19
12
0
5
10
15
20
25
2005E 2006E 2007F 2008F 2009F 2010F 2011F
Met
res
drill
ed (m
illio
ns)
27
11
0
5
10
15
20
25
30
2005E 2006E 2007F 2008F 2009F 2010F 2011F
(US
$ bi
llion
)
CAGR (’06-11): 21% CAGR (’06-11): 9%
Other3
Technology Services²Workover
Drilling Others
Western Siberia
Timan-Pechora
Volga-Urals
Eastern Siberia
Exposureto high growth
markets
The largestindependent
onshore driller in Russia
Highly qualified personnel &
leading management team
1
2
4
5
6
Established track record of profitable
growth and cash flow generation
Broad, powerful and growing
production base
Mutually beneficial relationship with LUKOIL
and successful growth with other IOCs/E&Ps and
geographies
3
Exposureto high growth
markets
The largestindependent
onshore driller in Russia
Highly qualified personnel &
leading management team
1
2
4
5
6
Established track record of profitable
growth and cash flow generation
Broad, powerful and growing
production base
Mutually beneficial relationship with LUKOIL
and successful growth with other IOCs/E&Ps and
geographies
3
8
1,045 1,0951,364
1,486 1,509
1,173
2,034
2,330
2,797
0
500
1,000
1,500
2,000
2,500
3,000
2005A 2006A 2007A 2008E 2009E
(thou
sand
met
ers)
Total meters contracted¹, LFA² Total meters drilled¹, Actual Backlog
Mutually Beneficial Relationship with LUKOIL
1 Production and Exploration drilling. Source: Company data2 LUKOIL Framework Agreement
LUKOIL drilling record
As well as being responsible for the majority of LUKOIL’s drilling activity, EDC is now retained by both GazpromNeft and Rosneft
Source: CDU TEK 2007
LUKOIL’s competitive drilling position
Exposureto high growth
markets
The largestindependent
onshore driller in Russia
Highly qualified personnel &
leading management team
1
2
4
5
6
Established track record of profitable
growth and cash flow generation
Broad, powerful and growing
production base
Mutually beneficial relationship with LUKOIL
and successful growth with other IOCs/E&Ps and
geographies
3
Exposureto high growth
markets
The largestindependent
onshore driller in Russia
Highly qualified personnel &
leading management team
1
2
4
5
6
Established track record of profitable
growth and cash flow generation
Broad, powerful and growing
production base
Mutually beneficial relationship with LUKOIL
and successful growth with other IOCs/E&Ps and
geographies
3
9
Successful Growth in Customer Base with Other IOC/E&Ps
Successful efforts to grow customer base with both Russian and Western oil companies
Production drilling contracts with Rosneft and Gazpromneft
Side-tracking services with Rosneft
Contract with LUKOIL / ConocoPhillips joint venture
Drilled 770.5 th. meters in 2007 versus 461.5 th meters in 2006 for customers other than LUKOIL group companies
1 EDC performs drilling work for LUKOIL over and above what is contracted under the LFA
Our scale and expertise make us the natural partner for Russian Majors and IOCs/E&Ps
2006A (2,495 th. meters drilled)
2007A (3,268 th. meters drilled)
17%1%
82%
Other
8%
15%
1%
76%
Other
EDC customer portfolio Highlights
1
1
Source: Company data
Exposureto high growth
markets
The largestindependent
onshore driller in Russia
Highly qualified personnel &
leading management team
1
2
4
5
6
Established track record of profitable
growth and cash flow generation
Broad, powerful and growing
production base
Mutually beneficial relationship with LUKOIL
and successful growth with other IOCs/E&Ps and
geographies
3
Exposureto high growth
markets
The largestindependent
onshore driller in Russia
Highly qualified personnel &
leading management team
1
2
4
5
6
Established track record of profitable
growth and cash flow generation
Broad, powerful and growing
production base
Mutually beneficial relationship with LUKOIL
and successful growth with other IOCs/E&Ps and
geographies
3
10
Segmentation of the Russian Oilfield Services Market
Western Siberia68%
Volga-Urals 14%
Timan-Pechora5%
Eastern Siberia 9%
Other 4%
Estimated Market Size by Region (2006)Estimated Market Size by Activity (2006)
Other drillingservices2
6% Core EDC services
Source: Douglas-Westwood1 Completion, fishing/milling, drilling and completion fluids, bit programme, cementing, casing, tubing and directional drilling2 Licences, insurance, miscellaneous transport and other
Current EDC
presence
New EDC target market
EDC deliver to client all key parts of the well drilling process
Technology services 1
48%
Drilling Rig & Crew20%
Workover Rig & Crew26%
Selected services offered by EDC
Exposureto high growth
markets
The largestindependent
onshore driller in Russia
Highly qualified personnel &
leading management team
1
2
4
5
6
Established track record of profitable
growth and cash flow generation
Broad, powerful and growing
production base
Mutually beneficial relationship with LUKOIL
and successful growth with other IOCs/E&Ps and
geographies
3
Exposureto high growth
markets
The largestindependent
onshore driller in Russia
Highly qualified personnel &
leading management team
1
2
4
5
6
Established track record of profitable
growth and cash flow generation
Broad, powerful and growing
production base
Mutually beneficial relationship with LUKOIL
and successful growth with other IOCs/E&Ps and
geographies
3
Exposureto high growth
markets
The largestindependent
onshore driller in Russia
Highly qualified personnel &
leading management team
1
2
4
5
6
Established track record of profitable
growth and cash flow generation
Broad, powerful and growing
production base
Mutually beneficial relationship with LUKOIL
and successful growth with other IOCs/E&Ps and
geographies
3
11
652
898
1174
0
200
400
600
800
1,000
1,200
2005 2006 2007W
ells
dril
led
(No)
1,699
2,495
3,268
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2005 2006 2007
Met
ers
drille
d ('0
00)
Growth = 31%
History of Operational Growth
Growth = 31%
EDC’s High growth in meters drilled EDC’s High growth in wells drilled
Source: Company data
Exposureto high growth
markets
The largestindependent
onshore driller in Russia
Highly qualified personnel &
leading management team
1
2
4
5
6
Established track record of profitable
growth and cash flow generation
Broad, powerful and growing
production base
Mutually beneficial relationship with LUKOIL
and successful growth with other IOCs/E&Ps and
geographies
3
Exposureto high growth
markets
The largestindependent
onshore driller in Russia
Highly qualified personnel &
leading management team
1
2
4
5
6
Established track record of profitable
growth and cash flow generation
Broad, powerful and growing
production base
Mutually beneficial relationship with LUKOIL
and successful growth with other IOCs/E&Ps and
geographies
3
Exposureto high growth
markets
The largestindependent
onshore driller in Russia
Highly qualified personnel &
leading management team
1
2
4
5
6
Established track record of profitable
growth and cash flow generation
Broad, powerful and growing
production base
Mutually beneficial relationship with LUKOIL
and successful growth with other IOCs/E&Ps and
geographies
3
12
Strong Asset Base Providing Platform for Growth
Source: Company data
Number of rigs
Exposureto high growth
markets
The largestindependent
onshore driller in Russia
Highly qualified personnel &
leading management team
1
2
4
5
6
Established track record of profitable
growth and cash flow generation
Broad, powerful and growing
production base
Mutually beneficial relationship with LUKOIL
and successful growth with other IOCs/E&Ps and
geographies
3
Exposureto high growth
markets
The largestindependent
onshore driller in Russia
Highly qualified personnel &
leading management team
1
2
4
5
6
Established track record of profitable
growth and cash flow generation
Broad, powerful and growing
production base
Mutually beneficial relationship with LUKOIL
and successful growth with other IOCs/E&Ps and
geographies
3
Exposureto high growth
markets
The largestindependent
onshore driller in Russia
Highly qualified personnel &
leading management team
1
2
4
5
6
Established track record of profitable
growth and cash flow generation
Broad, powerful and growing
production base
Mutually beneficial relationship with LUKOIL
and successful growth with other IOCs/E&Ps and
geographies
3
Workover Rigs as of 31 December 2007: 88 Drilling Rigs as of 31 December 2007: 195
Western SiberiaDrilling rigs 90Workover rigs 28
PermDrilling rigs 45Workover rigs 45
Naryan-MarDrilling rigs 20Workover rigs 8
UsinskDrilling rigs 21Workover rigs 6
NizhnevolzhskDrilling rigs 18Workover rigs 1
KAZAKHSTANTURKMENISTAN
UZBEKISTAN
ASTRA
Kazahstan Drilling rigs 1
13
41 34 48
34 3642
34 424 8
127796
112
49
0
50
100
150
200
250
300
2005 2006 2007
Cre
ws
(No)
Well workover & servicing crews Rig-up crews Completion crews Side-tracking crewsDrilling crews
190
216
263
Highly Qualified andExperienced Personnel
Extensive experience and knowledge of geology in the regions of Russia where we operate
Employees trained at BKE’s own state-of-the-art training centres
Co-operation with 18 universities and 13 colleges (103 new graduates hired in 2007)
Employee turnover rate decreased since 2005 as a result of competitive compensation benefits
1 Additional 1 crew on Astra offshore operations
Crews Highlights
Source: Company data
Exposureto high growth
markets
The largestindependent
onshore driller in Russia
Highly qualified personnel &
leading management team
1
2
4
5
6
Established track record of profitable
growth and cash flow generation
Broad, powerful and growing
production base
Mutually beneficial relationship with LUKOIL
and successful growth with other IOCs/E&Ps and
geographies
3
Exposureto high growth
markets
The largestindependent
onshore driller in Russia
Highly qualified personnel &
leading management team
1
2
4
5
6
Established track record of profitable
growth and cash flow generation
Broad, powerful and growing
production base
Mutually beneficial relationship with LUKOIL
and successful growth with other IOCs/E&Ps and
geographies
3
15
EDC is moving ahead with its planned rig manufacturing
Rig manufacturing with Le TourneauManufacturing facility
KAZAKHSTAN
UZBEKISTANTURKMENISTAN
WESTERN SIBERIA
Kogalym
Usinsk
TIMAN-PECHORA
KaliningradMoscow
(Headquarters)
Caspian Sea
Perm
Zhirnovsk
VOLGA-URALS
Astrakhan
RUSSIA
Naryan-Mar
EASTERN
SIBERIA
Produce drilling rigs at LUKOIL’s Kaliningrad facility with Le Tourneau
First Rig 450 tonne (Heavy), Top Drive, Fast Moving Rig, Le Tourneau Design
Expect 8-10 new rig deliveries in 2009
Vankor
16
Business Update Since IPO
Repaid debt totals US$122 million
Drilling rig currently being mobilized to Eastern Siberian for Rosneft
Schlumberger acquisition fully assimilated
Negotiating new Framework agreement with LUKOIL to be signed
18
80
166
86
136
17%
20%
15%
12%
0
40
80
120
160
200
2005 2006 1H 2006 1H 2007
(US
$m)
0%
10%
20%
30%
40%
EB
ITD
A m
argi
n (%
)
Key Financial Highlights
677
1,088
501
673
0
200
400
600
800
1,000
1,200
2005 2006 1H 2006 1H 2007
(US
$m)
Drilling and related services Other sales and services
Growth = 61%
Growth = 34%
Growth = 107%
Growth = 59%
Revenue development EBITDA
Source: Audited consolidated financial statements of EDC for the years ended 31 December 2005 and 2006 and reviewed interim consolidated financial statements of EDC for the six months ended 30 June 2006 and 2007
19
CAPEX overview
CAPEX Key CAPEX items
10-12 new rigs per year to be acquired over next 3-5 years
15-17 existing rigs per year to be modernized over next 3-5 years
Sustaining capital US$50 million38
96
250
020406080
100120140160180200220240260
2005A 2006A 2007 E
(US
$m)
Purchases of property, plant and equipment as set forth in EDC’s audited consolidatedstatements of cash flows for the years ended 31 December 2005 and 2006
20
Balance Sheet Discussion
278
162
Total equity and liabilities
Balance Sheet, as of December 31, 2006 (US$m)(Audited)
Balance Sheet, as of December 31, 2007 (US$m) (Unaudited)
Equity
Debt
EDC has a solid financing structure and ample financing capacity if required
Equity
Debt267
901
Total equity and liabilities
22
Corporate Governance
Transparent shareholder structure
7 current board members, including 5 non-executive directors, of which 3 are considered independent under the UK Combined Code
3 Board Committees
Audit and Finance Committee
Remuneration and Nomination Committee
Corporate Governance Committee
Commitment to working towards “best practice” corporate governance standards
23
Strategy
Expand, upgrade and modernise existing fleet
Increase crew efficiency/number
Improve in cost management and operational efficiency
Increase drilling market share in Russia
Increase sidetracks, horizontal wells and other related high value added services
Disciplined opportunistic acquisition programme
Leverage current position as largest independent to secure delivery and price terms with third party rig producers
Secure access to a rig manufacturing facility via operational JV
Participate selectively in tenders by major Russian and international oil and gas companies
Expansion into high-growth regions in Russia and CIS
Expansion in Caspian Sea basin
Consider opportunistic expansion in other offshore zones in Russia
Organic growth and efficiency improvement
Continued focus on drilling services and potential selective expansion into closely related services
Secure access to land rig manufacturing capacity
Further growth of customer base and expansion into new markets
Strategic expansion in offshore drilling
25
Why EDC?
The largestindependent
onshore driller in Russia
Exposureto high
growth markets
Highly qualified personnel &
leading management team
1
2
3
4
5
6
Established track record of profitable
growth and cash flow generation
Broad, powerful and growing
production base
Mutually beneficial relationship with LUKOIL and successful growth with other IOCs/E&Ps and geographies
26
Company Key Contact
Ronald HarrisChief Financial OfficerSenior VP and Investor RelationsMobile: +7 910 493-08-39 Mobile: + 1 281 353-83-73Email: [email protected]