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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
FIRST 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
First Quarter Investor Presentation
1 Q1 Key Highlights
2 Operational Highlights
3 Business Update
4 Business Unit Financials
5 Group Results
6 Summary
Q1 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
1 Q1 2019 revenue of $321.3m (Q1 2018: $291.1m) and EBITDA of $67.7m (Q1 2018: $69.0m)
2 Operational integration of the former Dalma business now complete, with further synergies identified
3 Several contract extensions and awards for the Land and Offshore Business Units
4 Increase of 18% firm contract backlog to $2.7bn (at 1 May 2019) across a blue chip customer base
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
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
18 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 May 2019
(1) The % split of LTM EBITDA is calculated using total KCAD group Q1 2019 LTM Proforma EBITDA of $295m (after corporate
costs of $17m)
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)
Market Outlook by Business Unit
5
Business Units Outlook
Land
Drilling
EuropeNew contract awards and extensions in Russia, Algeria and the Middle
East
High levels of tendering continue across most markets
Pricing remains competitive
Utilisation levels steadily increasing
Russia / Kazakhstan
Africa
Middle East
Bentec Tendering activity continues in a competitive market
Offshore
Services
North Sea
Activity remains steady with further contract awards
International
RDS
New Greenfield and Brownfield tendering opportunities however very
slow conversion rates
Greater investment in the industry required to provide meaningful uptick
A well of innovation
6
Integration of Dalma Energy LLC
7
Target synergies ($27m EBITDA & $2m capex)
EBITDA synergies by type
Integration plan complete
• Expectation of run rate EBITDA synergies increased further
from $24.5m (Q4 2018) to $27.4m (Q1 2019)
• Synergy target more than double original estimate of c.$11m
• Monthly run rate achievement in March 2019 of $1.9m, being
81% of total savings identified
• Close to full run rate synergy realisation on track for end of
Q2 2019
• Additional supply chain synergies identified in both Oman
and Saudi Arabia(1)
(1) Run rate synergy achievement based on 31 March 2019 actual achievement
Strong HSSE Performance Continues
8
1 Total Recordable Incident Rate per 200,000 man hours. This is a rolling 12 month average2 Dalma business has 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
Q1 2019
0.281,2
IADC industry
average 0.683 for
2018
Offshore awarded two Best Safety
Performance Awards by the IADC
Performance awards received from key
international customer
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-May-2019 9
Total contract backlog as at 1 May 2019
Total contract backlog by BU as at 1 May 2019
Total contract backlog as at 1 March 2019
Total contract backlog by BU as at 1 March 2019
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
Equinor (Statoil) Norway CAT J (2) May-36 Operating 2
Equinor (Statoil) Norway Oseberg's (4) & Kvitebjorn Oct-28 Operating / Stacked 3/2
BP Azerbaijan Azeris, SD, DWG, Cop & Chirag Apr-26 Operating 7
Vår Energi Norway Ringhorne Dec-25 Operating 1
Enquest UK Thistle, Heather & Magnus Dec-25 Operating / Stacked 1/2
CNOOC UK Scott Feb-25 Operating 1
Total UK Alwyn / Dunbar May-23 Operating / Stacked 1/1
COP UK Britannia Nov-22 Stacked 1
Equinor (Statoil) Norway Pipe pool management Nov-22 Active mgmt. contract
CNR UK Ninian's (2) Tiffany Nov-21 Operating / Stacked 1 /2
SEIC Russia LA, PA & PB May-21 Operating 3
Exxon Angola Kizomba (2) Stacked 2
2019 2020 2021
Robust Offshore Services Contract Backlog(1)
10
Denotes change since last earnings call
(1) Contract and rig status shown as at 1 May 2019
Firm
Options
Not Disclosed
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
Continued Focus on Building Land Utilisation
11
Historical and Forward Contracted Utilisation
Utilisation in Q1 2019 was 70%
Source: Company information. EBITDA shown after corporate overhead allocations.
Notes: (1) 2 months of Dalma only (includes $0.7m synergies) (2) Includes $1.8m synergies (3) Includes $3.0m synergies
(4) Includes $5.1m synergies (5) Bentec results shown before intercompany eliminations 12
Land & Bentec Financial Performance
Land Quarterly EBITDA ($m)
Bentec Quarterly EBITDA ($m) (5)
= EBITDA Margin
Land YTD Revenue & EBITDA ($m)
Bentec YTD Revenue & EBITDA ($m) (5)
39% 30%
(10)%
(1) (2) (3) (4)
6%
13
Offshore & RDS Financial Performance
Offshore Services Quarterly EBITDA ($m)(1)
RDS Quarterly EBITDA ($m)
Source: Company information. EBITDA shown after corporate overhead allocations.
Notes: (1) Q1 2018 EBITDA shows $12m relating to MODUs, margin for Offshore Services only
Offshore Services YTD Revenue & EBITDA ($m)
RDS YTD Revenue & EBITDA ($m)
11% 17%
3% 7%
= EBITDA Margin
KCAD LTM 204
Ex-Dalma LTM 107
Corporate Costs (17)
Subtotal 295
Holdco Equity Contribution 25
Total 320
Q1 2019 LTM Pro Forma EBITDA ($m)
KCAD LTM 203
Ex-Dalma (May - March) 83
Corporate Costs (17)
Total 270
Q1 2019 LTM EBITDA ($m)
KCA Deutag Group Full Year EBITDA and Pro Forma EBITDA(1)
14
Q1 2019 LTM EBITDA
LTM
EBITDA
$270m
Q1 2019 Pro Forma LTM EBITDA(2)
LTM
EBITDA
$295m
(1) Q1 2019 LTM figures include restated 2018 figures in compliance with IFRS 16 (2) Business Unit proportions calculated based ongroup EBITDA, before corporate overheads, of $286m. (3) Q1 2019 LTM EBITDA includes $10.6m of actualised synergies. (4) Q1 2019KCAD Pro Forma LTM EBITDA includes unaudited pre-acquisition EBITDA of the acquired IDTEC business of $1.3m for Apr-Sep 2018.(5) Q1 2019 Pro Forma LTM EBITDA includes $16.8m of additional Pro Forma synergies, Dalma pre-acquisition EBITDA of $6.4m forApr 2018.
(3)
(4)
(5)
Q1 2019 Q4 2018 Q1 2018 2019 YTD 2018 YTD
$'m $'m $'m $'m $'m
Cash generated from operations 26.0 89.3 65.7 26.0 65.7
Tax paid (12.5) (3.2) (8.1) (12.5) (8.1)
Cash flow from operating activities 13.5 86.1 57.6 13.5 57.6
Capital expenditure (18.2) (10.5) (9.4) (18.2) (9.4)
Acquisition of Holdco rig (25.0) 0 0 (25.0) 0.0
Proceeds from sale of Fixed Assets 0.1 1.2 0.8 0.1 0.8
Interest received 6.6 5.8 6.0 6.6 6.0
Other 0.4 0.0 0.0 0.4 0.0
Cash flow from investing activities (36.1) (3.5) (2.6) (36.1) (2.6)
Interest paid (18.8) (78.2) (13.9) (18.8) (13.9)
Foreign exchange 0.2 (2.2) (4.4) 0.2 (4.4)
Dividend paid to minority shareholders (0.3) 0.0 (0.3) (0.3) (0.3)
Lease payments (5.8) (4.9) (4.2) (5.8) (4.2)
(47.3) (2.7) 32.2 (47.3) 32.2
(5.4) 105.2 (5.3) (5.4) (5.3)
Increase in loan from parent company 25.0 0.0 0.0 25.0 0.0
Net cash flow (27.7) 102.5 26.9 (27.7) 26.9
Net Cash flow before debt
drawdown/(repayment)
Drawdown/(repayment) of debt and debt
redemption/issuance costs
Cash Flow and Working Capital
15
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
16
Net leverage as at 31 March 2019
(1) PF LTM EBITDA adjusted for unaudited LTM EBITDA of the acquired Dalma businesses of $6.4m and synergies of $16.8m, plus
unaudited LTM EBITDA of the acquired IDTEC business of $1.3m. (2) Q1 2018 LTM EBITDA includes the first $25m Holdco equity
contribution and Q1 2019 LTM EBITDA includes the second, as defined in the Amended Credit Agreement. (3) In addition to the
$230m Revolver Cash facility, we also have $115m of guarantee facilities. (4) $15m of this matures in May 2019.
Net Debt Evolution
295237
(1)
2525
(3)
(2)
(3)
Amount Utilised Coupon Maturity Facility Rating Leverage
Revolver Cash ($230m) 165 L+400 Mar-22 Caa1/B- 0.51x
Senior Secured Term Loan 412 L+675 Feb-23 Caa1/B- 1.28x
Oman Term Loan 28 L+400 Dec-20 - 0.09x
Total Bank Debt 604 1.89x
Senior Secured Notes 2021 375 7.250% May-21 Caa1/B- 1.17x
Senior Secured Notes 2022 535 9.875% Apr-22 Caa1/B- 1.67x
Senior Secured Notes 2023 400 9.625% Apr-23 Caa1/B- 1.25x
Total Institutional Debt 1,914 5.98x
Other debt 2
Gross Debt 1,917 5.98x
Cash 146 0.46x
Net Debt 1,771 5.53x
Finance lease liabilites 49 0.15x
Net Debt per balance sheet 1,820 5.68x
(3) (4)
Closing Remarks
17
• Operational integration of the Omani and Saudi Arabian businesses of Dalma Energy LLC now
complete with further synergies identified
• Increase in firm backlog to $2.7 billion across a blue chip company base
• Q1 revenue $321.3m and EBITDA $67.7m
• Multiple contract awards within the Land, Offshore and RDS Business Units
