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DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc.

Hercules Offshore, Inc. · Sep 30, 2013 · 38 slides

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Slides

  1. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 1
    World Class Deutsche Bank 21st Annual Leveraged Finance Conference September 30 October 2, 2013
  2. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 2
    World Class Overview
  3. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 3
    A Global Leader in Shallow Water Services Overview Worldwide Operations Global leader in jackup drilling and liftboat services 40 jackup rigs - third largest worldwide fleet 24 liftboats - largest international fleet Operations…
  4. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 4
    Transforming the Company for the Next Chapter Recent Strategic Events: 1. Acquisition of Discovery Offshore represents significant step toward rig fleet renewal and high-grading of rig fleet 2. Sale of Domestic Liftboats and Inland…
  5. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 5
    Discovery Acquisition Rationale Fleet Renewal for Hercules Offshore Ultra high-specification rigs historically command higher dayrates over industry cycle Discovery rigs expected to provide 30+ years of earnings capacity Newer…
  6. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 6
    Hercules Triumph Inaugural Contract Initial contract secured with Cairn India Limited Total contract value is approximately 36.6 million Base dayrate in the 214k - 216k range Approximately 13 million in mobilization fees…
  7. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 7
    Blockbuster Middle East Contract Extensions Five-year contract extensions on the Hercules 261 and Hercules 262 Total potential revenue of approximately 465 million Equates to an average dayrate of 125k - 130k per rig, an increase…
  8. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 8
    Total Debt Summary Description Amount Coupon Maturity First Call Date (millions) Rate Senior Secured Notes 300 7 1/8% Apr2017 Apr2014 105% Senior Unsecured Notes 200 10 1/4% Apr2019 Apr2015 108% Senior Unsecured Notes 300 7 1/2%…
  9. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 9
    World Class Business Outlook
  10. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 10
    Domestic Offshore Segment Overview Global recession and Macondo U.S. GOM Supply/Demand of Marketed Jackups created extreme conditions in 2009 and 2010 120 Near the trough (April 2011), 100 Hercules acquired main competitor,…
  11. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 11
    Domestic Offshore Backlog Company Average Days Backlog per Marketed Rig U.S. GOM (1) Company backlog per rig expected to improve by year end 2013 Average term of recent contracts is between 6 to 12 months, compared to 3 months…
  12. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 12
    Leading Edge Dayrates Hercules Offshore Leading Edge Dayrates U.S. GOM * Rates for 250MC and 300MC prior to April 2011 are based on Seahawk Drilling Fleet Status Report disclosures Source: Company Fleet Status Report disclosures…
  13. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 13
    Domestic Customer Base Exposure to Crude Oil Company specific U.S. Gulf of Mexico Customers U.S. GOM Liquids Mix Shelf production shows significant liquids mix Chevron 39% Crude oil from U.S. Gulf of Mexico typically priced at…
  14. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 14
    Large and Diverse Domestic Customer Base Diverse group of operators in the U.S. U.S. GOM Industry Customers Mix (1) GOM, ranging in size from mega-cap to private E&P Top two operators account for approximately 32% of U.S. GOM…
  15. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 15
    U.S. GOM Shelf M&A Activity (1) GOM Shelf E&P Transaction Values Closing Date Buyer Seller Deal Value (mm) % Oil Dec-10 Energy XXI ExxonMobil 1,012 55% Feb-11 EPL Oil & Gas Anglo-Suisse 201 92% May-11 Tana Exploration Maritech…
  16. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 16
    Reactivation Matrix (1) Capital Payback Analysis (m onths to payback) Dayrate Assumption 80,000 90,000 100,000 110,000 120,000 Hercules 209 Reactivation Capital Cost 14 11.4 9.3 7.9 6.8 6.0 reactivation cost 16 13.0 10.6…
  17. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 17
    Domestic Offshore Potential Earnings Upside (1) Incremental EBITDA Analysis ( in m illions, except dayrate) Increase in Average Dayrate 5,000 10,000 15,000 20,000 25,000 18 30 59 89 118 148 Number of Rigs Working 19 47 78…
  18. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 18
    Recent Fixtures in U.S. GOM vs. International Markets U.S. GOM West Africa Middle East SE Asia Ensco 99 Tommy Craighead Hercules 261 Key Gibraltar Fixtures (250 IC) (300 IC) (250 IC) (300 IC) Dayrate 125,000 145,000 136,000…
  19. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 19
    International Offshore Resilient oil prices are supportive of International Jackup Backlog and Dayrates strong growth in capital spending 18 200 National Oil Companies have been 16 175 Backlog per International Marketed Rig…
  20. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 20
    International Jackup Market Snapshot Current international jackup rig International Jackup Supply/Demand demand above prior peak in 2008 Worldwide ex. US GOM Jackup Supply / Demand Demand in most major international 460 markets…
  21. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 21
    Ultra High-Spec Rigs Command Premium Pricing Ultra high-specification jackup segment(1) Jackup fixtures by class since 2010(2) 620 600 60 550 500 500 21 450 230 Global jackup rig count 400 149 350 300 250…
  22. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 22
    International Offshore Drilling Outlook FY 2013E FY 2014E Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Hercules Triumph SE Asia 214- 216k (1) Hercules Resilience SE Asia Hercules 267 W. Africa 108-110k 108-110k Middle (2) (2) Hercules 266 116-118k…
  23. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 23
    International Liftboats Largest liftboat provider in West Africa Long term demand growth, tempered by competition creep Acquisition of Bull Ray expands high end market opportunities Established presence in Middle East Robust…
  24. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 24
    World Class Corporate Initiatives
  25. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 25
    Track Record of High Return Acquisitions Asset acquisitions since 2012 ( in millions) Hercules 266 Hercules 267 Bull Ray (formerly Ocean (formerly Ben Avon) (formerly Titan 2) Columbia) Date Acquired March 2012 February 2013…
  26. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 26
    Focusing on Attractive Asset Segments Revenue Mix by Segment (1) Figures based on LTM revenue ending March 31, 2013. (2) International Offshore segment includes pro forma estimate of Discovery (mean of Wall Street consensus…
  27. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 27
    Significant Expansion of Revenue Backlog Total Revenue Backlog (1) 1,400 1,200 Current Revenue Backlog = 1.1 Billlion Contracted Backlog ( millions) 1,000 800 600 400 200 0 3Q09 4Q09 1Q10 2Q10…
  28. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 28
    World Class Conclusion
  29. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 29
    Investment Highlights Discovery Offshore acquisition is a significant step toward fleet renewal and high-grading of assets Sale of domestic liftboats and inland barges eliminates low performing assets Positive industry trends…
  30. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 30
    APPENDIX 30 World Class
  31. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 31
    Domestic Offshore Marketed Rig Data Domestic Offshore Fleet Status as of 09/15/13 Contract Est. Duration (1) Rig Name Rig Type Location Customer / Status Dayrate (000s) Days Date Hercules 120 120' - MC, TD GOM Chevron 64-66 107…
  32. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 32
    Domestic Offshore Marketed Rig Data (continued) Domestic Offshore Fleet Status as of 09/15/2013 (continued) Contract Est. Duration (1) Rig Name Rig Type Location Customer / Status Dayrate (000s) Days Date Shipyard 10/27/13 Hercules…
  33. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 33
    International Offshore Marketed Rig Data International Offshore Fleet Status as of 09/15/2013 Contract Est. Duration (1) Rig Name Rig Type Location Customer / Status Dayrate (000s) Days Date Under Construction 10/07/13 Hercules…
  34. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 34
    International Liftboats Fleet Status August 2013 International Liftboat Fleet Status Leg Length/ Actively Revenue Per Liftboat Class Total Number Marketed Day Per Operating (1) (2) (3) (Feet) of Liftboats Liftboats Liftboat Days…
  35. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 35
    Crude Oil Driven Market in U.S. GOM Shelf Oil and condensates account for a Relationship between Oil/Gas Price to Production Mix growing percentage of US GOM Shelf production 7.5 40% 7.0 % Liquids Production in US GOM Shelf 6.5…
  36. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 36
    Discovery Offshore Transaction Overview History of Discovery Offshore S.A. Discovery Offshore S.A., a Luxembourg-based public limited liability company, was formed in early 2011 by Hercules Offshore Discovery ordered two newbuild…
  37. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 37
    Triumph and Resilience Ultra High-Spec Jackups KFELS Super A Class is a high-specification design by Keppel FELS for harsh environment Designed for operations in the southern North Sea Able to operate in water depths up to 400 ft.…
  38. DEUTSCHE BANKS 21ST ANNUAL LEVERAGED FINANCE CONFERENCE – Hercules Offshore, Inc. – slide 38
    World Class

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