World Class Dahlman Rose & Co. Ultimate Oil Services and E&P Conference December 3-4, 2012
World Class Overview
A Global Leader in Shallow Water Services Overview Worldwide Operations Global leader in jackup drilling and liftboat services 37 jackup rigs - fourth largest worldwide fleet 63 liftboats - largest worldwide fleet Operations in…
Hercules Offshores Strategy Remains Consistent Maintain Leading Position in Diversify Geographically Core Businesses Opportunistic Growth Focus on and Fleet Optimization Shallow Water Assets Maintain Status as an Efficient,…
World Class Business Outlook
Domestic Offshore Segment Overview Global recession and Macondo U.S. GOM Supply/Demand of Marketed Jackups created extreme industry conditions in 2009 and 2010 Near the bottom (April 2011), Hercules acquired main competitor just as…
U.S. GOM Supply vs. Demand U.S. GOM Jackup Supply and Demand as of November 27, 2012 80 62 88% Industry Utilization Number of Rigs 60 of Marketed Rigs 41 40 40 35 (21) (1) 20 0 Current Less: Cold Marketed Planned…
US GOM Shelf Production Mix Crude oil and condensates (Liquids) U.S. GOM Shelf Oil & Condensate Production Mix (water depth < 500 ft) account for a growing percentage of U.S. Gulf of Mexico Shelf production 45% From 2000 2006,…
Production Mix and Commodity Price Relationship Price disparity between crude oil and Relationship between Oil/Gas Price to Production Mix natural gas has been the driver of the shift in production mix 5.0 40% In 2004, crude oil (LLS)…
Domestic Customer Base Exposure to Crude Oil Company specific U.S. Gulf of Customers U.S. GOM Liquids Mix Mexico Shelf production shows significant liquids mix Apache 38% Crude oil from U.S. Gulf of Chevron 39% Mexico typically priced…
Domestic Offshore Backlog Hercules Offshore Average Backlog per Marketed Rig U.S. GOM (1) 240 210 180 150 120 90 60 30 0 Strong company backlog per rig at historical high and sustained since early 2012…
Leading Edge Dayrates Hercules Offshore Leading Edge Dayrates U.S. GOM 100 120 90 110 80 Dayrate (000 per day) Dayrate (000 per day) 100 70 90 60 80 50 70 40 30 60 20 50 200MC 250MS 250MC* 300MC* 350ILC…
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 CVX 9% EXXI 9% Top three operators account for approximately 41% of…
U.S. GOM Shelf M&A Activity GOM Shelf E&P Transaction Values (1) 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…
Reactivation Matrix (1) Capital Payback Analysis (m onths to payback) Dayrate Assumption 77,500 82,500 87,500 92,500 97,500 Reactivation Capital Cost 12 9.1 8.2 7.5 6.9 6.3 13 9.9 8.9 8.1 7.4 6.9 ( in millions) 14…
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 28 56 84 112 140 Number of Rigs Working 19 43 72…
International Offshore Resilient oil prices are supportive of International Jackup Backlog and Dayrates strong growth in international capital spending National Oil Companies have been aggressively adding to their rig fleets since the…
International Offshore Drilling Outlook FY 2012E FY 2013E Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Middle Hercules 261 83-85k 83-85k East Middle Hercules 262 79-81k 79-81k East Middle Hercules 266 124-126k East Hercules 260 W. Africa 69-71k…
Key International Jackup Markets Snapshot Middle East Jackup Supply / Demand West Africa Jackup Supply / Demand 140 40 130 35 Total Supply Total Supply Marketed Supply 120 Marketed Supply 30 Total Contracted Total Contracted…
Discovery Offshore Investment Creative and opportunistic means to establish ownership in premium, long-lived assets Discovery rig capabilities in top 8% of global rig fleet Discovery rig class commands highest dayrates among all…
International Liftboats Largest liftboat provider in West Africa and established presence in Middle East Well-established liftboat market and long term demand growth drivers in West Africa, tempered by competition creep Robust…
Domestic Liftboats Seasonally-driven market demand, with activity levels most active during the summer and fall period Select industry capacity movement out of the Gulf of Mexico, including Companys Kingfish vessel to the Middle…
World Class Corporate Initiatives
History of Growth August October January June August September October November February 2004 2004 2005 2005 2005 2005 2005 2005 2006 Acquired five Acquired 22 Acquired Rig 25 Acquired Rig Acquired Acquired Initial Acquired…
Successful Debt Reduction and Asset Sales Efforts Net Debt (1) Proceeds from Asset Sales Company has reduced net debt 468 million since 2Q08 Asset sales have generated a cumulative 196 million in proceeds since 2008 Divestitures…
Investment Highlights Positive industry trends continue in the U.S. GOM led by tight jackup rig supply and oil/liquids-rich activity demand driver Strengthening international jackup market, exemplified by Companys Saudi Aramco…
APPENDIX 29 World Class
Domestic Offshore Marketed Rig Data Domestic Offshore Fleet Status as of 11/28/2012 Contract Est. Duration (1) Rig Name Rig Type Location Customer / Status Dayrate (000s) Days Date 39-41 33 12/31/12 Hercules 120 120' - MC, TD GOM…
Domestic Offshore Marketed Rig Data (continued) Domestic Offshore Fleet Status as of 11/28/2012 (continued) 74-76 79 02/15/13 Hercules 213 200' - MC, TD GOM EPL 81-83 120 06/15/13 69-71 22 12/20/12 Hercules 214 200' - MC, TD GOM…
International Offshore Marketed Rig Data International Offshore Fleet Status as of 11/28/2012 Contract Est. Duration (1) Rig Name Rig Type Location Customer / Status Dayrate (000s) Days Date Hercules 170 170' - ILC, TD Bahrain Warm…
GOM Shallow Water Operator Data Top 20 Shallow Water (0-350ft) GOM Lease Holders Apache Corp Current % of Total Operator Chevron Jackup Current Stone Energy Apache Corp 8 24% McMoran O&G Chevron 3 9% W&T Offshore Stone Energy…
Summary of Discovery Offshore Structure Overview Structure Discovery Offshore is a newly established Luxembourg-based company Investors Hercules Offshore Constructing two ultra high-specification Keppel FELS Super A jackup rigs…
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