Barclays CEO Energy-Power Conference September 2016 1
Market Conditions Decisive actions to persevere through the downturn capital & expense management fleet restructuring investments in engineering and innovation to improve operational & safety performance Outlook for offshore…
Market Conditions Major & European IOCs Upstream Substantial reduction in billions Capital Spending Outlook upstream capex among 250 Major & European IOCs 218 208 since 2013 200 181 unprecedented decline in - 45% exploration…
Capital management Decisive Expense management Actions To Persevere Fleet restructuring Through The Investments to improve Downturn operational & safety performance engineering & innovation process improvements 5
Proactive Capital Management Accessed the debt markets twice to bolster liquidity and refinance near- term debt maturities Increased revolver to 2.25 billion and extended to 2019 Reduced capital expenditures and dividend to…
Benefits of Recent Capital Management Actions Liquidity Net Debt-to-Capital Ratio billions 4.05 41% 3.55 1.8 1.3 28% 2.25 2.25 4Q15 2Q16 4Q15 2Q16 Revolver Cash + Short-term investments Note: Net debt is a non-GAAP…
Debt Maturity Schedule millions 940 million of debt repurchased 1,025 760 778 669 623 454 300 No debt maturities 150 until 2019 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2027 2040 2044 8
Capital Expenditure Outlook Newbuild Capital Expenditures Other Capital Expenditures millions millions 375 225 100 100 65 75 25 50 10 0 55 50 50 2H16E 2017E 2018E 2019E 2H16E 2017E 2018E New rig construction Rig…
Expense Management Actions 2015 Actions 15% reduction in offshore unit labor cost 60+ million of annual savings from 27% reduction in onshore support headcount consolidated business unit reporting structure from five to three…
Disciplined Expense Management 25% rate reduction for offshore Contract Drilling Expense labor costs millions 543 25% rate reduction in repair and maintenance expense -36% 350 25% rate reduction for other expenses including…
Stacking & Reactivation Costs Upfront Cost Average Estimated Daily to Operating Expenses Estimated Cost Rig Type Preservation to Reactivate Stack Warm Preservation Stack Stack 40k 15k Drillship 5 million 25 - 35 million per…
Fleet Restructuring: Floaters Year-End Retirements Current 2009 Newbuilds(1) & Sales(2) Fleet 17 +13 -10 20 16.8 years Lower average fleet age 9.2 years 4 ultra-deepwater 15 ultra-deepwater capable floaters Greater drilling…
Fleet Restructuring: Jackups Year-End Retirements Current 2009 Newbuilds(1) & Sales(2) Fleet 51 +5 -24 32 Jackup sales since 2009 have generated 600 million in proceeds Under Construction ENSCO 141 ENSCO 123 Scheduled…
Investment in Engineering: 8500 Series Mooring Upgrade Global Floater Rig Count Low-cost mooring Fleet 295 upgrade increases the versatility of our 8500 Dynamically Positioned 193 Series rigs, placing Ultra-deepwater capable…
Investment in Innovation: Operational & Safety Results We continue to invest in three core programs: improving the drilling process asset uptime and efficiency Ensco Asset Management System re-engineering the support…
Excellent Safety Performance Total Recordable Record 2015 and Incident Rate YTD16 TRIR Leading-edge safety 1.2 management systems 1.0 0.8 Enhancing process 0.6 safety to drive further 0.4 improvements 0.2 0.0 2008 2009 2010…
Net Income Margin Largest Offshore Drillers 27% 24% 20% 17% 16% 16% ESV SDRL RDC NE RIG DO Source: FactSet as of August 2016; sum of trailing eight quarters of net income divided by sum of trailing eight quarters of…
High Levels of Customer Satisfaction Rated 1 Total Satisfaction Safety & Environment Performance & Reliability Job Quality Special Applications Ultra-Deepwater Wells Deepwater Wells Harsh Environment Wells Horizontal &…
Fleet Updates ENSCO 84 contracted to Saudi Aramco from December 2016 to August 2021 for low-70kpd rate Additional work secured for high-spec jackups in the North Sea: ENSCO 101 contracted to ENGIE in the Netherlands from October…
Fleet Updates ENSCO DS-6 returned to mid-480kpd rate in early August after commencing operations offshore Egypt following a standby period ENSCO DS-7 drilling contract early terminated for convenience 585kpd for first 90 days…
Outlook for Offshore Drilling 23
Offshore Exploration & Production Offshore production is 33% of global supply Offshore reserves are a critical part of major E&P portfolios and are vital to the economies of several countries Excessive costs/inefficiencies crept…
Path to Recovery Breakeven Offshore Catalyst Commodity Economics Rig Supply Markets Improvement / Re-engineering / Retirement of Brazil opens pre- stabilization in oil standardization / older, less salt to more prices…
Offshore Breakeven Economics Improving Offshore Outlook Recent Customer Commentary on Deepwater Projects Customers attention has turned to project Statoil Reduced breakeven cost from 80/bbl…
Offshore Breakeven Economics Improving Project breakevens for pre-FID deepwater projects have been reduced to 45 per barrel on average Brazilian pre-salt project breakevens under 40 per barrel on average Cost reductions have led…
Strategic Combinations & Alliances Among Offshore Service Companies Integrated FPSO solutions Innovation, efficiencies to reduce costs of offshore and cost reductions in developments deepwater projects Strategic combinations…
Attrition of Older Rigs 60 more floaters could be retired by year-end 2017 if attrition continues at similar rates observed throughout the downturn FLOATERS Retired to Date Currently Idle Expiring Contracts 63 floaters retired…
Newbuild Floater Order Book 5% 3 Contracted 8 29 47% SETE Brasil 28 Uncontracted, Under Construction 45% News reports suggest 2 SETE Brasil program Uncontracted, could be reduced to 8 On Order newbuilds in total 3%…
Newbuild Jackup Order Book 7% 7 Contracted, Established Zero rigs being built in China by Drillers speculators have been contracted 37 35% Uncontracted, Established 61 Drillers Uncontracted, Speculators 58% Source:…
Future Catalyst Markets: Brazil In 1Q16, the Brazilian Senate passed a bill that would eliminate requirement for Petrobras to manage all pre-salt operations and hold a minimum 30% stake in pre-salt projects More recently, Statoil…
Future Catalyst Markets: Mexico During 4Q15, an auction was completed for shallow-water blocks offshore Mexico, awarding licenses to several exploration and production companies Deepwater blocks are scheduled to be auctioned in…
Recap Proactive steps to: improve capital structure reduce expenses restructure fleet invest in engineering and innovation that improves operational and safety performance Positive steps taken by the offshore sector to reduce…
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