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EnerCom August 2022 Conference – Independence Contract Drilling, Inc.

Independence Contract Drilling, Inc. · Aug 8, 2022 · 42 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 1
    Independence 1 Contract EnerCom Drilling, Denver Inc. The Energy Investment Conference August 8, 2022
  2. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 2
    3 Highest Asset Quality 100% Pad-Optimal, Super-Spec Significant Investment Fleet Opportunity - Meaningful Current Valuation Ideal Geographic Focus on Most Discount to Market Based Prolific Oil and Natural Gas Upon Both…
  3. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 3
    Presentation Outline 4 1. Company Background: Pure-Play, 100% Pad- Optimal, Super-Spec U.S. Land Contract Driller 2. Very Constructive Market Dynamics and Outlook 3. Drivers of Returns and Free Cash Flow in Current Market…
  4. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 4
    5 COMPANY BACKGROUND Pure-Play, 100% Pad-Optimal, Super-Spec U.S. Land Contract Driller
  5. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 5
    Introduction: ICD 6 Sectors only publicly-traded, pure-play, Pad-Optimal, Super-Spec drilling contractor focused solely on North Americas most attractive oil and natural gas basins Marketed fleet comprised entirely of Pad-Optimal,…
  6. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 6
    2Q 22 Conference Call Highlights 7 17 rigs operating throughout the quarter 18th rig commenced operations early August 22 Future rig reactivations - 19th rig: scheduled for early Q422 - 20th rig: scheduled for mid-to-late Q4 22…
  7. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 7
    Rig Fleet & Geographic Markets 8 26 Marketed Pad-Optimal Super-Spec Rigs(1) ICD Operations Strategically Focused on the Most Prolific Oil and Natural Gas Producing Regions in 17 300 Series ShaleDriller Rigs(2) the United States 1,500…
  8. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 8
    300 Series Rigs Lead Transformation of Operating Fleet Compared to Pre-COVID levels 9 Demand for 300 Series spec rigs being driven by rapidly evolving industry dynamics: - Shift towards longer laterals and deeper wells - Shift…
  9. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 9
    ICD Margins Rapidly Expanding Beyond Pre-COVID Levels as Operating Fleets Converts to 300 Series Specs 10 ICD Fleet Composition Compared to ICD Margin-Per-Day Progression Most recent quarter: 16,000 ICD reported margin 30 per day…
  10. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 10
    Maximizing Returns By Strategically Marketing ICD Fleet Across Target Markets 11 Oklahoma Arkansas New Mexico Texas Permian Delaware Louisiana Basin 300 Series Target Market Haynesville/ETX 300 Series Target Market…
  11. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 11
    Geographic Mix / Customers Relationships 12 Current ICD Contracted Rigs By Basin Premier Customer Base Current and Prior ICD Customers 18 rigs currently contracted ICD currently plans to reactivate two additional rigs Haynesville…
  12. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 12
    13 Very Constructive Market Dynamics and Outlook
  13. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 13
    Defining a Pad-Optimal, Super-Spec Rig 14 Omni-Directional Walking 1500 HP Drawworks High-Pressure Mud Systems (7500 psi) Fast Moving AC Programmable Fleet must have flexibility to provide differing Total U.S. Pad-Optimal…
  14. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 14
    Drivers for Expected Improvements in Pad- Optimal, Super-Spec Utilization / Dayrates 15 Accelerating rig count with improving fundamentals Constructive oil supply / natural gas demand fundamentals Depleted…
  15. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 15
    ICD Fleet Utilization Growth Substantially Outperforming Overall Market 16 CUMULATIVE PERCENTAGE INCREASE IN AVERAGE RIG COUNT SINCE ICD currently operating 18 rigs PANDEMIC TROUGH and intends to 550% reactivate two additional…
  16. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 16
    U.S. Land Rig Count has Trailed Commodity Price Recovery but Continues to Accelerate 17 U.S. Average Land Rig Count vs WTI 1,200 120 1,000 100 800 80 600 60 400 40 200 20 0 0 Q1'17 Q2'17 Q3'17 Q4'17…
  17. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 17
    Source: EIA DUC Inventories 5,000 6,000 7,000 8,000 9,000 10,000 4,000 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Duc Inventory Incremental…
  18. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 18
    Pad Optimal Fleet Utilization Now Exceeding 90% Drives Incremental Dayrate Increases 19 500 450 In a market in which the incremental Estimated Pad- Optimal Supply(1) rig generally sets the spot market 400 price, the following…
  19. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 19
    Spare Pad-Optimal, Super-Spec Capacity Consolidating Within a Few Industry Participants 20 US Spare Pad-Optimal, Super-Spec Rig Capacity Approximately 125 Rigs(1) ICD currently has eight 300 Series rigs within its marketed fleet…
  20. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 20
    21 Drivers of Returns and Free Cash Flow in Current Market
  21. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 21
    Drivers of Returns /FCF Through Oil and Gas Cycle 22 Recent refinancing unlocks ICD ability to reactivate Pad-Optimal, Super-Spec rigs into an extremely tight, constructive market Improving 18th rig commenced operations August 1,…
  22. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 22
    ICD Margins Expanding in Market Recovery 23 ICD current contractual backlog extending into 2023 is Based upon current spot pricing and ICD contract roll 32,000 priced at an average revenue per day exceeding 32,000 schedule, ICD…
  23. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 23
    Led By Increasing 300 Series Market Penetration, ICD Margins Closing Historical Pre-COVID Profitability Gap 24 ICD current Q422 margin ICD Margin Per Day Comparison to Larger Public Company Peers guidance: 11,750 per day at…
  24. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 24
    ICD Operating Leverage Potential in an Improving Market 25 ICD has significant operating leverage potential in an improving market in which dayrates and U.S. 000s Adjusted Annualized EBITDA Potential land rig count are increasing;…
  25. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 25
    Illustrative ICD Free Cash Flow Growth 26 Assuming a constructive market through 2025, ICD poised to generate significant free cash flow that can be utilized to repay outstanding Illustrative ICD Free Cash Flow Generation (000s)…
  26. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 26
    27 Balance Sheet / Recent Debt Financing Untaps Imbedded Value
  27. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 27
    Recent Debt Refinancing Themes 28 Refinancing completed March 18, 2022 significantly ICD Long-Term Debt at June 30, 2022 (000s) de-risked ICD balance sheet Convertible Notes (Face) 157,500 Prior to refinancing, near-term debt…
  28. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 28
    Debt Terms / Refinanced Balance Sheet 29 157.5 million: optional 7.5 million uncommitted accordion upsizing Amount/Maturity Matures March 18, 2026 Defeasance options begin 18 months prior to maturity Cash interest at SOFR +…
  29. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 29
    Refinancing Untapping Value in ICD Rig Fleet 30 The refinancing checked all the boxes to ensure that ICD has the runway to achieve its financial and operational goals Eliminated Near-Term Maturities Extends debt maturity to March…
  30. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 30
    Significant Potential Value Uplift 31 Significant potential for uplift as the overhang related to our prior leverage profile gives way to imbedded value in our premier fleet. Newbuild super-spec rigs estimated to cost 30+ million…
  31. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 31
    Significant Potential Value Uplift 32 Even assuming full conversion of the convertible notes, Illustration of potential stockholder upside assuming full conversion of significant upside exists for ICD stockholders as they convertible…
  32. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 32
    Significant Potential Value Uplift 33 Even based upon reasonable EBITDA trading Illustration of potential stockholder upside assuming full conversion of convertible multiples and assuming full conversion of the notes based upon…
  33. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 33
    ICD Positioning in a Consolidating Market 34 ICD well positioned to participate 160 in industry consolidation activity Number of Operating Super-Spec or AC Rigs 140 Convertible into Super-Spec Rigs as it develops during the…
  34. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 34
    35 ESG
  35. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 35
    ESG and Sustainability Focused 36 100% of ICD marketed rigs are dual-fuel enabled and high-line capable, permitting substantial reduction and elimination of GHG emissions at the wellsite from rig operations 100% of ICD rigs utilize…
  36. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 36
    ICD ShaleDriller Rigs Substantially Reduce and Eliminate GHG Emissions at the Wellsite 37 Utilizing natural gas rather Similar to an electric car, In 2019, ICD converted all of its than diesel substantially utilizing the electric grid…
  37. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 37
    38 Highest Asset Quality 100% Pad-Optimal, Super-Spec Significant Investment Fleet Opportunity - Meaningful Current Valuation Ideal Geographic Focus on Most Discount to Market Based Prolific Oil and Natural Gas Upon Both…
  38. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 38
    39 Investor Contact Information Email inquiries: investor.relationsicdrilling.com Phone inquiries: (281) 878-8710
  39. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 39
    Appendices: Financial Statements 40
  40. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 40
    Appendices: Other Financial & Operating Data 41
  41. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 41
    Appendices: Non-GAAP Measures 42
  42. EnerCom August 2022 Conference – Independence Contract Drilling, Inc. – slide 42
    Appendices: Non-GAAP Measures 43

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