Slide 1: World’s leading premium jack-up player in the making
World’s leading premium jack-up player in the making - Acquiring nine premium jack-up newbuilds from PPL 6 October 2017 |
Slide 2: Important information and disclaimer
Important information and disclaimer This presentation has been prepared by representatives of Borr Drilling Limited (the “Company”) and is general background information about the Company's activities current as at the date of this presentation. Information in this presentation, including forecast
Slide 3: The deal
The deal |
Slide 4: Acquiring nine premium jack-ups at USD139.5m per rig
Acquiring nine premium1 jack-ups at USD139.5m per rig Nine PPL Pacific Class 400 premium jack-ups Fleet consistency across the nine new rigs Proven design2 & drilling packages Uniform fleet of premium jack-ups Scalable crew training and logistics Optimise inventories and supply chain Design Pacific
Slide 5: Yard transaction terms
Yard transaction terms Sources and uses Signed master agreement with PPL Signed a master agreement with PPL for the acquisition of nine premium Numbers in USDm jack-up rigs, six of which have been completed and three which are under construction Equity capital to be raised 650 - Total consideratio
Slide 6: Building a world leading drilling contractor
Building a world leading drilling contractor 1 Hercules transaction 2 Transocean transaction1 3 PPL transaction World leading fleet1 2 premium jack-ups 11 premium jack-ups 9 premium jack-ups 22 premium jack-ups 1: Excl. four standard jack-up rigs from the Transocean transaction 6|
Slide 7: The company
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Slide 8: A bombed out industry
A bombed out industry EV down 75% - Market cap down 85%1 Market cap Net debt 120 105 90 Total EV (USDbn) 75 60 45 30 15 0 YE2013 Current Source: DNB Markets, Bloomberg 1: Peer group includes large US listed drillers: ATW, DO, ESV, NE, RDC, RIG, SDRL; net debt is adjusted for market value 8|
Slide 9: You need to drill to get oil
You need to drill to get oil Disproportionate number of rigs needed to grow production1 Activity needs to increase fourfold to meet demand Active jack-up rig count by country (top 20) 14 Country 2010 2014 Today Saudi Arabia 13.2 Saudi Arabia 22 46 43 Kbbl/d +29% 13 India 26 31 33 4,000 3,761 3,520 2
Slide 10: If history repeats itself, more newbuildings will be needed
If history repeats itself, more newbuildings will be needed Historical cycle recovery Expected competitive jack-up fleet versus potential demand # of rigs Period Months Rig increase Supply Demand 500 Apr 1987 - Nov 1989 33 100 Apr 1999 – Apr 2001 24 88 400 171 Jan 2011 – Sep 2014 44 124 235 104 38 N
Slide 11: Utilisation has historically recovered quickly from the bottom
Utilisation has historically recovered quickly from the bottom Offshore driller utilisation versus E&P spending growth Offshore driller utl (%, 1Y lag) E&P spending (%, 2Y, RHS) 110 40 Est. 100 30 20 90 10 80 0 70 -10 60 -20 50 -30 40 -40 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2
Slide 12: Activity already recovering sharply
Activity already recovering sharply Outstanding jack-up rig-years, pre-tender and tenders 250 Historical cycle recovery Period Months Rig increase Apr 1987 - Nov 1989 33 100 200 Apr 1999 – Apr 2001 24 88 Rig years (excl. Norway) Jan 2011 – Sep 2014 44 124 150 Already +100% 100 50 0 2011 2012 2013 20
Slide 13: Best assets acquired at rock-bottom prices
Best assets acquired at rock-bottom prices Premium jack-up fleets1 Best assets in the industry Delivered 2011 or later Delivered pre 2011 Newbuild order cost by order date: USDm Other rigs 300 Yard price for rigs in transaction Borr 3 20 2 22 Rowan 4 12 16 250 Avg. original order price for rigs in y
Slide 14: Best balance sheet – lowest cost
Best balance sheet – lowest cost Best balance sheet Lowest cost NIBD & capex per premium jack-up equivalent unit (LHS)1 Cash break-even per premium jack-up equivalent rig2 Market cap in pct. of EV1 Opex and G&A Interest Debt amortization USDm. USDk/d Pct. 160 70 110 100 98 140 60 90 16 120 50 80 Ill
Slide 15: Proven track record – strong industrial partner
Proven track record – strong industrial partner Strong organisation Developing an integrated drilling solution Board Potentially Tor Olav Trøim Fredrik Halvorsen Jan Rask appointing one or (Chairman) (Director) (Director) two further Directors Simon Johnson (CEO) Rune M Lundetrae Svend A Maier Adolf
Slide 16: Jack-ups are good business
Jack-ups are good business Key assumptions - 22 premium jack-ups in operation EV / EBITDA3 & FCFE yield Current Avg. cash Avg. Avg. EV/EBITDA (x) FCFE yield (Pct.) market day break-even historical historical Last 10 year Dayrate scenario rate for peers 10yrs 5yrs peak 19 76% 80% 18.4 7.1 Historical
Slide 17: Significant upside potential from investing at cycle trough
Significant upside potential from investing at cycle trough Change in price for drillers from cycle trough to next peak1 Cycle trough Next peak +1,541% 1,750 Index points (Rebased @ cycle trough) 1,500 1,250 1,000 +702% +595% 750 500 250 0 1980s 1990s 2000s Peer performance: 1980s Peer performance:
Slide 18: Appendix
Appendix |
Slide 19: Why Borr prefers premium jack-ups ahead of floaters
Why Borr prefers premium jack-ups ahead of floaters 5 1 50% of the fleet is more than 30 years old Shallow-water oil is the low cost barrel1 Deepwater and Ultra 100% Break-even oil price 80 deepwater Shallow 80% <30 years water 60 (USD/bbl) 60% >30 years 40 40% 20 20% 0 0% 0 10 20 30 40 50 60 70 80
Slide 20: Premium jack-ups are a better investment than standard jack-ups
Premium jack-ups are a better investment than standard jack-ups Premium jack-ups are contracted at higher rates Premium jack-ups have higher utilisation Standard Premium 300 95 91% Standard Premium 86% 250 Avg. total utilisation (Pct.) 85 78% 79% 200 73% USDk/day 75 71% 69% 150 66% 65 61% 100 55% 50
Slide 21: Pricing power increasing
Pricing power increasing Historical jack-up margin and utilisation 100% Premium jack-up utilisation three years into 95% the recovery, based on history1 90% 85% Superprofit Total jack-up utilization 80% 75% 70% Jan 2017 utilisation trough 65% Linear relationship 60% between margin and utilisation 55
Slide 22: Premium and modern fleet
Premium and modern fleet Fleet composition 2017 2018 2019 Country Oil Company Delivered Design Water depth Name Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 UAE 2003 F&G JU-2000 400 Atla Cameroon 2004 F&G JU-2000 400 Balder Gabon BW Energy 2011 PPL Pacific Class 400 400 Norve Nigeria Total1 2013 KFELS Super A 400 Fri
Slide 23: Key events since inception
Key events since inception 30 Nov 2016 15 Mar 2017 11 July 2017 29 Aug 2017 12 Sep 2017 Magni Group signed a Signed letter of intent Signed letter of Announced holdings of Signed letter of intent for purchase agreement for and placed deposit for commitment for “Frigg” forward contracts to
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