UBS Global Oil And Gas Conference
UBS Global Oil and Gas Conference22 May 20181
Forward-Looking StatementsStatements contained in this investor presentation that are not historical facts are forward-looking statements within themeaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forwardlooking statements include words or phrases such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,”“project,” “could,” “may,” “might,” “should,” “will” and similar words and specifically include statements involving expectedfinancial performance, effective tax rate, expected expense savings, day rates and backlog, estimated rig availability; rigcommitments and contracts; contract duration, status, terms and other contract commitments; estimated capitalexpenditures; letters of intent or letters of award; scheduled delivery dates for rigs; the timing of delivery, mobilization,contract commencement, relocation or other movement of rigs; our intent to sell or scrap rigs; and general market,business and industry conditions, trends and outlook. Such statements are subject to numerous risks, uncertainties andassumptions that may cause actual results to vary materially from those indicated, including commodity pricefluctuations, customer demand, new rig supply, downtime and other risks associated with offshore rig operations,relocations, severe weather or hurricanes; changes in worldwide rig supply and demand, competition and technology;future levels of offshore drilling activity; governmental action, civil unrest and political and economic uncertainties;terrorism, piracy and military action; risks inherent to shipyard rig construction, repair, maintenance or enhancement;possible cancellation, suspension or termination of drilling contracts as a result of mechanical difficulties, performance,customer finances, the decline or the perceived risk of a further decline in oil and/or natural gas prices, or other reasons,including terminations for convenience (without cause); the cancellation of letters of intent or letters of award or anyfailure to execute definitive contracts following announcements of letters of intent, letters of award or other expected workcommitments; the outcome of litigation, legal proceedings, investigations or other claims or contract disputes;governmental regulatory, legislative and permitting requirements affecting drilling operations; our ability to attract andretain skilled personnel on commercially reasonable terms; environmental or other liabilities, risks or losses; debtrestrictions that may limit our liquidity and flexibility; tax matters including our effective tax rate; and cybersecurity risksand threats. In addition to the numerous factors described above, you should also carefully read and consider “Item 1A.Risk Factors” in Part I and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results ofOperations” in Part II of our most recent annual report on Form 10-K, as updated in our subsequent quarterly reports onForm 10-Q, which are available on the SEC’s website at www.sec.gov or on the Investor Relations section of our websiteat www.enscoplc.com. Each forward-looking statement speaks only as of the date of the particular statement, and weundertake no obligation to publicly update or revise any forward-looking statements, except as required by law.2
Perspectives on Offshore DrillingWhy Invest in Ensco?3
Offshore Drilling is a Cyclical Industry Offshore drilling is highly cyclicalwith six significant upcycles1 since1985Global Fleet Utilization100%90% 195 rigs40 months 70 rigs34 months 82 rigs28 months80% 118 rigs22 months70%60% 53 rigs17 months 103 rigs17 months50%– Average length of upcycle: 26 months– Average increase in contracted rigcount: 24% During the same period there hasbeen six major downcycles– Average decrease in contracted rigcount: 21%– Most recent downcycle wasparticularly severe, with contractedrig count declining 38% Expect offshore recovery to beprotracted and phased– Current contracted rig count 5%higher than Jan. 2017 lowsSource: IHS Markit RigPoint as of May 20181 Significant upcycle defined as a 10% increase in the number of contracted rigs4
Utilization of Offshore Drilling RigsDriven by Customer SpendingOffshore Drilling Rig Utilization & E&P Capex1004090308020701060050-1040-2030-30Global Fleet Utilization (%, left axis)Change in E&P Offshore Capex (2Y rolling avg %, right axis)Source: IHS Markit RigPoint, Rystad Energy Customers’ offshore projectexpenditures significantlyimpact global rig utilization Global rig utilization hasgenerally moved in line withthe rate of change in customerspending over time While nominal offshore capitalexpenditures are expected tobottom in 2018, aggregateoffshore capital expendituresare forecast to grow at 10%compound annual rate through20275
Offshore Production Critical toMeeting Future Global Energy DemandOffshore Oil Production1mm bbl/day Offshore production represents 30% of global production363432 5.5 millionbbl/day3028 Current production levelsdriven by historical investmentwith increased spendingneeded to meet future oildemand and replaceproduction depletion– Average annual depletion ratesof 11% and 5% for deep- andshallow-water production,respectively– Average time from FID to firstproduction of 50 months fordeepwater projects and 20months for shallow-waterprojects262422Source: Rystad Energy, IHS Markit Strategic Horizons1 Offshore oil production defined as oil, NGL & other liquids production6
Higher Oil Prices Support IncreasedOffshore Project SanctioningOffshore Project Approvals & Oil Prices10012080100806060404020200 Brent crude oil prices haverecently risen above 70/bbland have now remained above 60/bbl for six consecutivemonths-Offshore FIDs (#, left axis)Brent Crude Oil Avg Price ( /bbl, right axis)Average Offshore Breakeven Oil Prices /bbl 27StatoilPre-FIDNorwegianShelfProjects 33RespolPre-FIDShallowWaterProjects 20 - 40 40Chevron PetrobrasBrownfieldUS GOMDeepwaterProjectsPre-FIDPre-SaltProjects 40 During 2017, offshore projectsanctioning as measured byFID approval more thandoubled 2016 levels kportfolio Many offshore projects areeconomic at breakeven oilprices well below current levelsSource: AllianceBernstein, FactSet, Rystad Energy, IHS Strategic Horizons; Equinor 7 February 2017 Capital Markets Day; Repsol 23 February 2017 earnings conference call; Chevron 29April 2016 earnings conference call; Petrobras CEO Pedro Parente via Bloomberg 10 October 2016; Shell 2 February 2017 earnings conference call; Maersk 8 February 2017 earningsconference call7
Fixtures and Contracted Rig Years ForFloaters and Jackups Have IncreasedHigh–Spec 6020060100301003050002007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Fixtures (#, left axis)Rig Years (#, right axis)Source: IHS Markit RigPoint1 High-spec jackup defined as jackups with water depth rating of 350 ft. or greater002007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Fixtures (#, left axis)Rig Years (#, right axis)8
Increasing Customer Activity hasLed to Improved Utilization Utilization of offshore rigs hasstabilized since reachingbottom in late 2016 andincreased modestly during2017 after nearly three yearsof declinesGlobal Fleet Utilization100%90%80%70% Recent improvements in bothtotal and marketed utilizationare due in part to a highernumber of contracted 14Jul-14Apr-14Jan-1450%MarketedSource: IHS Markit RigPoint as of May 20189
Substantial Portion of Current GlobalSupply are Retirement CandidatesGlobal Rig FleetFloatersJackupsDelivered RigsUnder ContractFuture ContractIdle / StackedMarketed FleetNon-MarketedTotal Fleet1311850199582573062711945277529Marketed Utilization75%74%Total Utilization58%63%Newbuild RigsContractedUncontractedBuild in Brazil / ChinaTotal Newbuilds12714420296291 55 floaters1 could becandidates for retirementbased on age and contractexpirations 170 jackups2 could be retiredas expiring contracts andsurvey costs lead to theremoval of older rigs fromdrilling supply Uncontracted newbuildsexpected to be delayed further,while several newbuilds inBrazil and China are unlikely tojoin the global fleetSource: IHS Markit RigPoint as of May 20181 Includes floaters 30 years of age that are idle without follow-on work or have contracts expiring before year-end 2018 without follow-on work and floaters 15 to 30 years of age that havebeen idle for more than two years and without follow-on work2 Includes jackups 30 years of age that are idle without follow-on work or have contracts expiring before year-end 2018 without follow-on work and jackups 15 to 30 years of age that havebeen idle for more than two years and without follow-on work10
Retirements Expected to Lead toFuture Supply Contraction The global floater count coulddecline by 23 rigs, or 9%, ifadjusted for likely retirementsand newbuild deliveriesIllustrative Floater Supply28257-274-16OtherBuild in BrazilNewbuildsNewbuilds1-12 30yrs idlew/o futurecontract 30yrsrolling offcontract byYE201823420715-30yrsidle forover alSupplyIllustrativeMarketedSupplyIllustrative Jackup 18UncontractedNewbuilds-47 30yrs idlew/o futurecontract-2 30yrsrolling offcontract byYE201843115-30yrsidle forover 2yrs17414NonmarketedIllustrativeTotalSupplySource: IHS Markit RigPoint as of May 2018, Ensco analysis1 Build in Brazil newbuilds exclude 10 rigs that are unlikely to be delivered2 Assumes 65% of Chinese newbuilds enter the global supplyIllustrativeMarketedSupply– Excluding another 27 floatersthat are not currentlymarketed, illustrative marketedsupply of 207 compares tocontracted floater count of 149 When adjusting for likelyretirements and newbuilds thejackup count could decline by98 rigs, or 19%– Excluding another 17 jackupsthat are not currently marketed,illustrative marketed supply of414 compares to contractedjackup count of 33311
Perspectives on Offshore DrillingWhy Invest in Ensco?12
The Offshore Driller of ChoiceHigh-QualityRig FleetSafety & OperationalExcellence- Largest fleet in the sector- Diversified fleet withexposure to shallow- anddeep-water segments- Safety metrics consistentlybetter than industry average¹- 99% fleet-wide operationalutilization in 1Q 2018²Solid FinancialPositionSystems, Processes &Intellectual Property- 2.9 billion of liquidity- 236 million of debtmaturities to 2024- Significant improvement insubsea equipment relateddowntime since 2015- 30 recent patent filings3Broad Global Footprint &Customer Base8consecutive years rated #1 in total satisfaction among offshore drillers41 IADCindustry statistics as of 4Q17utilization is adjusted for uncontracted rigs and planned downtime3 Includes provisional and non-provisional patent filings completed or in progress since 1Q154 Independent industry survey by EnergyPoint Research2 Operational13
High-Quality Rig FleetDiverse Fleet Capable of Meeting a Broad Spectrum ofCustomers’ Well Program RequirementsUltra-DeepwaterDrillshipsTotal Includes two drillships and one jackup under construction, excludes managed rigs and non-operating rigs announced for retirement14
Fleet Renewal Strategy Has ImprovedOur Ability to Meet Customer DemandFleet uiredAssets29Divestitures65%31%7% Fleet repositioned tofocus on newest, mosttechnically-capableassets whilemaintaining exposure toboth shallow- anddeepwater markets– 40 rigs are either a 6thgeneration or greaterfloater or a modern highspecification jackup, upsignificantly from just 21in 201350%28%20136G FloatersCurrentPost-2002 Jackups2G-5G Floaters Rebalanced fleet betterenables us to meetcustomer demand forhighest-specificationassetsPre-2002 Jackups15Current fleet includes two drillships and one jackup under construction, excludes managed rigs and non-operating rigs announced for retirement
Highlights of Select Premium AssetsTechnical Specifications 12,000’ water depth & 40,000’total drilling depth rating Water depth rating and total drilling depth enable rig to operate in the mostchallenging ultra-deepwater environments Dual 7-Ram BOPs Second BOP reduces flat time between wells, and 7th Ram optimizes wellcontrol, safety and redundancy as well as saving time during testing Dual 2.5 million lb. derricks Dual derricks allow the rig to conduct simultaneous activities, reducingcustomers’ project time and costs, while higher hookload capacity increases arigs’ ability to drill/complete deeper, more complex wellsTechnical SpecificationsImportance to Customers Moored/dynamicallypositioned configuration Added flexibility for programs that straddle both shallow- and deep-water Proprietary ENSCO 8500Series design Flexible deck space well-suited for plug-and-abandon and intervention work Managed pressure drillingready Increased drilling efficiency for complex wells, plus monitoring and responsecapabilities to mitigate the risk of well-control incidentsTechnical SpecificationsTotal Rigs:Importance to CustomersImportance to Customers 40,000’ total drilling depth &2.5 million pound quad derrick Top-tier hoisting capacity allows for drilling of long-reach wells Patented Canti-LeverageAdvantageSM technology Enhanced hoisting capacity at the farthest reaches of the cantilever leads tofewer rig moves Automated drill floor Greater automation allows offline activities to be completed while continuingto drill16
Proprietary Solutions toIndustry ChallengesIndustry ChallengesEquipment Maintenance Equipment maintenance can beintrusive and untimely, requiringdisassembly and downtime Time-based maintenance canlead to extra costs when partsare replaced before the end oftheir useful lifeProprietary SolutionsReliability-Based Maintenance Ensco is transitioning to a reliability-based maintenance modelthrough in-house development of systems that apply real-timemonitoring, machine learning and predictive analysis to drillingequipment The Ensco Predictive Intelligence Center increases operationaluptime and decreases lifecycle costs by optimizing assetselection and maintenance activities The Ensco Asset Management System has contributed to a 70%improvement in subsea equipment-related downtime1Going on LocationPinSAFE System Going-on-location conditionshave traditionally beendetermined using estimates ofwave movements, which iscommonly conservative and cancause unnecessary downtimewhile waiting-on-weather Proprietary technology collects and analyzes real-time motionsdata of a floating jackup to determine if conditions are suitable forlowering legs to seabed Significant cost savings by optimizing jackup moves and reducingdowntime spent waiting on weather Improves safety by removing the need for human interpretation,ensuring consistent adherence to accepted level of risk whengoing-on-location171Reductionin subsea equipment-related downtime over total operating hours for floaters during 2016 & 2017 as compared to 2015
Safety & Operational ExcellenceSafety and Operational Performance ProvidesCompetitive Advantage and Benefits Financial ResultsTotal Recordable Incident Rate10.7 Critical to customers, inparticular for complex wellprograms0.60.50.40.3 Safety metrics consistentlybetter than industry nscoFleet-Wide Operational Utilization299%95%99%99%96%95%20131 IADC2014201520162017industry statistics as of 4Q17utilization is adjusted for uncontracted rigs and planned downtime3 Based on 2017 annual revenue2 Operational1Q18 Improved safety andoperational results eachsuccessive year duringindustry downturn 1% improvement inoperational utilizationincreases annual revenue byapproximately 20 million318
Solid Financial PositionStrong Balance Sheet Provides Financial Flexibility Customers want financiallystrong counter-parties that areable to:– Maintain rigs– Provide stable operations– Fulfill long-term contracts Flexibility to make selectiveinvestments in:– Technology & innovation– Opportunistic assetenhancements & high-gradingFinancial Position31 March 2018 2.9 billion of liquidity– 0.9 billion of cash and short-terminvestments– 2.0 billion revolving credit facility 2.7 billion of contracted revenuebacklog 4.1 billion of net debt & 32% netdebt-to-capital ratio1Source: Company Filings1 Net debt is a non-GAAP financial measure and should be considered as a supplement to, and not as a substitute for, or superior to, financial measures prepared in accordance withGAAP. Net debt-to-capital is calculated as follows: long-term debt of 5.0 billion, less 0.9 billion of cash and short-term investments, divided by the sum of long-term debt of 5.0billion plus shareholders’ equity of 8.6 billion, minus 0.9 billion of cash and short-term investments.19
Manageable Debt Maturities in Light ofStrong Balance Sheet & LiquidityOther Considerations Undrawn revolver extends beyond all nearterm debt maturities No secured debt in capital structure Generated 320M of net proceeds fromasset sales since year-end 2013 millionsAvailable Revolver1 2,003Cash & STInv. 2,867 864 265M of newbuild commitments remaining 236 million of Maturities Before 2024 1,805 850 1,001 1,000 955 123Liquidity 114 669 300 1502018 2019 2020 2021 2022 2023 2024 2025 2026 2027Cash & Short-Term InvestmentsRevolving Credit FacilitySenior Notes20402044Convertible Senior NotesSource: Company Filings1 Borrowing capacity under revolving credit facility is 2.0B through September 2019, 1.3B from October 2019 through September 2020 and 1.2B from October 2020 throughSeptember 202220
Global Footprint withDiverse Customer BaseCustomer Base Spans Majors, National Oil Companies and IndependentsNorth SeaMediterraneanSoutheastAsiaGulf of MexicoWest AfricaBrazilMiddle EastAustralia21Note: Certain customers may not currently have backlog
Higher Levels of Customer Activity HaveLed to Increased Contract AwardsAs Customer Activity Increases, Ensco Has WonMore New Contracts1 Than Any Offshore Driller New contracts have addedmore than 36 rig years2 toEnsco’s backlogPercentage of New ContractsAwarded since 2017117%7%6%5%4%3%Ensco3%– Diverse rig fleet and globalfootprint have led to floaterand jackup contracts acrossseveral regions– Won approximately 18% ofall ultra-deepwater contractsin 2017– Three multi-year jackupcontracts awarded recentlyCompany 1 Company 2 Company 3 Company 4 Company 5 Company 6Source: IHS Markit RigPoint; Ensco analysisNote: Independent companies with most new contract awards include Aban Offshore, Maersk Drilling, Noble, Paragon Offshore, Shelf Drilling and Transocean1 Calculated by dividing the number of rig years contracted by Ensco for fixtures classified as New Mutual in IHS Markit RigPoint (approximately 48) by thecorresponding industry-wide total (approximately 283)2 Calculated based on date of contract execution; number of rig years awarded differs from totals in industry databases due to timing delay between date of contractexecution and public disclosure of new contracts in certain cases.22
High-Quality Fleet Provides MeaningfulCash Flow in Market Recovery ScenarioIllustrative Annual EBITDA1 Contribution fromModern High-Specification Assets ( millions)Historical Average Day Rates K/day500Floater Dayrates 250K 350K 450K 75K8181,5462,274 100K9831,7112,439 125K 450K/day1,1471,8762,604300 250K/day200 125K/day100 ckup Dayrates400Jackups Based on historical build costs, an average dayrate of 465K for floaters and 150K forjackups would be needed to meet a 15%unlevered internal rate of return2– Since 2000, the average build costs for floaters was 665 million, while jackups averaged 200 million Ensco’s modern high-specificationassets can generate meaningfulcash flow for debt service andcapital commitments in normalizedday rate environmentSource: IHS Markit RigPoint1 Fleet includes 21 6G floaters and 19 jackups delivered in 2002 or later. EBITDA calculated using illustrative dayrates and a 95% utilization assumption less average opex of 150K/dayfor a floater and 50K/day for a jackup over 365 days.2Simplified discounted cash-flow analysis assumes 35-year useful life, average opex of 150K/day, 5 million of annual maintenance costs, 10 million of survey costs every five years forfloaters; and 30-year useful life, average opex of 50K/day, 2.5 million of annual maintenance costs, 7 million of survey costs every five years for jackups; and 95% operationalutilization. Analysis excludes debt service costs, shore-based support costs, taxes, and assumes no residual value at the end of the asset life.23
SummaryOffshore sector hasentered a differentpoint in the cycle Brent crude prices have increased significantly from cyclicallows Stabilization in oil prices has led to higher levels of offshoreproject sanctioning with the expectation that this trend continues Offshore rig utilization to benefit from increasing customerdemand and attrition of older, less capable assets from theglobal fleetEnsco’s strengthsprovide competitiveadvantage duringmarket recovery High-quality rig fleet and track record of safety and operationalperformance ahead of industry averages Technology and innovation improve operational results andaugment service offering Solid financial position bolstered by one of the strongest liquiditypositions in the offshore drilling sector Global footprint and diverse customer base Leader in new contract awards as customer activity hasincreased Fleet provides meaningful cash generation in market recoveryscenario24
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UBS Global Oil and Gas Conference 22 May 2018. 2 Forward-Looking Statements Statements contained in this investor presentation that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-
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STATE OIL AND GAS BOARD OF ALABAMA Berry H. (Nick) Tew, Jr. State Geologist and Oil and Gas Supervisor S. Marvin Rogers General Counsel STATE OIL AND GAS BOARD OF ALABAMA ADMINISTRATIVE CODE OIL AND GAS REPORT 1 RULES AND REGULATIONS GOVERNING THE CONSERVATION OF OIL AND GAS IN ALABAMA and OIL AND GAS LAWS OF ALABAMA with OIL AND GAS BOARD FORMS
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UBS Global Oil and Gas Conference Beijing September 2010 O I L S E A R C H L I M I T E D. 2 Oil Search Profile Established in Papua New Guinea (PNG) in 1929 Operates all of PNG’s producing oil and gas fields. Current gross production 40,000 boepd, net share 21,000 boepd Prov
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