North Atlantic Drilling Ltd.
Pareto Oil & Gas Conference
Oslo, September 10, 2014
Forward looking statements
The statements described in this 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-looking statements which could be made include, but are
not limited to, statements involving prospects for the company, expected revenues, capital
expenditures, costs and results of operations and contingencies and other factors. The
forward-looking statements contained in this presentation, including assumptions, opinions and views
of the company or cited from third party sources are solely opinions and forecasts which are subject
to risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from those indicated. All
subsequent written and oral forward-looking statements attributable to the company or to persons
acting on our behalf are expressly qualified in their entirety by reference to these risks and
uncertainties. You should not place undue reliance on forward-looking statements. Each
forward-looking statement speaks only as of the date of the particular statement, and we undertake
no obligation to publicly update or revise any forward-looking statements.
2
Agenda
Key Investment Highlights
Rosneft Partnership
Locations & Contract Backlog
Market Outlook
Q &A
3
Key Investment Highlights
› The leading drilling contractor in the
North Atlantic region
› Premium fleet of 10 harsh
environment drilling rigs including 3
newbuilds
Public investors
Seadrill Limited
(NYSE)
~70%
~30%
North Atlantic Drilling Ltd.
› Some 1,600 employees
(Bermuda)
› More than 40 years of operating
experience
Fleet:
› Committed growth of approximately
US$365 million in annualized
EBITDA in period 2014-2017
› Solid contract backlog of US$6.3 Bn
› NYSE-listed ~US$2.4 bn Market Cap
› Regular quarterly cash dividends to
investors
4
3+1
HE
Semi-submersib
le
1
HE Drillship
3+2
HE JU’s
Our Performance
Economic Utilization
EBITDA and Margin
180
70 %
160
60 %
140
50 %
120
100
40 %
80
30 %
60
20 %
40
10 %
20
0%
0
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
60%
98%
95%
90%
USS2.88
44%
40%
20%
0%
-20%
1,5
-40%
1
-60%
0
96%
Total investment return since Feb. 2011****
2
0,5
92%
Economic Utilization
3,5
2,5
94%
EBITDA Margin**
Accumulated dividends since inception in Feb. 2011
3
94%
Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14
Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14
EBITDA*
96%
-9%
-10%
-25%
-28%
-45%
-80%
-100%
NADL
ORIG
Share price
FOE
RDC
Dividends
DO
RIG
-91%
SONG
Total return
Source: Platou Markets
*) EBITDA: earnings before interest, depreciation and amortization equal to operating profit plus depreciation and amortization.
**) EBITDA in percent of our revenues excluding reimbursable revenue
***) Dividends have been adjusted for the 1:5 share consolidation which was effective from November 21, 2012
****) Total cumulative return, measured as of closing September 3, 2014
5
Agenda
Key Investment Highlights
Rosneft Partnership
Locations & Contract Backlog
Market Outlook
Q&A
6
Partnership with Rosneft
› Offshore Drilling Contracts
– 5 offshore drilling rigs
– US$4.1 bn of order backlog
› Onshore Drilling
– NADL to acquire ~150 land rigs including five-year contracts
– Rosneft to receive new primary shares in NADL, 30 percent ownership
– Rosneft to pay difference in value between land rigs and NADL shares in
cash to NADL
› Rosneft to appoint two Board members to NADL Board of Directors
› Seadrill maintains majority ownership in NADL after the initial transaction
7
Company structure post closing
Seadrill
Limited
Rosneft
>50%
~30%
Public
investors
(NYSE)
› Access to the Russian arctic
– significant growth potential
~20%
› Improved earnings visibility
North Atlantic Drilling Ltd.
(Bermuda)
› Partnership structure to
facilitate alignment of
interests
Fleet:
3+1
1
3+2
HE
Semi-submersibles
HE Drillship
HE JU’s
~150
land drilling rigs in Russia
8
› Local presence in Russia
through acquisition of land rig
business from Rosneft
Agenda
Key Investment Highlights
Rosneft Partnership
Locations & Contract Backlog
Market Outlook
Q&A
9
Norway and UK
Norway
6(5) rigs
UK
1 rig
10
Russia – offshore and main rig regions onshore
Kara Sea
1 rig
Usinsk/Komi
15 rigs
Gubkinsky
17 rigs
Nefteyugansk
63 rigs
Nizjnevartovsk
5 rigs
Krasnoyarsk
11 rigs
Samara/Orenburg
24 rigs
Krasnoadar
311
rigs
Grozny
2 rigs
Irkutsk
10 rigs
Sakhalin
2 rigs
Solid Earnings Visibility
Rig
Client
Current
dayrate
(US$k/day)
Contract status
2014
2015
2016
2017
2018
2019
2020
Semi-submersibles
West Alpha
537/552
West Venture
448
West Phoenix
465
West Hercules
503
@552
to Q2 2021/2022
West Rigel
Drillships
West Navigator
589
@628
Jack-ups
West Epsilon
289
West Elara
365
West Linus
377
@360
@375
HE-JU TBNI
to Q2 2022
HE-JU TBNI
to Q3 2022
Firm contract
12
to Q3 2022
Option
Transit
Managed on behalf of Seadrill
… with US$6.3 bn Backlog to High Quality Customers
›
›
›
›
Strong contract backlog of US$6.3 bn with investment
grade customers
Differentiated by premium harsh environment assets
and high operational performance
High safety track-record prerequisite to secure
contracts in one of the most safety focused drilling
regions
Key client relationships with top-tier oil companies
within offshore harsh environment regions
Customer Credit
Rating
Moody's1
S&P1
Rosneft
Baa1
BBB-
Statoil
Aa2
AA-
ConocoPhillips
A1
A
ExxonMobil
Aaa
AAA
Total
Aa1
AA-
Shell2
Aa1
AA
Contract coverage
Contracted
2014
2015
1%
2016
9%
99%
1)
13
Moody’s long-term credit rating and S&P’s long term foreign issuer credit rating, source from Bloomberg
2017
25%
Uncontracted
91%
31%
75%
69%
Agenda
Key Investment Highlights
Rosneft Partnership
Locations & Contract Backlog
Market Outlook
Q&A
14
Russian Arctic and Rosneft Partnership
New drilling capacity required
› The fleet of rigs capable of drilling in the
Russian Arctic today is 8-10 rigs in total
› 100 wells to be drilled by Rosneft and
Gazprom over the next 10 years in order
to maintain their licenses
› West Alpha to drill one well in 2014
Kara Sea
› Currently three blocks being explored by a
JV between Rosneft and ExxonMobil
› Estimated recoverable resources1:
–
–
45.9bn boe of oil
14.59bn m3 of gas
› West Alpha drilling the University-1 well
1) Source: Rosneft
15
Norway and UK: Challenging Market For Older Floaters
Rig Name
Manager
Ocean Vanguard
Ocean Princess
Transocean Prospect
Transocean Searcher
Ocean Nomad
Sedco 711
Sedco 704
Stena Spey
Transocean John Shaw
Paragon MSS1
Bredford Dolphin
Sedco 714
Transocean Winner
Sedco 712
WilHunter
Songa Delta
Songa Trym
Byford Dolphin
Borgny Dolphin
Diamond Offshore
Diamond Offshore
Transocean
Transocean
Diamond Offshore
Transocean
Transocean
Stena
Transocean
Paragon Offshore
Dolphin
Transocean
Transocean
Transocean
Awilco Drilling
Songa Offshore
Songa Offshore
Dolphin
Dolphin
Floater
Country
Built
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
SS
UK
UK
UK
Norway
UK
UK
UK
UK
UK
UK
Norway
UK
Norway
UK
UK
Norway
Norway
UK
UK
1982
1975
1983
1983
1975
1982
1974
1983
1982
1979
1980
1983
1983
1983
1983
1980
1976
1974
1977
Next SPS
2014
2015
15.04.2015
31.07.2018
10.04.2017
01.03.2018
29.09.2018
31.10.2017
31.01.2018
18.04.2018
15.06.2018
01.02.2016
15.05.2017
15.03.2019
01.02.2016
11.10.2018
26.11.2015
15.09.2016
15.01.2018
20.10.2014
01.10.2014
Firm contract
Options
Spesial Periodic Survey
Source: IHS, Platou Markets. Floaters older than 30 years with firm contracts expiring in 2014, 2015 or 2016
16
2016
2017
2018
Demand Outlook for Harsh Environment Drilling
Major Harsh Environment Projects in Pipeline
› Norway
–
Johan Sverdrup, Johan Castberg, Maria,
Zidane, Luva, Snøhvit, Bream, Barents Sea
exploration
› Russia/Arctic
–
–
Rosneft and partners’ exploration in the Arctic
Black Sea requirements
› UK/West of Shetland
–
–
Laggan/Toremore
OMV et. al. plus Nexen requirements
› Canada
–
–
Bay du Nord, Mizzen
Exxon, Husky and Statoil indicate 2-4 more
units needed in the region longer term
› Falklands
–
Sealion development, various exploration
› Alaska
17
Statoil’s production in Norway - forecast
900
800
Forecast
700
600
500
400
300
200
100
0
Undiscovered, Open acreage
Undiscovered awarded
Discovery (1970s)
Discovery (1980s)
Discovery (1990s)
Discovery (2000s)
Discovery (2010s)
Appraising
Johan Sverdrup
Field evaluation
Under development
Producing early
Producing 25-50%
Producing 50%-75%
Producing >75%
Producing (Refinery Gains)
Abandoned
Source: Rystad Energy, Platou Markets
Summary
Record High Contract Backlog of US$6.3 bn
Quarterly cash dividend distribution
3,5
USS2.88
3
2,5
2
1,5
1
0,5
0
Committed growth
The Russian opportunity
EBITDA1
1)
18
2014: West Linus
~US$80 million
2015: West Rigel
~US$125 million
2017: 2xHE JU’s
~US$160 million
Annualized estimated EBITDA-contribution
Agenda
Key Investment Highlights
Rosneft Partnership
Locations & Contract Backlog
Market Outlook
Q&A
19
Q&A