Astrup Fearnley Shipping & Offshore Conference · Astrup Fearnley Shipping & Offshore Conference 10...
Transcript of Astrup Fearnley Shipping & Offshore Conference · Astrup Fearnley Shipping & Offshore Conference 10...
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Astrup Fearnley Shipping & Offshore Conference
10 January 2019
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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-
looking 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 expected
financial performance, effective tax rate, expected expense savings, day rates and backlog, estimated rig availability; rig
commitments and contracts; contract duration, status, terms and other contract commitments; estimated capital
expenditures; 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 and
assumptions that may cause actual results to vary materially from those indicated, including commodity price
fluctuations, 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 any
failure to execute definitive contracts following announcements of letters of intent, letters of award or other expected work
commitments; 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 and
retain skilled personnel on commercially reasonable terms; environmental or other liabilities, risks or losses; debt
restrictions that may limit our liquidity and flexibility; tax matters including our effective tax rate; and cybersecurity risks
and 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 of
Operations” in Part II of our most recent annual report on Form 10-K, as updated in our subsequent quarterly reports on
Form 10-Q, which are available on the SEC’s website at www.sec.gov or on the Investor Relations section of our website
at www.enscoplc.com. 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, except as required by law.
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Key Themes
Offshore drilling
recovery is
underway
Ensco is well
positioned to
participate in the
recovery
• Offshore production critical to meeting growing oil and gas demand
• Years of underinvestment in future production has impacted reserve
lives for E&P customers
• E&P customers have greater cash flow to consider investments in
future production including offshore projects
• Offshore project sanctioning is increasing, leading to new contracts
and tenders for future work
• High-specification drilling rigs winning an outsized share of new work
• Attrition of less capable rigs expected to continue
• Concentrated fleet of high-quality assets capable of meeting
customer demand in deep- and shallow-water globally
• Track record of operational excellence and safety has led to
industry-leading customer satisfaction
• Leader in new contract awards as customer activity has increased
• Focused investments in innovation and technology help to
differentiate performance and reliability
• Solid financial position bolstered by strong liquidity and
manageable debt maturities
4
Ensco’s Leading Position
Offshore Market Recovery
5
Offshore Production Critical to Meeting
Growing Global Oil & Gas Demand
Global Oil & Gas Production
Global Oil & Gas Production – Offshore & Onshore
148165
184
0
40
80
120
160
200
Oil Gas Total
mm boe/d
Source: Rystad Energy
• Oil and gas production will
continue to be an important
part of meeting global energy
demand, with total production
forecast to grow by 19 million
barrels of oil equivalent per
day by 2025
• Despite significant growth in
unconventional onshore
production, offshore
production represents 29% of
overall oil and gas production
today – and expectations are
that offshore production will
provide more than 5 million
barrels of oil equivalent
growth by 2025
70% 71% 72%
30% 29% 28%
Onshore Offshore
+19 mm
boe/d
6
Several Years of Underinvestment by
Major E&Ps Has Impacted Reserves
Capital Expenditures by Major E&Ps1
Average Reserve Life for Major E&Ps
$ billions• Major E&Ps reduced capital
expenditures by 53% from
2014 highs in response to
lower commodity prices
• After three years of
significantly lower levels of
investment, the average
reserve life for the Major
E&Ps has gradually declined
to its lowest point in the past
decade
• Capital expenditures for Major
E&Ps are estimated to have
declined further in 2018,
putting additional pressure on
average reserve livesSource: Rystad Energy, SpareBank 1 Markets1 Major E&P customers defined as BP, Chevron, ConocoPhillips, Eni, Equinor, Exxon, Repsol, Shell and Total
124
160
187
213 219
171
124 102
-
50
100
150
200
250
2010 2011 2012 2013 2014 2015 2016 2017
-53%
10.9
12.0 12.3
12.8 12.9
12.1
11.1 10.7
8
9
10
11
12
13
14
2010 2011 2012 2013 2014 2015 2016 2017
years
-17%
7
Improving Market Conditions Have
Led to Higher Customer Cash Flows
Free Cash Flow Breakeven Oil Prices for E&Ps
Source: SpareBank 1 Markets, FactSet1 Free cash flow is calculated as analyst consensus estimates of operating cash flow less capital expenditures; major offshore E&P customers defined as Anadarko,
BP, Chevron, ConocoPhillips, Eni, Equinor, Exxon, Petrobras, Repsol, Shell and Total
• More recently, lower free cash
flow breakeven oil prices for
E&Ps, coupled with higher oil
prices, have created a more
conducive environment for
new project investments
• Despite the recent pullback in
oil prices, expectations are
that free cash flow continues
to grow in 2019, giving major
offshore customers greater
flexibility to invest in future
production
Free Cash Flow of Major Offshore E&Ps1
-11 -3
65
113 117
-20
0
20
40
60
80
100
120
140
2015 2016 2017 2018E 2019E
$ billions
6051
3642 39
5344
54
71
58
0
20
40
60
80
2015 2016 2017 2018E 2019E
Free cash flow breakeven oil price Avg Brent crude price
$/bbl
8
Offshore Projects Economic at Current Oil
Prices With More Approvals Expected
• Based on commentary from
major offshore customers,
many offshore projects are
economic at breakeven oil
prices well below current
levels
• New major offshore project
approvals in 2018 were more
than 2.5x 2016 cyclical lows,
with expectations of further
increases in sanctioning
activity during 2019
– New project approvals are a
leading indicator of future
capital expenditures
Average Offshore Breakeven Oil Prices
$27 <$30$33
<$40 <$40 <$40
Statoil Total Respol Chevron Petrobras Shell
$/bbl
Pre-FID
Norwegian
Shelf
Projects
Brazil
Pre-Salt
Project
Pre-FID
Deepwater
Projects
Pre-FID
Shallow-
Water
Projects
Pre-FID
Pre-Salt
Projects
Acquired
Maersk
portfolio
23
50
67
87
0
25
50
75
100
2016 2017 2018 2019E
Number of New Major Offshore Project Approvals
Source: Equinor 7 February 2017 capital markets day; call; Total 25 September 2017 investor day; Repsol 23 February 2017 earnings conference call; ExxonMobil 27 July 2018 earnings
conference call, in reference to Carcara project; Petrobras 30 January 2018 Latin America investment conference presentation; Shell 26 July 2018 earnings conference call; Rystad
Energy, major projects defined as projects with >$250 million of associated capital expenditures
9
Offshore Rig Utilization Expected to
Benefit From Increased E&P Investments
E&P Offshore Capital Expenditures
Source: Rystad Energy, IHS Markit RigPoint
• Given increased cash flow
and attractive new project
economics, E&P offshore
capital expenditures are
expected to increase
modestly in 2019 and
continue growing steadily
over the next five years
• Over the past three decades,
offshore drilling rig utilization
has moved in line with the
rate of change in customer
spending, suggesting further
utilization increases in 2019
and 2020 from higher
customer demand
-30
-20
-10
0
10
20
30
40
30
40
50
60
70
80
90
100
Global Fleet Utilization (%, left axis) Change in E&P Offshore Capex (2Y rolling avg %, right axis)
Offshore Drilling Rig Utilization and E&P Capital Expenditures
154 158183
201219
233
-
50
100
150
200
250
300
350
2014 2015 2016 2017 2018E 2019E 2020E 2021E 2022E 2023E
9% CAGR
$ billions
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• New contract awards in 2018
were 61% higher than 2016
– The number of 2018 floater
contracts nearly doubled 2016
lows, while new jackup contract
awards increased by 53%
• Despite lower year-to-year oil
prices, the number of open
tenders for offshore rigs has
increased 72% since year-end
2017, demonstrating
customers’ willingness to look
through near-term volatility to
longer term oil prices when
considering new offshore
projects
Offshore Rig Demand Showing
Signs of Steady Improvement
63102 114
142
171
217
0
70
140
210
280
350
2016 2017 2018
Floaters Jackups
Source: IHS Markit RigPoint as of December 20181 Classified as new mutual fixtures in IHS Markit RigPoint
Number of New Contracts1 Awarded
+61%
+72%
Avg Brent
Crude $/bbl$55$65
40 46
32
78
0
30
60
90
120
Dec-17 Dec-18
Floaters Jackups
Number of Open Offshore Rig Tenders
11
40%
60%
80%
100%
Jan 16 Jul 16 Jan 17 Jul 17 Jan 18 Jul 18
Highest-Specification Drillships
Winning More New Floater Contracts
Source: IHS Markit RigPoint as of December 20181 Classified as new mutual fixtures in IHS Markit RigPoint2 Drillships delivered in 2013 or later, equipped with dual BOP and 2.5mm lbs. hookload derricks
Highest-
Specification
Drillships2
Drillship Utilization – Delivered Rigs
• The number of new drillship
contracts awarded worldwide
during 2018 was more than 2.5x
2016 lows
• Highest-specification drillships that
deliver efficiencies for customers’
offshore projects are winning an
outsized share of new work
– These assets currently represent 34
out of 110 delivered drillships, or
~30% of total supply, and won ~45%
of all new drillship contracts awarded
in 2017 and 2018
• Utilization for these highest-
specification drillships increased by
17 percentage points during 2018
and is currently ~82%
3
15 1610
1719
13
3235
0
10
20
30
40
2016 2017 2018
Highest-Specification Drillships Other Drillships
Number of New Drillship Contracts1 Awarded Worldwide
2
12
Modern Jackups Winning More New
Contracts For Shallow-Water Work
40%
60%
80%
100%
Jan 16 Jul 16 Jan 17 Jul 17 Jan 18 Jul 18
Source: IHS Markit RigPoint as of December 20181 Classified as new mutual fixtures in IHS Markit RigPoint2 Jackups <20 years of age
Modern
Jackups1
Older
Jackups
Jackup Utilization – Delivered Rigs
• The number of new jackup
contracts awarded worldwide has
increased by 53% over 2016
levels
• Modern jackups that deliver
efficiencies for customers’ offshore
projects are winning an outsized
share of new work
– These assets currently represent
284 out of 520 delivered jackups, or
~55% of total supply, and won ~64%
of new jackup contracts awarded in
2017 and 2018
• Modern jackups have experienced
18ppt higher utilization than older
jackups on average since the
beginning of 2016
86110
137
56
61
80142
171
217
0
50
100
150
200
2016 2017 2018
Modern Jackups Older Jackups
Number of New Jackup Contracts1 Awarded Worldwide
2
13
Substantial Portion of Current Global
Supply are Retirement Candidates
• ~50 floaters1 could be candidates
for retirement based on age and
contract expirations
• ~150+ jackups1 could be retired as
expiring contracts and survey costs
lead to the removal of older rigs
from drilling supply
• Uncontracted newbuilds expected
to be delayed further, while several
newbuilds in Brazil and China are
unlikely to join the global fleet
Global Rig Fleet
Source: IHS Markit RigPoint as of December 20181 Includes rigs >30 years of age that are idle without follow-on work or have contracts expiring before year-end 2019 without follow-on work and rigs 15 to 30
years of age that have been idle for more than two years and without follow-on work
Floaters Jackups
Delivered Rigs
Under Contract 116 313
Future Contract 32 30
Idle / Stacked 50 111
Marketed Fleet 198 454
Non-Marketed 46 66
Total Fleet 244 520
Marketed Utilization 75% 76%
Total Utilization 61% 66%
Newbuild Rigs
Contracted 3 2
Uncontracted 26 23
Build in Brazil / China 14 54
Total Newbuilds 43 79
14
CurrentTotal
Supply
IllustrativeTotal
Supply
IllustrativeMarketedSupply
Retirements Expected to Lead to
Future Supply Contraction
• The global floater count could
decline by 22 rigs, or ~9%, if
adjusted for likely retirements
and newbuild deliveries
– Excluding another 25 floaters
that are not currently
marketed, illustrative marketed
supply of 197 compares to
contracted floater count of 148
• When adjusting for likely
retirements and newbuilds, the
jackup count could decline by
124 rigs or ~24%
– Excluding another 13 jackups
that are not currently marketed,
illustrative marketed supply of
383 compares to contracted
jackup count of 343
Illustrative Jackup Supply
Illustrative Floater Supply
CurrentTotal
Supply
IllustrativeTotal
Supply
IllustrativeMarketedSupply
4244
29 -26
-21
-8222 25
197
Build in Brazil
Newbuilds1
Other
Newbuilds
>30yrs idle
w/o future
contract >30yrs
rolling off
contract by
YE2019
15-30yrs
idle for
over 2yrsNon-
marketed
35520
24 -103
-76
-4 396 13383
Source: IHS Markit RigPoint as of December 2018, Ensco analysis1 Build in Brazil newbuilds exclude 10 rigs that are unlikely to be delivered2 Assumes 65% of uncontracted Chinese newbuilds enter the global supply
Chinese
Newbuilds2
Other
Newbuilds
>30yrs idle
w/o future
contract>30yrs
rolling off
contract by
YE2019
15-30yrs
idle for
over 2yrs
Non-
marketed
119 floaters retired since 3Q14
81 jackups retired since 3Q14
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Ensco’s Leading Position
Offshore Market Recovery
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Fleet Overview
Diverse Fleet Capable of Meeting a Broad Spectrum of
Customers’ Well Program Requirements
Ultra-Deepwater
Drillships
Versatile
Semisubmersibles
Premium
Jackups
Includes two drillships and one jackup under construction, excludes managed rigs and rigs announced for retirement
Total Rigs: 1212 35
17
Fleet Renewal Strategy Has Improved
Our Ability to Meet Customer Demand
46%
20%
17%
17%
2013
• Fleet repositioned to
focus on newest, most
technically-capable
assets while
maintaining exposure to
both shallow- and
deep-water markets
– 43 rigs are either a 6th
generation or greater
floater or a modern high-
specification jackup, up
significantly from just 24
in 2013
• Rebalanced fleet
enables us to better
meet customer demand
for highest-specification
assets
22%
5%
37%
36%
Current
34%
73%
Fleet Composition
Newbuild
Deliveries8
Acquired
Assets11
Divestitures30
Jackups > 20 years of age2G-5G Floaters6G+ Floaters Jackups < 20 years of age
Current fleet includes two drillships and one jackup under construction, excludes managed rigs and rigs announced for retirement
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ENSCO DS-14
ENSCO DS-13
ENSCO DS-12
ENSCO DS-11
ENSCO DS-10
ENSCO DS-9
ENSCO DS-7
Contracted Options Under Construction Available
Ensco Fleet Well Positioned to Meet
Deepwater Customer Demand
Source: IHS Markit RigPoint as of December 20181Drillships delivered in 2013 or later, equipped with dual BOP and 2.5mm lbs. hookload derricks
12
7
4 4 4 43
6
RIG
ES
V
RD
C
DO
NE
SD
RL
PA
CD
All
Oth
er
Highest-Specification Drillships1
• Ensco fleet includes seven of 44
highest-specification drillships that are
preferred by customers due to the
efficiencies they deliver to offshore
well programs
– Utilization of these assets increased by
17 percentage points during 2018, while
utilization for other drillships remained
flat over the same period
• Ensco’s highest-specification
drillships provide leverage to this
improving segment of the market
– Portfolio approach to contracting rigs
preserves exposure to improving
contracting environment
2019 2020 2021
Ensco Contract Status – Highest-Specification Drillships
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Ensco Fleet Well Positioned to Meet Mid-
& Shallow-Water Customer Demand
Source: IHS Markit RigPoint as of December 20181 Modern moored semisubmersibles classified as < 15 years of age with 5+ ram blowout preventers, 15K psi BOP working pressure and 2 million lbs. hookload; 2Jackups < 20 years of age; chart not inclusive of all modern jackups in the global supply; 3Seadrill includes NADL, reflects 50% ownership of SeaMex and
excludes newbuilds with no recourse to parent company
30
23 22
18
1311
96 6
BO
RR
RD
C/A
RO
ES
V
SD
RL
Ma
ers
k
NE
Ab
an
North
ern
SH
LF
Modern Jackups2
• Ensco owns four of 28 modern moored
semisubmersibles in the global fleet
with enhanced well-control capabilities
– Three of these rigs are equipped with a
versatile moored-DP configuration
including ENSCO 8503 and ENSCO
8505, which combined have won ~40% of
new floater contracts signed in the Gulf of
Mexico since mid-2014
• Ensco maintains one of the largest
modern jackup fleets in the industry,
providing exposure to the shallow-
water recovery
– Open tenders for jackup rigs have more
than doubled since year-end 2017
Modern Moored Semisubmersibles1
6
4 4
3 3
2 2
1
3
RIG
ES
V
OD
L
Ma
ers
k
SD
RL
NO
DL
Blu
ew
hale
DO
All O
ther
3
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Safety & Operational Excellence
• Critical to customers, in
particular for complex well
programs
• Safety metrics consistently
better than industry averages,
and high levels of operational
utilization
– 1% improvement in operational
utilization increases annual
revenue by approximately $20
million3
• Industry leader in customer
satisfaction for eight
consecutive years
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
2013 2014 2015 2016 2017 YTD'18
Total Recordable Incident Rate1
Industry Ensco
1 YTD’18 Ensco statistics as of 3Q18; IADC industry statistics as of 2Q182 Operational utilization is adjusted for uncontracted rigs and planned downtime; YTD’18 as of 3Q183 Based on 2017 annual revenue
Safety and Operational Performance Provides
Competitive Advantage and Benefits Financial Results
95%95%
96%
99% 99% 98%
2013 2014 2015 2016 2017 YTD'18
Fleet-Wide Operational Utilization2
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West Africa
North Sea
Global Footprint with
Diverse Customer Base
Mediterranean
Note: Certain customers may not have current contracts with Ensco
Customer Base Spans Majors, National Oil Companies and Independents
Middle East
Southeast
Asia
Gulf of Mexico
South America Australia
22
Ensco’s High-Quality Fleet and Global
Presence Has Led to Contract Awards
• Contracts have added
approximately 53 rig years2
to Ensco’s backlog
– Diverse rig fleet and global
footprint have led to floater
and jackup contracts across
several regions
– Three recent drillship contract
awards including work
offshore West Africa and
South America
– Several recent jackup
contracts around the world
including the Middle East, Asia
Pacific & North Sea
12%
6% 5% 5%5%
5%
4%
Ensco Company 1 Company 2 Company 3 Company 4 Company 5 Company 6
Percentage of New ContractsAwarded since 20171
Source: IHS Markit RigPoint as of January 2019; Ensco analysis
Note: Independent companies with most new contract awards include Aban Offshore, ARO Drilling, Noble, Rowan, 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 61) by the
corresponding industry-wide total (approximately 521)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 contract
execution and public disclosure of new contracts in certain cases.
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Leveraging Innovation & Technology
to Solve Industry Challenges
1 Includes provisional and non-provisional patent filings completed or in progress since 1Q15
• Focused investments in
innovation that differentiate
Ensco’s assets from the
competition through better
performance and reliability
• This includes developing
proprietary systems,
processes and technology
that improve the drilling
process and productivity of
Ensco’s operations
• These efforts have resulted in
more than 40 patent filings
since 20151
Equipment Maintenance
Placing Jackups on Location
• EAMS and EPIC systems increase
operational uptime and decrease
lifecycle costs by optimizing asset
selection and maintenance activities
• Proprietary PinSafe technology
creates significant cost savings for
customers by optimizing jackup moves
and reducing downtime spent waiting
on weather
Drilling Process Efficiency
• Continuous Tripping Technology™ is a
patented system that fully automates
the pipe tripping process without
stopping to make or break connections,
enabling 3x faster tripping speeds and
delivering expected cost savings along
with safer, more reliable operations
Continuous
Tripping
Technology
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Continuous Tripping Technology
Continuous Tripping Technology
Illustration While Moving Into A Well• Fully automated system implements
unique rotary table that moves
vertically using a secondary hoisting
system
• Rotary table moves in synchrony with
the top drive enabling pipe
connections to be made up and
broken out while the drill string is
moving in or out of the well
– Conventional stand-by-stand method
requires drill string to stop when pipe is
being connected or broken
• Applicable across all water depths
and can be retrofitted to existing rigs,
i.e. would not require a newbuild rig
– Recently installed on ENSCO 123 and
system commissioning is underway
Groundbreaking Patented Technology Fully Automates Pipe Tripping Process At
Constant Controlled Speed Without Stopping To Make Or Break Connections
Rotary table
elevates above
rig floor…
…to make pipe
connections with
the top drive…
…and moving back to the
rig floor at a constant
controlled speed to begin
the process again
25
Continuous Tripping Technology Helps to
Lower Customers’ Offshore Project Costs
180
153
120
130
140
150
160
170
180
190
Conventional Tripping Continuous Tripping
Illustrative One-Year Deepwater Program
$ millions
• 6 wells / 60 days per well using
conventional tripping
• >30,000 ft per well on average
• $500k/day spread cost including rig rate
~15% or
$27M
Source: Ensco analysis based on data collected from offshore activities performed by Ensco over the past 10 years, including more than 4,500 wells1Assumes average tripping speed of 9,000 ft per hour
1
3x Faster than conventional stand-
by-stand tripping methods
10%Reduction in total time on
average for all wells, and up to
15% for drill wells > 30,000 feet1
$For multi-well projects, savings
could equate to tens of millions of
dollars for the customer
26
Solid Financial Position
Financial Position 30 September 2018
• $2.6 billion of liquidity
– $0.6 billion of cash and short-term
investments
– $2.0 billion revolving credit facility
• $2.1 billion of contracted revenue
backlog
• $4.4 billion of net debt & 35% net
debt-to-capital ratio1
• Customers want financially
strong counter-parties that are
able to:
– Maintain rigs
– Provide stable operations
– Fulfill long-term contracts
• Flexibility to make selective
investments in:
– Technology & innovation
– Opportunistic asset
enhancements & high-grading
Balance Sheet & Liquidity Provide Financial Flexibility
Source: 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 with
GAAP. Net debt-to-capital is calculated as follows: long-term debt of $5.0 billion, less $0.6 billion of cash and short-term investments, divided by the sum of long-term debt of $5.0
billion plus shareholders’ equity of $8.3 billion, minus $0.6 billion of cash and short-term investments.
27
2044
Manageable Debt Maturities in Light of
Balance Sheet & Liquidity
$123 $114$955
$669
$1,000
$150
$850
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2040
$300
$ millions
$1,001
$1,805
Liquidity
$630
Ava
ilab
le R
evo
lve
r1C
ash
&
ST
In
v.
$2,633
Convertible Senior NotesSenior Notes
~$236 million of Maturities Before 2024
$2,003
Cash & Short-Term Investments Revolving Credit Facility
Other Considerations
• Undrawn revolver extends beyond all near-
term debt maturities
• Fully unencumbered fleet with no secured
debt in the capital structure and a secured
debt basket of $750 million
• Generated ~$330 million of net proceeds from
asset sales since year-end 2013
Source: 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 through
September 2022
28
• Ensco’s modern high-specification
assets can generate meaningful
cash flow for debt service and
capital commitments in normalized
day rate environment
High-Quality Fleet Provides Meaningful
Cash Flow in Market Recovery
Illustrative Annual EBITDA1 Contribution from
Modern High-Specification Assets Only
Source: IHS Markit RigPoint1 Fleet includes 21 6G+ floaters and 22 jackups < 20 years of age. EBITDA calculated using illustrative dayrates and a 90% utilization assumption less average opex of $150K/day for 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 for
floaters; 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 90% operational
utilization. Analysis excludes debt service costs, shore-based support costs, taxes, and assumes no residual value at the end of the asset life.
0
100
200
300
400
500
2002 2004 2006 2008 2010 2012 2014 2016 2018
$K/day
Floaters Jackups
Historical Average Day Rates
$450K/day
$250K/day
$125K/day
$75K/day
• Based on historical build costs, an average day
rate of ~$490K for floaters and ~$160K for
jackups 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
Floater Dayrates
$250K $350K $450K
Ja
cku
pD
ayra
tes $7
5K
715 1,405 2,095
$1
00
K
896 1,586 2,276
$1
25
K
1,077 1,767 2,456
EBITDA in $ millions
29