Edc capital markets_day_presentation_nov-2012

Eurasia Drilling Company Limited

Eurasia Drilling Company Limited

Capital Markets Day Excellence in Service -

Leadership in Growth

14th November 2012

Eurasia Drilling Company Limited Eurasia Drilling Company Limited

Disclaimer

The materials contained herein (the “Materials”) have been prepared by Eurasia Drilling Company Limited (the “Company”) and its subsidiaries and associates (the “Group”)

solely for use at presentations in November 2012. By accepting the Materials or attending such presentation, you are agreeing to maintain absolute confidentiality regarding

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The information contained in the Materials does not purport to be comprehensive and has not been independently verified. The information set out herein is subject to

updating, completion, revision, verification and amendment and such information may change materially. The Company is under no obligation to update or keep current the

information contained in the Materials or in the presentation to which it relates and any opinions expressed in them are subject to change without notice. The Company and its

affiliates, advisors and representatives shall have no liability whatsoever (in negligence or otherwise) for any loss whatsoever arising from any use of the Materials.

The Materials are strictly confidential and do not constitute or form part of, and should not be construed as, an offer, solicitation or invitation to subscribe for, underwrite or

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“Order”) or (ii) high net worth entities, and other persons to whom they may lawfully be communicated, falling within Article 49(2) of the Order (all such persons together being

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is not a relevant person should not act or rely on the Materials or any of their contents.

Neither the Company‟s share nor global depositary receipts representing the same have been, nor will they be, registered under the U.S. Securities Act of 1933, as amended,

or under the applicable securities laws of Australia, Canada or Japan. Any such securities may not be offered or sold in the United States or to, or for the account or benefit of,

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No representation or warranty, expressed or implied, is made by the Company and any of its affiliates as to the fairness, accuracy, reasonableness or completeness of the

information contained herein and no reliance should be placed on it. Neither the Company nor any other person accepts any liability for any loss howsoever arising, directly or

indirectly, from reliance on the Materials.

The Materials include forward-looking statements which are based on current expectations and projections about future events. These forward-looking statements are subject

to risks, uncertainties and assumptions about the Company and its subsidiaries and investments, including, among other things, the Group‟s results of operations, the

development of its business, trends in the oil field services industry, and future capital expenditures and acquisitions. In light of these risks, uncertainties and assumptions, the

events in the forward-looking statements may not occur. Neither the Company nor any other member of the Group undertakes to publish any revisions to any forward-looking

statements to reflect events that occur or circumstances that arise after the date of the Materials. In particular, we note that, unless indicated otherwise, the market and

competitive data in these Materials have been prepared by REnergy CO (“REnergy”) and Douglas-Westwood Limited (“Douglas-Westwood”), a global consulting and services

organisation focused on the energy and marine industries. REnergy and Douglas Westwood compiled the historical data presented in these Materials from a variety of

published and in-house sources, including interviews and discussions with market participants, market research, web-based research and competitor annual accounts.

REnergy compiled their projections for the market and competitive data beyond 2011 in part on the basis of such historical data and in part on the basis of their assumptions

and methodology. In light of the absence of publicly available information on a significant proportion of participants in the industry, many of whom are small and/or privately

owned operators, the data on market sizes and projected growth rates should be viewed with caution.

The Materials are not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other

jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such

jurisdiction. The Materials are not for publication, release or distribution in Australia, Canada, Japan or the United States.

DISCLAIMER 2

Eurasia Drilling Company Limited 3

PLAN FOR THE DAY

Kim Kruschwitz, VP Marketing & IR


Agenda

• 10.00am: Plan for the Day, Kim Kruschwitz, VP Marketing & IR

• Introduction and Investment Highlights– Alexander Djaparidze, CEO

• Outlook and Strategy – Kim Kruschwitz, VP Marketing & IR

• Onshore and Offshore Operations – Murat Sampiev, COO

• Q&A

• Coffee Break

• Marketing and Business Development – Kim Kruschwitz, VP Marketing & IR

• Financial Performance and Target Framework – Richard Anderson, CFO

• Summary and Outlook – Alexander Djaparidze, CEO

• Q&A

• 1.15pm: Buffet Lunch

PLAN FOR THE DAY 4


INTRODUCTION AND

INVESTMENT HIGHLIGHTS

Alexander Djaparidze, CEO


EDC History

6 INTRODUCTION AND INVESTMENT HIGHLIGHTS

OAO LUKOIL-Burenie

formed, LUKOIL‟s in-

house drilling division

1996–2003

LUKOIL-Burenie drilling

business developed

December 2004

EDC acquired LUKOIL-

Burenie

Acquired ASTRA jack-up

rig from LUKOIL

Acquired 28 W/O rigs from

SLB

Operations began on LUKOIL‟s

Yu.Korchagin platform

Acquired two West Siberia

W/O businesses from LUKOIL

(163 rigs)

Acquired OOO Meridian (21 W/O rigs) in

Komi Republic

Ordered NEPTUNE jack-up from Lamprell

(mid-2013 delivery)

Acquired Kaliningrad drilling business from LUKOIL (4 rigs)

SATURN jack-up rig acquired from Transocean

Schlumberger (SLB) asset transaction and strategic

alliance in Russia and CIS (19 drilling, 23 sidetrack & 34

W/O rigs)

November 2007

EDC IPO on LSE

Ordered MERCURY jack-up from Lamprell

(late-2014 delivery)

Entered Iraq acquiring 2+1 drilling rigs

2012

2011

2010

2009

2008

2007

2006

2004

1996-2003

1995


EDC Strategy at IPO

7 INTRODUCTION AND INVESTMENT HIGHLIGHTS


EDC‟s 2007 IPO Agenda – The Scorecard

• “Organic growth and efficiency improvement”

Metres drilled grew organically by 15% CAGR during 2007 to 2012 period

EBITDA margin grew 21% between IPO and 2012E

Metres drilled per crew per day up 40% vs. 2006

• “Continued focus on drilling services and potential selective expansion into closely

related services”

Our market share is now 29% vs. 20% in 2006 (based on metres drilled)

Horizontal drilling volumes tripled since 2007 (from c. 300K to c. 900K in 2012E)

The number of sidetracking jobs quadrupled between 2007 and 2012E

In 2011 did an asset swap with SLB; other “bolt-on” acquisitions

• Secure access to land rig manufacturing capacity”

Fabricated LeTourneau equipped “Yermak” at LUKOIL Kaliningrad facility

Secured alternative sources of rig supply

INTRODUCTION AND INVESTMENT HIGHLIGHTS 8


EDC‟s 2007 IPO Agenda – Scorecard (continued)

• Further growth of customer base and expansion into new markets”

Metres drilled for LUKOIL, our largest customer, grew 40% from 2007 to 2012E

Metres drilled for non-LUKOIL customers nearly quadrupled since IPO

Commenced drilling in Iraq in July 2012

• “Strategic expansion in offshore drilling”

EDC is the only Russian independent offshore drilling contractor

We now have 2 jack-up rigs plus 2 under construction compared to 1 in 2007



Leading Drilling Company

Largest onshore driller and only

independent Russian offshore

driller

EDC Investment Highlights – Key Attributes

Leading Management

High operational expertise and

insightful strategic vision

Strong Results

Established track record of

profitable growth and cash flow

generation

Quality Rig Fleet

Flexible, efficient and relevant

equipment

Expanding Prospects

Exposure to high growth

domestic markets & increasing

international opportunities



EDC Investment Highlights - Implications

Leadership - market leading position in innovation and growth

Secure fundamentals – stable core market environment – less volatile than other major drilling

markets

Growth - multiple growth opportunities in both core markets and developing markets

Higher value for our customers – investment & partnerships enhancing the customer proposition

Efficiency – long experience of driving operational efficiencies with more benefits to accrue

Commitment to strong shareholder returns – leadership position and prudent financial

management will continue to deliver strong free cash flow; focus on shareholder returns


Source: Company data Source: Company data

40

80

120

160

200

240

280

1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12

$m Ave YoY growth of 38% in qtrly

EBITDA

0%

5%

10%

15%

20%

25%

30%

2005 2006 2007 2008 2009 2010 2011

EDC ROCE

WACC=

12.8%


OUTLOOK AND STRATEGY

Kim Kruschwitz, VP Marketing and IR


The Story So Far - Phase 1 Growth & Efficiency

OUTLOOK AND STRATEGY 13

Phase I

2005 – Q3 2008

Growth and Efficiency

Market

Environment

• Rapid production

growth

• Soaring commodity

prices

• Hyrdofrac

effectiveness declining

Strategy • Grow volumes

• Grow market share

• Boost margins through

operating efficiency

Achievements

• Metres drilled +138%

(2008 vs 2005)

• Revenues +211%

(2008 vs 2005)

• Margins 11.9% to

21.5% (2005 to 2008)

0

20

40

60

80

100

120

5

6

7

8

9

10

11Russian oil production v. Urals price

mbd Crude Oil Production (lhs) US$/bbl Urals Blend (rhs)

0%

5%

10%

15%

20%

25%

30%

35%

40%

2

4

6

8

10

12

14

16

18

20

22 Russian development drilling v. EDC market share

mln metres Development Drilling (lhs) % EDC Mkt Share (rhs)

Source: REnergyCo 2012, Bloomberg

Source: REnergyCo 2012, CDU TEK, Company data


The Story So Far - Phase 2 Crisis Response


Phase II

Q4 2008 – 2009

Crisis Response

Market

Environment

• Oil price collapse

• Significant cuts in

upstream capex

• Weakening of Ruble

Strategy • Sustain volumes

• Preserve margins

• Reduce capex to

maintain B/S strength

Achievements

• Metres drilled in 2009

-6.7%


23.1% (2008 - 2009)

• 2009 capex down 67%

• Share buy-back

0%

5%

10%

15%

20%

25%

30%

35%

40%

2

4

6

8

10

12

14

16

18

20

22 Russian development drilling v. EDC market share


0

20

40

60

80

100

120

5

6

7

8

9

10

11

Russian oil production v. Urals price





The Story So Far - Phase 3 Re-Gearing for Growth


Phase III

2010 – 2012

Re-gearing for Growth

Market

Environment

• Oil price recovery

• Boost in upstream

capex

• Govt. drive for stable

oil production

• Industry restructuring

Strategy • Continue investment

in rig fleet

• Focus on core

strengths

• Develop offshore

capability

Achievements

• 2010 capex rose to

$284m from $107m in

2009

• Schlumberger alliance

• 2 jack-up rigs ordered

0%

5%

10%

15%

20%

25%

30%

35%

40%

2

4

6

8

10

12

14

16

18

20

22Russian development drilling v. EDC market share


0

20

40

60

80

100

120

5

6

7

8

9

10

11Russian oil production v. Urals price





Market Outlook – Structural Themes

1. Expanding prospects

• Russian economy highly dependent upon oil and gas industry (ca. 50% State revenues)

• Sustaining oil production requires more aggressive drilling – estimated 7-10% pa drilling growth

required

• Migration to more remote greenfield regions where operations, logistics and geology can be

more challenging

• Offshore opportunities in Caspian sea and other areas


Source: REnergyCO 2012 Source: REnergyCO 2012

-4

1

6

11

16

21

26

31

36

6

8

10

12Russian oil production v. development drilling

Crude Oil Production (lhs) Development Drilling (rhs)

m bpd m metres

-150

050

250

450

650

850

1050

1250

1450

1650

2012F 2013F 2014F 2015F 2016F 2017F

Incremental oil production by region

Other TyumenTomsk

East Siberia Timan Pechora

YamalNenets Volga-Urals

KhantyMansisk

000‟s bpd

16



Geography of operations


Head Office

Regional/Branch Office

Support Base

Operational Areas



Onshore developments


Source: REnergyCO 2012 Source: REnergyCO 2012

18

0

5

10

15

20

25

30

2005 2006 2007 2008 2009 2010 2011 2012F 2013F 2014F 2015F

Russian onshore market by metres drilled (millions)

Western Siberia Volga-Urals Eastern Siberia

Timan-Pechora Others

0

5

10

15

20

25

30

35

2005 2006 2007 2008 2009 2010 2011 2012F 2013F 2014F 2015F

Russian OFS market (US$ billions)

Exploration Development Intervention



Offshore developments – Caspian Sea


LUKOIL discoveries in Russian sector

Numerous blocks in exploration in Kazakh

waters and Turkmenistan in development phase

3 jack-up rigs currently in operation

(2013 demand expected to be 6-7 rigs)

Approx 3% of world oil reserves

Barriers to entry – time and costs to deliver new

jack-up rig

Medium term – further exploration development

and production plans



2. Ageing rig fleet ill-suited for increasing drilling complexity


The Russian drilling fleet

Average depth of Russian wells (metres)

Rig additions to Russian fleet

• Industry issues

‐ Many existing onshore rigs approaching end of 25

year useful life

‐ Fewer rigs capable of drilling deeper and more

complex wells

‐ Industry facing massive investment requirement in

next 5 years

EDC Total Russian Fleet

Average age 12 16

Average drilling depth 3,500 3,100

2,0

10

2,1

40

2,3

80

2,3

80

2,4

10

2,6

10

2,6

50

2,7

30

2,6

90

2,8

50

2,9

30

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Source: Douglas Westwood 2012

Source: Douglas Westwood 2012, Company estimates

Source: REnergyCO 2012

0

50

100

150

200

250

300

198

7

198

8

198

9

199

0

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2F

No. of rig

s



3. Industry Structure

• Drilling industry less cyclical than western „spot‟ markets


0

500

1,000

1,500

2,000

2,500

Jan-0

2

Apr-

02

Jul-0

2

Oct-

02

Jan-0

3

Apr-

03

Jul-0

3

Oct-

03

Jan-0

4

Apr-

04

Jul-0

4

Oct-

04

Jan-0

5

Apr-

05

Jul-0

5

Oct-

05

Jan-0

6

Apr-

06

Jul-0

6

Oct-

06

Jan-0

7

Apr-

07

Jul-0

7

Oct-

07

Jan-0

8

Apr-

08

Jul-0

8

Oct-

08

Jan-0

9

Apr-

09

Jul-0

9

Oct-

09

Jan-1

0

Apr-

10

Jul-1

0

Oct-

10

Jan-1

1

Apr-

11

Jul-1

1

Oct-

11

Jan-1

2

Apr-

12

Jul-1

2

Russia vs. North American drilling activity

North America Rig Count Russia Volumes (m/mo)

Source: Baker Hughes Inc./REnergyCO 2012

(km/mo)



4. Competition

• In-house operations being privatized or sold but

challenges of:

‐ Ageing assets with limited capabilities

‐ Cost centre vs customer service attitude

‐ Infrastructure & mobility requirements

‐ Financial leverage constraints

Russian drilling market share 2007*


• International operators:

‐ Barriers to entry

‐ Logistical challenges

‐ Integration issues

Russian drilling market share 2012 (1H)*

*by metres drilled

Source: CDU TEK and Company estimates Source: REnergyCO 2012

22.3%

58.4%

19.3% EDC

In-house

All otherindependents

28.5%

39.9%

31.6%

EDC

In-house

All otherindependents

Russian drilling market*: 2007 – 2012F +49% EDC market share*: 2007 – 2012 22% to 29%


EDC Strategic Response

1. Grow the business from a Leadership Position

• Strategic Leadership

‐ Bought LUKOIL‟s drilling assets in late 2004

‐ Successful IPO in 2007

‐ Successfully diversifying customer base

• Market Share Leadership

‐ 1 in 4 wells in Russia drilled by EDCL

‐ EDCL owns 2 of the 3 available jack-ups in the Caspian

Sea

• Efficiency Leadership

‐ Margins have more than doubled since 2005

‐ Youngest and most versatile rig fleet in Russia


EDC continues to grow faster than the Market

-

1,000

2,000

3,000

4,000

5,000

2005 2011

Metres drilled

18.8% CAGR

'000 mtrs

Mkt - 11.8% CAGR

-

400

800

1,200

1,600

2,000

2,400

2,800

2005 2011

Revenues

26.3% CAGR

$m

Mkt - 15.7% CAGR

23

Source: REnergyCO 2012/Company data

Source: REnergyCO 2012/Company data



2. Focus on the most attractive Growth Opportunities

• Strong revenue growth dynamic in core markets

• Other large medium-term opportunities – tight oil and Arctic

• Exploring international opportunities

3. Maintain our Leadership in Innovation and Efficiency

• Investing in our rig fleet

• Investing in our people

• Building partnerships to enhance our service




4. Leverage the characteristics of Russia‟s market to become our customer‟s

partner

• Seeking to develop long-term relationships

• Anticipating our customer‟s changing needs

5. Improving capability to offer more higher-value services

• Investment

• Strategic alliances

6. On-going focus on driving operating efficiencies

• For client benefit

• For EDC benefit

25 OUTLOOK AND STRATEGY

Re-engineering the contractual model


The Next Phase – Further significant opportunities

Phase I

2005 – Q3 2008

Growth and Efficiency

Phase II

Q4 2008 – 2009

Crisis Response

Phase III

2010 – 2012

Re-gearing for Growth

Phase IV

2013 – 2015 +

Delivering Growth

Market

Environment

• Rapid production

growth

• Soaring commodity

prices

• Hyrdofrac

effectiveness declining

• Oil price collapse

• Significant cuts in

upstream capex

• Weakening of Ruble

• Oil price recovery

• Boost in upstream

capex

• Govt. drive for stable

oil production

• Industry restructuring

• Drive to maintain

Russian oil production

• Increasing complexity

of drilling

• Ageing & incompatible

Russian rig fleet

Strategy • Grow volumes

• Grow market share

• Boost margins through

operating efficiency

• Sustain volumes

• Preserve margins

• Reduce capex to

maintain B/S strength

• Continue investment in

rig fleet

• Focus on core

strengths

• Develop offshore

capability

• Extend leadership

position

• On-going investment

in rigs & infrastructure

• Further enhancement

of productivity &

expertise

Achievements

• Metres drilled +138%

(2008 vs 2005)

• Revenues +211%

(2008 vs 2005)


21.5% (2005 to 2008)

• Metres drilled in 2009

-6.7%


23.1% (2008 - 2009)

• 2009 capex down 67%

• Share buy-back

• 2010 capex rose to

$284m from $107m in

2009

• Schlumberger alliance

• 2 jack-up rigs ordered

?



ONSHORE AND OFFSHORE

OPERATIONS

Murat Sampiev, COO


Russian Onshore – The Legacy

Historic context of OFS market

• Structure

‐ In-house cost-centres

‐ Geographically focused/full service lines

incl. drilling

‐ Metreage/well count quotas: commerciality

not considered

• Strategy

‐ Priority to develop new fields and grow

production as quickly as possible

‐ Limited consideration given to suitability of

fleet and utilisation of rig asset base

‐ Huge underutilised rig fleet throughout

Russia (Soviet era manufacture)

28 ONSHORE AND OFFSHORE OPERATIONS


0

5

10

15

20

25

30

35

40

3

4

5

6

7

8

9

10

11

Russian oil production and Development drilling


mbd m metres


Russian Onshore – Structural Dynamics

Russia‟s strategic imperative to maintain oil production levels is driving higher

drilling volumes as oil becomes harder to extract from maturing brownfields…

ONSHORE AND OFFSHORE OPERATIONS 29

• Maturity of brownfields…

‐ Declining well productivity &

reservoir pressures

‐ Increasing water-cut

‐ Requirement for infill drilling and

sidetracking operations

• Declining effectiveness of

hydrofracs on existing wells

‐ Intensive use of technology from

2000 to 2006

‐ Best candidates stimulated

multiple times 0

20

40

60

80

100

120

2004 2005 2006 2007 2008 2009 2010 2011

Additional production from hydrofracs declining

-

50

100

150

200

250

300

350

400

2001 2003 2005 2007 2009 2011

Barrels produced per metre drilled barrels

Productivity peak

Productivity per metre declining

at ca. 8% pa



m barrels


Russian Onshore – Structural Dynamics

More complex drilling services and the search for oil in new and more

challenging environments will grow in importance


Source: Company data

-

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00

2007 2008 2009 2010 2011

Upstream capex per boe

Brownfield Greenfield

$/boe

• Capex drivers in greenfield regions:

‐ Lack of infrastructure

‐ More complex geology, deeper reservoirs and

slower ROP

‐ Remote location logistics

• Well depth trend in Russia

‐ Deeper/longer well trend

‐ Average well depths exceeding 3,000 metres

‐ Drilling contractors & OFS companies need to

respond

Typically heavier, more modern rigs required


2,600

2,650

2,700

2,750

2,800

2,850

2,900

2,950

3,000

3,050

3,100

3,150Avera

ge M

easure

d W

ell

Depth

(m

etr

es)

EDC well depth

Russia Land W.Siberia


Russian Onshore – Rigs

Over 60% of Russian rig fleet estimated to reach maximum operational life over

next 10 years


Russian fleet age profile

Ageing legacy rigs less capable of meeting new drilling challenges

24%

10%

3% 4%

59%

< 5 years

5-10 years

10-15 years

15-20 years

>20 years


Source: Company estimates

11%

16%48%

8%15%

2%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

100 T 175 T 200 T 250 T 320 T 450 T

Max

. D

ep

th in

Me

ters

Light Medium Heavy

500 hp 750 hp 1,000 hp 1,200 hp 1,500 hp 2,000 hp

Russian fleet capacity profile



Most “traditional” Russian rigs will not meet the drilling requirements of a

growing % of fields


“Typical” Russian drilling

spread

• Uralmash-3000 series or

equivalent

‐ Domestic built rig; 15-25 years

old

‐ 160-200 MT hook load

‐ 750-1,000 hp (500-750 kW)

‐ Non-variable AC electric drive

‐ No Top Drive

‐ Awkward/slow assembly and

disassembly

• Simple solids control (mud

cleaning) system

• Duplex mud pumps

• Limited rotary drilling

Limitations v. modern rig

• Shallower wells

‐ Up to 3,000 metres

• Slower drilling speeds

• Less mobile

• Limited horizontal well

capacity

• Higher maintenance

cost/downtime

• Energy inefficient



Modern rigs “fit for purpose”


“Modern” drilling spread

• AC VFD “Cluster”

‐ Foreign designed & built rig;

1-8 years old

‐ 320-450 MT hook load

‐ 1,500-2,000 hp (1,000-1,500

kW)

‐ Variable Frequency Drive

(VFD) controls

‐ Top Drive

‐ Automatic pipe handling

• 3 stage solids control system

• Large capacity triplex mud

pumps

• Rotary drilling

‐ Conventional or Top Drive

Advantages v. older rig

• Deeper wells

‐ 5,000 metres or more

• Increased ROP

• Very mobile between well

pads

• Excellent horizontal &

multiple well capacity

• Low maintenance costs

and downtime

• More energy efficient

• Safe well control in high

pressure areas

Most capable and efficient solution for deeper and more complex drilling needs


Russian Onshore – EDC fleet

EDC‟s fleet modernisation programme is focussed on:

• Refurbishment of Medium Pad/Cluster rigs

‐ Workhorses of West Siberia far into the future

• Replacement of Light Stationary rigs with Mobile units

‐ Sidetracks, smaller field development & brownfield in-fill

• Replacement of Heavy Stationary rigs with predominantly Heavy

Pad/Cluster rigs

‐ Deeper plays, ERD & complex wells

EDC fleet spread now …. And expected in the future


Source: Company data, (EDC rig fleet as of beginning 2012)



Rig Type

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

To

t. Rig

s

Stat io nary 1 3 1 2 4 6 1 1 1 6 6 2 34

M o bile 2 1 1 3 6 6 2 4 5 8 38

M o bile 4 2 6

P ad/ C luster 4 9 7 20 10 5 3 1 1 2 1 1 3 5 3 6 12 1 3 6 103

Stat io nary 1 3 1 3 1 1 2 2 14

Stat io nary 1 3 1 8 5 3 2 3 4 2 32

P ad/ C luster 3 1 2 4 1 1 2 5 4 8 31

Totals 1 3 5 10 22 30 18 18 9 3 3 3 2 4 8 7 5 11 8 6 17 32 6 9 18 258

Weight

Range

Light

80-180 M T

Medium

200-270 M T

Heavy

320-450 M T

EDC fleet age 2012

34%

15%

3%

20%

28% Up to 5 years

5-10 years

10-15 years

15-20 years

>20 years

38%

27%

13%

3%

19% Up to 5 years

5-10 years

10-15 years

15-20 years

>20 years

EDC fleet age 2015(E)


Russian Onshore – Operating Efficiency

EDC crew efficiency focus

• Industry leading health and safety standards

‐ EDC LTI rate consistently lower than IADC global LTI rate

• Ongoing crew training to enhance output

‐ 2012 hired Aberdeen Drilling School to perform in-house drilling

optimisation training

• Crew performance incentivisation


50.0

60.0

70.0

80.0

90.0

100.0

110.0

120.0

2005 2006 2007 2008 2009 2010 2011 2012 (E)

EDC metres drilled per crew per day metres


EDC Crew Training Centre Expl. drilling up

65% Y-o-Y

Horiz. Metres up

30%

Expl. drilling up

17% Y-o-Y Horiz.

Metres up 102%


Russian Onshore – Utilisation

Efficient utilisation of assets is a key driver of EDC profitability


Support organisation optimisation

• Divested transport & well services

• Support base consolidation program

throughout operations

• Supply chain rationalisation

• Current programs include:

‐ Relocation of Zhirnovsk infrastructure 600km

closer to rig teams

Further utilisation improvements

• Faster moving rigs

• 1 Rig/1 Crew strategy

• Migrating from crew-based scheduling to rig-

based scheduling 0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 2006 2007 2008 2009 2010 2011 9M-12

Drilling fleet utilisation (excludes Sidetrack rigs)

Active Moving/ Rig-up/dn Total Utilised



Russian Onshore – Workover and Sidetracking

• Enhancing recovery from existing wells

• 14% of current revenues

• Attractive growth segment

• Complementary to existing core drilling

competence

• EDC proposition enhanced by high quality

Schlumberger assets


2007 2012

EDC

Workover rigs 88 390

Workover & completion crews 48 303

Sidetracking crews 11 30

Other Operators

Workover rigs 3,240 2,950

Workover & completion crews 2,595 2,601

Source: Company data/REnergyCo 2012

Source: REnergyCo 2012

0

1000

2000

3000

4000

5000

6000

2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E

Russian Workover & Sidetracking market (US$m)

Russian Workover Market Russian Sidetracking Market


Russia & CIS offshore – Caspian Sea

Current EDC Assets

• ASTRA

‐ BMC-150-H jack-up rig

‐ 150 ft. (45 m) water depth

‐ 15,000 ft. (4,570 m) drilling depth

• SATURN

‐ Keppel Fells CS Mod V jack-up

‐ 350 ft. (107 m) water depth

‐ 26,000 ft. (7,925 m) drilling depth

• Yuri Korchagin Platform

‐ EDC drilling contractor

‐ SLB drilling services contractor

Le Tourneau Super 116E Rigs under construction

• 1st new jack-up NEPTUNE due for delivery mid-2013

• 2nd new jack-up MERCURY due for delivery end-2014

• Deeper water (350 ft./107m) and drilling (30,000 ft./9,150m) capability

than competing new-builds



Acquisitions and Partnerships

Acquisitions and partnerships to extend geographic reach, expand

complementary services or enable higher quality offering for customers


Schlumberger (SLB) transaction Case Study

Bought: 19 drilling, 23 sidetracking and 34 workover

rigs

• Young, high-spec rig fleet

• Significant additional sidetrack and workover capacity

• Very high quality crews

Sold: drilling services business (directional drilling &

measurement, cementing and drilling fluids)

• Non-core

• High benefit from provision by SLB

Other benefits realised

• Closer alignment with all SLB product lines

• Greater efficiencies in customer service

• Enhanced offshore service capability

• Strategic Alliance to capture future projects


Q&A


MARKETING AND BUSINESS

DEVELOPMENT

Kim Kruschwitz, VP IR and Marketing


Market Context – significant changes in just 8 years

MARKETING AND BUSINESS DEVELOPMENT 42

• Primarily in-house operators pre-2005, cost centre focus

‐ Initial transformation – shedding non-core activities

‐ Improving utilisation and efficiency

• Competitor privatisations/spin-offs

2004

2012

Source: US EIA Source: REnergyCO 2012

0

5

10

15

20

25

30

35

40

3

4

5

6

7

8

9

10

11

199

0

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2F

Russian oil production and development drilling


mbd m metres

0

10

20

30

40

50

60

70

3

4

5

6

7

8

9

10

197

0

197

2

197

4

197

6

197

8

198

0

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2

198

4

198

6

198

8

199

0

199

2

199

4

199

6

199

8

200

0

200

2

US oil production and development drilling

Crude Oil Production (lhs) Crude Oil Development Drilling (rhs)

mbd m metres


“Surprisingly similar, but also very different”

Russian onshore drilling models have key differences to RoW that play to

EDC‟s strengths

43 MARKETING AND BUSINESS DEVELOPMENT

Russia Rest of World

• L-T contract model ‐ Lower volatility of pricing and margins

• Spot market ‐ Higher pricing & demand volatility

• Turnkey ‐ Optimal for simple drilling solutions

• Dayrate ‐ Optimal for more complex solutions

• Static, basic and ageing rig fleet ‐ Low efficiency and low utilisation

• Versatile, mobile rigs ‐ Transition will increase utilisation

• Mostly small independent players,

c40% of market are in-house ‐ EDC can sustain leadership for longer

• All independent, for-profit ‐ More competitive market

• Full service ‐ Integrated project management model

• Discrete service providers ‐ Specialisation


2008/09 Case Study – Russian market and RoW

Russian drilling market characteristics result in less volatility


EDC Experience North America Experience

Volumes 2009 metres drilled decreased 7% 2009 average rig count decreased 42%

Pricing Essentially flat Day rates declined

Customers Oil companies in Russia broadly able to

maintain capex; sheltered from oil price fall by

decline in Rbl/US$ fx rate

Significant capex cuts; major impact on rig

counts

Costs EDC cut costs and preserved margins Margin collapsed

50

70

90

110

130

150

170

190

210

230

250

2007 2008 2009 2010 2011

EDC v. North American peers: active rigs

Active Rigs US Peers Active Rigs EDC

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2007 2008 2009 2010 2011

EDC v. North American peers: net income margin

Net Income Margin US Peers Net Income Margin EDC

Sources: Company data, published annual reports for PTEN, HP, ESI & PD

(NBR does not publish rig utilization) Sources: Company audited results; published annual reports for PTEN, HP, ESI,

PD & NBR


Evolution of EDC Customer Mix - Onshore

• Spun out of LUKOIL in 2004

• LUKOIL now <60% of revenues

• Schlumberger deal has increased importance of Rosneft in customer mix

• As green field becomes more important we will evolve our service offering to meet

customer requirements


1%

82%

17%

2006 Customer mix

8%

56%

10%

25%

2%

2012 Customer mix

Other Other

Sources: Company data Sources: Company data


Customers as Partners – Anticipating their needs

Customers evolving needs

• Maintaining brownfield production becoming

an increasingly complex problem

• Huge growth in horizontal drilling,

underbalanced drilling, complex wells

• Shift towards greenfield production, offshore

and shale

• Customer‟s increasing challenges require a

different approach to risk sharing

EDC development

• Stronger, heavier and more versatile fleet

• Relationship with Schlumberger

• New model to proportionately share risk


Conventional vertical well Complex horizontal well

Flow rate (bbs/day) 291

787

IRR at Urals blend = US $100/bb 15%

28%

Case Study

Much higher flow rates make advanced drilling attractive for our customers

Gazprom Q2 2012 results; Credit Suisse estimates


Re-engineering customer relationships and sharing risk

intelligently

• Longer-term agreements improve revenue visibility

‐ LUKOIL onshore drilling, completion and workover

‐ TNK-BP Orenburg

‐ Gazpromneft West Siberia

‐ Caspian (Korchagin LOP, Petronas, ASTRA)

• Introducing greater flexibility to Framework Agreements

‐ Price to market

‐ More optimal deployment of assets

• A new approach to risk sharing

‐ Shift to day-rate for complex/challenging wells

‐ Retain turnkey pricing model for routine development drilling


Anticipated changes to the architecture of LUKOIL Framework Agreement mirror evolution of

EDC‟s businesses


Drilling Market – Medium-term outlook reinforces growing

complexity of customer needs


0

2

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6

8

10

12

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18

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201

3F

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201

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Russian onshore drilling US$ billions

Vertical & Deviated Horizontal Sidetracking Workover & Well Servicing

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

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US drilling rig count by well type (%)

Horizontal Conventional

Source: Baker Hughes Inc.


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Russia horizontal and conventional drilling (%)

Conventional Drilling Horizontal Drilling


US$ bn

1,184

1,475

1,549

1,649

1,387

1,792

2,235

3,000

3,600

4,000

4,400

2005

2006

2007

2008

2009

2010

2011

2012F

2013F

2014F

2015F

Horizontal drilling in Russia („000 metres)



Why we drill horizontally and frac


30m vertical 8 ½„” wellbore = 20.3 m2

2000m of 6 1/4” OH horizontal = 1000 m2

30m radial hydraulic fracture = 2,830 m2

20 stages (30m radial hydraulic fractures )

= 56,600m2

Source: Baker Hughes Inc.


Russian Onshore – EDC fleet

EDC‟s fleet modernisation programme is focussed on:

• Refurbishment of Medium Pad/Cluster rigs

‐ Workhorses of West Siberia far into the future

• Replacement of Light Stationary rigs with Mobile units

‐ Sidetracks, smaller field development & brownfield in-fill

• Replacement of Heavy Stationary rigs with predominantly Heavy

Pad/Cluster rigs

‐ Deeper plays, ERD & complex wells

EDC fleet spread now …. And expected in the future


Source: Company data, (EDC rig fleet as of beginning 2012)



Rig Type

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

To

t. Rig

s

Stat io nary 1 3 1 2 4 6 1 1 1 6 6 2 34

M o bile 2 1 1 3 6 6 2 4 5 8 38

M o bile 4 2 6

P ad/ C luster 4 9 7 20 10 5 3 1 1 2 1 1 3 5 3 6 12 1 3 6 103

Stat io nary 1 3 1 3 1 1 2 2 14

Stat io nary 1 3 1 8 5 3 2 3 4 2 32

P ad/ C luster 3 1 2 4 1 1 2 5 4 8 31

Totals 1 3 5 10 22 30 18 18 9 3 3 3 2 4 8 7 5 11 8 6 17 32 6 9 18 258

Weight

Range

Light

80-180 M T

Medium

200-270 M T

Heavy

320-450 M T

EDC fleet age 2012

34%

15%

3%

20%

28% Up to 5 years

5-10 years

10-15 years

15-20 years

>20 years

38%

27%

13%

3%

19% Up to 5 years

5-10 years

10-15 years

15-20 years

>20 years

EDC fleet age 2015 (E)


Substantial Medium-term Market Opportunities

• Tight oil/ Bajenov shale play

‐ Western Siberia up to 60-140bn barrels

‐ Geography aligns with EDC network infrastructure

‐ Modern rigs required to efficiently address complexities

of tight oil

Distribution of geological formations


Self-Sourced Bazhenov

Fractured Reservoirs

Assessment Unit

11740102

West Siberian Basin

Geologic Province 1174

Source: Bank of America Merrill Lynch Source: Rosneft


Substantial Medium-term Market Opportunities – the US

Experience • Recent US experience in tight oil

• Bakken and Eagleford plays show rapid

growth potential of tight oil

‐ Bakken play in North Dakota saw rig

numbers grow from 50 to 174 in only three

years

• US Market structure different to Russia

‐ More US independent players resulting in

greater volatility

• Bajenov shale play total reserves

estimated at 60bn – 140bn bbs, at least

size of entire US tight oil reserves


0

20

40

60

80

100

120

140

160

180

200

0

100

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TD

Bakken tight oil dynamics North Dakota

Crude Oil Production(lhs) Rig Count(rhs)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

0

50

100

150

200

250

300

2008 2009 2010 2011 2012 YTD

Eagle Ford drilling dynamics Texas

Crude Oil Production (lhs) Drilling Permits (rhs)

Sources: BHI, US EIA

Source: Railroad Commission, TX

kbp

kbp


Incremental Growth Opportunities


• Bolt-on acquisitions in core markets

• Tight oil opportunity (Bazhenov)

– MOU with LUKOIL/SLB

• MENA

– 3rd largest onshore market globally

– Acquisition led strategy

• Offshore

– Caspian

– Arctic

Strong Balance Sheet and established

Partnerships enhance our long-term

optionality

0

500

1,000

1,500

2,000

2,500

3,000

0

250

500

750

1,000

1,250

1,500

2007 2008 2009 2010 2011 2012F 2013F 2014F 2015F 2016F

Rig counts in Russia and other major markets

Russia (lhs) MENA (lhs) N.America (rhs)

No.

of

Rig

s



Russian Oilfield Services in 2020 – Our Vision

• What will the industry look like?

‐ Competitive structure

‐ Geographic profile

‐ Service mix

‐ Onshore v offshore

• The big strategic issues operators and service companies will face

‐ Reservoir maturity, water cuts, maintaining pressure

‐ Logistics

‐ Asset and service quality

• The contract model – will it have changed?

‐ Turnkey v dayrate

‐ L-T contract v spot market



FINANCIALS

Richard Anderson, CFO


Growing from strength…

Key Messages

• Strong growth 2007/2011

• Outperforming market in

metres drilled, revenues

and EBITDA

• Preserving high ROCE

returns

• Record results in Q3 2012

Robust core business

Record results Q3 2012

56 FINANCIALS

9M 2011 9M 2012 Change (%)

Metres drilled (000‟s) 3,668,942 4,582,644 +25

Revenues (US$m) 2,042 2,402 +17

EBITDA (US$m) 447 614 +37

2007 2011 CAGR (%)

Metres drilled (000‟s) 3,269 4,777 +9.95

Revenues (US$m) 1,492 2,752 +16.5

EBITDA (US$m) 313.8 597.2 +17.5

EPS (US$) 1.15 1.89 +13.2

ROCE(%)* - 24.2% N/A

*ROCE is calculated as Income from operations divided by capital employed (total shareholders‟

equity plus net debt)


Key Financial Highlights

• Transformation of EDC‟s

business reflected in

robust operating and

financial results

• Resilience of core

business and strong

operational management

seen during 2009 global

financial crisis

• Conservative balance

sheet and strong free

cash flow

• Investing in further

opportunities for organic

growth

• Strongly positioned for

opportunistic acquisitions

Strong track record

FINANCIALS 57

2007 2008 2009 2010 2011

Metres drilled (000‟s) 3,269 4,041 3,753 4,103 4,777

Revenues (US$m) 1,492 2,102 1,382 1,812 2,752

EBITDA (US$m) 313.8 452.7 319.8 435.9 597.2

EBITDA margin (%) 21.0 21.5 23.1 24.1 21.7

EPS (US$) 1.15 1.61 1.24 1.44 1.89

Dividend per share (US$) N/A 0.25 0.25 0.31 0.47

Net Debt: EBITDA (0.2) (0.04) (0.8) (0.5) 0.4

Capex (US$m) 319.7 327.0 106.8 283.8 399.9


Significant Capex program focused on evolving fleet to meet

the most demanding and complex customer needs

• 32 new onshore rigs

expected in next 3 years:

‐ 26 heavy-weight rigs

‐ 6 light-weight/mobile rigs

• Up to 30 medium-weight

rigs for retrofitting

• Jack-up rig orders

‐ $235m per rig

‐ Neptune due for delivery

mid-2013

‐ On budget

‐ Mercury due for delivery

end 2014

• Other

‐ North Iraq in 2012/13

EDC capital expenditure

58 FINANCIALS

$m

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

2007 2008 2009 2010 2011 2012F 2013F 2014F 2015F

Onshore- Maintenance Onshore- Investment

Offshore Other- onshore


EDC‟s Conservative Debt Profile

• Substantial debt headroom

• Strong FCF generation

• Net debt/EBITDA stable and not to exceed approx. 1.2x if large acquisition

• EDC US$ debt rated „BB/B‟ (positive outlook) by S&P and „BB‟ (stable outlook) by

Fitch

FINANCIALS 59

$m 2007 2008 2009 2010 2011 2012 (E)

Net cash (debt) 59 17 252 226 (244) (368)

Net debt/EBITDA (0.19x) (0.04x) (0.79x) (0.52x) 0.41x 0.48x

Free cash flow (146) (17) 303 39 26 -

Capex 320 255 177 225 417 c. 600


Debt Maturity Profile

• May refinance part of

2013 debt as current

market conditions are

supportive

• Broadly naturally

hedged

60 FINANCIALS

0

50

100

150

200

250

2012 2013 2014 2015 2016 2017 andthereafter

US

$ (

mill

ion

)

RUB denominated debt USD denominated debt Shareholder Debt, USD

175

118

68

34

155

203

d


Management Incentive Plan

• Old Incentive Plan was a modified SAR plan

‐ Did not work effectively due to stock price volatility

• New Plan was tied to meeting yearly EPS targets with thee years vesting

‐ EPS closely aligns management goals with shareholders

‐ Vesting provides a “Golden Handcuff” feature

FINANCIALS 61


Disciplined M&A Methodology

Financial criteria

• EBITDA accretive immediately

• Earnings accretive immediately

• IRR high teens

‐ Unlevered

‐ After tax

FINANCIALS 62

Purchase of Transocean jack-up

IRR(E) +17% vs IRR(A) +20%

Asset swap with Schlumberger

$105m EBITDA first full year for

$260m purchase price

Recent acquisitions generating

attractive returns


Steady Growth in Yearly Dividends

63

FINANCIALS

• Growth business

• Historically progressive dividend with current payout ratio of 20-25% of earnings

• Strong alignment with shareholder interests – share buyback and special dividend of

$179m ($1.22 per share) in 2010 (not shown above).

25 25

31

47

0

10

20

30

40

50

2008 2009 2010 2011

Div

ide

nd

pe

r sh

are

(U

S c

en

ts)


Outlook

2012 full year guidance

• October update:

‐ Revenues: US $3.175 bln

‐ EBITDA margin: at least 24.3%

‐ Metres drilled: over 5.8 mln metres

2013 and forward revenue visibility

• Healthy backlog/pipeline growing strongly

• 68% of 2013 tentative budgeted revenue contracted or about to be contracted

• c. 60% of revenues p.a. in 2014-2015 expected under long-term contracts

‐ Negotiating Framework Agreement with LUKOIL (2013-2015)

‐ Long-term agreement with LUKOIL for workover services (2010-2015)

‐ Long-term agreement with TNK-BP for drilling (2012-2014)

‐ Long-term agreement with LUKOIL for LSP-1 platform (2012-2017)

‐ Agreement with Petronas (Turkmenistan) in the Caspian offshore (2013-2015)

FINANCIALS 64


Base assumptions underlying EDC‟s 3 Year Target growth

framework

• Urals blend oil price $70-$120 pb

• Ruble stable at Rbs 31.5/US$

• Rbs and US$ interest rates broadly unchanged

• Russian wage and cost inflation +5%-7% pa

• Onshore drilling growth broadly in line with REnergy forecasts

• Stable pricing environment, but with change in drilling mix

FINANCIALS 65


SUMMARY AND OUTLOOK

Alexander Djaparidze, CEO


Outlook for 2015 – 3 Year Target Growth Metrics

EDC Core Business

*ROCE is calculated as Income from operations divided by capital employed (total shareholders‟ equity plus net debt)

EDC Upside

• Bolt on acquisitions within core operating area

• Strategic acquisitions in MENA area

• Incremental demand from tight oil drilling

• Movement into Northern Offshore Waters or further expansion into Caspian

• Increase payout ratio

SUMMARY AND OUTLOOK 67

2007 2012(E) 3 Year Target Range

Revenues (US$ m) 1,492 3,175 4,500-5,200

EBITDA Margin (%) 21.0 24.3 26 to 28

PAT Margin (%) 11.3 12.0 13 to 15

Net Debt/EBITDA (x) (0.2) 0.4 0.1

ROCE (%) 24.6 23.0 22 to 25*


EDC Investment Highlights

Leadership

Secure fundamentals

Growth

Higher value for our customers

Efficiency

Commitment to strong Shareholder Returns

68 SUMMARY AND OUTLOOK


Q&A


APPENDIX


Presentation Team

• One of the founders of EDC in 2002 and its current Chief Executive

Officer.

• Board member of EDC since 2002.

• Dr. Djaparidze served as the President of PetroAlliance Services

Company Limited (which he also helped found) from 1995 to 2007

and was Executive Chairman of the Board of Directors from

February 2007 until 2009.

• From 1990 until 1995 he served as Managing Director of MD SEIS,

a Russian-US joint venture oilfield services company.

• Dr. Djaparidze holds a degree in Mining Engineering and

Geophysics from Gubkin Russian State University of Oil and Gas

where he obtained his Doctorate of Science.

• In 2006, he was awarded the Russian Federation prize for special

achievements in science and technology.

APPENDIX 71

Alexander Djaparidze Chief Executive Officer


Presentation Team

• Chief Operating Officer of EDC since January 2010.

• 26 years in oilfield services sector.

• From 2009 to 2010 served as Senior Vice President of the Drilling

Services Group at Schlumberger Russia.

• Before joining Schlumberger since 2007 Mr. Sampiev was

President and a member of the Board of Directors of the

PetroAlliance Company Ltd.

• Holds a degree of Comprehensive Mechanization of Field

Development from Groznyi Oil Institute.

APPENDIX 72

Murat Sampiev Chief Operating Officer

Murat Sampiev

Chief Operating Officer


Presentation Team

APPENDIX 73

• Chief Financial Officer of EDC since July 2008.

• Board member of EDC since 2011.

• Chairman of the Board of Directors of Vanguard Natural

Resources LLC.

• Member of the Board of Directors of Transocean Ltd. from

November 2007 until June 2011.

• Member of the Board of Directors of Boots and Coots Inc. from

August 1999 until September 2010.

• Formerly, President and CEO of Prime Natural Resources Inc.

from June 2001 until April 2007.

• Certified Public Accountant and member of the Society of

Exploration Geophysicists.

• Bachelor of Science in Business-University of Colorado, Magna

cum Laude. Masters in Taxation-University of Denver.

W. Richard Anderson Chief Financial Officer of EDC


Presentation Team

• Vice President Marketing and Investor Relations of EDC since

July 2008; VP Marketing of EDC since April 2008.

• Over 30 years of experience in the oilfield services sector.

• Prior to joining EDC, Mr. Kruschwitz was employed by Baker

Hughes Inc. and its forerunners since 1981.

• Most recently Mr. Kruschwitz served as Country Director for

Baker Hughes in Nigeria, followed by an assignment as Global

Account Manager for ExxonMobil worldwide.

• Mr. Kruschwitz has extensive management, marketing and

operational experience on a global basis, including postings in

the Middle East, the Far East, Central Asia, Europe, North Africa,

West Africa and North America.

• Bachelor of Arts, Cum Laude and Fellow in Chemistry from

Jamestown College.

APPENDIX 74

Kim Kruschwitz Vice President, Marketing

& Investor Relations

Edc capital markets_day_presentation_nov-2012

Business

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