Scotia Howard Weil Energy Conference March 09
Forward-Looking Statements Statements contained in this investor presentation that are not historical facts are forward-looking statements within the meaning of Section 7A of the Securities Act of 9 and Section E of the Securities Exchange Act of 9. 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 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 A. 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 0-K, as updated in our subsequent quarterly reports on Form 0-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.
Agenda Offshore Market Recovery Improving offshore fundamentals Increasing customer demand Attrition of less capable rigs Pro Forma Company Positioning High-quality rig fleet Scale and diversification Solid financial position
Offshore Market Recovery Pro Forma Company Positioning
Offshore Production Critical to Meeting Growing Global Oil & Gas Demand mm boe/d 00 0 0 80 0 0 Global Oil & Gas Production +7 mm boe/d 79 Oil and gas production will continue to be an important part of meeting global energy demand, with total production forecast to grow by 7 million barrels of oil equivalent per day by 05 Oil Gas Total Global Oil & Gas Production Offshore & Onshore 0% 8% 8% 70% 7% 7% Onshore Offshore Source: Rystad Energy as of February 09 Despite significant growth in unconventional onshore production, offshore production represents 8% of overall oil and gas production today and expectations are that offshore production will provide approximately 5 million barrels of oil equivalent growth by 05 5
Several Years of Underinvestment by Major E&Ps Has Impacted Reserves $ billions 50 00 50 00 50 Capital Expenditures by Major E&Ps 8 8 70 5-5% 00 97 Major E&Ps reduced capital expenditures by 5% from 0 highs in response to lower commodity prices - 00 0 0 0 0 05 0 07 08 years 0 9 8 Average Reserve Life for Major E&Ps.8.9..0. 0.9-7%. 0.7 00 0 0 0 0 05 0 07 After four 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 several years Source: Rystad Energy as of February 09, SpareBank Markets Major E&P customers defined as BP, Chevron, ConocoPhillips, Eni, Equinor, Exxon, Repsol, Shell and Total
Improving Market Conditions Have Led to Higher Customer Cash Flows $/bbl 80 0 0 0 0 Free Cash Flow Breakeven Oil Prices for E&Ps 7 5 5 5 8 7 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 0 05 0 07 08 09E Free cash flow breakeven oil price Avg Brent crude price $ billions 0 0 00 80 0 0 0 0-0 Free Cash Flow of Major Offshore E&Ps 8 0 5 - - 05 0 07 08 09E Despite the recent pullback in oil prices, expectations are that major E&Ps continue to generate significant free cash flow in 09, giving large offshore customers greater flexibility to invest in future production Source: SpareBank Markets, FactSet as of March 09 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, ExxonMobil, Petrobras, Repsol, Shell and Total 7
Offshore Projects Economic at Current Oil Prices With More Approvals Expected $/bbl 00 75 50 5 Average Offshore Breakeven Oil Prices $9 <$0 ~$0 $ Petrobras Total Equinor Repsol Exxon Mobil 0 Pre-FID Deepwater Projects 08 0 Acquired Maersk Portfolio Projects with Production Starting 09-05 50 Pre-FID Shallow- Water Projects 7 <$0 <$0 Brazil & Guyana Greenfield Deepwater Projects Number of New Major Offshore Project Approvals Shell Pre-FID Deepwater Projects 0 07 08 09E 77 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 08 were more than.5x 0 cyclical lows, with expectations of further increases in sanctioning activity during 09 New project approvals are a leading indicator of future capital expenditures Source: Petrobras September 08 investor day presentation; Total 7 February 09 results and outlook presentation; Equinor February 09 capital markets update presentation; Repsol February 07 earnings conference call; ExxonMobil March 09 investor day, in reference to Stabroek and Carcara projects; Shell July 08 earnings conference call; Rystad Energy as of February 09, major projects defined as projects with >$50 million of associated capital expenditures 8
Offshore Rig Utilization Expected to Benefit From Increased E&P Investments $ billions 50.00 00.00 50.00 00.00 50.00 00.00 50.00 - E&P Offshore Capital Expenditures 9% CAGR 77 5 0 90 0 7 50 55 70 0 0 05 0 07 08 09E 00E 0E 0E 0E 0E 05E Offshore Drilling Rig Utilization and E&P Capital Expenditures 00 0 90 0 80 0 70 0 0 0 50-0 0-0 0-0 Global Fleet Utilization (%, left axis) Change in E&P Offshore Capex (Y rolling avg %, right axis) Source: Rystad Energy as of February 09, IHS Markit RigPoint as of March 09 Given increased cash flow and attractive new project economics, E&P offshore capital expenditures are expected to increase modestly in 09 and continue growing steadily over the next seven 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 09 and 00 from higher customer demand 9
Offshore Rig Demand Showing Signs of Steady Improvement Number of New Contracts Awarded +5% 7 0 New contract awards have increased for the past two consecutive years and were 5% higher in 08 as compared to 0 Avg Brent Crude $/bbl 0 07 08 Floaters Jackups Number of Open Offshore Rig Tenders +% 75 5 Mar-8 Mar-9 $7 $ Floaters Jackups Despite lower year-to-year oil prices, the number of open tenders for offshore rigs has increased % as compared to a year ago, demonstrating the improvement in offshore project economics and cash flows Source: IHS Markit RigPoint as of March 09 Classified as new mutual fixtures in IHS Markit RigPoint 0
Substantial Portion of Current Global Supply are Retirement Candidates Global Rig Fleet Floaters Jackups Delivered Rigs Under Contract 8 Future Contract 0 0 Idle / Stacked 7 99 Marketed Fleet 95 5 Non-Marketed 5 Total Fleet 0 57 ~0 floaters could be candidates for retirement based on age and contract expirations ~0 jackups could be retired as expiring contracts and survey costs lead to the removal of older rigs from drilling supply Marketed Utilization 8% 78% Total Utilization % 8% Newbuild Rigs Contracted Uncontracted 0 0 Build in China 0 5 Total Newbuilds 7 Uncontracted newbuilds expected to be delayed further, while several newbuilds in China are unlikely to join the global fleet Source: IHS Markit RigPoint as of March 09 Includes rigs >0 years of age that are idle without follow-on work or have contracts expiring before year-end 09 without follow-on work and rigs 5 to 0 years of age that have been idle for more than two years and without follow-on work
Retirements Expected to Lead to Future Supply Contraction 0 Current Total Supply Build in Brazil Newbuilds Illustrative Floater Supply 8-0 Other Newbuilds >0yrs idle w/o future contract - >0yrs rolling off contract by YE09 5 floaters retired since Q -7 5-0yrs idle for over yrs 7 Illustrative Total Supply Nonmarketed 0 Illustrative Marketed Supply The global floater count could decline by 7 rigs, or ~%, if adjusted for likely retirements and newbuild deliveries Excluding another 7 floaters that are not currently marketed, illustrative marketed supply of 0 compares to contracted floater count of 58 57 Current Total Supply Chinese Newbuilds Illustrative Jackup Supply -95 Other Newbuilds >0yrs idle w/o future contract - >0yrs rolling off contract by YE09 89 jackups retired since Q -5 5-0yrs idle for over yrs Illustrative Total Supply Nonmarketed 9 Illustrative Marketed Supply When adjusting for likely retirements and newbuilds, the jackup count could decline by 0 rigs or ~0% Excluding another jackups that are not currently marketed, illustrative marketed supply of 9 compares to contracted jackup count of 5 Source: IHS Markit RigPoint as of March 09, Ensco analysis Assumes 5% of uncontracted Chinese newbuilds enter the global supply
Offshore Market Recovery Pro Forma Company Positioning
Pending Rowan Merger Transaction Status Overwhelming Shareholder Approval FOR the Transaction Approx. 99% of votes cast by Ensco shareholders were in favor Approx. 9% of votes cast by Rowan shareholders were in favor Regulatory Approvals Received to Date U.S. Antitrust (HSR Act) Committee on Foreign Investment in the United States (CFIUS) UK Competition and Markets Authority (CMA) Regulatory Approvals Outstanding General Authority for Competition in the Kingdom of Saudi Arabia Court approval pursuant to a UK court sanctioned scheme of arrangement Transaction Expected to Close During Second Quarter 09
Pro Forma Fleet Will Be Amongst the Highest-Quality in the Industry Floater Fleets # Rigs % th Generation+ Jackup Fleets # Rigs # UHE or Modern Transocean 5 7% Pro Forma Combined 7 9 5 8 Pro Forma Combined 0 8 89% COSL 7 7 Seadrill 7 89% Shelf 7 Ensco 7 0 88% Ensco 5 Diamond 7 % Borr 5 0 Noble 8% Rowan 7 9 Maersk 8 88% Seadrill 9 8 Pacific 7 00% Maersk 5 Rowan 00% Noble Highest-Spec th Gen Moored/HE th+ Gen DP Only Other 5 Ultra HE Modern HE Modern Benign Other 7 Source: IHS Markit RigPoint as of March 09; Ensco analysis Seadrill includes Sevan Drilling and NADL; excludes newbuilds with no recourse to parent company; reflects 50% ownership of SeaMex Noble reflects 50% ownership in Shell JV rigs (Bully I and Bully II); Drillships delivered in 0 or later, equipped with dual BOP and.5mm lbs. hookload derricks Rowan jackup count excludes 7 rigs contributed to ARO Drilling and rigs expected to be retired 5 Includes jackups with the following rig designs: GustoMSC CJ70, Le Tourneau Super Gorilla Class and KFELS N Class Other jackups classified as harsh environment and North Sea capable < 0 years of age 7 Jackups not classified as harsh environment and North Sea capable < 0 years of age 5
Strong Portfolio of Highest-Specification Drillships that are Preferred by Customers Highest-Specification Drillships Drillship Utilization Delivered Rigs # of Rigs with H9 Availability 00% Transocean 80% Highest- Spec Drillships Pro Forma Combined 7 0% Other Drillships Ensco 7 Diamond 0 0% Jan Jul Jan 7 Jul 7 Jan 8 Jul 8 Jan 9 Noble Contract Status Highest-Spec Drillships Rowan Seadrill Pacific All Other ENSCO DS-7 ENSCO DS-9 ENSCO DS-0 ENSCO DS- ENSCO DS- ENSCO DS- ENSCO DS- Rowan Renaissance Rowan Resolute Rowan Reliance Rowan Relentless 09 00 0 Contracted Options Under Construction Available Source: IHS Markit RigPoint as of March 09; Ensco analysis Drillships delivered in 0 or later, equipped with dual BOP and.5mm lbs. hookload derricks Assumes no newbuilds delivered before year-end 09 Utilization excludes 0 highest-spec and other newbuilds ENSCO DS-7 expected to work following receipt of an LOA
Leading Provider of Ultra-Harsh and Modern Harsh Environment Jackups Ultra-Harsh & Modern Harsh Environment Jackups # of Rigs with H9 Availability 00% Jackup Utilization Delivered Rigs Ultra-Harsh/ Modern Harsh, Pro Forma Combined 7 9 0 80% Modern Benign 5 Maersk 5 0% Other Rowan 7 0 0% Jan Jul Jan 7 Jul 7 Jan 8 Jul 8 Jan 9 Noble 9 0 Contract Status Ultra-Harsh & Modern Harsh Environment Jackups Borr Ensco COSL Seadrill KCA Deutag Ultra HE Modern HE 5 0 0 0 Rowan Mississippi Ralph Coffman Joe Douglas Rowan Gorilla V Rowan Gorilla VI Rowan Gorilla VII Rowan Viking Rowan Stavanger Rowan Norway Bob Palmer ENSCO 0 ENSCO 0 ENSCO 0 ENSCO ENSCO ENSCO 09 00 0 Contracted Options Under Construction Available Source: IHS Markit RigPoint as of March 09; Ensco analysis Rowan jackup count excludes 7 rigs contributed to ARO Drilling and rigs expected to be retired Seadrill includes NADL and reflects 50% ownership of SeaMex, excludes newbuilds with no recourse to parent company Includes jackups with the following rig designs: GustoMSC CJ70, Le Tourneau Super Gorilla Class and KFELS N Class Other jackups classified as harsh environment and North Sea capable < 0 years of age 5 Jackups not classified as harsh environment and North Sea capable < 0 years of age All jackups > 0 years of age 7
ARO Drilling Unique Partnership Creates Value. Source: Company Filings 8
Leading Offshore Driller by Fleet Size and Geographic Presence Geographic & Asset Diversification Presence in virtually all major offshore regions Critical mass of highest-specification drillships well positioned to serve major deepwater basins of West Africa, South America and Gulf of Mexico Norway Other Europe 9 5 Versatile semisubmersible fleet capable of meeting a wide range of customer requirements including strong presence offshore Australia Under Construction Leading offshore driller by jackup fleet size in the Middle East and North Sea Mediterranean U.S. Gulf & Mexico Brazil Middle East 9 Asia Pacific 7 Other LatAm Africa 7 Source: Company Filings Excludes one Rowan jackup that is expected to be retired and two rigs managed by Ensco on behalf of a customer Includes nine Rowan jackup rigs leased to ARO Drilling and seven rigs owned by ARO Drillng; excludes one Rowan jackup that is expected to be retired Ensco Rigs Rowan Rigs ARO Drilling Rigs 9
Diversified Customer Base with Exposure to Largest Offshore Reserves Holders Combined Entity Customer Relationships Source: Company Filings Includes certain customers that may not currently have backlog 0
Leveraging Innovation & Technology to Solve Industry Challenges Focused investments in innovation that differentiate our 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 our operations Ability to economically develop and deploy new technologies across a wide asset base Continuous Tripping Technology 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 x faster tripping speeds and delivering expected cost savings along with safer, more reliable operations Equipment Maintenance EAMS and EPIC systems increase operational uptime and decrease lifecycle costs by optimizing asset selection and maintenance activities Placing Jackups on Location Proprietary PinSafe technology creates significant cost savings for customers by optimizing jackup moves and reducing downtime spent waiting on weather
Strong Liquidity Position Promotes Financial Flexibility Pro Forma Balance Sheet Highlights $. billion of cash and short-term investments $ millions ~$. billion of maturities to 0 $,0 Liquidity bolstered by revolving credit facility $.8 billion of contracted revenue backlog $98 No secured debt in capital structure $, $,07 Includes $850 million of convertible debt $,805 $,9 $500 $,000 $,0 $00 $ $0 $0 $ $ $9 $50 $00 $00 $,00 Cash & ST Inv. 09 00 0 0 0 0 05 0 07 00 00 0 Ensco Rowan Source: Company Filings
Significant Synergies to Drive Shareholder Value Creation $5 million of annual pre-tax expense synergies identified including: General and administrative reductions Operational support efficiencies Regional office consolidation Other operational synergies including inventory, logistics and vendor relationships > 75% of these synergies expected to be achieved within one year of closing Full run rate synergies anticipated by year-end 00 assuming transaction closes in second quarter 09 These synergies are expected to create approximately $. billion of capitalized value Further potential savings from adoption of best-in-class operational processes and economies of scale in capital purchasing Assumes $5 million of synergies capitalized at an illustrative % discount rate; inclusive of taxes, transaction costs, and expenses
$5K Jackup Dayrates $00K $75K High-Quality Pro Forma Fleet Provides Meaningful Cash Flow in Market Recovery Historical Average Day Rates Illustrative Annual EBITDA Contribution from UHE or Modern High-Specification Assets Only $K/day 500 00 $50K/day EBITDA in $ millions Floater Dayrates $50K $50K $50K 00 $50K/day 97,78,570 00 00 0 $5K/day $75K/day 00 00 00 008 00 0 0 0 08,9,00,88,55,7,9 Floaters Jackups Based on historical build costs, an average day rate of ~$90K for floaters and ~$0K for jackups would be needed to meet a 5% unlevered internal rate of return Since 000, the average build costs for floaters was ~$5 million, while jackups averaged ~$00 million Pro forma company s modern highspecification assets can generate meaningful cash flow for debt service and capital commitments in normalized day rate environment Source: IHS Markit RigPoint Fleet includes 5 G+ floaters and 8 jackups < 0 years of age or ultra-harsh environment capable; excludes assets owned by ARO Drilling. EBITDA calculated using illustrative dayrates and a 90% utilization assumption less average opex of $50K/day for a floater and $50K/day for a jackup over 5 days. Simplified discounted cash-flow analysis assumes 5-year useful life, average opex of $50K/day, $5 million of annual maintenance costs, $0 million of survey costs every five years for floaters; and 0-year useful life, average opex of $50K/day, $.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.
Summary Offshore drilling recovery is underway 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 Attrition of less capable rigs expected to continue Pro forma company is well positioned to participate in the recovery High-quality rig fleet includes strong portfolio of highest-specification drillships and leading fleet of modern harsh environment jackups Most geographically-diverse offshore driller with operations spanning six continents in nearly every major offshore basin around the world Large and diverse customer base includes most of the leading national and international oil companies, plus many independents Focus on technology to differentiate services and lower costs Solid financial position bolstered by strong liquidity and manageable debt maturities, with synergies expected to create shareholder value 5