Investor Presentation February 208
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 933 and Section 2E of the Securities Exchange Act of 934. 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. 2
Perspectives on Offshore Drilling Why Invest in Ensco? 3
Offshore Drilling is a Cyclical Industry 00% Global Fleet Utilization Offshore drilling is highly cyclical with six significant upcycles since 985 Average length of upcycle: 26 months 90% 80% 70% +70 rigs 34 months +53 rigs 7 months +8 rigs 22 months +82 rigs 28 months +95 rigs 40 months Average increase in contracted rig count: 24% During the same period there has been six major downcycles Average decrease in contracted rig count: 2% 60% +03 rigs 7 months Most recent downcycle was particularly severe, with contracted rig count declining 38% 50% Expect offshore recovery to be protracted and phased Current contracted rig count ~2% higher than Jan. 207 lows Source: IHS Markit RigPoint as of February 208 Significant upcycle defined as a 0%+ increase in the number of contracted rigs 4
Utilization of Offshore Drilling Rigs Driven by Customer Spending 00 Offshore Drilling Rig Utilization & E&P Capex 40 Customers offshore project expenditures significantly impact global rig utilization 90 80 70 30 20 0 Global rig utilization has generally moved in line with the rate of change in customer spending over time 60 0 50 40 30 Global Fleet Utilization (%, left axis) -0-20 -30 Change in E&P Offshore Capex (2Y rolling avg %, right axis) While nominal offshore capital expenditures are expected to bottom in 208, aggregate offshore capital expenditures are forecast to grow at ~0% compound annual rate through 2027 Source: IHS Markit RigPoint, Rystad Energy 5
Offshore Production Critical to Meeting Future Global Energy Demand 36 34 32 30 28 26 24 22 Offshore Oil Production mm bbl/day ~5.5 million bbl/day Source: Rystad Energy, IHS Markit Strategic Horizons Offshore oil production defined as oil, NGL & other liquids production Offshore production represents ~30% of global production Current production levels driven by historical investment with increased spending needed to meet future oil demand and replace production depletion Average annual depletion rates of ~% and ~4% for deep- and shallow-water production, respectively Average time from FID to first production of ~50 months for deepwater projects and ~20 months for shallow-water projects 6
Higher Oil Prices Support Increased Offshore Project Sanctioning Offshore Project Approvals & Oil Prices 00 80 60 40 20 00 80 60 40 Brent crude oil prices have more than doubled from 206 lows, most recently exceeding $60/bbl 20 0 Offshore FIDs (#, left axis) Brent Crude Oil Avg Price ($/bbl, right axis) Average Offshore Breakeven Oil Prices 20 - During 207, offshore project sanctioning as measured by FID approval more than doubled 206 levels $/bbl $27 $33 $20 - $40 < $40 < $40 < $40 Many offshore projects are economic at breakeven oil prices well below current levels Statoil Respol Chevron Petrobras Shell Maersk Pre-FID Norwegian Shelf Projects Pre-FID Shallow- Water Projects Brownfield US GOM Deepwater Projects Pre-FID Pre-Salt Projects Pre-FID Deepwater Projects Acquired Maersk portfolio Source: AllianceBernstein, FactSet, Rystad Energy, IHS Strategic Horizons; Statoil 7 February 207 Capital Markets Day; Repsol 23 February 207 earnings conference call; Chevron 29 April 206 earnings conference call; Petrobras CEO Pedro Parente via Bloomberg 0 October 206; Shell 2 February 207 earnings conference call; Maersk 8 February 207 earnings conference call 7
Fixtures and Contracted Rig Years For Floaters and Jackups Have Increased Floaters High Spec Jackups 50 500 50 250 20 400 20 200 90 300 90 50 60 200 60 00 30 00 30 50 0 2007 2008 2009 200 20 202 203 204 205 206 207 0 0 2007 2008 2009 200 20 202 203 204 205 206 207 0 Fixtures (#, left axis) Rig Years (#, right axis) Fixtures (#, left axis) Rig Years (#, right axis) Source: IHS Markit RigPoint High-spec jackup defined as jackups with water depth rating of 350 ft. or greater 8
High-Spec Assets and Established Well-Capitalized Drillers Winning Higher Percentage of New Work Jackup + Floater Contract Awards Percentage of Total New Contracts Awarded 70% 60% High-specification rigs are winning a higher percentage of new contracts as customer demand is increasing 50% 40% 30% 20% 0% Approximately 20% of global supply is owned by established well-capitalized drillers, which have won more than 30% of new contracts awarded during 207 0% % High-Spec Rigs % Established Well-Capitalized Drillers Source: IHS Markit RigPoint Percentage of New Contracts Awarded is calculated on a trailing six-month basis High-Spec includes fixtures classified by IHS as new mutual and with the following market categories: Drillship > 7500, Drillship Harsh Deepwater, Semi > 7500, Semi Harsh Deepwater, Semi Harsh High Spec, Semi Harsh Standard, JU 36-400 IC, JU >400 IC, JU Harsh Standard, JU Harsh High Spec. Established Well-Capitalized Drillers include ESV, RIG, DO, NE and RDC 9
Jan-4 Apr-4 Jul-4 Oct-4 Jan-5 Apr-5 Jul-5 Oct-5 Jan-6 Apr-6 Jul-6 Oct-6 Jan-7 Apr-7 Jul-7 Oct-7 Jan-8 Increasing Customer Activity has Led to Improved Utilization 00% 90% 80% Global Fleet Utilization Utilization of offshore rigs has stabilized since reaching bottom in late 206 and increased modestly during 207 after nearly three years of declines 70% 60% 50% Recent improvements in both total and marketed utilization are due in part to a higher number of contracted rigs Total Marketed Source: IHS Markit RigPoint as of February 208 0
Substantial Portion of Current Global Supply are Retirement Candidates Delivered Rigs Global Rig Fleet Floaters Jackups Under Contract 22 298 Future Contract 26 27 Idle / Stacked 54 34 Marketed Fleet 202 459 Non-Marketed 6 80 Total Fleet 263 539 Marketed Utilization 73% 7% Total Utilization 56% 60% Newbuild Rigs Uncontracted 28 32 Build in Brazil / China 4 64 Total Newbuilds 42 96 ~60 floaters could be candidates for retirement based on age and contract expirations ~90 jackups 2 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 Source: IHS Markit RigPoint as of February 208 Includes floaters >30 years of age that are idle without follow-on work or have contracts expiring before year-end 208 without follow-on work and floaters 5 to 30 years of age that have been idle for more than two years and without follow-on work 2 Includes jackups >30 years of age that are idle without follow-on work or have contracts expiring before year-end 208 without follow-on work and jackups 5 to 30 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 26 Current Total Supply 4 Uncontracted Build in Brazil Newbuilds 2 Newbuilds Illustrative Floater Supply 27-33 >30yrs idle w/o future contract -9 >30yrs rolling off contract by YE208-9 5-30yrs idle for over 2yrs 23 Illustrative Total Supply 29 Nonmarketed 202 Illustrative Marketed Supply The global floater count could decline by 30 rigs, or %, if adjusted for likely retirements and newbuild deliveries Excluding another 29 floaters that are not currently marketed, illustrative marketed supply of 202 compares to contracted floater count of 54 540 Current Total Supply 40 Chinese Newbuilds 3 Illustrative Jackup Supply 30-25 Uncontracted Newbuilds >30yrs idle w/o future contract -64 >30yrs rolling off contract by YE208-4 47 5-30yrs idle for over 2yrs Illustrative Total Supply 3 404 Nonmarketed Illustrative Marketed Supply When adjusting for likely retirements and newbuilds the jackup count could decline by 23 rigs, or 23% Excluding another 3 jackups that are not currently marketed, illustrative marketed supply of 404 compares to contracted jackup count of 320 Source: IHS Markit RigPoint as of February 208, Ensco analysis Build in Brazil newbuilds exclude 0 rigs that are unlikely to be delivered 2 Uncontracted newbuilds exclude rig on order and not currently under construction 3 Assumes 65% of Chinese newbuilds enter the global supply 2
Perspectives on Offshore Drilling Why Invest in Ensco? 3
The Offshore Driller of Choice High-Quality Rig Fleet Safety & Operational Excellence - Largest fleet in the sector - Diversified fleet with exposure to shallow- and deep-water segments - Safety metrics consistently better than industry average¹ - 99% fleet-wide operational utilization in 207² Solid Financial Position - $3.2 billion 5 of liquidity - $308 million of debt maturities to 2024 5 Systems, Processes & Intellectual Property - Significant improvement in subsea equipment related downtime since 205-30 recent patent filings 3 Broad Global Footprint & Customer Base 8 consecutive years rated # in total satisfaction among offshore drillers 4 IADC industry statistics as of 4Q7 2 Operational utilization is adjusted for uncontracted rigs and planned downtime 3 Includes provisional and non-provisional patent filings completed or in progress since Q5 4 Independent industry survey by EnergyPoint Research 5 4Q 207 results adjusted for the issuance of $B unsecured notes in January 208, cash tender offers for 209, 2020 and 202 notes, and redemption of 209 notes finalized in February 208 4
High-Quality Rig Fleet Diverse Fleet Capable of Meeting a Broad Spectrum of Customers Well Program Requirements Ultra-Deepwater Drillships Versatile Semisubmersibles Premium Jackups Total Rigs: 2 3 36 Includes two drillships and one jackup under construction, excludes managed rigs and rigs announced for retirement 5
Highlights of Select Premium Assets Technical Specifications 2,000 water depth & 40,000 total drilling depth rating Dual 7-Ram BOPs Dual 2.5 million lb. derricks Importance to Customers Water depth rating and total drilling depth enable rig to operate in the most challenging ultra-deepwater environments Second BOP reduces flat time between wells, and 7 th Ram optimizes well control, safety and redundancy as well as saving time during testing Dual derricks allow the rig to conduct simultaneous activities, reducing customers project time and costs, while higher hookload capacity increases a rigs ability to drill/complete deeper, more complex wells Technical Specifications Moored/dynamicallypositioned configuration Proprietary ENSCO 8500 Series design Managed pressure drilling ready Importance to Customers Added flexibility for programs that straddle both shallow- and deep-water Flexible deck space well-suited for plug-and-abandon and intervention work Increased drilling efficiency for complex wells, plus monitoring and response capabilities to mitigate the risk of well-control incidents Total Rigs: Technical Specifications 40,000 total drilling depth & 2.5 million pound quad derrick Patented Canti-Leverage Advantage SM technology Automated drill floor Importance to Customers Top-tier hoisting capacity allows for drilling of long-reach wells Enhanced hoisting capacity at the farthest reaches of the cantilever leads to fewer rig moves Greater automation allows offline activities to be completed while continuing to drill 6
Safety & Operational Excellence Safety and Operational Performance Provides Competitive Advantage and Benefits Financial Results 0.7 0.6 0.5 0.4 0.3 0.2 0. 0.0 203 204 205 206 207 95% Total Recordable Incident Rate Industry Ensco Fleet-Wide Operational Utilization 2 95% 96% IADC industry statistics as of 4Q7 2 Operational utilization is adjusted for uncontracted rigs and planned downtime 3 Based on 207 annual revenue 99% 99% 203 204 205 206 207 Critical to customers, in particular for complex well programs Safety metrics consistently better than industry averages Improved safety and operational results each successive year during industry downturn % improvement in operational utilization increases annual revenue by approximately $20 million 3 7
Systems, Processes & Intellectual Property Technology and Innovation Improve Operational Results and Augment Service Offering Systems & Processes 70% Ensco Asset Management System improvement in subsea equipmentrelated downtime Reliability-Based Maintenance Intellectual Property 30 Canti-Leverage Advantage SM patent filings since 205 2 PinSafe System Reduction in subsea equipment-related downtime over total operating hours for floaters during 206 & 207 as compared to 205 2 Includes provisional and non-provisional patent filings completed or in progress since Q5 8
Solid Financial Position Strong Balance Sheet Provides Financial Flexibility 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 Pro Forma Financial Position 3 December 207 $3.2 billion of liquidity $.2 billion of cash and short-term investments $2.0 billion revolving credit facility $2.8 billion of contract revenue backlog $3.9 billion of net debt & 3% net debt-to-capital ratio 2 Source: Company Filings Pro forma financial position after the issuance of $B unsecured notes in January 208, cash tender offers for 209, 2020 and 202 notes, and redemption of 209 notes finalized in February 208 2 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. billion, less $.2 billion of cash and short-term investments, divided by the sum of long-term debt of $5. billion plus shareholders equity of $8.7 billion, minus $.2 billion of cash and short-term investments. 9
Manageable Debt Maturities in Light of Strong Balance Sheet & Liquidity $ millions $3,65 Available Revolver 2 Cash & ST $2,003 $308 million of Maturities Before 2024 $,805 $850 Other Considerations Undrawn revolver extends beyond all nearterm debt maturities No secured debt in capital structure Generated ~$300M of net proceeds from asset sales since 204 ~$480M of newbuild commitments remaining 3 $,000 $,00 Inv. $,62 $94 $4 $955 $669 $50 $300 Liquidity 208 209 2020 202 2022 2023 2024 2025 2026 2027 2040 Cash & Short-Term Investments Revolving Credit Facility Senior Notes Convertible Senior Notes Source: Company Filings 4Q 207 cash and short-term investments adjusted to reflect values after the issuance of $B unsecured notes in January 208, cash tender offers for 209, 2020 and 202 notes, and redemption of 209 notes finalized in February 208 2 Borrowing capacity under revolving credit facility is $2.0B through September 209, $.3B from October 209 through September 2020 and $.2B from October 2020 through September 2022 3 Includes $207 million for jackup ENSCO 23 that was paid in January 208 2044 20
Global Footprint with Diverse Customer Base Customer Base Spans Majors, National Oil Companies and Independents North Sea Mediterranean Southeast Asia Gulf of Mexico West Africa Middle East Brazil Australia Note: Certain customers may not currently have backlog 2
Higher Levels of Customer Activity Have Led to Increased Contract Awards As Customer Activity Increases, Ensco Has Won More New Contracts Than Any Offshore Driller 5% 7% Percentage of New Contracts Awarded during 207 7% 6% Ensco Company Company 2 Company 3 Company 4 Company 5 Company 6 4% 4% 3% New contracts have added more than 23 rig years 2 to Ensco s backlog Diverse rig fleet and global footprint have led to floater and jackup contracts across several regions Won approximately 8% of all ultra-deepwater contracts in 207 Four drillship contracts awarded during 3Q7 Source: IHS Markit RigPoint; Ensco analysis Note: Independent companies with most new contract awards include Aban Offshore, Maersk Drilling, Noble, Paragon Offshore, Shelf Drilling and Transocean Calculated by dividing the number of rig years contracted by Ensco for fixtures classified as New Mutual in IHS Markit RigPoint (approximately 35) by the corresponding industry-wide total (approximately 237) 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. 22
$25K Jackup Dayrates $00K $75K High-Quality Fleet Provides Meaningful Cash Flow in Market Recovery Scenario Historical Average Day Rates Illustrative Annual EBITDA Contribution from Assets <5 Years of Age ($ millions) 500 $K/day $450K/day Floater Dayrates 400 $250K $350K $450K 300 $250K/day 795,523 2,25 200 00 $25K/day 933,662 2,390 0 $75K/day 2002 2004 2006 2008 200 202 204 206,072,800 2,529 Floaters Jackups Based on historical build costs, an average day rate of $465K for floaters and $50K for jackups would be needed to meet a 5% unlevered internal rate of return 2 Since 2000, the average build costs for floaters was ~$665 million, while jackups averaged ~$200 million Ensco s assets <5 years of age can generate meaningful cash flow for debt service and capital commitments in normalized day rate environment Source: IHS Markit RigPoint Fleet includes 2 floaters and 6 jackups that are less than 5 years of age. EBITDA calculated using illustrative dayrates and a 95% utilization assumption less average opex of $50K/day for a floater and $50K/day for a jackup over 365 days. 2 Simplified discounted cash-flow analysis assumes 35-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 30-year useful life, average opex of $50K/day, $2.5 million of annual maintenance costs, $7 million of survey costs every five years for jackups; and 95% operational utilization. Analysis excludes debt service costs, shore-based support costs, taxes, and assumes no residual value at the end of the asset life. 23
Summary Offshore sector has entered a different point in the cycle Brent crude prices have increased significantly from cyclical lows Stabilization in oil prices has led to higher levels of offshore project sanctioning with the expectation that this trend continues Offshore rig utilization to benefit from increasing customer demand and attrition of older, less capable assets from the global fleet Customer preference for high-specification assets and established well-capitalized drillers Ensco s strengths provide competitive advantage during market recovery High-quality rig fleet and track record of safety and operational performance ahead of industry averages Technology and innovation improve operational results and augment service offering Solid financial position bolstered by one of the strongest liquidity positions in the offshore drilling sector Global footprint and diverse customer base Leader in new contract awards as customer activity has increased Fleet provides meaningful cash generation in market recovery scenario 24
25