Investor Presentation 29 October 2015
1 Forward-Looking Statements
Statements contained in this presentation that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements 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, day rates and backlog, estimated rig availability; rig commitments; contract duration, status, terms and other contract commitments; new rig commitments and construction; scheduled delivery dates for rigs; the timing of delivery, mobilization, contract commencement, relocation or other movement of rigs; benefits derived from expense management actions; estimated capital expenditures; rig stacking costs; 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 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; our ability to realize the expected benefits from our redomestication and actual contract commencement dates; cybersecurity risks and threats; and the occurrence or threat of epidemic or pandemic diseases or any governmental response to such occurrence or threat. 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 2 undertake no obligation to publicly update or revise any forward-looking statements, except as required by law. Agenda
• Current Market Conditions
• Proactive Steps to Address Downturn
• Outlook for Offshore Drilling – efficiency & cost improvements – attrition of older rigs
• Maintain and Widen Leadership Position – #1 in customer satisfaction – best in innovation – most efficient/cost-effective driller
3 Current Market Conditions
Global exploration spend of • Substantial reduction in $ billions 18 largest E&Ps E&P capex $60 $58
$50 • Unprecedented decline in exploration spending $41 $40 • Lower rig utilization & day $29 $30 rates
$20 • Expect 2016 capex to be lower YoY $10 • The significant pullback in $0 spending will affect supply in the future
Source: IHS Upstream 4 Market Response
• Drillers – cutting costs & stacking/retiring rigs – deferring rig deliveries – speculators canceling rig orders • Service companies – strategic combinations to invest in technological innovations and process improvements that increase efficiencies and drive out costs • Customers – reducing capex – deferring projects – early terminations/concessions for existing rig contracts – re-engineering to increase efficiencies/reduce costs – testing economics for future programs based on lower costs and streamlined project management
5 • Capital Management Taking Decisive • Fleet Restructuring Steps To Be
• Expense Management Resilient Through The • Operational Excellence & Safety – innovation Downturn – process improvements
6 Proactive Capital Management
• Accessed the debt markets – $1.25 billion offering in 3Q14 – $1.10 billion offering in 1Q15 to refinance 2016 maturities
• Increased revolver to $2.25 billion and extended to 2019
• Reduced quarterly dividend to improve capital management flexibility
• Deferred ENSCO DS-10 delivery to 1Q17, delaying ~$300 million in capex
7 Debt Maturity Profile
$ millions
$3,000
$2,700 No debt $2,400 Increased Revolving Credit Facility to maturities $2.25B; extended to 2019 $2,100 until 2Q19
$1,800 $2,250 $1,500 $1,500
$1,200 $1,025 $900 $900 $700 $625 $600 $500 $300 $300 $150
$0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2027 2040 2044
8 Credit Ratings
• $1.1 billion of cash and short-term investments • $6.6 billion of contracted revenue backlog BBB BBB BBB- BBB- Investment Grade BB BB-
B-
CCC- Not Rated
ESV DO NE RDC RIG ATW PACD ORIG SDRL
Source: Bloomberg composite credit ratings as of October 2015; cash, short-term investments and contracted revenue backlog as of 30 September 2015 9 Declining Capital Expenditures
$ millions
$625* $555*
125 25 150
80 $205 475 $150* 55 325 30 120 150
4Q15 2016 2017 2018
New rig construction Rig enhancements Minor upgrades and improvements
*Note: Preliminary estimates for rig enhancement and minor upgrade and improvements for 2016, 2017 and 2018; final capex estimates to be determined upon completion of annual budget process and subject to change based on rig contracting; year-to-date capital expenditures through 30 10 September 2015: $1,130 million of new rig construction, $145 million of rig enhancements and $170 million of minor upgrades and improvements Fleet Restructuring: Newbuild Deliveries
2012.752013 2013.752014 2014.752015 2015.752016 2016.75 2017 2018 2017.752019 2018.752020 2019.75
ENSCO DS-7 4 yrs with Total
ENSCO 120 2+ yrs with Nexen
ENSCO 121 2 yrs w/ Wintershall Delivered & Contracted ENSCO 122 2 yrs with NAM
ENSCO 110 3 yrs with NDC
ENSCO DS-8 5 yrs with Total Delivered and On ENSCO DS-9 2 yrs on operating rate* Operating Rate ENSCO 123
ENSCO 140 Under Construction & ENSCO 141 Uncontracted
ENSCO DS-10 Drillships Premium jackups
*Note: Customer has terminated contract for its convenience. Per terms of contract for early termination, customer is required to make monthly payments for two years equal to the operating day rate of approximately $550,000, which may be partially defrayed should Ensco re-contract the rig 11 within the next two years and/or mitigate certain costs during this time period while the rig is idle and without a contract. Upgrades to Existing Floaters
• 2014 floater upgrades benefitting 2015 results – ENSCO 5004 – ENSCO 5006
• Mooring upgrade for ENSCO 8503 contracted to Stone Energy and ENSCO 8505 contracted to Marubeni
• 3rd ENSCO 8500 Series floater to receive mooring upgrade in 2016
12 Fleet Restructuring: Divestitures
• 20 rigs sold since 2010 generating ~$675 million in proceeds – 6 rigs sold in the past 12 months • 4 jackups sold for more than $200 million in proceeds during 3Q14, reducing exposure to Mexico jackup market • 2 floaters >30 years of age sold for scrap value
• 6 rigs currently held for sale – 4 floaters – 2 jackups
13 Expense Management Actions
15% reduction in offshore unit labor costs + $57 million annual savings in onshore support costs
• February 2015 – 9% unit labor cost decrease for offshore workers – 15% reduction of onshore positions • $27 million in annualized savings – full run-rate savings beginning 2Q15
• August 2015 – +6 ppt improvement in offshore unit labor cost savings to 15% compared to 2014 levels; full run-rate savings beginning 1Q16 – 14% incremental reduction of onshore positions • $30 million additional annualized savings; full run-rate beginning 4Q15 • consolidated business unit reporting structure from five to three, centralizing certain functions and rationalizing office space
14 Proactive Rig Stacking
• Stacking rigs without near- Avg Daily term contracting opportunities Warm Cold Operating reduces daily operating Stack Stack Expenses expenses <$10k $40k • Up-front costs to preserve Drillship per day per day (ENSCO DS-1 cold stacked rigs & DS-2) – $1 million for jackups $32k <$10k Semi – $5 million for semis per day per day
• 8500 Series semis cold $20k <$5k Jackup stacking process includes: per day per day – dehumidification – prevention of hull corrosion – key equipment preservation 15 Improved Expense Outlook
Contract Drilling Expense
2Q15A 3Q15A 4Q15E $503 million $434 million $415 – $420 million
Prior estimate Prior estimate $450 - 455 million $435 - 440 million
Expense reductions more than offset a projected increase in rig operating days v. 3Q15
16 Innovation During the Downturn
Ensco Asset Management System
• Proprietary asset management system – improve operational performance by increasing uptime – reducing maintenance costs – lower lifetime equipment costs • Leverages standardization
17 Excellent Safety Performance
Total Recordable • Leading-edge safety Incident Rate management systems
1.2 • Enhancing process 1.0 safety to drive further 0.8 improvements 0.6 0.4 0.2 0.0 2008 2009 2010 2011 2012 2013 2014 YTD 2015
Ensco Industry
Ensco statistics are Year To Date through September 30. The IADC industry statistics are as of Q2 2015. 18 Net Income Margin Largest Offshore Drillers
30% 26% 25%
19% 16% 16%
ESV SDRL NE RIG DO RDC
Source: Thomson One; sum of trailing eight quarters of net income divided by sum of trailing eight quarters of revenue. Thomson One's data is based on aggregation of information collected from industry equity research analysts, and may not be based on GAAP reported financial data; Ensco financials as of 30 September 2015; Peer financials as of 2Q15 earnings disclosures; excludes Seadrill’s $440 million gain on disposal of 19 West Auriga to Seadrill Partners in 1Q14 High Levels of Customer Satisfaction
Rated #1 • Total Satisfaction • Health, Safety & Environment • Technology • Special Applications • Deepwater Drilling • Shelf Wells • Non-Vertical Wells • Harsh Environment Wells • North Sea • Latin America & Mexico
20 Outlook for Offshore E&P
Key Points to Remember
1. Deepwater production is 7% of global supply
2. Offshore reserves are a critical part of major E&P portfolios
3. Excessive costs/inefficiencies crept into sector during the $100+ oil environment
4. Industry is proactively responding to commodity price pressures
5. Breakeven commodity prices for offshore programs are declining
6. Unprecedented decline in E&P exploration spending will create pent up demand and a future snapback in spending
21 Importance of Deepwater
• Shell has stated that deepwater is a key driver of growth – “Our growth priorities follow two strategic themes: integrated gas and deepwater. These will provide our medium-term growth and we expect them to become core engines in the future.”
• Shell’s recent acquisition of BG aligns with the company’s priorities in deepwater, particularly in Brazil – “Brazil is an absolutely outstanding upstream province … [and] at this moment is the most exciting part of the industry.” – “The potential is absolutely gigantic – there is much more to come.”
22 Importance of Deepwater
Other major E&Ps have made similar comments YTD regarding the importance of deepwater projects to future growth
– BP: “In order to deliver long-term growth, we will continue to maintain a disciplined investment approach into three distinctive classes of assets: deepwater, gas value chains and giant fields. We will continue to maintain a balanced portfolio of opportunities.”
– Chevron: “New supply will increasingly come from more complex and remote sources with higher full-cycle development costs [including] arctic, deepwater, heavy, sour and the like.”
– Total: “A new direction is being taken to carry out deep offshore operations in even deeper waters … and at greater distances for multi- phase production transport … which is fully in line with the ambitious goals of [the company’s] exploration and production [business] and supports major technology-intensive assets such as Libra in Brazil.” 23 Customers Re-Engineering Projects
• BP Mad Dog: Phase 2 – Cost estimates reduced to less than $10 billion from previous estimate of $22 billion – Project re-engineering through standardization and scope optimization, coupled with industry deflation, resulted in significantly less capital required to develop approximately 90% of resources
• Shell Appomattox – 20% reduction in project costs from supply chain savings, design improvements, etc.
• Total Block 32 – Capital expenditure estimate reduced by $4 billion to $16 billion – Optimized project design and contracting strategy
• Statoil –“Standardization is the new innovation.” 24 Service Sector Response
Recent strategic combinations/alliances among service companies to drive greater efficiencies and lower the breakeven commodity prices for projects:
• Schlumberger/Cameron – strategic innovation, efficiencies and cost reductions in deepwater projects; driving down breakeven commodity price levels • GE Oil & Gas/McDermott – improve design/planning of offshore oil and gas field developments • OneSubsea/Subsea 7 – enhance project delivery, improve recovery and optimize the cost and efficiency of deepwater subsea developments • FMC Technologies/Technip – overhaul subsea field operations to drive efficiencies • Baker Hughes/Aker Solutions – develop technology for production solutions that will boost output, increase recovery rates and reduce costs for subsea fields • Schlumberger/OneSubsea/Helix – optimize the cost and efficiency of subsea well intervention systems 25 Jackup Market Dynamics
• Shallow water well programs have lower breakeven commodity price points on average than deepwater projects – less complex drilling requirements, shallower water depths and greater access to existing infrastructure • More diverse customer base; shallow water demand a function of customer- and region-specific factors – increased rig demand in the Middle East from NOCs – leases requiring continued drilling in areas like North Sea and West Africa have stabilized demand as exploration capex has been reduced – well intervention now more economic in lower day rate environment – U.S. Gulf of Mexico and Asia Pacific markets are challenged due to capex reductions and uncontracted newbuild supply, respectively • Drillers with established operational and safety track records have an advantage in contracting rigs – zero newbuilds being built by speculators have been contracted 26 Global Marketed Rig Fleet
Floaters Jackups Contracted 208 300 Active Idle/Other 62 93 Fleet Total 270 393 % Contracted 77% 76%
Under Construction 5229 / 41% by 107 68 / 61% by SETE Brasil Speculators On Order / Planned 19 5 Newbuilds Total 71 112 % Contracted 52% 7%
Source: IHS-ODS Petrodata as of October 2015; competitive marketed floaters and jackups (independent leg cantilever rigs); ‘contracted’ includes rigs currently under contract or with a future contract 27 Newbuild Floater Order Book
13% 71 Total
9 17 24% Contracted SETE Brasil, Under Construction
26 Uncontracted, 12 Under 36% SETE Brasil, Construction On Order 17% 7 Uncontracted, On Order
10%
Source: IHS-ODS Petrodata as of October 2015; marketed competitive floaters 28 Newbuild Floater Delivery Schedule
30 Under SETE Brasil by Shipyard Constr. On Order Total 25 Estaleiro Atlantico Sul 4 3 7 5 Estaleiro Jurong Aracruz 4 3 7 BrasFELS, Angra dos Reis 5 1 6 Estaleiro Enseada do Paraguacu 2 4 6 20 Ecovix‐Engevix, Rio Grande do Sul 2 1 3 9 ? Total 17 12 29 15 2 5 10 ? 2 1 1 6 13 4 5 ? 2 8 ? 3 1 3 4 ? 0 11 2015 2016 2017 2018 2019 2020 Uncontracted, Under Construction Uncontracted, On Order SETE Brasil, On Order SETE Brasil, Under Construction Contracted
Source: IHS-ODS Petrodata as of October 2015; marketed competitive floaters 29 Floater Supply
Cumulative # of rigs rolling off contract > 30 years old:
9 45 59 65
71 45 55 41 43 31 19 38 31 36 38 37 35 Assumes all 32 rigs ‘On Order’ 32 or partially completed including SETE 211 Brasil rigs are 182 195 built, delivered 159 164 and complete customer acceptance 9 SETE* 15 SETE* 23 SETE* testing
Current 2015 2016 2017 2018 < 15 years old 15-29 years old 30-35 years old > 35 years old
*SETE Brasil rig counts by year are cumulative 30 Source: IHS-ODS Petrodata as of October 2015; marketed competitive floaters Attrition of Older Floaters
~100 floaters could be retired by year-end 2017 if attrition continues at similar rates observed over the past 12 months
Scrapped to Date Currently Idle Expiring Contracts 42 floaters scrapped ~30 floaters that are idle ~45 floaters with since 3Q14 without follow-on work contracts expiring before could be retired YE17 without follow-on work could be retired • 88% attrition for rigs >35 • 20 rigs >35 years of age • 38 rigs >35 years of age years of age historically x 88% attrition rate x 88% attrition rate – 24 rigs >35 years of age ~18 scrap candidates ~33 scrap candidates scrapped
• 67% attrition for rigs 30-34 • 18 rigs 30-34 years of age • 21 rigs 30-34 years of age years of age historically x 67% attrition rate x 67% attrition rate – 11 rigs 30-34 years of age ~12 scrap candidates ~14 scrap candidates scrapped
• 7 rigs <30 years of age • Floater utilization would scrapped (5 rigs <20 yrs old) improve to 79% from 71% if ~30 rigs were scrapped
Source: IHS-ODS Petrodata as of October 2015; ‘retired’ includes scrapped rigs, announced scrapping and rigs converted to non-drilling units; utilization figures include non-marketed units 31 Newbuild Jackup Order Book
7% 112 Total 8 Contracted, Established Zero rigs being Drillers built by speculators have been contracted
35 64 31% Uncontracted, Uncontracted, 57% Established Speculators Drillers
5 On Order, All Uncontracted 5%
Source: IHS-ODS Petrodata as of October 2015; marketed competitive jackups (independent leg cantilever rigs) 32 Newbuild Jackup Delivery Schedule
60 Speculator Newbuilds Under by Shipyard Constr. On Order Total China China Merchants Heavy Industry 12 ‐ 12 50 Shanghai Waigaoqiao Shipbuilding 7 1 8 6 Yantai CIMC Raffles 5 ‐ 5 Other 29 1 30 40 Subtotal 53 2 55 Singapore & Middle East Keppel FELS, Singapore 8 ‐ 8 24 ? Other ‐ Singapore 3 ‐ 3 30 UAE & Dubai ‐ 2 2 Subtotal 11 2 13 2 Total 64 4 68 20 24 ?
15 ? 10 20 3 1 ? 2 7 4 1 1 ? 0 2 2015 2016 2017 2018 2019 2020 Uncontracted, Established Drillers On Order, Established Drillers On Order, Speculators Uncontracted, Speculators Contracted
Source: IHS-ODS Petrodata as of October 2015; marketed competitive jackups (independent leg cantilever rigs) 33 Jackup Supply
Cumulative # of rigs rolling off contract > 30 years old:
19 65 90 115
104 151 164 68 64 Assumes all 28 17 rigs ‘On Order’ 73 or partially 105 17 19 20 completed 107 including rigs 20 built by 22 Speculators are built, 280 300 301 delivered and 231 complete 200 customer 3024 5248 6665 6866 acceptance Speculator*Speculator Speculator*Speculator Speculator*Speculator Speculator*Speculator testing
Current 2015 2016 2017 2018 < 15 years old 15-29 years old 30-35 years old > 35 years old
*Speculator rig counts by year are cumulative 34 Source: IHS-ODS Petrodata as of October 2015; marketed competitive jackups (independent leg cantilever rigs) Attrition of Older Jackups
100+ jackups could be retired as expiring contracts and survey costs lead to the removal of older rigs from drilling supply
Retired to Date Currently Idle Expiring Contracts 5 competitive 69 competitive 90 jackups >30 years of jackups retired jackups >30 years of age have contracts since 3Q14 age idle expiring before YE17 without follow-on work • 5 competitive jackups retired • 16 competitive jackups • ~50% of these rigs are >30 years old have been estimated to require a • Between 1Q09 and 2Q14, idle for at least one year major survey for another 13 competitive recertification within one jackups were retired with an • 15 competitive jackups year of contract expiration average age of 30 years >30 years old have been idle for six to 12 months • These surveys could require significant capital • 38 competitive jackups investment to meet >30 years old have been classification requirements idle up to six months that may prompt more rig retirements • Jackup utilization would improve to 84% from 72% Source: IHS-ODS Petrodata as of October 2015; competitive jackups are independent leg cantilever rigs, ‘retired’ includes if ~70 rigs were retired scrapped rigs, announced scrapping and rigs converted to non- 35 drilling units; utilization figures include non-marketed units Newbuild Cancellations and Deferrals
Floaters • Reports suggest many of the 29 rigs in SETE Brasil program may be cancelled • Seadrill and Vantage each cancel 1 drillship scheduled for 2015 delivery; 4 other newbuilds ‘on order’ cancelled • Atwood delays 2 drillships with 2015 expected deliveries by 18 months each • Ocean Rig delays 2 drillships with 2017 expected deliveries by 16 months each on average • Transocean delays 4 drillships with 2016 to 2018 expected deliveries by between 12 and 24 months each Jackups • 6 jackups ordered by speculators were cancelled since mid-year 2014 • Seadrill delays 8 jackups with 2015/2016 scheduled deliveries by approx. six months each • Transocean delays 5 jackups with 2016/2017 expected deliveries by more than two years each 36 Increase in Scrapping and Cold Stacking
Floaters Jackups
30 12 42 scrapped & 27 cold stacked 6 scrapped & 28 cold stacked 25 10
7 20 8
9 15 6 9
10 5 4 4 18 3 6 12 5 2 4 8 4 1 222 22 1 1 0 1 0 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 Scrapped Cold Stacked Scrapped Cold Stacked
Source: IHS-ODS Petrodata as of October 2015; jackups defined as independent leg cantilever rigs; ‘scrapping’ includes scrapped rigs, announced scrapping and rigs converted to non-drilling units 37 Summary
• We have taken proactive capital management, fleet restructuring and expense management decisions
• Our liquidity and balance sheet position In a very challenged gives us resilience and options market our liquidity • We will invest in innovation and and balance sheet engineering to grow our leadership position for the future provide resilience and options • The offshore drilling industry will be reconfigured by this downturn - newer entrants and companies with weaker balance sheets will struggle
38 39