EURASIA DRILLING COMPANY LTD 1H-12 Results & 2012 FY Trading Update
October, 2012 Disclaimer
EDC Overview 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 October 2012. By accepting the Materials or attending such presentation, you are agreeing to maintain absolute confidentiality regarding the information disclosed in the Materials and further agree to the following limitations and notifications. 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. Summary 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 otherwise acquire, any securities of the Company or any member of the Group nor should they or any part of them form the basis of, or be relied on in connection with, any contract to purchase or subscribe for any securities of the Company or any member of the Group or global depositary receipts representing the Company’s shares nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. This document is neither an advertisement nor a prospectus. The Materials have been provided to you solely for your information and background and are subject to amendment. The Materials (or any part of them) may not be reproduced or redistributed, passed on, or the contents otherwise divulged, directly or indirectly, to any other person or published in whole or in part for any purpose without the prior written consent of the Company. Failure to comply with this restriction may constitute a violation of applicable securities laws.
Investment Case The Materials are directed only at (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, (the “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 referred to as “relevant persons”). Any investment activity to which the materials relate is available only to, and will be engaged in only with relevant persons. Any person who 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, US persons except pursuant to an exemption from registration and, subject to certain exceptions, may not be offered or sold within Australia, Canada or Japan. 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 Positioning 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”). REnergy 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- Fin. Highlights based research and competitor annual accounts. REnergy compiled their projections for the market and competitive data beyond 2009 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.
SummaryAppendixQ&A 2 Agenda
EDC Overview . Overview . Summary Summary . Investment case
Investment Case . Performance and positioning . Financial Highlights
Positioning . Q&A
Fin. Highlights
SummaryQ&A 3 EDC at a glance
EDC Overview THE LARGEST DRILLING COMPANY IN RUSSIA AND THE CIS
1H 2012 Growth
Revenues . US$ 1,564 million 23.6% EBITDA . US$ 373 million Summary 39.8% Net Income . US$ 187 million 24.3% EBITDA margin . 23.9% 2.8pp
Market Share . 29% by meters drilled 4pp
Investment Case Production Assets . 258 Drilling & sidetracking rigs no change (v. end-2011) . 343 Workover Rigs 3.9% (v. end-2011) . 2 J/U rigs +2 J/U rigs under construction
Operating Statistics . 2,871,811meters drilled Positioning 23.5% . 411,519 th. horizontal meters drilled 12.8%
Strategic highlights . Ex-SLB assets are consolidated from the beginning of the year . Contracted Lamprell to build 4th jack-up rig, MERCURY, for the
Fin. Highlights Caspian Sea with a delivery late 2014 . Acquired two drilling rigs in Iraq with the option to buy third in July 2012
Key customers
SummaryQ&A 4
Geographic presence
EDC Overview Head Office Regional/Branch Office Support Base Operational Areas
Summary TIMAN-PECHORA
EASTERN Usinsk SIBERIA
Kogalym Investment Case
Moscow WESTERN SIBERIA Tyumen VOLGA-URALS Tomsk Kaliningrad
Positioning
Zhirnovsk
Astrakhan
Aktau Fin. Highlights
Tashkent Ashgabat
SummaryQ&A 5 Summary financial guidance
EDC Overview . Our expected total drilling volume for 2012 is at least 5.8 million meters
. Pricing in ruble terms has increased by 5-7% on average
Summary . Onshore horizontal drilling volumes for FY 2012 are now expected to be roughly equal to our 2011 total at approximately nine hundred thousand metres
. Onshore drilling services revenues are expected to grow in line with our backlog; sidetracking, workover and offshore drilling revenues are also expected to grow at a similar pace
Investment Case . For the full year 2012, revenue guidance is US $3.15 billion
. While 2011 saw significant changes to our services mix, we do not expect major variations in the ratio of conventional to horizontal drilling in 2012
Positioning . EBITDA margin is expected to outpace revenue growth, and is forecasted above 23.8% for 2012, more than 2 percentage points higher than 2011
. Capital expenditures is expected to increase to between US $550 and US$ 600 million for FY 2012.
Fin. Highlights
SummaryQ&A 6 1H-12 Results
EDC Overview Financial update Operations update
Top line revenue up 24% to US$ 1,564 Drilling output for 1H-12 was 2.871 mln meters, 23% million (1H-11: US$ 1,265 million); above 1H-11 (2.325 mln meters); EBITDA margin increased to 23.9% Horizontal meters drilled in 1H-12 were up 13% to
Summary (1H-11: 21.1%); 412 th. meters (1H-11: 365 th. meters); Net Income increased 24% to US $187 Exploration drilling volumes were down 11% y-o-y; million (1H-11: US $151 million); Sidetracking activity more than quadrupled in 1H-12 Earnings per share (basic/diluted) up 24% to and amounted to 102 wells, vs. 24 wells sidetracked US $1.28 (1H-11: US $1.03); in1H-11; Investment Case Net debt position (all debt reduced by cash) Our largest customer, LUKOIL accounted for 56% was US$ 350 million as of June 30, 2012; of our total drilling volumes in 1H-12 (54% in 1H-11), Dividend paid for the year ended December while ROSNEFT for 27% in 1H-12 (20% in 1H-11); 31, 2011 amounted to $ 0.47 per share; Our market share increased to 29% in 1H-12; Capital expenditures were US $282 million ASTRA j/u rig was employed in Kazakh waters of Positioning (1H-11: US $215 million). the Caspian Sea drilling on N Block; SATURN j/u rig continued its operations for Petronas in Turkmen waters of the Caspian Sea; We drilled 4 ER horizontal development wells on Lukoil's Yu. Korchagin field platform in the Caspian; Fin. Highlights The modules of our 3rd new-build j/u rig were in the process of shipping to the Caspian from UAE.
SummaryQ&A 7 Russian market
EDC Overview Russia’s onshore market by meters drilled (mln) Drilling volumes in Russia
26 grew at more than 8% Others 24 Volga-Urals between 2006-2011 22 Western Siberia Eastern Siberia As per REnergyCo, demand 20 Timan-Pechora for drilling is expected to grow 18 Summary approx. 9.2% per year, to 16 14 over 25 million meters in 2014 12 Based on current drilling 10 rates, and including certain 8 efficiency improvements, the 6 onshore rig fleet in Russia Investment Case 4 may be nearing 1,100 active 2 0 rigs by 2013 2006 2007 2008 2009 2010 2011 2012F 2013F 2014F Rig demand and E&P capex Russia’ s onshore OFS market (US$ billion) growth rates will be faster in 30 Greenfield areas, where Drilling Positioning Workover drilling is more complex and 25 Seismic penetration rates are lower Tech services In US$ terms, the onshore 20 drilling market is expected to
15 grow over 15% p.a. through Q&A 2014
10
5
0 Source: REnergyCo, April 2012 SummaryAppendix 2006 2007 2008 2009 2010 2011E 2012F 2013F 2014F 8 Russian oil industry
EDC Overview Russian oil production composition (mln bpd) Crude oil production from Brownfields
12 currently accounts for 85-90% of Others Volga-Urals Western Siberia Eastern Siberia Timan-Pechora Russia’s total output. 10 Decreases in Brownfield production were mainly offset by the contribution 8 from Greenfields in Eastern Siberia, Summary Timan-Pechora, the Caspian & Sakhalin 6 The mitigation of decline in Brownfield output (mainly Western Siberia) is 4 central to sustaining crude oil output in Russia 2 Investment Case Recently, the oil companies have begun
0 to focus on the delivery of drilling value, 2004 2005 2006 2007 2008 2009 2010 2011 2012F 2013F 2014F while maintaining a reasonable overall cost structure Source: REnergy Co, April 2012
Positioning Russian crude oil production and development drilling
11 40 10 35 9 30 8 25 7 20
Fin. Highlights 6 15 5 10 4 5 3 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F
Crude Oil Production (mbd, lhs) Development Drilling (mln meters, rhs) Source: REnergy, April 2012 SummaryQ&A 9 Drilling impact
EDC Overview Russian Brownfield production, kbpd Russian Brownfield production 1H-12 Update
In 1H 2012 the output growth from Greenfields began to 9,400 Russian brownfield slightly decelerate, which makes it more challenging to 9,300 production has virtually both offset the production decline from Brownfields and stopped declining since to increase Russia’s total oil and condensate output. 9,200 1Q10. Summary 9,100 The output from the mature fields of Russia's four largest oil producers largely stabilized, resulting in a 9,000 decline of 1% y-o-y despite massively increased drilling 8,900 volumes during the last several years, the movement to
8,800 more horizontal drilling, as well as supportive changes in the taxation system. 8,700
Investment Case 8,600
2Q2011 4Q2011 3Q2007 4Q2007 1Q2008 2Q2008 3Q2008 4Q2008 1Q2009 2Q2009 3Q2009 4Q2009 1Q2010 2Q2010 3Q2010 4Q2010 1Q2011 3Q2011 1Q2012 2Q2012
Drilling volumes in Russia (mln. meters) Horizontal drilling in Russia (mln. meters)
20 18.742 3 Positioning 2.235 18 17.233 15.454 16 14.627 14.554 2 1.792 14 1.649 12.305 1.475 1.549 12 2 1.387 10.117 10.068 1.184 1.180 10 9.212 1.118 1 Fin. Highlights 8 +9% +6% 6 4 1 2 0 0 2005 2006 2007 2008 2009 2010 2011 1H-11 1H-12 2005 2006 2007 2008 2009 2010 2011 1H-11 1H-12 Source: Troika Dialog, CDU TEK SummaryQ&A 10 Drilling complexity is increasing
EDC Overview Average Depth (MD) of Wells Drilled by EDC Horizontal Drilling (th. meters)
1,000 2,600 900 879 2,650
2,700 800 Summary
2,750 700
2,800 600 2,850 500 437 2,900 412 400 365 Investment Case 2,950 337 305 298 3,000 300 Russia Land 3,050 200
W.Siberia Average MeasuredWellDepth(meters) 3,100 100
3,150 Positioning 0 2007 2008 2009 2010 2011 1H-111H-12
Increased horizontal drilling in 2010 and 2011 has made a noticeable impact on well depth. The average well drilled by EDC in Western Siberia is now more than 3,000 meters deep.
Fin. Highlights Our customers are demanding hi-spec rigs as well depth & complexity are increasing. Assets are becoming scarce, and with the development of Greenfield areas, logistics is more challenging
To respond to these challenges, fleets must be Modern, Heavy, more Efficient and more Mobile
SummaryQ&A 11 Caspian Sea jack-up market
EDC Overview Demand for jack-ups growing in all STATOIL Exploration Caspian sectors served by EDC: Russia NCOC (Exxon) In the Russian sector, Lukoil has made Exploration a number of discoveries and has several CMOC (Shell) appraisals/prospects to drill Exploration & Appraisal Summary (Significant Dev. planned 2014) Numerous blocks are in exploration CNPC phase in Kazakh waters, and some Exploration developments are being planned LUKOIL Offshore Turkmenistan is currently in Exploration, Appraisal & Development with jack-ups development phase using jack-ups off Investment Case small platforms. Additional exploration CONOCO/ MUBADALA blocks are being looked at by numerous Exploration potential operators TOTAL Exploration Currently 3 jack-ups active in the Turkmenistan Caspian; demand by 2013 expected to Azerbaijan be 6-7 rigs Positioning PETRONAS EDC actions to address demand: Production Nov-10 contracted Lamprell Plc to build DRAGON Production a new 3rd j/u, NEPTUNE, with delivery (15 year multi -rig development) beg. later in 2012
Fin. Highlights Turkmen Exploration Feb-11 acquired the SATURN j/u rig (Chevron, Conoco, from Transocean Total) Apr-12 contracted Lamprell Plc to build Iran a new 4th j/u rig, MERCURY, with delivery beg. later in 2014
SummaryQ&A Source: The Economist, Company data 12 Operating performance
EDC Overview EDC drilling volume performance
6,000
5,800 LUKoil-Bureniye 5,000 EDC Actual SummaryOutlook 4,777 EDC Forecasts 4,581* 4,000 4,041 4,103 3,753
3,000 3,269
InvestmentStrategic Focus Case 2,495
2,000 Drilled Drilled Meters(thousands)
1,699 1,396 1,000 1,235 1,242
InvestmentPositioning Case 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F
*-YTD 2012 Data through September
19% CAGR in drilling volumes during EDC’s history as an independent driller
Fin.Positioning Highlights Growth until 2011 has been organic Starting end-Apr 2011, EDC consolidates drilling volumes of assets acquired from Schlumberger
SummaryQ&A 13 Market share (by meters drilled)
EDC Overview 2007 (at IPO) 1H 2011 1H 2012
EDC EDC 22% 25% EDC Summary All others All others All others 29% 40% 31% 27% SGC 4% * SSK SSK 8% SSK 9% SurgutNG 7% SurgutNG SurgutNG 24% 23% 24% WFT WFT Investment Case 6% 5%
At the time of EDC’s IPO In 2007, we The Russian market grew 11% in The Russian market grew 9% in 1H-12 were the largest independent drilling drilling volume terms vs 1H-10 in drilling volume terms vs. 1H-11 contractor in Russia Positioning A relatively mild winter contributed to a Our volumes grew at a higher pace The Company has grown significantly strong drilling activity in 1Q-11 than the market as we consolidated since then, and by 2011 EDC became from the beginning of the year drilling E&P companies maintained their the largest drilling company in the CIS volumes of ex-SLB drilling company upstream Capex spending as both the and in the Eastern Hemisphere (SGC), which resulted in 4pp market price of crude oil and the ruble share increase In 2005, our first year of operations as remained relatively stable through the an independent Company, our market period The Russian drilling market is still Fin. Highlights share was ≈17%, growing to 22% in dominated by in-house drilling The growth of EDC’s market share to 2007 by expanding work scope for our companies, but the number of 25% was attributable to the existing customers and successfully independents is growing as E&P consolidation of Schlumberger drilling tendering for new clients companies divest their in-house drilling assets late April 2011 capabilities
Source: CDU TEK and Company estimates, *- Represents meters drilled by SGK prior to based on Russian Onshore meters drilled becoming part of EDC (Jan-Apr 2011 period) SummaryQ&A 14 Customer diversification (by meters drilled)
EDC Overview 2007 (at IPO) 1H 2011 1H 2012
Other 1% 3% 1.5% Other 7.5% 8% 20% Other 4% 27%
Summary
15% 19% 8%
Investment Case
76% 54% 56%
In 2007 the share of non-Lukoil During 1H-11 Lukoil’s share in total During 1H-12 Lukoil’s share in total customers was 24% drilling volumes decreased to 54%, drilling volumes increased slightly to while their drilling volumes increased 56%, while their drilling volumes Positioning In the end of 2006 we concluded a 5% y-o-y increased 29% y-o-y contract with Rosneft for drilling services to Yuganskneftegas in Western Siberia Together with acquired Schlumberger Added third drilling rig to Rosneft’s rigs, our total volume with Rosneft more Vankor field (East Siberia); Rosneft’s In 2008 we commenced drilling than doubled, and they became our share in total drilling volumes reached operations on Rosneft’s Vankor field in second largest customer (increase in 27% as volumes increased 67% y-o-y Eastern Siberia volumes excl. SLB was 62% y-o-y) Commenced drilling at Gazpromneft’s Commenced drilling operations in Fin. Highlights Drilling volumes for TNK-BP were six Novoportovskoe field (Yamal peninsula) Kazakhstan with two rigs for Kazakhoil times larger y-o-y, but we only began Aktobe in 2008 drilling for them in May 2010
Source: Company data SummaryQ&A 15 Rig fleet and CAPEX
(drilling & sidetrack rigs) ($US mln) EDC Overview EDC rig fleet EDC capital expenditures 550-600mm 600 Actual
100-125 T 160-175 T 200-225 T 250-270 T 320-400 T 450 T 500 2012F 0
1,000 400 400 Summary 2,000 320 327 40 284 3,000 31 300 113 282*
4,000 US$ (million) 200 5,000 11 60 96 107 Max. Depth in Metersin Depth Max. 6,000 Investment Case 100 38 7,000 3 0 8,000 2005 2006 2007 2008 2009 2010 2011 2012F *- As of 31 December, 2011 Note: Purchases of PPE as set forth in EDC’s audited consolidated statements of cash flows for the years ended 31 December 2005, 2006, 2007, 2008, 2009, 2010 & 2011 *- 1H-12 (unaudited) EDC fleet age Drilling & Positioning sidetracking Rig fleet (onshore) rigs 34% Rigs on hand, beginning of 2011 211
Up to 5 Years 5 to 10 Years New rigs contracted - 2010/11 investment programme 17 10 to 15 Years Fin. Highlights 28% 15 to 20 Years 15% Rigs added through acquisitions 42 Over 20 Years
3% Older rigs retired (12) 20%
Rigs on hand, beginning of 2012 258 Source: Company data as of 31 Dec 2011 SummaryQ&A 16 Key strategic focus
EDC Overview . Acquire in-house and/or independent drilling SLB drilling assets add 3-4% market share on contractors a full-year basis Increase market . Invest in fleet expansion and upgrades By 2012, roughly one in three new wells in share . Leverage capacity and efficiency leadership Russia will be being drilled by EDC rigs and to gain market share with existing customers crews
Summary . Target acquisition of businesses with diverse SLB assets work mostly for Rosneft & TNK-BP Growth of customer portfolios In 2012 LUKOIL will account for ≈55% of total customer base . Differentiate ourselves from our competitors meters drilled . Evaluate other strategic opportunities outside In July 2012 we acquired our first rigs outside of Russia and the CIS of Russia and CIS
Investment Case . Commission new offshore drilling assets in Acquired SATURN jack-up rig from Expansion in response to market developments Transocean in 2011 offshore drilling . Consolidate the market through acquisition of Contracted 2 new-build j/u rigs for the Caspian existing assets where possible In 1H-12 drilled four ED wells using LUKOIL’s
. Develop offshore ERD drilling capability Yu. Korchagin field platform
Positioning June 2010 acquisition of OOO Meridian added . Consolidate all workover assets under one 18 workover crews in the Komi Republic, entity within EDC group to ensure brand Expand & improve expanding our presence in Timan-Pechora identity workover capacity SLB transaction added 34 workover rigs . Target selected acquisitions of additional Ongoing acquisition of KNP assets will add 57 workover and sidetracking capacity w/o rigs to our fleet Fin. Highlights
Strategic Alliance with Schlumberger provides . Expand and improve core drilling service Broaden us access to best in class services offerings in advance of divestiture technology In 2011 added 17 high-capacity drilling rigs for . Develop and promote strategic partnerships platform our onshore operations, expect to add a further with global technology leaders 10-12 rigs in 2012 SummaryQ&A 17 Key financial highlights 2007 2008 2009 2010 2011 1H-11 1H-12 EDC Overview (US$ thousands) Audited Audited Audited Audited Audited Unaudited Unaudited Revenue 1,492,189 2,101,779 1,382,203 1,812,156 2,752,417 1,265,282 1,564,185 % growth 37.2% 40.9% -34.2% 31.1% 51.9% 46.8% 23.6% EBITDA 313,751 452,720 319,813 435,847 597,202 267,021 373,314 % margin 21.0% 21.5% 23.1% 24.1% 21.7% 21.1% 23.9%
SummaryOutlook Net income 168,544 220,933 165,490 207,353 277,237 150,601 187,267 % margin 11.3% 10.5% 12.0% 11.4% 10.1% 11.9% 12.0% Operating cash flow 173,320 309,851 409,507 322,553 425,729 125,010 231,703 Capital Expeditures 319,740 327,015 106,815 283,777 399,954 214,736 281,783 Free Cash Flow -146,420 -17,164 302,692 38,776 25,775 -89,726 -50,080 InvestmentStrategic Focus Case Dividend per share (US$) n.a. $ 0.25 $ 0.25 $ 0.31* $ 0.47 n.a. n.a. EPS (US$) $ 1.31 $ 1.51 $ 1.22 $ 1.44 $ 1.89 $ 1.03 $ 1.28 *- represents year-end 2010 declared dividend per share, excludes special dividend declared in Apr. 2010 of US $1.22 per share
EBITDA margin,% The increase in EBITDA margin in 1H-12 to 23.9% is InvestmentPositioning Case 24.1% mostly attributable to: 23.1% 23.9% 21.0% 21.5% 21.7% 21.1% Sustained cost control efforts by the management;
15.2% Strong performance of our offshore business;
11.9% Steady improvement in the efficiency of our Fin.Positioning Highlights drilling processes;
No significant changes in the mix of services as during 1H-11; and
No adverse impact from one-off items as during 1H-11. 2005 2006 2007 2008 2009 2010 2011 1H11 1H12 SummaryQ&A 18 Debt profile
EDC Overview Debt structure To finance acquisitions the Company raised the following debt 1,000 late in 2010 and during 1H-11: 800 753 670 3-years ruble denominated 600 loan from Alfa bank at 8.4% for Summary c. US$ 231 mln in December 404 400 2010 284 263 182 200 5-years USD denominated loan from Raiffeisen Bank at 5.65% 0 2007 2008 2009 2010 2011 1H-12 for US $220 mln in April 2011
Investment Case -200 -220 7-years ruble bonds at 8.4% for -400 -350 c. US $155 mln in June 2011 Short-term debt Long-term debt Net cash/(net debt)
Debt maturity profile No debt was raised during 1H-12 250
Positioning 203 During 1H-12 we retired US $71 200 mln in long-term debt 175 155 150 118 As of June 30, 2012 US$
100 denominated debt accounted for US$ (million) US$
Fin. Highlights 68 40% of total outstanding debt 50 34
0 2012 2013 2014 2015 2016 2017 and thereafter RUB denominated debt USD denominated debt SummaryQ&A 19 Q&A
EDC Overview
SummaryOutlook
InvestmentStrategic Focus Case
InvestmentPositioning Case
Fin.Positioning Highlights
SummaryQ&A 20 Appendix: IR contacts & Calendar
EDC Overview 2012 upcoming events
End-October 3Q-12 Results Update November 14-15 Capital Markets Day (London, New York)
Summary December 3-4 Dahlman Rose & Co 2nd Annual Ultimate Oil Services & Drilling Conf., NYC
Investment Case
Investor Relations key contacts
Richard Anderson Kim Kruschwitz
Positioning Chief Financial Officer Vice President, Marketing and Investor Relations Tel: +1-281-778-0621 Tel: +44 (0) 207 717 9707 E-mail: [email protected] E-mail: [email protected]
Taleh Aleskerov Evgeniya Bitsenko
Fin. Highlights Senior Vice President, Finance Manager, Investor Relations E-mail: [email protected] Email: [email protected]
SummaryQ&A 21 Appendix: World’s largest drillers
EDC Overview
--550-- Nabors Industries LTD M --$5.3-- Helmrich & Payne, Inc R Summary A I --364-- Precision Drilling Corp R --$4.5-- Eurasia Drilling Company Ltd G K --350-- Patterson UTI Energy, Inc --$4.4-- Nabors Industries LTD E F --310-- Ensign Energy Services Inc T --$2.6-- Patterson UTI Energy, Inc Investment Case L
E --286-- Helmrich & Payne, Inc --$2.5-- Precision Drilling Corp C E --258-- Eurasia Drilling Company Ltd A --$2.4-- Ensign Energy Services Inc T P --55-- KCA Deutag --$0.5-- Parker Drilling Co.
Positioning --28-- Parker Drilling Co.
Sources: companies’ info Source: Bloomberg Fin. Highlights Market Cap as of 21 Sep, 2012, US$ billion
SummaryQ&A 22 Appendix: Income Statement
EDC Overview 2007 2008 2009 2010 2011 1H 2011 1H 2012 in US$ thousands Audited Audited Audited Audited Audited Unaudited Unaudited
Av. exchange rate RUB/USD 25.6 24.9 31.7 30.4 29.4 28.6 30.6
Total Revenue $ 1,492,189 $2,101,779 $1,382,203 $1,812,156 $2,752,417 $1,265,282 $ 1,564,185 Costs and Other Deductions
Summary Operating Expenses 1,031,480 1,453,718 912,050 1,195,891 1,898,246 864,732 1,048,835 Selling, General and Admin. Expenses 90,021 122,011 94,861 106,920 144,614 63,142 70,475 Taxes Other than Income Taxes 56,574 72,571 55,061 72,547 118,850 70,536 69,453 Depreciation 58,705 101,777 106,390 142,000 215,168 93,412 108,342 (Gain)/Loss on Disposal of PP&E 610 4,722 (382) (6,344) 1,362 3,392 157 Goodwill impairement loss - - - 7,096 1,296 - -
Income/(Loss) from Operations $ 254,799 $ 346,980 $ 214,223 $ 294,046 $ 372,881 $ 170,068 $ 266,923
Investment Case Interest Expense 29,880 26,553 13,524 15,125 52,342 21,133 27,403 Interest and Dividend Income (4,546) (9,553) (10,631) (7,993) (11,485) (3,753) (6,543) Currency Transaction Loss/(profit) (349) 33,017 4,414 7,355 11,054 (1,745) (2,206) Net gain on acquisition of business - - (2,849) (557) - - - Gain on business exchange transaction - - - - (32,284) (32,861) - Other Expenses 363 759 418 951 (6,495) (149) 2,108
Income/(Loss) Before Taxes $ 229,451 $ 296,204 $ 209,347 $ 279,165 $ 359,749 $ 187,443 $ 246,161 Positioning Income Tax Expense 60,907 75,271 43,857 71,812 82,512 36,842 58,894
Net Income/(Loss) $168,544 $220,933 $165,490 $207,353 $277,237 $150,601 $187,267 Pat Margin 11.3% 10.5% 12.0% 11.4% 10.1% 11.9% 12.0%
EBITDA $313,751 $452,720 $319,813 $435,847 $597,202 $267,021 $373,314 EBITDA Margin, % 21.0% 21.5% 23.1% 24.1% 21.7% 21.1% 23.9% EPS (US$ per share) $1.15 $1.61 $1.24 $1.44 $1.89 $1.03 $1.28 Fin. Highlights
SummaryQ&A 23 Appendix: Balance Sheet
EDC Overview 31-Dec-07 31-Dec-08 31-Dec-09 31-Dec-10 31-Dec-11 30-Jun-12 in US$ thousands Audited Audited Audited Audited Audited Unaudited ASSETS Current Assets Cash 343,089 279,430 433,724 629,466 509,781 320,766 Accounts Receivable,net 230,888 230,147 191,054 235,360 348,082 440,040 Inventories 132,822 183,448 116,801 145,633 214,434 252,205 Summary Other Current Assets 62,792 61,359 53,270 66,608 80,922 62,641 Total Current Assets $ 769,591 $ 754,384 $ 794,849 $1,077,067 $1,153,219 $1,075,652
Property, plant and equipment 572,132 608,684 684,188 765,184 1,286,125 1,465,268 Other non-current assets 18,080 82,467 44,371 111,817 159,085 156,825 Total Assets $ 1,359,803 $1,445,535 $1,523,408 $1,954,068 $2,598,429 $2,697,745
LIABILITIES AND SHAREHOLDERS EQUITY Investment Case Current Liabilities Accounts payable & accrued liabilities 210,337 236,343 228,499 258,706 407,411 393,981 Notes Payable - Current LTD 118,911 91,721 31,796 117,550 175,217 188,831 Other Current Liabilities 35,783 53,655 90,702 75,030 78,136 90,128 Total Current Liabilities $ 365,031 $ 381,719 $ 350,997 $ 451,286 $ 660,764 $ 672,940 Notes Payable - Long Term 165,494 171,138 150,379 286,367 578,117 481,592 Long Term - Other 7,382 12,135 19,874 31,633 60,592 79,020 Positioning Total Liabilites $ 537,907 $ 564,992 $ 521,250 $ 769,286 $1,299,473 $1,233,552 SHAREHOLDERS' EQUITY Paid-in-Capital & APIC 515,649 481,132 471,300 679,856 679,423 682,115 Retained Earnings 277,855 464,461 596,340 578,989 787,250 974,517 Accumulated other comprehensive loss 28,392 -65,050 -65,482 -74,063 -167,717 -192,439 Total Shareholders' Equity $ 821,896 $ 880,543 $1,002,158 $1,184,782 $1,298,956 $1,464,193
Fin. Highlights Total Liabilities & shareholders' equity $ 1,359,803 $1,445,535 $1,523,408 $1,954,068 $2,598,429 $2,697,745 0 0 0 0 0
SummaryQ&A 24 Appendix: Cash Flow Statement
EDC Overview 2007 2008 2009 2010 2011 1H 2011 1H 2012 in US$ thousands Audited Audited Audited Audited Audited Unaudited Unaudited
Net Income $ 168,544 $ 220,933 $ 165,490 $ 207,353 $ 277,237 $ 150,601 $187,267
Non-cash Adjustments (Depreciation) 58,705 101,777 106,390 142,000 215,168 93,412 108,342 Changes in Working Capital excl. Cash (53,929) (12,859) 137,627 (26,800) (66,676) (119,003) (63,906) Summary Cash from Operations $ 173,320 $ 309,851 $ 409,507 $ 322,553 $ 425,729 $ 125,010 $ 231,703
Capex (319,740) (327,015) (106,815) (283,777) (399,954) (214,736) (281,783) Acquisition of subsidiary, net of cash acquired - - (23,374) (43,132) (559,340) (557,750) - Disposal of subsidiary, net of cash disposed - - - - 95,374 95,009 - Other Investing Cash Flow 13,589 3,125 4,349 1,719 15,055 14,878 1,928 Net Change in Loans (20,386) 11,872 (84,500) 214,618 397,841 469,290 (71,163) Investment Case Dividends Accrued or Paid (10,000) - (34,327) (212,786) (45,387) (45,387) (68,976) Sale/(purchase) of Treasury/common shares 480,139 (40,100) (18,621) 204,356 (5,114) (2,869) - Refund of offering costs from JP Morgan - 5,583 - - - - - Effect of exchange rate fluctuations (3,129) (26,975) 8,075 (7,809) (43,889) 20,696 (723)
Net increase/(decrease) in cash $ 313,793 $ (63,659) $ 154,294 $ 195,742 $(119,685) $ (95,859) $ (189,014)
Positioning
Fin. Highlights
SummaryQ&A 25