Seadrill Partners LLC Wells Fargo Pipeline, MLP and Energy Symposium December 2012
Forward Looking Statement This presentation contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflects management s current expectations, estimates and projections about its operations. All statements, other than statements of historical facts, that address activities and events that will, should, could or may occur in the future are forward-looking statements. Words such as may, could, should, would, expect, plan, anticipate, intend, forecast, believe, estimate, predict, propose, potential, continue or the negative of these terms and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Unless legally required, Seadrill Partners undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are: the ability to obtain external financing and the expected compliance with financing agreements; failure of OPCO s drilling rigs to perform satisfactorily or to our expectations; fluctuations in the international price of oil; discoveries of new sources of oil that do not require deepwater drilling rigs; our ability to meet future capital expenditure requirements and to maintain operating expenses at adequate and profitable levels, our ability to leverage Seadrill Limited s relationship and reputation in the offshore drilling industry; our ability to purchase drilling rigs from Seadrill Limited or third parties in the future; OPCO s ability to comply with, maintain, renew or extend its existing drilling contracts or to redeploy its drilling rigs upon termination of its existing drilling contracts at profitable dayrates; the occurrence of any accident involving OPCO s drilling rigs or other drilling rigs in the industry; changes in governmental regulations that affect us or OPCO and the interpretations of those regulations; increased competition in the offshore drilling industry and other actions of competitors; the increase availability on a timely basis of drilling rigs, supplies, personnel and oil field services in the areas in which OPCO operations; and general economic, political and business conditions globally. Unpredictable or unknown factors also could have material adverse effects on forward-looking statements. Please read Seadrill Partners' filings with the Securities and Exchange Commission for more information regarding these factors and the risks faced by Seadrill Partners. 1
About Us Initial Public Offering October 2012 Priced at $22.00 top end of the range November 30, price $26.27 Annual distribution $1.55 per unit ~30% ownership in 4 offshore drilling rigs Initial net debt to EBITDA 3.2x Form 1099 tax filer Less than 20% of cash distributions will be constituted as dividend income for tax purposes 2
MLP Structure Hemen Holding (Fredriksen Group) 24.6% Interest 100.0% Membership Interest Seadrill Member LLC Incentive Distribution Rights 70% Limited Partner Interest Seadrill Limited (NYSE: SDRL) 14.8 MM Common Units 16.5 MM Subordinated Units 75.7% Limited Liability Company Interest 24.3% Limited Liability Company Interest Public Unit Holders 10.06 MM Common Units Non Economic LLC Interest 100.0% Membership Interest Seadrill Partners LLC (NYSE: SDLP) 49% Limited Liability Company Interest Seadrill Operating GP LLC 30.0% Limited Partner Interest 51.0% Limited Liability Company Interest Non economic General Partner Interest Seadrill Operating LP OPCO Seadrill Capricorn Holdings LLC West Capricorn Operating Subsidiaries: West Aquarius West Capella (56%) West Vencedor 3
Seadrill Partners Key Investment Highlights Increasing capital spending plans by global oil majors drives strong offshore drilling demand Strong Industry Dynamics Continued shift to deeper water formations by operators as a means to replenish reserves and increase production Strong demand for high specification rigs and increased focus on safety and efficiency post Macondo Attractive long term contracts with global oil majors (4.1 years, $3.0 billion backlog) Attractive Assets and Contract Coverage Modern, technologically advanced fleet run by an experienced operator (average fleet age 2.75 years) Significant built in growth opportunities Strong relationship with Seadrill Limited and the Fredriksen Group 4
Offshore Drilling Outlook Remains Strong Robust Upstream Spending Outlook Strong Deepwater Contracting Activity 5 Source: ODSPetrodata, IHS Herold
Increase in Deepwater Contract Terms January 2009 September 2012 25 36 Months 8% 12 24 Months 22% More than 37 Months 10% Up to 12 60% More than 37 Months 48% Up to 12 16% 25 36 Months 15% 12 24 Months 21% Recent contract fixtures signaling strength and longevity in the deepwater market Seadrill Limited contracted $4 billion commitment for 19 rig years with BP for three ultra deepwater rigs Transocean contacted $7.6 billion commitment for 40 rig years with Shell for four ultra deepwater rigs Songa contracted $2.7 billion commitment for 16 rig years with Statoil for two ultra deepwater rigs 6 Source: ODS Petrodata
Seadrill Partners Long-Term Contract Coverage 2013 2014 2015 2016 2017 2018 2019 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q West Vencedor US$206,500 West Capella US$544,000 US$580,000 (1) West Aquarius US$530,000 US$530,000 (2) West Capricorn US$487,000 US$487,000 Contracted Option Period Average remaining contract term: 4.1 years (3) 7 (1) Five year contract extension starts in April 2014. Customer has an option to reduce the extension period to three or four years at an increased day rate of $627,500 or $615,000, respectively, from April 2014 (2) Once West Aquarius arrives in Canada (December 2012), it will operate under a sub contract to Statoil ASA (3) As of September 30, 2012; excluding any optional extension periods
Contracted Rates Below Leading Edge Market Rates UDW Dayrates (US$ 000 per day) 700 650 600 550 500 450 West Capella West Aquarius West Capricorn 400 350 300 Jun 05 Jun 06 Jun 07 Jun 08 Jun 09 Jun 10 Jun 11 Jun 12 Below Market Contracts Limit Recontracting Risk 8 Source: ODS Petrodata
Revenue Growth Opportunities (Illustrative) ~220% Increase to Base ~40% Increase to Base (1) (2) (1) 9 (1) Assumes Seadrill Partners can reach an agreement to purchase. (2) Seadrill Limited is not obligated to offer these assets to Seadrill Partners.
Other 5YR+ Contracted Assets Potential Dropdowns 2013 2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2015 2016 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2017 1Q 2Q 3Q 4Q 2018 1Q 2Q 3Q 4Q 2019 1Q 2Q 3Q 4Q (2) West Sirius (GoM) US$474,000 US$535,000 07/2019 (2) West Auriga (GoM) Newbuild US$565,000 10/2020 (2) West Vela (GoM) Newbuild US$565,000 01/2021 (1) West Mira (Canada) Newbuild US$590,000 06/2020 Under construction / Transit Contracted 10 (1) Assumes Seadrill Partners can reach an agreement to purchase. (2) Seadrill Limited is not obligated to offer these assets to Seadrill Partners.
Seadrill Limited s Substantial Global Operational Footprint Americas 9 units Gulf of Mexico - 3 Semis South America -3 Semis -2 Jack-ups -1 Semi-tender North Atlantic 6 units -3 Semis -2 Jack-ups - 1 Drillship Africa-Middle East 10 units - 3 Drillships -1 semi - 2 Semi-tenders -4 Jack-ups Newbuilds 19 units Asia Pacific 23 units (1) -2 Semis - 4 Semi-tenders -9 Tender rigs -8 Jack-ups - 7 Drillships -2 HE Semis -1 HE jack-up -4 BE jack-ups -4 Tender Rigs -1 Semi-tender 11 (1) Includes five tender rigs owed by Varia Perdana
Seadrill Limited s Development Rig Fleet 2005 (5 Assets) Current Rig Fleet (67 Assets) EBITDA Growth (US$ Millions) (1) Deepwater Rig Average Age 0 2 4 6 8 10 12 14 16 18 20 22 24 Seadrill 2 Ensco 6 Transocean Noble 13 14 Diamond 22 12 (1) EBITDA is a non GAAP financial measure.
MLP Predecessor Historical and Forecast Twelve Months Ended Twelve Months Ending ($ in millions, except per unit amounts) 6/30/2012 9/30/2013 Adjusted EBITDA $311.7 $389.9 Cash interest expense (33.1) (61.2) Cash interest income 1.2 2.3 Cash income tax expense (23.9) (30.1) Maintenance capital expenditure reserves (22.1) (29.5) Replacement capital expenditure reserves (34.0) (47.2) Cash available for distribution before NCI $199.8 $224.2 Less: cash flow attributable to NCI (151.7) (153.7) Cash available for distribution $48.1 $70.5 Total Unit Coverage 1.10x Total distributions $64.1 Distribution per LLC unit $1.55 13 (1) Adjusted EBITDA is a non GAAP financial measure.
MLP Pro Forma Capitalization Historical Pro Forma ($ in millions) 12/31/2011 6/30/2012 6/30/2012 Cash and cash equivalents $15.4 $2.9 $2.9 Debt: Sponsor credit facility 0.0 0.0 0.0 Current portion of long term debt 180.9 180.9 180.9 Non current portion of long term debt 1,149.6 1,059.2 1,056.8 Total debt $1,330.5 $1,240.1 $1,237.7 Equity: Partners'/Owners' equity $793.0 $934.4 $315.8 Non controlling interest 621.0 Total Capitalization $2,123.5 $2,174.5 $2,174.5 Debt / NTM Adjusted EBITDA (1)(2) 3.2x 14 (1) Twelve months ending 6/30/2013. (2) Adjusted EBITDA is a non GAAP financial measure.
Conclusion Upstream Capex Remains Strong Long term Contract Backlog 2013 2014 2015 2016 2017 2018 2019 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q West Vencedor US$206,500 West Capella US$544,000 US$580,000 West Aquarius US$530,000 US$530,000 West Capricorn US$487,000 US$487,000 Youngest Deepwater Fleet Substantial Built in Growth 0 2 4 6 8 10 12 14 16 18 20 22 24 Seadrill 2 Ensco 6 Transocean 13 Noble 14 Diamond 22 Base MLP Revenue OPCO Dropdown T 15 / T 16 Dropdown Other Dropdowns 15
Appendix
Seadrill Partners Fleet West Capricorn 100% owned by OPCO (1) Dynamically positioned semi submersible drilling rig built in 2011 West Aquarius 100% owned by OPCO (2) Dynamically positioned semi submersible drilling rig capable of operating in harsh environments such as offshore Norway and Canada Principal Features: Type: 6 th generation semi submersible drilling rig Maximum water depth: 10,000 feet Built: 2011 Builder: Jurong Shipyard Principal Features: Type: 6 th generation semi submersible drilling rig Maximum water depth: 10,000 feet Built: 2009 Builder: Daewoo Shipbuilding and Marine Engineering 17 (1) Seadrill Partners will own a 51% interest in Seadrill Capricorn Holdings LLC, which will own a 100% interest in the West Capricorn. (2) Seadrill Partners will own a 30% interest in Seadrill Operating LP, which will own a 100% interest in the West Aquarius.
Seadrill Partners Fleet West Vencedor 100% owned by OPCO (1) Tender rig capable of operating in harsher environments with the ability to work with tension leg platforms and SPAR platforms West Capella ~56% owned by OPCO (2) Self propelled dynamically positioned Class 3 drillship suitable for remote locations due to its mobility and large carrying capacity Principal Features: Type: Semi submersible tender rig Maximum water depth: 6,500 feet Built: 2010 Builder: Keppel FELS Limited Principal Features: Type: DP3 ultra deepwater drillship Maximum water depth: 10,000 feet Built: 2008 Builder: Samsung Heavy Industries 18 (1) Seadrill Partners will own a 30% interest in Seadrill Operating LP, which will own a 100% interest the West Vencedor. (2) Seadrill Partners will own a 30% interest in Seadrill Operating LP, which will own an approximate 56% interest in the West Capella.
Debt Summary Outstanding Balance at LIBOR Quarterly Balloon ($ in millions) 6/30/2012 Maturity Margin Amortization Payment West Aquarius $290.8 June 2014 L + 243 bps $13.9 $207.7 West Vencedor 111.1 July 2015 L + 225 bps 4.2 71.5 West Capella 281.9 June 2014 L + 243 bps 13.3 201.4 West Capricorn 508.8 February 2017 L + 188 bps 13.8 275.0 Unsecured Sponsor Credit Facility 0.0 September 2017 L + 500 bps NA NA Total Debt Available Credit Facility ~$1.2 Billion $300 Million 95% swapped to a fixed rate 19
MLP Predecessor Summary Historical and Forecasted Financial Information Twelve Months Ended Twelve Months Ending ($ in millions, except per unit amounts) 6/30/2012 9/30/2013 Total operating revenues $524.6 $658.4 Total operating expenses (260.2) (350.3) Net operating income $264.4 $308.1 Net Interest Expense (89.1) (65.3) Income before income taxes and NCI 175.3 242.8 Income taxes (29.3) (29.5) Net income $146.1 $213.3 Net income attributable to NCI (114.0) (146.8) Net income attributable to Seadrill Partners LLC $32.1 $66.5 Adjusted EBITDA Reconciliation Net income attributable to Seadrill Partners LLC $32.1 $66.5 Interest income (1.2) (2.3) Interest expense and other financial items 90.2 67.6 Depreciation and amortization 57.2 87.4 Amortization of mobilization revenue and expenses (9.8) (5.6) Income taxes 29.3 29.5 Non controlling interest 114.0 146.8 Adjusted EBITDA (1) $311.8 $389.9 20 (1) Adjusted EBITDA is a non GAAP financial measure.