EFTA00728748.pdf

Pacific Dri ling Company Presentation September 2010 EFTA00728748 Pacific Drilling Disclaimer This presentation and all information contained herein or provided herewith (including all information otherwise made available, whether oral or in writing, in connection with or related to this presentation) (collectively, the "Presentation") is strictly confidential. Accordingly, this Presentation is being supplied to you solely for your information and may not be copied, published, distributed, reproduced or further distributed to any person or published in whole or in part, for any purpose. This Presentation is being provided to you on the basis you keep confidential any information contained herein or otherwise made available, whether oral or in writing, in connection with, or related to, this Presentation or Pacific Drilling Limited (the "Company") or any company that controls, is controlled by or under common with the Company. The distribution of this Presentation in certain jurisdictions may be restricted by law and any failure to comply with these restrictions may constitute a violation of laws of any such jurisdiction. This document and the information contained in it does not constitute a prospectus or listing particulars and does not form any part of an offer or invitation or solicitation of any offer to apply for securities of the Company. This Presentation does not constitute or form part of any invitation or inducement under Section 21 of the Financial Services and Markets Act 2000 to engage in investment activity. No reliance may be placed for any purpose whatsoever on the information contained in this Presentation or any assumptions made as to its completeness. No representation or warranty, express or implied, is given as to the accuracy of the information or opinions contained in this Presentation or in any presentation made to you verbally and no liability is accepted by the Company or its directors, members, officers, employees, agents or advisers for accuracy or completeness of any such information or opinions. The information and opinions contained in this Presentation are provided as at the date hereof, and are subject to change without notice. 2 EFTA00728749 Pacific Drillig Index I Executive Summary I Pacific Drilling Company Profile I Offshore Drilling Market Update I Organization and Operational Readiness Update I Illustrative Financial Projections Appendix I Biographies EFTA00728750 Pacific Dri ling ,11,90747, EXECUTIVE SUMMARY EFTA00728751 Pacific Drittg Executive Summary II Pacific Drilling Limited is a newly established, ultra-deepwater, drillship operator ■ Established in 2006 as an independent division of the Ofer Group; natural extension of Group's offshore and shipping activities I Strong management team with many years experience in Oilfield Services and Offshore Management II The company has interest in 6 best-in-class drillships built by Samsung Heavy Industries ("SHI") ■ Two ships in joint venture with Transocean (delivered in 2009 on budget, on time); both contracted to Reliance Industries and ONGC in India and fully-financed ■ Four wholly-owned drillships under construction, with one to be delivered in late Sept. 2010, and the other three in 2011 I Company on target with plan: best-in-class organization is built up; management systems put in place; qualified for all major oil companies ■ Market demand for premium assets with the deepest water capabilities remains robust I Actively participating in market opportunities; multiple contract prospects worldwide ■ 5 years of contracted backlog with Chevron in the Gulf of Mexico I Shareholder already invested over US$1.3Bn in equity and the company is currently closing a $1.8Bn project financing facility with commercial banks and ECA's 5 EFTA00728752 PACIFIC DRILLING COMPANY PROFILE EFTA00728753 Pacific Drilling Company Background I Pacific Drilling Limited is dedicated to being the preferred, pure-play, ultra-deepwater drillship operator ■ A Fleet of 6 new SHI built drillships: 2 in operation in India and 4 under construction in South Korea ■ Turnkey contracts with the most reliable yard in the industry ■ Prime assets with the highest level of specifications and technical abilities Two ships in joint venture with Transocean — Transocean Pacific Drilling Inc. ■ On time and on-budget per approved budget and bank commitments; considered "best-in-class" construction management performance ■ Both operated by Transocean and contracted to Reliance Industries, one of which assigned to ONGC II Financed through a 5-year post-construction $1.265B financing, secured by rigs and contracts I Four ships wholly-owned by Pacific Drilling ■ All four constructed by Samsung Heavy Industries ("SHI") ■ Construction oversight by Pacific Drilling; deliveries staggered from late 2010 to mid 2011 Natural business extension for one of the world's largest private tonnage and offshore installation owners ■ Technical support and expertise from companies of the Ofer Group ■ Full construction management team in place, with deliveries staggered to allow management of all units by same team ■ Executive and operational management team in place — offshore team under development 7 EFTA00728754 Pacific Dri ding A Fleet of Best-in-class High-specification Assets ■ Six Samsung Heavy Industries Ultra-Deepwater Drillships ■ Proven design from a proven yard using well established topsides design from National Oilwell Varco (NOV) ■ SHI building over twenty units of similar design ■ Two .I1/ rigs contracted to Reliance with customer specific upgrades DDKG1 = 10,000' operating water depth, single activity with offline stand-building DDKG2 = 12,000' operating water depth, single activity with offline stand-building and riser hang-off cart ■ Two rigs based on modified SHI 10000 hull with enhanced moderate to harsh environment operating capability ■ 10,000' single activity, with offline stand-building and increased accommodations (200 berths) • Enhanced thruster capacity and hull-strengthening to expand operating envelope • Two rigs based on Saipem 12000 design ■ 12,000' nominal water depth - upgraded riser handling, tensioners and subsea systems ■ Designed for full dual activity with twin 1000ST load paths, enhanced mud and solids handling and 200 man accommodation ■ All rigs under turnkey construction contracts I Drilling packages are turnkey NOV with full commissioning support ▪ PDL is SHI's largest drillship customer B Group is one of the largest fleet customers of SHI 8 EFTA00728755 Pacific Dri ling Construction Schedule Pictures are from the Pacific Bora Feb. 20, 2010 Bora Scirocco Mistral Santa Ana 9/30/10 2009 2010 2011 Jan. 2010 0 Steel Cutting Keel laying Delivery/sail away Mobilization and Operations 9 EFTA00728756 Pacific Dritir? Chevron USA / Pacific Santa Ana Charter 12-05-2010 Pacific Santa Ana awarded 5-year contract with Chevron HOUSTON - Pacific Drilling Limited is pleased to announce the signing of a contract with Chevron USA Inc. for the Pacific Santa Ana per the previously released letter of intent. The contract represents a revenue stream of approximately $880Million over the five year initial term which commences in late 2011. Pacific Santa Ana, under construction in South Korea, represents the height of current drilling technology, with capabilities to operate in up to 12,000ft water depth and drill to over 35,000ft well depth. Pacific Drilling Limited is a privately owned, ultra-deepwater drilling contractor, which has an interest in six Samsung design ultra-deepwater drillships. Four drillships Pacific Bora, Pacific Scirocco, Pacific Mistral and Pacific Santa Ana are expected to be delivered between September 2010 and July 2011 and will be wholly owned and operated by Pacific Drilling. Two vessels are currently operating in India and are held and operated by a 50% JV. 10 EFTA00728757 Pacific Drilling Building Partnership with Clients ▪ The high profile contract award with Chevron for "dual gradient drilling" differentiates Pacific Drilling from other new entrants B Rigorous due-diligence by Chevron validates Pacific Drilling's technical, operational, and financial strengths II Several pending term contract opportunities with Chevron will be enhanced by this award B Existing contract will be the basis for global International Master Agreement II Credibility from this award enhances opportunities with other operators ■ Philosophy of engagement with clients at an early stage of a project II Co-location of rig management resources in client office to enhance communication II Close engagement with client engineering resources to support construction process ▪ High visibility of Pacific Drilling senior management at all levels of client organization ■ Strength of management team recognized by multiple clients (both IOCs and NOCs) ▪ Qualified for and included in all UDW tender opportunities worldwide • No dedicated sales organization — contract acquisition and management is the responsibility of line management 11 EFTA00728758 Pacific Dri ling OFFSHORE DRILLING MARKET UPDATE EFTA00728759 Pacific Drtirl? Continuing Activity In the Ultra-Deepwater Market ▪ Market demand for premium assets with the deepest water capabilities remains robust [ Demand for UDW assets kept pace with growing supply despite some weakness in other offshore drilling segments • Future requirements post the GoM moratorium expected to favour newer, larger and more technologically-advanced vessels ▪ Major oil companies continue to upgrade their floating rig fleets and utilize more dynamically positioned rigs at the expense of lower tier floating rigs and midwater rigs I Base demand driven by development of multiple discoveries over last 10 years, especially in West Africa, and ongoing exploration in mature basins of the Golden Triangle ▪ Brazil sub-salt play likely to introduce significantly more demand over next 2-3 years B 28 additional rig requirements claimed by Petrobras B US$174Bn E&P capex plan offering numerous business opportunities I Emerging prospects in S.E. Asia, Mediterranean and Black Seas, and deeper more complex plays in established areas 13 EFTA00728760 Pacific Drilling Strong Fundamentals Throughout the Cycle ■ Existing fields' depletion rates drive the need for continued new productive capacity ■ Global productive capacity declines estimated at 5-8% represent over 4 million bbls per day per year that must be replaced simply to meet flat demand ▪ This equates to the replacing all the current combined oil production capacity of Nigeria and Angola ■ Economic recovery set to stimulate demand for oil and other commodities in the next few years • Anticipated oil price realizations are expected to support the strong demand environment ■ Oil price currently trading above $75/bbl ▪ Futures prices and industry forecasts point to medium-term levels north of $90/bbl ■ Ultra-deepwater represents almost the only province with both the accessibility and the scale of projects to meet the Oil Major's requirements ■ UDW Projects are typically at the lower cost end of the supply curve and so will be attractive relative to other projects I New discoveries require higher capability assets and more time to develop 14 EFTA00728761 Pacific Drilling - Established Areas Show Continuing Strength - Developing Plays Support Growth of the Sector Mita. ,••• Developing Plays in Established Area, Gulf of Mexico Lower Tertiary ultra-deep well bores Exploration success Brazil (Santos & Espirtu Santos Basins} - Light oil & gas • Tupi sub salt play Mediterranean Deepwater Egypt and Libya India Continued KG Basin success DO Supports Deepwater Sustainability Established • Gulf of Mexico Attractive fiscal terms Brazil Exploration success Increased activity from international operators West Africa Exploration success New development programs Australia Markets opening for LNG • • Established 4.) Developing 15 EFTA00728762 Pacific Dri ling ORGANIZATION AND OPERATIONAL READINESS UPDATE EFTA00728763 Pacific Team-based culture: Management and support organization are in place CEO C.J. Beckett VP IT C. Wright VP HR M. Hobbs VP OHSE P. Linkin COO R. MacChesney VP PSC E. Rincon VP Operations C. Van Diemen Dir. Operations Support K. Wink Rig Manager T. Blyth Operations Recruiting Mngr S. Gibson Rig Manager F. Vleghert Chad prepared to illustrate repelling lines. not seniority Rig Manager F. Jacquemin VP Treasurer J. Boots VP Engineering P. Guirlet Subsea Manager P. Bennett VP Controller P. Reese Project Manager C. Stanbridge Commissioning Manager S. Hamilton Maintenance Manager D. Adams Commissioning Manager M. Dalton 17 EFTA00728764 Pacific Drilling Building Solid and Scalable Management Systems Pacific Drilling Management System (MS) developed ▪ Holistic enterprise-wide system — applicable across organization ■ Based on ISO Management Standard Principles and Industry best practices ■ We intend to be compliant with all relevant industry and quality systems and may seek independent certification against ISO 9001, ISO 14001, OHSAS 18001 if appropriate I Strong emphasis on Line Management responsibility for both Quality and HSE with support from a dedicated Quality and HSE department QHSE Management Team in place including Quality Manager, HSE Manager and Construction Project HSE Advisor in place HSE Manual developed and under continual improvement I Well control manual developed I Vision and Values, Quality Policy, HSE Policy, Code of Conduct and other functional department policies in place Documentation Management process clearly defined and document development ongoing throughout organization with involvement of all personnel I Human Resources and Supply Chain Standards & Procedures in place Proactive, industry leading software lifecycle and change management system developed, supported by unique relationship with Athens Group to ensure trouble-free rig start-up 18 EFTA00728765 Risk Profile Well Thought Through I Turnkey construction of four drillships by highly reputable and experienced Korean shipbuilder (Samsung Heavy Industries) k Construction on time and on budget ■ Proven vessel design using proven equipment technology W Implemented construction & commissioning Lessons Learned from Joint Venture I Operational leadership from first class and experienced management team I Target customers: high credit quality NOC's and Investment- grade IOC's I Strong sponsor 19 EFTA00728766 Pacific Dri iing ILLUSTRATIVE FINANCIAL PROJECTIONS EFTA00728767 Project Projections and Economics: Illustrative Example ■ The Rig is assumed to begin drilling on January 1, 2011 ■ Total Rig Cost: $750 MM Operating Assumptions: IR Day Rate :$450,000 Opex (per day) :$150,000 II Cost Escalation :2% It Contract Tenor : 5 years [ Tax (% of Revenue) :3% Financing Assumptions: Interest on Debt : 7.0% Loan Tenor : 5 years IK Loan Amount : $450 MM Balloon Payment : $200 MM Indicative Cash Flow Projections Pro-Delivery 2011 2012 2013 2014 2015 Revenues 147.8 156.6 157.6 158.6 159.7 Mob Fees (net of expenses) 20.0 Opex (54.8) (55.8) (57.0) (58.1) (59.3) EBITDA 113.1 100.8 100.6 100.5 100.4 Taxes (4.4) (4.7) (4.7) (4.8) (4.8) Net Interest Expenses (29.8) (26.3) (22.8) (19.3) (19.3) Operation Cash Flows 78.9 69.8 73.2 76.5 76.4 Construction Capex (750.0) Maintenance Capex (3.0) (3.0) (3.0) (3.0) (3.0) Free Cash Flows (750.0) 75.9 66.8 70.2 73.5 73.4 Issuance of Equity 300.0 Debt Issuance / Repayment 450.0 (50.0) (50.0) (50.0) (50.0) (50.0) Net Change in Cash 0.0 25.9 16.8 20.2 23.5 23.4 Ending Cash Balance 0 25.9 42.7 62.9 86.4 109.7 Ending Debt Balance 450.0 400.0 350.0 300.0 250.0 200.0 Net Debt 450.0 374.1 307.3 237.1 163.6 90.3 EBITDA/Net Interest Expense 3.8x 3.8x 4.4x 5.2x 5.2x Debt/EBITDA 3.5x 3.5x 3.0x 2.5x 2.Ox Net Debt/EBITDA 3.3x 3.1x 2.4x 1.6x 0.9x Projected Debt Service Coverage Ratio 1.32x 1.38x 1.45x 1.45x NM 21 EFTA00728768 Pacific DripLig APPENDIX EFTA00728769 Pacific Drillirl? Pacific Drilling Management Biographies Chris Beckett, CEO Chris has nearly twenty years experience in the energy industry, including over ten years with Schlumberger in a series of international management roles with increasing responsibility, three years at McKinsey & Co. providing strategic and operating advice to global energy companies and governments, and most recently four years at Transocean where he led the Strategic Business Development and Planning. Chris holds a B.Sc (hops) from University of London in Exploration Geophysics and Masters of Business Administration from Rice University, where he graduated as a Jones Scholar. Bob MacChesney, COO Bob has twenty-nine years experience in the drilling industry, including 20 years with Schlumberger (Sedco Forex) and nine with Transocean. During his tenure with these companies he served in a variety of positions between Operations Management and Marketing including Country Manager in Malaysia, India, Brazil and UK; Region Manager in Middle East and India and Corporate Director Deep Water Marketing. Bob has a BSc in Engineering from Southampton University in the UK. Cees Van Diemen, VP Operations Cees Van Diemen has joined the company as Vice President of Operations. Cees brings thirty-two years experience in the mobile offshore drilling industry, including 25 years with Noble Drilling Corporation and its predecessor Neddrill. His career started offshore in the traditional drill positions from Floorman to Offshore Installation Manager, before taking on increasing responsibility in onshore management roles from rig manager in West Africa, the Mediterranean and the North Sea, to district manager in the North Sea and Division manager in Europe and lately in Brazil. During his career, Cees has had extensive experience in deepwater drilling from the early days of 600ft water depth activity in 1977 to recent operations in 9200ft water depth. Cees holds a BSc in automotive engineering from the University of Apeldoorn in the Netherlands. Paul Guirlet, VP Technical Support Paul joined Pacific Drilling after 19 years of experience in various engineering and operations positions with various major drilling contractors, including 12 years with Sedco Forex and Transocean. Paul has extensive experience in Engineering, rig upgrade and construction, developing and implementing Maintenance Management systems, as well as Rig Operation Management in West Africa and Indonesia. Paul is a Graduate Engineer from Ecole Nationale Superieure de Techniques Avancees, Paris. 23 EFTA00728770 Pacific Drilling rot. kz4VAI-tte:kyfr 7e ' C: z 7 Pacific Drilling Management Biographies (Cont'd) Paul Linkin, VP QHSE Paul joined Pacific Drilling after nearly 20 years of experience in various operations and QHSE management roles at Schlumberger. Paul has extensive experience developing and implementing management systems in both field and office environments, with a particular focus on Quality and HSE management in remote locations. Paul holds a B.Eng degree in Electrical Engineering from University of Portsmouth. Paul Reese, VP Controller Paul has been a finance professional in the oilfield services and E&P space for over fifteen years. Prior to joining Pacific Drilling he was Controller for the Global Exploration and Development division at BHP Billiton Petroleum. Before that Paul served in various financial management roles at Transocean including Finance Director for the North and South America Business Unit and Assistant VP for Audit and Advisory Services. Paul holds a BA in Economics and Business Managerial Studies and Masters in Accounting from Rice University. John Boots, VP Treasurer John brings over 20 years of US and European experience in the energy industry, including fourteen years at Noble Drilling and its predecessor Neddrill and two years as a financial and management consultant for multiple oilfield service companies. Most recently, John was Corporate Treasurer & Director of Investor Relations at Global Industries. During his tenure with these companies he served in a variety of financial leadership roles, including Treasury, Finance, Controlling, Investor Relations & Internal Audit, based in the US, Netherlands and Italy. John holds a BA in Economics from the University of Alkmaar, the Netherlands. Michelle Hobbs, VP Human Resources Michelle is a Senior Management Human Resources Professional with extensive experience in international HR strategy development and execution, acquisitions and integration, organizational planning and design, compensation and budgeting. Most recently she served as VP Human Resources for TGS-NOPEC Geophysical Company and prior to that held roles with increasing responsibility in various services and manufacturing companies in Europe and North America. Michelle holds a BA from University of Houston and advanced certifications in HR from University of Michigan and Rice University. 24 EFTA00728771 Pacific Drilling Management Biographies (Cont'd) Kevin Wink, Director Operations Support Kevin brings 35 years of worldwide operational experience from Reading & Bates, and Transocean : from roustabout in the Gulf of Mexico to General Manager of Operations in charge of 13 rigs in India. Kevin has an extended and proven track record of managing high specification drilling rigs and starting up operations in new countries. He is focused on bringing together teams to provide dedicated and efficient operational support to our clients. Steve Gibson, OM Special Projects Steve has thirty years experience in the industry including 27 years with Sedco Forex and Transocean. Before moving into management he worked offshore from floor hand to OIM. In additional to a strong operational background Steve has served in various positions in the personnel function and until recently was head of personnel for Songa Drilling. In addition to contributing his operational experience Steve is responsible for recruitment of operational shore based management and senior offshore positions. Frederik Vleghert, Rig Manager Frederik joined Pacific Drilling after 25 years with Neddrill, and Noble where he worked from Roustabout to Assistant Driller on jack-ups and from Assistant-Driller to Offshore Installation Manager on DP drillships prior to take over his first rig Manager job in 2004, a position he held for the last 5 years. His work locations were mainly North Sea and Brazil. Frederic Jacquemin, Rig Manager Frederic comes from a engineering background (M.Sc Petroleum Engineering & Project Development — IFP School, Paris) and worked for Transocean for 6 years as Operations Engineer, and Rig Manager in West Africa, South East Asia and Australia. Tom Blyth, Rig Manager Tom worked 20 years with Sedco-Forex, and Transocean, from Roustabout to Offshore Installation Manager on DP semi-submersible units prior to being assigned as 50 generation DP drillship rig Manager in 2008. Tom spent most of his time in the North Sea, West Africa and Brazil. 25 EFTA00728772