Odfjell Drilling Ltd : ODL - Q2 2017 Report

This interim report is unaudited and has been prepared in accordance with IAS 34 "Interim Financial Reporting".

Odfjell Drilling Ltd. Group

• Operating revenue of USD 165 million compared to USD 183 million in Q2 2016.

• EBITDA of USD 72 million compared to USD 73 million in Q2 2016.

• EBITDA margin of 44% compared to an EBITDA margin of 40% in Q2 2016.

• The Group's contract backlog is USD 2.7 billion, whereof USD 1.4 billion is firm backlog. The comparable figure at the end of Q2 2016 was USD 3.0 billion, whereof USD 1.8 billion was firm backlog.

  Mobile Offshore Drilling Units segment

• Operating revenue of USD 124 million compared to USD 122 million in Q2 2016.

• EBITDA of USD 67 million compared to USD 65 million in Q2 2016.

• EBITDA margin of 54% compared to 53% in Q2 2016.

  Drilling & Technology segment

• Operating revenue of USD 23 million compared to USD 37 million in Q2 2016.

• EBITDA of USD 1 million compared to an EBITDA loss of USD 0.2 million in Q2 2016.

• EBITDA margin of 4% compared to a negative EBITDA margin of 1% in Q2 2016.

  Well Services segment

• Operating revenue of USD 23 million compared to USD 29 million in Q2 2016.

• EBITDA of USD 8 million compared to USD 11 in Q2 2016.

• EBITDA margin of 34% compared to 39% in Q2 2016.

Deepsea Stavanger secured additional work

On 4 July 2017, Odfjell Drilling was awarded a one well contract with Total E&P South Africa, to be drilled by the 6th generation semi-submersible, Deepsea Stavanger, offshore South Africa.

On 10 August 2017, Odfjell Drilling signed a contract with Aker BP ASA for Deepsea Stavanger covering a period of approximately 9 months. The contract is for exploration and development drilling at various locations in the Norwegian Sea and the Barents Sea.

Deepsea Bergen secured drilling program potentially into second half 2019

Deepsea Bergen received on 31 May 2017, a letter of award from Statoil securing further drilling activities for the unit in 2018-2019. The contract includes one firm well plus 4 x 3 optional wells to be drilled on the Norwegian Continental Shelf ("NCS").

Furthermore, Wellesley Petroleum AS awarded on 9 June 2017 to Deepsea Bergen, a one well contract plus optional well testing and side-track on the NCS.

Platform Drilling secured work for TAQA

TAQA awarded Odfjell Drilling a contract, on 12 June 2017, for platform drilling and maintenance services on five of its platforms in the UK North Sea. The contract period is for two years, with additional yearly options. Odfjell Drilling commenced the contract end of July 2017.

Well Services awarded contract with ConocoPhillips in Norway

Well Services has been awarded a contract with ConocoPhillips for Casing, Tubing Running and Pulling Services on Ekofisk on the Norwegian Continental Shelf.

The duration of the contract is 4 years expected to start in Q3 2017. In addition there are 2x2 year options.

Secured extension of the Deepsea Bergen facility

On 29 August 2017, Odfjell Drilling finalized the amendment and extension of the Deepsea Bergen facility as announced on 10 July 2017. The facility amount is currently USD 66 million and scheduled instalments will be USD 6 million in December 2017, USD 3.5 million in September 2018, USD 3.5 million in December 2018 and USD 7 million quarterly thereafter. A balloon of USD 4 million shall be paid together with the final instalment in 3Q 2020.

(Comparable figures for last comparable period in brackets)

Consolidated group financials

Profit & loss Q2 2017

Operating revenue for Q2 2017 was USD 165 million (USD 183 million), a decrease of USD 18 million, mainly due to a reduction in activity in Drilling & Technology from Q2 16 to Q2 17. Well Services also had a reduction in activity and revenue, while Mobile Offshore Drilling Units had a minor increase of revenue.

EBITDA in Q2 2017 was USD 72 million (USD 73 million), a net decrease of USD 1 million. The decrease in EBITDA in Well Services was partly offset by improved EBITDA in Mobile Offshore Drilling Units and Drilling & Technology.

The EBITDA margin in Q2 2017 was 44% (40%). The decrease in revenue from 2016 to 2017 was offset by reduced costs mainly due to the efficiency program implemented during the market downturn.

EBIT in Q2 2017 was USD 31 million, at level with Q2 2016.

Net financial expenses in Q2 2017 amounted to USD 19 million compared to 20 million in Q2 2016.

In Q2 2017 the tax expense was USD 1 million (USD 4 million). Tax expense is mainly related to profits in Norway and the UK, in addition to withholding taxes in other countries.

Net profit in Q2 2017 was USD 11 million (USD 9 million).

Profit & loss YTD 2017

Operating revenue for YTD 2017 was USD 313 million (USD 341 million), a decrease of USD 28 million. Operating revenue decreased due to a reduction in activity in Drilling & Technology and Well Services from 2016 to 2017, partly offset by an increase of revenues in Mobile Offshore Drilling Units.

EBITDA YTD 2017 was USD 126 million (USD 117 million), a net increase of USD 9 million mainly due to improved EBITDA in Mobile Offshore Drilling Units, partly offset by decreased EBITDA in Well Services.

EBIT YTD 2017 was USD 45 million (USD 36 million), an increase of USD 9 million.

Net financial expenses YTD 2017 amounted to USD 38 million, at the same level with YTD 2016. YTD 2017 the tax expense was USD 3 million, compared to USD 9 million YTD 2016.

Net profit YTD 2017 was USD 3 million, compared to a loss of USD 10 million YTD 2016.

Balance sheet

Total assets as at 30 June 2017 amounted to USD 2,182 million compared to USD 2,264 million as at 31 December 2016, a decrease of USD 82 million.