investor presentation.pptx

Investor PresentationSeptember 2015

1

Forward-Looking Statements

Statements herein that are not historical facts are forward looking statements within the meaning of thePrivate Securities Litigation Reform Act of 1995, including, without limitation, statements as to theexpectations, beliefs and future expected business, financial performance and prospects of the Company.These forward-looking statements are based on our current expectations and are subject to certain risks,assumptions, trends and uncertainties that could cause actual results to differ materially from thoseindicated by the forward-looking statements. Among the factors that could cause actual results to differmaterially include oil and natural gas prices, the level of offshore expenditures by energy companies,variations in energy demand, changes in day rates, cancellation or renegotiation by our customers ofdrilling contracts, letter agreements or letters of intent or the exercise of early termination provisions,risks associated with fixed cost drilling operations, cost overruns or delays on shipyard repair, constructionor transportation of drilling units, maintenance and repair costs, costs or delays for conversion or upgradeprojects, operating hazards and equipment failure, risks of collision and damage, casualty losses andlimitations on insurance coverage, customer credit and risk of customer bankruptcy, conditions in thegeneral economy and energy industry, weather conditions and severe weather in the Company’s operatingareas, increasing complexity and costs of compliance with environmental and other laws and regulations,changes in tax laws and interpretations by taxing authorities, civil unrest and instability, terrorism andhostilities in our areas of operations that may result in loss or seizure of assets, the outcome of disputesand legal proceedings, effects of the change in our corporate structure, and other risks disclosed in theCompany’s filings with the U.S. Securities and Exchange Commission. Each forward-looking statementspeaks only as of the date hereof, and the Company expressly disclaims any obligation to update or reviseany forward-looking statements, except as required by law.

2

Company Overview & Investment Highlights

Market Dynamics

Delivering Shareholder Value

Conclusion

Rowan Has Evolved into a Pure Play, High-Spec Offshore Driller

COMPANY OVERVIEW & INVESTMENT HIGHLIGHTS

5

Rowan Overview & Investment Highlights

As a result of our timely strategic decisions and investments,Rowan is well positioned to navigate the current challenging market

Strong financial position

Investment Highlights

• RDC: NYSE-listed

• Investment Grade (BBB- / Baa3)

• 3,708 direct employees worldwide (2)

• 32 offshore drilling units

• 4 UDW drillships

• 28 Jack-ups(3)

• 19 High-Spec(1) and 8 Premium

(1) High-specification defined as rigs with a two million pound or greater hook-load capacity(2) As of August 11, 2015(3) Includes one cold stacked commodity jack-up

1

2

3

4

5

Company Overview

6

Competitive differentiation in drilling demanding wells

High-specification(1) fleet well positioned in key industry segments

Solid contract backlog diversified among premium customer base, geographic regions and asset types

Experienced and loyal workforce


Rowan is Focused on Demanding Drilling Services1

West Franklin

Wil-K

Al-Shaheen

“Our mission is to be recognized by our customers as the most efficient and capable provider of demanding contract drilling services”

Rowan ranks #1 among offshore drillers for HPHT applications four out of the last five Energypoint

Research Inc. surveys7

Blackbeard

Extended Reach Gas

Forties Field

North Platte

Heidelberg

Demanding Drilling Requirements achieved by Rowan:Temperatures up to 450°FDrilling depths beyond 30,000 ft.Pressures exceeding 20,000 psiHookloads exceeding 2,000,000 lbs.Ultra Harsh EnvironmentsJU water depths exceeding 400 ft.

Jackdaw

Examples of demanding wells drilled by Rowan

Ekofisk


Rowan Has a Leading Position in High-Spec Jack-ups 2

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• 2,000,000+ lb hookloadcapability

• Rugged and reliable legs and jacking system

• High pressure drilling systems

• Backlog extending into 2024

• Valued jack-up customers

High-Specification Jack-up Fleet Well Positioned to

Outperform


Best-in-class drillships, all on contract

• Dual, redundant seven-ram BOPs

• 1,250 ton hook load

• Designed and equipped for 12,000 foot water depth

• All four contracted into 2017 and beyond

• Valued UDW customers

Rowan Ultra-Deepwater Drillships are Best-in-Class 2

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http://www.repsol.com/es_en/

http://www.repsol.com/es_en/

Rowan’s Fleet Strategically Positioned in Global Markets2

10


Rowan has Solid Backlog with Diversity of Customers, Geographic Regions, and Asset Base3

Current Rowan contract backlog as of 07/20/2015

Contract Backlog by Region & Asset Type

USD Billions

43%

34%

16%4% 3%

1%0%

0%

Deepwater Middle EastNorway TrinidadUK Southeast AsiaTunisia Gulf of Mexico

-

500

1,000

1,500

2,000

2015 2016 2017 2018+

Contract Backlog by Year

USD Millions

Contract Backlog by Customer Type

Majors / Independent67%

NOCs33%

Total backlog of $4.4B that extends to 2024

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Note: Approximately 2/3 of our backlog is with NOCs or investment grade customers


4 Strong Financial Position

Strong balance sheet / Investment grade credit rating (BBB- / Baa3) provides:

Access to capital even in challenging markets

The ability to grow opportunistically

Attractive debt maturity profile with significant untapped borrowing capacity available from $1.5B revolver

Projected free cash flow from existing backlog exceeds debt maturities through 2018

*Weighted-average annual interest rate is 5.6%

2042 2044

Outstanding Debt is $2.8 Billion* as of June 30, 2015

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

5.0

00

%

7.8

75

%

4.8

75

%

4.7

50

%22

.5 b

ps

(un

dra

wn

)Available $1.5B

revolver

5.4

00

%

5.8

50

%

12

USD

Millions


4 Strong Financial Position

$0$200$400$600$800

$1,000$1,200$1,400$1,600$1,800$2,000

Debt Maturities Through 2017

Newbuild Commitments Through 2017

Rowan has $0 in Newbuild Capex Commitments and only $400mm in Debt Maturities through 2017

In M

illio

ns

Total: ~6,300

Total: ~11,000

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92-year history of operating excellence

Culture of continuous improvement

Experienced and loyal employees with proven industry leadership

Strong commitment to safe and reliable operations supports goal of highest customer satisfaction

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Rowan Has an Experienced and Loyal Workforce5

Rowan is one team built around great equipment, great people, and shared mission and values



Market Dynamics


Conclusion

Uncontracted Newbuild Deliveries Pushing to the RightJack-ups

Schedule

d R

ig D

eliveri

es

/ Q

tr.

• 120 uncontracted jack-ups on order• >40% have delayed delivery by 6+ months

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Majority of uncontracted newbuildjack-ups are at Chinese shipyards, which have agreed to delay deliveries with little resistance thus far

Includes data supplied by IHS-Petrodata, Inc; Copyright 2015 and Rowan Companies (as of 27-AUG- 2015)

74 units

46 units

Build Country

China

Other

0

5

10

15

20

25

30

35

Before3Q15

3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 After4Q16

Original Delivery Date

Current Delivery Date

16

MARKET DYNAMICS

A Roadmap to RecoveryJack-ups

• Sluggish demand forecast for several years likely results in:• Less competitive rigs stacking after current contract• Many uncontracted newbuilds struggling to contract• Active modern rigs from established drilling contractors winning work

• Market recovers after supply is reduced and demand rebounds

Includes data supplied by IHS-Petrodata, Inc; Copyright 2015, Rystad Energy and Rowan Companies (as of 27-AUG- 2015)

Cu

rre

nt

YE

20

15

YE

20

16

YE

20

17

YE

20

18

YE

20

19

YE

20

20

Uncontracted Newbuilds

Active Fleet

Stacked Rigs

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Older stacked rigs unlikely to reactivate

100+ stacked

rigs

MARKET DYNAMICS

0

2

4

6

8

10

12

14

16

18

20

Current By YE 2020

19Rowan High-Spec

Jack-ups

Includes data supplied by IHS-Petrodata, Inc. Copyright 2015 (as of 08/18/15) and Rowan Companies

Customers Demand Higher-Specification Rigs

• Drilling challenging

wellbore designs

• Focused on achieving

lower wellbore costs

• Higher regulatory

standards

Number of High-Specification Jack-Ups

More Capable Rigs Likely to Work Through the CycleJack-ups

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MARKET DYNAMICS

• 38 uncontracted floaters• >50% have delayed delivery by 6+ months

Uncontracted Newbuild Deliveries Pushing to the RightDrillships and Semi-Submersibles

Schedule

d R

ig D

eliveri

es

/ Q

tr.

Includes data supplied by IHS-Petrodata, Inc; Copyright 2015 and Rowan Companies (as of 27-AUG-2015)

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2216

Build Country

Singapore/S. Korea

Other

Majority of uncontracted newbuildfloaters are at Singaporean/S. Korean shipyards, which continue to agree to delivery delays but starting to impose significant financial penalties on buyers

Recent delivery delays have resulted in cost increases of $50-$100M per rig

0

2

4

6

8

10

12

14

16

18

20

Before3Q15

3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 After4Q16

Original Delivery Date

Current Delivery Date

MARKET DYNAMICS

A Roadmap to RecoveryDrillships & Semi-Submersibles

• Sluggish demand forecast for several years likely results in:• Less competitive rigs stack after current contract• Many uncontracted newbuilds struggle to contract• Active modern rigs from established drilling contractors winning work

• Market recovery after supply is reduced and demand rebounds

Includes data supplied by IHS-Petrodata, Inc; Copyright 2015, Rystad Energy and Rowan Companies (as of 27-AUG- 2015)

Cu

rre

nt

YE2

01

5

YE2

01

6

YE2

01

7

YE2

01

8

YE2

01

9

YE2

02

0

Uncontracted Newbuilds

Active Fleet

Stacked

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MARKET DYNAMICS

75+ stacked

rigsOlder stacked rigs unlikely to reactivate

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More Capable Rigs Likely to Work Through the CycleDrillships & Semi-Submersibles

Best-in-Class Specifications:

• 1,250 ton hook load

• Dual 7-ram blowout preventers

• Managed Pressure Drilling capable

• Advanced Riser Gas Handling

• 12,000 ft water depth equipped

• IMO Tier III emissions compliance

Few rigs possess the specifications required for today’s demanding wells and pending regulations

MARKET DYNAMICS


Market Dynamics


Conclusion

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Priorities to Deliver Shareholder Value

Rowan will improve our return on assets,profit margins, and maximize the earningspower of our fleet

StrongFinancialReturns

Customers want: • Safe and reliable operations• Managed operational risk • Procedural discipline• Low flat spot time• Solid counterparty stability

HighestCustomer Satisfaction

Employees want to be part of a winninghigh- performing team, a career path with development opportunities, and a healthywork-life balance

Best PlaceTo Work

DELIVERING SHAREHOLDER VALUE

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Rowan is Focused on Strong Financial Returns

Execution

Cost Control

Optimal Capital Allocation

StrongFinancialReturns


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Executing Operational Efficiency

(1) Out-of-Service Time (OOS) are those days when a rig is out of service and is not able to earn revenue. The Company may be compensated for certain out-of-service days, such as for shipyard stays or for rig transit periods preceding a contract; however, recognition of any such compensation is deferred and recognized over the period of drilling operations.

Rowan is focused on maintaining low levels of operational downtime and reducingout-of-service time to drive higher earnings and improve margins

0%

1%

2%

3%

4%

Unbillable Operational DowntimeJack-up Target: 2.5% Drillship Target: ~5%

Out-of-Service Time (OOS) (1)

FY 2015 Target: 3-6% (excludes idle time)

0%

5%

10%

15%

20%

25%

30%


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Cost Control: Rowan is Focused on Cost Efficiency

Cost Structure• Review back office and support processes for

efficiency and focus on controlling off-rig costs

• Reducing costs of offshore crews

Cost

Control

• Streamline maintenance systems

• Optimize preventive maintenance

MaintenanceSystems

Rig Inventories

• Optimize inventories of parts and capital spares

• Reduce costs by strategically sourcing with key vendors

Performance Management

• Drive performance through strong key performance

indicators and clear incentives at regional and rig levels


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Cost Control Focus Has Had Material Impact

2015 Projections

Preliminary (Nov.)

Year-End (Feb.)

May Current Reduction

Drilling Expense

$1,130 -$1,160

$1,100 -$1,120

$1,015 -$1,030

$1,000 -$1,010

~12%

SG&A $133 - $136 $120 - $130 $115 - $120 $115 - $120 ~13%

Non-newbuildCapex

$250 - $310 $190 $190 $190~25% -

40%

$ in millionsDELIVERING SHAREHOLDER VALUE

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Optimal Capital Allocation: Options to Maximize Shareholder Value

Dividends• Enhance shareholder value through a regular quarterly

cash dividend

Optimal

Capital

Allocation Debt Repayment

Share Repurchases

Upgrades of Existing Rigs

As Rowan generates free cash flow, we will consider all capital allocation options while maintaining a strong balance sheet

Asset Acquisitions

and Divestitures

• In this uncertain time, we stay the course. However,

we will continue to opportunistically consider share

repurchases

• Consider early retirement of debt to maintain solid

balance sheet

• Consider acquisition of quality assets if pricing and

contract opportunities are attractive

• Consider building assets against contracts with

suitable rate and term

• Continue divesting older assets

• Invest in older assets only if returns are clear



Market Dynamics


Conclusion

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Rowan is Positioned to Benefit from its Strategic Actions

Competitive differentiation in drilling demanding wells 1

High-specification fleet well positioned in key industry segments

2

Solid contract backlog diversified among premiumcustomer base, geographic regions and asset types3

4 Strong financial position

5 Experienced and loyal workforce

Appendix

Worldwide Marketed Jack-up Utilization has dropped to 82%

Includes data supplied by IHS-Petrodata, Inc; Copyright 2015

US GOM

Indian Ocean

North Sea

Mediterranean

Middle East

Southeast AsiaMexico

C&S America

West AfricaAustralia

45%

22 Rigs

82%

50 Rigs92%

12 Rigs

74%

27 Rigs

84%

37 Rigs

50%

2 Rigs

69%

70 Rigs

91%

150 Rigs

63%

16 Rigs

88%

50 Rigs

Marketed Supply: 483 units

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APPENDIX

Jack-up Market Bifurcation on Utilization Continues

20

40

60

80

100

IS, MS, MC <300'IC 300'IC 350'+ IC(including High Spec)

%

59 units

124 units

141 units

218 units

Worldwide jack-up total utilization by rig class

33

APPENDIX


While High-Spec Jack-ups Still Command Premium Rates; No Rig Class is Immune to the Cycle

$0

$50,000

$100,000

$150,000

$200,000

$250,000

IS, MS, MC <300'IC 300'IC 350'+ IC(including High Spec)

~$71K

~$94K

~$108K

~$172K

Earned day rates worldwide by rig class

USD

34

APPENDIX


USA

Indian Ocean

Southeast Asia

C&S America

West AfricaAustralia

95%

37 Rigs

83%

29 Rigs

88%

26 Rigs

100%

7 Rigs

100%

1 Rig

57%

7 Rigs

0%

1 Rig

Mediterranean

66%

3 Rig

Worldwide Marketed Drillship Utilization has dropped to 86%

Marketed Supply: 113 units

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APPENDIX


10,000’+ Utilization Remains Above 85% … So Far

50

60

70

80

90

100

<5,000' 5,000'-7,499' 7,500'-9,999' 10,000'+

%

*Floater Market includes drillships and semis


120 units

47 units

99 units

Worldwide floater total utilization by water depth

44 units

36

APPENDIX

Later Generation Floaters Attain Higher Rates

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

<5,000' 5,000'-7,499' 7,500'-9,999' 10,000'+

~$516K

~$354K

~$380K

~$422K

Earned day rates worldwide by water depth

*Floater Market includes drillships and semis

Includes data supplied by IHS-Petrodata, Inc; Copyright 2015 37

APPENDIX

Region Jack-ups ($K/day) Jack-ups ($K/day)

Gulf of Mexico Mid $40s – Mid $50s Low – Mid $50s

Middle East Low $50s – Mid $60s Mid $50s – Mid $70s

U.K. North Sea Mid – High $70s Mid – High $80s

Norway North Sea Mid $130s - Low $140s Low – Mid $160s

Southeast Asia Mid $40s – Low $50s Mid – High $50s

Trinidad Mid $60s – Mid $70s Mid $60s – Low $70s

As of 08/05/2015. Ranges exclude mobilization amortization and rebills. Daily operating costs vary by rig class and region. Higher capable rigs

generally earn higher day rates and typically have higher operating costs per day. During shipyard stays, crew and other personnel-related costs are

usually capitalized rather than expensed.

Region Drillships ($K/day) Drillships ($K/day)

Gulf of Mexico Low $150s – Low $160s High $160s – High $170s

Current Rowan Avg. Regional Offshore Rig Operating Costs

38

APPENDIX

As of August 2015 As of September 2014

58%

10%

14%

3%

1% 3%

10%

Labor & Fringes

Employee-related *

R&M

Insurance

Rig moves

Rebillables

All other **

* Employee-related costs include training, catering and crew transportation

** Other includes rentals, medics, agent commissions, satellite

communications and other misc. drilling costs

Percentage of total operating costs

2015 Operating Cost Components

39

APPENDIX

Rowan Guidance as of August 5, 2015

Key metrics:2Q 2015

Actual

3Q 2015

Projected

FY 2015

Projected

Jack-up Operational Downtime

(unbillable)Slightly over 1% 2.5% 2.5%

Drillship Operational Downtime (1) ~13% N/ASlightly higher than

5%

Contract Drilling Expenses

(excluding rebills)$241 MM $265 - $270 MM $1.000 -1.010 BN

SG&A $31 MM ~$31MM $115 - $120 MM

Depreciation $95 MM ~$102MM $385 - $395 MM

Interest Expense,

Net of Capitalized Interest$31 MM ~$41MM $145 - $150 MM

Effective Tax Rate ~8%Slightly higher than

10%-15% range10-15%

Capital Expenditures $102 MM N/A $750 - $775 MM

(1) Rowan expects operational downtime for the drillships to be less than 5% after approximately six-months up to

one year break in period during which operational downtime is likely to be somewhat higher.

APPENDIX

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Investor Contacts:

Chris Pitre Director, Investor Relations and Corporate [email protected]+1 713 968 6642

Carrie PratiManager, Marketing and Investor [email protected]+1 713 960 7581

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