SHELF DRILLING, LTD. PRESS RELEASE SHELF DRILLING REPORTS SECOND QUARTER 2020 RESULTSDubai, UAE ,August 13, 2020 -Shelf Drilling, Ltd. ("Shelf Drilling " and, together with its subsidiaries, the "Company", OSE: SHLF) announces results for the second quarter of 2020 endingJune 30 . The results highlights will be presented by audio conference call onAugust 13, 2020 at6:00 pm Dubai time /4:00 pm Oslo time. Dial-in details for the call are included in the press release posted onAugust 10, 2020 and on page 3 of this release.David Mullen , Chief Executive Officer, commented: "Despite an extremely challenging backdrop,Shelf Drilling delivered strong financial and operating performance for the second quarter of 2020 with an Adjusted EBITDA margin of 40% and solid operating cash flows. In response to the challenges imposed by the COVID-19 pandemic, we took immediate actions to protect the health of our employees, ensure continuity of our operations, reduce costs and preserve liquidity. I would especially like to recognize the extraordinary contribution of our people in achieving these results with their efforts and resilience throughout this challenging period." Mullen added: "The offshore jack-up rig market outlook has substantially deteriorated since the beginning of the year, with a number of contract terminations and suspensions with limited new fixture activity since the onset of the COVID-19 pandemic. I expect to see continued pressure on dayrates and lower rig utilization for the near to medium term. However, I remain confident that our customer relationships, our efficient operating platform and the quality and dedication of our people will continue to makeShelf Drilling the international jack-up contractor of choice." Second Quarter Highlights o Q2 2020 Revenues of$155.0 million , a 14.5% sequential decrease compared to Q1 2020. o Q2 2020 Adjusted EBITDA of$61.5 million , representing an Adjusted EBITDA Margin of 40%. o Q2 2020 Net Income of$8.1 million . o Q2 2020 Capital Expenditures and Deferred Costs totaled$26.5 million , including$13.3 million associated with rig acquisitions. o The Company's cash and cash equivalents balance atJune 30, 2020 was$92.2 million , up from$69.0 million atMarch 31, 2020 . o The Company's total debt atJune 30, 2020 was$1.0 billion , including$55.0 million drawn on the Company's revolving credit facility. o$1.6 billion in contract backlog atJune 30, 2020 across 30 contracted rigs. Second Quarter Results Revenue was$155.0 million in Q2 2020 compared to$181.4 million in Q1 2020. The$26.4 million (14.5%) sequential decrease in revenue was due to a combination of lower dayrates and effective utilization. The average dayrate decreased to$57.8 thousand in Q2 2020 from$64.2 thousand in Q1 2020 primarily explained by lower pricing where customers renegotiated dayrates as a result of the COVID-19 pandemic. Effective utilization decreased to 84% in Q2 2020 from 92% in Q1 2020, mostly due to the completion of two contracts in early Q2 2020 inNigeria andIndia . Total operating and maintenance expenses decreased by$18.1 million (17.9%) in Q2 2020 to$82.9 million compared to$101.0 million in Q1 2020. The sequential decrease was due to lower operating and personnel costs related to rigs which were not operating or whose operations were suspended or terminated during Q2 2020, reduced maintenance and shipyard expenses and reduced costs from actions taken to offset reductions in dayrates and activity. General and administrative expenses were$12.1 million in Q2 2020 compared to$13.3 million in Q1 2020. General and administrative expenses in Q2 2020 included$1.5 million of one-time restructuring costs and$2.3 million of bad debt expense. The significant reduction in recurring general and administrative expenses was the result of cost savings and restructuring measures implemented at the Company's headquarters inApril 2020 . Adjusted EBITDA for Q2 2020 was$61.5 million compared to$67.6 million for Q1 2020. The Adjusted EBITDA margin of 40% for Q2 2020 increased from 37% in Q1 2020 despite the significant reduction in revenue. Capital expenditures and deferred costs of$26.5 million in Q2 2020 decreased by$46.0 million from$72.5 million in Q1 2020. This included$10.4 million in Q2 2020 for the reactivation of the Shelf Drilling Enterprise as well as$2.9 million relating to the reactivation and operations readiness projects on other recently acquired rigs, compared to$55.0 million associated with rig acquisitions in Q1 2020,$50.7 million of which related to theShelf Drilling Enterprise . Capital expenditures and deferred costs, excluding rig acquisitions, decreased across the fleet to$13.2 million in Q2 2020 from$17.5 million in Q1 2020. Q2 2020 ending cash balance of$92.2 million increased by$23.2 million from$69.0 million at the end of Q1 2020, primarily due to lower operating costs and capital expenditures and deferred costs. The Quarterly Report, which includes the Condensed Consolidated Interim Financial Statements is available on our website. A corresponding slide presentation to address the results highlights for Q2 2020 is also available on our website. For further queries, please contact:Greg O'Brien , Executive Vice President and Chief Financial OfficerShelf Drilling, Ltd. Tel.: +971 4567 3616 Email: greg.obrien@shelfdrilling.com Dial in Details for the Audio Conference call: Participants will receive conference access information only when they register for the conference via the link below: Online Registration: http://emea.directeventreg.com/registration/8747038 Participants must register for the call using online registration. Upon registering, each participant will be provided with call details and a Registrant ID. Call reminder will also be sent to registered participants via email the day prior to the event. Conference ID number: 8747038 AboutShelf Drilling Shelf Drilling is a leading international shallow water offshore drilling contractor with rig operations acrossMiddle East ,Southeast Asia ,India ,West Africa and the Mediterranean.Shelf Drilling was founded in 2012 and has established itself as a leader within its industry through its fit-for-purpose strategy and close working relationship with industry leading clients. The Company is incorporated under the laws of theCayman Islands with corporate headquarters inDubai, United Arab Emirates . The Company is listed on theOslo Stock Exchange under the ticker "SHLF". Special Note Regarding Forward-Looking Statements Matters discussed in this announcement may constitute forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as "believe", "expect", "anticipate", "strategy", "intends", "estimate", "will", "may", "continue", "should" and similar expressions. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and may be beyond its control. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. Given these factors, you should not place undue reliance on the forward-looking statements. Additional information aboutShelf Drilling can be found at www.shelfdrilling.com. This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
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