Shelf Drilling : Reports First Quarter 2021 Results

PRESS RELEASE

SHELF DRILLING REPORTS FIRST QUARTER 2021 RESULTS

Dubai, UAE, May 11, 2021 - Shelf Drilling, Ltd. ("Shelf Drilling" and, together
with its subsidiaries, the "Company", OSE: SHLF) announces results for the first
quarter of 2021 ending March 31. The results highlights will be presented by
audio conference call on May 11, 2021 at 6:00 pm Dubai time / 4:00 pm Oslo time.
Dial-in details for the call are included in the press release posted on May 5,
2021 and on page 3 of this release.

David Mullen, Chief Executive Officer, commented: "We delivered good operational
and financial performance in the first quarter of 2021 despite the very
challenging environment imposed by the COVID-19 pandemic. The recent surge in
infections has been particularly harmful in several of the geographies in which
we work.  The sequential increase in Revenue and EBITDA was primarily due to
several rigs that returned to work or started new contracts at the end of 2020
or early 2021 combined with a further reduction in operating expenses."

Mullen added: "We are observing encouraging signs of an improving jack-up market
with the recent recovery and stabilization of the oil price. We have seen a
number of recent contract awards and have built a solid pipeline of marketing
opportunities. The $310 million issuance in March 2021 of new senior notes due
in 2024 improves our balance sheet, simplifies our capital structure and
significantly increases our liquidity position and financial flexibility. We
remain focused on delivering safe and best-in-class services to our customers
and believe Shelf Drilling is well positioned to capitalize on opportunities in
our sector."

First Quarter Highlights

o Q1 2021 Revenues of $129.7 million, a 7% sequential increase compared to Q4
2020.
o Q1 2021 Adjusted EBITDA of $46.5 million, representing an Adjusted EBITDA
Margin of 36%.
o Q1 2021 Net Loss of $16.4 million, including $10.1 million in loss on debt
extinguishment in relation to our debt refinancing transactions.
o Q1 2021 Capital Expenditures and Deferred Costs totaled $16.6 million. 
o The Company's cash and cash equivalents balance at March 31, 2021 was $287.3
million.
o The Company's total debt at March 31, 2021 was $1.2 billion.
o $1.3 billion in contract backlog at March 31, 2021 across 27 contracted rigs.
o In January 2021, the Company received a notification from customer on early
termination of operations for the High Island VII and Compact Driller to August
2021 from February 2023 and June 2022, respectively.
o In February 2021, the Company completed the sale of the Shelf Drilling Journey
for net proceeds of $76.6 million. 
o In March 2021, the Company completed a private offering of $310.0 million
aggregate principal amount of 8.875% senior secured notes due 2024, to repay and
terminate the Company's revolving credit facility, due April 2023, cash
collateralize bank guarantees issued under the revolving credit facility and to
redeem and repurchase all of the outstanding 8.75% Senior Secured Notes, due
November 15, 2024.
o In March 2021, the Company secured a two-year contract extension until
February 2023 for the Trident 16 in direct continuation of its current contract
for operations in Egypt. 
o In April 2021, the Company received an award for a three-year contract for the
J.T. Angel with planned start-up of operations in India in Q4 2021. 
o In May 2021, the Company received an award for a three-year contract for the
Trident XII with planned start-up of operations in India in Q4 2021 and secured
a ten-year extension for the High Island IX in Saudi Arabia. 
o In addition, the Company completed in April 2021 the sale of the Trident 15,
Key Hawaii and Galveston Key, which were recorded as assets held for sale as of
March 31, 2021.

First Quarter Results

Revenues were $129.7 million in Q1 2021 compared to $121.3 million in Q4 2020.
The $8.4 million (6.9%) sequential increase in revenues was primarily due to
higher effective utilization. Effective utilization increased to 77% in Q1 2021
from 69% in Q4 2020, primarily due to the startup of one new contract in
Thailand, the full quarter of operations of two rigs which started contracts
during Q4 2020, the return to operations of one rig each in Saudi Arabia and
Nigeria which were previously suspended and completion of extended out of
service time for one rig in Saudi Arabia. This was partly offset by the
completion of two contracts in Tunisia and Nigeria, and the planned out of
service of one rig in Saudi Arabia. The average dayrate increased to $56.3
thousand in Q1 2021 from $55.8 thousand in Q4 2020. 

Total operating and maintenance expenses decreased by $4.3 million (5.4%) in Q1
2021 to $74.3 million compared to $78.6 million in Q4 2020. The sequential
decrease was primarily due to lower operating costs on rigs which were not
operating during Q1 2021 and lower maintenance and shipyard expenses, partly
offset by operating costs for the Shelf Drilling Enterprise which started a new
contract in Thailand. 

General and administrative expenses of $9.6 million in Q1 2021 decreased by $1.5
million as compared to Q4 2020 of $11.1 million. General and administrative
expenses in Q1 2021 included lower provision for doubtful accounts of $1.8
million due to the current year collection of aged receivables for which an
allowance was recorded in 2020. General and administrative expenses in Q1 2021
and Q4 2020 included $0.9 million and $1.1 million of non-cash share-based
compensation expense, respectively.

Adjusted EBITDA for Q1 2021 was $46.5 million compared to $31.8 million for Q4
2020. The Adjusted EBITDA margin of 36% for Q1 2021 increased from 26% in Q4
2020. 

Capital expenditures and deferred costs of $16.6 million in Q1 2021 decreased by
$12.3 million from $28.9 million in Q4 2020. This included a decrease in rig
acquisitions to $1.2 million in Q1 2021 from $10.2 million in Q4 2020 largely
related to the completion of the reactivation, upgrade and contract preparation
project on the Shelf Drilling Enterprise. Capital expenditures and deferred
costs, excluding rig acquisitions, decreased across the fleet to $15.4 million
in Q1 2021 from $18.7 million in Q4 2020, primarily due to decreased shipyard
activity in Saudi Arabia.

Q1 2021 ending cash and cash equivalents balance of $287.3 million increased by
$213.9 million from $73.4 million at the end of Q4 2020. The increase in cash
and cash equivalents was due to net cash proceeds of the private offering of
$310.0 million 8.875% Senior Secured First Lien Notes, due November 2024
completed in March 2021 and the receipt of the remaining cash proceeds from the
sale of the Shelf Drilling Journey, partially offset by the repayment of the
$80.0 million 8.75% Senior Secured Notes, due 2024 and the $55.0 million
outstanding balance under the Revolving Credit Facility.
 
The Quarterly Report, which includes the Condensed Consolidated Interim
Financial Statements, and a corresponding slide presentation to address the
results highlights for Q1 2021 are available on the Company's website.


For further queries, please contact: 
Greg O'Brien, Executive Vice President and Chief Financial Officer 
Shelf Drilling, Ltd. 
Tel.: [phone] 
Email: [e-mail]
 
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/6490408  

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: 6490408

About Shelf Drilling 
Shelf Drilling is a leading international shallow water offshore drilling
contractor with rig operations across the Middle 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 the Cayman Islands with its corporate
headquarters in Dubai, United Arab Emirates. The Company is listed on the Oslo
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, users of this information should not place undue reliance on the
forward-looking statements.

Additional information about Shelf 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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