SHELF DRILLING, LTD. PRESS RELEASE SHELF DRILLING REPORTS FOURTH QUARTER 2023 RESULTSDubai, UAE ,March 4, 2024 -Shelf Drilling, Ltd. ("Shelf Drilling ", "SDL" and, together with its subsidiaries, the "Company", OSE: SHLF) announces results for the fourth quarter and full year of 2023 endedDecember 31 . The results highlights will be presented by audio conference call onMarch 4, 2024 at6:00 pm Dubai time /3:00 pm Oslo time. Dial-in details for the call are included in the press release posted onFebruary 27, 2024 and on page 3 of this release.David Mullen , Chief Executive Officer, commented: "The fourth quarter of 2023 concluded a very positive year forShelf Drilling . We generated EBITDA of$88 million , bringing the full year total to$311 million , in line with the guidance we provided at the beginning of 2023. We delivered the best safety performance in our company's history, and we completed our most intense period of major out of service projects, in aggregate on time and on budget. The execution of our refinancing transaction late in the year has resulted in a significantly improved capital structure with a clear runway until 2029." Mullen added: "Oil and gas consumption has reached record levels and is expected to increase for many years to come with shallow water activity in our markets playing a critical role. Global jack-up utilization has reached 94%, and dayrate momentum has accelerated over the past 18 months. There may possibly be some reduction inSaudi Arabia in the quarters ahead, but we expect incremental demand in other regions to sustain strong level of jack-up activity and utilization for the foreseeable future. As ofDecember 31, 2023 , our backlog was$2.3 billion , with 35 of our 36 rigs under contract, and we have a solid pipeline of new marketing opportunities for uncontracted days in 2024 and 2025. Our long-term track record of diligent cost management and financial discipline, combined with our operational execution capabilities and streamlined capital structure, will positionShelf Drilling very well to create long-term value for all our stakeholders." Fourth Quarter Highlights o Q4 2023 adjusted revenues of$238.8 million . o Q4 2023 adjusted EBITDA of$88.0 million , representing an adjusted EBITDA margin of 37%, including$(3.0) million adjusted EBITDA fromShelf Drilling (North Sea ), Ltd. ("SDNS"). o Full year 2023 adjusted revenues of$893.8 million , adjusted EBITDA of$311.5 million and adjusted EBITDA margin of 35%. o Q4 2023 net loss attributable to controlling interest of$16.8 million . This includes$27.7 million loss on debt extinguishment related to our debt refinancing transaction inOctober 2023 . o FY 2023 capital expenditures and deferred costs totaled$225.8 million , including$11.5 million at SDNS. o The Company's cash and cash equivalents balance atDecember 31, 2023 was$98.2 million , including$27.7 million at SDNS. o Contract backlog of$2.3 billion atDecember 31, 2023 across 35 contracted rigs with weighted average dayrate of$83.4 thousand . o InDecember 2023 , the Shelf Drilling Perseverance secured a new contract withPetroVietnam Domestic Exploration Production Operating Company Limited which is expected to start inVietnam inJuly 2024 for a firm term of approximately 16 months. o InFebruary 2024 , the Baltic secured a new contract expected to start inApril 2024 inNigeria for a firm term of approximately 70 days. o OnMarch 1, 2024 , the Company executed an agreement related to the revolving credit facility that increases the total facility size from$125.0 million to$150.0 million . o Financial guidance for full year 2024 is included in "2024 Financial Guidance" section of the Q4 2023 results highlights presentation on our website. Fourth Quarter Results Adjusted revenues were$238.8 million in Q4 2023 compared to$264.2 million in Q3 2023. The$25.4 million (10%) sequential decrease in revenues was primarily due to lower effective utilization across the fleet, as four fewer rigs were operating for the full quarter of Q4 2023, as well as a decline in other revenues as one rig inNorway completed its bareboat charter contract in Q4 2023. Effective utilization decreased to 85% in Q4 2023 from 90% in Q3 2023, primarily due to the contract preparation project for one rig inIndia , the contract completion of one rig inWest Africa inSeptember 2023 and planned out of service for two rigs inSaudi Arabia , partially offset by the commencement of new contracts for three rigs in mid-Q3 2023 inWest Africa ,United Kingdom andItaly , and for one rig inIndia in Q4 2023. Average earned dayrate decreased to$80.2 thousand in Q4 2023 from$81.5 thousand in Q3 2023 mainly due to lower revenue contribution for two rigs inWest Africa . Total operating and maintenance expenses increased by$6.0 million (5%) in Q4 2023 to$134.9 million compared to$128.9 million in Q3 2023. The sequential increase was primarily due to higher shipyard costs for one rig inIndia ahead of its new contract commencement expected inMarch 2024 , higher demobilization costs for two rigs inWest Africa , one that completed its contract inSeptember 2023 and one rig that commenced a new contract inOctober 2023 , and higher demobilization and maintenance costs for one rig inNorway which completed its contract in Q4 2023. This was partially offset by lower maintenance costs for one rig in theUnited Kingdom that started a new contract in Q3 2023 and lower expenses for fleet spares. General and administrative expenses decreased by$6.6 million in Q4 2023 to$13.6 million as compared to$20.2 million in Q3 2023. The sequential decrease was primarily due to the$5.7 million provision for credit losses recorded in Q3 2023, primarily at SDNS. Adjusted EBITDA for Q4 2023 was$88.0 million compared to$114.8 million for Q3 2023. The adjusted EBITDA margin of 37% for Q4 2023 decreased from 43% in Q3 2023. Capital expenditures and deferred costs of$47.6 million in Q4 2023 increased by$12.8 million from$34.8 million in Q3 2023. This increase was primarily related to higher spending for two rigs inSaudi Arabia undergoing out of service projects in Q4 2023, one rig inIndia preparing for a new contract and higher spending on fleet spares. This was partially offset by lower spending for one rig each inItaly andIndia which started their new contracts in Q3 2023 and early Q4 2023. Q4 2023 ending cash and cash equivalents balance of$98.2 million decreased by$46.5 million from$144.7 million at the end of Q3 2023. The Q4 2023 ending cash and cash equivalents balance for SDNS was$27.7 million , leaving$70.5 million of cash and cash equivalents for SDL excluding SDNS. The decrease in cash and cash equivalents was primarily due to the successful completion of the comprehensive debt refinancing transaction and a sequential decrease in EBITDA, partially offset by a favorable impact from changes in net working capital. The Form 10-K Equivalent, which includes the Consolidated Financial Statements, and a corresponding slide presentation to address the results highlights for Q4 2023 are available on the Company's 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: https://register.vevent.com/register/BI43ae74b1965c44669e3ce1b0d96e3ed9 Participants must register for the call using online registration. Upon registering, each participant will be provided with call details. AboutShelf Drilling Shelf Drilling is a leading international shallow water offshore drilling contractor with rig operations acrossMiddle East ,Southeast Asia ,India ,West Africa , Mediterranean andNorth Sea .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, users of this information 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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