Shelf Drilling : Reports Second Quarter 2021 Results

PRESS RELEASE

SHELF DRILLING REPORTS SECOND QUARTER 2021 RESULTS

Dubai, UAE, August 12, 2021 - Shelf Drilling, Ltd. ("Shelf Drilling" and,
together with its subsidiaries, the "Company", OSE: SHLF) announces results for
the second quarter of 2021 ending June 30. The results highlights will be
presented by audio conference call on August 12, 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 July 29, 2021 and on page 3 of this release.

David Mullen, Chief Executive Officer, commented: "The series of steps taken
since the beginning of the COVID-19 pandemic has ensured continuity of
operations and improvement in our liquidity position. The recovery of oil prices
since late 2020 is translating into improved demand for jack-up drilling
services. In total, we have secured 13 new contracts or extensions on existing
contracts adding 21 rig years of backlog thus far in 2021. We also continued our
selective asset divestiture efforts to increase financial flexibility and reduce
cost outlay for certain non-working rigs."

Mullen added: "As we anticipated, EBITDA declined sequentially during the second
quarter of 2021 following the completion of certain contracts in India and the
Middle East. We also commenced projects to bring two rigs suspended in 2020 back
into operation in the third quarter of 2021 and prepare four rigs for new
contracts scheduled to commence in late 2021 or early 2022. With a stronger
commodity price environment and our backlog position, we are very well
positioned heading into 2022."

Second Quarter Highlights

o Q2 2021 Revenues of $130.5 million, a 0.6% sequential increase compared to Q1
2021.
o Q2 2021 Adjusted EBITDA of $34.4 million, representing an Adjusted EBITDA
Margin of 26%.
o Q2 2021 Net Loss of $22.6 million.
o Q2 2021 Capital Expenditures and Deferred Costs totaled $26.5 million. 
o The Company's cash and cash equivalents balance at June 30, 2021 was $285.6
million.
o The Company's total debt at June 30, 2021 was $1.2 billion.
o Contract backlog of $1.6 billion at June 30, 2021 across 28 contracted rigs.
o In June 2021, the Company secured a one-year contract for the Shelf Drilling
Tenacious in Angola with planned start-up of operations in January 2022. In June
2021, the Company secured a short-term contract for the Shelf Drilling Mentor in
Congo also with planned start-up of operations in January 2022. Both rigs are
expected to be mobilized to West Africa during the fourth quarter of 2021.
o In June 2021, the Company secured a contract for the Baltic for operations in
Nigeria, which commenced in late June 2021 with an expected duration of
approximately one year.
o In July 2021, the Company executed an agreement to sell the High Island VII
for $4.2 million for non-drilling purposes. 

Second Quarter Results

Revenues were $130.5 million in Q2 2021 compared to $129.7 million in Q1 2021.
The $0.8 million (0.6%) sequential increase in revenues was primarily due to an
increase in average earned dayrate, mainly due to increased activity for higher
dayrate generating rigs.  This increase was partially offset by a decrease in
effective utilization to 71% in Q2 2021 from 77% in Q1 2021, primarily due to
the completion of contracts for three rigs in India and one rig in Oman.

Total operating and maintenance expenses increased by $7.4 million (10%) in Q2
2021 to $81.7 million compared to $74.3 million in Q1 2021. The sequential
increase was primarily due to higher maintenance and shipyard expenses for three
rigs that are preparing for new contracts (India and Angola) and two rigs that
were being prepared to return from suspension of operations (Italy and Saudi),
partially offset by a reduction in expenses on idle rigs. 
 
General and administrative expenses of $14.6 million in Q2 2021 increased by
$5.0 million as compared to Q1 2021 of $9.6 million. General and administrative
expenses in Q2 2021 included a $2.5 million provision for doubtful accounts
compared to a $1.8 million reversal of provision recorded in Q1 2021. General
and administrative expenses in Q2 2021 and Q1 2021 included $1.1 million and
$0.9 million of non-cash share-based compensation expense, respectively. 

Adjusted EBITDA for Q2 2021 was $34.4 million compared to $46.5 million for Q1
2021. The Adjusted EBITDA margin of 26% for Q2 2021 decreased from 36% in Q1
2021. 

Capital expenditures and deferred costs of $26.5 million in Q2 2021 increased by
$9.9 million from $16.6 million in Q1 2021. This increase was primarily due to
increased shipyard activity in India and Saudi Arabia and the initial contract
preparation work on the Shelf Drilling Tenacious. 

Q2 2021 ending cash and cash equivalents balance of $285.6 million decreased by
$1.7 million from $287.3 million at the end of Q1 2021. 
 
The Quarterly Report, which includes the Condensed Consolidated Interim
Financial Statements, and a corresponding slide presentation to address the
results highlights for Q2 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/1198978  

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: 1198978

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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