Financial results 3Q 2016

Oslo,26 October 2016

AGENDA

FINANCIAL RESULTS 3Q 2016

MARKET

OPERATIONS

SUMMARY

Income Statement – Key Figures

(USD mill) 3Q 2016 2Q 2016 Change

Operating revenues 210,4 215,3 (4,9)Recharged income 3,2 4,0 (0,8)Total revenues 213,6 219,3 (5,7)

Operating costs (91,4) (72,6) (18,8)Recharged expenses (3,1) (3,9) 0,8 Total operating expenses (94,5) (76,5) (18,0)

Oper. result before depr. (EBITDA) 119,1 142,8 (23,7)

Depreciation (70,2) (79,6) 9,4 Impairment (61,3) (159,0) 97,7 Operating result (EBIT) (12,4) (95,8) 83,4

Net financial items (17,3) (11,1) (6,2)Result before tax (29,7) (106,9) 77,2

Estimated tax (4,2) (7,1) 2,9 Net result (33,9) (114,0) 80,1

EBITDA Comparison 3Q 2016 vs. 2Q 2016

Financial Items Breakdown

(USD mill) 3Q 2016 2Q 2016 Change

Interest income 0,4 0,5 (0,1)Other financial income 0,6 - 0,6 Gains on financial instruments 2,8 9,3 (6,5)Financial income 3,8 9,8 (6,0)

Interest expenses (8,3) (9,7) 1,4 Losses on financial instruments (3,5) (11,1) 7,6 Other financial expenses (2,2) (1,9) (0,3)Financial expenses (14,0) (22,7) 8,7

Net foreign currency gain (7,1) 1,8 (8,9)

Net financial items (17,3) (11,1) (6,2)

Offshore Drilling Segment

(USD mill) 3Q 2016 2Q 2016 Change

Operating revenues 209,4 214,3 (4,9)Recharged income 3,2 4,0 (0,8)Total revenues 212,6 218,3 (5,7)

Operating costs (88,8) (68,7) (20,1)Recharged expenses (3,1) (3,9) 0,8 Total operating expenses (91,9) (72,6) (19,3)

Oper. result before depr. (EBITDA) 120,7 145,7 (25,0)

Depreciation (69,7) (79,0) 9,3 Impairment (61,3) (159,0) 97,7

Operating result (EBIT) (10,3) (92,3) 82,0

Engineering & Fabrication Segment

(USD mill) 3Q 2016 2Q 2016 Change

Operating revenues (external) 1,0 1,0 - Inter-segment revenues 0,6 0,2 0,4 Total operating revenues 1,6 1,2 0,4

Operating costs (3,2) (4,1) 0,9 Oper. result before depr. (EBITDA) (1,6) (2,9) 1,3

Depreciation (0,5) (0,6) 0,1

Operating result (EBIT) (2,1) (3,5) 1,4

Consolidated Balance Sheet

(USD mill)30 Sep 2016 30 Jun 2016 Change

Intangible assets - 11,8 (11,8)Property, plant & equipment 1 435,3 1 553,7 (118,4)Other non-current assets 20,2 19,9 0,3 Total non-current assets 1 455,5 1 585,4 (129,9)

Other current assets 266,1 467,2 (201,1)Cash and cash equivalents 391,0 132,9 258,1 Total current assets 657,1 600,1 57,0 Total assets 2 112,6 2 185,5 (72,9)

Equity 853,5 885,3 (31,8)

Non-current interest bearing debt 887,0 910,9 (23,9)Other non-current liabilities 101,3 102,2 (0,9)Total non-current liabilities 988,3 1 013,1 (24,8)

Current interest bearing debt 190,9 190,9 - Other current liabilities 79,9 96,2 (16,3)Total current liabilities 270,8 287,1 (16,3)Total equity and liabilities 2 112,6 2 185,5 (72,9)

Consolidated Cash Flow

(USD mill) 3Q 2016 2Q 2016 Change

Profit before income taxes (29,7) (106,9) 77,2 Depreciation and impairment 131,5 238,6 (107,1)Interest expense 9,6 11,1 (1,5)Changes in working capital 15,5 (42,3) 57,8 Unrealized loss/(gain) financial instruments 2,0 (10,3) 12,3 Cash generated from operations 128,9 90,2 38,7

Interest paid (8,5) (10,5) 2,0 Taxes paid (7,7) (8,0) 0,3 Net cash flow from operating activities 112,7 71,7 41,0

Net investment in fixed assets (1,9) (6,0) 4,1 Bollsta settlement 176,4 - 176,4 Cash flow used in investment activities 174,5 (6,0) 176,4

Proceeds from interest bearing loans 65,0 90,0 (25,0)Repayments of interest bearing loans (95,5) (217,1) 121,6 Cash flow used in financing activities (30,5) (127,1) 96,6

Foreign currency 1,4 (2,8) 4,2 Net change in cash and cash equivalents 256,7 (61,4) 314,0 Cash at beginning of period 132,9 197,1 (64,2)Cash at end of period 391,0 132,9 254,0

Offshore drilling EBITDA and margin

Fleet status

RIG DESIGN W DEPTH LOCATION CLIENT CONTRACT STATUS DAY RATE (USD) NEXT CRS

Bolette Dolphin DS/ Gusto P10' 12 000 Ivory Coast Anadarko May 2014 - July 2018 419 000/ 488 000 1Q 2019

Blackford Dolphin SS / Aker H-3 7 000 UK Chevron July '15 - January '17 428 000 2Q 2019

Belford Dolphin DS / LMG Marin 10 000 Malaysia Idle

Bideford Dolphin SS / Aker H-3 1 500 Norway Statoil January '14 - January '17 NOK 1048' + USD 301' 2Q 2019

Borgland Dolphin SS / Aker H-3 1 500 Norway Idle 1Q 2020

Bredford Dolphin SS / Aker H-3 1 500 Norway Idle 2Q 2017

Byford Dolphin SS / Aker H-3 1 500 UK BP April '13 - October '16 345 500 2Q 2020

Borgsten Dolphin Tender support / AH-3 UK Idle 1Q 2018

Borgholm Dolphin Accomodation / AH-3 UK Idle 4Q 2017

MID WATER FLOATERS NORWAY

MID WATER FLOATERS UK

ULTRA- / DEEPWATER UNITS

Continued high focus on cash discipline

Prepared for a challenging 2017

A high focus on cost reduction since 2014

Main focus on preserving cash through

Reducing operational cost for rigs in operation

Reducing capex on rigs in operation and idle rigs

Reducing lay up cost for idle rigs

Adjusting the organization to the market reality

Limited investment commitments for the company in the near to medium term

FINANCIAL RESULTS

MARKET

OPERATIONS

SUMMARY

Global market – floating units

A rebalancing of the oil market is emerging

Continued cold stacking and some scrapping due to overcapacity expected

E&P companies diverting spending to short cycle, higher return activity

Earlier recovery of the mid-water is expected to materialize as compared to the ultra-deepwater

NameWest NavigatorCOSLPioneerTransocean SearcherSonga TrymBredford DolphinPolar PioneerCOSLInnovatorWest VentureIsland InnovatorWest HerculesWest AlphaSonga DeeBorgland DolphinSonga DeltaBideford DolphinStena DonTransocean SpitsbergenLeiv EirikssonTransocean ArcticScarabeo 5Deepsea BergenDeepsea StavangerScarabeo 8COSLPromoterDeepsea AtlanticSonga EquinoxSonga EnduranceSonga EncourageSong Enabler

Contract Option Yard/under construction

Q3 Q4 Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4 Q1 Q22016 2017 2018

Norwegian floater market

There has been a considerable reduction in the utilization of the rig fleet in Norway during the last year and this is expected to continue into 2017, resulting in an increased number of stacked units

Few new visible contract opportunities in the near term

However, several new projects and in-field projects are being prepared for sanctioning in 2017 and beyond

As per October 2016

Source: DNB and the Company

Average dayrates Norway

NameOcean VanguardOcean NomadOcean PrincessTransocean ProspectWilHunterSertaoSedco 711Sedco 714West PhoenixParagon MSS1Stena SpeyByford DolphinBlackford DolphinOcean GuardianPaul B. Loyd, Jr.Ocean ValiantSedco 712Ocean PatriotWilPhoenixTransocean LeaderDeepsea Aberdeen

Contract Option Yard/under construction

Q4 Q1 Q2 Q3 Q42016 2017 2018

Q1 Q2 Q3 Q4 Q1 Q2 Q3

UK floater market

The utilization in the UK market is approaching a historical low

Requests and tender activity has increased during the last quarters for work with start up in 2017, with some contracts already awarded

A moderate improvement in drilling activity is expected

The low project and maintenance activity in general is affecting the accommodation segment, with limited short- term visibility

As per October 2016

Source: DNB and the Company

Average dayrates UK

Deepwater dayrates - worldwide

FINANCIAL RESULTS

MARKET

OPERATIONS

SUMMARY

Russia

New Zealand

Papua -New Guinea

Australia

Philippines

Japan

Brunei

Taiwan

South Korea

North Korea

Indonesia

Malaysia

Vietnam

Cambodia

LaosMyanmar

Sri Lanka

Madagascar

India

Mongolia

China

Mozambique

South Africa

Malawi

Pakistan

Zimbabwe

Botswana

Kirgistan

Tadschikistan

Somalia

Afghanistan

Tanzania

Namibia

Sambia

Kenya

Dschibuti

Qatar

Yemen

Uganda

Ethiopia

Usbekistan

Angola

Turkmenistan

Eritrea

Iran

Zaire

Saudi-Arabia

Sudan

Iraq

Kazakhstan

Azerbaijan

Congo

Argentina

Jordan

Central Africa

Chile

Gabun

Israel

Syria

Lebanon

Georgia

Cameroon

Chad

Egypt

Cyprus

Nigeria

Turkey

Benin

Togo

Ghana

Libya

Greece

Niger

Bulgaria

Ivory Coast

Burkina Faso

Liberia

Ukraine

Serbia

Romania

Tunesia

Sierra Leone

Belarus

Mali

Guinea

Brazil

Hungaria

Algeria

Lithuania

Italy

Guinea- Bissau

Estonia

Latvia

Senegal

Gambia

Poland

Mauretania

Finnland

Bolivia

West Sahara

Germany

Marocco

Sweden

Denmark

Spain

France

Belgium

Netherlands

Portugal

Peru

Norway

French- Guayana

United Kingdom

Guyana

Ireland

Columbia

Ecuador

Venezuela

Trinidad

Panama

Puerto Rico

Costa Rica

Dominican RepublicHaiti

Nicaragua

Jamaica

Honduras

El Salvador

Iceland

Belize

Cuba

Mexico

USA

Greenland

Canada

NepalBhutan

Bangladesh

Thailand

Uruguay

Guatemala

Kuwait

Oman

United Arab Emirates

Lesotho

Swaziland

Burundi

Rwanda

Croatia Bosnia- Herzegovina

Austria

Switzerland

Luxemburg

Moldawia

Albania

Macedonia

Montenegro

Slovenia

Czech Republic

Slovakia

Armenia

Paraguay

Surinam

ByfordDolphin

BorgstenDolphin

BorgholmDolphin

BlackfordDolphin

BidefordDolphin

BorglandDolphin

BredfordDolphin

BoletteDolphin Belford

Dolphin

Fred. Olsen Energy – Operating worldwide

Contract overview

Unit

Bolette Anadarko

Belford 1)

Blackford Chevron

Bideford Statoil 2)

Borgland RMN Cons.

Bredford

Byford BP

Borgsten Total 3)

Borgholm

1) Terminated for convenience2) Suspended3) Termination right exercised with a termination fee of USD 22 million

2017 20182016

Contract backlog

Total backlog approx. USD 390 million

Ultra deepwater

Belford Dolphin

Completed the five-year class renewal survey at the Keppel yard in October 2015

The unit is preserved and maintained, located outside Labuan, Malaysia

Marketed for contract possibilities worldwide

Bolette Dolphin

Operates under a four-year contract with Anadarko presently offshore the Ivory Coast

A reduced dayrate for approximately 240 days is agreed and will be compensated with an extension of approximately 2.5 months at original contract rate

The corresponding contract expires in July 2018

Midwater - Norway

Bideford DolphinOperates under a three-year contract with Statoil, estimated to be completed end of January 2017

In June 2016, the Company received a notice of suspension from Statoil for three months with a suspension rate of 80%. The suspension ceased mid September

Completed its class renewal survey July 2014

Borgland Dolphin

Completed the 18 well drilling contract, with a Rig Management Norway AS (RMN) managed consortium of four oil companies, in September 2016

The unit will be preserved and maintained in LyngdalNorway, ready for new contracts

The unit completed its class renewal survey February 2015

Midwater - Norway / United Kingdom

Bredford DolphinCompleted the 12-well contract with an AGR consortium early January 2016

The unit is cold stacked at Kvinesdal, Norway

The class renewal survey was completed August 2012

Borgholm DolphinThe unit is cold stacked and located at the quay side of Harland & Wolff

Class renewal survey was completed March 2013

Midwater - United Kingdom (cont.)

Byford Dolphin

Continued under the contract with BP Exploration in the UK during the quarter. The contract will expire end of October 2016

The unit will be preserved and maintained in Lyngdal, Norway, ready for new contracts

The unit completed its class renewal survey July 2015

Borgsten Dolphin

Continued under the tender support services contract with Total E&P UK until early October

Total has exercised their right to terminate the contract from October 2016 and the company will receive a termination fee of USD 22.1 million which will be booked in 4th quarter 2016

The unit will be cold stacked in Invergordon, Scotland

Deepwater – United Kingdom

Blackford Dolphin

Continued the 572 days contract with Chevron offshore UK

The unit had 17 days off-hire in the quarter and an additional 15 days in the beginning of 4th quarter due to subsea downtime

The contract is estimated to expire around January 2017

Completed its class renewal survey in June 2014

Harland & Wolff

Focus on ship repair, ship building, steel fabrication and engineering services

The activity at the yard has been limited during the third quarter and the outlook for the fourth quarter of 2016 is still expected to be challenging

The yard will continue to explore all opportunities and maintain focus on reducing cost

Borgholm Dolphin remained cold-stacked at the yard

SummaryFinancial

Revenues were USD 214 million

EBITDA was USD 119 million

Profit before tax was negative USD 30 million

Impairments amounted to USD 61 million

Contract backlog amounting to approximately USD 390 million

Received the settlement with HHI of USD 176.4 million

Strong cash discipline and continued focus on cost reductions

Operational

Bideford Dolphin back in operation mid September after the suspension

Borgland Dolphin in lay up from end of September

For drilling units coming off contract; preservation of the equipment and the units in order to minimize reactivation time and cost

Q&A