Investor PresentationJuly 2012

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Disclaimer

The following disclaimer applies to this presentation and any information provided regarding the information contained in this presentation (the Information). You are advised to read this disclaimer carefully before reading or making any other use of this presentation or any information contained in this presentation.

Except as required by law, no representation or warranty, express or implied, is made as the fairness, accuracy, completeness, reliability or correctness of the Information, opinions and conclusions, or as to the reasonableness of any assumption contained in this document. By receiving this document and to the extent permitted by law, you release Hughes Drilling, and its officers, employees, agents and associates from any liability (including in respect of direct, indirect or consequential loss or damage or loss or damage arising by negligence) arising as a result of the reliance by you or any other person on anything contained in or omitted from this document.

Statements contained in this material, particularly those regarding the possible or assumed future performance, costs, dividends, returns, production levels or rates, prices, reserves, potential growth of Hughes Drilling, industry growth or other trend projections and any estimated company earnings are or may be forward looking statements. Such statements relate to future events and expectations and as such involve known and unknown risks and uncertainties, many of which are outside the control of, and are unknown to, Hughes Drilling and its officers, employees, agents or associates. In particular, factors such as variable climatic conditions and regulatory decisions and processes may cause or may affect the future operating and financial performance of Hughes Drilling. Actual results, performance or achievement may vary materially from any forward looking statements and the assumptions on which those statements are based. The Information also assumes the success of Hughes Drillings business strategies. The success of the strategies is subject to uncertainties and contingencies beyond Hughes Drilling’s control, and no assurance can be given that the anticipated benefits from the strategies will be realized in the periods for which forecasts have been prepared or otherwise. Given these uncertainties, you are cautioned to not place undue reliance on any such forward looking statements. Hughes Drilling undertakes no obligation to revise the forward looking statements included in this presentation to reflect any future events or circumstances.

In addition, Hughes Drilling’s results are reported under Australian International Financial Reporting Standards, or AIFRS. This presentation may include references to EBITDA, EBITA, EBIT and NPAT. These references should not be viewed in isolation or considered as an indication of, or as an alternative to, measures reported in accordance with AIFRS or as an indicator of operating performance or as an alternative to cash flow as a measure of liquidity.

The distribution of this Information in jurisdictions outside Australia may be restricted by law and you should observe any such restrictions. This Information does not constitute investment, legal, accounting, regulatory, taxation or other advice and the Information does not take into account your investment objectives or legal, accounting, regulatory, taxation or financial situation or particular needs. You are solely responsible for forming your own opinions and conclusions on such matters and the market and for making your own independent assessment of the Information. You are solely responsible for seeking independent professional advice in relation to the Information and any action taken on the basis of the Information. No responsibility or liability is accepted by Hughes Drilling or any of its officers, employees, agents or associates, nor any other person, for any of the Information or for any action taken by you or any of your officers, employees, agents or associates on the basis of the Information.

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Corporate Overview

Bob Hughes

57.8%

Founders &

directors

16.8%

Others

25.4%

Directors and Senior Management

Robert Hackett Non-Executive Chairman

Bob Hughes Executive Director

Andrew Drake Managing Director

Geoff Bruce Non-Executive Director

Craig Burton Non-Executive Director

Paul Brenton Chief Financial Officer

and Company Secretary

Share price performance, 2011 - current

Corporate Snapshot

Key personnel

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HDX XAO

ASX Code HDX

Shares on issue 1,136.7m

Share price 3.8c

Market Cap. $43.2m

Net Debt ~$20.0m

Enterprise value $63.2m

PBT FY12 (guidance) $7.9m

Top 20 shareholders 81%

Unlisted options 48.2m

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Investment HighlightsMarket leader � Market leader in coal blast-hole contracting in the Bowen Basin and the Australian open pit coal market

� Largest contract blast hole rig fleet servicing the coal industry

� Focused exclusively on in-pit production drilling (no exploration drilling)

Earnings

visibility

� Significant contracted revenue with blue chip customers and differing maturities

� >90% of revenue associated with in-pit coal production drilling

� Key costs (rigs, consumables, labour) well understood and managed by Hughes, with pass-through of

variable elements such as CPI and fuel

Blue chip client

base

� Client base includes BHP Mitsui Coal, Downer EDI, Jellinbah, Leighton, Peabody and Yancoal

� Customer sites are generally low cost producers with significant remaining mine life

Multiple

sources of

sustainable

competitive

advantage

� Reichdrill distribution agreement secures exclusive access to Reichdrill blast hole rigs at a substantially

lower cost than alternatives, and with significantly shorter lead times

� Young blast-hole fleet: average age 3.6 years (life 11 to 14 years)

� Blast-hole rigs utilise operators, not certified drillers – shorter lead-time to train new operators and

lower operating costs

� Single brand of blast rig equipment reduces complexity and provides for maintenance and balance

sheet efficiencies

� Low staff turnover drives high productivity

Significant

growth

potential

� Full-year impact of rig deployments during FY12 still to come

� Significant further expansion of blast-hole rigs forecast for FY13 and beyond

� Significant potential to expand initial contract position in NSW coal fields

Experienced

Board and

management

� Highly experienced Board and management team with a demonstrated track record of establishing and

growing successful drilling services businesses

� Ongoing executive leadership role and significant equity stake of Bob Hughes

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Hughes-EDS merger overview

• Performance Shares convert to ordinary shares on a ratio

based on the FY2012 normalised NPAT (assuming 30% tax

rate) achieved:

– At least $8.0 million: 1:1 conversion

– Between $5.5-8.0 million: on a pro-rata basis; or

– Less than $5.5 million: no conversion

• Hughes FY12 PBT guidance of $7.9m (+/- 5%)

• Board does not expect there to be a significant issue of

ordinary shares on conversion of Performance Shares.

Performance shares

• Hughes Drilling Limited formed via merger of cleaned-up ASX-

listed shell code EDS and privately-owned Hughes Drilling P/L

• Effective date of merger 1 December 2011

• Consideration for the acquisition of Hughes Drilling Pty Ltd by

EDS was the issue of 721.7m EDS shares and 360.8m

Performance Shares

• No cash consideration

• Hughes Drilling Pty Ltd shareholders represent ~64% of the

merged company following completion of the merger

Background

Geographical footprint

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Operational Overview

Blast-Hole Drilling Delineation Drilling Express Hydraulics

Overview Production drilling: Blast

hole drilling in-pit for open

cut coal

Production drilling: Drilling

for reserve delineation and

structural support for coal

Sales and distribution of

drilling consumables and

spares

FY12

Revenue

Contribution

~75%

(FY13 growth in place)

~20%

(not proposed to expand

fleet)

~5%

(5 year objective:25% of

revenue and profits)

Key assets 27 rigs:

• 11x Reichdrill C750D

• 9x Reichdrill C700D

• 2x Reichdrill C550DII

• 4x Terex GD5000

• 1x SKS

12 Marketed rigs:

• 4x Atlas Copco CT14

• 1x Atlas Copco RD20

• 3x Boart Longyear LF90

• 1x Boart Longyear LF230

• 1x Ingersol Rand T4

• 1x McCulloch DR800 MkII

• 1x UDR 650 Hybrid

• 1 UDR 1000

Agencies/Distrib. for:

• Reichdrill

• Torquato

• Sullivan Palatek

• Thomson International

• Halco

• Ryco

• N&N Drilling

Contracts /

Customers:•BHP Mitsui

Coal

•Downer EDI

•Peabody

•Yancoal

•Leighton

•Jellinbah

• Sonoma

• Poitrel

• Goonyella Riverside

• Jellinbah

• North Dawson

• Boggabri

• Wilkie Creek

• Yarrabee

• Millennium

• Cockatoo Island

• Wambo • Other Hughes

business units

• Peabody

• Sandvik

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Location of OperationsMine/Maintenance

DepotRig Service Region No

Wilkie Creek (QLD) Blast hole Surat Basin 2

Goonyella (QLD) Blast hole Bowen Basin 3

Jellinbah (QLD) Blast hole Bowen Basin 3

Poitrel (QLD) Blast hole Bowen Basin 3

Sonoma (QLD) Blast hole Bowen Basin 6

Nth Dawson (QLD) Blast hole Bowen Basin 2

Yarrabee (QLD) Blast hole Bowen Basin 1

Millenium (QLD) Blast hole Bowen Basin 2

Yatala Depot (QLD) Blast hole Maintenance 2

Cockatoo Island (WA) Blast hole Off WA Coast 1

Boggabri (NSW) Blast holeGunnedah

Basin2

Wambo (NSW) Delineation Hunter Valley 12

Total Number of Rigs

Blast hole

Delineation

Total

27

12

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Blast-Hole Drilling – Overview • The leading blast-hole drilling contractor in the Bowen

Basin

• The Hughes Drilling Group was founded in 1991 by Bob

Hughes and merged with listed shell from 1 December

2011

• Owns and operates 27 blast-hole drilling rigs for open cut

coal mine operations in Queensland and NSW, with the

fleet forecast to increase to 40 blast-hole drilling rigs by

June 2013

High quality, blue chip client base

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Blast-Hole Drilling - Business Model• Focused and simple service offering

– Blast hole drilling in open cut coal mines

– No blasting, no hard rock, no exploration

– Production drilling – low cyclicality

• Sustainable competitive advantage

– Shorter lead time for new equipment delivery than competitors in

an environment where demand is significantly outstripping supply

– Industry leading productivity due to single brand blast rig fleet

and low workforce turnover

– Limited exposure to skilled labour shortages – rigs require

machinery operators, not qualified drillers (trained in-house)

– Competitive pricing facilitated by low capital and operating costs

(rig cost advantage and use of operators vs. drillers)

• Conservative approach to funding fleet expansion

– Rigs funded by debt with 4 year amortisation

– Initial contract terms of 3 -5 years with extension options

– Typical effective life of rigs 11 – 14 years (average rig age 3.5

years)

– No capitalisation of maintenance capex

• Visibility of future revenues and earnings

– Revenue primarily earned on a $/metre drilled basis with monthly

contractual minimum and standby rates

– No exposure to fuel price movements

– CPI adjustment mechanism

– Mobilisation and demobilisation charges

– Key costs all within Hughes control – labour, drilling consumables,

maintenance, capital charge

Contract Rigs Expiry Hughes

Tenure

Sonoma

(Leighton)

1x Reichdrill C750D

2x Reichdrill C700D

2x Terex GD5000

1x SKS

June 2012 7 years

Poitrel

(BMA)

2x Reichdrill C750D

1x Reichdrill C700D

Sept 2015 2 years

Goonyella

(BMA)

2x Reichdrill C750D

1x Reichdrill C700D

June 2015 5 years

Jellinbah

(Jellinbah)

2x Reichdrill C750D

1x Reichdrill C700D

June 2015 5 years

North Dawson

(Leighton)

2x Reichdrill C700D Oct 2013 2 years

Boggabri

(Downer EDI)

1x Reichdrill C750D

1x Reichdrill C700D

1x Reichdrill C550DII

Dec 2016 June 2012

Wilkie Creek

(Peabody)

1x Reichdrill C700D

1x Reichdrill C550DII

May 2013 2 years

Yarrabee

(Yancoal)

1x Reichdrill C750D June 2014 2 year

Millennium

(Downer EDI)

2x Reichdrill C750D May 2013 2 year

Cockatoo Is.

(Leighton)

1x Terex GD5000 Sept 2012 2 years

Note: excludes Terex GD5000 in Brisbane for maintenance

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Delineation Drilling• Profitable residual business of the former EDS listed shell business

• “Inside the fence line” drilling services contract for Peabody at the Wambo mine in the Hunter Valley

– Coal resource delineation drilling

– Surface structural support drilling for underground expansion

• Contract commenced in September 2009 for a four-year term, with a two-year option

– Contracted in initially for two rigs and expanded to four rigs in 2010; further increased capacity from seven

to 11 rigs during 2011, and currently deploying 12 rigs

• Stable, secure contract with potential for significant life beyond current contract and option period

• Hunter Valley open cut & underground operating since 1969

• Thermal coal and PCI

• 2.6mt (open cut) and 2.8mt (underground) saleable coal production in 2011

• Open cut mine via truck and shovel operated by Downer

• Underground mine via longwall

• Significant expansion (including exploration) program to the north commenced 2008:

• Establish potential of coal resource to Bowfield seam to a depth of 650m

• Progressively establish 250m grid of boreholes to establish JORC resource to measured status

• 75 holes for ~22,000m between 2009 and 2011

Wambo

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Express Hydraulics

• Express Hydraulics is the agency and distribution services business originally established as the internal

procurement and workshop arm for Hughes, but which also services external customers

• Agency and distribution arrangements currently in place for:

– Blast hole and other drilling rigs

– High performance rotary screw air compressors

– Drill pipe and drill stem accessories

– Rotary drill bits

– Downhole hammers

– Hydraulic fittings

• Source of significant competitive advantage to Hughes today with significant future growth potential

• 5 Year strategic objective of Express Hydraulics generating 25% of revenue and EBIT

Industry partners

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Financial Overview

Balance Sheet (31 Dec 2011)Pro forma Profit & Loss (FY09 – FY12)

($m) FY09 FY10 FY11 FY12

Q1

(aa)

Q2

(aa)

Q3

(au)

Q4

(g)

FY12

Guidance

Revenue:-Blast hole

-Delineation

-Other

22.8

N/A

0.4

17.5

N/A

0.0

19.8

N/A

0.0

7.2

N/A

0.0

7.0

0.8

0.0

7.3

3.4

0.0

8.7

4.1

0.0

30.2

8.3

0.0

Total

Revenue

23.3 17.5 19.8 7.2 7.8 10.7 12.8 38.5

EBITDA

- EBITDA %

4.3

18.5%

3.520.0%

5.527.8%

2.129.2%

3.443.6%

3.633.6%

5.240.6%

14.337.1%

EBIT

- EBIT %

1.7

7.3%

0.8

4.6%

2.814.1%

1.520.8%

3.342.3%

1.715.9%

3.628.1%

10.126.2%

PBT 1.1 0.3 2.3 1.2 1.8 2.3 2.6 7.9

NPAT 0.8 0.4 2.0 0.8 1.3 1.6 1.8 5.5

Note 1: (aa) Actual audited; (au) Actual unaudited; (g) guidance

Note 2: 30 June Year end

Note 3: EDMS operations included from 1st December 2011

FY12 guidance includes one off expenses:

• Merger costs expensed in FY12

• Expensed start-up costs associated with expansion at Wambo

• Discontinued business costs expensed in FY12

• Assumes corporate tax of 30%, not taking into account prior year tax losses

($m) 31 Dec 2011

Cash (Net of O/D) 2.3

Inventories 8.0

Debtors 6.0

Assets held for sale 2.8

Property, plant & equipment 23.8

Deferred tax asset & Intangible 6.6

Total Assets 49.5

Trade creditors 6.9

Borrowings 18.8

Other liabilities 4.3

Total Liabilities 30.0

Net Assets 19.5

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Industry OverviewCoal sector - Long TermCoal sector - Short Term

• Australia is the world’s second largest exporter of coal

and is forecast to continue to be one of the dominant

coal exporters to Asia.

• The current move by Colombia and other South

American suppliers to sell into Asia is expected to match,

in volume, the requirements from the current structural

step-up in demand from Japan.

• In effect, long term demand growth will continue to be

largely satisfied by Australia and Indonesia.

• 96% of Australia’s black coal reserves are found in

Queensland (58% of Australia’s total) and New South

Wales (38%) – both core geographic markets of Hughes.

• Global demand for coal - the worlds’ cheapest source

of energy - is forecast to grow 53% by 2035 with China

and India representing 85% of the increase

• Urbanisation of large developing countries = rising

electricity and steel consumption for many decades

• Japan is switching back to coal fired power generation

and reduced exposure to nuclear.

• Sustained growth in demand for coal = sustained

growth for Australia’s large coal mines.

Competitive Environment

Competition:

• Mine owners operating own rigs – Productivity? ROI?

• Contract miners (DOW, LEI) operating own rigs – Productivity? ROI?

• Contractors: Coldwell, Drillpro, Action

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Robert Hackett

(Chairman)

• Former CEO of both an Asia Pacific onshore drilling contractor (minerals, drill & blast, geothermal, oil & gas)

and a $400m turnover/5,000 employee Middle East based site services contractor.

• He has prior experience in project finance and investment banking.

• He has a Bachelor of Engineering (Civil, Adelaide), an MBA (IMD, Switzerland) and MAICD.

Bob Hughes

(Executive Director)

• Founder of the Hughes Drilling business and major shareholder of HDX.

• Started drilling career 36 years ago, providing drilling and blasting services for quarries and mining ops.

• In 1991 he established Hughes Drilling Pty Limited, contracting initially to Leighton and has been the

driving force in the Company’s development.

Andrew Drake

(Chief Executive Officer)

• Has been General Manager and recently the Chief Executive Officer of the premerger Hughes business.

• Joined the Company 6 years ago in 2006.

• For the previous 16 years he held managerial and business development roles with Dyno Nobel, the

world’s second largest explosives supplier.

Craig Burton

(Non-Executive Director)

• An experienced and active investor in emerging projects and businesses, both publicly listed and private,

with a focus on base metals, oil, gas and mining services.

• He is a co-founder of two ASX companies. He has a Bachelor of Laws (University of Western Australia) and

MAICD.

Geoff Bruce

(Non-Executive Director)

• Mr Bruce has been a Chartered Accountant since 1984

• He was previously the CFO of Downer EDI from 1998 to 2007, playing a key role in transaction structuring,

financing, oversight of transaction execution and subsequently an active director of operating subsidiaries.

• Immediately prior to his employment with Downer EDI he was the CFO of Century Drilling Limited.

Paul Brenton

(Chief Financial Officer)

• CPA with 17 years experience in accounting, corporate finance and commerce.

• He held the position of Chief Financial Officer of Buildev Group prior to joining EDMS in 2010.

• He started his career with PricewaterhouseCoopers working across a range of business sectors including

to clients based in mining, manufacturing and construction.

Management & Board

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FY2013 Outlook

• Full-year effect of operating 12 rigs (FY12

operating equivalent of six rigs as consolidated

only from 1 December, 2011)

• No plans to further expand delineation drilling rig

fleet

• Five year strategic objective to increase third-

party agency sales and EBIT to 25% of group.

• Significant non-recurring costs incurred in FY2012

related to the merger, Wambo expansion start-up

and refurbishment and costs associated with

EDMS discontinued operations

• Strong balance sheet & unutilized facilities

provides flexibility to react to market

opportunities (e.g. Boggabri)

Express Hydraulics Corporate

Delineation Drilling

• Rig count to increase from 27 (as at Jun-12) to 40

(as at Jun-13) through organic growth

• 12 month operating equivalent rig count is

expected to increase from 24 during FY2012 to 33

during FY2013

• ~50% of expansion in the rig fleet already

contracted

Blast-Hole Drilling

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