Archer Limited : First Quarter 2017 Trading Update

Hamilton, Bermuda (May 4, 2017)

First quarter 2017 highlights 

• Archer agreed the terms of a comprehensive debt refinancing and raised $100 million in a private placement.
• First quarter revenue was $201.6 million.
• First quarter underlying EBITDA was $17.3 million, excluding restructuring costs of $2.4 million.
• Net loss was improved by $26 million from $48.3 in fourth quarter 2016 to $22.3 million in first quarter 2017.
• US operations experienced significant increase in activity.
• Archer Oiltools secured frame agreements with Statoil.

Subsequent event highlights 

• Subsequent equity offering raised $5.8 million of additional equity.
• Refinancing agreements with Seadrill and banks reduced debt by $105.3 million and other liabilities by $21 million.
• Final documentation agreed with lenders representing 94% of the exposure under the Company's main facility and implementation by way of Scheme of arrangement commenced.
• Total refinancing, including the equity issuances, reduced the net interesting bearing debt by $211 million.
• Marathon Oil confirmed a 5-year extension to the three UKCS Brae field platforms.
• Successfully field tested Comtrac (C6).

Revenue for Q1 2017 was $201.6 million compared to $221.4 million for Q4 2016, a reduction of $19.8 million with lower activity levels for both segments. Eastern Hemisphere revenue was down $8.7 million, following lower activity levels, mainly related to Engineering and Oiltools. Western Hemisphere revenue decreased by $11.1 million with a $13.1 million reduction in Land Drilling, partially offset by growth in Frac Valves services.

The reduction in activity levels in Q1 2017 resulted in a EBITDA before restructuring cost ("underlying EBITDA") of $17.3 million, down $1.5 million, mainly due to a $1.4 million reduction in Eastern Hemisphere following fall through from lower revenue partially offset by one-time benefit from the reversal of a bad debt provision and from the settlement of a previously written off receivable balance. In spite of revenue reductions in the Western Hemisphere, operating performance with underlying EBITDA of $8.3 million remained flat compared to Q4 2016, where lost margin from reduction in Land Drilling activity was offset by incremental margin from revenue growth for Frac Valves services as well as costs savings realized in Land Drilling following headcount reductions.

Net financial items of $20.1 million in Q1 2017, was in line with previous month. Net loss of $22.3 million was an improvement of $26 million from Q4 2016.

Total net interest-bearing debt at March 31, 2017 was $710.9 million compared to $795.9 million as of December 31 2016. The reduction relates to net proceeds received from the private placement in February 2017. The remaining element of the refinancing will be recorded in the second quarter.

Outlook

 The outlook for oil services remains uncertain, but Archer and its subsidiaries are benefiting from substantial exposure to the high growth US onshore market. Overall, second quarter activity is expected to be in line with first quarter activity. Increased activity in Eastern Hemisphere is expected to offset the anticipated reduction in active drilling units in Argentina and Bolivia. Activity in second half of 2017 is estimated to improve over first half. 

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In connection with the trading update release, a conference call will be held at 8:00 Houston time, 14:00 London time, 15:00 Oslo time on Thursday May 4, 2017.

To listen to the conference call, the following options are available:

 A. Webcast

To register for the webcast please go to http://edge.media-server.com/m/p/xsc9udwc

B. Conference call

To access the call, which is open to the public, please contact the conference call operator at the participant telephone numbers listed below. Please call in 10 minutes prior to the scheduled start time, and ask for the "Archer First Quarter 2017 Trading Update Conference Call."

Participant Telephone Numbers:                                   

             Local - Oslo, Norway:                                       +472350 0486

            Local - New York, United States of America:      +1646 254 3367

            Local - London, United Kingdom:                      +44(0)20 3427 1919

            Confirmation Code:                                           7397370

The operator will ask for your name, company and the confirmation code.

Following the presentation there will be a Q&A session. Information on "how to ask questions" will be given at the beginning of the Q&A session.