PARETO SECURITIES CONFERENCE

David Dickson Chief Executive Officer

September 2, 2015

Forward-Looking Statement
In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, McDermott cautions
that statements in this presentation which are forward-looking, and provide other than historical information, involve risks,
contingencies and uncertainties that may impact McDermotts actual results of operations. These forward-looking
statements include, but are not limited to, statements about backlog, bids outstanding and target projects and the
anticipated breakdown and timing of award of such, and revenue pipeline, to the extent these may be viewed as indicators
of future revenues or profitability, market outlook and expected capital expenditures in the industry, the expected scope,
execution, timing and value of projects discussed herein, financial foundation and liquidity, expected cash flows from
operations in 2015, expected benefits and savings resulting from our cost saving initiatives and expected benefits from our io
oil and gas consulting venture and Petrofac alliance, and 2015 guidance with respect to revenues, operating income, capital
expenditures, year-end cash balances and other items. Although we believe that the expectations reflected in those
forward-looking statements are reasonable, we can give no assurance that those expectations will prove to have been
correct. Those statements are made by using various underlying assumptions and are subject to numerous risks,
contingencies and uncertainties, including, among others: adverse changes in the markets in which we operate or credit
markets, our inability to successfully execute on contracts in backlog, changes in project design or schedules, the availability
of qualified personnel, changes in the scope, terms or timing of contracts, contract cancellations, change orders and other
modifications and actions by our customers and business partners, difficulties executing on the project, changes in industry
norms and adverse outcomes in legal and other dispute resolution proceedings. If one or more of these risks materialize, or
if underlying assumptions prove incorrect, actual results may vary materially from those expected. You should not place
undue reliance on forward-looking statements. For a more complete discussion of these and other risk factors, please see
McDermotts annual and quarterly filings with the Securities and Exchange Commission, including its annual report on Form
10-K for the year ended December 31, 2014. This presentation reflects managements views as of the date hereof. Except to
the extent required by applicable law, McDermott undertakes no obligation to update or revise any forward-looking
statement.

McDermott Today

A vertically integrated offshore and subsea engineering and

construction company executing projects from concept to installation
Strategically located fabrication yards and a versatile marine fleet
Strong long-term relationships with leading energy customers globally

93 years of innovative offshore infrastructure solutions

Market Outlook
Industry capex cuts expected to have greater impact on new field
developments (greenfield) and deepwater subsea activities
Globally, national oil companies continue to spend capital, even with
reduced commodity prices, to maintain production levels and
national objectives
Timing of new awards remains volatile as customers reevaluate and
recycle their portfolio of projects
An excess supply of subsea vessels is resulting in increased
competition in the regions that remain active
Different geographies have varied outlooks and challenges relative to
project economics

Managing assets and financial flexibility within a challenging macro environment

Industry Macro Drivers - Capex (2014 2017)

In billions
$80

In billions
$8

Global

$60

$6

$40

$4

$20

$2

$0

Middle East

$0
2014

2015

Offshore

2016

2014

2017

Subsea

Global Offshore Outlook

2015

2016

2017

Offshore

Middle East

Offshore developments, especially brownfield, are

expected to be the least affected by the low oil
prices

Shallow-mid water activity is not expected to

be affected by the oil price slide as projects
are based on low sanction prices

Subsea spend declining through 2016 with

increases in spend anticipated beginning in 2017

Moderate increase in capex is expected

throughout the decade

A number of major deep-water gas projects could

fall out of the forecast window due to oil prices

Spending levels, in the near-term, seem to be

unaffected by commodity price volatility

Middle East NOCs maintaining capex spend to ensure production

*Source: Infield Systems

Extensive Field Development Experience

Customerfocused solutions from concept to installation

Global Footprint, Local Expertise

Operational centers of excellence in the key energy markets

A Diverse and Global Customer Base

SUPER MAJORS
NATIONAL
OIL COMPANIES

MAJORS

INDEPENDENTS

Customers with varying commodity price sensitivities and near-term objectives

Specialized Fleet of 13 Vessels

HEAVY LIFT
DLV2000* | DB50 | DB32| DB30 | DB27

FLEX-LAY
AGILE | EMERALD SEA | NORTH OCEAN 102

RIGID REEL-LAY
NORTH OCEAN 105

CONSTRUCTION
SUPPORT/LAUNCH BARGES
CSV108 | Thebaud Sea | I-600 | I-650

Multi-class group of versatile assets operating regionally and globally

*Under construction

Strategically Located Fabrication Yards

JEBEL ALI, UAE

Serving a variety of international and local markets

*Joint ventures

10

The Complete EPCI Project Lifecycle

PROCUREMENT

CONSTRUCTION

INSTALLATION

VERTICALLY INTEGRATED

ENGINEERING

PROJECT LIFECYCLE
In-house management and control of all stages of a projects lifecycle

11

Ichthys: A Complete Client Solution

Engineering scope
-

500,000 man-hours from offices across

the globe

Procurement
-

In excess of $600 million of in-field

equipment procured

Construction
-

48 subsea structures and a Riser Support

Structure weighing over 27,000 tons
fabricated in Batam, Indonesia

Installation
-

Three deepwater installation vessels

expected to be utilized over a 3.5 year
period

Health and Safety

-

Over 8 million man hours without a lost

time incident

Demonstrated customer collaboration

through successfully implemented
change orders
The project is on schedule and profitable
Demonstrating solid project execution on one of the worlds largest SURF EPCI projects

12

Saudi Aramco: Lump Sum Award

Largest single award in McDermotts
Middle East history
Full scale EPCI contract utilizing
specialized shallow water installation
vessels and fabrication yards in
Dammam and Jebel Ali
Complex project work in 4 offshore
fields, which is expected to be
completed by 2018
Project scope includes:
-

13 Jacket and decks

20 Platform upgrades/electrification
30 miles of pipeline
104 miles of cables and umbilicals
Over a year of Derrick Barge days

13

Key Project Awards - YTD

Timeline - Award Date to Expected Completion
Field or
Project

3Q

2Q

1Q

Client

N. Field Alpha
Qatar Petroleum
Saudi Aramco
Marjan Field
Chevron USA
Jack & St. Malo
RasGas
Ras Laffan Field
QGEP
Santos Basin
Al-Khafji Joint Ops
Hout Field

Saudi Aramco
PEMEX
LLOG Exploration
Saudi Aramco

Work Work Project

Type Scope
Size
BF

EPCI

Large

BF

EPCI

Significant

BF

T&I

Sizeable

BF

EPCI

Sizeable

GF

EPCI

Large

BF

EPCI

Large

12 Jackets

BF

EPCI

Large

Ayatsil Field

BF

EPCI

Large

Otis Field

BF

EPCI

Sizeable

Lump Sum

BF

EPCI

Mega

2015
1Q

2Q

3Q

2016
4Q

1Q

2Q

3Q

2017
4Q

Prioritizing bidding on opportunities in areas with a local presence and

competitive differentiators

Successfully building 2016 and 2017 backlog

1Q

2Q

3Q

4Q

AEA
ASA
MEA

Areas include the Americas, Europe and Africa (AEA) , Middle East (MEA) and Asia (ASA). Work type is Brownfield (BF) or Greenfield
(GF) and Work Scope is Engineering, Procurement, Construction and Installation (EPCI) or Transportation and Installation (T&I)

2015 Q2 YTD order intake exceeds $1.26 billion, FY 2014 = $1.4 billion

14

2Q Backlog and New Order Intake

698

In millions

5,000

$700
$600
$500
330

$400
$300
$200

429

428

3,750
2,500

176

166

1,250

$100

$0
1Q'14

2Q'14

New Awards

3Q'14

Change Orders

Backlog Roll-off by Year

4Q'14

1Q'15

2Q'15

Backlog

Backlog Roll-off by Project Type

First two quarters of 2015 have increased 2016 backlog by $1 billion

15

Quarterly Revenues
$1,047
$ in millions

$806
$604

$550

$476

1Q'14

2Q'14

$415

3Q'14

2Q'14 Revenue Breakdown

4Q'14

1Q'15

2Q'15

2Q'15 Revenue Breakdown

Improving execution in Asia and on three Middle East projects driving greater revenue recognition

16

Strong Financial Foundation

$771 million of cash and restricted cash

at June 30, 2015
-

Majority of cash is unrestricted with the

ability to utilize most restricted
Net debt of $83.2 million

No significant scheduled debt

maturities until 2019, with $500 million
of outstanding debt not due until 2021

Cash flow from operations expected to

be positive in 2015

Cost saving initiatives in progress

providing longer-term financial stability

$1,553

($ millions)
As of June 30, 2015

$826

$28
Equity

Long-term Debt

Current
Maturities of
Long-term Debt

Significant asset coverage, ample liquidity and a strong cash balance

17

Global Leaders Uniting for Long-Term Growth

io oil and gas consulting
Venture between McDermott and GE Oil & Gas
Conceptual and pre-FEED engineering consultancy
Designed to deliver clients greater price and cost certainty on
field developments

Petrofac Strategic Alliance

Five-year strategic marketing alliance to pursue
top-tier deepwater subsea, umbilical, riser and
flowline projects
Leverages McDermotts experience delivering
large subsea EPCI projects, specialty subsea fleet
and fabrication capabilities
Provides access to Petrofacs top-tier,
ultra-heavy lift, S-Lay / J-Lay JSD 6000 vessel

Strategic and collaborative partnerships to provide efficient technical and cost solutions

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Corporate Summary

Vertically integrated EPCI solutions providing more cost efficient and technically
strong results for customers
Clear market position in the regions where clients anticipated to spend capex in
the near-term
Cost-saving initiatives providing flexibility and longer-term financial stability
Strategic partnerships positioning for long-term growth

19

Appendix

20

Engineering and Procurement Overview

Capabilities

Studies and conceptual designs

Front-End Engineering & Design (FEED)
Detailed engineering and design
Transportation and installation engineering

Strategic Benefit

Negotiating, purchasing, transporting and

quality assurance
Global sourcing
Deep local knowledge
Strong supplier relations

Centers of engineering excellence

supported by regional expertise
Providing early stage engineering
and technology experience
Long history of generating innovative
offshore infrastructure solutions
Global procurement purchasing
power

An integrated turnkey business model providing clients with greater execution certainty

21

Fabrication and Installation Overview

Capabilities

Topsides and onshore modules

Jackets, piles and compliant towers
TLPs, SPARs, FPSOs
Subsea hardware
Heavy-lift
Floatover installation
S-Lay, J-Lay, Flex-Lay and Reel-Lay
Subsea installation

Strategic Benefits

Large-scale fabrication facilities

and yards throughout the world
A versatile vessel fleet of regional
and global assets
Ability to leverage local content
requirements
Company-wide focus on health,
safety and the environment

Operational oversight through all phases of the EPCI process

22

Bids Outstanding and Target Projects1

$ in billions

$21 billion as of June 30, 2015

Oil/Gas

Business Line

Greenfield/Brownfield
$11.4

$15.2

$15.2

OIL

OFFSHORE SUBSEA

$9.6

$5.8

$5.8

Segment

GREEN

GAS

Customer

$15.2

BROWN

Contract Scope

$11.2

$14.3

$6.6

$7.8

$5.0
$2.0

AEA

MEA

ASA

NATIONAL
OIL
COMPANY

SUPER
MAJOR

$3.1

INDEPENDENT

EPCI

EPC

$3.6

OTHER

Includes change orders. There is no assurance that bids outstanding or target projects will be awarded to McDermott
23

Summary Balance Sheet

Cash And Restricted Cash
Other Current Assets
Fixed Assets Net & Other

Q4'14
852.9
634.5
1,929.5

Q1'15
800.4
744.6
1,915.0

Q2'15
771.0
809.9
1,903.6

Total Assets

3,416.9

3,460.0

3,484.5

Total Current Liabilities

Long Term Notes Payable
Other
Total Liabilities

860.9
837.4
179.5
1,877.8

944.0
834.2
170.4
1,948.6

938.4
826.5
166.8
1,931.7

Total Stockholders Equity

1,539.1

1,511.4

1,552.8

Total Liab Stock Equity

3,416.9

3,460.0

3,484.5

$27.0
($11.5)

$27.1
($60.9)

$27.7
($83.2)

Memo
Short Term Debt
Net Debt (Cash & Rest. Cash Less Total Debt)

24

Summary Income Statement

TY'14
New Orders
1,099.7
Backlog
3,601.0
Revenue
2,300.9
Gross Profit
187.9
Total SG&A
208.6
Restruct'ing/Asset sale
37.1
Equity Income (Loss)
(7.8)
Operating Income
8.6
Tax/Other
84.6
Net Income (Loss)
(76.0)

Q1'15
697.8
3,748.4
550.5
75.0
51.7
(10.0)
(6.7)
6.6
21.1
(14.5)

Q2'15
428.5
3,130.3
1,046.5
121.0
47.8
(24.1)
(7.5)
41.6
30.1
11.5

YTD'15
1,126.3
3,130.3
1,597.0
196.0
99.5
(34.1)
(14.2)
48.2
51.2
(3.0)

25

2015 Revised Guidance (As of 8/10/2015)

Revenues
Operating Income
Capex (excluding capitalized interest)
Capitalized Interest
Year-end Cash
Restructuring Costs
Asset Impairments/Losses on Sales
Income Taxes
Gross Interest Expense
Cash Interest/Amortization1
Year-end Gross Debt 2

March 15 Guidance

Revised Guidance

$3.3 - $3.6 billion

$25 - $50 million
$275 - $295 million
$25 million
$600 - $650 million
$25 - $35 million
-$35 - $45 million
$72 million
$60/$12 million
$865 million

$3.0 - $3.3 billion

$50 - $70 million
$130 - $140 million
$23 million
$700 - $750 million
$40 - $50 million
$8.7 million
$45 - $55 million
$72 million
$64/$12 million
$865 million

Revenues for the year are anticipated to be lower than original 2015 guidance, as a result of the delays at Ichthys during the first quarter
and customer initiated project changes
Full-year operating income, including restructuring costs, is expected to be higher as a result of improved execution and focus on cost
management. Operating income guidance does not include amounts for unplanned and unreserved contingencies
Capex, excluding capitalized interest, decreased substantially for the year, as the key spend for the delivery of the DLV 2000 shifted into 1Q
2016, due to slight delays on the construction of the vessel. Maintenance and project capital expenditures are expected to be in the range
of $30 - $40 million for 2015
As a result of the delay in the final DLV 2000 payments, year-end cash is anticipated to be higher than originally forecasted. Costs
associated with McDermotts restructuring have increased due to severance costs, external consulting support and the costs related to the
decommissioning of the DB 101
Income taxes for the year have increased in-line with improved operating income

1
2

Cash interest expense of $64 million includes $3.3 million cash paid pertaining to FY 2014 interest expense
Year-end gross debt is exclusive of $20 million of debt issuance costs

26

INVESTOR
CONTACT

K. Darcey Matthews
Vice President, Investor Relations
281.870.5147
dmatthews@mcdermott.com

The information contained herein is provided for general information purposes only and is not intended or to be construed as a warranty,
an offer, or any representation of contractual or other legal responsibility. McDermott has a policy of continuous improvement of its
products and services and reserves the right to change information including specifications and processes without notice.