Every Challenge is an Opportunity Bob Deason President & CEO 1

J. Ray McDermott EPCI of offshore facilities & pipelines US & Atlantic Basin, Asia Pacific, Caspian, Middle East $4.7 billion - backlog Q2 ’09 $3.2 billion - revenue 2008 17,000+ employees worldwide 95% non-US citizens 89% work outside of US 21 vessels (7 DLBs; 14 multi-functional) 6 engineering offices 6 fabrication/marine bases 6 2

Offshore Market unprecedented growth rapid growth spending decline 3 3 Source: The World Offshore Oil & Gas Production & Spend Forecast 2009-2013 Douglas-Westwood and Energyfiles 3 3

Offshore Market 2003 - 2008 Rapid Growth: Repair balance sheets Dramatic cost increases Problem projects – cost / schedule Technological challenges Subsea Floaters Resources Major new competitors Growth in protectionism Investments failed to adequately replace resources 4

Offshore Market 2009 - 2011 Spending Decline: Managing downturn Right size asset base Business stress Address execution Extreme cost pressure Under-investment by operators Inconsistent globally 5

Offshore Market 2012 onwards – Unprecedented Growth: Catch up under investment Expanded asset base available Aging workforce Will we manage projects better? 6

Government Related Challenges US OCSLA manning requirements Jones Act reinterpretation Income tax – draft legislation Aggressive administration International Protectionism Unclear tax and customs regimes Ethics and compliance Sanctity of contracts 7

Technology Related Challenges Floating solutions Subsea infrastructure More extreme environments Deeper water depths More remote locations More challenging reservoirs 8 7

Customer Related Challenges Unhealthy contracting environment Intensive cost pressure Long and complicated tendering process Bureaucratic organizations NOC’s vs. IOC’s Questionable contract award criteria 9 7

Near-term Opportunities Right-sizing company Upgrading company expertise Adding people / assets through attractive opportunities Improving cost position Resetting growth strategies Actively working with trade associations 10 8

Longer-term Opportunities Bringing assets in line with future market requirements Developing new technical solutions Partnering in areas requiring local content Expand geographical footprint Upgrade execution 11 8

Summary We are in a cyclic business Bottom of cycle 2010-2011 Relatively mild downturn Time to reset cost Upgrade execution strategies Prepare for upturn 12 8

Engineering – Procurement – Construction - Installation J. Ray McDermott Engineering – Procurement – Construction - Installation 13