Quarterly Presentation Q2 2017 Group
highlights 1 Attractive long-term market fundamentals supporting continued demand for subsea offshore solutions 2 A true global subsea IMR operator with strong project and execution capabilities 3 Unique strategic position providing integrated life-of-field subsea services 4 State-of-the-art subsea vessels, the world s 4 th largest ROV fleet and 1 288 subsea employees 5 Strong order intake through the down cycle securing tangible near-term growth and highly attractive financial profile 6 Resilient backlog as backbone for stable operating model PLSV contracts in Brazil cementing strategic position 2
Group at a glance 2005 established NOK 1.2bn 1) Revenues Q2 17 NOK 17.7bn Firm backlog Q2 17 1 288 2) Subsea employees worldwide Q2 17 Integrated Supplier of subsea offshore services Modern State-of-the-art asset base 26 3) Subsea vessels 71 4) ROVs 1) Note: According to management reporting 4) Note: Including 2 AUVs and 2 ROVs on order 2) Note: Excluding marine crew 3) Note: Including newbuilds Skandi Olinda and Skandi Recife and chartered-in vessels Harvey Deep Sea and Skandi Chieftain 3
More than a decade of structural growth and consolidation 2005 2008 2010 2013 2014 2016 established following the acquisition of Geoconsult. The Company was listed second half 2005. First Reserve acquires 49% of, which in the following is delisted from the Oslo Stock Exchange Large and global organisation following multiple acquisitions from 2005-2010 Covus Subsea Century Subsea SEMAR SWG Offshore CSL Awarded four PLSV long-term contracts in conjunction with TechnipFMC Expanding organisation on the back of several large contract awards. Number of employees and vessels peaking at 1,858 and 27, respectively Focus on consolidation and streamlining of business operations to improve efficiency and competitiveness in weak market Development in # of Subsea Employees 1) # of FTEs 337 11 11 553 563 13 897 16 1014 18 1246 21 1492 24 1354 1667 25 26 1858 27 1566 24 1278 1288 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q2 2017 Development in # of vessels in operation 2) # of vessels 21 24 2017 Delivery of two newbuilds entering into long-term contracts 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q2 2017 Owned vessels Chartered-in vessels Total 1) Note: Newbuilds not included 2) Note: Marine crew not included 4
Global footprint Bergen Aberdeen St John s 8 452 4 228 Houston NORTH AMERICA ATLANTIC Kuala Lumpur Singapore Brunei Manila Macaé Rio de Janeiro Luanda Jakarta Darwin Buenos Aires BRAZIL 4 297 ASIA PACIFIC Perth Melbourne 8 311 1) Note: Number of employees as at Q2 17, excluding marine crew 2) Note: Vessels in operation, including 2 chartered-in vessels (not including newbuilds) 5
Several major and attractive contracts to commence in 2017 IMR contract offshore Angola 16 months + 3x4 months options Scope comprising project management, engineering, supply of vessels and ROVs Jan 2017 ENI Angola Long-term charter with Petrobras 18 months + 18 months options On contract with Petrobras since 2010 Vessel co-owned on a 50% basis through joint venture with TechnipFMC First-pipe lay vessel built in Brazil Jan 2017 Skandi Vitoria Apr 2017 Skandi Buzios Long-term charter with Petrobras 8 years + 8 years options Vessel co-owned on a 50% basis through joint venture with TechnipFMC Built in Norway Jul 2017 Husky Energy Long-term IMR contract offshore Eastern Canada 10 years + 10 years options IMR scope comprising supply of new well intervention vessel, two work class ROVs and personnel High strategic importance through strengthened presence in the Canadian market Oct 2017 Prelude FLNG Long-term FLNG IMR contract awarded in Australia with Shell 5 years + 4 years options Scope comprising underwater services and Multi-Purpose Vessel (MSVP) services spanning project management, engineering and supply of vessel and ROVs 6
Two business segments Group Subsea IMR Projects Long-term Chartering 1) Framework agreements Engineering capabilities Opex spending Long-term charters Vessel capabilities Capex spending Revenues Q2 17 2) NOK 868 million EBITDA 3) Q2 17 NOK 127 million ~15% margin Firm backlog 4) NOK 4.3bn Revenues Q2 17 2) NOK 331 million EBITDA Q2 17 3) NOK 273 million ~82% margin Firm backlog 4) NOK 13.4bn 1 288 Employees Q2 17 15 vessels in operation 5) Q2 17 7 vessels in operation Q2 17 2 newbuilds Q2 17 1) Note: Long-term chartering comprises 5 PLSVs in operation, 2 PLSVs under construction, Skandi Acergy and Skandi Patagonia 4) Note: Firm backlog as at end of Q2 17 7 2) Note: According to management reporting 3) Note: According to management reporting, and excluding gains from sales of assets 5) Note: Including 2 chartered-in vessels
Subsea IMR Projects Numerous projects completed worldwide Built a leading subsea projects division for over a decade Subsea project activity established with a global footprint in all key offshore regions High quality asset base leveraging unrivaled subsea and vessel operating competence A clear action plan to pursue further opportunities Continue to increase the scope and complexity of operations Strengthen presence in selected geographies Further build project backlog with core focus on IMR projects Selected IMR projects Last 5 years Selected Mooring projects Last 5 years Goliat Field support ENI (2016) Saipem CRX/Nene (2014) Call-off for Light Construction Services and Seabed Survey Services Statoil (2012-2015) Technip Frame agreement (2012-2015) ConocoPhillips ROV Services (2012 and onwards) Freeport McMoran IMR support (2013-2016) Saipem JSM Export Line support (2014-2015) ROV Support vessel Petrobras (2011 and onwards) Yinson OCTP FPSO Field Dev. (2016-2017) Bongkot Mooring Replacement PTTEP (2017) Raroa Mooring OMV (2016-2017) Gina Krog TMRS Teekay (2016) Catcher Mooring Installation BWO (2016) Goliat FPSO Marine Installation ENI (2011-2015) Lam Son Mooring Installation PTSC (2014) Knarr Mooring Project Teekay (2013-2014) Banff Re-instatement Project Teekay (2013-2014) 8
Subsea IMR Projects Selected contracts in backlog Location Client Scope Commencement Duration Angola ENI Angola IMR 2017 16 months + 12 months Eastern Canada Husky Energy IMR 2017 10 years + 10 years Prelude Australia Shell Australia IMR 2017 5 years + 4 years Brazil Petrobras Inspection 2016 1 year + 1 year Gorgon, Janz and Wheatstone Chevron Australia IMR 2015 3 years + 2 years Malampaya Shell Philippines IMR 2014 7 years + 3 years Brazil Petrobras IMR 2012 6 years + 4 years Brazil Petrobras IMR 2011 6.5 years + 4 years North Sea Conoco Phillips IMR 2011 8 years + 13 years Asia Pacific North Sea / Atlantic Brazil North America Leading supplier of IMR services in the region Leading supplier of mooring services in the North Sea and West Africa Strong position being one of the major suppliers of IMR services Gradually built up the region, becoming a top three supplier of IMR services in the GoM 9
holds a leading position in the subsea IMR market through its global presence and integrated solutions offering Improved competitive position for DOF Subsea when market normalises multiple competitors have scaled down operations or entered financial distress Positioning Geographies Illustrative Favourable competitive dynamics in tendering for mid-sized subsea IMR projects Larger EPCI providers typically invited to tender, however less capable and willing to meet specific project requirements due to relatively small project size Vessel suppliers typically not invited to tenders due to lack of engineering capabilities benefits from offering an integrated engineering and vessel solution Local Multi-regional Global = Chapter 11 / financial distress Source: ABGSC Dayrate / Support services Small to medium EPCI contracts Larger EPCI contracts Capabilities 10
Long-term Chartering provides state-of-the-art vessels to leading players Skandi Acergy Skandi Acu Skandi Africa 7 vessels in operation 2 contracted newbuilds NOK 13.4bn firm backlog per Q2 17 Construction support vessel Construction & pipe laying vessel Construction & pipe laying vessel Operations High-end vessels operating advanced subsea projects for third party EPCI contractors Skandi Niteroi Skandi Patagonia Skandi Vitoria Contracts Strong long-term contract coverage Construction & pipe laying vessel Dive support vessel Construction & pipe laying vessel Remuneration Day-rate based Skandi Buzios Skandi Recife Skandi Olinda Selected clients Construction & pipe laying vessel Construction & pipe laying vessel Construction & pipe laying vessel 11
Key financials 1) Revenue EBITDA 2) Backlog (excl. options) NOK million NOK million NOK billion 5 249 6 579 7 422 7 251 5 426 1 799 1 949 2 097 2 041 1 733 15,5 16 17 21,5 18,9 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 1) Note: Figures according to management reporting 2) Note: EBITDA excl. profit from sale of non-current assets 12
2 nd Quarter 2017
Highlights Q2 2017 Subsea IMR Projects In April, purchased the remaining shares in Canadian Subsea Shipping Company AS, and in May, Canadian Subsea Shipping Company AS took delivery of a newbuild vessel, Skandi Vinland. The vessel commenced a 12-year bareboat charter contract with Canada in July, and the vessel will be utilised on a 10-year IMR contract with Husky Energy off the East Coast of Canada In the North America region, extended the charter party for chartered-in Jones Act compliant MPSV Harvey Deep Sea until the end of 2018, plus two one-year extension options The North America region was awarded for Harvey Deep Sea securing 70% contract coverage and NOK 150 million in backlog for the vessel through Q1 2018 Skandi Chieftain was awarded a 5-month contract in Canada with commencement in June 2017 The Asia Pacific region was awarded a diving contract, securing utilisation for Skandi Singapore Skandi Skansen was awarded contracts on the UKSC and in the Norwegian Sea securing utilisation through most of Q3 2017 Geosund was awarded contracts to take part in a series of campaigns for a major operator undertaking trenching and survey support activities in the Norwegian Sea region, securing 50 days utilisation until mid-august 2017 DOF subsea was awarded a contract in the Mediterranean by TMPC to undertake the pipeline inspection on the TMPC's Pipeline System in Q3 2017. will deploy the survey vessel Geosund was awarded a subsea oil field support project offshore Newfoundland for a Canadian operator. Skandi Neptune will be utilised on the project has been awarded a contract for Skandi Constructor by Siemens on the Galloper Offshore Wind Farm Project in the North Sea. The contract secures utilisation until the end of the year announced that Fugro has extended the firm period of hire for the Skandi Carla time charter contract until end of October 2019 In Brazil, Petrobras has extended the contract for Skandi Salvador by 6 months from August 2017 In Asia Pacific and Atlantic, has been awarded several contracts and work under existing frame agreements, securing utilisation of the vessels Skandi Singapore, Skandi Hercules and Skandi Neptune in Q3 and into Q4 2017. In the North America region, has been awarded several contracts for the Diving Support Vessel Skandi Achiever in the Gulf of Mexico and Trinidad and Tobago. The contracts secure utilisation of the vessel until mid October 2017 Long-term Chartering The Norwegian-built PLSV Skandi Buzios, owned by JV with TechnipFMC, commenced her long-term charter contract with Petrobras on 13 April 2017 Financing The shareholders have concluded to await an improvement in stock market conditions before initiating an IPO During the quarter, secured financing and took delivery of the newbuild Skandi Vinland 14
Condensed Profit & Loss 1) 1) Note: Financial statement according to IFRS. Condensed financial statement according to management reporting is included in the Quarterly Financial Report 15
Condensed Balance Sheet 1) 1) Note: Financial statement according to IFRS. Condensed financial statement according to management reporting is included in the Quarterly Financial Report 16
Quarterly performance 1) NOK million 2 500 2 000 1 500 1 000 500 40% 35% 30% 25% 20% 15% 10% 5% EBITDA margin - Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Operating income EBITDA EBITDA margin 0% NOK million Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Operating income 1 679 1 804 1 871 1 530 1 963 1 904 2 025 1 656 1 962 1 991 1 642 1 406 1 660 1 232 1 128 982 1 199 EBITDA 471 595 550 502 543 552 502 458 515 553 516 456 510 447 320 279 400 EBITDA margin 28,1% 33,0% 29,4% 32,8% 27,7% 29,0% 24,8% 27,7% 26,2% 27,8% 31,4% 32,4% 30,7% 36,3% 28,4% 28,4% 33,4% Current assets 3 319 3 119 3 470 3 247 3 252 2 998 4 223 3 414 3 414 3 674 3 752 2 900 3 010 2 742 2 483 2 808 2 595 Non-current assets 16 344 16 330 16 340 16 012 16 151 16 215 15 796 16 726 16 578 16 447 16 818 17 652 18 206 18 514 18 043 18 087 18 428 Total assets 19 663 19 450 19 810 19 258 19 403 19 213 20 019 20 140 19 992 20 121 20 570 20 552 21 216 21 256 20 526 20 896 21 023 Current liabilities 2 805 2 808 3 167 3 470 3 741 3 607 4 505 4 139 4 577 4 492 3 650 2 991 3 022 2 645 2 478 2 444 3 010 Non-current liabilities 11 862 11 474 11 427 10 126 9 701 9 668 9 402 9 924 9 009 9 988 11 228 11 482 11 864 12 174 11 993 12 503 11 942 Equity 4 996 5 167 5 216 5 662 5 962 5 938 6 112 6 077 6 405 5 641 5 692 6 078 6 330 6 437 6 055 5 948 6 071 Total equity and liablilites 19 663 19 449 19 810 19 258 19 404 19 213 20 019 20 140 19 991 20 121 20 570 20 551 21 216 21 256 20 526 20 896 21 023 1) Note: Figures according to management reporting, and excluding profit from sale of non-current assets 17
Debt maturity profile Debt maturity profile, 2017E 2021E 4 000 3 500 3 000 2 500 2 000 1 500 1 000 500-2017E 2018E 2019E 2020E 2021E Thereafter Bond Loan Bank Debt Balloons The figures reflect amortisation and balloon payments on outstanding debt 18
Backlog 1) 25,0 22,4 20,0 NOK billion 15,0 10,0 5,0 2,0 3,3 3,5 3,0 2,8-2017 2018 2019 2020 2021 Thereafter Option 0,3 0,8 0,9 0,7 0,8 15,9 Firm 1,7 2,5 2,6 2,4 2,0 6,5 Total 2,0 3,3 3,5 3,0 2,8 22,4 As at 30 June 2017, the Group s firm contract backlog was NOK 17.7 billion 1) Note: Figures based on remaining backlog as at end of Q2 17 2) Note: Contract backlog excludes master service agreements (MSAs) within the Subsea IMR Projects segment only confirmed POs are included in the backlog 19
Modern high-end fleet Year of delivery fleet Fleet age 9,0 2000-2006 25 % Newbuilds 8 % 8,0 7,0 Skandi Africa, Ship of the Year 2015 6,0 2007-2015 67 % Years 5,0 4,0 3,0 2,0 1,0 Skandi Acu, PLSV built 2016 - Average fleet age Value adjusted average fleet age Majority of the fleet delivered from 2007 and onwards Modern fleet with a value adjusted average fleet age of 6.0 years High-end vessels, capable of a wide scope of worldwide operations Skandi Buzios, PLSV built 2017 20
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