Boa Offshore – 1 June 2015 First quarter 2015 Results presentation ...

Boa Offshore – 1 June 2015

First quarter 2015 Results presentation

Helge Kvalvik, CEO

This presentation is made by Boa Offshore (or the ”Company”). The information contained herein

include statements that are ”forward-looking” in their nature. These forward-looking statements include

all matters that are not historical facts and are based on the Company’s current intentions, believes

and expectations about among other things, the Company’s results of operations, financial condition,

prospects, growth, strategies and the industry in which the Company operates. Such forward-looking

information and statements reflect current views with respect to future events. The Company cannot

give any assurance as to the correctness of information and statements related to such future events.

Furthermore, these forward-looking statements involve known and unknown risks, uncertainties and

other factors that are in many cases beyond the Company’s control that could cause the actual results

of operations, financial condition, liquidity and the development of the industry in which the Company’s

businesses operate to differ materially from the impression created by the forward-looking statements

contained herein, because they relate to events and depend on circumstances that may or may not

occur in the future. Although the Company believes that its intentions, beliefs and expectations, and

the statements in this presentation, are based on reasonable assumptions as of today, the Company

can not give any assurance that the actual results will be as set out in this presentation. Financing the

Company involves risks, and several factors could cause the actual results, performance or

achievements of the Company to be materially different from the impression created by the forward-

looking statements contained herein. Neither the Company, nor any company within the Boa Offshore

Group, is making any representation or warranty (express or implied) as to the accuracy, reliability or

completeness of the information and statements in this presentation, and neither the Company, any

company within the Boa Group, nor any of their directors, officers or employees will have any liability

to any persons resulting from the possible use of information in the presentation.

Disclaimer

2 2

3 Boa Offshore Financials

Contents

3

2 Boa Offshore update and overview

4 Boa Offshore Business segments

5 Market Outlook

1 Boa Offshore summary

Boa Offshore Group – Summary First Quarter 2015

• Boa Offshore First Quarter 2015 results

EBITDA for 1Q15 of NOKm 6 vs’ NOKm 102 in 1Q14

Severely hit by BMSI and AHTS on weak market over winter

- Adjusted for these two segments, EBITDA was up Y/Y on strong OCV and SBL

Actions taken, 2Q15 EBITDA expected back to “normal” around 2Q14 level

• Balance sheet

Consolidated cash of NOKm 678, up from NOKm 634 YE 14

NIBD 1Q15 of NOKbn 3,09, somewhat up from NOKbn 3,02 YE 14

- Capex of NOKm 140 for the quarter

NIBD/EBITDA LTM increased to 8.5x from 6.5x YE 14

- Run-rate to improve, however LTM to be affected through 2015

Value adjusted Equity of 42% per 1Q15, virtually unchanged from 43% in YE 14

• Market Outlook

Short-term challenging outlook due to lower oil prices remains, despite recovery in oil prices from

January low

Recent pick-up for BMSI and AHTS compared with slow winter, visibility still relatively low

Many of the segments where Boa Offshore operates are exposed to less cyclical factors

- Barges: Operating within a range of industries, outside oil & gas

- Tugs: Ports and Terminals

- OCV/BMSI: A significant part is IMR related

EBITDA 2015 objective adjusted to NOKm 400

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Contents

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5 Market Outlook


Boa Offshore Group in short

• Boa Offshore AS is a Norwegian limited company owned by Ole T. Bjørnevik and his family

• Boa Offshore currently operates and manages a diversified fleet of 40/42 units in various segments, of which 37/39 owned (excl’/incl’ MPSVs)

Subsea installation and construction (Boa OCV/BMSI)

Sea transportation and load-out and launching of heavy objects (Boa Barges/BMSI)

Rig moves (tugs/AHTS)

Seismic EM vessel operations (Boa SBL)

Harbor and costal towage and salvage operations (tugs)

• Global presence and operations, and Leading player in the global market for heavy lift barges

• Head Office in Trondheim (Norway) and offices in Houston (USA) and Gdynia (Poland), with approximately 395 employees

• Engineering and project management capacity out of Trondheim and Houston

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Business overview – Concentrated in three segments

10 Tugs 20 Barges 10/12 Offshore Vessels

• 4 ASD escort tugs

• 5 harbour / towage tugs

• 1 harbour tug

• 8 semi-submersible barges

• 8 deck cargo barges

• 3 other barges

• Newbuild BB 37

• OCV – Boa Sub C

• OCV – Boa Deep C

• SBL – Boa Thalassa

• SBL – Boa Galatea

• Boa Bison

• 2/4 newbuilds

• 3 chartered subsea vessels

Mid-Norway and North Sea operations

Tugs has been the core business of Boa since inception

Revitalization of this business segment with a substantial fleet renewal and growth

World wide operations

Leading player in the global heavy lift market

Continuous new building program since 1999

World wide operations

Ongoing modernization of the fleet, including NFDS

Successfully owns and operates two of the world’s most high spec OCVs

Tonnage provider and solution/ project provider for:

• Salvage operations

• Turn key towage / transport / handling operations

Tonnage provider, also solution/ project provider for:

• All engineering related to barges. In house design

• Turn key transportation projects

• Load out and launching

• Dry docking operations

• Float over

BMS solution/ project provider for:

• SURF (subsea, umbilicals, risers and flowlines)

• IRM (inspection, repair and maintenance)

• Floater moves and installations

• Also use of 3rd party vessels

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5 Market Outlook


Boa Offshore Group consolidated historical financials

• LTM EBITDA per 1Q15 of NOKm 366, down from NOKm

461 in 2014

• EBITDA 1Q15 of NOKm 6, from NOKm 102 in 1Q14

Performance excl’ AHTS and BMSI slightly better Y/Y

on strong OCV and SBL

Weak performance and market in AHTS – improved

sequentially so far in 2Q15

Very low utilization in BMSI in 1Q15 – new contracts

secured from March 2015 (ref 4Q14 report) will

improve earnings

• 1Q15 Net Debt of NOKm 3,09 slightly up from YE 14 of

NOKm 3,02

Capex of NOKm 140 in 1Q15

• Fleet value of NOKbn 4.9 per YE 2014 (semi annual review)

• Remaining estimated capex per 31.12.14 < NOKm 100,

down from NOKbn 1 Q/Q in 3Q14 and NOKm 200 in 4Q14

- excl’ MPSVs and Subsea IMR newbuild announced March

2015

• Net Debt about to stabilize, as stated in 4Q14 report

• EBITDA to recover from 2Q15

2Q15 EBITDA projected to be in line with 2Q14

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Key financial items

Key balance sheet items

* LTM = last twelve months

Fully funded newbuilding program

10

• Initiated newbuild program fully financed

• Boa took delivery of the AHTS Boa Bison July 2014

• Boa Offshore, through its subsidiary Boa PSV, has started a

legal process to look into the company’s rights to cancel the

contracts for the two MPSVs in China according to the British

regulations they are subjected to

The two vessels have in place full refund guarantees from the

yard’s banks

• Boa IMR newbuild to be delivered spring 2017

Long term financing with large shipping bank, limited further

pre-delivery installments, and equity partner

• Remaining estimated capex 2015e for newbuilding program

(incl. Boa Jarl) of < NOKm 100, down from < NOKbn 1 in

3Q14 and NOKm 200 in 4Q14

Excluding VS 495 MPSV newbuilds and IMR newbuild

Vessel Design Yard Delivery

/status Debt financing Ownership Guarantor Total cost Other

Boa Jarl VS 491 Fosen/

Chinese hull H1’15

60% guaranteed SMN/GIEK,

Eksportkreditt funding NFDS Offshore 2 AS

Boa Offshore & Det

Nordenfjeldske Dampskibsselskab

NOKm ~680

+ interests

28k bhp, 600t winch,

ROV hangar

Boa Barge 37 Boa Chinese H2’15 SMN Boa Barges AS Boa Offshore & Boa Holding NOKm ~140 152m semi submersible

Boa IMR NY100 Fosen Q1’17 Large offshore/shipping bank Boa IMR AS Boa Offshore NOKm ~700 LOA 108m, beam 24m

Boa Heron VS 495 Chinese H2’15 70% bank, CDB & Sinosure Boa PSV AS Boa Offshore & Boa Holding USDm ~75 IMR/light construction

Boa Pelican VS 495 Chinese H2’15 70% bank, CDB & Sinosure Boa PSV AS Boa Offshore & Boa Holding USDm ~75 IMR/light construction

Boa Offshore Group – Balance Sheet comments

11

• Boa Offshore Consolidated Cash position per 1Q15 of

NOKm 678, up from NOKm 634 YE 14

Capex (-), Bond re-payment (-)

Working capital (+), Raised bank debt for China

newbuilds escrow (+), net debt neutral

• Boa Offshore AS cash of NOKm 122, down from NOKm

186 YE 14 and up from NOKm 88 in 3Q14

Bond re-payment (-)

Working capital (-) and Modest capex on

Boa IMR (-)

OCV dividend paid in 1Q15 to Boa Offshore AS (+)

• NIBD/EBITDA increased to 8.5x from 6.5x Q/Q on weaker

1Q15 results

Run-rate will improve from 2Q15, LTM to be

hampered

• NIBD about to stabilize

• Relatively strong Value Adjusted Equity ratio of 42,5%

• Limited remaining capex for 2015-16 < NOKm 100

Some equity needed at delivery of Boa IMR spring

2017

NIBD/EBITDA LTM


Solid value backing


Contents

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5 Market Outlook


Boa OCV – state of the art vessels

• Boa OCV consist of the two state of the art offshore

construction vessels Boa Deep C and Boa Sub C, built in

2004 and 2007 respectively

• EBITDA LTM of NOKm 274, up from NOKm 256 in 2014

• 1Q15 EBITDA of NOKm 78, up from NOKm 77 Q/Q and

NOKm 60 Y/Y

Boa Deep C bare-boat rate somewhat reduced from

01.01.15

• NIBD of NOKbn 1.0, unchanged Q/Q

NIBD/EBITDA LTM of 3.7 per 1Q15

• Shipbrokers** average valuation per YE 2014 of NOKbn ~1.9

for both vessels (semi annual review)

• Gross/net LTV unchanged at 63/54%

• Challenging market outlook short-term remains

• Long-term outlook for subsea construction vessels remains

prospective, despite oil companies announcing lower growth

and moderation in investments in the short-term on lower oil

prices

Industry cost decline now make new offshore and

Deepwater projects economically viable below

USD70/bbl

• Short-term and long-term opportunities for Deep C and Sub C

from 2015 remains, both through BMSI and third party users

13

Boa Offshore key P&L

** Source: According to average of two independent shipbroker valuations per 31.12.2014

Tugs and

others Barges

Offshore

Vessels


Boa SBL – specialized seismic vessels

• Owns two modern seismic vessels being the world’s first

custom built vessels for “EM” seismic, built 2008/2009.

On long term contracts to EMGS:

Thalassa firm until Dec’ 2015

Galatea firm until July 2016

• LTM EBITDA of NOKm 72, up from NOKm 64 in 2014

• 1Q15 EBITDA of NOKm 23, up from NOKm 20 in 4Q14

and NOKm 15 in 1Q14

• Strong operational track record with a commercial on-hire

of 99% last four years

• Average shipbroker values* of NOKm 590 (semi annual

review)

2014 NIBD of NOKm 307 = net LTV 52%

NIBD/EBITDA LTM of 4.3x

• Although purpose built for EMGS, vessel design is

generic (MT 6000 series) and vessels can be converted

into:

Traditional 3D seismic/OBN/OBC seismic

Survey/ROV support

IMR/light construction

Offshore Wind Farm support

• More challenging market, but some opportunities persist

Boa SBL key P&L

14

Tugs and

others Barges

Offshore

Vessels

** Source: According to average of two independent shipbroker valuations per 31.12.2014


Boa Barges – world leading operator

• Boa Offshore Group today operates 20 barges of different

capabilities (incl. one newbuild) worldwide

• LTM EBITDA of NOKm 122, up from NOKm 120 in 2014

• 1Q15 EBITDA of NOKm 13, down from NOKm 40 in 4Q14

and up from NOKm 11 in 1Q14

• Larger contracts finalized in 2014

• Built up an in-house engineering capacity that is unique in

the industry performed from Trondheim and Houston

• From 2002 Boa Offshore Group developed its own in-

house design, giving substantial cost savings related to

newbuilding costs

• Boa Offshore offers a unique combination of barges and

tugs to provide total turn-key projects for transportation,

launching or dry docking operations by barges

• Has been in involved in several major field developments

world wide

• Tendering activity slower through winter, but a number of

leads for 2015-16 across several industries including; Oil &

Gas, Power, Offshore Wind, Civil Construction

• 2015 EBITDA projected lower than 2014

• Backlog points to higher EBITDA in 2016/17 again

• Several ongoing discussions for future work

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Tugs and

others Barges

Offshore

Vessels

Boa Barges AS key P&L


Tugs and others

16

Tugs and

others Barges

Offshore

Vessels

• The “other segments” include 10 tugs, smaller barges,

BMSI, Boa Offshore parent activities and AHTS Boa Bison

• LTM EBITDA NOKm -103 (neg) in “other segments”

including eliminations (negative), down from NOKm 22 in

2014

• BMSI with very weak quarter on utilization

• AHTS with yard stay and weak market

• Tugs “in the blue” despite seasonal slow quarter

• Performance to improve significantly in 2Q15 and for

remainder of the year

• Four vessels, Olympic Boa, Boa Deep C, Polar Queen and

Topaz Captain currently chartered to support BMSI’s

strategy

• A number of short/medium term new contracts for BMSI

announced in connection with FY 14 results in US GoM

and Mexico

• More short-term work secured since FY 14 report

• New LOI for Topaz Captain 4 months in South

America

• New LOI for Olympic Boa after current Mexico work

• Market outlook for all of the “other” segment is mixed with

Boa Offshore Parent and Tugs stable, and BMSI and

AHTS improving from very slow winter.

• However visibility beyond 4Q15 still limited

Tugs and others key P&L


Tugs and others – AHTS comments

17

Tugs and

others Barges

Offshore

Vessels

• Boa Bison with yard stay in 1Q15, in addition to

experiencing a weak market

• So far the second quarter has shown a significant

sequential improvement

• Boa Bison has performed well in the spot market since

returning mid March

• 8 spot contracts performed since mid March, one of

the best vessels in class

• Takes time to build track record and reputation

• Market expected to remain volatile (see market

outlook)

• However, relative performance improving

Source: ODS-Petrodata, Boa Offshore

Boa Bison 1Q15 Type Activity Client Fixture Date

Completed Spot Towing Teekay Tankers 31 des 2014

Completed Spot Towing TBA 27 jan 2015

Completed Spot Rig Move Maersk Oil 19 mar 2015

Number of spot contracts 3

Boa Bison so far 2Q15 Type Activity Client Fixture Date

Completed Spot Rig Move TAQA 27 mar 2015

Completed Spot All Duties Statoil 8 apr 2015

Completed Spot All Duties Shell 18 apr 2015

Completed Spot ROV Work MLS 1 mai 2015

Completed Spot Rig Move DNO 15 mai 2015

Completed Spot Rig Move MLS 20 mai 2015

Current Spot All Duties Shell 26 mai 2015

Number of spot contracts 7

AHTS spot vessels > 27,000bhp since 15/3/15

Numer of spot contracts

Boa Bison 8

Vessel A 7

Vessel B 7

Vessel C 7

Vessel D 5

Vessel E 5

Vessel F 5

Vessel G 4

Vessel H 3

Tugs and others – BMSI comments

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Tugs and

others Barges

Offshore

Vessels

• A combination of activity plunge since autumn 14 on

the back of lower oil prices and an influx of vessels to

US GoM from other regions led to extremely poor

utilization for the BMSI fleet in 1Q15

• A restructuring of BMSI has taken place

• A number of contracts awarded to BMSI since

Feb/March will lead to significant EBITDA

improvement in coming quarters

• New LOI 4 months for Topaz Captain in South

America starting end May 15

• Polar Queen on 4+4x1 months contract from

April (only one short contract in 1Q15)

• Deep C several smaller contracts, and ongoing

discussions (two shorter IRM contracts in

1Q15)

• Olympic Boa 90 days in Mexico from mid

March, and new 3 months LOI for 3Q15 (only

two shorter IRM contracts in 1Q15)

• Vessel count to decrease in coming months and peers

have picked up more contracts too, implies short-term

market improvement vs’ slow winter

• Risk on more vessels from Brazil

• However, market remains challenging and prices have

declined

Source: ODS-Petrodata, Boa Offshore

* LAM = Latin America, incl Mexico

Demand drivers US GoM/LAM*

Vessels US GoM min DP2, 90m LOA and 150t crane


Contents

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5 Market Outlook


Growth in subsea expected over time

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• Despite oil companies current moderation in growth plans,

the outlook for the subsea segment remains relatively

robust long-term. Short-term, projects have been

postponed/stopped on lower oil prices

• With the ageing infrastructure and accumulated base the

need for Inspection, Maintenance & Repair (IMR) services

increases (less cyclical than the installation market)

• Number of tree installations likely to increase from an

average of < 300 p.a. in 2010-2013 up to 400 next 2-4

years (all water depths)

Almost 400 under construction for 2015

• Beyond 2015 we probably need to see oil prices back

above USD70/bbl to see planned developments progress

Industry players point to new offshore and Deepwater

projects economically viable <USD70/bbl

Subsea tree installations World Wide

• Number of FPS* installations likely to increase from an

average of ca 18 p.a. in 2010-2014 up to 25-30 next 2-4

years (IHS/ODS-Petrodata)

• Even stronger growth in >1000m water depth

• BOA DEEP C and BOA SUB C with their unique winch

set-ups are both ideal for FPSO installations

Few similar vessels with winch capacity

• The two Boa OCV vessels have previously been involved

in several such FPS installation operations

FPS* installations World Wide

Source: ODS Petrodata, Boa Offshore

Need for more IMR services and vessels

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IMR market:

• Over time the subsea market will most likely continue to

be a growth market due to need for production from

deepwater (subsea) and aging subsea infrastructure

(IMR)

• The estimated accumulated number of producing subsea

wells will reach almost 8,000 in 2018e, up from more

than 5,000 in 2013 (chart down to the left)

• The average age of subsea wells are in most regions

approaching 10 years, with the North Sea having the

oldest base with an average age of 12 years

• With the ageing infrastructure the need for Inspection,

Maintenance & Repair (IMR) services increases

• The number of 100-130m LOA min’ DP2 vessels used for

IMR has increased from 2 in 2007 to more than 20

vessels pt, from less than 10% of the fleet in 2007 to 30-

40% of the fleet today (see chart to the upper left)

• In addition to the need for IMR Services comes also the

need for general support with the growing accumulated

base of offshore projects, Life of Field support,

accommodation support etc

Vessels working IMR mode

World wide # of producing subsea wells

Source: ODS Petrodata, Boa Offshore

North Sea working rigs vs total rigs Demand drivers Rigs

• Number of rigs working in North Sea still above

level last year

• Similar to same period last year a number of rigs in

yard

• Two left yard week of 18/5 (TO Leader + O

Valiant)

• New rigs entering North Sea in 2015/16: Semis,

Jack-Ups and Accommodation Rigs

• Rigs with expiring contracts in risk of not finding new

work

• Net effect of rigs working could still be in line/above

2014 level

FPS

• 3-5 FPSs per year to be installed in 2015-17,

compared with only one in 2014 (Knarr)

Fleet

• The North Sea AHTS fleet has increased since 4Q14

on the back of terminated contracts in Russia and

vessels returning from other regions

• Fleet size bigger risk than demand for 2015/16

North Sea FPSO installations

Current 79 rigs

Source: IHS/ODS Petrodata, Boa Offshore

Petrojarl

Knarr

installert høst

2014

Average 9M2014 – 74 rigs

North Sea AHTS market

Boa Offshore – 1 June 2015 First quarter 2015 Results presentation ...

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