Boa Offshore update March 2014 2013 Results Review Helge ...

Boa Offshore update March 2014

2013 Results Review

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

• Boa Offshore results

Full year 2013 EBITDA continued upwards trend with NOKm 430 reported

- Up from NOKm 382 in 2012 and NOKm 238 in 2011

EBITDA 2H 13 of NOKm 221, up from NOKm 209 in 1H 13 and NOKm 204 in

2H 12

Net profit of NOKm 69 significantly impacted by non-recurring financial costs

• Balance sheet

NIBD/EBITDA increased according to expectations to 4,9x due to drawn down

of debt related to ongoing newbuilds

Liquidity situation post several re- financing actions also continued to improve,

with Cash of NOKm 748 reported per YE 2013 (NOKm 220 YE 2012)

• Stable/growing underlying markets

Most of the segments where Boa Offshore operates continue to experience

stable to increasing demand

The only “open” spot in the consolidated backlog is Boa Deep C – currently

working with BMSI through 2014, but with a number of long-term prospects

pursued from 2015

• Initiated Newbuilding program fully financed

AHTS 2 expected to be announced shortly

4


5 Boa Barges

Contents

5



6 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 fleet of 40 units in various segments, of which 34 owned (including newbuilds)

Subsea installation and construction (Boa OCV/BMSI)

Seismic EM vessel operations (Boa SBL)

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

Rig moves (tugs/AHTS)

Harbor and costal towage and salvage operations (tugs)

• Performs the technical, commercial and operational tasks on behalf of all its subsidiaries, with approximately 355 employees.

• Global presence and operations

• Engineering and project management capacity out of Trondheim and Houston

• Leading player in the global market for heavy lift barges

• Head Office in Trondheim (Norway) and offices in Houston (USA) and Gdynia (Poland)

• LTM EBITDA of NOKm 430

• Fleet value of NOKbn 3.6 per 31.12.13 (excl’ newbuilds)

Approximately NOKbn 6 fully invested (incl’ newbuilds)

• 2013 Net Interest Bearing Debt of NOKbn 2.1

Value adjusted equity ratio of 47% as of YE 2013

6

Business overview – Concentrated in three segments

9 Tugs 20 Barges 11 Offshore Vessels

• 3 ASD escort tugs

• 5 harbour / towage tugs

• 1 harbour tug

• 10 semi-submersible barges

• 6 deck cargo barges

• 3 other barges

• Newbuild BB 37

• OCV – Boa Sub C

• OCV – Boa Deep C

• SBL – Boa Thalassa

• SBL – Boa Galatea

• Newbuilding program

• 3 leased subsea/OCV vessels

Mid-Norway and North Sea operations

Tugs has been the primary business of Boa since inception

Revitalization of this business segment with a substantial fleet renewal 2010-2012

World Wide operations

Leading player in the global heavy lift market

Continuous new building program since 1999

Management of Myklebusthaug Dina Lifter/Launcher

World wide operations

Ongoing modernization of the fleet, incl 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

BMSI solution/ project provider for:

• SURF (subsea, umbilicals, risers and flowlines)

• IRM (inspection, repair and maintenance) of platforms

• Floater moves and installations

• Also use of 3rd party vessels

7

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1 2 3

Boa Offshore Group – fleet overview

• Based on independent broker estimates, the total

charter free market value of the Boa Offshore fleet

was NOKbn 3.6 as of YE 13, excluding newbuilds

Unchanged 6M/6M

• Boa Deep C and Boa Sub C represent more than

50% of the delivered vessels’ total value

• The SBL vessels Boa Thalassa and Boa Galatea

have a combined average value of NOKm 620

• Barges represent NOKm 770 whereas tugs

represent approx. NOKm 230

• Gross LTV incl Newbuilds of 61%, net LTV of 45%

Fleet value by segment YE 2013 excl’ newbuilds

8

EBITDA by segment YE 2013 (NOKm) Built Share

Vessel

value*

Gross

debt** Gross LTV

Boa Deep C 2004 100% 908

Boa Sub C 2007 100% 1,085

Sum Boa OCV 1,993 1,013 51%

Boa Thalassa 2008 100% 310

Boa Galatea 2009 100% 310

Sum Boa SBL 620 390 63%

Barges 2006 100% 770

Tugs and others 1994 100% 230

Sum barges/tugs 1,000 506 51%

Unsecured bond 559

Total delivered vessels 3,612 2,468 68%

Newbuilds - 1,082 406 38%

Adjusted fleet value 4,694 2,873 61%

* Vessel values according to independent shipbroker valuations pursuant to existing loan agreements, two brokers OCV/SBL, one broker Barges & Tugs

** Outstanding loan balance as of YE 13

9

Boa contract backlog larger vessels

• All major vessels virtually firm through 2014

• Boa Deep C* the only owned vessel currently without firm long-term backlog out of the larger vessels

in the Boa Offshore Fleet

• Deep C occupied in US GoM through 2014 on various commitments with BMSI (wholly owned)

• The Polar Queen* and Topaz Captain are not owned and chartered in – however, prospects for these

vessels are relatively good in US GoM and Mexico

• Both vessels now firm with 3rd parties well into H2 14

• Newly chartered in vessel Olympic Boa has already secured some work in US GoM in 2014

• Solid interest for both Deep C and Sub C from 2015

• Galatea and Thalassa expected to work with current client through optional period

* When Boa Deep C and Polar Queen work for BMSI, open days btw contracts can occur. However, a number of contracts for both vessels now secured in 2014


Contents

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5 Market Outlook


Boa Offshore Group consolidated historical financials

• Since 2011 Boa Offshore has streamlined its business

model, now showing results

• Boa Offshore 2013 EBITDA increased to NOKm 430

(growth of 12% y/y)

Boa OCV posted a record strong 2013 with an EBITDA of NOKm 277 (+15% Y/Y)

Barges record strong with EBITDA of NOKm 94

SBL stable at NOKm 55 (higher 2H 13 than 1H 13)

«Other» flat at NOKm 4.

• Net profit of NOKm 68 significantly hampered by non-recurring financial costs associated with re-financing and partly drawing new loans in the group

• Net interesting bearing debt increased to NOKbn 2.1

YE due to ongoing NOKbn > 2 newbuilding program.

2013 Net capex of approximately NOKm 500,

majority in 2H 13

• Initiated newbuilding program fully funded and fully

financed

• Solid key credit matrices

Value adjusted equity 47%

Annualized NIBD/EBITDA 4.9x

11

Key financial items

Key balance sheet items

* Annualized

1775

1274

1758

1363

2126

1487

1000

1200

1400

1600

1800

2000

2200

2400

NIBD Equity

NOKm

2011

2012

2013

Boa Offshore Group relative to peers

12

NIBD/EBITDA Value adjusted equity

EBITDA/Interest expense Return on assets

*Boa Offshore EBITDA figure includes P&L expensed provision for class/periodical maintenance (NGAAP)

** Adjusted for non-recurring financial items reported in 2013 P&L

Source: SpareBank 1 Markets

**

Boa Offshore initiated newbuild program – fully financed

13

• Initiated newbuild program fully financed

• AHTS # 2 will be initiated when the unit is fully financed

In discussion with banks and yard – announcement expected shortly

Approximately 60-70% of needed equity for project injected by YE 13

Remaining part/portion to be accelerated when financing and yard outfitting contract finalized

• Parent company guarantee for all newbuilds from Boa Offshore/Boa Holding and guarantee from Det Nordenfjeldske

Dampskibsselskab AS (AHTS #1 only)

• The two MPSV vessels have in place refund guarantees from the yard’s banks. Vessels are scheduled to be delivered in 1H 2015

• Remaining capex 2014-2015e for newbuilding program (incl AHTS 2) of > NOKbn 1.2

Vessel Design Yard Delivery

/status Debt financing Ownership Guarantor Total cost Other

AHTS #1 VS 491 Fosen/

Chinese hull 1H'14

60% guaranteed SMN/GIEK,

Eksportkreditt funding NFDS Offshore 1 AS

Boa Offshore, Boa Holding & Det

Nordenfjeldske Dampskibsselskab

NOKm ~650

+ interests

28k bhp, 600t winch,

ROV hangar

AHTS #2 VS 491 On hold - conditioned on fully financing Boa Shipping AS N/A NOKm > 650 28k bhp, 600t winch,

ROV hangar

MPSV #1 VS 495 Chinese 1H’15 70% bank, CDB & Sinosure Boa PSV AS Boa Offshore & Boa Holding USDm ~75 IMR/light construction

MPSV #2 VS 495 Chinese 1H’15 70% bank, CDB & Sinosure Boa PSV AS Boa Offshore & Boa Holding USDm ~75 IMR/light construction

Boa Barge 37 Boa Chinese 2H’15 SMN Boa Barges AS Boa Offshore & Boa Holding NOKm ~140 152m semi submersible


Contents

14



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

• Account for > 50% of Boa Offshore values and EBITDA

• EBITDA 2013 of NOKm 277, up from NOKm 240 in

2012.

• NOKm 1,013 gross debt and NIBD of NOKm 807 per

YE 2013

NIBD/EBITDA of 2.9x 2013

Shipbrokers average valuation per YE 2013 of

NOKbn ~2.0 for both vessels

Gross/net LTV per 1H 13 of 51/40%

• Relatively strong outlook for subsea construction

vessels, despite oil companies announcing lower

growth in investments

• Identified attractive possibilities for Deep C and Sub C

from 2015

10 year class of vessel to be performed on Deep

C in March/April. EBITDA typically not materially

impacted as provisions to cover class cost are

charged in the P&L on a running basis and due to

earned allowance days

- Deep C Currently engaged by BMSI through

2014 15

Boa OCV key P&L

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 + 1x12 months

options.

Galatea firm until July 2015 + 2x12 months

options.

• EBITDA 2013 of NOKm 55, in line with NOKm 57 in

2012

• 2H 13 EBITDA of NOKm 29 slightly up H/H from

NOKm 26

Somewhat higher USD/NOK sequentially

• Strong operational track record with a commercial

on-hire of 99% last three years

• Average shipbroker values* of NOKm 620

YE13 NIBD of NOKm 350 = net LTV 56%

• 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

Boa SBL key P&L

16

Tugs and

others Barges

Offshore

Vessels

* Source: According to average of two independent shipbroker valuations

Boa Barges – world leading operator

• EBITDA 2013 of NOKm 94, up from NOKm 83 in 2012

• Boa Offshore Group has since 1998 had continuous

newbuilding program for barges at Chinese yards

• Boa Offshore Group today operates 20 barges of

different capabilities (incl. newbuild) worldwide

Also carrying out management of Myklebusthaug Dina

Lifter/ Launcher

• Built up an in-house engineering capacity that is

unique in the industry

• From 2002 Boa Offshore Group developed its own in-

house design, giving substantial cost savings related

to newbuilding costs

• Boa Offshore Group can offer a unique combination of

barges and tugs to provide total turn-key projects for

transportation, launching or dry docking operations by

barges

• Engineering and project management performed from

Trondheim and Houston

• Has been in involved in several major field

developments world wide

• Current high tendering activity across several

industries including; Oil & Gas, Power, Offshore Wind,

Civil Construction

17

Tugs and

others Barges

Offshore

Vessels

Boa Barges AS key P&L

Tugs and others

18

Tugs and

others Barges

Offshore

Vessels

• 2013 EBITDA of NOKm 4 in “other segments” including

eliminations (negative). Main contributors in “other segments”

are the tug fleet, smaller barges and BMSI

• Boa Offshore (parent) strong results, BMSI up

somewhat Y/Y, while the Tug fleet experienced some

(temporary) challenges in 2013

• Boa currently operates 9 tugs and 9 smaller barges (in addition

to the 10 larger barges in Boa Barges AS) in various

subsidiaries within the group

• BMSI provides engineering, construction and contracting

services related to fixed and floating offshore platforms and

subsea field developments, based in Houston US.

A full-service solution provider with an experienced in-

house engineering group, project managers and

execution staff with extensive track record.

Capable of supporting vast offshore installation

campaigns including: IMR, SURF, and mooring

installations

• Three vessels, Olympic Boa, Polar Queen and Topaz Captain

currently chartered to support BMSI’s strategy

Currently working in US GoM and Mexico

• Contracts for most subsidiaries and assets in “other segments”

are of a short to medium term character.

• 2011 negatively affected by non core assets which where sold

in 4Q 11

• Market outlook for all of the “other” segment is stable to positive

Tugs and others key P&L

Segment outlook: Further improvement in EBITDA expected

in years ahead

19

• 2014-15 stable/slightly lower when Deep C expected to commence new contract(s)

• Several leads for Sub C and Deep C from 2015

• Recent contracts in OCV segment and bidding activity are good leading indicators

• High market activity and delivery of newbuilds projected to modestly increase EBITDA

• Delivery of Boa Barge 34, 43 and 44 in 2013, and BB 37 in 2015/16 will add to earnings

• Offshore construction activity in general showing growth

• Boa Barges expected to grow steadily going forward

• SBL earnings expected to remain stable

• EMGS expected to continue exercising remaining options (until Dec’ 16 and July 17,

respectively)

• Vessels have proven to be a cost efficient and reliable tool for EMGS

• No expansion or investment plans for Boa SBL at present

• NFDS AHTS with delivery in 1H 14

Dayrates in North Sea spot market in 2013 for largest AHTS above NOK420k per day

Recent term fixtures in Kara Sea and Brazil also supportive for term contracts

• Offshore Vessel Newbuilds will add significantly to earnings from 2015

• BMSI with good prospects in active US GoM and Mexico markets

• Considering more chartered in vessels when timing is right (ref Olympic Boa)

• Tugs improvement in 2014

• Long term some expansion could be justified against contracts

SBL

Barges

OCV/Subsea

NFDS/Newbuilds

Tugs/BMSI

* Boa Marine Services Inc.


Contents

20



5 Market Outlook


Industry Book to Bill as leading indicator for Barges, OCV,

and BMSI

• Offshore construction backlogs

currently at all-time high (Saipem,

Subsea7, Technip)

The book-to-bill (B-t-B) ratio was

at 1.3x in 2013

Last three years average of 1.3x

• Above 1.0 indicates future growth

as order intake exceeds turnover

• Lead time for the major projects are

in general 2-3 years

• Indicates higher subsea/offshore

construction activity in years to

come, and most likely demand for

construction vessels and also

barges

• In addition, demand increase seen

from smaller/mid-size IMR and

construction players

Industry Book to Bill

21 Source: Pareto Research, company reports, Boa Offshore

22

Substantial growth in subsea wells and FPSOs expected:

OCV, BMSI

Subsea tree installations World Wide

• Estimated subsea tree installations is a key indicator for vessel activity

• Number of tree installations likely to increase from an average of < 300 p.a. in 2010-2013 up to 400-500 within 2-4 years (IHS/ODS-Petrodata)

Even stronger growth in +2000m water depth

• Most important markets are North Sea, Brazil, and West Africa with US GoM and Australia as runners up

FPSO installations World Wide

• OCV: Boa Sub C and Boa Deep C also well suited for FPS installation due to bollard pull capacity

• Average number of FPS installations p.a. < 20 last 5 years, and below this level in 2011/2012

• Prospect list indicate 25-30 per year on average next five years (IHS/ODS-Petrodata). Some projects will be postponed/turned down

• Includes FPSO, FSRU, FSO, Semi, TLP and Spars

Source: ODS/IHS, Boa Offshore

23

Very few available OCVs in 115-140m category with

DP2/3 and min’ 250t crane

OCV fleet 115-140m LOA/min’ DP2 • Current fleet of offshore construction vessels (all modes) count < 55 vessels in category 115-140m LOA and min’ DP 2 capabilities

• Fleet will increase to around > 65 in 2015

• Some vessels uncertain of timing of delivery.

• Fleet growth matching demand drivers (subsea wells, FPSOs etc, see previous slide)

• Most vessels in this category ordered in 2012-13 with delivery 2014-15 have been contracted on long-term charters

• Good prospects for Deep C and Sub C, both available from early/mid 2015

• These two vessels offers some unique features with wider beam, Crane and bollard pull capacity etc

• Boa Sub C positioned in a higher segment with significantly higher cost and replacement cost of vessels

Source: ODS/IHS, Boa Offshore, UNO, Pareto Research

24 Source: ODS/IHS, Boa Offshore, EWEA

Market drivers Barges and BMSI

Barges Main Markets

• Most of Boa Barges’ main markets are developing favorably in the short to medium term

• Number of fixed platform installations in Mexico will increase from average of 7 in 2012-13 to 17 in 2014-15, of which 24 already under construction

BB 29 and 30 on contract in Mexico from YE 13

Same pattern in West Africa, whereas North Sea is flattening out/coming off somewhat

US GoM subsea activity - BMSI

• Post the Macondo incident in 2010 subsea and deepwater activities have increased again in US GoM

• Around 25 subsea installations performed in 2012, and more than 35 in 2013, and around 70 estimated for 2014 (most of the X-mas trees already under construction)

• Number of Floater drilling rigs will increase from around 40 today to > 50 in 2015/2016

Leading indicator for future subsea activity

North Sea AHTS > 20k bhp spot market dayrates

North Sea AHTS spot Market > 20,000bhp

• Boa Offshore has one large AHTS 28,000 bhp

under construction through NFDS with delivery 1H

14, and plans for one more with delivery 1H 15

• Average dayrate last 9 years around NOK 400,000

• Average dayrate 2005-2008 was NOK 550,000

• Dayrates significantly down in 2009-10 in a

combination of falling demand (rig count etc) and

too many new vessels delivered to the market

• Dayrates recovered in 2013 in a combination of:

Stable/decreasing North Sea AHTS fleet (few

newbuilds delivered) and

Rising demand, rig moves

Improved PSV market, spill-over effect

Other demand more dominant in years 2014-16

(see coming slides)

• Currently around 25 AHTS vessels > 20,000 bhp

working in the North Sea

• Fleet has increased from 11 vessels in 2005

• 33 new AHTS > 20k bhp vessels delivered from

European yards 2005-2013, i.e. around 20 vessels

have left for other markets (mainly Brazil)

• Number of vessels working peaked in 2010

• Only 4-5 large AHTS vessels under construction for

delivery 2014-2016 (1x Far and 2x Boa/NFDS, 1-2x

GBB)

25

North Sea market AHTS > 20,000 Fleet

Source: ODS Petrodata, Boa Offshore, Pareto Research

0

10

20

30

40

50

60

UK Norway

# rigs

Supportive demand factors:

• Number of floater/semisubmersible drilling rigs working up in 2013 vs 2012.

• Larger increase to come in 2014-2016 with > 10 new rigs entering North Sea

Estimated to includie: Island Innovator, Songa x4, Sedco 712, Stena Carron, Blackford, Ocean Patriot, DS

Aberdeen, Bollsta Dolphin, COSL Promoter, COSL Prospector

North Sea AHTS Market: Floater Rigs working

26 Source: ODS Petrodata, Pareto Research

• Number of FPSO installations have been

limited in 2013, will increase again in 2014

and years ahead

• Rosneft/Exxon have contracted 6 AHTS

vessels for their Kara Sea campaign in the

summer of 2014/2015, with options for

2016/17

• In addition, offshore drilling campaigns

offshore Greenland, Alaska and Canada could

materialize in 2014-16 (Cairn, Statoil, Shell

etc)

In 2011, 12 larger OCVs were employed

Offshore Greenland for Cairn Energy, whereof

4 large AHTS vessels

• In sum, minimum 6 vessels will leave the

North Sea spot market for the coming years

(at least seasonal)

27 Source: ODS Petrodata, Boa Offshore, Company reports, Pareto Research

North Sea AHTS Market: Other demand drivers

Usige Gorm Gryphon

Huntington

Athena

Goliat

Knarr

Cheviot

Greater Stella

North Sea FPS installations

Possible Arctic campaigns 2014-16

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