Shipping market outlook 2013- ’16 - CEFOR Cefor/2013/Jonas Kraft - Shipping... · Shipping market...

Shipping market outlook 2013-’16 Cefor Presentation at Grand Hotel

March 2013

Please refer to important disclosures at the end of this document

Market research

Nicolai Hansteen Direct: +47 2287 8817

Email: [email protected]

Equity research

Jonas Advocaat Kraft Direct: +47 2413 2188


Equity research

Eirik Haavaldsen Direct: +47 2413 2120


2

Status quo is depressing for most segments

Source: Pareto Research, Marsoft

Utilization is the key indicator for shipping returns

75% 100%

Depression

Euphoria..

80% 85% 90% 95%

Container Tanker Bulker

LNG

Day

rate

s

Fleet utilization

Day

rate

s

Improving

3

Table of contents

1. Dry bulk

2. Product tankers

3. Crude tankers

4. LNG

4

Smaller dry bulkers outperform larger due to versatility

Source: Pareto Securities, Marsoft, Clarksons Research Services

Capesize spot rates Panamax spot rates

Supramax spot rates Handysize spot rates

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Jan Feb Mar Apr May June Jul Aug Sept Oct Nov Dec5 Yr Avg 2012 2013 Current

USD/d

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Jan Feb Mar Apr May June Jul Aug Sept Oct Nov Dec

5 Yr Avg 2012 2013 Current

USD/d

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000


USD/d

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000


USD/d

5

Dry bulk market balance to turn positive during 2013

DWT supply growth vs DWT demand growth

We estimate the dry bulk market balance to turn positive in 2013 with net supply growth at 7%, below DWT demand growth of 8%

Source: Pareto Securities, Marsoft

5.3%3.8%

13.4%

11.3%10.0% 7.7%

6.0%

4.4%

7.1% 7.1%

14.9% 15.2%

12.9%

6.7%

2.6%2.1%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2008 2009 2010 2011 2012e 2013e 2014e 2015eDemand growth, DWT Supply growth, DWT

y/y growth

6

… which should lead to higher market utilization

We forecast utilization to improve in 2013 and onwards, yet stay below the 10-year avg of 93%

Rates should stay below pre-financial crisis levels, but slowly increase from the lows in 2012

Dry bulk fleet utilization

Source: Pareto Securities, Marsoft

Base case USD/dCape (170' dwt) "

Pmax (74' dwt) "

Hmax (51' dwt) "

Hsize (27' dwt) "

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013e 2014e 2015e 2000-2011 avg21,000 13,000 12,000 41,000 69,000 50,000 45,000 117,000 105,000 42,000 33,000 16,000 8,000 12,000 19,000 28,000 47,000

11,000 9,000 8,000 20,000 36,000 25,000 24,000 57,000 49,000 19,000 25,000 14,000 8,000 9,000 16,000 20,000 25,000

11,000 9,000 9,000 16,000 31,000 24,000 23,000 48,000 41,000 17,000 22,000 14,000 10,000 10,000 15,000 18,000 22,000

7,000 6,000 7,000 11,000 19,000 17,000 14,000 30,000 29,000 11,000 16,000 11,000 8,000 8,000 11,000 13,000 15,000

95%96%

95%95.2%

97.3%

95.6%

92.7% 91.5%

88.4%

86.2%87.0%

89.9%

91.9%

0

20,000

40,000

60,000

80,000

100,000

120,000

80%

82%

84%

86%

88%

90%

92%

94%

96%

98%

100%

2003 2005 2007 2009 2011 2013e 2015e

Avg capesize rates (rhs) Utilization (lhs)

Utilization % USD/d

7

Steel mills ramping up production for fiscal stimulus package

Growth in global steel production is centered on China

Source: Marsoft/Pareto

China est. 2013 2014 2015 2016

GDP ∆ 8.2% 8.5% 9.1% 8.8%

Steel prod. ∆ 7.3% 7.5% 7.2% 7.1%

Best case 8.5% 8.7% 8.3% 8.1%

Low case 4.2% 4.4% 4.3% 4.1%

Growth in global steel production is centered on China

Fiscal stimulus package of RMB 1 trillion, equivalent of USD 150 bn, is being directed primarily at new infrastructure projects

Steel mills are ramping up production geared towards the construction sector

0

200

400

600

800

1000

1200

1400

1600Other Asia Japan Europe China

Million metric tonnes

8

Iron ore imports boosted by ramp-up in steel production

China’s iron ore imports will reach 1bn tons by ‘15

Source: Marsoft/Pareto

Ramp-up in steel production boosting iron ore intake

China’s imports will exceed 800 mill. tons in ’13

Annualized imports of 1bn tons in Q4 2015

China’s iron ore is becoming poorer in Fe content. Average domestic iron ore estimated to 16.5% in Fe grade

Consequently, China’s import need is not only about need for volumes, but also about need for higher grade material to offset its domestic low grade iron ore

Calling on Australia and Brazil

0

200

400

600

800

1000

1200Brazil Australia India Other

Million metric tonnes

9

Newbuilds at historical troughs

Capesize newbuilding prices at historical low adjusting for inflation, given a NB price of USD 46m

The calculation uses US inflation rate. Inflation adjusted levels probably higher historically, given above inflation growth rates in steel plate and labour costs

Nominal and inflation adjusted capesize NB prices

Source: Pareto Securities, Clarksons Research Services

0

20

40

60

80

100

120

1986 1988 1990 1992 1994 1996 1997 1999 2001 2003 2005 2007 2009 2011

Nominal prices Inflation adj. prices

USDm

10

Table of contents

1. Dry bulk

2. Product tankers

3. Crude tankers

4. LNG

11

World oil production, demand and refinery capacity growth from 2012 to 2016

*Production growth excludes biofuels and OPEC NGLs Source: IEA; Pareto

North America

-1012345

Prod Demand Refinery

Latin America

Europe

FSU

Asia

-1012345


-1012345


-1012345


-1012345


-1012345


-1012345


Africa

Middle East

12

The tanker market is changing in favor of product tankers

Source: D’Amico Shipping

Tanker shipping evolution

Refining capacity building up closer to the oil reserves, in particular in the Middle East

ME refining capacity is expected to grow with as much as 1.2mbd over the next three years, and 1.9mbd per day 2011-2017

Despite India and China also rapidly ramping up capacity, we expect product trade from the Middle East to Asia to grow rapidly going forward

In OECD countries, we see limited new refinery expansion, and their relatively older refineries are also less able to alter between different product types

All of this results in increased tonne-mile demand for all types of product types:

− Regional market imbalances (shortage in OECD..)

− Arbitrage trading emerging

13

Second lowest orderbook in the shipping industry

Source: Pareto Securities, World Yards,

The total product tanker orderbook is now at 9.5%

Nominal orderbook by segment in DWT

22.3% 22.2%18.1%

11.8% 11.7%9.5% 9.3% 7.9%

0%

5%

10%

15%

20%

25%

Container LNG Drybulk Crude LPG Product Ro-Ro Chemical

% of exis ting fleet

14

LR2 orderbook is low

Lowest nominal orderbook in the LR2 segment: 3.9% of existing fleet

Source: Pareto Securities, WorldYards

Product tanker nominal orderbook in dwt

3.9%6.4%

16.5%

11.0%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

LR2 LR1 MR MR Chem/Prod

% of fleet

15

Demand growth exceeds supply growth

We reiterate our view that the product tanker market will tighten going forward after four very difficult years

Net supply growth of 3.7% forecasted for 2013, below demand growth of 4.6%. The net market balance tightens further in 2014 and 2015

DWT supply/demand growth vs prod tankers avg earnings

Source: Pareto Securities, Clarksons

3.7% 3.2%

0.9%

4.6%

6.2% 6.1%

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

-5%

0%

5%

10%

15%

20%

2002 2004 2006 2008 2010 2012 2014E

Clean tankers avg earnings (rhs) Supply (lhs) Demand (lhs)

y/y change, % USD/d

16

Spot bombed out – but shows signs of recovery

Source: Pareto Securities, Clarksons

YTD avg tanker earnings of USD 18,500/d well above the avg the past four years, but below the ’01-’09 avg

− 2009-2012: USD 12.0k/d

− 2001-2009: USD 25.8k/d

− 1990-2012: USD 16.6k/d

Clean tanker average TCE earnings (all segments)

0

10,000

20,000

30,000

40,000

50,000

60,000

1990 1991 1993 1995 1997 1999 2001 2002 2004 2006 2008 2010 2012

USD/d

17

Volatility implies a tighter market

MR rates on the benchmark Cont-USAC leg (TC2) has avg USD 18k/d YTD

Rate spikes in the Atlantic MR market indicate that capacity utilization should be in the high 80’s level

Source: Pareto Securities, Imarex, Bloomberg, Clarksons Research Services

MR spot rates

-5,000

0

5,000

10,000

15,000

20,000

25,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

USD/d

2012 2013 FFA 2013 FFA 2014

MR rates Cont-UK/USAC (TC2) and current FFA

0

7,500

15,000

22,500

30,000

2003 2005 2007 2009 2011 2013e 2015e

USD/d

Spot 10yr average

Spot USD/d 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013e 2014e 2015eLR2 " 31,000 40,000 41,000 32,000 26,000 43,000 17,000 15,000 10,000 12,000 16,000 21,000 27,000LR1 " 25,000 32,000 34,000 28,000 27,000 37,000 14,000 14,000 8,000 12,000 16,000 19,000 23,000MR " 18,000 24,000 25,000 22,000 21,000 21,000 8,000 8,000 8,000 7,000 15,000 17,000 20,000

18

Nominal newbuild prices at inflation adjusted trough levels

Nominal and inflation adjusted MR NB values

Source: Pareto, Clarksons Research Services, Bloomberg

MR newbuilding prices at the lowest level since beginning of 1987 adjusting for inflation, given a NB price of USD 33m

With spot rates back to ’04-’08 levels, this implies an EBITDA payback of 5-6x

0

10

20

30

40

50

60

70

80

90

1976 1978 1980 1983 1985 1987 1990 1992 1994 1997 1999 2001 2004 2006 2008 2011

Nominal prices Inflation adj prices

USDm

19

Fuel efficient designs indicate downside in resale values

MR values and NPV of fuel savings over the lifetime of the asset

Source: Pareto Securities

The NPV of the fuel savings of a MR which burns 20% less fuel is USD 9m over the lifetime of the vessel (USD 4,600/d)

This indicates further downside in resale values, given that resales are trading on oar with current broker quotes

FRNT 2012 estimate the cost efficiencies of new generation eco-design MR to be USD 6,000/d, which implies a NPV of 12m over the lifetime of the vessel

Assumptions:

− WACC 10%, 25 years lifetime, standard consumption 35 tons/d, bunker price IFO 380 cst at USD 650/t, 20% savings fuel efficient design, 205 effective fuel consumption days (65% of days at sea, 55% of seatime in laden condition, 70% of consumption in ballast versus laden condition)

33

9

24

33

0

5

10

15

20

25

30

35

MR NB cost current NPV bunker savings MR implied valueresale

MR resale currentquote

USDm -26%

20

Table of contents

1. Dry bulk

2. Product tankers

3. Crude tankers

4. LNG

21

Crude tanker supply/demand balance

Source: Pareto, Marsoft

We forecast the crude tanker market will remain difficult through 2013 and 2014

Demand growth stable around 2.5%

Recovery likely to be slow

In the supply growth figures we here assume just below 10m dwt of crude tanker capacity scrapped:

− 5.9m dwt VLCC (19 vessels)

− 2.4m dwt Suez (15 vessels)

− 1.3m dwt Afra (12 vessels)

It will be a difficult 2013, but hopes for recovery in 2014

5.2%

2.3%

6.5%

3.9%

7.7%

5.3%4.1%

2.3%

-1.5%0.8%

-1.9%

-5.5%

5.0%4.4%

5.6%

2.1% 2.3% 2.6%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

2007 2008 2009 2010 2011 2012 2013E 2014E 2015E

Net supply growth Demand growth

22

2013 becoming the worst year ever?

Source: Pareto, Clarksons, PF Bassøe

2013 starting off as the worst year – in history

Average YTD for VLCCs is ~7k

February-March seeing an average of ~2.8k

VLCC average spot rates

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000


USD/d


23

2013 becoming the worst year ever?


2013 starting off as the worst year – in history

Average YTD for VLCCs is ~7k

February-March seeing an average of ~2.8k

VLCC average spot rates in Q1

22,141

69,435

90,45987,39385,357

47,635

129,456

56,44154,704

23,08621,330

7,203

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

24

Somewhat better for suezmaxes


Driven by some higher Black Sea – Med. activity Suezmax rates improved somewhat last month

Still, levels below 2012

Suezmax average spot rates

0

10,000

20,000

30,000

40,000

50,000

60,000


USD/d


25

VLCC fixture activity picked up last week

Total VLCC spot fixtures

Source: Pareto, Clarksons

51 fixtures last week, compared with 4W average of 37

Positive trend, after a very slow start

Spike actually driven by AG-West rather than East

10

15

20

25

30

35

40

45

50

55


Vessels


26

Yet, vessel availability remains at unusually high levels

VLCC availability MEG next four weeks


94 vessels expected to the MEG over the next four weeks

10

20

30

40

50

60

70

80

90

100

110

120

130


Vessels


27

No matter what, 2013 will be weak!

Current fleet vs. orderbook for VLCCs


642

5623

0

100

200

300

400

500

600

700

Current fleet 2013 deliveries 2014 deliveries

# of VLCCs

~9% ~4%

28

No scrapping so far in 2013

VLCC and Suezmax scrapping: Q1 09-13

Source: Wordlyards

Not a single VLCC or suezmax scrapped so far in 2013…

One reason could be that listed players do not want to take huge write-downs

1

10

1

6

0

1

5

2

8

00

2

4

6

8

10

12

14

16

Q1'09 Q1'10 Q1'11 Q1'12 Q1'13

# of vessels Suezmax

VLCC

29

Table of contents

1. Dry bulk

2. Product tankers

3. Crude tankers

4. LNG

100

110

120

130

140

150

160

0

2

4

6

8

10

12

14

Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13

Spot rate $'/day $/btu spread JPN-EUR

Gas price spread JPN-EUR LNG spot rates

30

LNG spot rates coming further down

Source: Pareto Securities, Factset, Fearnley LNG

LNG spot rates vs. Euro-JPN gas price spread

Spot rates now reported below USD 110’/day

Warmer weather in Asia has also reduced demand for LNG there, resulting in falling natural gas prices

31

Because of lack of LNG supply

Source: Pareto Securities, Bloomberg

Growth in LNG supply (bcm)

Global LNG supply fell in 2012, after a few years of rapid growth

This is due to delays in project start-ups, but also significant production issues in many existing plants

-5%

0%

5%

10%

15%

20%

25%

2009 2010 2011 2012 2013e 2014e 2015e 2016e

LNG supply growth y/y

32

Uncommitted newbuilds starting to arrive later this year


Delivery schedule LNG carriers

Current orderbook ~24% of existing fleet, with most of this arriving in 2014

~44% of vessels under construction do not have contracts at this point

20 vessels arriving in 2014 without contracts secured at this point

2

56

35

65

3

01 1

01 1

7

5 3

6

33

5

5

21

4

0

2

4

6

8

10

12

Q1'13 Q3'13 Q1'14 Q3'14 Q1'15 Q3'15 Q1'16 Q3'16

# of units

Contracted Available

33

And the market balance is uncertain going forward


Growth in LNG supply (bcm)

Supply growth – in terms of LNG vessels) is outgrowing demand growth in 2013-2015

87 vessels in the orderbook between now and 2017, with 37 of them being without contract

Seven of those arriving this year, 20 in 2014 and eight in 2015

0.1% 0.4%

2.4%

4.0%3.3%

4.5%

3.6%

2.0%2.7%

7.3% 7.1%

3.7%

0.9%

0.0%

-3%

-1%

1%

3%

5%

7%

9%

2012e 2013e 2014e 2015e 2016e 2017e 2018e

Growth y/y

Demand Supply (Fleet orderbook, ex. options)

34

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Market rules, conventions and practices may differ from U.S. markets, adding to transaction costs or causing delays in the purchase or sale of securities. Securities of some non-U.S. companies may not be as liquid as securities of comparable U.S. companies. Auerbach Grayson & Company and/or Pareto Securities Research may have material conflicts of interest related to the production or distribution of this research report which, with regard to Pareto Securities Research, are disclosed herein. Pareto Securities Inc. is a broker-dealer registered with the U.S. Securities and Exchange Commission and is a member of FINRA & SIPC. U.S. To the extent required by applicable U.S. laws and regulations, Pareto Securities Inc. accepts responsibility for the contents of this publication. Investment products provided by or through Pareto Securities Inc. or Pareto Securities Research are not FDIC insured, may lose value and are not guaranteed by Pareto Securities Inc. or Pareto Securities Research. Investing in non-U.S. securities may entail certain risks. This document does not constitute or form part of any offer for sale or subscription, nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. The securities of non-U.S. issuers may not be registered with or subject to SEC reporting and other requirements. The information available about non-U.S. companies may be limited, and non-U.S. companies are generally not subject to the same uniform auditing and reporting standards as U.S. companies. Market rules, conventions and practices may differ from U.S. markets, adding to transaction costs or causing delays in the purchase or sale of securities. Securities of some non-U.S. companies may not be as liquid as securities of comparable U.S. companies.

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Distribution in Singapore Pareto Securities Asia Pte Ltd (“Pareto Securities Asia”) is an exempt financial advisor under the Singapore Financial Advisers Act and a subsidiary of Pareto Securities AS in Singapore. This report is directed only to "accredited investors", "expert investors" and "institutional investors" as defined in the Singapore Securities and Futures Act. This report is intended for general circulation amongst such investors and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should seek advice from a financial adviser regarding the suitability of any product referred to in this report, taking into account your specific financial objectives, financial situation or particular needs before making a commitment to purchase any such product. Please contact Pareto Securities Asia, 16 Collyer Quay, # 27-02 Hitachi Tower, Singapore 049318, at +65 6408 9800 in respect of any matters arising from or in connection with this report. Copyright This publication or report may not be mechanically duplicated, photocopied or otherwise reproduced, in full or in part, under applicable copyright laws. Any infringement of Pareto Securities Research´s copyright can be pursued legally whereby the infringer will be held liable for any and all losses and expenses incurred by the infringement.

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Appendix B

Disclosure requirements pursuant to the Norwegian Securities Trading ST Regulation § 3-11, letters d-f, ref the Securities Trading Act Section 3-10

Overview over issuers of financial instruments where Pareto Securities AS have prepared or distributed investment recommendation, where Pareto Securities AS have been lead manager/co-lead manager or have rendered publicly known not immaterial investment banking services over the previous 12 months:

Appendix C

Disclosure requirements pursuant to the Norwegian Securities Trading ST Regulation § 3-11 (4)

Column I shows the overall ratio of “Buy”, “Hold” and “Sell” in Pareto’s Recommendations in financial instruments.

Column II shows the ratio of “Buy”, “Hold” and “Sell” in Pareto’s Recommendations in financial instruments where Pareto Have provided investment banking services to the issuer the previous 12 months.

Appendix A

Disclosure requirements pursuant to the Norwegian Securities Trading Regulations section 3-10 (2) and section 3-11 (1), letters a-b

Pareto Securities AS does not alone or - together with affiliated companies or persons – owns a portion of the shares exceeding 5 % of the total share capital in any company where a recommendation has been produced or distributed by Pareto Securities AS.

Pareto Securities AS or its affiliates own as determined in accordance with Section 13(d) of the Exchange Act, 1 % or more of the equity securities of Equinox Offshore Accommodation Ltd.

Pareto Securities AS may hold financial instruments in companies where a recommendation has been produced or distributed by Pareto Securities AS in connection with rendering investment services, including Market Making.

Please find below an overview of material interests in shares held by employees in Pareto Securities AS, in companies where a recommendation has been produced or distributed by Pareto Securities AS.

By material interest is meant holdings exceeding a value of NOK 50 000.

Column I Column II

Buy 66.1% 85.70%

Hold 25.4% 11.40%

Sell 8.5% 2.90%

This overview is updated quarterly (last updated 15.01.2013).

CompanyAnalyst

holdingsTotal

holdingsCompany

Analyst holdings

Total holdings

Archer - 17 500 Olav Thon Eiendomsselskap - 920

Bonheur - 15 800 Orkla - 22 564

BW Offshore - 61 686 Petroleum Geo-Services - 2 700

BWG Homes 14 300 14 300 Prosafe - 1 405

Cermaq - 3 000 Protector Forsikring - 499 000

Discovery Offshore - 12 000 Questerre Energy - 67 000

DNB - 48 227 Renewable Energy Corp - 52 256

DNO International - 20 400 S.D. Standard Drilling - 100 000

DOF - 100 000 SalMar - 58 400

EOC Limited - 25 000 Sandnes Sparebank - 5 617

Farstad Shipping - 21 700 Seadrill - 5 500

Fred Olsen Energy 100 300 Selvaag Bolig - 50 000

Gjensidige Forsikring - 48 528 Ship Finance Ltd - 3 184

Golden Ocean Group - 50 200 Solstad Offshore - 4 100

Havila Shipping - 3 650 Sparebank 1 Nord-Norge - 20 637

Höegh LNG - 7 263 Sparebank 1 SR-Bank - 143 117

Itera 40 000 41 000 Sparebanken Øst - 22 349

Kongsberg Gruppen - 59 700 Statoil - 8 742

Lerøy Seafood Group - 20 700 Storebrand - 2 263

Marine Harvest Group - 20 000 Subsea 7 - 76 471

Morpol - 18 000 Telenor - 7 800

Noreco - 75 000 TGS-NOPEC - 7 450

Norsk Hydro - 286 308 Veidekke - 42 400

Northland Resources - 467 000 Wilh. Wilhelmsen Holding A - 404

Odfjell - 7 300 Yara International - 30 519

This overview is updated monthly (las t updated 31.12.2013)

- Aker - Havila Shipping - Protector Forsikring

- Aker Floating Production - Hercules Offshore - Rocksource

- Austevoll Seafood - Houston American Energy Corp - Saga Tankers

- BassDrill - Höegh LNG - SalMar

- Bergen Group - Idex - Scana Industrier

- Berner Gruppen - Interoil - Scandinavian Insurance Group

- BN Bank - Kistefos - Seadrill

- BW Offshore - KrisEnergy - Selvaag Bolig

- Clearwater - Mecom Group - Siemens

- Concedo - Morpol - Sigma Drilling

- DDI - Neptune Offshore - SinOceanic Shipping

- Det Norske Oljeselskap - Noreco - Solør Bioenergi

- DNB - Norse Energy Corp - Songa Offshore

- Dockwise - North Atlantic Drilling - Sparebank 1 SR Bank

- DOF - North Energy - Sparebanken Møre

- Dolphin Group - Northern Offshore - Sparebanken Øst

- EMS Seven Seas - Northland Resources - Teekay

- Equinox - Ocean Yield - Teekay LNG

- Expro Intl Group - Oceanteam Shipping - Tizir

- Floatel - OSX - Troll

- GasLog - Pacific Drilling - TTS Group

- Global Investment Group - Panoro Energy - Wilh. Wilhelmsen

- Grieg Seafood - Prosafe - Xtreme Drilling and Coil Services

- Haikui - Prospector Offshore Drilling - Protector Forsikring

- Rocksource

This overview is updated monthly (this overview is for the period 31.12.2011 – 31.12.2012).

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Appendix D

This section applies to research reports prepared by Pareto Öhman AB.

Disclosure of positions in financial instruments

The beneficial holding of the Pareto Group is 1 % or more of the total share capital of the following companies included in Pareto Öhman AB’s research coverage universe: Isconova.

The Pareto Group has material holdings of other financial instruments than shares issued by the following companies included in Pareto Öhman AB’s research coverage universe: RusForest.

Disclosure of assignments and mandates

Overview over issuers of financial instruments where Pareto Öhman has prepared or distributed investment recommendation, where Pareto Öhman AB has been lead manager or co-lead

manager or has rendered publicly known not immaterial investment banking services over the previous twelve months:

Africa Oil Isconova ShaMaran PetroleumAlpcot Agro Klövern SagaxBlackpearl Resources Lucara Diamond Tethys OilBlack Earth Farming RusForest Vostok Nafta

Members of the Pareto Group provide market making or other liquidity providing services to the following companies included in Pareto Öhman AB’s research coverage universe:

Africa Oil Isconova Tethys OilBlackperal Resources ShaMaran Petroleum Trigon AgriLucara Diamond

Members of the Pareto Group have entered into agreements concerning the inclusion of the company in question in Pareto Öhman AB’s research coverage universe with the following companies:

Africa Oil, Isconova, Shamaran Petroleum.

This overview is updated monthly

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