DOF ASA Investor Presentation 2017 - DOF Group
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Investor Presentation 2017 DOF ASA
DISCLAIMER
This presentation ("Presentation") has been prepared by representatives of DOF ASA (the "Company" or "DOF"), and together with its subsidiary, the "Group" or the
"DOF Group") based on publicly available information for use in presentations by the Company solely for information purposes, and this document and the information
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reflect material developments which may occur after the date of the Presentation.
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Matters discussed in this Presentation may constitute or include forward-looking statements. Forward-looking statements are statements that are not historical facts and
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assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to
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any forecast result will be achieved and you are cautioned not to place any undue influence on any forward-looking statement.
DOF ASA – Q3 presentation 2017 2
The contents of this Presentation shall not be construed as legal, business or tax advice. Each reader of this Presentation should consult its own legal, business or tax advisor as to legal, business or tax advice. If you are in any doubt about the contents of this Presentation, you should consult your stockbroker, bank manager, lawyer, accountant or other professional adviser. This Presentation and the information contained herein are not an offer of securities for sale in the United States and are not for publication or distribution to persons in the United States (within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”)). The securities of the Company have not been and will not be registered under the Securities Act and may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act. Any failure to comply with this restriction may constitute a violation of United States securities laws. In any member state of the European Economic Area (the “EEA”) that has implemented Directive 2003/71/EC (such directive and amendments thereto, including Directive 2010/73/EU, to the extent implemented in each relevant EEA member state, together with any applicable implementing measures in the relevant home member state, the “EU Prospectus Directive”), this Presentation is only addressed to and directed at Qualified Investors in that member state within the meaning of the EU Prospectus Directive. This Presentation is not a prospectus for the purpose of the EU Prospective Directive and does not contain the same level of information as a prospectus. This Presentation will only be communicated to persons who have professional experience, knowledge and expertise in matters relating to investments and are "investment professionals" for the purposes of article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 and only in circumstances where, in accordance with section 86(1) of the Financial and Services Markets Act 2000 (“FSMA”) the requirement to provide an approved prospectus in accordance with the requirement under section 85 FSMA does not apply. Consequently, the shares may be offered only to “qualified investors” for the purposes of sections 86(1) and 86(7) FSMA, or to limited numbers of UK investors, or only where minima are placed on the consideration or denomination of securities that can be made available (all such persons being referred to as "relevant persons"). Any application or subscription for the shares is available only to relevant persons and will be engaged in only with relevant persons. Neither this document nor any copy of it may be taken, released, published, transmitted or distributed, directly or indirectly, in or into the United States, Canada, Australia or Japan. Any failure to comply with this restriction may constitute a violation of United States, Canadian, Australian or Japanese securities laws. This Presentation is also not for publication, release or distribution in any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction nor should it be taken or transmitted into such jurisdiction and persons into whose possession this document comes should inform themselves about and observe any such relevant laws. No money, securities or other consideration is being solicited, and, if sent in response to this Presentation or the information contained herein, will not be accepted. This Presentation shall be governed by Norwegian law and any dispute arising in respect of this Presentation shall, if not resolved amicably, be finally resolved by arbitration according to the Norwegian Arbitration Act of 14 May 2004 no. 25. The place of arbitration shall be Oslo and the arbitration proceedings shall be conducted in English. The dispute, the arbitration proceedings and the arbitral award shall be confidential and a separate confidentiality agreement shall be entered into by the parties prior to the commencement of the arbitration proceedings. DOF ASA – Q3 presentation 2017 3
Agenda
1. Transaction
2. Company update
3. Segments
4. Appendices & Risk Factors
DOF ASA – Investor presentation November 2017 4
Increasing ownership in DOF Subsea and extending runway to 2022
DOF ASA is raising NOK 500 million of new equity in a private placement
NOK 400 million pre-committed by the main shareholder Møgster Mohn Offshore
Increasing ownership in DOF Subsea from 51% to 65% at the bottom of the cycle and extending runway to 2022
Subject to i.a. extension of credit facility with main banks until mid 2021 and bondholder approvals in DOF Subsea
DOF ASA is fully subscribing NOK 500 million of new equity in DOF Subsea AS at NOK 10.5 per share
DOF ASA’s ownership increases from 51% to 65% – First Reserve diluted from 49 % to 35%
Implied pre-money equity value of NOK 1.26 billion – discount to book value of NOK ~6 billion
Equity issue is conditional upon extension of DOF Subsea 2018 bond to May 2020 (at terms as described on page 5)
All DOF Subsea assets delivered from 1Q 2019
DOF Rederi AS extending runway by 2 more years
Banks reducing secured debt amortizations by additional two years on soft terms with estimated cash impact of NOK 550 million
DOF ASA is attractively positioned:
65% of EBITDA is from Subsea with high contract coverage
25% of EBITDA is from the Brazilian activity, long term contracts, local flag privileges and long-term funding from BNDES
10% of EBITDA is from the offshore supply vessel activity
DOF ASA – Investor presentation November 2017 5
The Private Placement
Issuer: DOF ASA (OSE ticker code “DOF”) Use of proceeds: Finance subscription of NOK 500 million in
new equity issue in DOF Subsea AS, fulfill lenders’ conditions
Total number of shares fully diluted: 1 994 561 603 for two more years of soft borrowing terms, extend credit
Ordinary shares : 1 683 979 100 facility and general corporate purposes
Mandatorily convertible zero-coupon Bond: 310 582 503 Conditions: EGM approval, lenders approval, and
Subordinated Convertible Bond (CB) is only repayable through shares bondholders approval of extension until May 2020 (with NOK
100 million amortization in October 2019) @ NIBOR+7%
Transaction: Equity issue of 500 million through a private
placement Listing: The new shares issued will be issued on separate
ISIN following registration of the new share capital. Delivery of
Subsequent offering expected to commence around 1 February borrowed shares already listed on OSE under a share lending
2018 for eligible shareholders and subordinated convertible agreement with Møgster Mohn Offshore AS. Listing of the
bondholders who have not participated in the private placement new shares on OSE following publication of a prospectus
Subscription price: NOK 0.60 per offer share Timing:
Pre-commitment: The main shareholder Møgster Mohn Offshore 27 November – announcement
AS has pre-committed to subscribe for NOK 400 million. 28 November – Summons to Extraordinary General
Meeting and DOF Subsea bondholder meeting
Offer shares: 833,333,333, corresponding to 29.5% of total 12 December – Bondholders meeting
outstanding shares post transaction (including mandatorily
19 December – EGM
subordinated CB)
20 December – Payment of subscribed shares
Managers: Pareto Securities AS, ABN Amro, Clarksons Platou 21 December – Delivery of borrowed shares DVP
Securities, Nordea Markets 31 January 2018 – Approval of prospectus and listing of
new shares
DOF ASA – Investor presentation November 2017 6
Increased ownership in DOF Subsea at attractive terms
DOF ASA is increasing the ownership in DOF Subsea from 51% to 65% at attractive LT Chartering – growth from 2x
terms newbuilds with 8-year contracts
DOF ASA is investing NOK 500 million in new equity at a pre-money value of NOK 1.26 EBITDA (excl. sales gains) NOK million
~9 vessels in
operation by Q1’19
billion compared to book value of NOK 6 billion
Increasing ownership by 14%-points at NOK ~4.5 billion discount to book 1119
787
499
285 295 370
DOF Subsea has a fleet of state-of-the-art subsea vessels and one of the world’s largest
owned fleets of work ROVs 2012 2013 2014 2015 2016 Last 2019
12m
Long-term Chartering – 9x high-end construction vessels (whereof 6 in JV with
TechnipFMC), average remaining contract tenor ~5 years, 77% EBITDA margin
YTD and NOK 12.4 billion in backlog Subsea IMR Projects – bottom of
Subsea IMR Projects – 17x vessels with ~71 ROVs and ~1 300 employees – NOK the cycle
3.9 billion in backlog EBITDA (excl. sales gains) NOK million
1,728
1,649
1,542
DOF Subsea has an aggregate firm backlog of NOK 16.3 billion compared to net debt of 1,503
NOK 11.4 billion post-money
945
Capex NOK 1.9 billion next 18 months (2 JV vessels with TechnipFMC with
BNDES financing)
301
2012 2013 2014 2015 2016 Last 2019
12m
DOF ASA – Investor presentation November 2017 7
Agenda
1. Transaction
2. Company update
3. Segments
4. Appendices & Risk Factors
DOF ASA – Investor presentation November 2017 8
DOF Group overview
Contract backlog Fleet
Assets
Firm contracts: NOK 24 billion Group fleet of 68 vessels (wholly and • 68 vessels
Options: NOK 34 billion partly owned) including 2 JV newbuilds
(PLSVs) and one chartered-in vessel
Net debt**: NOK 20.8 billion 1 Subsea
Remaining capex: NOK ~1.9 billion 17 AHTS
Whereof 40 vessels owned by DOF 29
**per 30.9.2017 PSV
Rederi and Norskan; 24 vessels are
owned by DOF Subsea and 3 vessels 20
Chartered Subsea
Vessels
under management
Global organization • 71 ROVs
Head office in Norway • 1 subsea vessel chartered in from
Total market value of owned vessels in external owner
Regional offices in Australia, Singapore, UK, operation NOK ~33.5 billion based on
USA, Canada, Angola, Argentina and Brazil ship broker valuations
Total 4 077 employees Average age fleet of 9.4 years (value
adjusted average age of 6.3 years)
Subsea employees: 1 287
Marine personnel: 2 790
DOF ASA – Investor presentation November 2017 9
DOF Group
DOF ASA
Norskan “DOF Rederi” DOF Subsea
NOK ~5.4 bn net debt 1) NOK ~3.15 bn net debt 2) NOK ~11.4 bn net debt
Wholly-owned Brazilian entity The international OSV activities To be owned 65/35% with First
Reserve Corporation
Owner of 12 vessels mainly “high-end” 30 vessels mainly PSV and AHTS
AHTS fleet with Brazilian flag (owned wholly or partly) Subsea contractor, built global
presence over the last 10 years
Brazilian built tonnage with local Long track-record within the OSV market
privileges and “blocking” rights A flexible business model – Subsea
• Including 5 AHTS vessels owned 50% through DOF
Deepwater IMR Projects and Long-term Chartering
Operates all the Group’s vessels in
Brazil (20 vessels) 26 vessels (incl. newbuilds and
chartered-in vessels)
Sucessful alliance with TechnipFMC in
Brazil
1) Include cash from holding - post Private Placement of NOK 750 million
2) Net debt is post NOK 500 million new equity
DOF ASA – Investor presentation November 2017 10DOF Group has 3 business areas
NIBD NOK 20.25 billion
DOF ASA As per 30.09.17 (post equity issue)
Norskan “DOF Rederi” DOF Subsea
EBITDA NOK
million
4,000
3,500 Break-even EBITDA
648
3,000 688 Amortization2) NOK 1 800 million
739 438
2,500 538 847
560 "DOF Rederi" Interest NOK 900 – 950 million
439 867 Norskan
2,000 522
Maintenance CAPEX (2018) NOK 150 – 250 million
DOF Subsea
1,500
1,000 1,945 2,100 2,042
1,731 1,731 Break-even EBITDA1) NOK 2 850 – 2 950 million
500
0
2012 2013 2014 2015 2016 1) Compared to 2017 guidance, estimated contribution NOK ~500 million from new vessels on
contract (Buzios, Vinland and Darwin in 2017, and Recife in 2018). Managers’ estimate
2) Average 80% of normal amortization (reduced amortization only for «DOF Rederi»)
DOF ASA – Investor presentation November 2017 11DOF Subsea is accretive to the DOF story on all metrics
Assets by fair market value* DOF Subsea
24 owned vessels (incl. 2 newbuilds) + 2 chartered-in vessels
Value weighted average age of fleet 5 years
9 vessels in Long-term Chartering division with an average 5 years
remaining contract coverage
DOF
17 vessels in Subsea IMR Projects division
Rederi
15% Firm backlog of NOK 16.3 billion vs. net debt NOK 11.4 billion
Upside from recovery in Subsea IMR Projects
Norskan
Norskan 12 owned vessels and operates 20 vessels in Brazil
28% DOF
Subsea 10 Brazilian built or Brazilian flagged, giving first right-of-refusal on
57% contracts in Brazil
Value weighted average age of fleet 7 years
Firm backlog equal to NOK 6.4 billion vs. net debt NOK 5.4 billion
DOF Rederi
27 owned vessels (wholly and partly owned + 3 vessels on management)
Value weighted average age of fleet 8.5 years
Fair market values per 30.9.2017 (excl. newbuilds) based on
Firm backlog NOK 1.3 billion vs. net debt NOK 3.5 billion
ship broker valuations
DOF ASA – Investor presentation November 2017 12DOF Group is reducing net debt quarter by quarter
NOK million
13,000
DOF Rederi and Norskan
12,500 (DOF Supply) has reduced
12,000 net debt from NOK 9.6
billion post restructuring
11,500 3Q16 to NOK 8.9 billion
3Q17
11,000
10,500 DOF Subsea has reduced
net debt from NOK 12.0
10,000
billion Q3’16 to Q3’17 NOK
9,500 11.9 billion, despite NOK
1.4 billion of new vessel
9,000 deliveries against 8-10 year
8,500 contracts
8,000 Q3’17P is pro-forma for
Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q3'17P planned equity issue
DOF Supply DOF Subsea (ex deliveries) DOF Subsea newbuilds w/ contract
DOF ASA – Investor presentation November 2017 13Several major contracts commencing in 2017
Long-term contract with Petrobras Nov 2017
18 months + 18 months options
On contract with Petrobras since
2010
Vessel owned in joint venture with
IMR contract offshore Angola TechnipFMC
Jul 2017
16 months + 3x4 months First-pipe lay vessel built in Brazil
options
Scope comprising project
Prelude FLNG
management, engineering,
vessels and ROV services Apr 2017
Husky Energy
Jan 2017
Long-term FLNG IMR
contract awarded in
Australia with Shell
Jan 2017 Skandi Buzios 5 years + 4 years options
IMR scope comprising
Long-term IMR contract
project management,
Skandi Vitoria offshore Eastern Canada
engineering, logistics,
10 years + 10 years options
vessel and ROV services
IMR scope comprising project
Long-term contract with management, engineering,
Petrobras vessel and ROV services
ENI Angola 8 years + 8 years options High strategic importance
Vessel owned in joint through strengthened presence
venture with TechnipFMC in the Canadian market
Built in Norway with 650t
VLS
DOF ASA – Investor presentation November 2017 14Strong contract backlog – positioned to deliver DOF ASA – Investor presentation November 2017 15
DOF Group Debt structure
Debt structure post refinancing1) Debt maturity profile, pro-forma per 30 September 2017
Outstanding Average NOK million
Debt overview
Q3’17 post-money Maturity
10,000
DOF (ex DOF
NOK ~9.9 billion ~8 years 151
Subsea) debt 9,000
DOF (ex. DOF
NOK ~1.25 billion
Subsea) cash 8,000
7,000
DOF Subsea debt NOK 13.1 billion ~6 years
6,000
DOF Subsea cash NOK ~1.7 billion2)
7,801
5,000
Net debt post-
~NOK 20.15 billion
money
4,000
Blended interest cost ~4.5%
3,000 2,108
1,517 853
Bond
15% Export credit 2,000 -
agency All assets are bilaterally
43% financed 1,763
1,000 1,922 1,860 1,834
- 1,379
Financing from more than 20 774
100 408
banks - - - -
Rest 2017E 2018E 2019E 2020E 2021E Thereafter
Financing for remaining
Commercial newbuilds in place
bank debt Bond Bank amortization Bank balloons
42%
1) All numbers according to management reporting
DOF ASA – Investor presentation November 2017 2) Including restricted cash 16Two newbuildings remaining with 8-year contracts Co-owned 50/50 with TechnipFMC Vessel Yard Delivery Type Contract Financing Skandi Recife Vard Brazil 2Q 2018 PLSV 8 years Petrobras Loan agreement signed with BNDES Skandi Olinda Vard Brazil 1Q 2019 PLSV 8 years Petrobras Loan agreement signed with BNDES DOF ASA – Investor presentation November 2017 17
New ownership structure
The Møgster family, owning ~40% of the fully-diluted number of
Laco AS Perestroika AS shares in DOF ASA through Laco AS, and Frederik Mohn, owning
~7% (fully diluted) through Perestroika AS, have joined forces
(Møgster family) (Fr. Mohn)
By establishing a joint ownership Møgster Mohn Offshore AS,
owning 47% of DOF ASA (fully diluted)
Møgster Mohn Offshore AS has committed to invest NOK 400
million in new equity in DOF ASA along with funds from the
Stock market Møgster Mohn general stock market, to:
investors (53%) Offshore (47%)
i) further strengthen the equity base of DOF ASA, and
ii) fund DOF ASA’s full subscription of NOK 500 million in a
share issue in DOF Subsea
DOF ASA will increase its ownership in DOF Subsea from 51% to
First Reserve DOF ASA
65%
(49%-35%) (51%-65%)
Subject to 2-year extension of DOFSUB07, 2-year extension of
soft terms in DOF Rederi fleet loan and extension of a credit
facility in DOF ASA
DOF Subsea
AS
DOF ASA – Investor presentation November 2017 18Equity case
2017 EBITDA approximately NOK 2.4-2.5 billion, within the range of the previous guidance to the market
Good backlog for 4th quarter 2017 (74% of available fleet days)
Increasing ownership in DOF Subsea to 65% at the bottom of the cycle
Repaying NOK 1.8 billion of debt each year (82% of normal amortization)
Liquidity maintained as planned – can sustain a downturn until 2022 and be well positioned for healthy
earnings when the market returns
Market upswing expected from 2019 and onwards
Focus on continue building organization within subsea
The two remaining newbuild to be delivered in 2018 and 2019 are committed on firm 8-year contracts with
Petrobras – 6-years payback
DOF ASA – Investor presentation November 2017 19Agenda
1. Transaction
2. Company update
3. Segments
4. Appendices & Risk Factors
DOF ASA – Investor presentation November 2017 20DOF
Rederi
15%
Norskan
28% [CATEG
ORY
NAME]
SEGMENT 1:
57%
DOF Subsea has two business segments
DOF Subsea Group
Subsea IMR Projects Long-term Chartering1)
Framework Engineering Opex Long-term Vessel Capex
agreements capabilities spending charters capabilities spending
Revenues YTD2) EBITDA YTD3) Firm backlog4) Revenues YTD2) EBITDA YTD3) Firm backlog4)
NOK 2 250 million NOK 221 million NOK 3.9bn NOK 1 025 million NOK 784 million NOK 12.4bn
~10% margin ~77% margin
1 287 Employees 17 vessels in 7 vessels in operation 2 newbuilds
Q3’17 operation5) Q3’17 Q3’17 Q3’17
1) Note: Long-term Chartering comprises 5 PLSVs in operation, 2 PLSVs under construction, Skandi 3) Note: According to management reporting
DOF ASA – Investor presentation November 2017 Acergy and Skandi Patagonia 4) Note: Firm backlog as at end of Q3’17
21
2) Note: According to management reporting 5) Note: Including 2 chartered-in vesselsDOF
Rederi
15%
Norskan
28% [CATEG
ORY
SEGMENT 1:
Significant upside potential from Subsea IMR Projects
NAME]
57%
Strong influx of new contracts – 3 long-term contracts and framework agreements
for commencement in 2017
Gaining market share and reputation in core offshore regions a key enabler for
access to new project opportunities
Increasing opportunities for repeatable revenue related to additional project scope
under existing contracts
IMR market expected to grow due to aging subsea infrastructure and low spending
during recent market downturn
Leverage significant access to highly-skilled subsea personnel in order to position
for expected market upturn in 2018/2019
EBITDA (excl. sales gains) NOK million
1,728
1,649
1,503 1,542
Commencing
945
2017
301
2012 2013 2014 2015 2016 Last 12m 2019
DOF ASA – Investor presentation November 2017 22DOF
Rederi
15%
Norskan
28% [CATEG
SEGMENT 1:
ORY
NAME]
57% Subsea IMR Projects has several large frame agreements
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 2011 6.5 years + 4 years
IMR
North Sea Conoco Phillips 2011 8 years + 13 years
Asia Pacific North Sea / Atlantic Brazil North America
Leading supplier of IMR Leading supplier of Strong position being one Gradually built up the
services in the region mooring services in the of the major suppliers of region, becoming a top
North Sea and West IMR services three supplier of IMR
Africa services in the GoM
DOF ASA – Investor presentation November 2017 23DOF
Rederi
15%
Norskan
28% [CATEG
SEGMENT 1:
Subsea IMR Projects – selected projects and scope of work
ORY
NAME]
57%
1 Chevron Australia IMR Project 2 SPEX Malampaya IMR Project 3 ENI Angola IMR Project 4 Petrobras IMR Project
Project description Project description Project description Project description
Provision of Subsea IMR services for the Responsible for providing MPSV (Skandi Contracted by ENI Angola for the provision Contract with Petrobras for provision of a
Gorgon, Jansz and Wheatstone fields off the Hawk) for Underwater Services (UWS) and of a Field Support Vessel (FSV) to support Construction Support Vessel (CSV) and IMR
Northern West Coast of Australia. The Platform Support to the Malampaya the East Hub and West Hub development services to support the production and
delivery comprises supply of vessels, ROVs, Deepwater Gas-to-Power project operated by projects, offshore Angola, and to provide drilling facilities and infrastructure on fields
project management and engineering SPEX. The complete delivery is managed Project Management and Engineering operated by Petrobras in Brazil
services (including on-and offshore from a single focal point based in Singapore services
personnel) and other associated services
DOF Subsea delivering a number of work DOF Subsea delivering a range of typical IMR DOF Subsea delivering services within the Current contract started in August 2016, and
scopes including: scopes as part of the UWS requirements: following operating modes: DOF Subsea has delivered several scopes
• Deployment and recovery of subsea pig • Subsea Inspections • Supply Chain Services project to date, including:
launcher/receiver (SSPLRs) • Subsea Maintenance • Light Construction Vessel • ROVs – 202 diving days (70% of time)
• Tie-in and disconnection of SSPLRs • Light Subsea Constructions • Accommodation Services • Jumper Installation
• Flying lead inspection, recovery and installation • Engineering and Tooling Support • Engineering and Project Management • Multi-Beam survey inspection – 1,200 km
• Gorgon Pre-Commissioning Support • Platform Support for Malampaya field • X-tree intervention
• Wheatstone Mattress Installation and Grouting The light construction mode will be the main • Subsea equipment inspection
• Wheatstone Pipeline System Inspection and mode of the operation • Flexible line inspection
Surveying
DOF ASA – Q3 presentation 2017 24DOF
Rederi
15%
Norskan
28% [CATEG
ORY
NAME]
SEGMENT 1:
57%
DOF Subsea holds leading position in subsea IMR market
Positioning DOF Subsea
• Improved competitive position for Geographies
Illustrative
DOF Subsea when market
normalises
− multiple competitors have scaled down
operations or entered into financial
Global
distress
• Favourable competitive dynamics
in tendering for mid-sized subsea
IMR projects Multi-regional
− 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
•
Local
DOF Subsea benefits from
= Chapter 11 / financial distress
offering an integrated engineering
and vessel solution
Capabilities
Dayrate / Support services Small to medium EPCI contracts Larger EPCI contracts
Source: ABGSC
DOF ASA – Investor presentation November 2017 25DOF
Rederi
15%
Norskan
28% [CATEG
ORY
SEGMENT 1:
NAME]
57%
DOF Subsea long-term chartering provides solid backlog
• High-end vessels operating advanced subsea projects for third party EPCI contractors
Operations • 6 vessels are owned 50/50 with TechnipFMC and have Brazilian flag privileges
• Long-term contract coverage
Contracts • Two JV PLSVs on contract from August 2016 and April 2017
• Delivery of newbuilds in Q2’2018 and Q1’2019, against 8-year contracts to Petrobras NOK 12.4bn
firm backlog per Q2’17
Remuneration • Day-rate based income and long contracts provide earnings visibility
Selected clients • Blue chip clients
EBITDA NOK million
~9 vessels 2
in operation contracted
~6 vessels newbuilds
~5.3 in
vessels in operation
operation
1119
787
499
285 295 370 7
vessels in
operation
2012 2013 2014 2015 2016 Last 12m 2019
DOF ASA – Investor presentation November 2017 26DOF
Rederi
15%
Norskan
28% [CATEG
ORY
SEGMENT 1:
NAME]
57%
DOF Subsea long-term chartering provides solid backlog
Subsea Built Current Firm Option
vessel year client end end
NOK 0.8bn and 1.0bn
~5 years ~5.3 and ~6.3 9
EBITDA contribution
Average contract coverage Operational vessels Vessels in operation
in 2016 and 1H 2017
in 20161) and 1H 20172) from Q1’19
annualised
1) Note: Skandi Acu delivered August 2016
DOF ASA – Investor presentation November 2017 2) Note: Skandi Buzios delivered April 2017
27DOF
Rederi
15%
Norskan
28% [CATEG
ORY
NAME]
SEGMENT 1:
57%
Successful strategic alliance with TechnipFMC in Brazil
State-of-the art PLSV fleet co-owned through JV with TechnipFMC, the #1 global provider of flexible pipes
Exposure to larger projects
50% 50%
Reduced redeployment risk
DOFCON Brasil AS Short pay-back time on investment
(established 2009)
Attractive financing terms
6 vessels – USD 2 billion invested
Skandi Vitoria and Skandi Niteroi first pipe-lay Skandi Açu and Skandi Buzios built in Norway and
delivered on-hire to Petrobras in August 2016 and
vessels built in Brazil
April 2017, respectively
Skandi Açu, Skandi Buzios, Skandi Refice and Skandi
Skandi Recife and Skandi Olinda currently under
Olinda all awarded 8 + 8 year contracts with Petrobras
construction with delivery in Q2 2018 and Q1 2019
DOF ASA – Investor presentation November 2017 28DOF
Rederi
15%
Norskan
28% [CATEG
ORY
NAME]
57%
SEGMENT 1:
DOF Subsea has maintained strong backlog
Current backlog at 2014 levels
NOKbn Book-to-bill of ~1.0x from 2014-2016
45
Current firm contract backlog equals
40 ~3x actual 2016 revenue
35
Book to bill first three quarters of
30
17.5
17.5 18.3 2017 of 57%
18.0 20.1 20.7
19.0 19.7 18.7 17.1 19.4
25 17.8 18.0 17.5 18.0
16.8 17.2 Firm contract backlog in NOK has
15.1
20 been relatively steady over time
15 Down 12% last 12 months
22.5 21.5 20.0 20.8
10 18.5 18.9 18.3 17.7
17.0 17.3 17.3
14.9 16.2 16.0 15.5 15.2 15.8 16.3
Down 28% last 24 months
5
0 Up 3% last 36 months
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2013 2014 2015 2016 2017
Firm contracts Options
DOF ASA – Investor presentation November 2017 29DOF
Rederi
15%
Norskan
28% [CATEG
ORY
SEGMENT 2:
Norskan – strategically positioned in Brazil
NAME]
57%
The first 15 years
2001-2006 2009 2010 2011 2013 2014 – 2015
Skandi Copacabana Skandi Salvador Skandi Vitória 4 new PLSV´s Skandi Amazonas
First Brazilian built First Brazilian built & Skandi Niterói 2 built in Brazil & Skandi Iguaçu
AHTS CSV First Brazilian built Biggest AHTS vessels
PLSVs built in Brazil by DOF
Events last 12 months show that our strategy is working
2016 2017
Skandi Admiral (AHTS), REB flag, on-hire 1 yr in June 2017
Skandi Commander REB flag, on-hire 6 months in Aug, 2017
Skandi Buzios (PLSV) on-hire for 8 yrs contract in April 2017
Skandi Botafogo (AHTS) one year contract in Feb 2017
Skandi Vitoria (CSV) 532 days contract from Jan 2017
Skandi Leblon (PSV) 365 days contract from Jan 2017
Skandi Flamengo (PSV) 668 days contract from Jan 2017
Skandi Salvador (CSV) one year contract from August 2016
Skandi Açu (PLSV) on-hire for 8 yrs contract in Aug 2016
DOF ASA – Investor presentation November 2017 30DOF
Rederi
15%
Norskan
28% [CATEG
ORY
SEGMENT 2:
Norskan – strong backlog supported by Brazillian flag
NAME]
57%
Norskan own the Brazilian AHTS fleet and operates the Group’s fleet in Brazil
Constitutes ~24% of Group’s fair market value
Owns 13 vessels (mainly AHTS) and operates additional and 8 subsea vessels, on behalf of the DOF Group and the DOFCON JV
72% and 55% contract coverage in 2018 and 2019
Long term funding from FMM/BNDES
EBITDA YTD 2017 of NOK 622 million
Firm Opt. 2018 2019 2020
Vessel name Type Built Size Location Client end end N D J F MA MJ J A S O N D J F MA MJ J A S O N D J F MA MJ J A S O N D
NORSKAN BHP
Skandi Chi eftai n CSV 2005 74.2 LOA Canada PGS Nov-17 Nov-17
Skandi Hav CSV 1983 87.7 LOA Brazi l Petrobras Oct-18 Oct-18
Skandi Botafogo AHTS 2006 16,800 bhp Brazi l Petrobras Jan-18 Jan-19
Skandi Fl umi nens e AHTS 2007 16,800 bhp Brazi l Petrobras Jan-18 Jul -18
Skandi Gi ant AHTS 2002 18,000 bhp Indones i a Lay up Nov-17 Nov-17
Skandi Ri o AHTS 2006 16,820 bhp Brazi l Petrobras Aug-18 Feb-22
Skandi Ipanema AHTS 2011 12,000 bhp Brazi l Petrobras Mar-18 Dec-21
Skandi Amazonas AHTS 2011 22,000 bhp Brazi l Petrobras Jan-20 Jan-28
Skandi Iguacu AHTS 2012 22,000 bhp Brazi l Petrobras Jun-20 Jun-28
Skandi Urca AHTS 2014 28,000 bhp Brazi l Petrobras Nov-20 Nov-28
Skandi Angra AHTS 2014 28,000 bhp Brazi l Petrobras May-21 May-29
Skandi Paraty AHTS 2014 23,120 bhp Brazi l Petrobras Feb-20 Feb-24
Contract Option Lay up
DOF ASA – Investor presentation November 2017 31DOF
Rederi
15%
Norskan
28% [CATEG
ORY
SEGMENT 3:
DOF Rederi – the international OSV activity
NAME]
57%
DOF Rederi own the international OSV fleet
17 PSVs, 8 AHTS vessels, and 2 subsea vessels
Constitutes ~9% of Group’s EBITDA
Historical EBITDA averaged NOK 610 million in 2012-2016
Value weighted average age of fleet of 8.5 years
13% of the fair market value of DOF Group fleet
Firm backlog NOK 1.5 billion
DOF ASA – Investor presentation November 2017 32Outlook
No change in guidance for 2017 (NOK 2 400 million – NOK 2 800 million)
Good backlog for 4th quarter 2017 (74% of available fleet days)
DOF Group repaying NOK 1.8 billion of debt each year (~80% of normal amortization)
Focus on continue building organization within subsea
The two remaining newbuild to be delivered in 2018 and 2019 are committed on firm 8-year
contracts with Petrobras – 6-years payback
Markets:
Expected to be challenging during winter season in the North Sea
2018 activity looking better than 2017
Market upswing expected from 2019 and onwards
DOF ASA – Investor presentation November 2017 331. Transaction
2. Company update
3. Segments
4. Appendices & Risk Factors
Agenda
DOF ASA – Investor presentation November 2017 34Main Financial Highlights Q3
Operational EBITDA Q3 NOK 607 million (excl hedge)
Average utilization total fleet 73% in Q3
79% PSV segment
69% AHTS segment Comments to highlights
72% Subsea segment (project fleet 69%) Performance
• DOF Subsea EBITDA: NOK 332 million
• DOF Supply EBITDA: NOK 275 million
EBITDA ex hedge Q3 2017 EBITDA ex hedge Q3 2016
Operations
• Avg. utilization of DOF Subsea fleet: 73%
• Avg. utilization of DOF Supply fleet: 72%
44 % 42 %
• Six vessels in lay-up end September
56 % 58 % • Stable utilization PSV segment, variable
utilization Subsea IRM projects, and AHTS
fleet in the spot market
DOF Supply DOF Supply
DOF Subsea DOF Subsea
All numbers based on management reporting
DOF ASA – Investor presentation November 2017 35Profit & Loss Q3 2017
All figures in NOK million Q3 2017 Q3 2016 YTD Q3 2017 YTD Q3 2016 Main events in Q3
Operating income 1 846 2 076 5 512 6 821
Operational performance:
Operating expenses -1 231 -1 291 -3 698 -4 426
Net profit/loss from TS and JV -8 -17 -5 -14
Net gain on sale of vessel - - -1 73 PSV:
EBITDA before hedge 607 767 1 808 2 454 • Stable utilization spot fleet in the North Sea
Hedge operating income -45 -40 -132 -164 • Two vessels in lay-up end Q3
Operating profit - EBITDA 562 727 1 676 2 290
AHTS:
Depreciation -291 -294 -860 -839 • Steady earnings from the fleet in Brazil
Impairment -395 -928 -981 -1 519 • Variable utilization spot fleet in North Sea
Operating profit- EBIT -124 -495 -165 -68 • Low utilization in APAC
• Four vessels in lay-up end Q3
Financial income 3 1 048 41 1 087
Financial costs -257 -255 -797 -853
4 -57 -168 -283
Subsea:
Net currency gain/loss
Net profit/loss before unrealized gain/loss -374 241 -1 089 -117 • Variable utilization Subsea IRM fleet
• Low utilization in APAC,
Net unrealized currency gain long term debt 297 170 514 780 • improved and decent utilization in
Net unrealized gain on market instr. 61 155 113 365 the other regions
Profit/loss before tax -16 565 -462 1 028
• A 5% drop in FMVs, of the fleet on
Tax -10 12 -40 -113 aggregated level represented in the
Net profit/loss -26 577 -502 915 impairment
According to management reporting
DOF ASA – Investor presentation November 2017 36Balance as of 30.09.2017 Main events balance sheet YTD
Amounts in NOK million 30.09.2017 31.12.2016 30.09.2016
ASSETS Non current assets:
Tangible assets 26 099 27 469 27 918 • One vessel sold, two newbuilds delivered YTD
Goodwill 320 330 338 • No major events in Q3
Deferred taxes 898 1 023 1 014
Investment in associated and joint Current assets:
ventures 75 70 89 • Operating cash flow NOK 669 million
Other non-current receivables 587 619 547 • Investments NOK -1,133 million
Non-current assets 27 979 29 511 29 906 • Financing activity NOK 232 million
Receivables 2 233 2 243 2 392
Cash and cash equivalents 2 137 2 370 2 260 Equity:
Current assets 4 370 4 614 4 651 • Convertible bond loan NOK 336 million by end Q3
Total assets 32 348 34 125 34 557
EQUITY AND LIABILITIES Non current liabilities:
Subscripted equity 2 832 2 675 2 829 • Two new loans drawn upon delivery newbuild
Retained equity 1 307 1 950 2 236 • New bond loan USD 175 million drawn in February
Non-controlling equity 3 549 3 521 3 665 • No major changes in Q3
Equity 7 688 8 146 8 730
Non-current interest bearing debt 20 186 21 901 21 688 Current liabilities:
Other non-current liabilities 131 222 247 • Short term IBD:
Non-current liabilities 20 317 22 123 21 935 Amortisation NOK 1,967 million (next 12 months)
Bond loan NOK 508 million (May 2018)
Current part of interest bearing debt 2 926 2 081 2 402
Credit facilities and accrued interests
Other current liabilities 1 417 1 775 1 491
Current liabilities 4 343 3 856 3 893 • No balloons on secured debt before 2019
Total equity and liabilities 32 348 34 125 34 557
According to management reporting
DOF ASA – Investor presentation November 2017 37Risk factors (1/4) The risks and uncertainties described below are the principal known risks and uncertainties faced by the Group as of the date hereof. The absence of negative past experience associated with a given risk factor does not mean that the risks and uncertainties described herein should not be considered. If any of the following risks were to materialise, individually or together with other circumstances, they could have a material adverse effect on the Group and/or its business, financial condition, results of operations, cash flows and/or prospects, which could cause a decline in the value and trading price of the shares in the Company, resulting in the loss of all or part of an investment in the same. The order in which the risks are presented does not reflect the likelihood of their occurrence or the magnitude of their potential impact on the Group’s business, financial condition, results of operations, cash flows and/or prospects. The risks mentioned herein could materialize individually or cumulatively. Risks relating to the industry in which the Company operates: The Group's business, results of operations and financial condition depend on the level of exploration, development and production activity in the oil and gas industry, which is significantly affected by, among other things, volatile oil and gas prices An over-supply of offshore support vessels may lead to a reduction in charter rates Competition within the oil and gas services industry may have a material adverse effect on the Group's ability to market its services Governmental laws and regulations relating to the oil and gas industry could hinder or delay the Group's operations, increase the Group's operating costs, reduce demand for its services and/or restrict the Group's ability to provide its services or operate its vessels The Group may be subject to contractual environmental liability and liability under environmental laws and regulations, which could have a material adverse effect on the Group's business, results of operations, cash flows, financial condition and/or prospects The Group's business involves numerous operating hazards and if a significant accident or other event occurs, and is not fully covered by the Group's insurance or any recoverable indemnity, it could materially and adversely affect the Group's business, results of operations, cash flows, financial condition and/or prospects The Group operates in various jurisdictions, thereby exposing the Group to risks inherent in international operations and subjecting the Group to compliance with the laws and regulations of the jurisdictions in which it operates The Group's international operations are exposed to the risk of acts of piracy, which could result in increasing costs of operations The Group does business in jurisdictions with inherent risks relating to fraud, bribery and corruption DOF ASA – Investor presentation November 2017 38
Risk factors (2/4) Risks related to the Group: The Group's backlog may not be ultimately realized The Group's contracts may be subject to early termination due to certain events The Group's future business performance depends on its ability to renew and extend existing contracts, and to win new contracts Unforeseen or unanticipated risks, costs or timing when bidding for or managing contracts could materially and adversely affect the Group's business, results of operations, cash flows, financial condition and/or prospects The Company is a holding company and is dependent upon cash flow from subsidiaries to meet its obligations and in order to pay dividends to its shareholders Risks related to the Group's operations: The Group is exposed to client concentration risk The Group's operating and maintenance costs will not necessarily fluctuate in proportion to changes in operating revenues The Group's newbuild projects are subject to risks which could cause delays or cost overruns The ageing of the Group's fleet may result in increased operating costs in the future and a less competitive fleet The required maintenance and dry-docking of the Group's vessels could be more expensive and time consuming than originally anticipated Disruptions of deliveries by the Group's suppliers could increase operating costs, decrease revenues and adversely impact the Group's operations The Group's financial condition may be materially and adversely affected if the Group fails to successfully integrate acquired assets or businesses, or is unable to obtain financing for acquisitions on acceptable terms The market value of the vessels and/or those the Group may acquire in the future may decrease, which could cause the Group to incur losses due to impairment of book values or if it decides to sell assets The Group conducts a portion of its operations through joint ventures, exposing it to risks and uncertainties, many of which are outside its control The Group may not be able to successfully implement its strategies The Group may not be successful in attracting skilled employees or retain key personnel Labour interruptions could have a material adverse effect on the Group's operations Damage to the Group's reputation and business relationships may have a material adverse effect beyond any monetary liability The Group may not be able to keep pace with a significant step change in technological development The Group uses information technology systems to conduct its business, and disruption, failure or security breaches of these systems could materially and adversely affect its business and results of operations DOF ASA – Investor presentation November 2017 39
Risk factors (3/4) Policies, procedures and systems to safeguard employee health, safety and security may not be adequate or sufficiently implemented or adhered to Risks related to laws, regulations and litigation: The Group may be subject to litigation that could have a material adverse effect on the Group's business, results of operations, cash flows, financial condition and/or prospects Laws and regulations could hinder or delay the Group's operations, increase the Group's operating costs, reduce demand for its services and restrict its ability to operate its vessels or otherwise A change in tax laws of any country in which the Group operates from time to time, or complex tax laws associated with international operations which the Group may undertake from time to time, could result in a higher tax expense or a higher effective tax rate on the Group's earnings Risks related to financing and market risk: The Group may require additional capital in the future in order to execute its growth strategy or for other purposes, which may not be available on favourable terms, or at all The Group's existing or future debt arrangements could limit the Group's liquidity and flexibility in obtaining additional financing, in pursuing other business opportunities or corporate activities or DOF's ability to declare dividends to its shareholders Interest rate fluctuations could affect the Group's cash flow and financial condition Fluctuations in exchange rates could affect the Group's cash flow and financial condition Risks related to the shares: The market value of the shares may fluctuate significantly, which could cause investors to lose a significant part of their investment Møgster Mohn Offshore AS has significant voting power and the ability to influence matters requiring shareholder approval The Company's ability to pay dividends is dependent on the availability of distributable reserves and the Company may be unwilling to pay any dividends in the future regardless of availability of distributable reserves Future sales, or the possibility for future sales of substantial numbers of shares may affect the shares' market price Future issuances of shares or other securities may dilute the holdings of shareholders and could materially affect the price of the shares Pre-emptive rights to secure and pay for shares in any additional issuance may be unavailable to U.S. or other shareholders Investors may be unable to exercise their voting rights for shares registered in a nominee account DOF ASA – Investor presentation November 2017 40
Risk factors (4/4) Investors may be unable to recover losses in civil proceedings in jurisdictions other than Norway Norwegian law may limit shareholders' ability to bring an action against the Company The transfer of shares is subject to restrictions under the securities laws of the United States and other jurisdictions Exchange rate fluctuations could adversely affect the value of the shares and any dividends paid on the shares for an investor whose principal currency is not NOK No due diligence investigations have been conducted prior to the Private Placement, and the Company may be subject to material losses or claims which neither the Company nor the Managers are aware of at the date of this Presentation DOF ASA – Investor presentation November 2017 41
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