INVESTOR PRESENTATION - PARETO ENERGYCONFERENCE-SEPTEMBER2020 - Euronav
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INVESTOR PRESENTATION
PARETO ENERGY CONFERENCE - SEPTEMBER 2020
1
FORWARD LOOKING STATEMENTS
Matters discussed in this presentation may constitute forward-looking statements under U.S. federal securities laws,
including the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect the Company’s
current views with respect to future events and financial performance and may include statements concerning plans,
objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are
other than statements of historical facts. All statements, other than statements of historical facts, that address activities,
events or developments that the Company expects, projects, believes or anticipates will or may occur in the future,
including, without limitation, the delivery of vessels, the outlook for tanker shipping rates, general industry conditions
future operating results of the Company’s vessels, capital expenditures, expansion and growth opportunities, bank
borrowings, financing activities and other such matters, are forward-looking statements. Although the Company believes
that its expectations stated in this presentation are based on reasonable assumptions, actual results may differ from
those projected in the forward-looking statements. Important factors that, in our view, could cause actual results to
differ materially from those discussed in the forward-looking statements include the failure of counterparties to fully
perform their obligations to us, the strength of the world economies and currencies, general market conditions, including
changes in tanker vessel charter hire rates and vessel values, changes in demand for tankers, changes in our vessel
operating expenses, including dry-docking, crewing and insurance costs, or actions taken by regulatory authorities,
ability of customers of our pools to perform their obligations under charter contracts on a timely basis, potential
liability from future litigation, domestic and international political conditions, potential disruption of shipping routes due
to accidents and political events or acts by terrorists. We undertake no obligation to publicly update or revise any
forward looking statement contained in this presentation, whether as a result of new information, future events or
otherwise, except as required by law. In light of the risks, uncertainties and assumptions, the forward looking events
discussed in this presentation might not occur, and our actual results could differ materially from those anticipated in
these forward-looking statements.
2
EURONAV
EURONAV – WHO
– WHO WE ARE
WE ARE
The world’s largest, independent quoted crude tanker platform
45 VLCC incl. 4 N/B 25 Suezmax*
International company – internationally connected
Av Age Av Age Headquarters in Antwerp
7.4 Yrs 11.1 Yrs
Euronav offices
Partnerships
2 FSO* 2 ULCC Mix of time charter and spot exposure for the rest of 2020
19%
Fixed days
Spot days
81%
* Includes JV 3
WHO WE ARE – LIQUIDITY FOCUS
Repayment schedule and RCF reductions Balance sheet liquidity June 2020 $1086m
600 1200
806
Millions
1000
500
800 + $270 m
outstanding
1086
capex
$m
400 600
400
280
300
200
0
200 Cash Undrawn Secured Total
Revolver
100
Strong balance sheet =hedge against cyclicality
0 o Tanker business is cyclical, towards which the only cure is
201920202021202220232024202520262027202820292030 to have a strong balance sheet and liquidity pool
Reductions (non-cash) Repayments
o Policy to retain at least two years of operational
Balloon to be refinanced Undrawn balloon to be refinanced
liquidity at all times and maintain strong banking
Bond Maturity
relationships
Source: Euronav 4
FSO 7 years +5 years
WHO WE ARE
OPERATIONAL LEVERAGE
$1,188
Each $5,000 uplift in Long-term 20 years
both VLCC and Suezmax
rates improves net
niche market
revenue and EBITDA by
$108mm $540
$324
$108
BASE
+$5,000 +$15,000 +$25,000 +$55,000
per day per day per day per day
VLCC TCE rates $25,000 $30,000 $40,000 $50,000 $80,000
Suezmax TCE rates $20,000 $25,000 $35,000 $45,000 $75,000 1-3 years
TANKER MARKET STRUCTURE
Seasonal Few customers, lots of suppliers
Source: Clarksons
48 Quarterly average
Thousands
46
VLCC rate 1990-2019 Traders
44
42
40
38
36
34
32 Oil Refiners
30 Companies
Q1 Q2 Q3 Q4
Cyclical Ship
Source: Clarksons
Broker
100,000
90,000 Quarterly average 1 Year
80,000 TCE rate 1990-2020
70,000
60,000
50,000
owner
40,000 Pool
30,000
20,000
10,000
0 owner owner
owner owner
Q1-1990
Q2-1991
Q3-1992
Q4-1993
Q1-1995
Q2-1996
Q3-1997
Q4-1998
Q1-2000
Q2-2001
Q3-2002
Q4-2003
Q1-2005
Q2-2006
Q3-2007
Q4-2008
Q1-2010
Q2-2011
Q3-2012
Q4-2013
Q1-2015
Q2-2016
Q3-2017
Q4-2018
Q1-2020
Source: Euronav 6
TANKER MARKETS ARE SEASONAL
30 YEAR RECORD IMPLIES RATE LOW IN MID SEPT
60,000
55,000
50,000
Average VLCC spot rate since 1990
45,000
40,000
35,000
30,000
25,000
20,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: Clarksons
7
CURRENT HEADWINDS
8
STORAGE DISRUPTION DID NOT MATERIALISE
Source: Clarksons
9
DEMAND FOR OIL
TRANSPORT HEAVY SO RECOVERY LIKELY PROLONGED
45
40
35
Oil demand m bpd by sector 2018
30
25
20
15
10
5
0
Road transport Aviation & Shipping Industry & Petrochemicals Buildings & Power Other sectors
Source: Kepler Cheuvreux, WEO 2019
10CRUDE DEMAND
WHAT HAPPENED IN 2008/9 FINANCIAL CRISIS
Recovery took time globally
Source: IEA
11OECD crude inventory bbls k (EIA)
2500
2600
2700
2800
2900
3000
3100
3200
3300
3400
3500
jan/04
jul/04
Source: EIA
jan/05
jul/05
jan/06
jul/06
jan/07
jul/07
jan/08
jul/08
jan/09
jul/09
jan/10
jul/10
jan/11
jul/11
CRUDE INVENTORY
jan/12
OECD Inventory
jul/12
jan/13
jul/13
jan/14
jul/14
jan/15
jul/15
Days of Demand
jan/16
jul/16
jan/17
jul/17
jan/18
jul/18
jan/19
jul/19
jan/20
jul/20
EIA FORECAST BACK TO PRE COVID 19 LEVELS END 2021
jan/21
jul/21
25
30
40
45
20
35
EIA days of demand for inventory
12SEABORNE CRUDE TRADE AND OIL DEMAND
STRONG BUT NOT UNIFORM CORRELATION
IEA & Seaborne crude y/y change IEA & Seaborne demand correlation
4.0 105 45
IEA oil demand and clarksons crude seaborne globally
100
3.0
40
95
2.0
Seaborne crude m bpd
90
IEA Demand m bpd
35
1.0 85
(m bpd)
0.0 80
30
75
-1.0
70
Since 1994 For every 1m bpd 25
-2.0
65 seaborne crude = 2.36m bpd
IEA demand
-3.0 60 20
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
Seaborne crude m bpd IEA Demand IEA Demand Seaborne crude m bpd
Source: IEA, Clarksons Source: IEA, Clarksons
13CURRENT TAILWINDS
14VLCC – DISRUPTION (=POSITIVE) HEAVY
Temporary disruption
Semi permanent disruption
Permanent feature
Source: CLarksons
15TON MILES
RECENT STAGNATION WITH RECOVERY EXPECTED IN 2021
41 11,000
40
10,500
World Seaborne trade crude oil mbpd
39
Seaborne trade billion tonne-miles
10,000
38
9,500
37
9,000
36
8,500
35
8,000
34
33 7,500
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
World Seaborne Billion tonne-miles World Seaborne Crude Oil Trade
Source: Clarksons, Bloomberg
16VESSEL SUPPLY DYNAMIC
POSITIVE MEDIUM & LONG TERM DRIVER
17VESSEL SUPPLY
BALANCE & OUTLOOK STRUCTURALLY IMPROVING
Increasingly restricted financing
CONTRACTING NEW + new technology to meet
VESSELS environmental targets cap orders
ORDER BOOK
VLCC /Fleet = 8%
Suezmax /Fleet = 10%
ORDER BOOK c. 20-year lows
168 VLCCs/21% of fleet needs
OPERATIONAL FLEET special survey by end Q1 21
Scrap prices lower and costs of
RECYCLING exiting shipping rising
Source: Euronav
18LITTLE CONTRACTING
AND ORDER BOOK AT 20 YEAR LOW
140,000 60
# of VLCC ordered & Orderbook as % of fleet
120,000
50
100,000
40
VLCC rates
80,000
30
60,000
20
40,000
10
20,000
0 0
Orderbook as % of fleet No of VLCC ordered VLCC earnings
Source: Clarksons
19NEWBUILDING ORDERS CONSTRAINED
NEWBUILDING CONTRACTS
RISING BARRIERS ORDER BOOK CURRENTLY 23 YR LOW
60
FINANCING
BANKS & CAPITAL 50
MARKETS
40
REGULATION
IMO 2030,
BASEL IV 30
20
TECHNOLOGY IN
FUEL PROPULSION
10
LONG TERM 0
CRUDE DEMAND
VLCC Orderbook % Fleet % Suezmax Orderbook % Fleet %
Source: Clarksons, Bloomberg, Euronav
20LARGE TANKER SHIPPING – REGULATED
6
5
1.5
100% utilisation
$m cost of special surveys
4 1.5
1.5
3
1.5
1.5
2 4
3.25
2.5
1 2
1.5
0
Year 5 - Spec Survey#1 Year 10 - Spec Survey#2 Year 15 - Spec Survey#3 Year 17.5 - Intermediate Year 20 - Spec Survey#5
survey
5 year survey cycle 30 month survey cycle
Base cost of special survey Cost of Ballast Water treatment system – mandatory at next special survey from Sept 2019
Source: Euronav
21KEY SUPPLY ISSUE
POTENTIAL CATALYSTS FROM 186 SURVEYS NEXT 2 YEARS
Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Total % of fleet
Over 20 years 7 5 8 17 9 11 4 18 79 10%
Over 17.5 years 14 20 13 29 14 17 7 28 142 18%
Over 15 years 18 28 18 36 15 26 8 37 186 24%
40
35
No of VLCC to take special survey
7 9
30
25
8
12 10
9
20
15 5
1 6
15 10
11 5
10 5
6 1
7 3 4
5 2
3 8
5 2
4 1 4
2 1 2
0
Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022
SS 25 years SS 22.5 years SS 20 years SS 17.5 years SS 15 years
Source: Clarksons
22SHIPOWNERS DILEMMA
Illustrative maths – older vessels have lower addressable market
Scrap Scrap Revenue Factor in Cash BE @ Special
VLCC Today VLCC over 50% $15k Survey Net Return
900 days utilisation
Value $m* Value $m* Rate $m $m 900 days $m Cost $m $m
16 13.7 OR 20,000 18 9 13.5 4 -8.5
16 13.7 30,000 27 13.5 13.5 4 -4.0
16 13.7 40,000 36 18 13.5 4 0.5
16 13.7 50,000 45 22.5 13.5 4 5.0
30 month average VLCC rate since 1990 = $38k Average Scrap VLCC value since 2004 $16m
90,000 30
80,000
25
70,000
60,000 20
50,000
15
40,000
30,000 10
20,000
5
10,000
Source: Clarksons
0 0
Source: Clarksons
30 month average VLCC rate Average VLCC rate 1990-2020 VLCC Scrap Value $m Average scrap value since 2004 $m
23SCRAPPING
VLCC RATES GO BELOW P&L BREAK EVEN = 5% FLEET DEPARTS
VLCC fleet 804 @ start of year = 40 VLCC or 53 VLCC equivalents
9% 30,000
8%
25,000
7%
% of VLCC fleet scrapped
6% 20,000
VLCC rates
5%
15,000
4%
3% 10,000
Average age
2%
20.0 19.2 20.0 22.0 21.3 18.2 19.9 20.4 24.2 20.8 25.9 22.1 20.4 of VLCC
5,000
scrapped in
1% this year
0% 0
1994 2018 1992 2017 2011 2013 1993 2012 1999 1995 2002 1996 2009
Rates % fleet scrapped
Source: Clarksons
24CURRENT TRADING
25TANKER MARKET HIT SHORT TERM
LOWER OIL DEMAND, SUPPLY & HIGHER VESSEL SUPPLY
Recovery in oil demand Crude export forecast supply cut Oversupply of vessels short term
trajectory stalled in August by Nigeria & Iraq compliance as % idle moves above average
96 15.0 8.0
7.0
95 14.5
6.0
% of VLCC/Suez fleet idle
94
m bpd EIA global crude demand forecast
5.0
OPEC AG & Nigeria exports m bpd
14.0
4.0
93
13.5
3.0
92
2.0
13.0
1.0
91
12.5 0.0
90
12.0 % VLCC fleet idle
89
% Suez fleet idle
11.5 VLCC idle average
88 Jun Jul Aug Aug Suez idle average
June July Aug forecast actual
Source: Bloomberg Source: Clarksons
Source: EIA 26CONTANGO – UNDERPINNING TANKERS
27CONTANGO’S TEND TO PERSIST
IN LINE WITH PREVIOUS CONTANGO PERIODS
1997
2015
2020
2008
28FLOATING STORAGE
AN INEXACT SCIENCE AND STILL NEEDS TO UNWIND
350
“excess” or market storage
= 116m bbls
300
250
208m bbl
11 Sep 2020
200
150
100 92m bbl
start 2020
50
0
Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20
VLCC storage mbbls Suezmax storage mbbls Aframax storage mbbls
29FLOATING STORAGE
OVERHANG IS REAL BUT LIMITED
100
90
80
70
No of Vessels in market storage
37
60
50
30
40
29
30
20
10
0
Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20
VLCC # storage Suezmax # storage Afra # storage
30US CRUDE EXPORTS
REMAIN RESILIENT AT 3M BPD DESPITE US OUTPUT DROP
US crude exports been more resilient than Most forecasts for 2m bpd US crude
expected even with fall in US crude production exports if near 3m bpd = 40+ VLCC
4000 13500
3500 13000
3000
US Crude Production k bpd
12500
US Crude Exports k bpd
2500
12000
2000
11500
1500
11000
1000
500 10500
0 10000
Q4 19 Q1 20 Q2 20 Q3 20
US Crude exports US crude production
Source: Bloomberg Source: Braemar
31CHINA CRUDE BUYING
ALWAYS BEEN REACTIVE AROUND OIL PRICE TREND
Increase buying on falling or low oil price
120 12
Reduce buying on rising or high oil price
100 10
China crude oil imports m bpd
80 8
Oil Price per barrel $
60 6
40 4
20 2
0 0
Oil price China crude imports m bpd Linear (China crude imports m bpd)
Source: Bloomberg
32FUEL SPREADS – CONTINUE TO CONTRACT
Oil price
Fuel Spread for 2020
Fuel Spread for 2021
33Environmental
Accomplishments
Sustainability needs all 3 E+S+G Tangible 2020-25
emission targets set
• to work effectively and
• not in isolation
Emissions data
since 17
Social Opportunities
Accomplishments More disclosure,
targets & route to
zero carbon
Bloomberg Index is
Governance
company wide audit on Accomplishments
social issues
Consistent survey
top 10
Leadership role in
Covid19 crew crisis
Independent board &
highest standards
Opportunities Opportunities
Better standardisation in Closer alignment with 50% female board
shipping for staff best governance representation
34OUTLOOK
TANKER MARKET IN TRANSITION PHASE
Demand for Supply Vessel Euronav
Oil Ton miles Balance
of Oil Supply
sheet
Q4 19
Rating
Restrictions lower OPEC+ driving US export growth Orderbook to fleet Liquidity of $1bn
Q2 demand but supply cuts but oil to ameliorate but ratios at + share buyback
recovery unclear >$40 adds bbls offset elsewhere 20 year lows for LT value
from Q4 19
DOWNGRADE
Change
DOWNGRADE DOWNGRADE UPGRADE No Change
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