Quarterly Presentation Q4 2016

DOF Subsea Group

DOF Subsea Group

DOF Subsea Group in Brief

3

2005Established

20 526NOK million

total assets(according to management reporting)

Modernhigh-end fleet

and equipment

20owned subsea

vessels

4vessels

on order

1vessel

on charter

65 ROVs,

4 ROVs on order

First Reserve

Corporation (49%)

1 278employees

DOF Subsea

DOF Subsea Holding(100%)

DOF ASA(51%)

DOF Subsea Group in Brief

• Fleet

• One of the largest subsea vessel owners in the world

• Owns and operates a fleet of 20 vessels, plus 4 newbuilds on order

• In addition, 1 chartered-in vessel as at 31 December 2016

• The market value of owned vessels in operation is about NOK 14.7 billion, with a value

adjusted average age of 6.3 years

• Operates 65 ROVs, and 4 ROVs on order

• Global organization

• Head office in Bergen

• Regional offices in Australia, Singapore, Norway, UK, Angola, US, Canada and

Brazil

• Total of 1 278 employees and contractors

• Onshore: 605

• Offshore: 673

4

Asia Pacific Atlantic Brazil North America

345 415 301 217

DOF Subsea Group in Brief

Condensed figures last five quarters(According to internal management reporting)

5

Q4 2016 key figures(According to internal management reporting)

• Financials:

• Operating income: NOK 1 128 million

• EBITDA: NOK 415 million

• EBITDA margin: 37%

• EBITDA excl. gain on sales: NOK 320 million

• Impairment: NOK 205 million

• Backlog:

• Firm contract backlog: NOK 19 billion

• Backlog incl. options: NOK 37 billion

• Utilisation:

• TC vessel utilisation: 82%

• Project vessel utilisation: 74%

• Total fleet utilisation: 78%

Recent Events

• Fleet

• Skandi Santos delivered to new owner in November 2016

• Skandi Constructor moved from the Atlantic region to the Philippines in the Asia Pacific region

• Final delivery of second PLSV, Skandi Buzios, from yard in January 2017

• The vessel has been imported to Brazil, and has started with pipelay testing and sea trials

• Planned commencement of her long-term charter with Petrobras in mid-April 2017

• Contracts

• Petrobras awarded the Brazilian built PLSV Skandi Vitoria an 18-month contract. The vessel commenced as per

contract on 16 January 2017.

• In Asia Pacific, DOF Subsea was awarded a 3-year IMR frame agreement with one of the major oil and gas

companies in the region. In addition, a Safety Case has been secured for Geoholm, and the vessel will be

available in the Asia Pacific region from the beginning of Q2 2017.

• In February 2017, Geoholm was awarded a contract by Technip Oceania Pty Ltd, part of TechnipFMC in Australia,

for the provision of ROV and light construction support services for the Prelude FLNG project, operated by Shell

Australia.

• In Atlantic, DOF Subsea has received a letter of award (LOA) for one subsea vessel from an oil major. The

duration of the contract is over a year and has commencement in Q1 2017.

• Finance

• Refinancing of Geosund and Geosea in December 2016

• Drawdown of 2nd tranche on Skandi Buzios at final delivery from yard in January 2017

6

Our Global Footprint

7

ATLANTIC

NORTH AMERICA

BRAZILASIA PACIFIC

Macaé

Rio de Janeiro

Buenos

Aires

Houston

St John’s

Aberdeen

Bergen

Luanda

Singapore

Manila

Melbourne

Jakarta

BruneiKuala Lumpur

Darwin

Perth

3018

4156

2173

3454

DOF Subsea Timeline

8

DOF Subsea fleet evolution

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2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

0

4

8

12

16

20

24

28

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

NO

K m

illio

n

Nu

mb

er

of o

pe

rate

d v

essels

Owned vessels Chartered vessels MV of owned fleet (r.a.)

MV of fleet

DOF Subsea employees

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Nu

mb

er

of e

mp

loye

es

Employees

* As at 31 December 2016

2005 - 2010

Fleet: From 11 to 21 vessels

• DOF Subsea was established in 2005

• DOF Subsea was listed on the Oslo Stock Exchange in 2005, and taken private by DOF and FRC in 2008

• Established a global footprint, present in all major offshore oil & gas regions

• Built a global organization through organic growth and acquisitions

• Developed global Business Management System, and achieved global ISO certification

• JV with Technip

• Expanded the fleet by taking delivery of 10 newbuilds

2011

Fleet: 24 vessels

• Feb: Delivery of Skandi Niteroi

• May: Sale of Geosounder

• Jun: Acquisition SkandiConstructor

• Jul: Delivery of Skandi Skansen

• Sep: Delivery of SkandiSingapore

2012

Fleet: 25 vessels

• Mar: Sale of OSCV newbuild

• Mar: Signed OSCV newbuildcontract

• Mar: CharteredSkandi Hawk

2013

Fleet: 26 vessels

• Feb: Signed OSCV newbuildcontract

• Feb: Chartered Harvey Deep-Sea

• Mar: Sale ofGeobay

• Jun: Delivery of Skandi Bergen

• Aug: Signed newbuildcontracts for 4 x PLSVs

• Nov: Chartered Normand Reach

• Global ISO recertification

2014

Fleet: 28 vessels

• Jan: Delivered Skandi Bergen to new owners

• Mar: CharteredRoss Candies

• Mar: CharteredChloe Candies

• Nov: Delivered Skandi Skolten to new owners

2015

Fleet: 24 vessels

• Feb: Delivered Skandi Aker to new owners

• Mar: Delivery of Skandi Africa

• May: Acquired Skandi Hawk (previously chartered-in)

• June: Sale of Skandi Arctic

• Oct: Chloe Candies redelivered

• Nov: Sale of Skandi Inspector

• Dec: Ross Candies redlivered

2016

Fleet: 21 vessels

• Jan: Delivered Skandi Protector to new owners

• Apr: Delivery of Skandi Açu

• July: Third party vessel Normand Reach redelivered

• Sep: Agreement regarding sale ofSkandi Santos

• Nov: Skandi Santos deliveredto new owners

2017

Fleet: 22 vessels

• Jan: Final delivery of Skandi Buzios

Modern High-end Fleet

9

• Majority of the fleet delivered from 2007 and onwards

• Modern fleet with a value adjusted average fleet age of 6.3

years

• High-end vessels, capable of a wide scope of worldwide

operations

Newbuilds17 %

2007-201558 %

2000-200625 %

Year of delivery DOF Subsea fleet

* As at 31 December 2016 – i.e. Skandi Buzios still considered as newbuild

-

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

9,0

Ye

ars

Fleet age

Average fleet age

Value adjusted average fleet age

Skandi Africa, Ship of the Year 2015

Skandi Acu, PLSV built 2016

Skandi Buzios, PLSV built 2017

* Newbuilds not included in

calculation of average fleet age

Business Management

10

• Global business management system accredited by DNV to:

• Business Management System ISO 9001:2015

• Health and Safety System OHSAS 18001:2007

• Environmental Management System ISO 14001:2015

• Sustainability reporting according to Global Reporting Initiative G4 implemented

• Achieved Carbon Disclosure Project reporting result of B (report for 2015)

• IMCA International Contractor membership

• ISO recertification by DNV GL achieved during Q2 2016

2009

HSEQ Key Statistics

11

• Substantial HSE improvement since 2005

• Substantial increase in activity level measured by total man-hours

0

1 000 000

2 000 000

3 000 000

4 000 000

5 000 000

6 000 000

-

2,0

4,0

6,0

8,0

10,0

12,0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Ma

n-h

ou

rs

Fre

qu

en

ce

: In

cid

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1 0

00

00

0 m

an

-ho

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LTIFC TRFC Man-hours

Segment Information

Annual and Quarterly Operating Income by Segment(According to internal management reporting)

• The activity level and turnover have decreased in both segments during 2016 due to sale of vessels, redelivery of third

party vessels and challenging market conditions (rates and utilisation)

• DOF Subsea has built a global presence over the last 10 years, and developed the subsea project business gradually

• Project business going forward:

• Continue to build project backlog – focus on IMR projects

• Mix between owned and chartered-in vessels

12

2014 2015 2016

Subsea projects 5 187 4 810 3 544

Chartering of vessels 2 236 2 441 1 880

Total 7 422 7 252 5 424

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

NO

K m

illio

n

Chartering of vessels Subsea projects

Q4 2014 Q4 2015 Q4 2016

Subsea projects 1 447 1 013 679

Chartering of vessels 577 630 448

Total 2 024 1 643 1 127

0

500

1 000

1 500

2 000

2 500

NO

K m

illio

nChartering of vessels Subsea projects

Backlog

• Figures based on remaining backlog at year-end 2016

• At year-end 2016, the total backlog including options was approx. NOK 37 billion

• Firm contract backlog counts for approx. NOK 19 billion

13

2017 2018 2019 2020 2021 Thereafter

Options 0,4 0,6 0,6 0,5 0,8 15,1

Firm 2,8 2,4 2,6 2,4 2,0 6,6

0,0

5,0

10,0

15,0

20,0

NO

K b

illi

on

Firm Options

Financials

Condensed Profit & Loss (IFRS 11)

• Operating income was NOK 1 001 million in Q4 2016, and NOK 5 099 million for the full year

• EBITDA was NOK 385 million in Q4 2016, and NOK 1 764 million for the full year

• EBIT was NOK 10 million in Q4 2016, and NOK 446 million for the full year, after impairment of NOK 205 million for Q4

2016 and NOK 632 million for the full year

15

Condensed Balance Sheet (IFRS 11)

• From year-end 2015, non-current assets have decreased to NOK 14 479 million from NOK 15 417 million

• From year-end 2015, total receivables have decreased to NOK 1 108 million from NOK 1 560 million

• From year-end 2015, cash and cash equivalents have decreased to NOK 1 062 million from NOK 1 464 million

• Total liabilities as at 31 December 2016 were NOK 10 594 million

• The net interest bearing debt as at 31 December 2016 was NOK 8 357 million

• The book equity was NOK 6 055 million, giving a book equity ratio of 36.5 % to total assets as at 31 December 2016

16

Quarterly Performance(Excl. profit from sales of non-current assets, and according to management reporting)

17

NOK million Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

Operating income 1 288 1 225 1 679 1 804 1 871 1 530 1 963 1 904 2 025 1 656 1 962 1 991 1 642 1 406 1 660 1 232 1 128

EBITDA 417 329 471 595 550 502 543 552 502 458 515 553 516 456 510 447 320

EBITDA margin 32,4% 26,9% 28,1% 33,0% 29,4% 32,8% 27,7% 29,0% 24,8% 27,7% 26,2% 27,8% 31,4% 32,4% 30,7% 36,3% 28,4%

Current assets 2 612 3 077 3 319 3 119 3 470 3 247 3 252 2 998 4 223 3 414 3 414 3 674 3 752 2 900 3 010 2 742 2 483

Non-current assets 16 012 16 043 16 344 16 330 16 340 16 012 16 151 16 215 15 796 16 726 16 578 16 447 16 818 17 652 18 206 18 514 18 043

Total assets 18 624 19 120 19 663 19 450 19 810 19 258 19 403 19 213 20 019 20 140 19 992 20 121 20 570 20 552 21 216 21 256 20 526

Current liabilities 1 989 2 000 2 805 2 808 3 167 3 470 3 741 3 607 4 505 4 139 4 577 4 492 3 650 2 991 3 022 2 645 2 478

Non-current liabilities 11 534 12 051 11 862 11 474 11 427 10 126 9 701 9 668 9 402 9 924 9 009 9 988 11 228 11 482 11 864 12 174 11 993

Equity 5 102 5 069 4 996 5 167 5 216 5 662 5 962 5 938 6 112 6 077 6 405 5 641 5 692 6 078 6 330 6 437 6 055

Total equity and liablilites 18 625 19 120 19 663 19 449 19 810 19 258 19 404 19 213 20 019 20 140 19 991 20 121 20 570 20 551 21 216 21 256 20 526

0%

5%

10%

15%

20%

25%

30%

35%

40%

-

500

1 000

1 500

2 000

2 500

Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

EBIT

DA

mar

gin

NO

K m

illio

n

Operating income EBITDA EBITDA margin

Debt Maturity Profile

18

• The figures reflect amortisation and balloon payments on outstanding debt

Debt maturity profile, 2017E – 2021E

-

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

2017E 2018E 2019E 2020E 2021E Thereafter

NO

K m

illio

n

Bond Loan Bank Debt Balloons

Bond Loan – DOFSUB07

- NOK 1 300 million

- Maturity May 2018

Risk Mitigating Factors

19

Risk mitigating

factors

Global presence provides access to more market opportunities

Strong backlog provides

earnings visibility

Diversified blue-chip customers

reduce counterparty risk

Value added services provide

increased earnings potential

Modern, high-end fleet

provides safe collateral

Strong bank-and investor relationships

provide access to credit

Sales of vessels confirm values

Weaker subsea market

Outlook

Challenging Fundamentals for Subsea Activity

• Demand

• Volatile oil price

• Continued cost focus by oil companies

• Reduced offshore E&P spending

• Uncertain project timing

• Counterparty risk

• Increased focus on price, technologically

advanced and flexible vessels and engineering

capabilities

• DOF Subsea owns the world’s most

sophisticated fleet, and has a global

organisation

21

Challenging Fundamentals for Subsea Activity

22

• Supply

• Oversupply of vessels

• Several vessels in lay-up

• Number of subsea contractors to be reduced

Challenging market

conditions

Reduced demand

Oversupply

Challenging Fundamentals for Subsea Activity

23

Weak subsea

market and pressure

on margins

Lower IMR activity

Lower rig activity, and delayed field

developments

Reduced E&P spending

Volatile oil price

Number of niche subsea

players reduced

Improved access to qualified

personnel

Oversupply of subsea vessels

DOF Subsea has mitigated the weaker fundamentals through a global footprint, diversified

portfolio of clients and strong project backlog

Thank you!