Saipem

Earnings Release • Oct 25, 2016

THIRD QUARTER 2016 RESULTS AND STRATEGY UPDATE

25 October 2016

martedì 25 ottobre 2016 Saipem. Engineering Energy

FORWARD-LOOKING STATEMENTS

Forward-looking statements contained in this presentation regrading future events and future results are based on current expectations, estimates, forecasts and projections about the industries in which Saipem S.p.A. (the "Company") operates, as well as the beliefs and assumptions of the Company's management.

These forward-looking statements are only predictions and are subject to known and unknown risks, uncertainties, assumptions and other factors beyond the Company' control that are difficult to predict because they relate to events and depend on circumstances that will occur in the future. These include, but are not limited to: forex and interest rate fluctuations, commodity price volatility, credit and liquidity risks, HSE risks, the levels of capital expenditure in the oil and gas industry and other sectors, political instability in areas where the Group operates, actions by competitors, success of commercial transactions, risks associated with the execution of projects (including ongoing investment projects), in addition to changes in stakeholders' expectations and other changes affecting business conditions.

Therefore, the Company's actual results may differ materially and adversely from those expressed or implied in any forward-looking statements. They are neither statements of historical fact nor guarantees of future performance. The Company therefore caution against relying on any of these forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, economic conditions globally, the impact of competition, political and economic developments in the countries in which the Company operates, and regulatory developments in Italy and internationally. Any forward-looking statements made by or on behalf of the Company speak only as of the date they are made. The Company undertakes no obligation to update any forward-looking statements to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. Accordingly, readers should not place undue reliance on forward-looking statements due to the inherent uncertainty therein.

The Financial Reports contain analyses of some of the aforementioned risks.

Forward-looking statements neither represent nor can be considered as estimates for legal, accounting, fiscal or investment purposes. Forward-looking statements are not intended to provide assurances and/or solicit investment.

TODAY'S PRESENTATION

OPENING REMARKS

Strategy update: decisive response to delayed market recovery

• Organisational transformation:
• Enhancing effectiveness, efficiency and business accountability
• Creation of a new high value engineering services division
• Asset base rationalisation and write off
• Renewed focus on technology and innovation to enhance competitiveness

9M 2016 Highlights

• Strong performance in Offshore continued in Q3
• Net debt reduced below €1.7bn, €1bn inaugural bonds issued
• 9M good order intake of €6.6bn increasing backlog at €14.6bn
• 9M 2016 adjusted result in line with expectations, full year guidance confirmed
• Write down and impairment for around €2bn impacting 2016 reported result

2017 Outlook

STRATEGY UPDATE

MARKET OUTLOOK

2017 scenario	 Oil price delaying E&P capex recovery post 2017  Further reduction in development costs needed to boost E&P spending  Strict cash flow management by Oil Companies  Industry consolidation and alliances expected to continue
Offshore E&C	 Offshore fleet underutilization  Technology and cost effectiveness supporting brownfield and a few greenfield projects  Gas-led developments more resilient
Onshore E&C	 Sustained pressure on margins  Sanctioning delays (e.g. LNG)  Middle East, downstream and non-oil related segments more resilient
Offshore Drilling	 Global fleet overcapacity  Deepwater dayrates down over 50% from historic peak
Onshore Drilling	 Still good visibility in Middle East  South America impacted by demand decline

6

STRATEGY UPDATE

DECISIVE RESPONSE TO DELAYED MARKET RECOVERY

FIT FOR THE FUTURE 2.0 NEW BUSINESS MODEL - RATIONALE

FIT FOR THE FUTURE 2.0 LEANER ORGANIZATION AND DECENTRALIZED MODEL

c.800 staff headcount reduction in Europe Anticipated cost savings through process efficiencies

HIGH VALUE ENGINEERING SERVICES BUSINESS ADDING VALUE FOR CLIENTS FROM EARLY PHASES OF PROJECT DEVELOPMENT

RATIONALE

• Enter a new market to:
• Capture increasing demand for cost effective and innovative solutions
• Capitalise on Saipem licenses (around 200 units) and patents (more than 2,100)
• Generate new partnerships based on technological content

COMPETITIVE ADVANTAGES

• Expertise covering the entire Oil&Gas value chain
• Unparalleled track record in breakthrough and frontier projects in harsh environment
• Leverage EPC(I) experiences to reduce costs and risks for clients

SYNERGIES WITH CURRENT BUSINESS

• Improving commercial effectiveness
• Smoother transition from FEED to EPC(I)/EPCM phase
• Exchange of high value engineering resources to accelerate young talents growth
• Capitalising on lessons learned

FIT FOR THE FUTURE 2015 COST SAVING PROGRAMME ON TRACK

• 36% of the planned initiatives completed, the balance in line with targets
• Overall headcount reduction trend in line with schedule

DELIVERING EXPECTED TARGETS

ASSET BASE RATIONALISATION

Non core assets Disposal processes ongoing (leased FPSOs, Yards, engineering offices, etc.)

TECHNOLOGICAL INNOVATION INNOVATION LEADERSHIP TO DRIVE GROWTH

"INNOVATION FACTORY"

• Competitive advantage: bringing ideas into reality by adopting new processes and technologies
• Focusing on Talent & Culture: cluster of young talents placed in a new, high-tech and creative environment
• Disruptive Innovation: contamination of experiences and technologies used in other sectors

KEY FEATURES

• More than 100 resources (FTE) dedicated
• Around €200mn Innovation spending planned over the 4y plan
• 5 main centres

Saipem. Engineering Energy

SELECTED DEVELOPMENTS

INNOVATIVE SUBSEA AND LNG SOLUTIONS TO ENHANCE COMPETITIVENESS

INNOVATIVE SOLUTIONS OPTIMIZING EXISTING / NEW INFRASTRUCTURES

New tie-back solutions for longer distances and larger diameters

• resident technology, to reduce sulphates in sea water injected in the reservoir, developed in collaboration with Total and Veolia
• HYDRONE, a new hybrid ROV/AUV technology, as a permanent subsea infrastructure for Life of Field management services

EXPLOIT LNG TECHNOLOGY AND MARKET KNOW-HOW

• Tandem Offloading Floating System for FLNG applications
• Pioneering experiences in the market of conversion of LNG Carriers

9M 2016 BACKLOG

(€ mn)

BACKLOG BY YEAR OF EXECUTION (€ mn)

E&C OPPORTUNITIES

Americas

• ExxonMobil Liza – subsea
• Sable Decommissioning – fixed facilities
• Kinder Morgan – onshore pipelines
• Codelco Rodomiro Tomic – onshore pipelines1
• CFE pipelines – onshore pipelines
• Shell LNG Canada – LNG2 (delayed)

West and North Africa

• Eni Shorouk future dev. – subsea/pipelines
• BG Burullus Phase IXB – subsea (delayed)
• Eni Zabazaba – FPSO and subsea
• Eni West Hub - subsea
• New Age FLNG FEED – FLNG
• Eni Loango field development – fixed facilities
• BP Platina URF – subsea
• BlackRhino Qua Iboe Power Plant – downstream
• Okpai Phase II Power Plant – downstream
• Quantum Methanol (early works) – downstream3
• E-Chem Petrochemical Complex – downstream
• GASCO Ethane Deep Cut Phase II – upstream - New

Asia Pacific

• Hess Equus – subsea/offshore pipelines
• Chevron Gehem Gendalo – FPU (post 2017)
• Shell Inpex Masela – FPU (post 2017)
• ONGC KG-98/2 – subsea - New
• Agri Nutrients Ballance Ammonia/Urea – downstream

Europe/ CIS and Central Asia

• Nord stream 2 – offshore pipelines
• BP Miller Decommissioning – fixed facilities
• CAT3 Ekofisk – fixed facilities
• INA Refinery – downstream
• SOCAR Baku Refinery – downstream - New
• Gazprom Moscow Refinery Upgrading FEED – downstream
• BUP Ammonia Plant – downstream (delayed)
• SEIC Sakhalin 2 LNG extension - LNG
• RFI TAV Brescia Verona – infrastructures
• High Speed Railway Moscow – Kazan – infrastructures - New

Middle East

• S. Aramco LTA development – offshore fixed facilities
• QP Bul Hanine EPCI – offshore fixed facilities (post 2017)
• KNPC New Refinery pipeline – onshore pipelines
• ADCO BAB Integrated Facilities – upstream (delayed)
• BGC Ar Ratawi NGL Gas Plant – upstream (post 2017)
• KOC GC32 – upstream
• ADCO Al Dabbi'ya ASR Development – upstream (delayed)
• DUQM Refinery – downstream (delayed)
• Oman TTC Ras Markaz Terminal – downstream (delayed)

East Africa

• Eni Mamba – subsea (post 2017)
• Anadarko Golfinho – subsea (post 2017)
• Eni Onshore – LNG

• Anadarko Onshore – LNG4

• Engineering phase ongoing. Execution phase subject to obtainment of environmental permits. 2. Preselected contractor for FEED and EPCM execution. Ongoing OBE updating to consolidate basis for client final investment decision. 3. Early Works awarded. 4. Selected contractor, award subject to client final investment decision.

Total value of opportunities: more than €33bn

UPDATE ON DRILLING

OFFSHORE DRILLING FLEET CONTRACTS

			Committed		Stand-by		Termination fee
								CLIENT	LOCATION
R E T WA P-		Saipem 12000						Eni	Worldwide
		Saipem 10000						Eni	Worldwide
		Scarabeo 9						Eni	Angola
		Scarabeo 8						Eni	North Sea
E DE		Scarabeo 7						Eni	Indonesia
		Scarabeo 6						-	-
		Scarabeo 5						Statoil	North Sea
	SPEC HI	Perro Negro 8						NDC	Abu Dhabi
R E		Perro Negro 7						Saudi Aramco	Saudi Arabia
T WA		Perro Negro 5					CONTRACTED TO 2024 >>	Saudi Aramco	Saudi Arabia
W- O	D	Perro Negro 4						Petrobel	Egypt
L L A H S	DAR AN ST	Perro Negro 3						-	-
		Perro Negro 2						NDC	Abu Dhabi
		TAD						Eni	Congo
			2016	2017	2018	2019	2020

ONSHORE DRILLING FLEET 9M16 UTILISATION RATE: 66.7%

9 MONTHS 2016 RESULTS

9M 2016 RESULTS YoY COMPARISON (€ mn)

* EBITDA EBIT and Net Profit adjusted for special items

9M 2016 NET PROFIT REPORTED/ADJUSTED BRIDGING (€ bn)

Net Profit

PRELIMINARY ASSET WRITE OFF AND IMPAIRMENT

Total* c.€ 2 bn

* The final write off and impairment will be available with the annual financial accounts

9M 2016 NET DEBT EVOLUTION (€ bn)

STRENGTHENED DEBT PROFILE

Overall €1bn Inaugural Bonds completed

• €500mn 4.5y bond fixed annual coupon 3.0%
• €500mn 7y bond fixed annual coupon 3.75%
• Proceeds reducing bridge to bond to €400mn
• Listed on the Euro MTF of the Luxembourg Stock Exchange

Liquidity and Available Financial Sources

• Significant cash available around €1.1bn (in addition to c.€0.7bn trapped)
• Cash facilities for c.€1.9bn: RCF €1.5bn and GIEK export facility c.€0.35bn
• Total guarantee lines of €8.8bn; €7.2bn utilised (including €2.3bn lines with eni)

2017 GUIDANCE AND CLOSING REMARKS

2017 GUIDANCE

Metrics	FY 2017
Revenues	 c.€10bn
EBITDA % margin	 c.€1bn  c.10%
Net profit	 Higher than €200mn*
CAPEX	 c.€400mn
Net financial position	 Below €1.4bn
	* After c.€30mn of restructuring costs 26

(update on final figure in February)

CLOSING REMARKS

ROBUST 2016 OPERATIONAL PERFORMANCE AND STRENGTHENED FINANCIAL PROFILE

DECISIVE RESPONSE TO DELAYED MARKET RECOVERY

LEANER, MORE FOCUSED ORGANISATION TO ENHANCE STRATEGIC FLEXIBILITY, PREPARING FOR MARKET UPTURN

2017 GUIDANCE SUPPORTED BY BACKLOG COVERAGE

APPENDIX

2016 GUIDANCE

Metrics	FY 2016
Revenues	 c.€10.5bn
EBITDA Adjusted % margin	 c.€ 1.3bn  c.12%
EBIT Adjusted % margin	 c.€600mn  c.5.5%
Net profit Adjusted	 c.€250mn* **
CAPEX	 Below €400mn
Net financial position	 c.€1.5bn

* Adjusted for special items

** After c.€20mn of restructuring costs

3Q 2016 RESULTS YoY COMPARISON (€ mn)