Golden Ocean Group

Investor Presentation • May 22, 2019

RESULTS Q1 - 2019 May 22, 2019

FORWARD LOOKING STATEMENTS

• Matters discussed in this presentation may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements, which 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. Words such as "believe," "anticipate," "intends," "estimate," "forecast," "project," "plan," "potential," "may," "should," "expect," "pending" and similar expressions identify forward-looking statements. The forward-looking statements in this presentation are based upon various assumptions. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. The information set forth herein speaks only as of the date hereof, and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication.
• In addition to these important factors and matters discussed elsewhere herein, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies, fluctuations in currencies and interest rates, general market conditions, including fluctuations in charter hire rates and vessel values, changes in demand in the dry bulk market, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents, political events or acts by terrorists, and other important factors described from time to time in the reports filed by the Company with the Securities and Exchange Commission.
• Certain shipping, steel, Chinese and global industry information, statistics and charts contained herein have been derived from several sources. You are hereby advised that such industry data, charts and statistics have not been prepared specifically for inclusion in these materials and Golden Ocean has not undertaken any independent investigation to confirm the accuracy or completeness of such information

COMPANY UPDATE

HIGHLIGHTS

• The Company reports net loss of \$7.5 million and net loss per share of \$0.05 for the first quarter of 2019, compared with net income of \$23.6 million and earnings per share of \$0.16 for the fourth quarter of 2018
• Adjusted EBITDA in the first quarter of 2019 was \$36.0 million, compared with \$70.4 million in the fourth quarter of 2018
• Refinanced the non-recourse loans for 14 vessels, reducing interest expense and cash break even levels
• Invested in Singapore Marine, a newly-established dry bulk operator
• Announces a cash dividend of \$0.025 per share for the first quarter of 2019

PROFIT & LOSS

(in thousands of \$)	Q1 2019	Q4 2018	Quarterly Variance
Operating revenues	126,956	177,175	(50,219)
Voyage expenses	(34,199)	(44,059)	9,860
Net revenues	92,757	133,116	(40,359)
Ship operating expenses	(42,111)	(38,497)	(3,614)
Administrative expenses	(3,530)	(3,728)	198
Charter hire expenses	(15,788)	(24,992)	9,204
Depreciation / impairment	(22,875)	(23,333)	458
Other gains (losses)	-	65	(65)
Net operating expenses	(84,304)	(90,485)	6,181
Net operating income (loss)	8,453	42,631	(34,178)
Net financial expenses	(15,320)	(16,895)	1,575
Derivatives and other financial income (loss)	(560)	(1,956)	1,396
Net income before taxation (loss)	(7,427)	23,780	(31,207)
Income Tax expense	38	194	(156)
Net income (loss)	(7,465)	23,586	(31,051)
Earnings (loss) per share: basic and diluted	(\$0.05)	\$0.16	(\$0.21)
Adjusted EBITDA	36,021	70,416	(34,395)
TCE per day	13,131	17,525	(4,394)

CASH FLOW DURING THE QUARTER

Q1 2019

BALANCE SHEET

(in thousands of \$)	Q1 2019	Q4 2018	Quarterly Variance
ASSETS
Short term
Cash and cash equivalents (incl. restricted cash)	153,036	325,624	(172,588)
Other current assets	132,252	135,611	(3,359)
Long term
Restricted cash	46,115	46,981	(866)
Vessels (incl. newbuildings and held-for-sale)	2,384,506	2,406,456	(21,950)
Operating leases, right of use assets, net	201,124	-	201,124
Other long term assets	19,992	36,684	(16,692)
Total assets	2,937,025	2,951,354	(14,329)

LIABILITIES AND EQUITY

Total liabilities and equity	2,937,025	2,951,354	(14,329)
Equity	1,510,695	1,523,512	(12,817)
Other long term liabilities	-	7,278	(7,278)
Non-current portion of operating lease obligations	170,976	-	170,976
Long term debt and capital lease	857,287	879,063	(21,776)
Long term
Other current liabilities	64,616	64,087	529
Current portion of operating leases	22,072	-	22,072
Current portion of long term debt and capital lease	311,379*	477,413	(166,034)
Short term

*INCLUDES \$81.7 MILLION RELATED TO NON-RECOURSE LOAN FACILITIES WHICH WERE REFINANCED IN APRIL AND MAY 2019

RECENT UPDATES TO CREDIT FACILITIES

Extended \$420 million debt facility

• Maturity for facility financing 14 vessels extended by three years
• Separate tranche added for up to 11 scrubber installations
• Each scrubber financed with up to \$3 million
• Repaid over three years, starting January 2020
• Extension and scrubber tranche at same terms and covenants as existing facility

Refinanced debt facilities totaling \$221.1 million

Three non-recourse facilities financing 14 vessels replaced by two new facilities with more favorable terms:

\$93.75 million for 5 vessels

\$131.79 million for 9 vessels

Five year tenor

Five year tenor

19 year profile

• 19 year profile
• Margin of LIBOR + 215 bps
• Margin of LIBOR + 210 bps
• Fully guaranteed by GOGL and covenants aligned with remaining debt
• Lower margin and longer profile reduce cash break even for the 14 vessels with 1,300 \$/d and 200 \$/d for the entire fleet

DEBT MATURITIES BEFORE REFINANCING

NOTE: \$93.75MN FACILITY IS FULL DRAWN; DOCUMENTATION COMPLETED FOR \$131.79MN FACILITY 8

DEBT MATURITIES AFTER REFINANCING

MODERN, EFFICIENT FLEET

• Fully-burdened Opex includes dry docking and management fees
• One vessel completed dry dock in Q1 2019, which included installation of BWTS
• Additional 18 vessels, two Panamax and 16 Capesize vessels, are scheduled for dry-dock in 2019
• Average fleet age of less than six years and majority of the fleet designed with fuel-efficient engines and ballast water treatment systems
• Additional advantage to be gained through scrubber installations

OPERATING EXPENSES (YTD 2019) BWTS INSTALLATION SCHEDULE

SCRUBBERS FURTHER INCREASE COMPETITIVE ADVANTAGE UNDER NEW SULPHUR CAPS

• Golden Ocean's fleet of Capesize vessels has an average age of less than six years
• The Company signed contracts to install 19 exhaust gas scrubbers on Capesize vessels with options for four additional vessels; installations to coincide with scheduled dry docks in 2019 and 2020
• Strategic investment decision creates a further competitive advantage as new regulations on sulphur emissions come into effect in 2020

POTENTIAL SCRUBBER ADVANTAGE

SCRUBBER INSTALLATION SCHEDULE

NOTE: COMPLIANT FUEL PRICE ESTIMATED 1:2 FO:GASOIL BLEND; ASSUMES MODERN AND 10 YR OLD VESSELS CONSUME 9,500 AND 11,750 MT, RESPECTIVELY, OF FUEL ANNUALLY

FLEET DEPLOYMENT

Opportunistic chartering strategy with significant operating leverage

CHARTERING PROFILE

DRY BULK MARKET UPDATE

DRY BULK SUPPLY / DEMAND & UTILIZATION

Utilization declined to ~82% in the first quarter as seasonal weakness was more pronounced following normal q1 fleet growth, easing up of congestion and shorter trade routes

SUPPLY, DEMAND AND UTILIZATION RATE - DRY BULK SHIPS 10,000 DWT +

LOSS OF IRON ORE EXPORTS REFLECTED IN VOLUMES

Volumes grew slightly year-over-year despite ~15mn metric tonne decrease in iron ore volumes

SEABORNE TRADE OF DRY BULK COMMODITIES (MAJOR IMPORTERS)

DECLINE IN BRAZIL IRON ORE PRODUCTION WILL BE REFLECTED IN Q2 2019 EXPORT FIGURES

QUARTERLY EXPORTED IRON ORE VOLUMES PER COUNTRY

STEEL MARGINS HAVE STABILIZED SINCE THE START OF THE YEAR DESPITE INCREASE IN IRON ORE PRICES

GROSS PROFIT (STEEL PRICE MINUS COST OF COKING COAL AND IRON ORE; ALL PRICES SPOT)

Gross profit using Au coking coal, Au iron ore price and Tangshan steel billett price Gross profit using Cn coking coal price, Au iron ore price and Tangshan steel billett price

IRON ORE PRICE DIFFERENTIALS

WORLD STEEL PRODUCTION TRENDS

Chinese steel production growth remained strong, while the rest of the world was unchanged year over year

ANNUAL CHANGE IN STEEL PRODUCTION

INDIAN COAL IMPORTS HAVE GROWN EACH OF THE PAST FIVE QUARTERS AND ARE UP 15% YEAR-OVER-YEAR

COAL IMPORTS BY MAJOR IMPORTERS CHINA AND INDIA COAL INVENTORIES

CONTINUED YEAR OVER YEAR GROWTH IN ELECTRICITY CONSUMPTION SUPPORTS COAL DEMAND IN CHINA

CHINESE ELECTRICITY OUTPUT

CHINESE ELECTRICITY OUTPUT BY SOURCE

U.S. GRAIN EXPORTS CONTINUE TO BE DISRUPTED BY TRADE TENSIONS

GRAIN EXPORTS BY SOURCE

SOYBEAN AND SOYBEAN MEAL EXPORTS BY SOURCE

CAPESIZE FLEET GROWTH SLOWING AS SCRAPPING ACCELERATES

HANDYMAX / SUPRAMAX HANDYSIZE

CAPESIZE PANAMAX / POST-PANAMAX

PROJECTED FLEET GROWTH IS MODERATE VERSUS HISTORCAL LEVELS

High likelihood that some 2019 deliveries are cancelled or pushed out to 2020; limited ordering and scrapping ahead of regulations is expected

FLEET GROWTH (ASSUMES NO SCRAPPING OR NEW ORDERING)

DEMOLITION ACTIVITY HAS INCREASED

Demolition has increased in 2019 driven by weaker of freight rates and reduced differential between resale prices and scrap value

CAPESIZE DEMOLITION AND VESSEL VALUES

S&P PRICES TRENDING DOWN, ACTIVITY REMAINS LIMITED

CAPESIZE VALUES AND EARNINGS

PANAMAX VALUES AND EARNINGS

Asset values (mm USD)

INCREASING PREMIUM FOR MODERN VESSELS

"ECO" vessel premium has increased while older vessels lose value as fuel price is set to become an even more important factor in 2020

CAPESIZE DEMOLITION AND VESSEL VALUES

OUTLOOK AND STRATEGY

MARKET UNCERTAINTY AND VOLATILITY HAS FORCED CORRECTIVE ACTION AND RESTRAINT

UPSIDE POTENTIAL DOWNSIDE RISKS

• China implements additional stimulus measures to support growth and/or offset potential impact of tariffs
• Iron ore supply comes back, lowering iron ore prices and reversing stock drawdowns
• Trade tensions ease, removing significant uncertainty and returning US soybean trade to normal levels
• Coal imports to China rebound as restrictions are lifted and imports to India and Other Asia continue to grow
• Older vessels are scrapped ahead of investments required to meet BWTS or remain economical following sulphur emissions regulations

• Effective capacity is constrained ahead of IMO 2020 due to cleaning of fuel tanks, availability of fuel and offhire for scrubber installations

• Longer term reduction of iron ore volumes from Brazil if Vale is not able to recoup production losses

• Unresolved trade tensions cause global trade to slow
• Economic activity decreases in China, leading to lower consumption of steel and coal
• Reduced amount of coal in the energy mix in China and other countries
• Slippage removed from the orderbook and fleet size grows materially
• Valemax share of order book increases market volatility

COMPETITIVE CASH COST DRIVE EARNINGS AND PROTECTS DOWNSIDE

• Fully-burdened Opex includes dry docking and management fees
• G&A net of management fees are estimated to be approximately \$450 per day on a fleet of 77 vessels
• Average margin above LIBOR on bank financing is competitive at ~2.3% and majority of bank debt has 20 year profile (adjusted for year of age)

CASH BREAKEVEN LEVELS VS. INDEXES(1)

REDUCE THE CASH BREAKEVEN FROM THESE LEVELS SOURCE: CLARKSONS

QUESTIONS & ANSWERS

THANK YOU FOR YOUR ATTENTION!