Prosafe SE

Earnings Release • Feb 6, 2018

6 February 2018

Q4 2017 results and market update

Disclaimer

All statements in this presentation other than statements of historical fact are forward-looking statements, which are subject to a number of risks, uncertainties, and assumptions that are difficult to predict and are based upon assumptions as to future events that may not prove accurate. Certain such forward-looking statements can be identified by the use of forward-looking terminology such as "believe", "may", "will", "should", "would be", "expect" or "anticipate" or similar expressions, or the negative thereof, or other variations thereof, or comparable terminology, or by discussions of strategy, plans or intentions. Should one or more of these risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this presentation as anticipated, believed or expected. Prosafe does not intend, and does not assume any obligation to update any industry information or forward-looking statements set forth in this presentation to reflect subsequent events or circumstances.

Q4 2017 Highlights

• Good operating performance
• Utilisation of 36.1 per cent in the quarter (43 per cent)
• Operating revenues at USD 76.7 mill.
• Cash flow from operations at USD 44.2 mill.
• Delivering on cost and capex reductions. Focus on continuous improvement remains
• Business development presence established in Mexico and Houston
• Positive macro indicators
• Foresee gradual pick-up in accommodation demand from 2019

Agenda

Financial results

• Business & Operations
• Outlook
• Summary

Income statement

(Unaudited figures in USD million)	Q4 17	Q3 17	Q4 16	2017	2016
Operating revenues	76.7	68.9	125.8	283.0	474.0
Operating expenses	(36.6)	(41.3)	(47.8)	(160.1)	(220.8)
EBITDA	40.1	27.6	78.0	122.9	253.2
Depreciation	(25.2)	(34.8)	(34.1)	(127.2)	(115.7)
Impairment	0.0	(609.0)	(84.7)	(609.0)	(84.7)
Operating profit/(loss)	14.9	(616.2)	(40.8)	(613.3)	52.8
Interest income	0.4	0.5	0.1	1.4	0.3
Interest expenses	(19.2)	(19.1)	(18.4)	(74.9)	(85.6)
Other financial items	11.4	2.3	33.7	12.4	222.2
Net financial items	(7.4)	(16.3)	15.4	(61.1)	136.9
Profit/(Loss) before taxes	7.5	(632.5)	(25.4)	(674.4)	189.7
Taxes	(2.6)	(2.5)	(7.3)	(7.8)	(17.1)
Net profit/(loss)	4.9	(635.0)	(32.7)	(682.2)	172.6
EPS	0.07	(8.89)	(0.51)	(9.47)	8.36
Diluted EPS	0.06	(7.22)	(0.47)	(7.75)	8.10

Balance sheet

(Unaudited figures in USD million)	31.12.17	30.09.17	31.12.16
Goodwill	0.0	0.0	226.7
Vessels	1 527.2	1 555.0	2 029.3
New builds	125.2	124.9	122.2
Other non-current assets	10.5	11.2	13.9
Total non-current assets	1 662.9	1 691.1	2 392.1
Cash and deposits	231.9	207.8	205.7
Other current assets	52.2	58.4	89.1
Total current assets	284.1	266.2	294.8
Total assets	1 947.0	1 957.3	2 686.9
Share capital	9.0	7.9	7.9
Other equity	453.5	447.7	1 121.6
Total equity	462.5	455.6	1 129.5
Interest-free long-term liabilities	57.5	67.9	62.2
Interest-bearing long-term debt	1 329.1	1 329.0	1 342.9
Total long-term liabilities	1 386.6	1 396.9	1 405.1
Other interest-free current liabilities	79.3	86.2	104.4
Current portion of long-term debt	18.6	18.6	47.9
Total current liabilities	97.9	104.8	152.3
Total equity and liabilities	1 947.0	1 957.3	2 686.9

Agenda

• Financial results
• Business and Operations
• Outlook
• Summary

Significant reduction in costs

• Prosafe has operated with a resilient focus on reducing costs across the organisation since the downturn started
• Reduced onshore operating costs by ~45%
• Reduced onshore headcount by ~ 50%
• Reduced vessel operating costs by 20%-40%
• Reduced stacking costs by 30%-50%
• Operating as efficiently and as lean as possible, while maintaining market leading safety and operating metrics

TSV Safe Scandinavia – Westcon dispute

• Court proceedings commenced 22 August 2017
• The yard's budget for the work matured to approx. NOK 1.07 billion after several revisions
• Total cost claimed by yard approx. NOK 2.4 billion
• Prosafe has already paid approx. NOK 2.1 billion
• Yard has claimed additional approx. NOK 300 million*
• Prosafe has claimed:
• Re-payments of approx. NOK 300 million*
• And compensation for losses in connection with delayed start-up of contract
• Ruling is expected by early March 2018
• * excl. interest and legal cost

TSV Safe Scandinavia - strong performance at Oseberg

• Firm contract with Statoil until end June 2018 at Oseberg East on the NCS
• Strong and efficient operational and technical performance
• Drilling with TSV support started in March 2016
• Services provided: Drilling support, well intervention, accommodation and other vessel support

Safe Scandinavia future opportunities

• In addition to TSV and Accommodation services, dialogue with blue chip companies to collaborate within Plug and Abandonment (P&A) and decommissioning:
• Well Plug & Abandonment: Ambition to reduce the total project time for P&A by 30-50% with activities undertaken in parallel
• Well intervention
• "Making Safe" / other Decommissioning preparation activities concurrently with P&A
• Vessel being marketed North Sea focus

Fleet renewal – controlling 3 new builds at COSCO

• Negotiations with COSCO regarding Safe Nova, Safe Vega and Safe Eurus ongoing
• The standstill agreement between Prosafe and COSCO related to Safe Nova and Safe Vega has been extended until early April 2018
• Looking for optionality and value creation potential from financing terms, price and timing of delivery
• Right to cancel Safe Nova and Safe Vega newbuild contracts and claim a refund of instalments plus interest equal to approx. USD 60 million secured by Bank of China

Exploring all opportunities for strategic positioning

Exploring all opportunities for strategic positioning

Prosafe strategic focus

• Be a leading offshore accommodation company globally
• Fleet management in anticipation of market recovery
• Fleet renewal
• Scrapping
• Financial planning to deliver on strategic goals and be robust in anticipation of market recovery
• Consolidation and other commercial arrangements
• Streamlined and efficient organisation

Agenda

• Financial results
• Business and Operations

Outlook

Summary

Strategy-driven effects prevalent in today's market

Maintenance intensity significantly down with the MMO-market as victim

Source: Rystad Energy

Order backlog per YE 2017: MUSD 340 incl. options

Firm contracts

Contracts

	2017	2018	2019	2020
	$N$ $D$ $\vert$ $\mathsf{J}$ : $\circ$ S.	FMAMJJJASOND J.	$J$ $F$ $N$ $D$ $\circ$ S M. M.	$\mathsf F$ $N \mid D$ M S M. 0.
SAFE NOTOS		Petrobras UMS
SAFE BOREAS		Statoil Mariner
SAFE ZEPHYRUS		Statoil Johan Sverdrup
SAFE SCANDINAVIA	Statoil TSV
REGALIA
SAFE CALEDONIA	Total Cent. Grab.
SAFE BRISTOLIA
SAFE ASTORIA
SAFE CONCORDIA
SAFE SWIFT		Rosetti

Positive macro indicators: Oil price & Break-even

Source: Oil Services Quarterly, January 2018, Clarksons Platou

Positive macro indicators: E&P Capex & RRR

Source: Oil Services Quarterly, January 2018, Clarksons Platou

North Sea hit hardest

• North Sea was one of the hardest hit regions during the downturn
• ~ 65% fall from 2013 peak
• Current activity is largely related to hook-up and commissioning (HUC) projects awarded prior to 2015
• Next round HUC projects expected to commence beyond 2020
• The rebound in MMO expected to begin from 2019 driven by accumulating maintenance need on aging infrastructure

International markets will be increasingly important

Mexico

• Mexico is dominated by MMO activity
• Majority of activity is related to fixed platforms in shallow, benign waters relatively close to shore
• Although historically HUC was not a primary demand driver, this may change – although likely beyond 2020
• Supply in Mexico has been falling due to units being removed from the market

Source: SEB

Brazil: Anticipate tender activity

• Petrobras technical specifications ('GTD') have evolved substantially since 2010 – some of the highest requirements of any operator
• 9 vessels of 8 owners operating in 2015
• Presently 5 vessels contracted, reducing to 1 vessel by mid-2018
• Anticipated tender activity to address vessel shortage
• With demand forecasted to be in the 5 - 6 unit range, this will be a demand driver in the next 6 -18 months, although completion will be prevalent

Source: Prosafe

GTD: General Technical Description (minimum technical requirements)

Prospects and tendering – Prosafe business intel

• Seven tenders ongoing for 2018 through 2020 – one in the North Sea
• The prospect list with a three-year look-out remains at a relatively high level
• 23 prospects with high probability of going to tender

Tenders and Prospects - outlook is generally three years

P90, P50 and P10 are prospects probability of moving to a tender. Source: Prosafe

Agenda

• Financial results
• Business and Operations
• Outlook

Summary

Summary

• Good operating performance
• Good cash position
• Delivering on cost and capex reductions. Focus on continuous improvement remains
• Business development presence established in Mexico and Houston
• Positive macro indicators
• Foresee gradual pick-up in accommodation demand from 2019
• Continue to be proactive in industry restructuring

Appendix

Operating revenue

(USD million)	Q4 17	Q3 17	Q4 16	2017	2016
Charter income	70.5	62.9	95.8	256.0	375.5
Mob/demob income	0.5	1.0	17.5	3.9	34.0
Other income	5.7	5.0	12.5	23.1	64.5
Total	76.7	68.9	125.8	283.0	474.0