Prosafe SE

Earnings Release • Feb 9, 2017

Prosafe SE: Fourth quarter 2016 results

Prosafe SE: Fourth quarter 2016 results

Highlights

* Consolidation and fleet high grading with closing of Axis transaction

* Cost optimisation ahead of plan with further measures in progress

* Strengthened management team in place

* New contract for Safe Caledonia and extensions for Safe Boreas and Safe

Zephyrus

* Safe Notos commenced contract, while Safe Concordia continuing to work

* EBITDA USD 78 million in Q4 2016 vs USD 51.4 million in Q4 2015

Operations

(Figures in brackets refer to the corresponding period of 2015)

Fleet utilisation in the fourth quarter was 43 per cent (62 per cent).

Safe Boreas continued the contract with Repsol Sinopec (formerly Talisman

Sinopec) in UK throughout the quarter. The Repsol Sinopec contract at Montrose

has been extended until 27 February 2017.

Safe Zephyrus commenced the contract with Aker BP in Norway in late July 2016

and was on contract throughout the fourth quarter. The contract was extended

until end January 2017.

Safe Notos commenced its 3 years and 222 days duration contract for Petrobras on

7 December 2016. Safe Concordia was fully contracted in the quarter for

Petrobras and continues on short-term extensions at market adjusted dayrate.

Safe Scandinavia Tender Support Vessel (TSV) was fully contracted in the quarter

with Statoil. The TSV contract has a firm period until July 2018.

In December 2016 following an audit by the Petroleum Safety Authority Norway

(PSA), the PSA issued an order in relation to non conformances which are

currently being closed out. Prosafe remain committed to safe and compliant

operations at all times.

Regalia operated for Shell in the UK from the beginning of August until mid-

October.

Safe Caledonia, Safe Bristolia, Safe Astoria, Safe Lancia and Safe Regency were

all idle in the quarter and were laid up in various locations.

Safe Eurus is in a preserved mode with COSCO (Qidong) Offshore Co., Ltd (Cosco)

in China awaiting recovery of the market. Prosafe has acquired control over the

Axis Nova and Axis Vega semi submersibles which Prosafe intends to rename as

Safe Nova and Safe Vega, respectively. Prosafe has commenced negotiations with

Cosco where the vessels are currently being completed with the aim of reaching

an acceptable commercial solution regarding timing and terms of delivery. If an

agreement is not reached, Prosafe has the right to cancel the newbuild contracts

due to late delivery and claim a refund of the gross deposit of approx. USD 60

million secured by Bank of China.

Following completion of the right to take delivery of the Axis Nova and Axis

Vega vessels, Prosafe has recently decided to sell Safe Lancia for scrapping.

This is the fourth vessel sold for scrap since the summer of 2016.

Financials

Fourth quarter 2016

EBITDA for the fourth quarter amounted to USD 78.0 million (USD 51.4 million).

This improvement is mainly due to an improved cost performance both onshore and

offshore, mobilisation income of USD 17 million for Safe Notos and the

contribution from Safe Scandinavia TSV.

As there are few prospects in the foreseeable future for the smallest vessel in

the fleet, the Safe Astoria, an impairment of USD 84.7 million has been charged

to the income statement in the fourth quarter.

Operating loss for the fourth quarter amounted to USD 40.8 million (USD 118.7

million).

Net financial items amounted to USD 15.4 million positive (USD 22.2 million

negative). The main contributing factor to this positive change is a favourable

change in fair value of interest rate swaps.

Net loss equalled USD 32.7 million (USD 143.0 million).

Total assets at 31 December amounted to USD 2,687 million (USD 2,187 million).

Net interest-bearing debt equalled USD 1,185 million (USD 1,190 million), and

the book equity ratio was 42.0 per cent (32.7 per cent).

Full year 2016

Utilisation of the fleet was 43 per cent (70 per cent). EBITDA for the full year

amounted to USD 253.2 million (USD 262.9 million). The relatively small decline

in EBITDA compared to the significantly reduced utilisation is due to a higher

average day rate, which reflects that units which generate a relatively high day

rate have been on contract during this year as opposed to last year when several

of the vessels were on bareboat contracts in the Gulf of Mexico.

Depreciation and impairment amounted to USD 200.4 million (USD 232.1 million),

and operating profit equalled USD 52.8 million (USD 30.8 million).

Net financial items for 2016 amounted to USD 136.9 million positive (USD 70.9

million negative). As part of the refinancing, a gain on forgiveness of bond

debt of USD 197.6 million was recognised in the third quarter.

Net profit for 2016 equalled USD 172.6 million (net loss of USD 50.6 million).

Share capital and acquisitions of shares

On 9 November 2016 the settlement of the subsequent offering was completed and

504,000,000 new shares were issued.

On 30 November 2016 the Extraordinary General Meeting approved the reverse share

split in the ratio of 100:1. Every 100 ordinary shares of nominal value EUR

0.001 each were consolidated into 1 ordinary share, each of nominal value EUR

0.10.

On 13 December 2016 the Company announced that agreements had been made with

respect to the acquisition of all outstanding shares in the two single purpose

companies Axis Nova Singapore Pte. Ltd. and Axis Vega Singapore Pte. Ltd. and

25% of the shares in Dan Swift (Singapore) Pte. Ltd.

The agreed consideration for the transaction of USD 70 million was settled by

the issuance of 5,868,900 ordinary shares priced at NOK 30 per share, and

subordinated zero coupon convertible bonds of NOK 403,092,000, convertible into

13,436,400 shares at a conversion price of NOK 30 per share. The transaction was

completed during December 2016.

Subsequent to all the events described above, the number of shares in the

Company as at 31 December 2016 is 71,399,002.

The acquisition of Axis Nova Singapore Pte. Ltd and Axis Vega Singapore Pte.

Ltd. have been fully consolidated in the balance sheet as of 31 December 2016.

The acquisition of Dan Swift (Singapore) Pte. Ltd has been accounted for as an

investment in an associated company.

In addition, convertible bonds with ISIN no. 001077102.5 ("Convertible Bonds")

of nominal value NOK 200,184 were converted into 8,007 new ordinary shares in

the Company on 3 February 2017, based on the conversion price of NOK 25 per

share. Following this part conversion, the remaining outstanding principal of

the Convertible Bonds is now reduced to NOK 78,589,829. The number of

outstanding shares in the Company has increased to 71,407,009 shares, each of

nominal value EUR 0.1.

Update Westcon Dispute

The litigation process relating to the conversion of the Safe Scandinavia into a

tender support vessel remains ongoing between Westcon Yards AS and Prosafe Rigs

Pte. Ltd. The next phase includes a court mediation between the parties

scheduled for mid March 2017.

Outlook

Prosafe continues to rebuild its position by taking the lead in respect of cost

efficiency, scrapping, fleet renewal and consolidation while retaining its focus

on safe operations at all times.

Positive developments recently include a new contract which has been secured for

Safe Caledonia, in addition to securing short term extensions for Safe

Concordia, Safe Boreas and Safe Zephyrus at market adjusted rates.

These developments, coupled with our prospects tracking, continue to indicate

that the market is at or is near the bottom of the cycle and that we can

anticipate a gradual recovery in demand and utilisation from 2018.

Further, a combination of elements such as falling reserve replacement ratios,

significantly lower break-even prices for oil companies, apparent oil price

stability and the fact that spending by oil companies on maintaining offshore

fields cannot be deferred indefinitely, should result in guarded optimism about

the future recovery in activity levels.

Prosafe is the world's leading owner and operator of semi-submersible

accommodation vessels. The company is headquartered in Larnaca, Cyprus and

listed on the Oslo Stock Exchange with ticker code PRS. For more information,

please refer to www.prosafe.com

Larnaca, 8 February 2017

The Board of Directors of Prosafe SE

Attachments:

Q4 2016 report

Q4 2016 presentation

For further information, please contact:

Stig Harry Christiansen, Acting CEO

Prosafe Management AS

Phone: +47 478 07 813

Robin Laird, Acting CFO

Prosafe Offshore Services Pte Limited

Phone: +65 81 27 21 01

Cecilie Helland Ouff, Senior Manager Finance and Investor Relations

Prosafe AS

Phone: +47 991 09 467

This information is subject to the disclosure requirements pursuant to section

5-12 of the Norwegian Securities Trading Act.