Prosafe SE

Investor Presentation • Feb 9, 2017

Q4 2016 results & 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.

Agenda

Highlights

• Plan the work Work the plan
• Financial results
• Status, strategy and outlook
• Summary

Highlights

• Reinforcing safety culture
• Good operating performance and strong EBITDA
• Impairment of Safe Astoria MUSD 85: No cash effect and no impact on covenants
• Closing of Axis transaction; 100% of Safe Nova and Safe Vega and 25% of Safe Swift
• New contract for the Safe Caledonia for Total in the UK in 2017
• Extensions for the Safe Boreas and Safe Zephyrus
• Safe Notos commencing contract and Safe Concordia continuing to work
• Johan Sverdrup ITT for 2018 and 2019 received
• Current market is dominated by "Greenfield" delays could create opportunities
• Cost optimisation ahead of plan with further measures in progress
• Strengthened management team in place

Agenda

• Highlights
• Plan the work - Work the plan
• Financial results
• Status, strategy and Outlook
• Summary

Plan the work - Work the plan

Rebuilding of Prosafe - status

• Company refinanced
• Strengthened management structure and team in place
• Reorganisation and substantial cuts for efficiency
• Spend reduction for max cash
• Fleet high-grading from scrapping
• Consolidation and fleet renewal
• Flexible models for strategic optionality
• Commercial strategy adapted to circumstances

Strengthening management team

Working the plan to rebuild leading position and create shareholder value

Update on Cost and capex

	2011-2015 annual average levels	Initial target levels	Run rate (January 2017)	Ambition By Q2
Offshore opex1)	USD 180m	USD 140 – 150m	USD 130 – 140m	Further reductions of 10%+/-
Onshore opex	USD 40m	USD 28m (-USD 10-12 m/ 25-30%))	USD 24m/-40% (= 18% versus 10% indicated in Q3)	Further reductions of 10%+/-
Annual fleet capex2)	USD 60m	USD 20-30m	USD 10-15m	USD 10-15m
Headcount reduction (in %)		35-40 percent		45-50% onshore. Offshore pending vessel activity – 20-35%

1) Will to some extent be affected by activity level

2) Excluding new-builds and conversions, updated from Q2 presentation

Update on vessel's cost per day

CPD for vessels in operation being reduced by ca. 20-30% since 2014*

Opex (CPD k/d) (figures in USD)	NCS/UK	NCS (TSV)	UKCS	Brazil
	DP	Moored	Moored	DP
2014	75-80/60-65	100-105	50-55	60-65
2017e	60-65/45-50	85-90	35-40	40-45
% reduction	19%/24%	15%	29%	32%

Stacking CPD (k/d) (figures in USD)	High-spec vessels 1) (cold/warm)	Low-spec vessels 1) (cold/warm)
August '16 estimate	15-30	5-10
Now	15-25	5-10

1) Will depend on location and duration and cold/warm/hot stack

2) * slightly less on TSV given complexity of operations

Fleet renewal and rightsizing

• Completed the acquisition of the Safe Nova and Safe Vega
• Termination rights and USD 60 mill refund guarantee intact
• Started marketing of the Safe Swift (pre. Dan Swift)
• Dialogue for optimal flexibility and value creation commenced with yard in China
• Continued scrapping with Safe Lancia being the 4th vessel

Diversified fleet and flexible models

Strategic optionality to meet client needs in most regions

Agenda

• Highlights
• Plan the work Work the plan
• Financial results
• Status, strategy and outlook
• Summary

Income statement

(Unaudited figures in USD million)	Q4 16	Q3 16	Q4 15	2016	2015
Operating revenues	125.8	129.8	103.9	474.0	474.7
Operating expenses	(47.8)	(61.5)	(52.5)	(220.8)	(211.8)
EBITDA	78.0	68.3	51.4	253.2	262.9
Depreciation	(34.1)	(29.1)	(24.5)	(115.7)	(86.5)
Impairment	(84.7)	0.0	(145.6)	(84.7)	(145.6)
Operating profit/loss	(40.8)	39.2	(118.7)	52.8	30.8
Interest income	0.1	0.1	0.1	0.3	0.2
Interest expenses	(18.4)	(28.7)	(10.4)	(85.6)	(41.6)
Other financial items	33.7	196.8	(11.9)	222.2	(29.5)
Net financial items	15.4	168.2	(22.2)	136.9	(70.9)
Profit/(Loss) before taxes	(25.4)	207.4	(140.9)	189.7	(40.1)
Taxes	(7.3)	(5.5)	(2.1)	(17.1)	(10.5)
Net profit/(loss)	(32.7)	201.9	(143.0)	172.6	(50.6)
EPS	(0.51)	16.13	(58.85)	8.36	(21.29)
Diluted EPS	(0.47)	15.78	(58.85)	8.10	(21.29)

Operating revenue and expenses - key points

(USD million)	Q4 16	Q3 16	Q4 15	2016	2015
Charter income	95.8	114.4	93.7	375.5	425.4
Mob/demob income	17.5	2.1	1.5	34.0	5.4
Other income	12.5	13.3	8.7	64.5	43.9
Total	125.8	129.8	103.9	474.0	474.7

• Non-recurring cost items of MUSD 62
• Britannia/Hibernia/Jasminia (stacking, mobilisation and prepare for scrap cost): MUSD 40
• Financial restructuring: MUSD 12
• Resizing of organization: MUSD 7
• Axis acquisition: MUSD 3

Balance sheet & covenant update

(Unaudited figures in USD million)	31.12.16	30.09.16	31.12.15
Goodwill	226.7	226.7	226.7
Vessels	2 029.3	1 887.3	1 578.6
New builds	122.2	318.8	228.5
Other non-current assets	13.9	4.1	4.9
Total non-current assets	2 392.1	2 436.9	2 038.7
Cash and deposits	205.7	183.4	57.1
Other current assets	89.1	90.9	91.4
Total current assets	294.8	274.3	148.5
Total assets	2 686.9	2 711.2	2 187.2
Share capital	7.9	6.7	72.1
Other equity	1 121.6	1 070.3	643.1
Total equity	1 129.5	1 077.0	715.2
Interest-free long-term liabilities	62.2	102.1	58.9
Interest-bearing long-term debt	1 342.9	1 373.3	1 107.5
Total long-term liabilities	1 405.1	1 475.4	1 166.4
Other interest-free current liabilities	104.4	105.8	166.1
Current portion of long-term debt	47.9	53.0	139.5
Total current liabilities	152.3	158.8	305.6
Total equity and liabilities	2 686.9	2 711.2	2 187.2

Covenants - large headroom:

• Liquidity minimum MUSD 65
• Q4: MUSD 205.7
• Interest coverage ratio (adjusted EBITDA : Net interest expense over previous 12 month period) minimum 1.0

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Agenda

• Highlights
• Plan the work Work the plan
• Financial results
• Status, strategy and outlook
• Summary

From 80% average utilization to 30%+firm in 2017

Total order book of almost USD 1 billion, ca 50/50 split firm/options

Being active in the restructuring of the industry

Status TSV Safe Scandinavia at Oseberg East

• Firm contract till summer 2018
• Strong technical performance
• Goal to be the safest operator as per Zero mindset – no compromise.
• Full focus on PSA Order and LTI
• Remain cautiously optimistic about extended life at Oseberg East given technical performance and production development

The market is slowly but surely bottoming out

Capacity Utilization by Offshore Segment

Source: Clarksons Platou Securities AS

Also dayrates bottoming out?

• North Sea recent awards indicate a significant dayrate reduction through 2016 and 2017
• Other regions somewhat less affected
• Some signs, however, of higher rates from 2018 onwards
• Positive rate development anticipated to continue pending demand pick up and supply side

Market anticipated to normalise with spend-more MMO

Share of market (ca.)	25%	75%	0-10%
Market visibility	High	Low	Medium
Lead time	Long	Short	Medium
Average duration	8 months	6 months	Anticipated longer
Key drivers	Project sanctioning, hookup and commissioning	Age of installed topsides, subsea tieback projects	Shutdowns and platform removal
Current market	80%	20%

Improved tendering indicating pick up from 2018?

Prosafe fleet renewal – A managed process…

Contributing to replacement and rebalancing

EBITDA and capex guidance

Previous guidance
2016 and 2017 combined	MUSD 320+
=> 2017	MUSD 110+/-
Capex per year	MUSD 20-30

Current guidance
2016 and 2017 combined	MUSD 365 +/- (slight increase)
2017 remain low point (anticipated)	MUSD 110 +
Capex per year	MUSD 10-15*
Onshore cost & headcount	Additional 10% +/-
Liquidity – cash flow from operations	Neutral at ca. MUSD 100** p.a => Runway is "protected"

*) Incl. SPS for the Safe Caledonia

**) 2017 is however also impacted by USD 30 m repayment of sellers credit to Jurong

Agenda

• Highlights
• Plan the work Work the plan
• Financial results
• Strategy and Outlook

Summary

Summary

• Reinforcing safety culture
• Strengthening the management team
• Solid underlying performance and cash control
• Further cost reductions underway
• New contract and extensions despite soft market
• Focus on safe and efficient operations of the TSV
• Prosafe will continue to be active and assist in the supply side rebalance towards 2020
• Guarded optimism as market activity anticipated to gradually pick up from 2018 driven mainly by a normalization of brownfield markets
• Continue to rebuild Prosafe to take the lead in industry development