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Magnora ASA

Investor Presentation • May 21, 2014

3659_rns_2014-05-21_03f096e2-82eb-4220-b546-7e25289ccc88.pdf

Investor Presentation

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Sevan Marine ASA Presentation of first quarter results 2014

Hotel Continental, Oslo, 21 May 2014 Presented by: Carl Lieungh, CEO Kjetil Vangsnes, CFO

IMPORTANT INFORMATION

THIS PRESENTATION AND ITS ENCLOSURES AND APPENDICES (HEREINAFTER JOINTLY REFERRED TO AS THE "PRESENTATION") HAVE BEEN PREPARED BY SEVAN MARINE ASA ("SEVAN" OR THE "COMPANY") EXCLUSIVELY FOR INFORMATION PURPOSES. THIS PRESENTATION HAS NOT BEEN REVIEWED OR REGISTERED WITH ANY PUBLIC AUTHORITY OR STOCK EXCHANGE. RECIPIENTS OF THIS PRESENTATION MAY NOT REPRODUCE, REDISTRIBUTE OR PASS ON, IN WHOLE OR IN PART, THE PRESENTATION TO ANY OTHER PERSON.

THE CONTENTS OF THIS PRESENTATION ARE NOT TO BE CONSTRUED AS LEGAL, BUSINESS, INVESTMENT OR TAX ADVICE. EACH RECIPIENT SHOULD CONSULT WITH ITS OWN LEGAL, BUSINESS, INVESTMENT AND TAX ADVISER AS TO LEGAL, BUSINESS, INVESTMENT AND TAX ADVICE.

THERE MAY HAVE BEEN CHANGES IN MATTERS WICH AFFECT THE COMPANY SUBSEQUENT TO THE DATE OF THIS PRESENTATION. NEITHER THE ISSUE NOR DELIVERY OF THIS PRESENTATION SHALL UNDER ANY CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THE AFFAIRS OF THE COMPANY HAVE NOT SINCE CHANGED, AND THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION, TO UPDATE OR CORRECT ANY INFORMATION INCLUDED IN THIS PRESENTATION.

THIS PRESENTATION INCLUDES AND IS BASED ON, AMONG OTHER THINGS, FORWARD-LOOKING INFORMATION AND STATEMENTS. SUCH FORWARD-LOOKING INFORMATION AND STATEMENTS ARE BASED ON THE CURRENT EXPECTATIONS, ESTIMATES AND PROJECTIONS OF SEVAN OR ASSUMPTIONS BASED ON INFORMATION AVAILABLE TO THE COMPANY. SUCH FORWARD-LOOKING INFORMATION AND STATEMENTS REFLECT CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS, UNCERTAINTIES AND ASSUMPTIONS. SEVAN CANNOT GIVE ANY ASSURANCE AS TO THE CORRECTNESS OF SUCH INFORMATION AND STATEMENTS.

AN INVESTMENT IN THE COMPANY SHOULD BE CONSIDERED AS AN HIGH-RISK INVESTMENT, AND SEVERAL FACTORS COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAY BE EXPRESSED OR IMPLIED BY STATEMENTS AND INFORMATION IN THIS PRESENTATION, INCLUDING, AMONG OTHERS, RISKS OR UNCERTAINTIES ASSOCIATED WITH THE RESTRUCTURING, THE COMPANY'S BUSINESS, SEGMENTS, DEVELOPMENT, MANAGEMENT, FINANCING, MARKET ACCEPTANCE AND RELATIONS WITH CUSTOMERS, ABILITY TO SECURE EMPLOYMENY FOR ITS TWO HULLS, ABILITY TO IMPLEMENT COST REDUCING INITIATIVES, THE COMPANY'S TECHNOLOGY AND OFFSHORE UNIT DESIGN, LATENT LIABILITIES ASSOCIATED WITH DIVESTED BUSINESSES, AND, MORE GENERALLY, GENERAL ECONOMIC AND BUSINESS CONDITIONS, INCLUDING, BUT NOT LIMITED TO, WITHIN THE OIL AND GAS INDUSTRY, CHANGES IN DOMESTIC AND FOREIGN LAWS AND REGULATIONS, TAXES, CUSTOMS DUTIES, VAT OR VARIATIONS THEREOF, CHANGES IN COMPETITION AND PRICING ENVIRONMENTS, FLUCTUATIONS IN CURRENCY EXCHANGE RATES AND INTEREST RATES AND OTHER FACTORS. MOREOVER, THE CONTEMPLATED RESTRUCTURING IS ASSOCIATED WITH UNCERTANTIES AND MAY BE CONSUMMATED IN A MANNER THAT DEVIATES FROM THE DISCUSSIONS CONTAINED IN THIS PRESENTATION, OR NOT AT ALL. READERS ARE CAUTIONED THAT, EVEN IF THE RESTRUCTURING IS CONSUMMATED, THE COMPANY MAY NOT ACHIEVE THE BENEFITS FROM THE RESTRUCTURING, OR SUCCESSFULLY BE ABLE TO IMPLEMENT ITS STRATEGIES, IMPLIED BY THIS PRESENTATION. 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 DOCUMENT. THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION, TO UPDATE OR CORRECT THE INFORMATION INCLUDED IN THIS PRESENTATION.

THIS PRESENTATION DOES NOT CONSTITUTE OR FORM A PART OF, AND SHOULD NOT BE CONSTRUED AS, AN OFFER OR INVITATION TO SUBSCRIBE FOR OR PURCHASE ANY SECURITIES OF THE COMPANY. NEITHER THIS PRESENTATION NOR ANYTHING CONTAINED HEREIN SHALL FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH, ANY POTENTIAL TRANSACTION REFERRED TO IN THIS PRESENTATION. ANY POTENTIAL OFFER OF SECURITIES OF THE COMPANY WOULD BE BASED ON A PROSPECTUS PREPARED FOR THAT PURPOSE.

THIS PRESENTATION IS SUBJECT TO NORWEGIAN LAW, AND ANY DISPUTE ARISING IN RESPECT OF THIS PRESENTATION IS SUBJECT TO THE EXCLUSIVE JURISDICTION OF NORWEGIAN COURTS.

•First quarter highlights

  • •Floating Production (FPSO, FSO, FLNG)
  • •Other Applications (Drilling, Accommodation)
  • •Investments (Logitel, KANFA/Technip, KANFA Aragon)
  • •Financials
  • •Outlook

Highlights

  • o Operations
  • •Operating revenue (24.6 MUSD) was 5.1 MUSD higher than Q1 2013
  • •EBITDA (1.6 MUSD) was 1.3 MUSD higher than Q1 2013
  • o Sales
  • • High tendering activities within the FPSO/FSO segment expected to materialize in FEED studies and potential license agreements
  • • The new FLNG concept has been presented to several IOCs and with positive response
  • o Finance
  • •Cash position remains healthy at 37 MUSD as at Q1 2014
  • •Received settlement from ONGC and proceeds from Technip after balance sheet date
  • o Dividend
  • •Board recommendation to pay dividend

4

Events after balance sheet date

  • o Technip acquired 49% of KANFA AS
  • • The transaction represents a successful conclusion of the stepwise growth plan for the KANFA Group
  • • Creates a platform for further growth wherby a co-operation with Technip will open new market opportunities in terms of project size as well as geographic reach
  • o Three-party LOI with Teekay and CeFront regarding Logitel
  • • Upside: Teekay as Logitel owner with clearly stated strategic intent to become a major player in the floating accommodation market, with skills and financial resources to deliver on their ambitions, and with resulting potential for Sevan

  • • Downside protection: The transaction will also significantly reduce Sevan's risk exposure through, inter alia, removal of the intervening party guarantee with Petrobras, and providing a more solid counterparty under the convertible

  • •First quarter highlights

  • •Floating Production (FPSO, FSO, FLNG)
  • •Other Applications (Drilling, Accommodation)
  • •Investments (Logitel, KANFA/Technip, KANFA Aragon)
  • •Financials
  • •Outlook

Proven technology: Sevan designed FPSOs

Field operator: E.ON Field: Huntington Location: UK Central Water depth: 91 m Hull size: Sevan 300

Goliat

Field: GoliatLocation: Sub-arctic Barents SeaHull size: Sevan 1000 Under construction at the HHI yard in Korea

Field operator : ENI

Field operator: Dana Petroleum Location: Northern North Sea, 160km east of the Shetlands and 12 km west of Tern

Hull size: Sevan 400 Under construction at the Coscoyard in China

Western Isles

Sevan FPSOs current prospects

Bridge-linked FPSO FDPSO

o A number of FPSO prospects have been identified among several potential clients

Sevan FSOs current prospects

o Currently working with Teekay Offshore on several potential prospects

9

Sevan FLNG concept

Topside

Hull and containment

Offloading based on HiLoad

  • oConceptual design completed
  • o Liquefaction technology: KANFA Aragon's Dual Nitrogen Expansion
  • oLiquefaction capacity: 2.4 mtpa
  • oStorage capacity: 220,000 m³
  • oHiLoad technology for offloading
  • o Constructability study with major Korean yard
  • oMarketing ongoing
  • oMore than 20 FLNG projects

  • o Encouraging response from several IOCs

  • •First quarter highlights

  • •Floating Production (FPSO, FSO, FLNG)
  • •Other Applications (Drilling, Accommodation)
  • •Investments (Logitel, KANFA/Technip, KANFA Aragon)
  • •Financials
  • •Outlook

Proven technology: Sevan designed Drilling Units

Sevan Driller

Field operator: Petrobras Field: Pre-salt BrazilBuilding year: 2009 Design: Sevan 650

Sevan Brasil

Field operator: Petrobras Field: Pre-salt BrazilBuilding year: E2012 Design: Sevan 650

Sevan Louisiana

Field operator: LLOG BluewaterLocation: US Gulf of MexicoBuilding year: E2013 Design: Sevan 650

Sevan Developer

Design: Sevan 650 Building year: 2013 /2014 Yards:Cosco Shipyard, China

Arctic MODU

o Concept study for Arctic MODU currently ongoing in cooperation with Sevan Drilling/North Atlantic Drilling oFEED expected to start H2 2014

Proven technology: Sevan designed Accommodation Units

Two Accommodation Units under construction

Logitel Offshore has entered into a 3 year charter contract with Petrobras commencing end 2014 for the provision on one accommodation unit, currently under completion at the COSCO yard in China, to be stationed offshore Brazil.

Six FAU Options with the Cosco Shipyard

  • oTeekay Offshore Partner has signed an MOU with the intention to acquire Logitel Offshore
  • oLogitel Offshore has the option to build 6 more FAUs at the Cosco Shipyard

  • oThe first option is expected to be called off in 2014

  • •First quarter highlights

  • •Floating Production (FPSO, FSO, FLNG)
  • •Other Applications (Drilling, Accommodation)
  • •Investments (Logitel, KANFA/Technip, KANFA Aragon)
  • •Financials
  • •Outlook

Logitel Offshore transaction

  • o As holder of the convertible bond, Sevan has entered into a three-party agreement with:
  • • Teekay Offshore Partners LP as buyer
  • •Cefront Technology AS as seller
  • •of Logitel Offshore
  • o With Teekay acquiring Logitel we see an owner who has the expressed intention to become a major player in the market for Floating Accommodation Units, and with the necessary capital and skill set to deliver upon their ambitions
  • o Hence representing a new business stream for Sevan

Logitel Offshore transaction cont'd

  • o Sevan is relieved from its exposure as intervening party under Logitel Offshore's employment contract with Petrobras
  • o Repayment profile and maturity for the Convertible to be amended to six instalments of 10 MUSD per unit delivered
  • o Sevan will receive license fees and provide services, as further FAUs are built by TOO
  • o LOI is expected to become effective within two months

KANFA Group – stepwise growth plan

2014

  • Seek strategic partner with complementary competencies
  • Diversified revenue mix between engineering, process equipment packages and process modules
  • Grow the top line further and secure robust financial performance

17

•

•

•

KANFA Group – company structure before the Technip transation

KANFA Group – company structure after the Technip transation

KANFA Technip transaction - strategic rationale

Technip has a global footprint and is one of the world's leading oil & gas services groups

  • o The cooperation with KANFA will provide:
  • •New opportunities to develop the North Sea business
  • •Access to other oil and gas markets
  • o KANFA continues to focus on:
  • •Existing business model
  • •Support to Technip in offshore FEED and EPC projects on the NCS

KANFA Technip transaction cont'd

  • o KANFA has 50 employees, with main offices is in Asker, Norway
  • o Currently involved in the execution and delivery of various process equipment packages for projects like Edvard Grieg, Piranema, Aasta Hansteen, Nyhamna and Martin Linge
  • oCarrying out various engineering studies
  • o High tendering activities are expected to materialize in new orders within the coming weeks and months

KANFA Aragon – company profile

A process technology company focusing on FLNG as well as more traditional gas processes

  • oPatented FLNG liquefaction process based on an optimized dual nitrogen expander cycle
  • o Traditional gas processing and gas conditioning includes:
  • •Gas compression
  • • Gas dehydration, CO2 and H 2S removal
  • •Dew point control
  • •Etc

KANFA Aragon cont'd

  • oLocated in Bergen, Norway
  • oHas currently 25 employees
  • o Has designed the 2.4 mtpa topside for the Sevan FLNG concept
  • o Currently involved with the dehydration (TEG) and vapour gas recovery packages for the Aasta Hansteen project
  • o Currently also involved in various FLNG Pre-FEED studies

  • o Has recently established an engineering company in Houston, Texas together with five experienced engineering professionals in the Gas Processing and LNG Industry

  • •First quarter highlights

  • •Floating Production (FPSO, FSO, FLNG)
  • •Other Applications (Drilling, accommodation)
  • •Investments (Logitel, KANFA/Technip, KANFA Aragon)

•Financials

•Outlook

Q1 2014 – Profit & Loss statement

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Note: See press release and Q1 2014 interim report dated May 20, 2014 for a more detailed description of the Q1 interim financial results.

Q1 2014 – Balance Sheet

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(*) Voyageur Spirit project was deconsolidated from Sevan Marine Group as at Q2/2013

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  • •First quarter highlights
  • •Floating Production (FPSO, FSO, FLNG)
  • •Other Applications (Drilling, accommodation)
  • •Investments (Logitel, KANFA/Technip, KANFA Aragon)
  • •Financials
  • •Outlook

Outlook

  • o The outlook for the FPSO/FSO market segment is generally positive. However, tighter monitoring of capital expenditure may lead to longer tendering processes, and potentially, postponements of certain projects. Increased focus on cost effective solutions should be an advantage for Sevan
  • o For mobile offshore units we expect the drilling segment to remain challenging in the short and medium term. However, we believe that the co-operation with Sevan Drilling / NADL / Seadrill will generate new opportunities in the longer term
  • o Likewise, the entry of Teekay into the FAU market is a clear positive for Sevan and is likely to generate increased activity in the short and medium term
  • o After Technip Norge has acquired a 49% stake in KANFA, we expect that the strategic relationship and co-operation with Technip for the process topside segment will open up a larger market for KANFA, both in terms of project size and geographic reach

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