ABL Group — Investor Presentation 2018

Sep 12, 2018

Pareto Oil & Offshore conference September 13, 2018

aqualis.no

Disclaimer

• This Presentation has been produced by Aqualis ASA (the "Company" or "Aqualis ") solely for use at the presentation to investors and other stake holders and may not be reproduced or redistributed, in whole or in part, to any other person. This presentation is strictly confidential, has not been reviewed or registered with any public authority or stock exchange, and may not be reproduced or redistributed, in whole or in part, to any other person. To the best of the knowledge of the Company, the information contained in this Presentation is in all material respect in accordance with the facts as of the date hereof, and contains no material omissions likely to affect its importance. However, no representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, neither the Company nor any of its subsidiary companies or any such person's officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this Presentation. This Presentation contains information obtained from third parties. Such information has been accurately reproduced and, as far as the Company is aware and able to ascertain from the information published by that third party, no facts have been omitted that would render the reproduced information to be inaccurate or misleading.
• This Presentation contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes", expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. None of the Company or any of its parent or subsidiary undertakings or any such person's officers or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments. The Company assumes no obligation, except as required by law, to update any forward-looking statements or to conform these forward-looking statements to our actual results.
• AN INVESTMENT IN THE COMPANY INVOLVES RISK, 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 COMPANY'S BUSINESS, SEGMENTS, DEVELOPMENT, GROWTH MANAGEMENT, FINANCING, MARKET ACCEPTANCE AND RELATIONS WITH CUSTOMERS, AND, MORE GENERALLY, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN DOMESTIC AND FOREIGN LAWS AND REGULATIONS, TAXES, CHANGES IN COMPETITION AND PRICING ENVIRONMENTS, FLUCTUATIONS IN CURRENCY EXCHANGE RATES AND INTEREST RATES AND OTHER FACTORS.
• 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. THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION, TO UPDATE OR CORRECT THE INFORMATION INCLUDED IN THIS PRESENTATION.
• By attending or receiving this Presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the Company's business. This Presentation does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction to any person to whom it is unlawful to make such an offer or solicitation in such jurisdiction.

Aqualis at a glance – A leading global energy consultancy

Listed on Oslo Stock Exchange

Experience

Aqualis – Our journey

Offshore Oil & Gas

- Service offering covering the life cycle of offshore assets

Marine project / asset life cycle

	Project initiation	Engineering / design phase	Project procurement	Construction		Hook-up and commissioning		Asset management	De commissioning
e or h s Offs e c vi s er ali s u q A	Engineering (niche-focus): Basic / conceptual design / FEED Modifications and upgrades of drilling rigs / FPSOs / FSOs / lift boats Transportation & installation analysis		Construction yard supervision: Site attendance on behalf of owners, shipyards, financial institutions, 3rd parties Conversions, upgrades & New-builds Due diligence / compliancy; financial community focus		Marine operations: Transport and installation services; "moving of offshore assets" Rig moving Float-overs Site attendance & procedure management		Inspection & approvals: Marine warranty services Mooring analyses Condition and suitability surveys / audits DP inspections and audits Jack-up site assessments

Aqualis' key competencies cover both offshore opex and capex cycles

Offshore Oil & Gas

• Strong track record and extensive client list

Offshore renewables

• Service covering all needs in value chain

Offshore renewables

- Global Clients & Projects

Ocean Wind (US) Bay State (US) East Anglia ONE (UK) East Anglia THREE (UK) Hornsea 1 (UK) Hornsea 2 (UK) Hornsea 3 (UK) Navitus Bay (UK) Kentish Flats Ext (UK) West of Duddon Sands (UK) Galloper (UK) Lincs (UK) Barrow (UK) Beatrice (UK) Robin Rigg (UK) Neart na Gaoithe (UK) London Array (UK) Walney 1 & 2 (UK) Gwynt y Mor (UK) Wikinger (DE) Borkum West II Phase 1 (DE) Borkum West II Phase 2 (DE) Nordsee Ost (DE) Horns Rev 3 (DK)

Fecamp (FR) Dunkirk (FR) Gode 1 & 2 (DE) Hohe See (DE) Fecamp (FR) Kincardine (Floating) (UK) HyWind 1 (Floating) (UK) Borssele 1 & 2 (NL) Burbo Bank Extension (UK) Race Bank (UK) Dudgeon (UK) Westernmost Rough (UK) Gunfleet Sands (UK) Ormond (UK) Triton Knoll (UK) Confidential Project (UK) Demo Project (Floating) (S Korea) Greater Changhua (Taiwan) Confidential Project (Taiwan)

Offshore renewables

• Opening a new office in Taiwan

• OWC has established a new office in Taiwan to support the fast growing Taiwanese offshore wind sector

• OWC will offer offshore wind consultancy services and expertise to the Taiwanese and also focus on the wider Asia Pacific markets
• The OWC team has grown quickly to 5 FTEs in 3 months and are supporting a major project

2017/18 Highlights – a stronger company

(1) Billing ratio for Technical Staff including subcontractors

Revenues and adjusted EBIT trend

Revenues (USDm) Adjusted EBIT ¹ development(USDm, %)

Revenue LTM (USDm) Adjusted EBIT ¹ LTM (USDm, %)

(1) Adjusted EBIT: Earnings before interest and taxes adjusted for corporate restructuring costs in connection with the IPO in Q3 2014 for goodwill impairments, share of net profit / (loss) from associates and impairment of loan to and investment in associates

Strong balance sheet

• Figures as of Q2 2018
• Cash balance of USD 9.8 million
• No interest bearing debt
• Equity ratio of 73%
• Dividend of 0.90 NOK/share paid in Equity July 2018

New Business Lines

Rig Inspection service line

• Services offered include drilling rig inspections, covering all industry audit and inspection requirements, associated with:
• Rig Selection Services.
• Rig Inspection and Assurance Services.
• New Build Assurance Service.
• Rig Preservation Inspection Service.
• Rig Re-activation inspections
• Well Control Equipment Inspections.
• Between well, well control equipment inspections.
• Cyber-based drilling equipment inspections.
• Integrated Control System inspections and testing
• Targeting drillships, semi-submersibles and jack-up rigs of all generation types. Both onshore and offshore

Rig Inspection service line

- Focused Equipment Inspections

Aqualis Offshore can also conduct area focused drilling system inspections typically using smaller teams to execute the inspections, examples of focused inspections being, but not limited to:

• Well Control Equipment Inspections.
• Well Control Gap Analysis.
• Cyberbased drilling equipment Inspections.
• Integrated Control Management Systems (ICMS) inspections.
• ROV System Assurance Inspections.

As with full rig inspection both equipment compliance and operability is verified based upon equipment age, statutory requirements, local requirements and industry standards.

Marine casualty Investigations

• We offer a range of marine damage investigation services to the shipping and offshore energy insurance markets. Sectors include cargo, construction, liability and hull & machinery surveys. Our surveyors have many years of experience carrying out insurance damage surveys on marine and offshore vessels.

Our services cover:

• Vessel hull and machinery damage surveys
• Damage to fixed and floating objects including collision assessment
• Casualty, Litigation , Expert witness
• Port and voyage risks
• Loss prevention services and loss of hire
• Personal injury
• Damage surveys of high value equipment and cargo
• Project cargo risk management
• Risk assessments and feasibility studies
• Shipbuilding & repair facilities procedures
• Salvage and wreck removal
• Moorings, structural design and failure analysis, intact/damage stability
• Additional services include vessel vetting and entry condition surveys

Selected recent projects

FPSO's P-75 & P-77 – Naval Architecture & Marine Operations

• Acting as Towmasters for the tow of the FPSO P-75 from Dalian, China to Rio Grande, Brazil and then to Santos Basin
• FPSO P-75 arrived in Brazil in early August and sailed to Santos Basin field on 31 August 2018.
• FPSO P-77 will depart from China in September 2018.

Additional work includes Naval Architecture and Marine Operations, incl. Stability Manuals, and Tow Procedures to Santos Basin

Egina FPSO Station Keeping Project

• Contracted to provide 24/7 Station keeping masters for offshore operation to hold vessel in position with 4+1 tugs whilst being connected to a pre-installed mooring spread
• Egina FPSO will be spread moored on 16 lines (4 x 4). Located approx. 200km off coast of Nigeria in a water depth ~1470m
• Samsung Heavy Industries, the Engineering, Supply, Construction and Commissioning contractor, ocean towed the FPSO from South Korea to Nigeria (POSH Terasea tugs) and will organise the tow to the EGINA field
• Installation currently on going. First 4 anchors were connected mid last week and operation scheduled to complete this week

Bahrain LNG Terminal – Platform Transportation & Installation

The project is being developed to supplement local gas production in Bahrain to ensure capacity to meet peak seasonal gas demand and industrial growth

An offshore LNG terminal with an FSU is being constructed. The project will have a capacity of 800 million standard cubic feet per day and will be completed in early 2019

It will comprise a floating storage unit (FSU), an offshore LNG receiving jetty and breakwater, an adjacent regasification platform, subsea gas pipelines from the platform to shore, an onshore gas receiving facility, and an onshore nitrogen production facility

Aqualis Offshore's scope of work covers the regasification platform

Bahrain LNG Terminal Project

Aqualis SOW:

• All Engineering related to the loadouts, transportation and float off operation for jacket and topside installations, including marine procedures
• Site supervision during loadout and installation

Jacket Weight (NTE) = 2,022 MT Topside Weight (NTE) = 7,200 MT

• Jacket was successfully installed earlier in May 2018

Bahrain LNG Terminal Project – multi faceted loadout / marine operation

• Topside loadout took place in mid August onto a smaller installation "Giant 5" barge (depth of hull 8.50m)
• Barge and topside piggy backed onto a large self propelled dry transportation HLV – expected to sail about now
• Topside and installation barge to be discharged offshore Bahrain
• Topside to be installed by floatover within shallower water terminal area

Bahrain LNG Terminal Project - Piggy-back Transportation Arrangement

Bahrain LNG Terminal Project - Floatover Arrangement

Bahrain LNG Terminal Project

- Floatover Arrangement

First set of "new build" rig inspections completed in China

• Aqualis Offshore have completed a program of rig inspections within China. The inspections were completed by members of both Shanghai and UK office teams.
• The Chinese team members provided invaluable support bring rig construction & Inspection experience to supplement our UK rig inspection teams experience.
• The Chinese team also provided technical translation support during the inspections allowing greater degree of communication between the rig owners and our inspection teams.

GOM - MP261JP Platform Decommissioning Project

• Removal of jacket and Topside using Versabar's VB 10000 twin truss crane

FPSO P-67 Dry Transportation China-Brazil

MWS for the dry transportation of FPSO P-67 from China to Brasil and inshore mooring at Rio de Janeiro.

Largest ever cargo transported by a Heavy Transport Vessel at 80,000 MT and 288m length

Dry Transportations

Dry Transportations

Rig Moving of 29 offshore drilling units in the Indian Ocean

• Aqualis Offshore assisted ONGC with the large majority of the pre-monsoon rig moves. These were completed, in close cooperation with ONGC's in-house rig move cell, by the company's specialist team of mariners
• Each of the 29 rigs were placed at their respective monsoon locations in April / May 2018 before the onset of the seasonal adverse weather conditions.
• The contract with ONGC has been rerenewed for the 2018/19 policy year

SNP/Star Consortium MWS for loadouts - KSA

• 2 MWS projects ongoing for loadouts in Saudi Arabia
• 7 deck modules for Marjan/Zuluf field
• 8 jackets and decks for Safaniyah field
• Attendance in Dammam shipyard, KSA

Triton Knoll Offshore Wind Farm

Triton Knoll offshore wind farm is a 90 x 9.5 MW Offshore Wind Farm of 860 MW in the UK.

• OWC were contracted to provide specific specialist project management services for Innogy's flagship offshore wind project
• This award followed on from supporting Innogy (RWE) on previous projects such as Gwynt y Môr, Nordsee Ost and Galloper offshore wind farms
• OWC carried out the work with personnel from its office in London, UK

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Training for China Energy Engineering Corp.

• OWC were contracted to develop and deliver a training course on offshore wind construction and risk
• China Energy Engineering Corporation chose OWC's consultancy services to deliver this training in preparation of their first offshore wind project in China
• The scope of the training included the manufacture and installation of wind turbine foundations, offshore substations, wind turbines and the installation of subsea cables
• The training material was developed by OWC personnel in London, Germany and Asia and is being delivered by London and Asian based OWC staff

Outlook

• Sentiment is increasingly positive in the oil and gas market as seen by FID's increasing and expectations of higher asset utilisations medium term
• The marine consultancy market within Middle East remains strong and strengthening in the Far East, but remains challenging in particular in Europe and the Americas
• Rates are still highly competitive and putting pressure on service companies, but recent developments suggest rates have flattened out. It is already more challenging to recruit seasoned marine consultants
• The offshore renewables market has a strong outlook. Whilst OWC has strengthened its market position and has a good outlook for 2H 2018, rates and margins are generally under pressure. OWC is focusing on improving its margins and enhancing its service offering. OWC is expanding its footprint
• Aqualis aims to continue to gain market share and develop new business lines
• Consolidation is needed in the marine and engineering industry, including consultancy, to mitigate oversupply, rationalize global operations and achieve better economies of scale

Q&A

The European Securities and Markets Authority (ESMA) issued guidelines on Alternative Performance Measures ("APMs") that came into force on 3 July 2016. The Company has defined and explained the purpose of the following APMs:

EBITDA

Management believes that "EBITDA" which excludes share of net profit / (loss) from associates, depreciation, amortisation and impairments is a useful measure because it provides useful information regarding the Company's ability to fund capital expenditures and provides a helpful measure for comparing its operating performance with that of other companies. EBITDA may not be comparable to other similarly titled measures from other companies

Operating profit adjusted

Management believes that "Operating profit adjusted" which excludes share of net profit / (loss) from associates, impairments of goodwill and impairment of investment in associates is a useful measure because it provides an indication of the profitability of the Company's operating activities for the period without regard to significant events and/or decisions in the period that are expected to occur less frequently.

Profit (loss) after taxes adjusted

Management believes that "Profit (loss) after taxes adjusted" which excludes share of net profit / (loss) from associates, impairments of goodwill and impairment of investment in associates is a useful measure because it provides an indication of the profitability of the Company's operating activities for the period without regard to significant events and/or decisions in the period that are expected to occur less frequently.

Order backlog

Order backlog is defined as the aggregate value of future work on signed customer contracts or letters of award. Aqualis' services are shifting towards "call out contracts" which are driven by day-to-day operational requirements. An estimate for backlog on "call out contacts" are only included in the order backlog when reliably estimates are available. Management believes that the order backlog figure is a useful measure in that it provides an indication of the amount of customer backlog and committed activity in the coming periods