Hunter Group ASA — Investor Presentation 2017

Nov 15, 2017

Hunter Group ASA

3Q results 2017

16 November 2017

Disclaimer

This presentation (the "Presentation") includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements and this Presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for Hunter Group ASA (including subsidiaries and affiliates, the "Company").

These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for the Company, oil prices, exploration and production spending levels in the oil industry, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time in the Presentation.

Although the Company believes that its expectations and the Presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. The Company is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither the Company nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.

This Presentation reflects the conditions and views as of the date set out on the front page of this Presentation. The information contained herein is subject to change, completion, or amendment without notice. In furnishing this Presentation, the Company undertakes no obligation to provide the recipient with access to any additional information.

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.

This Presentation does not constitute an offer or an invitation to buy, subscribe or sell shares of the Company or any other securities in any jurisdiction.

This Presentation must be read in connection with other publicly available information about the Company, including prospectuses, information memorandums, stock exchange notices, annual and interim reports published by the Company. The contents of this Presentation are not to be construed as financial, legal, business, investment, tax or other professional advice.

This Presentation is subject to Norwegian law. Any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of the Norwegian courts with Oslo District Court as legal venue in the first instance.

• 1. Highlights
• 2. Financials
• 3. Dwellop
• 4. Indicator
• 5. Outlook
• 6. Appendix

Highlights

• Increased attention from the market with respect to Work-Over Rig (WOR) and well intervention cantilever (WIC) due to enhanced value proposition
• Change in sales focus towards high value products and systems, materializing in increased opportunities, however with longer decision processes
• Sound cash collection in Dwellop, documenting results of implemented account receivable follow-up – Q3 2017 cash position NOK 287m, equal to Q2 2017 cash position
• Concluded reorganization and cost reduction in Indicator AS, providing minimal costs going forward
• Business opportunities for Indicator currently being evaluated
• No material development in the patent infringement accusations from WellPartner*
• Continuously in process of assessing transactions

WOR with 135ft cantilever reach

The Hunter Crane

An oil service technology investment company

• 1) WOR Work-over rig is a movable rig used to perform well repair and production enhancement work in existing wells, which easily can be moved from one location to another

• 2) Simops: Simultaneous operations

• 1. Highlights

• 2. Financials
• 3. Dwellop
• 4. Indicator
• 5. Outlook
• 6. Appendix

Income statement

	Quarters		Year to date
Unaudited figures in NOK 1 000	Q3 2017	Q3 2016	Note	30.09.2017	30.09.2016	31.12.2016
Revenues
Revenues	9 535	5		32 579	47	66
Total Revenues	9 535	5		32 579	47	66
Operating expenses
Raw matrials and consumables	1 041	201		15 011	1 497	1 561
Payroll expenses	8 741	1 166		19 639	2 996	4 140
Depreciation and amortisation expense	3 681	15	3	6 132	95	99
Net write-down intangible assets and capitalized grants	0	0	3	69 374	0	0
Other operating expenses	8 296	731		21 229	3 088	4 391
Capitalised development cost	0	-632		-1 915	-3 105	-3 515
Total operating expenses	21 760	1 481		129 470	4 571	6 676
Operating profit (loss)	-12 225	-1 476		-96 890	-4 524	-6 610
Interest income	317	0		1 667	0	0
Finance income	1 242	0		1 966	0	0
Other financial income	0	0		0	0	0
Interest expenses	-188	-105		-491	-347	-445
Other financial expenses	-1 960	0		-2 542	0	0
Net financial income (loss)	-590	-105		601	-347	-445
Profit (loss) before taxes	-12 815	-1 581		-96 289	-4 871	-7 055
Tax on ordinary result	0	0	8	17 796	0	0
Net profit (loss)	-12 815	-1 581		-78 493	-4 871	-7 055
Earnings per share	-0,01	-0,09		-0,08	-0,26	-0,38
Earnings per share diluted	-0,01	-0,09		-0,08	-0,26	-0,38
		Quarters		Year to date
Unaudited figures in NOK 1 000	Q3 2017	Q3 2016		30.09.2017	30.09.2016	31.12.2016
Total comprehensive income
Profit (loss) for the period	-12 815	-1 581		-78 493	-4 871	-7 055
Other	0	0		0	0	0
Translation differences	0	0		0	0	0
Comprehensive income for the period	-12 815	-1 581		-78 493	-4 871	-7 055
Total comprehensive income attributable to:
Equity holders of the parent	-12 815	-1 581		-78 493	-4 871	-7 055
Non-controlling interest	0	0		0	0	0
Total comprehensive income	-12 815	-1 581		-78 493	-4 871	-7 055

▪	Revenue of NOK 10m in Q3 and NOK 33m YTD (Dwellop included from May 2017)
	- Dwellop sale YTD is NOK 69m

▪ Operating costs excluding depreciation and write downs of NOK 18m during Q3, and NOK 54m YTD (Dwellop included from May 2017)

• Dwellop costs YTD is NOK 75m

▪ NOK 3m was recognized as one off costs in Q3 and NOK 9m YTD

• One off cost relates to restructuring of Indicator and acquisition of Dwellop
• Limited additional one off costs expected going forward, however depended upon M&A activities
• EBITDA was negative with NOK 9m in Q3, whereof negative NOK 2m relates to Dwellop, and negative with NOK 20m YTD, whereof -NOK 2m relates to Dwellop (from May 2017)
• Dwellop negative EBITDA NOK 6m YTD

• Net income was negative with NOK 13m in Q3 and NOK 78m YTD (Dwellop included from May 2017), equivalent to negative earnings per share of NOK 0.01 and NOK 0.08 respectively

• Dwellop negative net income NOK 12m YTD

Balance sheet

(Unaudited figures in NOK 1 000)	Note	30.09.2017	30.06.2017	30.09.2016	31.12.2016
NON-CURRENT ASSETS
Research and development	2, 3	19 259	20 688	149 316	149 632
Patents and customer relationships	2, 3	20 279	21 648	387	387
Goodwill	2, 3	58 655	58 655	0	0
Total intangible assets		98 193	100 990	149 703	150 019
Property, plant, equipment & machineries		26 322	27 206	28	24
Total tangible assets		26 322	27 206	28	24
TOTAL NON-CURRENT ASSETS		124 515	128 196	149 730	150 043
CURRENT ASSETS
Inventories		13 273	1 188	0	0
Total inventories		13 273	1 188	0	0
Accounts receivables		24 771	48 314	0	0
Other short-term receivables		3 894	6 816	2 227	605
Total current receivables		28 664	55 131	2 227	605
Cash and cash equivalents		286 827	286 815	327	335
TOTAL CURRENT ASSETS		328 764	343 133	2 554	940
TOTAL ASSETS		453 279	471 329	152 284	150 983

• 22% of total assets recognized as intangible assets
• Inventories increased with NOK 12m during the quarter due to purchase of equipment to smaller projects
• Accounts receivables reduced by NOK24m during the quarter due to increased focus on cash collection in Dwellop
• Total cash of NOK 287m, identical to Q2 2017 cash position
• Cash in Dwellop as of Q3 was NOK 7m

Balance sheet

(Unaudited figures in NOK 1 000)	Note	30.09.2017	30.06.2017	30.09.2016	31.12.2016
EQUITY
Share capital	4	163 948	163 948	2 317	2 317
Share premium	4	504 507	504 507	218 070	218 070
Additional paid-in capital	4	0	0	3 869	3 935
Other equity	4	-239 835	-227 082	-163 219	-165 403
TOTAL EQUITY		428 619	441 373	61 037	58 919
LIABILITIES
Capitalized grants	3	0	0	81 500	81 500
Other interest-bearing debt		12 600	13 500	0	0
Total non-current liabilities		12 600	13 500	81 500	81 500
Trade creditors		4 585	7 483	1 979	2 063
Accrued public charges and indirect taxes		-222	563	456	281
Taxes payable		0	0	0	0
Debt financial institutions		3 600	3 600	6 910	6 889
Other current liabilities		4 097	4 811	402	1 331
Total current liabilities		12 060	16 456	9 747	10 564
TOTAL LIABILITIES		24 660	29 956	91 247	92 064
TOTAL EQUITY AND LIABILITIES		453 279	471 329	152 284	150 983

• Total equity of NOK 429m
• Interest bearing debt of NOK 16.2m with quarterly instalments of NOK 0.9m. Debt is due February 2019 with a balloon payment of NOK 11m
• Available credit facility in Dwellop of NOK 15m currently undrawn

Cash flow statement

	Quarters			Year to date		Year end
Unaudited figures in NOK 1 000	Q3 2017	Q3 2016	Note	30.09.2017	30.09.2016	31.12.2016
Contribution from operations before tax	-9 201	-1 494		-21 835	-4 727	-6 730
Change in accounts receivables and accounts payables	20 708	-861		9 402	-1 098	-1 015
Change in inventory	-12 086	0		-4 370	0	0
Change in other receivables and payables and other	1 362	542		-5 151	-298	-376
Net cash flow from operating activities	783	-1 813		-21 953	-6 124	-8 121
Capitalization of development cost	0	-632		-1 915	-3 105	-3 516
Net investments in PPE & intangible assets	0	0	2	-60 000	0	0
Net cash flow from investment activities	0	-632		-61 915	-3 105	-3 516
Public grants	0	0		1 061	2 619	5 166
Contribution from industry partners	0	2 500		0	6 500	6 500
Interest received	317	3		1 667	22	30
Interest paid	-188	-108		-491	-369	-488
Proceeds from borrowings financial institution	-900	89		-8 654	198	178
Capital contribution	0	0	4	385 368	0	0
Transaction cost capital contribution	0	0	2	-18 069	0	0
Net cash flow from financing activities	-772	2 484		360 882	8 970	11 386
Total net changes in cash flow	12	39		277 014	-259	-251
Cash in acquired company	0	0	2	9 478	0	0
Cash and cash equivalents beginning of period	286 815	288		335	586	586
Cash and cash equivalents end of period	286 826	327		286 826	327	335
Profit (loss) attributable to equity holders
of the parent	-12 815	-1 581		-96 289	-4 871	-7 055
Employee options	61	-33		125	-298	-232
Depreciation	3 681	15		6 132	95	99
Net write-down intangible assets and capitalized grants	0	0		69 374	0	0
Financial income	-317	- 3		-1 667	-22	-30
Financial expenses	188	108		491	369	488
* Contribution from operations before tax	-9 201	-1 494		-21 835	-4 727	-6 730

• Significant working capital release during the quarter brings operating cash flow to NOK 1m during the quarter. The corresponding number YTD is negative with NOK 22m
• The company made no investments during the quarter. The corresponding number YTD is NOK 62m and mainly relates to the acquisition of Dwellop
• Cash flow from financing was negative with NOK 1m during the quarter and relates to repayment of debt in Dwellop, while the YTD number was NOK 361m and is particularly driven by private placements and repair issues of NOK 385m

Changes in various cash flow items year to date September 30, 2017 is reflecting the change in Dwellop's items from May 2, 2017 to September 30, 2017.

Reverse stock necessary to comply with OSE minimum share price listing requirements

• OSE has a minimum share price listing requirement of NOK 1 per share, which can not be breached continuously over a six months period
• Notice of extraordinary general meeting circulated 14th November 2017 with EGM to take place 6th December 2017
• The Board of Directors propose a reverse stock split 10:1
• Implied number of shares outstanding to be 131 158 013 if approved at the EGM
• Implied share price NOK 2.3,- based on closing share price 14th November 2017

• Requires 2/3 of the votes casted on the EGM

• 1. Highlights

• 2. Financials
• 3. Dwellop
• 4. Indicator
• 5. Outlook
• 6. Appendix

Dwellop

Valuation proposition within well intervention handling equipment

• Relatively high degree of non-productive time due to limited development within well intervention equipment handling space

• Core activities done in the same way as it "always has been done"

• Products and technologies reducing mobilization and demobilisation

• Improving access in combination with enabling better access facilitate for SimOps ensure access to all well slots at the same time
• Reduced operational risk

Dwellop's innovative solutions and technology enabling swifter operations

Dwellop's work over rig well positioned to capitalize on the emerging well intervention and P&A market globally

• Drilling machine, however "oversized tool" for well intervention and P&A work
• Limited cantilever reach due to weight of drilling module disqualifying the use of jack-ups for intervention and P&A:
• Standard jack-ups typically +/- 75ft
• XLs jack-ups have +/- 90ft

way

• Right tool for performing well intervention and P&A operations
• Light weight enabling long cantilever reach
• Jack-up with up to 135ft reach
• Liftboat with 45ft

"Only in the North Sea alone, there is a need of 15 jack-ups for P&A work alone over the next 40 years"*

The Hunter Crane A blessing for the oil companies and forward leaning drilling contractors

Observations

• Simops crane developed to solve efficiency issues related to the shadow well slots on the well head
• Crane capable of handle equipment such as wire line and coil tubing below the cantilever, hence significantly improvement in efficiency with respect to well interventions operations
• Currently in discussions with oil companies that wants to use the crane under P&A and drilling operations
• The crane is mounted under drilling operation of the jackup in question, to keep mobilization costs low and eliminate non-productive time

Preliminary assessment indicate an efficiency gain of up to 20% related to certain jack up operations*

Dwellop's well intervention cantilever (WIC) is 50% more efficient than currents methods

Case study Foldable jacking frame developed in cooperation with client

Dwellop team

CEO	Helge Hustoft - Over 30 years of industry experience - Previously senior positions in Statoil and Navion - Cand Merc., University of Oregon
	Eirik Bergsvik - Chairman
	- Over 25 years experience from the oil service industry
	- Previously CEO of Interwell AS (2011-2016), board member at MHWirth (2014-2017) and CEO of National Oilwell Varco Norway AS (2006-2011)
	Martha Kold Bakkevig
	- Broad experience from management, strategy and business development
	- Currently a board member in Kongsberg Gruppen ASA, Borregaard ASA, DeepWell AS, Haugaland Kraft AS, Reach Subsea ASA, Incus Investor ASA, Kold Invest AS
Board of	- Previously CEO of DeepWell AS (2007-2016)
Directors	Sigmund Prestegård
	- Over 30 years of experience from oil & gas industry and banking sector
	- The majority of the career from BP in roles spanning finance, planning, offshore operations, and asset management
	- Last 5 years as CFO in a start-up company developing Rotary Steerable Drilling technology
	Vegard Urnes, Interim CEO Hunter Group ASA
	- More than 17 years experience from the oil services industry and M&A / investment banking
	- Previously with corporate finance at Goldman Sachs, later at ProCorp and NRP Securities before founding Navis Finance in 2013

• 1. Highlights
• 2. Financials
• 3. Introduction to Hunter Group
• 4. Dwellop
• 5. Indicator
• 6. Outlook

• 7. Appendix

• Reorganization completed 3q

• Limited to none cash burn going forward

• In process of assessing alternatives

• 1. Highlights

• 2. Financials
• 3. Introduction to Hunter Group
• 4. Dwellop
• 5. Indicator
• 6. Outlook
• 7. Appendix

Outlook

• The outlook for oil services still remains challenging. Even with oil price levels above USD 60 and oil companies apparently are entering into an expansion mode, operational and investments decisions are lagging. It is anticipated that the increased oil price, in combination with reserves depletion is likely to improve activity levels in the oil and gas industry
• A positive market signal is that oil companies now have started to pay for engineering studies
• Looking forward there are reasons to believe that there will be an improvement in the market for Dwellop, as activity is increasing and numbers of RFQ's (Request For Quotation) are rising. Furthermore, Dwellop is in discussions with clients regarding WOR, WIC and Hunter Crane and management strive to materialize these opportunities

• In light of the positive market signals, Hunter Group will continue to focus on investment in technologies within oil companies "opex territory" which will increase their return on existing offshore infrastructure

• 1. Highlights

• 2. Financials
• 3. Introduction to Hunter Group
• 4. Dwellop
• 5. Indicator
• 6. Outlook
• 7. Appendix

Well intervention market – WOR & WIC

Shallow offshore platforms & wells¹

8,000 platforms

24yrs avg age of wells

3.3 wells per platform

• EOR through either production / development drilling or well intervention
• Saudi Aramco alone has a continuously demand for about 15 units² to change electrical submersible pumps (ESP)
• Today it exists 20 liftboats able to carry the work-over rig; in addition to 8- 10 under construction³

Large – Existing – Growing – Expanding

1) Selected regions shallow water platforms (less than 65m water depth) and corresponding data. Source Infield Systems, Maybank and Triyards

2) 700 wells, average 16 days incl mob to change an ESP pump with two years lifespan

3) GMS and management

Significant market potential within P&A

Offshore production well P&A forecasts

• Number of platform wells P&A'ed in 2016
• UKCS 89

• NCS 48

• UKCS and NCS forecasted wells to be P&A'ed by 2025 is

• UKCS 1,470 (60 % is platform wells)
• NCS 362 (85 % is platform wells)

Around GBP 1.5bn P&A market 2017e on the UKCS and NCS

Share information

14 November 2017
		Name	Holding	%
		SONGA TRADING INC	72 000 001	5,49
▪	HUNT, ticker on Oslo Axess	DYNAMO MANAGEMENT AS*	56 802 583	4,33
	- 1,311,580,130 shares outstanding	TIGERSTADEN AS	54 904 655	4,19
	Market cap NOK 302m as of 14th -	MP PENSJON PK	51 600 000	3,93
	November 2017	MIDDELBORG INVEST AS	51 004 655	3,89
		SILVERCOIN INDUSTRIE	50 000 000	3,81
		Norron Sicav - Targe SKANDINAVISKA ENSKIL	46 046 302	3,51
		APOLLO ASSET LIMITED C/O ARNE FREDLY	41 988 525	3,20
		STOREBRAND VEKST VER JPMORGAN	39 804 223	3,03
		ARGENTUM FONDSINVEST	32 923 145	2,51
		VERDIPAPIRFONDET DNB V/DNB ASSET	31 711 623	2,42
		SKANDINAVISKA ENSKIL SEB - CMU	30 000 000	2,29
		DUKAT AS	22 250 000	1,70
		INVESCO PERP EURAN S BNY MELLON SA/NV	21 225 389	1,62
		LINGTECH AS *	20 614 196	1,57
		ALDEN AS	20 000 000	1,52
		F STORM AS	20 000 000	1,52
		GRUNNFJELLET AS	20 000 000	1,52
		Skandinaviska Enskil	19 965 000	1,52
		RESONANS INVEST AS *	19 814 196	1,51
		Top 20 shareholders	722 654 493	55,08
		Others	588 925 637	44,92
		Total	1 311 580 130	100