Hunter Group ASA

Investor Presentation • Sep 9, 2020

Hunter Group ASA - Company Presentation 9 September 2020

Save a tree – presentation can be found at www.huntergroup.no

CERTAIN STATEMENTS INCLUDED IN THIS DOCUMENT CONTAIN FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING PLANS, OBJECTIVES, GOALS, STRATEGIES, FUTURE EVENTS OR PERFORMANCE, AND UNDERLYING ASSUMPTIONS AND OTHER STATEMENTS, WHICH ARE OTHER THAN STATEMENTS OF HISTORICAL FACTS. THE WORDS "BELIEVE," "ANTICIPATE," "INTENDS," "ESTIMATE," "FORECAST," "PROJECT," "PLAN," "POTENTIAL," "MAY," "SHOULD," "EXPECT" "PENDING" AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS. THE FORWARD-LOOKING STATEMENTS IN THIS DOCUMENT ARE BASED UPON VARIOUS ASSUMPTIONS, MANY OF WHICH ARE BASED, IN TURN, UPON FURTHER ASSUMPTIONS, INCLUDING WITHOUT LIMITATION, MANAGEMENT'S EXAMINATION OF HISTORICAL OPERATING TRENDS, DATA CONTAINED IN HUNTER GROUP'S RECORDS AND OTHER DATA AVAILABLE FROM THIRD PARTIES. ALTHOUGH HUNTER GROUP BELIEVES THAT THESE ASSUMPTIONS WERE REASONABLE WHEN MADE, BECAUSE THESE ASSUMPTIONS ARE INHERENTLY SUBJECT TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT AND ARE BEYOND HUNTER GROUP'S CONTROL, YOU CANNOT BE ASSURED THAT HUNTER GROUP WILL ACHIEVE OR ACCOMPLISH THESE EXPECTATIONS, BELIEFS OR PROJECTIONS. THE INFORMATION SET FORTH HEREIN SPEAKS ONLY AS OF THE DATES SPECIFIED AND HUNTER GROUP UNDERTAKES NO DUTY TO UPDATE ANY FORWARD-LOOKING STATEMENT TO CONFORM THE STATEMENT TO ACTUAL RESULTS OR CHANGES IN EXPECTATIONS OR CIRCUMSTANCES. IMPORTANT FACTORS THAT, IN HUNTER GROUP'S VIEW, COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DISCUSSED IN THE FORWARD-LOOKING STATEMENTS INCLUDE, WITHOUT LIMITATION: THE STRENGTH OF WORLD ECONOMIES AND CURRENCIES, GENERAL MARKET CONDITIONS, INCLUDING FLUCTUATIONS IN CHARTERHIRE RATES AND VESSEL VALUES, CHANGES IN DEMAND IN THE TANKER MARKET, INCLUDING BUT NOT LIMITED TO CHANGES IN OPEC'S PETROLEUM PRODUCTION LEVELS AND WORLD WIDE OIL CONSUMPTION AND STORAGE, CHANGES IN HUNTER GROUP'S OPERATING EXPENSES, INCLUDING BUNKER PRICES, DRYDOCKING AND INSURANCE COSTS, THE MARKET FOR HUNTER GROUP'S VESSELS, AVAILABILITY OF FINANCING AND REFINANCING, ABILITY TO COMPLY WITH COVENANTS IN SUCH FINANCING ARRANGEMENTS, FAILURE OF COUNTERPARTIES TO FULLY PERFORM THEIR CONTRACTS WITH US, CHANGES IN GOVERNMENTAL RULES AND REGULATIONS OR ACTIONS TAKEN BY REGULATORY AUTHORITIES, POTENTIAL LIABILITY FROM PENDING OR FUTURE LITIGATION, GENERAL DOMESTIC AND INTERNATIONAL POLITICAL CONDITIONS, POTENTIAL DISRUPTION OF SHIPPING ROUTES DUE TO ACCIDENTS OR POLITICAL EVENTS, VESSEL BREAKDOWNS, INSTANCES OF OFF-HIRE AND OTHER IMPORTANT FACTORS.

THIS PRESENTATION IS NOT AN OFFER TO PURCHASE OR SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE OR SELL, ANY SECURITIES OR A SOLICITATION OF ANY VOTE OR APPROVAL.

7x VLCCs delivered 2019 - 2020

Company overview Top 10 shareholders (as of 8 September 2020)

Investor	Shares (m)	Ownership
Apollo Limited Asset	169	29%
Sundt AS	46	8%
Songa	40	7%
Swap Invest	16	3%
Paribas Securities BNP	15	3%
Nordnet Livsforsikring	10	2%
London DB	8	1%
Luxembourg DNB	6	1%
Halvorsens Fabrikk	6	1%
Verdipapirfondet Nordea Kapital	5	1%
Sum 10 top	319	56%
Total	575	100%

• Nimble and agile fleet of 7x SMART VLCCs built at DSME and fitted with Wärtsilä scrubbers
  • − Avg. all-in price of USD ~86m
• Superior access to cargo flow provided by Tankers International, the world's largest VLCC pool
• Quality and bespoke technical management services provided by OSM in Arendal
• Objective is to return all surplus cash to shareholders, either through dividends, buybacks or deleveraging

			Q4 '19 – Q2 '20 financial highlights
	•	Delivery of Hunter Atla		Q4'19	Q1 '20	Q2 '20
Q3 2019 • Financed first three vessels with USD 180m sale and	Pool days	181	277	197
	leasebacks to avoid equity issuance and shareholder dilution	TC days	-	12	191
	Offhire/startup days	44	10	-
			Total sailing days	225	299	388
• Q4 2019 • Completed sale of one vessel for USD 98m	Delivery of Hunter Saga and Hunter Laga	Revenue	24.4	20.8	29.6
		Pool revenue	12.0	19.9	14.5
		TC revenue		0.9	14.8
		Other revenue	12.4	-	-
	• Delivery of Hunter Freya		Operating expenses	3.4	5.3	6.4
• Secured USD 377.5m bank financing Q1 2020 − USD 220 million takeout loan for four latest vessels − USD 157.5m bank loan to refinance the sale and leaseback		Opex. & insurance	1.4	1.9	2.5
		Cash based G&A	0.2	0.3	0.3
		Voyage expenses & commissions	1.9	0.6	0.3
• Delivery of Hunter Disen Q2 2020 • Booked 4 of 7 vessels on 6-8 month • Hunter Idun		Net income	16.1	11.8	18.8
	TCs at height of market	Yard instalments	120	77	87
		Remaining capex	269	192	106
		Cash balance	52.5	35.2	17.1
		and Hunter Frigg delivered	Interest-bearing debt	180.0	233.1	283.2
• Q3 2020 • bank debt		Booked Hunter Frigg on 6-8 month TC at USD 40,000/day
		Refinanced Hunter Atla and Hunter Saga with USD 100.4m	Avg. achieved TCE	\$66,600	\$72,030	\$76,340
		Avg. cash breakeven per day	\$27,500	\$21,100	\$24,300

Benchmark spot rates of around USD 15,500 per day means USD ~20,500 for Hunter vessels

Robust rate coverage through current market weakness

Second half 2020: 66% covered at USD 63,750 per day

100% covered at USD 42,075* per day

Current charter coverage
	'20 Q2	'20 Q3	'20 Q4	'21 Q1
Atla Hunter	TC			Spot
Saga Hunter			Spot
Hunter Laga		TC		Spot
Hunter Freya			Spot
Hunter Disen	Construction	TC		Spot
Idun Hunter	Construction		TC	Spot
Hunter Frigg	Construction		TC	Spot

Volatile?

Benchmark VLCC spot rates: TD3C MEG - China

The world will still need increasing amounts of oil

Oil market balance normalizing sooner than expected

• Trough monthly avg. demand of 82mbd in April, causing OECD inventory to peak at 90 days forward coverage
• June demand reported at 90mbd -> December demand expected at 99mbd
• OECD inventories forward day coverage expected back to normal early 2021

close to USD 5 trillion or ~12% of GDP

• Close to USD 7 trillion of fiscal stimulus pledged globally in response to COVID-19

JPMorgan Global Composite PMI

• Global PMIs have rebounded since April low, with August reading of 52.3
  • − Above/below 50 means expanding/contracting economy

45k lightweight tonnes = \$16.2m scrap value

360

VLCC orderbook and scrap candidates

500

\$/ldt

200

Sep 18

Nov 18

Jan 19

Mar 19

May 19

• 826 VLCCs currently on the water

• All time low orderbook of ~7%
• 181 VLCCs turning 15 years or more by 2022, equal to ~22% of current fleet
  • 78 VLCCs turning 20 years
  • 103 VLCCs turning 15 years
• Limited new orders due to uncertainty around decarbonization requirements
  • − LNG dual fuel VLCCs currently priced with \$15-20m premium

• Scrap prices have rebounded recently, increasing scrapping incentives for owners of older tonnage

Jul 19

Scrap prices* have rebounded

Sep 19

Nov 19

Jan 20

Mar 20

May 20

Jul 20

Sep 20

• Typical 20-year special survey costs USD 3.5m
  • BWTS USD ~1.5m
  • USD ~2m survey costs
    • − Steel renewal, machinery overhaul etc.
  • 20 25 days total offhire

Hunter Group ASA Org. nr. 985 955 107

Dronningen 1 0287 Oslo, Norway +47 975 31 227 info@huntergroup.no