Prosafe SE

Earnings Release • Nov 3, 2016

Prosafe SE: Third quarter 2016 results

Prosafe SE: Third quarter 2016 results

EBITDA excluding non-recurring cost items was USD 86.3 million in the third

quarter and reported EBITDA amounted to USD 68.3 million.

Highlights

* Completed comprehensive financial restructuring and secured runway through

2020

* Phase 1 re-organization and cost and capital expenditure cuts ongoing till

end 2016

* Continues renewal and rightsizing of fleet

* Operating revenues USD 129.8 million in Q3 2016 vs USD 154.1 million in Q3

2015

* EBITDA USD 68.3 million in Q3 2016 vs USD 97.6 million in Q3 2015

* EBITDA excl. non-recurring cost items USD 86.3 million in Q3 2016 vs USD

97.6 million in Q3 2015

(Figures in brackets refer to the corresponding period of 2015)

Operations

Utilisation of the vessels was 52 per cent (81 per cent).

Safe Boreas continued the contract with Repsol Sinopec (formerly Talisman

Sinopec) in UK and was in full operation throughout the quarter. Repsol Sinopec

has exercised the first 14-day option at a discounted day rate, extending the

contract at Montrose into December.

Safe Zephyrus commenced the contract with Det norske in Norway late July and was

in operation throughout August and September.

Safe Scandinavia Tender Support Vessel (TSV) and Safe Concordia were fully

contracted in the quarter with Statoil and Petrobras, respectively.

Regalia operated for Shell in the UK from beginning of August until mid-October.

Safe Caledonia completed her operation for BP in August and the vessel has been

laid up in UK since then.

Safe Bristolia is cold-stacked in Norway after completion of a two-month

contract with BG Group late July.

Safe Notos remains in transit to Brazil and is scheduled to commence the

contract with Petrobras late November or early December.

Safe Astoria, Safe Lancia and Safe Regency were idle in the quarter. Safe

Astoria is cold-stacked in Batam, Indonesia, Safe Lancia is cold stacked in Port

Isabel, Texas USA and Safe Regency is laid-up in Curaçao in the Caribbean.

In August, Jasminia and Safe Hibernia were sold for scrap/recycling in the USA.

Financials

Revenues for the third quarter of 2016 were USD 129.8 million (USD 154.1

million). This decline is due to the lower utilisation referred to above. This

effect has been partly compensated by a higher average day rate, which reflects

that units which generate a relatively high day rate have been on contract

during the third quarter this year as opposed to last year when several of the

rigs were on bareboat contracts in the Gulf of Mexico.

Operating expenses, including non-recurring costs of USD 18 million, amounted to

USD 61.5 million (USD 56.5 million). Underlying costs were therefore down to USD

43.5 million. USD 8.7 million out of the USD 18 million of non-recurring costs

related to the refinancing, USD 6.7 million to rationalisation and USD 2.6

million to the vessels which have been scrapped. Cost initiatives implemented in

2015/2016 are continuing to reduce onshore costs as well as vessel operating

costs.

EBITDA was USD 68.3 million (USD 97.6 million).

Depreciation has increased to USD 29.1 million (USD 26.3 million) mainly due to

the new build Safe Zephyrus and the Safe Scandinavia TSV project. This effect

has been partly offset by vessels which have been impaired or scrapped.

Operating profit equalled USD 39.2 million (USD 71.3 million).

Net financial items were USD 168.2 million positive (USD 15.6 million negative).

As part of the refinancing, a gain on forgiveness of bond debt of USD 197.6

million has been recognised this quarter.

Effective 1 July 2016, the Company has decided, based on a holistic cost-benefit

evaluation, to abandon hedge accounting of interest rate swaps. Any change in

fair value of interest rate swaps is now taken through the income statement

rather than direct to equity via comprehensive income. In the third quarter USD

2.4 million was charged to the income statement.

As a consequence of abandoning hedge accounting, the interest expenses have

increased by USD 14.7 million in the third quarter. This amount has previously

been charged directly to equity through comprehensive income and corresponds to

the portion of the negative fair value of interest-rate swaps which could be

allocated to the bond debt as of 30 June 2016. As of 30 September 2016, the

remaining amount to be charged as interest expenses over the maturity of the

current bank loan is USD 73.5 million, i.e. USD 3.3 million per quarter through

to Q1 2022.

Taxes increased to USD 5.5 million (USD 2.5 million) mainly due to increased tax

in the UK. Net profit increased to USD 201.9 million (USD 53.2 million).

Total assets at 30 September amounted to USD 2,711 million (USD 2,342 million).

Net interest-bearing debt equalled USD 1,242.9 million (USD 1,222.7 million),

while the book equity ratio increased to 39.7 per cent (33.2 per cent).

Share issues

On 23 August 2016, the Extraordinary General Meeting resolved to issue shares as

described in the previous quarterly report.

On 14 September 2016, 4,376,600,000 new class A shares were issued in connection

with the private placement closed on 12 July 2016.

On 19 September 2016, 1,400,839,757 new class A shares were issued as part of

the conversion of senior unsecured bonds to shares.

On 22 September 2016, all actions and conditions required for completion of the

refinancing were finalised and fulfilled, and the effective date of bond debt

discharge and bank amendments took effect.

On 23 September 2016, convertible bonds of a nominal value of NOK 3 million were

converted into 12,000,000 class A shares.

Following this conversion, the remaining outstanding principal of the

convertible bond loan is reduced to NOK 78.8 million.

This convertible bond has been recognised as equity as there is no contractual

obligation to deliver cash or to exchange it with other financial assets or

liabilities. The convertible bond will also be settled by a fixed number of

Prosafe shares.

A reduction in the nominal value of the Company's ordinary shares, by way of a

reduction of share capital without distribution, was also completed in the

period.

As a consequence, all issued shares of the Company now have a nominal value of

EUR 0.001.

Following publication of the listing prospectus on 14 October 2016, the class A

shares were converted to ordinary shares. As a result, the Company has only one

class of shares in issuance, ordinary shares.

Prior to the subsequent repair offering referred to below, the number of

outstanding shares in the Company was 6,049,010,116 shares.

The subsequent repair offering was launched on 14 October 2016, and up to

504,000,000 new shares will be issued when completed. Subsequent to this share

issue, the total number of issued shares will be up to 6,553,010,116.

Outlook

Market outlook remains uncertain in the near term, and although there are a

number of prospects in the years ahead, 2017 is still expected to be the low

point in activity level.

In general, the market activity is expected to normalize in the years ahead

through a combination of maintenance and modification, hook-up and

decommissioning. Further cost reductions in the E&P sector are expected to

contribute to more projects becoming economically viable. Combined with

continued focus on enhanced recovery, life extensions and safe and efficient

operations, the company expects a gradual market recovery from 2018 onwards.

Prosafe has moved quickly to scrap three vessels and it anticipates that other

suppliers' vessels will be scrapped and/or exit the high end of the North Sea

market in the years ahead. It is further anticipated that consolidation within

the accommodation segment will happen. The combination of these factors means

that the supply-demand environment is expected to become more balanced towards

2020. The aforementioned plus the substantial debt reduction, the significantly

improved cash flow from the refinancing, combined with Prosafe's high quality

and versatile fleet, places the company in a strong position when the market

recovers.

Prosafe is the world's leading owner and operator of semi-submersible

accommodation vessels. The company is headquartered in Larnaca, Cyprus and

listed on the Oslo Stock Exchange with ticker code PRS. For more information,

please refer to www.prosafe.com

Attachments:

Q3 2016 report

Q3 2016 presentation

Larnaca, 2 November 2016

The Board of Directors of Prosafe SE

For further information, please contact:

Stig Harry Christiansen, Acting CEO

Prosafe Management AS

Phone: +47 478 07 813

Robin Laird, Acting CFO

Prosafe Offshore Services Pte Limited

Phone: +65 81 27 21 01

Cecilie Helland Ouff, Senior Manager Finance and Investor Relations

Prosafe AS

Phone: +47 991 09 467

This information is subject to the disclosure requirements pursuant to section

5-12 of the Norwegian Securities Trading Act.