Prosafe SE — Investor Presentation 2016

Aug 24, 2016

Q2 2016 results

Disclaimer

All statements in this presentation other than statements of historical fact are forward-looking statements, which are subject to a number of risks, uncertainties, and assumptions that are difficult to predict and are based upon assumptions as to future events that may not prove accurate. Certain such forward-looking statements can be identified by the use of forward-looking terminology such as "believe", "may", "will", "should", "would be", "expect" or "anticipate" or similar expressions, or the negative thereof, or other variations thereof, or comparable terminology, or by discussions of strategy, plans or intentions. 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 as anticipated, believed or expected. Prosafe does not intend, and does not assume any obligation to update any industry information or forward-looking statements set forth in this presentation to reflect subsequent events or circumstances.

Agenda

Recent developments

• Restructuring
• Financial results
• Operations review
• Strategy & Outlook
• Summary

Recent developments

• Will secure runway through 2020 after comprehensive refinancing
• Will significantly improve debt structure and cash flow
• Will have limited covenants and significantly improved room to manoeuvre
• Re-organisation into a lean organisation
• •Safe and cost efficient management of fleet
• •35-40% headcount reduction
• •20-30% opex reduction and 40% capex reduction
• Amendment and contract extension signed with Petrobras revenue flow through to mid 2020
• Safe Britannia, Safe Hibernia and Jasminia sold for scrap
• Good activity for Prosafe´s vessels in the North Sea in Q2/Q3
• Safe Zephyrus awarded Acknowledgement of Compliance from the Petroleum Safety Authority Norwayand commenced contract

Agenda

Recent developments

Restructuring

• Financial results
• Operations review
• Strategy update
• Summary

Restructuring

• 1. Restructuring goal
• 1. Financial restructuring
• 1. Operation cost/efficiency restructuring
• 1. Supply side restructuring

1. Restructuring goal: re-establishing the Prosafe investment case

2.Financial restructuring: recapitalisation and net debt

• Reduction of debt/new build investment USD 530 million
• Reduction of amortisation of USD 470 million
• Interest saving from swap restructuring of approx. USD 23m
• Improved cash flow 2017-2020 approx. USD 1,023 million

2. Financial restructuring : significantly improved debt profile

9

2. Revised covenants - room to manoeuvre

• Liquidity minimum MUSD 65million (from closing of transaction)
• Interest coverage ratio
• •Minimum 1.0 X (from closing of transaction until 31 Dec' 2019)
• •Minimum 1.5 X (from 1 Jan' 2020 onwards)
• Leverage ratio
• •Suspended until 31 Dec' 2020
• Minimum market value
• •Suspended until 31 Dec' 2018
• •Covenant set at 110% from 31 Dec' 2019 onwards (in respect of 2 consecutive test dates)
• • For the USD 288 million facility only, a step up in the market value covenant in March 2021 to 125%
• Dividend restrictions
• • No distributions until all bank lenders received repayments equal to all deferred instalments

2. Refinancing status

Approvals

• Cosco deal agreed/signed
• 4 Bonds approved
• EGM approved the refinancing
• Bank lenders representing 89 per cent of outstanding bank debt have approved or provided in principle agreement for the refinancing
• The Board has decided to conduct a repair issue of up to 504 million shares (USD 15 million) only shareholders at 12 July 2016, who did not participate in private placement, can subscribe

Timeline

• Subject to timely receipt of final bank approvals, completion of refinancing, including payment and delivery in private placement, expected to occur late August / early September
• Immediate OTC listing of new class A shares issued as part of refinancing, pending publication of prospectus, capital reduction and Oslo Børs listing
• Prospectus expected to be published towards end of September 2016
• Subscription period repair issue to start once prospectus is published (2 week subscription period)

3. Substantial cost/efficiency improvements - on target

• Target of sustainable cost reductions (efficiencies) of USD 30-40 million per annum
• • Target to reduce headcount by 35-40 per cent by Q4 2016/Q1 2017
• • Effects more visible from Q3 16 onwards, and full effect on measures from Q1 2017 onwards
• Improved underlying cost development in H1 2016 compared to H1 2015
• • Non-recurring items of approx. USD 40 million H1 2016
  • • Off-hire and demobilisation costs for vessels in Mexico of USD 37.5 million
  • •Restructuring cost of approx. USD 4 million

3. Cost Reduction – offshore

Now seeing cost per day (CPD) for vessels in operation being reduced by 20-25 per cent compared to 2014

O ( C P D k / d ) p e x ( f i i U S D ) g u r e s n	N C S	U K C S	B i l r a z
	D P	M d o o r e	D P
2 0 1 4	7 5- 8 0	5 0- 5 5	6 0- 6 5
2 0 1 6 e	6 0- 6 5	4 0- 4 5	4 0 5- 5

S i C ( / ) k P D k d t a c n g ( f i i U S D ) g r e s n u	i H h- g s p e c ) 1 l e s s e s v	L o -s p e c w ) 1 l e s s e s v
	1 5- 3 0	5- 1 0

1) Will depend on location and duration and cold/warm/hot stack

3. Cost reduction- onshore

• Onshore costs in 2014 and 2015 average USD 40m p.a
• • Overall onshore costs are trending down –cost saving initiatives
• • Slim lining of organisation – significant headcount reductions
• From 2017 onshore cost down by USD 10-12 million per annum (30%)

3. Lower Capex – returnto maintenance

• Strategic projects - new-builds and major conversions all completed
• Focus will return to maintenance capex / 5 year Special Periodic Survey
• Short to medium term target of maintenance/fleet capex of USD 20-30 million per annum

3. Cost and capex reductionsummary

• Target set in Q1 2016 : USD 30-40 million per annum in cost cuts / efficiencies
• Full effects visible from Q1 2017 onward

	2 0 1 1- 2 0 1 5 l a n n u a l l a v e r a g e e v e s	R i d l l t t e v s e a r g e e v e s	T i 2 0 1 t 7 a r g e s a v n g s
1 ) f f O h s o r e o p e x	S U D 1 8 0 m	S U D 1 4 0 1 0 5 m –	S ( ) U D 3 0- 4 0 2 0 % m
O h n s o r e o p e x	S U D 4 0 m	S U D 2 8 m	S ( ) U D 1 2 3 0 % m
) 2 A l f l t n n u a e e c a p e x	U S D 6 0 m	U S D 2 0 3 0 m -	U S D ( ) 3 0- 4 0 4 0 % m
H d d i ( i % ) t t e a c o u n r e u c o n n		3 5- 4 0 t p e r c e n

1) Will to some extent be affected by activity level

2) Excluding new-builds and conversions

Agenda

• Recent developments
• Restructuring
• Financial results
• Operations review
• Strategy update
• Summary

Income statement

S ( U d i d f i i U D i l l i ) t n a e g r e s n m o n u u	Q 2 1 6	Q 1 1 6	Q 2 1 5	6 M 1 6	6 M 1 5	2 0 1 5
O i t p e r a n g r e v e n u e s	1 1 5. 4	1 0 3. 0	9 2. 5	2 1 8. 4	2 1 6. 7	4 7 4. 7
O i t p e r a n g e x p e n s e s	( ) 5 3. 8	( ) 5 7. 7	( ) 5 1. 0	( ) 1 1 1. 5	( ) 1 0 2. 8	( ) 2 1 1. 8
E B I T D A	6 1. 6	5. 4 3	5 4 1.	1 0 6. 9	1 1 3. 9	2 6 2. 9
D i i t e p r e c a o n	( ) 2 9. 1	( ) 2 3. 4	( ) 1 8. 7	( ) 5 2. 5	( ) 3 5. 7	( ) 8 6. 5
I i t m p a r m e n	0. 0	0. 0	0. 0	0. 0	0. 0	( ) 1 4 5. 6
O i f i t t p e r a n g p r o	3 2. 5	2 1. 9	2 2. 8	5 4. 4	8. 2 7	3 0. 8
I i t t n e r e s n c o m e	0. 1	0. 0	0. 1	0. 1	0. 1	0. 2
I t t n e r e s e x p e n s e s	( ) 1 8. 6	( ) 1 9. 9	( ) 1 2. 8	( ) 3 8. 5	( ) 2 3. 0	( ) 4 1. 6
O h f i i l i t t e r n a n c a e m s	( 9 ) 7.	( 0. 4 )	5. 7	( 8. 3 )	( 1 0. 2 )	( 2 9. ) 5
f i i i N l t t e n a n c a e m s	( ) 2 6. 4	( ) 2 0. 3	( ) 7. 0	( ) 4 6. 7	( ) 3 3. 1	( ) 7 0. 9
/ ( ) P f i L b f t t r o o s s e o r e a x e s	6. 1	1. 6	1 5. 8	7. 7	4 5. 1	( ) 4 0. 1
T a e s x	( 0. 9 )	( 3. 4 )	( 3. 6 )	( 4. 3 )	( 9 ) 5.	( 1 0. ) 5
f i / ( ) N l t t e p r o o s s	5. 2	( ) 1. 8	1 2. 2	3. 4	3 9. 2	( ) 5 0. 6
E P S	0. 0 2	( 0. 0 1 )	0. 0 5	0. 0 1	0. 1 7	( 0. 2 1 )
D i l d E P S t u e	0. 0 2	( ) 0. 0 1	5 0. 0	0. 0 1	0. 1 7	( ) 0. 2 1

Balance sheet

( Un d i d f ig in U S D i l l ion ) te au ur es m	3 0. 0 6. 1 6	3 1. 0 3. 1 6	3 1. 1 2. 1 5	3 0. 0 6. 1 5
Go dw i l l o	2 2 6. 7	2 2 6. 7	2 2 6. 7	2 2 6. 7
Ve ls ss e	1 5 5 9. 0	1 5 8 1. 6	1 5 7 8. 6	1 6 1 1. 5
Ne bu i l ds w	6 4. 9 5	6 3 3 5.	2 2 8. 5	2 1 1. 1
O he t t a ts r n on -c ur re n ss e	4. 3	4. 7	4. 9	6. 0
To l n ta t a ts on -c ur re n ss e	2 4 4 4. 9	2 4 4 8. 3	2 0 3 8. 7	2 0 5 5. 3
Ca h d de i ts s an p os	6 8. 2	7 1. 0	5 7. 1	9 4. 9
O he t t a ts r c ur re n ss e	8 6. 6	1 1 1. 5	9 1. 4	9 1. 5
To l c ta t a ts ur re n ss e	1 5 4. 8	1 8 2. 5	1 4 8. 5	1 8 6. 4
To l a ta ts ss e	5 2 9 9. 7	2 6 3 0. 8	2 1 8 7. 2	2 2 4 1. 7
S ha i l ta re c ap	2. 1 7	2. 1 7	2. 1 7	6 9 5.
O he i t ty r e q u	6 0 6. 4	6 1 0. 4	6 4 3. 1	6 9 4. 7
i To l e ta ty q u	6 7 8. 5	6 8 2. 5	7 1 5. 2	7 6 0. 6
In fre lon l ia b i l i ies te t- te t re s e g- rm	9 8. 4	9 0. 8	5 8. 9	5 9. 4
In be ing lon de b te t- te t re s ar g- rm	1 5 2 0. 7	1 5 5 4. 9	1 1 0 7. 5	1 1 8 5. 6
To l lo l ia b i l i ie ta -te t ng rm s	1 6 1 9. 1	1 6 4 5. 7	1 1 6 6. 4	1 2 4 5. 0
O he in fre l ia b i l i ies t te t- t t r re s e cu rre n	1 0 6. 1	1 3 5. 8	1 6 6. 1	2 0 3. 1
C ion f lon de b t p t te t ur re n or o g- rm	1 9 6. 0	1 6 6. 8	1 3 9. 5	3 3. 0
ia i i ie To l c l b l ta t t ur re n s	3 0 2. 1	3 0 2. 6	3 0 5. 6	2 3 6. 1
To l e i d l ia b i l i ie ta ty t q a n s u	2 5 9 9. 7	2 6 3 0. 8	2 1 8 2 7.	2 2 4 1. 7

Pro-forma balance sheet per Q2 post refinancing

	Re d te p or		A d j d te us
( S ) Un d i d f ig in U D i l l ion te au ur es m	3 0. 0 6. 1 6	j. A d	3 0. 0 6. 1 6
Go dw i l l o	2 2 6, 7		2 2 6, 7
Ve ls ss e	1 5 5 9, 0		1 5 5 9, 0
Ne bu i l ds w	6 4, 9 5		6 4, 9 5
O he t t a ts r n on -c ur re n ss e	4, 3		4, 3
To l n ta t a ts on -c ur re n ss e	2 4 4 4, 9	0, 0	2 4 4 4, 9
Ca h d de i ts s an p os	6 8, 2	1 0 5, 3	1 7 3, 5
O he t t a ts r c ur re n ss e	8 6, 6		8 6, 6
To l c ta t a ts ur re n ss e	1 5 4, 8	1 0 5, 3	2 6 0, 1
To l a ta ts ss e	2 5 9 9, 7	1 0 5, 3	2 7 0 5, 0
S ha i l ta re c ap	7 2, 1	( ) 6 4, 1	8, 0
O he i t ty r e q u	6 0 6, 4	4 1 5 5,	1 0 6 1, 5
To l e i ta ty q u	5 6 7 8,	3 9 1, 0	5 1 0 6 9,
In fre lon l ia b i l i ies te t- te t re s e g- rm	9 8, 4		9 8, 4
In be ing lon de b te t- te t re s ar g- rm	1 5 2 0, 7	( ) 1 3 7, 7	1 3 8 3, 0
To l lo l ia b i l i ie ta -te t ng rm s	1 6 1 9, 1	( 1 3 7, 7 )	1 4 8 1, 4
O he in fre l ia b i l i ies t te t- t t r re s e cu rre n	1 0 6, 1		1 0 6, 1
Cu ion f lon de b t p t te t rre n or o g- rm	1 9 6, 0	( 1 4 8, 0 )	4 8, 0
To l c l ia b i l i ie ta t t ur re n s	3 0 2, 1	( ) 1 4 8, 0	1 5 4, 1
To l e i d l ia b i l i ie ta ty t q u a n s	2 5 9 9, 7	1 0 5, 3	2 7 0 5, 0

• •Reduced debt
• •Improved liquidity
• •Solid business platform

Covenants Q2 2016

• Liquidity minimum MUSD 65*
• •Cash Q2: MUSD 68
• Book equity minimum 25 percent
• •Book equity Q2: 26 per cent
• Leverage ratio maximum 6.0
• •Net debt/adjusted EBITDA Q2: 3.6

* In April, Prosafe obtained a reduced minimum liquidity covenant of USD 20 million until the end of the thirdquarter 2016

Agenda

• Recent developments
• Restructuring
• Financial results
• Operations review
• Strategy update
• Summary

Highly competitive vessels with increased earnings capacity

State-of-the-art North Sea capable fleet

• Fleet renewal program completed with capex spend of approx. USD 1.35bn since 2012
• • Core fleet of 7 state-ofthe-art North Sea capable vessels (including Eurus)
• ~80% of fleet value capable of North Sea operations; a high barrier market

Operations overview

Geographic overview

Key comments

In Operation:

• Regalia, Shell, Brent Charlie, UKCS
• Safe Boreas, Talisman, Montrose A, UKCS
• Safe Caledonia, BP, ETAP, UKCS
• Safe Concordia, Petrobras, P56, Brazil
• Safe Scandinavia (TSV), Statoil, Oseberg Ost, NCS
• Safe Zephyrus, Det Norske, Ivar Aasen, NCS

Mobilising:

Safe Notos; transit to Brazil

Lay – up / Construction:

• Safe Bristolia; lay-up, Norway
• Safe Astoria; Cold stack, in Batam, Indonesia
• Safe Lancia; Cold stack in Port Isobel, USA
• Safe Regency; lay-up, Curaçao
• Safe Eurus; Under construction COSCO, Qidong, China

Recycling/Scrap:

Safe Britannia/ Safe Hibernia / Jasminia

Contract coverage

Capital expenditure 2016

• Agreed deferred delivery to 31 December 2019 for Safe Eurus – therefore reduced capex for 2016. In addition Prosafe can cancel.
• Aggregate capital expenditure adjusting for Safe Eurus delivery - for 2016 is in line with previous indications of approx. USD 500 million
• Remaining capex for H2 2016 of approx. USD 30 million
• Major capex items in 2016:
• • Final delivery instalments on Safe Notos and Safe Zephyrus delivered in Q1 2016

Agenda

• Recent developments
• Restructuring
• Financial results
• Operations review
• Strategy & outlook
• Summary

Back to normal: accommodation market demand drivers

29Source: Prosafe, Page 16, "Offshore Floating Accommodation Market Drivers", Report to Prosafe by Rystad Energy, April 20, 2016. For access to full report, contact Rystad Energy.

Activity level forecasted to recover from 2018

2016 – 20; "Back to normal"

Returning to traditional demand (maintenance and modification) with shorter lead times compared to hook-up projects

• Continuous growth in installed base with significant number of new fields in production during recent years1

• • Increasing share of platforms older than 20 years, triggering strong demand for maintenance work 2
• • Platforms increasing lifetime beyond design life driving need for substantial modification work3
• • Strong backlog of tieback projects triggering need for modification work at host platforms4
• • Significant drop in modification capex leading to large backlog of outstanding maintenance projects building up in current down-turn5

Indicative: global accommodation market anticipated to rebalance by 2020

High fleet growth combined with weaker market – "low end" vessels at risk by 2020

Agenda

• Recent developments
• Restructuring
• Financial results
• Operations review
• Strategy update

Summary

Summary

• Will secure runway through 2020 after comprehensive refinancing
• Will significantly improve debt structure and cash flow
• Will have limited covenants and significantly improved room to manoeuvre
• Re-organisation into a lean organisation
• •Focus continues on safe and cost efficient management of fleet
• Substantial cost and capex cuts
• Market outlook remains uncertain near term continue to see 2017 to be low point; however expectations are forgradual market recovery from 2018

Appendix

Recapitalisation summary

C i l i t a p a r a s e	Eq ity ita l ra ise f U S D 1 3 0m • u ca p o U S D 4 0m be d bu ba k p f t he Co 's ior d bo ds to to t o • us e y- c ar mp an y se n u ns ec ure n S ( ) T he Bo d ha de i de d du bs f fe ing f u U D 1 5m ir iss to t a nt to ar s c co n c su eq ue o r o p rep a ue •
R i t t e s r u c u r n g f b d o o n s	N O K 2. 4 b i l l ion in fac lue f t he Co 's d ing ior d bo ds in P R S 0 8, P R S 0 9, P R S 1 0 a d P R S 1 1 a te ts ta • ag g reg a e v a o mp an y ou n se n u ns ec ure n n re d int ix f n i b le bo d o d ina ha 3 0 % f t he fac lue d c h te t t co nv er o a m o ew co nv er n r o r ry s res a o e v a a n as Co ( ) f O ( ) T he i l l iss i i b le bo d o N K 8 2. 7 9 m i l l ion i b le int 3 3 1, 1 6 3, 7 6 4 ha i i 1, 3 9 6, 8 3 6, 2 5 0 n ha rt t mp an y w ue a c on ve n co nv er o ne w s res ew s res • ; fo i de ion he bo d c ion t r t as co ns ra n on ve rs T he h-o f fe U S D f fac lue t o 4 0m t 3 5 % • ca s u r w as a o e v a
B k a n d t a m e n m e n s	S S Am isa ion l ie f o f U D 1 2 8m in 2 0 1 7 a d 2 0 1 8 ( 9 0 % du ion ), U D 1 1 4m in 2 0 1 9 ( 9 0 % du ion in H 1 a d 7 0 % du ion in H 2 ), d t t t t t or re n re c re c n re c an • S ( ) – Co U D 1 0 0m in 2 0 2 0 7 0 % du ion b ine d w it h s ing i de l p it ive l iq i d ity f fec fo he f a im ly t tru tu to ta t r t te re c co m wa p res c r p rov s os e mp an o p p rox a u y U S D 4 9 3m U S D bn fac i l ity f ina l m ity in Fe br 1. 3 tu 2 0 2 2 • a r ua ry U S D fac i l ity f ina l m ity Ma de d a i la b i l ity f u dr U S D Eu he Q Re ins f 2 8 8m tu 2 0 2 1 – te 1 4 4m tr to 4 2 0 1 9. ta te nt • a r y ex n va o n aw n rus an c me o ig ina l a isa ion f i le Eu he f t he U S D 2 8 8 m i l l ion fac i l ity rt t tr or mo p ro on rus an c o Am de d f ina ia l c fo l l fac i l it ies ts • en nc ov en an r a Re ise d m in d c h s ha ism be inc lu de d to ar g an as we ep m ec n • v
C O S C O	Se d a d d it ion l f lex i b i l ity it h Co k ing de l ive f Sa fe Eu ta • cu re a w sc o on ry o rus De fe d de l ive f Sa fe Eu Q 4 2 0 1 9 ( h e l ier im ire d by he Co ) to t t • rre ry o rus or su c ar e r eq u mp an y fu fe f Sa fe L im ita ion he l ia b i l ity in he Pr do ke de l ive Eu t rt t t t ta o n a ny r ev en os a es no ry o rus • fe f t S Q De d m ity da he U D 2 9m l ler 's d it a 4 2 0 1 9 tu te nt to • rre a r o se cre g ree me

Operating revenues

( S ) U D i l l i m o n	Q 2 1 6	Q 1 1 6	Q 2 1 5	6 M 1 6	6 M 1 5	2 0 1 5
C h i t a r e r n c o m e	1 0 9 1	5 6 2	8 0 0	1 6 5 3	1 9 1. 8	4 2 5 4
M b / d b i o e m o n c o m e	0 5	1 3 9	0 8	1 4 4	1. 8	5 4
O h i t e r n c o m e	5 8	3 2 9	1 1. 7	3 8 7	2 3 1	4 3 9
T l t o a	1 1 5 4	1 0 3 0	9 2 5	2 1 8 4	2 1 6 7	4 4 7 7