Prosafe SE

Investor Presentation • May 26, 2020

Q1 2020 results and market update

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

Executive summary

• Re-assessment of outlook and financial implications
• Update on financial situation
• Financial results
• Strategy & summary

Executive summary

• Effects of Covid-19, oil price crash, structural demand shift and over supply
• Utilisation in Q1 of 32.7 per cent (62.5 per cent)
• Total liquidity per Q1 of USD 184 million
• Impairments in Q1 of USD 811 million
• Strategy

Agenda

• Executive summary
• Re-assessment of outlook and financial implications
• Update on financial situation
• Financial results
• Strategy & summary

A new market reality with changed demand drivers

• Average EBITDA last 4 years from core and recurring MMO activity about MUSD 40

(50)

Global oversupply of vessels

Committed Vessels Predicted Demand Global Vessels

Re-assessment of outlook and financial implications

Market outlook – A new market reality

• A prolonged downturn over several years followed by Covid-19 and oil price crash
• In addition, the industry remains subject to significant global oversupply
• Limited tenders in the North Sea and few contract opportunities anticipated in the next years in Norway in particular. Due to Covid-19 implications, the Forties Pipeline System (FPS) shutdown deferment into 2021 may present further opportunity
• Brazil offering opportunities, although at lower rates. Three tenders currently outstanding
• Will maintain ambition to re-enter Mexico in the future
• Low cost (benign) offshore provinces not anticipated to offer profitable work due to competition from low cost alternative vessels available
• The attempt to merge and consolidate in 2019 to face a challenging and changing market failed

Financial implications

• A further re-assessment of market outlook impacts cashflow projections significantly in the short term and long term
• As a consequence, the company incurs impairments totalling USD 811 million on the book value of vessels in the quarter
• Resulting in a book equity of negative USD 859 million per Q1 2020
• Further, in light of ongoing commercial discussions with clients, there is uncertainty related to the extent to which the order backlog will materialize in 2020 as scheduled as well as to the final outcome of the related discussions with clients

Note: refer to further information about the Company's financial situation in the following section

Agenda

• Executive summary
• Re-assessment of outlook and financial implications
• Update on financial situation
• Financial results
• Strategy & summary

Update on financial situation

• At the end of Q1 2020, Prosafe has liquidity of USD 184 million and adequate liquidity under the current "halt payment" situation and all else equal for the foreseeable future
• Ref. message in the 2019 Annual Report: after several years of low activity across the industry and an unsustainable debt level, the company has entered a Forbearance agreement with a majority of lenders which includes a "halt payment" situation where neither amortizations nor interest is paid to lenders while a long-term financial solution is being negotiated and lenders reserve their rights
• The company continues the restructuring discussion with its lenders and now targets an extension to the Forbearance Agreement till end June 2020. The company has presented a business plan and a restructuring proposal that – if approved as proposed – will result in a sustainable balance sheet
• Pending the ongoing process, trade creditors and clients are served and the company continues to operate on a business as usual and going concern to protect and create value through challenging market conditions

Agenda

• Executive summary
• Re-assessment of outlook and financial implications
• Update on financial situation
• Financial results
• Strategy & summary

Q1 2020 in short

• Implemented Covid-19 plans early to safeguard people and assets, and this has proven successful both onshore and offshore
• Total liquidity of USD 184 million per Q1 2020
• The company has presented a restructuring proposal to lenders that if approved as proposed, will result in a sustainable balance sheet. The company has requested an extension to the Forbearance arrangement till end June 2020 in order to ensure stability and sufficient time to seek agreement with lenders
• Firm order book of USD 127 million per Q1 2020 (USD 159 million)
• Due to ongoing discussions with clients regarding contracts in light of Covid-19 and the oil price collapse there is uncertainty related to the extent to which order backlog will materialize in 2020
• Fleet utilisation of 32.7 per cent (62.5 per cent) for the quarter
• Regalia will be marketed for recycling
• Reported EBITDA was USD 1.1 million (USD 24.1 million) in the quarter. Underlying EBITDA in the quarter adjusted for one-off effects was USD 2.1 million
• An impairment of USD 811 million was made to the book value of vessels and the book equity was negative by USD 859 million as of March 2020

Order backlog (USD million) per end Q1 2020

Prosafe's firm backlog was USD 127 million as at end Q1 2020

Fleet status: Contracts, wins and extensions

Safe Vega and Safe Nova – newbuilds at yard

• Safe Caledonia contract with Total UK for 162 days from mid-April 2020 with a 30 day option deferred until end Q1 2021
• Safe Eurus and Safe Notos under contract suspension for up to 120 days since early April. All suspension days to be added to the firm period of the contracts
• Safe Zephyrus will not perform the Shearwater contract in 2020 and discussions with the client are ongoing
• Safe Concordia completed Equinor Peregrino contract on 14 May 2020
• Regalia will be marketed for recycling

Reducing the cost base to improve competitiveness and preserve cash

Opex (CPD USD k/d)	NCS	UK	NCS (TSV)	UKCS	Brazil
	DP	DP	Moored	Moored	DP
2015- 2019	- ~20%	- ~ 45%	- ~25%	- ~50%	- ~42%

Stacking CPD (USD k/d)	Warm stack	Cold stack
2015 -	-	-
2019	~38%	~33%

*Excluding one-offs

Income statement

	Q1
(Unaudited figures in USD million)	2020	2019
Operating revenues	25	67
Operating expenses	(24)	(43)
Operating results before depreciation	1	24
Depreciation	(18)	(26)
Impairment	(811)	(4)
Operating (loss) profit	(828)	(7)
Interest income	0	0
Interest expenses	(19)	(15)
Other financial items	(8)	(5)
Net financial items	(27)	(20)
(Loss) Profit before taxes	(854)	(27)
Taxes	(1)	(1)
Net (Loss) Profit	(855)	(28)
EPS	(9.72)	(0.32)
Diluted EPS	(9.72)	(0.32)

• Impairments of USD 811 million as a result of reassessment of market outlook
• Fleet utilisation at 32.7 per cent (Q1 2019: 62.5 per cent)
• Lower operating revenues due to lower utilisation and lower average dayrates – approx. USD 96k in 2020 vs approx. USD 150k in 2019
• EBITDA of USD 1.1 milllion, while underlying EBITDA adjusted for one-off effects was USD 2.1 million
• Operating expenses were improved compared to the same quarter last year. Non-recurring costs of approx. USD 1 million were mostly related to the ongoing process with lenders for a long-term financial solution

Balance sheet

(Unaudited figures in USD million)	31.03.20	31.03.19
Vessels	437	1,401
New builds	1	126
Other non-current assets	2	3
Total non-current assets	440	1,530
Cash and deposits	184	109
Other current assets	16	45
Total current assets	200	154
Total assets	639	1,684
Share capital	9	9
Other equity	(868)	363
Total equity	(859)	372
Interest-free long-term liabilities	41	22
Interest-bearing long-term debt	77	1,171
Total long-term liabilities	118	1,193
Other interest-free current liabilities	36	75
Current portion of long-term debt	1,344	44
Total current liabilities	1,380	119
Total equity and liabilities	639	1,684
Key figures:
Working capital	(1,181)	36
Liquidity reserve	184	264
Interest-bearing debt	1,421	1,215
Net Interest-bearing debt	1,237	1,106
Book equity ratio	(134)%	22%

• Total assets of USD 639 million mainly due to the impairments carried out in Q3 2019 and Q1 2020
• Rigs impaired by USD 811 million
• Liquidity reserve per Q1 2020 of USD 184 million
• Net interest-bearing debt increased mainly due to taking delivery of the Safe Eurus last year, partially offset by a one-off positive adjustment of USD 28.7 million to amortised cost of interest-bearing debt resulting from lenders re-electing PIK margin instead of warrants at Q4 last year
• Book equity was negative by USD 859 million by end of Q1 2020. The company is pursuing a sustainable balance sheet as part of the ongoing discussion with lenders

Agenda

• Executive summary
• Re-assessment of outlook and financial implications
• Update on financial situation
• Financial results
• Strategy & summary

Strategy and goals

• Secure a sustainable financial solution
• Maintain commercial win rate for any opportunities that arise
• Re-enter Mexico
• Seek engagement for Safe Scandinavia (TSV) outside accommodation
• Consolidation and fleet renewal
• Pursue ESG initiatives

Scrapping will gradually rebalance the market

• But expected to take time…

Current supply is 38:

• 29 of 38 vessels are delivered after 2005
• Two vessels are at the yard (Nova and Vega)

Average age:

• Whole fleet: 11.4 years
• Most competitive fleet: 6.1 years

We expect a gradual replacement of older and less competitive vessels

• We have identified 12 scrapping candidates which we believe have negative or marginal NPV.
• Scrapping might be delayed due to the young age of the fleet, and the low cost of cold stacking and reaction of vessels (\$2-15m to reactivate)

Consolidation

• Prosafe sees several interesting and value-enhancing consolidation/distressed asset acquisition opportunities

• Prosafe is well placed to drive consolidation in the industry due to its strong commercial outperformance, cost leadership and global presence

• Balance sheet risk may be prohibiting. The Chinese owned competitors (OOS, CIMC, Cosco) are effectively operating on debt free basis
• Operating 1 2 flotels is not efficient
• The down turn is expected to reshape the industry into fewer and larger operators
• Joint ventures / partnerships pursuit

Summary

• Total liquidity of USD 184 million per Q1 2020
• The company has presented a restructuring proposal to lenders. Extension to current Forbearance arrangement requested from end May 2020 till end June 2020
• Firm order book of USD 127 million per Q1 2020 (USD 159 million). Pending ongoing discussions with clients, there is uncertainty related to the extent to which order backlog will materialise in 2020
• Fleet utilisation of 32.7 per cent (62.5 per cent) in the quarter
• An impairment of USD 811 million was made to the book value of vessels and the book equity was negative by USD 859 million as of March 2020
• Prosafe will continue to seek entry into new geographical markets
• Prosafe's ambition remains to pursue a sustainable financial solution and pursue a leading position based on global presence, safe and low cost operations and fleet enhancement. The strategy to take an active role in future consolidation remains

Appendix

Operating revenue

(USD million)	Q1 20	Q1 19	Q4 19	2019
Charter income	24.4	56.8	24.4	191.7
Other income	0.6	10.5	1.9	33.7
Total	25.0	67.3	26.3	225.4

Development of operating results

Liquidity reserve & net interest-bearing debt