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Saipem

Investor Presentation • Mar 6, 2018

4504_ip_2018-03-06_a994cee2-d2a8-4cdc-b525-e224957f8f42.pdf

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2017 RESULTS AND STRATEGY UPDATEPRESENTATION

6 March 2018

FORWARD-LOOKING STATEMENTS

Forward-looking statements contained in this presentation regrading future events and future results are based on current expectations, estimates, forecasts and projections about the industries in which Saipem S.p.A. (the "Company") operates, as well as the beliefs and assumptions of the Company's management.

These forward-looking statements are only predictions and are subject to known and unknown risks, uncertainties, assumptions and other factors beyond the Company' control that are difficult to predict because they relate to events and depend on circumstances that will occur in the future. These include, but are not limited to: forex and interest rate fluctuations, commodity price volatility, credit and liquidity risks, HSE risks, the levels of capital expenditure in the oil and gas industry and other sectors, political instability in areas where the Group operates, actions by competitors, success of commercial transactions, risks associated with the execution of projects (including ongoing investment projects), in addition to changes in stakeholders' expectations and other changes affecting business conditions.

Therefore, the Company's actual results may differ materially and adversely from those expressed or implied in any forward-looking statements. They are neither statements of historical fact nor guarantees of future performance. The Company therefore caution against relying on any of these forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, economic conditions globally, the impact of competition, political and economic developments in the countries in which the Company operates, and regulatory developments in Italy and internationally. Any forward-looking statements made by or on behalf of the Company speak only as of the date they are made. The Company undertakes no obligation to update any forward-looking statements to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. Accordingly, readers should not place undue reliance on forward-looking statements due to the inherent uncertainty therein.

The Financial Reports contain analyses of some of the aforementioned risks.

Forward-looking statements neither represent nor can be considered as estimates for legal, accounting, fiscal or investment purposes. Forward-looking statements are not intended to provide assurances and/or solicit investment.

TODAY'S PRESENTATION

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2017: READY FOR THE FUTURE

FY 2017 performance:

  • E&C Offshore sound margins underpinned by cornerstone projects
  • •Volumes softening in 4Q17 mainly due to shift of activities to 2018
  • E&C Onshore profitability recovery on track, excluding LPG arbitration
  • Drilling Offshore resilient margins backed by long term contracts
  • High utilisation in Drilling Onshore outside South America

Strong 4Q awards of €2.4bn and €12.4bn year-end backlog

Net Debt reduced to €1.3bn

Settlement in Algeria reopens a strategic market

Strategy Update:

  • Divisional reorganisation fully implemented
  • Focus on core business: disposal of maritime works business
  • Continued de-risking

2018 Guidance

FY 2017 RESULTS

As disclosed to the market by Saipem with a press release dated March 5, 2018 (available on the Company's website in the "Media - Press Release" section), Consob declared with resolution no. 20324 of 2 March 2018 (the "Resolution") the "noncompliance of Saipem's 2016 consolidated and statutory financial statements with the rules governing their preparation", as stated by Saipem in the aforementioned press release of March 5, 2018 to which complete reference is made.

The Board of Directors of Saipem, in disagreement with the Resolution of Consob, resolved on March 5, 2018 to propose an appeal against it in the competent judicial offices.

FY 2017 RESULTSYoY COMPARISON (€ mn)

7

FY 2017 RESULTS – E&CYoY COMPARISON (€ mn)

Highlights

  • •Healthy margins sustained by good execution
  • •Shift of activities into 2018 affecting 4Q volumes

FY 2017 RESULTS – Drilling YoY COMPARISON (€ mn)

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Highlights

  • •Rig idleness affecting volumes
  • •Resilient margins backed by LT contracts and cost savings

Highlights

  • •Continued weakness in Latin America
  • •Lower rates and start up costs reducing margins

FY 2017 NET RESULT

RECONCILIATION BETWEEN ADJUSTED AND REPORTED (€ mn)

Net Result

10

FY 2017 RESULTS - FROM EBITDA Adjusted TO NET RESULT

FY 2017 NET DEBT EVOLUTION (€ bn)

Net Debt target met despite non-recurring items

12

CAPITAL STRUCTURE AS OF DECEMBER 31, 2017 (€ mn)

  • New €500mn Eurobond issued in 4Q'17 with maturity January 2025 Term Loan fully pre-paid
  • Average debt maturity extended to 4.3 years. Overall financing interest rate c.4% including treasury hedging
  • Undrawn committed cash facilities totalling c.€1.8bn, in addition to c.€0.3bn of uncommitted facilities
  • Available cash and equivalent c. €1.4bn**

(*) Committed

(**) Not including additional trapped cash c.€0.5bn

NEW IFRS – IMPACT RESTRICTED TO IFRS16

IFRS 15 – REVENUE RECOGNITION and IFRS 9 – FINANCIAL INSTRUMENTS FROM JANUARY 1, 2018

•No material impact

IFRS 16 –LEASE ACCOUNTING

FROM JANUARY 1, 2019

  • •Asset "Right-of-Use" in capital employed and depreciated (D&A)
  • •Lease obligations increasing net debt

  • •Financial charges applied over lease debt

  • Very preliminary estimates

  • Increase of financial debt estimated ranging from €650mn to €800mn, depending upon contractual options
  • Increase of EBITDA estimated by c.€100mn, mostly in E&C Offshore

FEATURES

IMPACTS

GROUP STRATEGY UPDATEAND BACKLOG

MARKET OUTLOOK

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UNBILLED REVENUES AND ARBITRATIONS/COURT DISPUTES(€ bn)

  • SONATRACH FINAL SETTLEMENT ON 14 FEBRUARY, 2018
  • REMAINING ONGOING ARBITRATIONS/COURT DISPUTES IN AUSTRALIA, CANADA , RUSSIA, ALGERIA

FFF2.0 – OPTIMISATION PROGRAMME

NEW DIVISIONAL INITIATIVES INCREASING TARGET SAVINGS TO €150mn

NEW DIVISIONAL INITIATIVES INCREASING YEARLY SAVINGS TO c. €40mn**

  • South America right-sizing
  • Vessels performance improvement program
  • Corporate optimization

(*) Including €15mn in 2016 and residual costs related to 2020

(**) Including €10mn from vessel scrapping in 1H 2017

FY 2017 BACKLOG(€ mn)

(*) Net of impacts from disposal of Maritime Works for €256mn

BACKLOG BY YEAR OF EXECUTION (€ mn)

23

DIVISIONS

XSIGHT

WE BRING ABOUT OUR CLIENTS' VISION, INSIGHTFULLY

  • ENGAGEEPCI EXPERIENCE IN EARLY PHASE DEFINITION
  • DISRUPTTRADITIONAL LESS EFFICIENT PROCESSES AND SOLUTIONS

  • INNOVATEALONG THE ENTIRE LIFE OF THE ASSET

  • EPCI COMPETENCES REASSEMBLED UNDER A NEW EFFICIENT OPERATING MODEL

  • TECHNOLOGIES AND SERVICES SYNERGIC DEVELOPMENT
  • FOCUS ON EFFICIENCY OF EXECUTION AND VALUE CREATION

PRODUCTS AND SERVICES

BALANCED PORTFOLIO OF PRODUCTS AND SERVICES:

  • •30 different clients
  • •Over 50 ongoing projects

Breakdown of activities by product

  • High Tech Floater
  • Offshore Full FieldDevelopment Upstream and LNG
  • Refinery
  • Petrochemical
  • Syngas and Fertilizer

  • Green Technology and Renewable

  • INTEGRATE TECHNOLOGY INNOVATION WITH PROCESS KNOW HOW

  • LEVERAGE ON XDIM™ COLLABORATIVE PLATFORM TO INCREASE EFFICIENCY AND INTEGRATE TECHNOLOGY
  • EXPANSION TO NEW COUNTRIES TO ENLARGE CLIENT PROXIMITY

DIVISIONSE&C ONSHORE

E&C ONSHORE - MAIN ONGOING PROJECTS

(*) E&P works started based on a Limited Notice to Proceed

E&C ONSHORE - RECENT AWARDS

Hawiyah Gas Plant (HGP) expansion Project –Saudi Arabia AWARD

  • Client: Saudi Aramco
  • Location: Saudi Arabia
  • Scope of work: EPC (brownfield + greenfield) of new gas processing facilities at the Hawiyah Gas Plant to process 1070 MMSCFD of raw gas
  • Highlights:
  • Long term relationship. 3 projects ongoing for Saudi Aramco

  • Local content maximized to support IKTVA (In Kingdom Total Value Added) programme of Saudi Aramco

  • Client: Pemex

  • Location: Mexico
  • Scope of work: EPC, commissioning and start-up of total 9 units for the "General Lazaro Cardenas", the "Francesco I" and "Miguel Hidalgo" refineries.
  • Highlights:
  • Maintenance and modernization in downstreambusiness

  • Consolidated Client for Saipem Onshore E&C

  • Client: Duqm Refinery and Petrochemical Industries Company L.L.C

  • Location: Oman
  • Scope of work: EPC works for a new grassroots Crude Tank Farm at Ras Markaz composed by 8 crude oil tanks with a cumulative volume of 824,000 m3.
  • Highlights:
  • First project launched by Client, a JV between the Oman Oil Company (OOC), the national oil company, and Kuwait Petroleum International (KPI).
  • Project executed in Consortium with CB&I Europe BV.

E&C ONSHORE - OPPORTUNITIES

E&C ONSHORE - FUTURE GOALS AND ACTIONS

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DIVISIONSE&C OFFSHORE

E&C OFFSHORE - MAIN ONGOING PROJECTS

E&C OFFSHORE – ZOHR: A FIRST TIME EVER A NEW WIN-WIN MODEL

A challenging recipe….

… tackled with Saipem ingredients

  • •Demanding Technical Requirements
  • •Tight Schedule

  • • Involvement of a Large Specialised Naval Spread

  • Fast Track Shared Approach

  • Early Engagement and Integrated Team Work
  • Optimised Vessels Utilisation
  • Local Content Environment as Enabler
  • Technical and Technological Solutions

E&C OFFSHORE – 4Q 2017 AWARDS

Manifa Water Injection System Upgrade – Saudi Arabia

  • Client: Saudi Aramcounder Saudi Aramco LTA Developments
  • Location: Arabian Gulf
  • Scope of work: Engineering, Procurement and Construction of a new offshore pipeline replacing the existing one and other activities
  • Main Saipem Vessels to be utilized: Castoro II

West Hub Vandumbu - Angola

  • Client: Eni
  • Location: Angolan waters, 350 km north west of Luanda
  • Scope of work: Engineering, Procurement, Construction and Installation required for the development of the Vandumbu subsea field
  • Main Saipem Vessels to be utilized: Saipem FDS
  • Project Highlights
  • •Deepwater depths up to to 1500 metres
  • •Realisation of two production pipelines made of special material

E&C OFFSHORE - OPPORTUNITIES

E&C OFFSHORE – STRATEGIC TECHNOLOGY TARGETS

INNOVATION for GLOBAL SOLUTIONS STRATEGIC MARKETS ASSETS DIVERSIFIEDOFFERINGNew field architectures by extending subsea services Enhancing efficiency through process & equipment innovation Offshore WindfarmsLate Asset Management and Decommissioning HEATED PiPLong Tie-Backs SPRINGS® Seabed Processing Life Of Field ServicesNew Welding and Testing Processes MaterialsNew IstallationEquipment and Methods TECHNOLOGYHYDRONEPLASMA WELD.PLASTIC LINEDANTIFLOODING

DIVISIONSOFFSHORE DRILLING

OFFSHORE DRILLING - RECENT AWARDS

4Q 2017 awards

Scarabeo 8 – North Sea Norwegian sector

  • Client: Shell
  • Location: offshore Norway
  • Terms: one well plus one well option with start in June '18

Perro Negro 8 – Arabian Gulf

  • Client: ADNOC - NDC
  • Location: offshore UAE
  • Terms: 10 months activity (started end December '17)

1Q 2018 awards Scarabeo 8 – North Sea Norwegian sector

  • Client: Shell
  • Location: offshore Norway
  • Terms: option for second well exercised

Saipem TAD - Congo

  • Client: Total
  • Location: offshore Congo
  • Terms: 5 firm wells (started in early February '18) + up to 5 optional wells

OFFSHORE DRILLING - FLEET CONTRACTS

*ON STACKING MODE - TOTALLY WRITTEN OFF

OFFSHORE DRILLING – FLEET IMPROVEMENT

  • Modification of Scarabeo 9 allowing to cross the Bosphorus and access new market

  • Saipem 12000 with 2nd BOP: fully aligned to latest requirements

  • Application of new digital solutions undergoing:

  • Smart rig (digital rig, smart maintenance)
  • Virtual rig (training)
  • Smart HSE

Scarabeo 8 digital twin well undergoing, assessment ongoing on rest of the fleet

OFFSHORE DRILLING– STRATEGY UPDATE

  • Focus on clients base expansion
  • From long-term model to short-term commitments
  • Further improvement of efficiency: operations, supply chain, assets integrity, digitalization
  • Plug&Abandonment and drilling integrated services
  • Evaluation of possible partnerships

DIVISIONSONSHORE DRILLING

UPDATE ON ONSHORE DRILLING FLEET

ONSHORE FLEET @ Dec. 31, 2017: 84 RIGS*

ONSHORE DRILLING - FOCUS ON LATIN AMERICA RIGHT-SIZEDERISKED & LEANER OPERATIONS READY TO CAPTURE MARKET UPSWING

Strategy

  • •Hold/grow select Countries
  • •Derisk and decentralize
  • •Branch increased autonomy

Fit for the future + «Bullet train»

  • •Right-size the business
  • •Cost Structure Optimization
  • •Logistic optimization

ONSHORE DRILLING - STRATEGY UPDATE

CLOSING REMARKS AND 2018 GUIDANCE

NEW SAIPEM GROUP STRATEGY BY DIVISION

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2018 GUIDANCE

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2017: READY FOR THE FUTURE

2017 ROBUST PERFORMANCE IN A STILL CHALLENGING ENVIRONMENT

STRENGTHENED FINANCIAL PROFILE

ENHANCED ACCOUNTABILITY OF DIVISIONS, NEW BUSINESS OPPORTUNITIES AND FURTHER COST EFFICIENCY

REGAINED ACCESS TO ALGERIAN MARKET

2018 GUIDANCE BACKED BY OPERATIONAL EFFICIENCY AND BACKLOG

APPENDIX

4Q 2017 RESULTS QoQ TREND (€ mn)

4Q 2017 RESULTS – E&C QoQ TREND (€ mn)

4Q 2017 RESULTS – Drilling QoQ TREND (€ mn)

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