Investor Presentation. September 2015

Transcription

1 Investor Presentation September 2015

2 Forward looking statements 1

3 Euronav Largest independent quoted tanker company in world IEA forecast 1.6m bpd growth 2015 & 2016; base case of 1m bpd Lower oil price has stimulated demand Demand non-oecd now > OECD Base demand for 1m bpd demand for VLCCs Demand for Oil Vessel Supply Additional increase but limited by historical standards Order book at 17% of VLCC fleet & 15% of Suezmax fleet all time low was 13% Financing of newbuilds much reduced since 2009 Negligible conversions of other vessels into large tankers OPEC retaining output target of 30m barrels per day Potential for Iran to return to production / pre-sanctions USA shale production intact since oil price fall Russia, North Sea, West Africa, - all at record output into Atlantic Supply of Oil Ton miles Dynamic new trading lanes being formed USA shale reducing need for imports pushing Atlanctic to be long oil China and India diversifying suppliers Potential for lift of USA crude ban could add further positive dynamic Current Fleet 27 VLCC 23 SUEZMAX 1 VPLUS 2 FSO + 4 (TBD) 125, ,000 DWT Over 441,000 DWT Stripped water capacity Up to 320,000 DWT Only 4 in world fleet 380k barrels 2 Million barrels 1 Million barrels 3 Million barrels 2.8 Million barrels Average age 6 years Average age 10 years Average age 12 years Average age 12 years 2

4 Potential for Powerful Cash Generation Euronav is well positioned for strong cash flow generation Breakeven (including debt service): ~$27,000 for VLCC - opex $8,000 ~$22,000 for Suezmax - opex $7,400 FSOs generate a consistent, high quality income stream $52mm of EBITDA Return to shareholders policy to return at least 80% of net income (P&L definition) Pro forma fleet earnings capability (EBITDA, $M) 1 Next 12 months spot days exposure ~ 14,500 days $264 $339 +$5,000 per day $493 +$15,000 per day $650 +$25,000 per day $1,092 +$55,000 per day VLCC $25,000 TCE rates $30,000 $40,000 $50,000 $80,000 Suezmax $20,000 TCE rates $25,000 $35,000 $45,000 $75,000 Each $5,000 uplift in both VLCC and Suezmax rates improves net revenue and EBITDA by $75mm 1 Based on full year contribution of 57 ships on proportionate basis 3

5 1 Demand 1m bpd = demand for VLCCs pa Demand for Oil has ALWAYS been robust Lower Oil Price can reverse 7 years demand destruction Source: Citi Demand consistently upgraded during ,200 1, Refinery expansion in Asia & Middle East a key driver $80 $490/t Asia Pacific Middle East Current Market $60 Asia Pacific 3.5m bpd $300/t Bunker $4900/t Middle East 1.4m bpd Source: Deutsche Bank

6 2 Vessel Supply VLCC & Suezmax order book is moderate Source: Clarksons + Poten 5

7 ..but financing more difficult now and order book manageable New era of financing restrictive Source: Clarksons Hamburg Marine Money *up to Nov 2014 Order book as % of fleet manageable Order book assessment not as strong as first looks Traditional Captive fleet Private equity Unknown* Total Ownership Shipping (China, Saudi etc) Q Q Q Total Q Q Q Q "2016" Total Crkn Est Deliver Q Q Q Q "2017" Total Grand Total Source: Clarksons August 27th

8 3 - Supply of Oil = more cargoes = more demand for shipping Historically VLCC rates close correlation with Output OPEC also continues to grow Source: Gibsons Source: IEA & Bernstein Non OPEC output continues to grow More cargoes Atlantic > East on VLCC Source: Mcquilling 7

9 4 - Structural expansion - Increased ton miles given trade shifts New order being established in transportation routes USA no longer importing light crude but heavy crude imports from Middle East remain intact 4 Arabian Gulf to China 5,500 miles West Africa to USA 5,000 miles West Africa to China 9,650 miles Latam to China 11,500 miles 21 days 19 days 33 days 44 days Middle East no additional exports as own production to feed their local refinery expansion 2 WAF (West Africa) light crude trade lane to USA dried up now export to Asia 5 Atlantic = long crude from Latam, Russia, North Sea, WAF ALL going East Latam to Far East - trade lane expanding 3 6 Asian Demand to remain strong underpinned by China refinery expansion & filling strategic reserve 8

10 5 China demand robust with structural support China important but demand now diversified China Oil demand always been steady not spectacular China Oil Demand YoY growth (mbpd) YoY growth (%) 16.1% 3.1% 7.5% 5.6% 2.3% 1.9% 13.6% 4.2% Source: IEA & Bernstein Drivers for growth SPR & refinery reform e 2016e 2017e 2018e China Oil Demand YoY growth (mbpd) YoY growth (%) 4.3% 3.5% 4.3% 3.0% 2.7% 2.7% 2.7% Source: ABG Base effect: 14% GDP growth 07 < 5% 15 GDP growth 9

11 6 - Other factors Iran, asset/earnings correlation, contango Iranian fleet re-admittance to global fleet neutral impact 17 VLCCs trading during sanctions to China, Turkey, India, Taiwan Syria, S Korea & Japan 4 x 2013, 4 x 2012, 6 x x 2007, 2 x VLCCs been on storage 3x 2013, 1 x 2012, 2 x x VLCCs been on storage near 3rd special survey 5 x 2003, 3 x VLCCs full time storage vintage Iranian VLCC fleet total 40 Only net 15 VLCCs likely to re-enter global commercial fleet Source: citi Earnings & Asset price relationship - dislocated Contango persisted for months in previous cycles Contango in 2015 rising again Source: UBS Source: Bloomberg 10

12 What does it all mean? Tanker sector will remain volatile VLCC & Suezmax Freight rates from Average VLCC c built Earnings $/Day Average VLCC c built Earnings $/Day Average Suezmax c built Earnings $/Day Average Suezmax c built Earnings $/Day Source: Clarksons to 11 Setp

13 What does it all mean? Sustained growth for large tankers to 2020 Demand IEA forecasts 1.6m bpd 2015 & m bpd currently equates to demand for around VLCCs depending on trade route China, India economic & Middle East/Asia refinery build out underpin growth outlook Lower Oil price has stimulated demand YTD Likely demand for VLCCs pa to 2020 Vessel Supply Order book has grown YTD but remains manageable given medium-term growth outlook Financing of fleet expansion challenged post financial crisis reducing potential order flow Order book analysis suggests more limited impact Supply capped at 50 VLCC pa; likely to be 30 pa to 2020 Supply of Oil Lack of global production disruption and USA shale response to lower prices driving record output Atlantic Basin flows from Latam, Russia, West Africa all heading East positive for ton miles More Oil = More cargoes Likely to drive additional tonnage requirement 2015/16 12

14 Company overview

15 Chartering strategy successful now and in past - upside leverage Chartering strategy seeks to maximize returns through optimal mix of spot and fixed charters Deliberately positioned itself toward more spot exposure at this stage of the cycle Look to maximize earnings through combining high-quality assets and directly employed crews in storage opportunities for both short term and long-term (FSO) contracts Fixed / Spot Exposure (Year end 2004) Fixed / Spot Exposure (Year end 2008) Fixed / Spot Exposure (Jan 2015) Fixed / Spot Exposure (Aug 2015) Fixed 17% 43% 57% 18% 25% Spot 83% 82% 75% Chartering strategy allows Euronav to capitalize on increasing rate environment 14

16 Maximizing value through size Tankers International Pool Overview of the Tankers International Pool Fragmented Global VLCC Fleet Top 10 owners Source: Total 644 ships August Only owners pool for VLCCs a cost center No value leakage; no commissions Leading spot market oriented VLCC pool in which ship owners with vessels of similar sizes and quality participate Innovation platform (VL Database, TI Pool App) VLCC Chartering undertaking leadership role 15

17 FSO Offshore market Opportunistic capability Floating storage and offloading units ( FSOs ) market overview In 2008, Euronav undertook conversions of 2 ULCC into the largest 2 FSOs in the world Fixed income service contract in Qatar delivering $52mm EBITDA annually until 2017 Vessel Life expectancy extended to 2032; contract in place to 2017 tender for field operation just released Potential for contract extension given 100% uptime under Euronav stewardship 16

18 Euronav substantial increase in liquidity 17

19 Potential disruptive factors China - slowdown Iran Slow steaming (hidden capacity) Slowdown is relative base effect on absolute numbers is key Strategic crude stockpile to grow 2015/2016 Refinery plans in China well advanced & teapot reforms started Part of fleet been trading with Far East during sanctions period Production ramp up uncertain but more supply could hit oil price Overall impact limited - insurance of Iranian vessels unclear Recent speeding up partially responsible for market softness Ballast legs seen most increase Short term issue of congestion partially offset impact Yard Capacity Limited amount of yards building VLCC (11) /Suezmax (15-20) Financing landscape has changed post financial crisis Oil price increase Other OPEC production cut could drive oil price higher Shale production stable above $40 per barrel Instability in specific oil producing states cuts output Worldwide shale development unlikely outside of USA OPEC output cut / Middle East reduce exports USA Export ban repeal likelihood raised = positive for tankers 18

20 Current trading - What happened in August? June & July - exceptionally strong more so than usual Speeding up some speeding up to meet cargoes given cheap bunkers Owners little/no negotiation or analysis during month Spot activity reduced charterers took more vessels on TC to use on own programmes Re-let activity stronger than normal put downward pressure on rates 19

21 Euronav largest, independent crude tanker company in the world BALANCE SHEET strengthened and simplified with over $3bn modern fleet; leverage sub 50%* CYCLE Euronav well placed with over 75% spot exposure & strong management team LIQUIDITY long term strategic goal achieved number of shares trading > $20m p/day RETURN TO SHAREHOLDERS Return at least 80% of net income each fiscal year CURRENT TRADING 1H 2015 EBITDA $273.6m Net Income $ 173.3m (1H: dividend 87c per share) * Post 4 VLCC acquisition June

22 Appendix

23 Appendix - VLCC order book today & recent progression Source: Clarksons + Poten 22

24 Appendix - Suezmax order book today & recent progression Source: Clarksons + Poten 23