AGM Presentation Paddy Rodgers, CEO May 2016 1 Forward Looking - - PowerPoint PPT Presentation

AGM Presentation

Paddy Rodgers, CEO May 2016

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Forward Looking Statements

Matters discussed in this presentation may constitute forward-looking statements under U.S. federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect the Company’s current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and

• ther statements, which are other than statements of historical facts. All statements, other than statements of

historical facts, that address activities, events or developments that the Company expects, projects, believes or anticipates will or may occur in the future, including, without limitation, the delivery of vessels, the outlook for tanker shipping rates, general industry conditions future operating results of the Company’s vessels, capital expenditures, expansion and growth opportunities, bank borrowings, financing activities and other such matters, are forward-looking statements. Although the Company believes that its expectations stated in this presentation are based on reasonable assumptions, actual results may differ from those projected in the forward-looking

• statements. Important factors that, in our view, could cause actual results to differ materially from

those discussed in the forward-looking statements include the failure of counterparties to fully perform their obligations to us, the strength of the world economies and currencies, general market conditions, including changes in tanker vessel charter hire rates and vessel values, changes in demand for tankers, changes in our vessel operating expenses, including dry-docking, crewing and insurance costs, or actions taken by regulatory authorities, ability of customers of our pools to perform their obligations under charter contracts on a timely basis, potential liability from future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists. We undertake no obligation to publicly update or revise any forward looking statement contained in this presentation, whether as a result of new information, future events or

• therwise, except as required by law. In light of the risks, uncertainties and assumptions, the forward looking

events discussed in this presentation might not occur, and our actual results could differ materially from those anticipated in these forward-looking statements.

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Section 1

Euronav at a Glance

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2015 – Strong year for Euronav and our shareholders

BEST YEAR SI NCE 2 0 0 8 - DELI VERED

Consistently strong rate environm ent during 2 0 1 5 Robust m arket fundam entals continued into 2 0 1 6

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STRATEGI C OBJECTI VES – DELI VERED

Substantial increase in share liquidity achieved Listing in New York provides platform for future grow th

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DI VI DEND – COMMI TMENT DELI VERED

Policy to return 8 0 % net incom e* * - delivered May 2 0 1 5 : $ 0 .2 5 Sept 2 0 1 6 : $ 0 .6 7 May 2 0 1 6 : $ 0 .8 2

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ACTI VE PORTFOLI O MANAGEMENT

Profit sale of older tonnage ( Antarctica, Cap Laurent, Fam enne) Fleet renew al - 4 VLCCs bought sum m er 2 0 1 5 *

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In USD

Q1 Q2 Q3 Q4 Full Year EBI TDA 131.3 142.3 127.9 160.6 562.2 Net I ncom e 80.9 92.4 72.2 104.7 350.1 EPS 0.508 0.580 0.454 0.658 2.199

* Will all be delivered in May 2016. * * Pre capital gains.

• EBI TDA: USD 1 6 4 m – with year on year freight rate growth
• Rate volatility high but reflects strong and tight freight m arket
• Sale of Fam enne for $ 1 3 .8 m capital gain
• Outlook

Q2 VLCC so far:

• 4 3 % fixed at more than USD 59,000 per day

Q2 Suezm ax so far:

• Nearly 4 2 % fixed at more than USD 32,500 per day

* Including profit share where applicable * * Excluding technical offhire

In USD per day First quarter 2 0 1 6 First quarter 2 0 1 5 VLCC Average spot rate (in TI pool)* 60,638 50,845 Average time charter rate* * 40,847 44,547 SUEZMAX Average spot rate* 38,386 41,944 Average time-charter rate* * 32,251 41,593

Q1 2016 Highlights

Euronav – Largest Tanker Company in the World

W ELL POSI TI ONED FOR STRONG CASH FLOW GENERATI ON

Breakeven ( including debt service) :

~ USD 2 7 ,3 0 0 / day for VLCC – OpEx / day USD 8 ,1 6 5 ~ USD 2 4 ,0 0 0 / day for Suezmax – OpEx / day USD 7 ,5 2 0

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3 MM barrels

• Avg. age 12 years

2.8 MM barrels

• Avg. age 12 years

30 VLCC

Up to 330,000 DWT

2MM barrels

• Avg. age 6 years

1MM barrels

• Avg. age 10 years

22 SUEZMAX

150,000 – 165,000 DWT

1 V – PLUS

Over 441,000 DWT

2 FSO

Stripped water capacity 380k barrels CURRENT FLEET – TOTAL 5 5 VESSELS – 1 3 .1 MM DW T Only 2 in world fleet W HO W E ARE Leading pure-play tanker company with best-in-class operating platform Committed to shareholder long-term value creation… Strong balance sheet Most liquid big tanker player in the world … with significant direct return to shareholders

Fixed I ncom e > USD 1 0 0 m illion of EBITDA (1) generated annually from fixed income contracts (FSO + TC contracts)

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Spot I ncom e - High Leverage to Upside Each USD 5 ,0 0 0 uplift (above break-even) in both VLCC and Suezmax rates improves net revenue and EBITDA by USD 7 2 m illion

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Returns to Shareholders Return 8 0 % of net income to shareholders (2)

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1. Proportionate consolidation method 2. P&L definition excluding exceptional items such as gains on disposal of assets

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Euronav – Exposed to Structural Growth in Demand for Oil

Europe U.S. West Africa Middle East Asia Pacific 24 – 26 VLCCs 22 – 24 VLCCs 29 – 32 VLCCs 52 – 54 VLCCs 48 – 50 VLCCs 48 – 50 VLCCs 1 .2 m bpd x 3 6 5 days = 4 4 0 m barrels 4 4 0 m barrels / 2 m capacity per VLCC = 2 2 0 cargoes 2 2 0 cargoes / 4 .5 annual journeys for VLCC ( 1 ) = 4 9 VLCCs I NCREMENTAL VLCC DEMAND FOR 1 .2 MBPD ADDI TI ONAL EXPORTS = 3 6 – 4 9 VLCC PER YEAR

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W HAT W E DO

I m porter Exporter

Supply Demand Demand Supply

Russia China LatAm / Caribs

Euronav - Most Liquid Big Tanker Player

Source Bloomberg based on Exchange volumes

LI QUI DI TY GI VES SHAREHOLDERS OPTI ONALI TY

More Trading Hours

Euronext Brussels: 9 a.m. – 5. 30 p.m. (CET) NYSE: 9.30 a.m. – 4 p.m. (EST)

Average daily volume shares = 1 .3 8 m m shares per day

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Ticker Symbol: EURN Average daily volume USD = USD 2 0 m m per day Velocity = 3 3 4 % * Free float = 8 5 %

* Calculation method = daily volume x trading days / free float

TOTAL TRADED VALUE OF EURONAV US AND BB SHARES ( SAME SHARE) - EURN US EQUI TY & EURN BB EQUI TY

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Feb 15 Mar 15 Apr 15 May 15 Jun 15 Jul 15 Aug 15 Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 EURN US EURN BB

Section 2

Current Industry Dynamics

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Demand for Oil ROBUST

• Oil demand growing

last 25 years

• Yearly average 1.1

mbpd

• IEA forecast 1.2m bpd

EVERY year to 2020

• 1.2 m bpd oil demand

growth = for 30-40 VLCCs

Supply of Oil

EXCESS

• Market share strategy
• USA production shale:

very resilient & responsive

• Iran increase of 900k

bpd

Supply of Vessels

MANAGEABLE

• Natural replacement

cycle of 5% p.a.

• Order book largely

industrial not speculative

• Order velocity

substantially fallen since Q3 2015

Ton Miles

BALANCED

• Trade lines established

from production in West to consumption in East

• Ton miles a dynamic

function in tankers

• Chinese imports

diversification

• USA crude exports to

increase ton miles

Financing

NEW BARRI ER TO ENTRY

• New regulations

(Basel 2&3) restricting lending

• Distress in shipping

loans has reduced risk appetite

• Shipyards under

pressure to reform

Oil Tankers – Five Key Drivers

1 2 3 4 5

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Oil Price – Impact on Demand

10 20 30 40 50 60 70 80 90 100 110

Lack of disruption/ market share game Iran and other supply remain high Shale - as swing producer increases

• utput

Capex cuts in E&P Potential coordinated cuts in production QE returns/ $ loss of value/ oil as financial asset Dem and Destructive 2 0 0 9 - 2 0 1 4 proved in this oil price range that dem and w as destroyed Neutral Dem and Stim ulating proven over time that the cheaper the commodity price the greater it is used Dem and Disruptive Current structure of global markets mean energy/ capex/ sovereign wealth effects > consumer stimulus from lower oil prices OI L PRI CE OUTLOOK ( I LLUSTRATI ON)

11 Demand for Oil

1

0.6 2.5 3.0 3.1 3.3 3.5 4.4 4.6 5.0 5.7

Oil Supply = High but Production Cuts Unlikely

OI L SUPPLY – SHALE PROVI NG TO BE VERY RESI LI ENT W HO I S GOI NG TO MATERI ALLY CUT? NEED CO-ORDI NATI ON BETW EEN THE TOP 1 0 PRODUCERS = 6 0 % W ORLD SUPPLY SHALE OI L SPEED TO PRODUCTI ON I S KEY OPEC QUOTAS? … OPEC HAS NEVER COMPLI ED W I TH QUOTAS

Supply of Oil

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Average field development (approval to start up) time by resource [ years, selected areas]

Source SBC Analysis, Rystad

USA 12.8* Russia 11.1 Saudi Arabia 10.2 Canada 4.5 China 4.4 Iraq 4.3 UAE 2.9 Iran 2.9 FSU ex Russia 2.9 Kuwait 2.8

m illion barrels per day 500 1000 1500 2000 2500 3000 3500 4000 400 600 800 1000 1200 1400 1600 1800 2011 2012 2013 2014 2015 Thousands of barrels per day Num ber of oil rigs Baker Hughes crude oil rig count North Dakota crude oil production Texas crude oil production

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* includes bio fuel

Source IEA November 2015

Order Book Dynamics – Structure - VLCC

54 62 49 30 24 23 45 45 30

• 48
• 25
• 13
• 22
• 11
• 1
• 5
• 8
• 7
• 16
• 8
• 10
• 60
• 40
• 20

20 40 60 2010 2011 2012 2013 2014 2015 2016 2017 2018

Could be scrapped (≥20 years old) depending on market levels Must be scrapped (over 22,5 years old) Scrapped Forecast Additions Additions

Net:1 3

Q1= 9 Q2= 9 Q3= 8 Q4 = 1 9 Q1= 12 Q2= 4 Q3= 4 Q4= 25 Q1 = 1 0 Q2= 5 Q3= 5 Q4 = 1 0

Net:6 Net:4 0 Net:8 Net:2 2 Net:3 7 Net:3 6 Net:3 7 Net:2 3

VLCC – ADDI TI ONS, SCRAPPI NG, REMOVALS  I MPLI ED BUFFER

Supply of Vessels

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BASE CASE

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HUGE REDUCTI ON I N SHI PPI NG BANK EXPOSURE

Around USD 70bn withdrawn from shipping sector since 2008

REGULATI ONS FORCE LEVERAGE DOW N

• Banks lending

flexibility severely curtailed due to Basel II & III

• Shipping & Energy

loans in distress

• Quantum of available

lending capital restricted for commercial reasons

PRI VATE EQUI TY I N RETREAT

• PE exiting shipping
• PE been surprised by

the lack of liquidity implying a return to the sector as difficult to realize

SHI P OW NERS UNDER PRESSURE

• Other shipping

segments: Dry Bulk, Offshore, Container under severe financial pressure

• Most tanker owners

have mixed fleets so pressure felt within

• wnership structure

SHI PYARD PRESSURE TO RESTRUCTURE & REDUCE CAPACI TY

• Low order books in all

shipping segments leading to ship yard distress

• Reforms being

actively adopted by shipyards driven by governments

Increasing Barriers to Entry

Financing

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Bank ( USD bn) 2 0 0 8 2 0 1 4 HSH Nordbank 58 25.5 Deutsche Schiffsbank/ Commerzbank 44.8 14.7 RBS 30 12 Lloyds/ HBOS 12.2 HVB/ UniCredit 11.2 5.7 Source Marine Money + Deutsche Bank

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Section 3

Our Strategy

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Maximizing Value Through Information

Other VLCC Tanker Pools ( Ships on the W ater)

• Tankers International = Only owner-led VLCC pool
• No value leakage; no commissions  Cost center
• Leading spot market oriented VLCC pool in which ship owners

with vessels of similar sizes and quality participate

• Spreading information (VL Database, TI Pool App)

Source: Clarkson’s – Total 665 VLCC ships @ 28 April 2016 Source: Company reports

Red indicates Captive or Sovereign fleet Blue indicates fleet in stock listed companies

VLCC Chartering Undertaking Leadership Role

Differentiate spot players vs industrial players

SI ZE I S CRI TI CAL TO I MPROVE MARKET KNOW LEDGE BARRI ER TO ENTRY – I NFORMATI ON

Heidm ar – VLCC Seaw olf

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Navig8 – VL8

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China VLCC

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1 Ship Owner, 37 Vessels 2 Ship Owner, 52 3 Ship Owner, 27 10 – 15 Ship Owner, 103 COSCO Group, 32 4 – 10 Ship Owner, 154 SK Holdings, 18 NYK, 21 Fredriksen Group, 25 Euronav NV, 28 Angelicoussis Group, 30 Bahri, 34 MOL, 32 China Merchants Grp, 35 NIOC, 37

Top 1 0 Ow ners Control 4 4 %

• f Global

VLCC Fleet

53 37 16

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Small owners are data deficient (267 VLCCs)

Capital allocation strategy

CAPI TAL ALLOCATI ON

Capex Liquidity reserve M&A criteria – balance sheet M&A – operational Shareholder Returns

• Approximately USD 20 million

maintenance capex (Drydocks)

• $130m outstanding capex on 2 VLCC

to be delivered in 1H16 – fully funded

• Retain min TWO years of
• perational liquidity at all times
• Maintain strong banking

relationships

• Will never issue

non-accretive new equity

• Additional vessels

must on pro-forma basis either match

• r reduce break

even costs

• Distribute regularly excess cash to

shareholders

2 3

Strong balance sheet Leverage

• Maintain strong balance sheet

through cycle

• Target 30% to 50% leverage

according to where we are in the cycle

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Euronav Positioned for Powerful Cash Generation

Notes: 1. Based on full year contribution of 57 ships on proportionate basis’ 2. Proportionate consolidation method 3. P&L definition excluding exceptional items such as capital gains on disposal of vessels

W ELL POSI TI ONED FOR STRONG CASH FLOW GENERATI ON

Returns to Shareholders Return 8 0 % of net income to shareholders (3) Fixed I ncom e > USD 1 0 0 m illion of EBITDA (2) generated annually from fixed income contracts (FSO + TC contracts) Breakeven ( including debt service) :

~ USD 2 7 ,3 0 0 / day for VLCC – OpEx / day USD 8 ,1 6 5 ~ USD 2 4 ,0 0 0 / day for Suezmax – OpEx / day USD 7 ,5 2 0

264 339 493 650 1,092

500 1,000 1,500 + $5,000 per day + $15,000 per day + $25,000 per day + $55,000 per day

Each USD 5 ,0 0 0 uplift ( above breakeven) in both VLCC and Suezm ax rates im proves net revenue and EBI TDA by

USD 7 2 MM

PRO FORMA FLEET EARNI NGS CAPABI LI TY

( EBI TDA, $ MM) ( 1 )

VLCC TCE RATES $25,000 $30,000 $40,000 $50,000 $80,000 SUEZMAX TCE RATES $20,000 $25,000 $35,000 $45,000 $75,000

Next 1 2 Months Spot Days Exposure = 1 4 ,3 4 1 Days

($MM)

1 2 3

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