American Shipping Company ASA Presentation of Q3 2019 20 November - - PowerPoint PPT Presentation

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American Shipping Company ASA Presentation of Q3 2019 20 November - - PowerPoint PPT Presentation

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American Shipping Company ASA Presentation of Q3 2019 20 November 2019 Important information Nothing herein shall create any implication that there has been no change in the affairs of American Shipping Company ASA ("AMSC" or the

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Presentation of Q3 2019

20 November 2019

American Shipping Company ASA

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Important information

  • Nothing herein shall create any implication that there has been no change in the affairs of American

Shipping Company ASA ("AMSC" or the "Company") as of the date of this Company Presentation. This Company Presentation contains forward-looking statements relating to the Company's business, the Company's prospects, potential future performance and demand for the Company's assets, the Jones Act tanker market and other forward-looking statements. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes", "expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward-looking statements contained in this Company Presentation, including assumptions, opinions and views of the Company

  • r cited from third party sources, are solely opinions and forecasts which are subject to risks,

uncertainties and other factors that may cause actual events to differ materially from any anticipated development.

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SLIDE 3

Third Quarter 2019 Highlights

* Net profit after tax, adjusted for non-recurring items, currency fluctuations, mark-to-market of derivatives and changes to deferred tax ** Includes DPO, reported EBITDA for Q3 19 is USD 21.5 million

3

  • Adjusted net profit of USD 3.0 million*
  • Normalized EBITDA** of USD 22.4 million
  • No profit share
  • DPO of USD 0.9 million
  • Declared Q3 dividend of USD 0.08 per share, consistent

with prior guidance

  • Ex-dividend date of 26 November 2019 with payment on or about 5th

December 2019

  • Classified as a return of paid in capital
  • Stable market conditions for Jones Act tankers
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SLIDE 4

Normalized EBITDA* (USD millions) Normalized EBITDA* per quarter (USD millions)

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  • Normalized EBITDA* of USD 22.4 million in Q3 19 (USD 22.2 million in Q3 18)
  • No profit share in Q3 19 or Q3 18
  • DPO of USD 0.9 in Q3 19 (USD 0.9 million in Q3 18)

* Including Profit Share (except 2018 and 2017 where profit share was 0 for the full year) and DPO. Reported EBITDA for Q3 19 is USD 21.5 million

85 85 85 84 3 4 4 11 10 10 20 30 40 50 60 70 80 90 100 4 2017 2015 2016 2018 Profit Share Reported EBITDA DPO 21 21 21 21 21 21 21 21 21 22 2 4 6 8 10 12 14 16 18 20 22 24 1 Q4 17 1 1 Q2 17 Q3 17 1 Q3 18 Q1 18 Q1 19 1 1 Q4 18 Q2 18 1 1 1 Q2 19 Q3 19 1 Reported EBITDA Profit Share DPO

Stable, Predictable EBITDA

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SLIDE 5

Long-term fixed rate bareboat charters to OSG secures cash flow

Fleet Deployment Overview

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Firm Charter Options

Houston Long Beach Los Angeles New York Texas City Boston Nikiski Martinez Tampa Anacortes

Vessel End users

  • AMSC’s fleet is on firm BB Charters to OSG with

evergreen extension options

  • AMSC receives fixed annual bareboat revenue of

USD 88 million + ~50% of the profits generated by OSG under the time charter contracts

  • OSG time charters the vessels to oil majors for

U.S domestic trade

BBC exp. 2022 BBC exp. 2022 BBC exp. 2022 BBC exp. 2022 BBC exp. 2022

  • Exp. ‘20
  • Exp. ‘20
  • Exp. ‘20
  • Exp. ‘20

BBC Options BBC Options BBC Options BBC Options BBC Options BBC Options BBC Options BBC Options BBC Options Options BBC exp. 2025

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A Critical Part of Oil Majors’ Transportation Logistics

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Jones Act Tanker Routes:

 Gulf Coast refineries to Florida and East Coast (Clean)  Alaska and Intra-west coast movements (Clean/Dirty)  Cross-Gulf movements (Dirty)

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BAKKEN EAGLE FORD PERMIAN Patoka, IL US GULF

Key US Oilfields Clean Pipeline Barges Crude Pipeline

5 3 2 1 1 6

Primary trade routes for Jones Act crude oil and products

Pipeline project Start Incremental capacity Total capacity Local refining & existing pipelines 4.18 Cactus 2 - Initial Q3 ’19 0.37 4.55 EPIC - Initial Q3 ’19 0.30 4.85 Gray Oak Q4 ’19 0.90 5.75 EPIC - Final Q1 ’20 0.30 6.05 Cactus 2 - Final Q2 ’20 0.33 6.38 Wink-to-Webster Q3 ’21 1.00 7.38 Wink-to-Webster Q1 ’22 0.50 7.88 Source: Navigistics’ Wilson Gillette Report Sept 2019

The Permian Pipeline Crunch

2 3

 Delaware Bay Lightening (Dirty)  Shuttle tankers from deep water U.S. Gulf to Gulf Coast Refineries (Dirty)  Gulf Coast crude to Northeast refineries (Dirty)

4 5 6 1

Permian Pipeline Capacity – New Projects and Production Growth, MBDs

Permian production growth has surpassed pipeline takeaway capacity – additional pipelines to drive tanker demand

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Jones Act tanker fleet deployment by main trades (Tankers and ATBs)

7 Source: Navigistics’ Wilson Gillette Report Sept 2019 and AMSC analysis Note: 1) Idle capacity refers only to old ATBs

Majority of Fleet Carry Clean Products

8% 17% 36% 36%

Chemicals Idle1)

3%

MSC West Coast

0%

Crude Oil Clean USG

8% 17% 22% 48%

Chemicals

3%

MSC Idle1) Crude Oil

2%

West Coast Clean USG

2015

Total capacity: ~20 mbbls

Sept 2019

Total capacity: ~23.5 mbbls

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Rising seaborn transport from Gulf to East Coast Gulf Coast to Florida Trade Lane

Increasing Clean Volumes Into Florida

8 Sources: EIA

1

PADD 1 PADD 3 PADD 2

Jacksonville Port Everglades Tampa Corpus Christi Houston Beaumont New Orleans Pascagoula

Mbbls per month

12.5 17.5 22.5 27.5

Mbbl

PADD 1 Receipts of Products by Tanker and Barge from PADD 3 Trendline 5% CAGR

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PADD 3 to PADD 1 Crude Oil Moves by Tanker and Barge Trade lane carrying Crude from Gulf Coast to U.S. Northeast

9 Source: EIA, Marine Traffic and AMSC analysis

PADD 1

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PADD 3 PADD 2

Jacksonville Port Everglades Tampa Corpus Christi Houston Beaumont New Orleans Pascagoula Washington New York Philadelphia Boston

Crude Trade to East Coast stabilizing

  • East Coast volumes back to ~6 tankers, up from ~1 tanker

during 2017

  • Volumes driven by spread in pricing of U.S. oil vs

international alternatives

1 2 3 4

Mbbl

PADD 3 to PADD 1 Movements of Crude by Tanker (3M Rolling Ave)

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PADD 3 to PADD 1 Crude Oil Moves by Number of Tanker Liftings Crude Oil Price Spread - WTI Houston vs. Bonny Light

10 Source: Argus and Marine Traffic

  • On average 7 MR voyages per month of crude to U.S.

Northeast refineries

  • Crude loaded in Houston vs. West Africa needs to be

minimum $1.50 cheaper to be competitive for purchase by U.S. Northeast Refiners

  • Spread has been sufficiently wide since Aug/Sept 2017

Oil Price Spread - Key Driver for Crude Shipping Volumes

2 4 6 8 10 12 14 Aug‐17 Sep‐17 Oct‐17 Nov‐17 Dec‐17 Jan‐18 Feb‐18 Mar‐18 Apr‐18 May‐18 Jun‐18 Jul‐18 Aug‐18 Sep‐18 Oct‐18 Nov‐18 Dec‐18 Jan‐19 Feb‐19 Mar‐19 Apr‐19 May‐19 Jun‐19 Jul‐19 Aug‐19 Sep‐19 Oct‐19

‐1.00 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00

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Fleet profile by vessel age Considerable fleet growth in past years, but scrapping likely to bring fleet back to 2015 levels

1 2 3 4 5 6 7 8 9 10 11 12 50 30 15 20 45 40 35 25 10 5

AMSC Tankers Scrap/lay up ATBs

11 Source: Navigistics’ Wilson Gillette Report Sep 2019, broker reports and AMSC analysis

Fleet Reduction as Scrapping Continues

Number of vessels

Candidates for scrapping

Kbbls capacity

5000 10000 15000 20000 25000 30000 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Fleet Scrapping

Actual Projected 2015 levels

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SLIDE 12

*Applicable to common stockholders of the parent company

Figures in USD million (except share and per share information) Q3 2019 Q3 2018

Operating revenues 22.1 22.1 Operating expenses (0.6) (0.8) Operating profit before depreciation - EBITDA 21.5 21.3 Depreciation (8.5) (8.5) Operating profit - EBIT 13.0 12.8 Gain on investments

  • Net interest expense

(10.0) (10.4) Unrealized gain/(loss) on interest swaps 0.1 0.1 Net foreign exchange gain/(loss)

  • Profit/(loss) before income tax

3.1 2.5 Income tax expense

  • (0.2)

Non-cash income tax benefit/(expense) (0.2) 0.1 Net profit / (loss) for the period * 2.9 2.4 Average number of common shares 60,616,505 60,616,505 Earnings/(loss) per share (USD) 0.05 0.04

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Income Statement (unaudited)

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Figures in USD millions 30.09.2019 30.09.2018

Vessels 686.5 720.3 Interest-bearing long term receivables (DPO) 25.3 27.2 Other non current assets

  • 16.4

Derivative financial assets

  • 4.2

Trade and other receivables 0.1 0.1 Cash held for specified uses 2.4 2.1 Cash and cash equivalents 50.5 47.3 TOTAL ASSETS 764.8 817.7 Total equity 166.0 180.6 Deferred tax liabilities 12.7 12.3 Interest-bearing long term debt 533.2 580.7 Derivative financial liabilities 0.9

  • Interest-bearing short term debt

41.6 28.3 Deferred revenues and other payables 10.4 15.8 TOTAL EQUITY AND LIABILITIES 764.8 817.7

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Balance Sheet (unaudited)

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CASH DEVELOPMENT IN 3Q 19 (USD millions)

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57.2 52.9 21.5 14.4 7.1 4.8 0.5

Other EBITDA OB Cash Interest Amortization Dividends CB Cash

Cash position decreased during the quarter

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Highlights

Investment Highlights

Comments

INCREASING DEMAND IN KEY TRADES

  • Stable crude shipments from U.S. Gulf to the U.S. Northeast
  • Growing clean trade into Florida
  • Jones Act time charter rates approaching USD 60,000 per day

REDUCING FLEET CAPACITY

  • Scrapping of older tonnage continues with 2 MRs and 5 ATBs retired in 2018 and two

additional ATBs to date in 2019

  • 10 tankers and ATBs approaching 35 years or older in 2020; with Special Surveys

coming up

  • Slim orderbook with only two barges for delivery in 2020

LEADING MARKET POSITION WITH STABLE CASH FLOWS

  • Bareboat contracts provide stable cash flows with profit share upside potential
  • Existing modern fleet that is integral to OSG’s business
  • Well positioned to take advantage of growth opportunities in a strengthening market

FLEET WELL POSITIONED TO BENEFIT FROM MARKET UPSIDE

  • AMSC owned vessels already committed on new time charters for most of 2020
  • The fleet is well positioned to capitalise on increased time charter rates through the

profit split

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