American Shipping Company ASA Presentation of Q4 2019 28 February - - PowerPoint PPT Presentation

Presentation of Q4 2019

28 February 2020

American Shipping Company ASA

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.

Fourth 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 Q4 19 is USD 21.3 million

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• Adjusted net profit of USD 2.4 million*
• Normalized EBITDA** of USD 22.2 million
• DPO of USD 0.9 million
• OSG exercised one of its perpetual 3 year extension options

for 4 vessels, moving BBC expiries to Dec 2023

• Firm comittment for a USD325m senior secured refinacing

for 9 ships including a USD70m RCF facility

• TC Rates for Jones Act Tankers reached 60,000 per day
• Declared Q4 dividend of USD 0.08 per share, consistent

with prior guidance

• Ex-dividend date of 5 March 2020 with payment on or about 16 March 2020
• Classified as a return of paid in capital

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

4

• Normalized EBITDA* of USD 22.2 million in Q4 19 (USD 22.2 million in Q4 18)
• No profit share in Q4 19 or Q4 18
• The Q4 19 DPO of USD 0.9 was received 3 January 2020 and is therefore not reflected in the

year-end accounts; the payment is included in Normalized EBITDA in the illustrations above. The DPO in Q4 18 was USD 0.9 million

* Including Profit Share (except 2017 to 2019 where profit share was 0 for the full year) and DPO. Reported EBITDA for Q4 19 is USD 21.3 million

85 85 85 84 85 3 4 4 11 10 10 20 30 40 50 60 70 80 90 100 2016 2015 4 2017 2018 4 2019 Profit Share DPO Reported EBITDA 21 21 21 21 21 21 22 21 2 4 6 8 10 12 14 16 18 20 22 24 Q2 18 1 1 Q1 18 1 Q3 18 Q4 18 1 1 Q1 19 1 Q2 19 1 Q3 19 1 Q4 19 Reported EBITDA Profit Share DPO

Stable, Predictable EBITDA

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

 Delaware Bay Lightening (Crude)  Shuttle tankers from deep water U.S. Gulf to Gulf Coast Refineries (Crude)  Crude from Corpus Christi, TX to LOOP (not shown)  Crude from Corpus Christie and Beaumont to Northeast

Jones Act crude oil & products primary trade routes

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)  Mid-Atlantic to New England (Clean)  Alaska and Intra-west coast movements (Clean/Dirty)  Cross-Gulf movements (Dirty) 1 2 3 4 5 6 7

6 4 2 5 3

BAKKEN EAGLE FORD PERMIAN

1

Patoka, IL

1

US GULF

Key US Oilfields Clean Pipeline Barges Crude Pipeline

8

8

Source: Navigistics’ Wilson Gillette Report Dec 2019

Private & Confidential

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

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

Majority of Fleet Carry Clean Products

8% 17% 36% 36%

Idle1)

3% 0%

MSC Chemicals West Coast Crude Oil Clean USG

4% 7% 21% 20% 43%

Clean USG Chemicals MSC

6%

Idle1) West Coast Crude Oil

2015

Total capacity: ~20 mbbls

Dec 2019

Total capacity: ~23.2 mbbls

Private & Confidential

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

Private & Confidential

12.5 17.5 22.5 27.5 Jan‐2010 Oct‐2010 Jul‐2011 Apr‐2012 Jan‐2013 Oct‐2013 Jul‐2014 Apr‐2015 Jan‐2016 Oct‐2016 Jul‐2017 Apr‐2018 Jan‐2019 Oct‐2019

Mbbl

PADD 1 Receipts of Products by Tanker and Barge from PADD 3 Trendline 3.5% CAGR

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

6

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

Private & Confidential

1 2 3 4 Jan‐2013 Jun‐2013 Nov‐2013 Apr‐2014 Sep‐2014 Feb‐2015 Jul‐2015 Dec‐2015 May‐2016 Oct‐2016 Mar‐2017 Aug‐2017 Jan‐2018 Jun‐2018 Nov‐2018 Apr‐2019 Sep‐2019 Feb‐2020

Mbbl

PADD 3 to PADD 1 Movements of Crude with Tankers

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

Private & Confidential

‐2.00 ‐1.00 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00

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 Nov‐19 Dec‐19 Jan‐20 Feb‐20

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 45 40 25 50 20 35 30 15 10 5 1

Scrap/lay up ATBs AMSC Tankers

11 Source: Navigistics’ Wilson Gillette Report Dec 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

*Applicable to common stockholders of the parent company

Figures in USD million (except share and per share information) Q4 2019 Q4 2018

Operating revenues 22.1 22.1 Operating expenses (0.8) (0.8) Operating profit before depreciation - EBITDA 21.3 21.3 Depreciation (8.5) (8.5) Operating profit - EBIT 12.8 12.8 Net interest expense (10.3) (10.2) Unrealized gain/(loss) on interest swaps 0.1 (1.8) Profit/(loss) before income tax 2.5 0.8 Income tax expense

• 0.3

Non-cash income tax benefit/(expense) 1.3 (0.8) Net profit / (loss) for the period * 3.8 0.3 Average number of common shares 60,616,505 60,616,505 Earnings/(loss) per share (USD) 0.06 0.01

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Income Statement (unaudited)

Figures in USD millions 31.12.2019 31.12.2018

Vessels 678.9 711.8 Interest-bearing long term receivables (DPO) 25.3 26.7 Other non current assets

• 16.4

Derivative financial assets

• 2.4

Trade and other receivables 0.4 0.2 Cash held for specified uses 1.6 2.7 Cash and cash equivalents 46.3 51.1 TOTAL ASSETS 752.4 811.3 Total equity 165.0 176.1 Deferred tax liabilities 11.4 13.0 Interest-bearing long term debt 522.7 572.3 Derivative financial liabilities 0.8

• Interest-bearing short term debt

44.3 29.6 Deferred revenues and other payables 8.2 20.3 TOTAL EQUITY AND LIABILITIES 752.4 811.3

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Balance Sheet (unaudited)

CASH DEVELOPMENT IN 4Q 19 (USD millions)

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52.9 47.9 21.3 4.5 8.5 4.8 8.5

Amortization EBITDA OB Cash Interest Dividends CB Cash Other *

Cash position decreased during the quarter

* Decrease due to receipt of January charter hire and DPO payments on 3 January 2020

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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 at USD 60,000 per day

REDUCING FLEET CAPACITY

• Scrapping of older tonnage continues
• 8 tankers and ATBs are 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 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