American Shipping Company ASA Presentation of Q1 2019 21 May 2019 - - PowerPoint PPT Presentation

Presentation of Q1 2019

21 May 2019

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.

First 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 Q1 19 is USD 20.8 million

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• Adjusted net profit of USD 2.2 million*
• Normalized EBITDA** of USD 21.7 million
• No profit share
• DPO of USD 0.9 million
• Declared Q1 dividend of USD 0.08 per share, consistent

with prior guidance

• Ex-dividend date of 27 May 2019 with payment on or about 5th June

2019

• Classified as a return of paid in capital
• Optimimization of existing capital structure
• Removed bond ammortization
• Extended secured bank loan tenors
• Stable market conditions for Jones Act tankers

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

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• Normalized EBITDA* of USD 21.7 million in Q1 19 (USD 21.8 million in Q1 18)
• No profit share in Q1 19 or Q1 18
• DPO of USD 0.9 in Q1 19 (USD 0.9 million in Q1 18)

* Including Profit Share (except 2018 and 2017 where profit share was 0 for the full year) and DPO. Reported EBITDA for Q1 19 is USD 20.8 million

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

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

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

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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 Current capacity 2.80 Local refining 0.50 3.30 Sunrise Q2 ’19 0.12 3.51 Cactus 2 Q4 ’19 0.67 4.18 Gray Oak Q1 ’20 0.70 4.88 EPIC Q2 ’20 0.40 5.28 Enterprise NGL Q2 ’20 0.10 5.38 Permian to Gulfcoast Q3 ’20 0.60 5.98 ExxonMobil Q4 ’20 1.00 6.98 Source: Navigistics’ Wilson Gillette Report May 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 volumes to drive tanker demand

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

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

Majority of Fleet Carry Clean Products

8% 17% 36% 36% 3%

Clean USG MSC

0%

West Coast Idle1) Chemicals Crude Oil

8% 17% 22% 47%

MSC

3%

Clean USG Idle1) West Coast Chemicals Crude Oil

3%

2015

Total capacity: ~20 mbbls

Significant upside potential for Jones Act deployment in Crude Oil

May 2019

Total capacity: ~23.3 mbbls

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

Increasing Volumes Into Florida

8 Sources: EIA

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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 Linear (PADD 1 Receipts of Products by Tanker and Barge from PADD 3)

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 Returning to Peak Levels on East Coast

• 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 Jan‐2013 Apr‐2013 Jul‐2013 Oct‐2013 Jan‐2014 Apr‐2014 Jul‐2014 Oct‐2014 Jan‐2015 Apr‐2015 Jul‐2015 Oct‐2015 Jan‐2016 Apr‐2016 Jul‐2016 Oct‐2016 Jan‐2017 Apr‐2017 Jul‐2017 Oct‐2017 Jan‐2018 Apr‐2018 Jul‐2018 Oct‐2018 Jan‐2019 Apr‐2019

Mbbl

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

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

• From Jan 2018 there has been on average 7-8 MR voyages

per month of crude to U.S. Northeast refineries

• 11 voyages in Jan 2019, Delta refinery completed

maintenance in Oct/Nov and P66 Bayway has had some downtime during Q1 2019

• 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 Increased 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

‐1.00 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 Jan 2017 Mar 2017 May 2017 Jul 2017 Sep 2017 Nov 2017 Jan 2018 Mar 2018 May 2018 Jul 2018 Sep 2018 Nov 2018 Jan 2019 Mar 2019 May 2019

Fleet profile by vessel age Considerable fleet growth over the last 3 years, but scrapping likely to bring fleet back to 2015 levels

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

Scrap/lay up ATBs AMSC Tankers

11 Source: Navigistics’ Wilson Gillette Report Dec 2018, 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) Q1 2019 Q1 2018

Operating revenues 21.6 21.6 Operating expenses (0.8) (0.7) Operating profit before depreciation - EBITDA 20.8 20.9 Depreciation (8.3) (8.3) Operating profit - EBIT 12.5 12.6 Gain on investments (0.2)

• Net interest expense

(10.3) (10.2) Unrealized gain/(loss) on interest swaps (1.2) 1.9 Net foreign exchange gain/(loss)

• Profit/(loss) before income tax

0.8 4.3 Income tax expense

• Non-cash income tax benefit/(expense)

0.1 (0.5) Net profit / (loss) for the period * 0.9 3.8 Average number of common shares 60,616,505 60,616,505 Earnings/(loss) per share (USD) 0.01 0.06

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Income Statement (unaudited)

Figures in USD millions 31.03.2019 31.03.2018

Vessels 703.4 737.3 Interest-bearing long term receivables (DPO) 26.3 28.2 Other non current assets

• 16.4

Derivative financial assets 1.2 3.5 Trade and other receivables 0.2 0.2 Cash held for specified uses 3.2 2.2 Cash and cash equivalents 48.9 46.3 TOTAL ASSETS 783.2 834.1 Total equity 172.1 185.8 Deferred tax liabilities 12.9 12.1 Interest-bearing long term debt 554.3 593.7 Derivative financial liabilities

• Interest-bearing short term debt

33.7 28.3 Deferred revenues and other payables 10.2 14.2 TOTAL EQUITY AND LIABILITIES 783.2 834.1

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Balance Sheet (unaudited)

CASH DEVELOPMENT IN 1Q 19 (USD millions)

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53.8 20.8 16.3 18.7 14.7 4.8

Dividends EBITDA Amortization OB Cash Interest Other

0.6

CB Cash

52.1

Liquidation proceeds from PTAS *

Cash position decreased during the quarter

* Proceeds from Philly Tankers AS were used to repay the Aker loan, included in amortization, and accrued interest

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Highlights

Investment Highlights

Comments

INCREASING DEMAND IN KEY TRADES

• Soaring crude shipments from U.S. Gulf to the U.S. Northeast, highest since 2015
• Growing clean trade into Florida
• Jones Act rates continue to increase

REDUCING FLEET CAPACITY

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

additional ATB in 2019

• 11 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

• OSG is to redeploy nine AMSC owned vessels on new time charters during 2019 and

early 2020

• The fleet is well positioned to capitalise on increased time charter rates through the

profit split