American Shipping Company ASA Presentation of Q4 2017 14 February - - PowerPoint PPT Presentation

Presentation of Q4 2017

14 February 2018

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 2017 Highlights

• Adjusted net profit of USD 4.0 million*
• Normalized EBITDA** of USD 22.1 million
• No profit share
• DPO of USD 0.9 million
• Declared Q4 dividend of USD 0.08 per share, consistent

with prior guidance

• Ex-dividend date of 20 February 2018 with payment on or about 1st

March 2018

• Classified as a return of paid in capital
• Improved market conditions for Jones Act tankers
• Increasing demand for transportation of both crude oil and clean

products

• Limited supply growth going forward
• TCE rates for short term fixtures reportedly above USD 50,000 per day

* 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 17 is USD 21.2 million

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

Stable, Predictable EBITDA

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• Normalized EBITDA* of USD 22.1 million in Q4 17 (USD 24.3 million in Q4 16)
• No profit share in Q4 17 (USD 1.8 million in Q4 16)
• DPO of USD 0.9 in Q4 17 (USD 1.0 million in Q4 16)

* Including Profit Share (except 2017 when profit share was zero) and DPO. Reported EBITDA for Q4 17 is USD 21.2 million

85 85 85 85 4 4 3 1 10 11 6 10 20 30 40 50 60 70 80 90 100 2014 2017 2016 2015 Reported EBITDA DPO Profit Share 21 21 21 22 21 21 21 21 21 21 21 4 3 3 4 3 2 21 1 2 4 6 8 10 12 14 16 18 20 22 24 26 1 Q2 15 1 Q1 15 1 Q1 16 1 Q4 15 1 Q3 15 1 Q4 17 Q3 17 1 Q2 17 1 Q1 17 1 Q4 16 1 Q3 16 1 1 Q2 16 1 Reported EBITDA DPO Profit Share

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

Fleet Deployment Overview

5 * All vessels excluding Overseas Tampa which is contracted to June 2025

2017-19 2019 - beyond

BBC BBC BBC BBC BBC BBC BBC BBC BBC BBC Options BBC Options BBC Options BBC Options BBC Options BBC Options BBC Options BBC Options BBC Options BBC Opt. BBC*

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

Vessel End users

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

December 2019* plus evergreen extension

• ptions
• 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

 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)

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 Key US Oilfields Key Pipeline / rail Barges

1 6 4 2 5 3

US GULF BAKKEN EAGLE FORD PERMIAN Corpus Christi

1

Patoka, IL

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

Majority of Fleet carry Clean Products, but Swing Demand Derived from Shale Transportation

7 Source: Navigistics’ Wilson Gillette Report, Dec 2017 and AMSC analysis

4 % 2 % 7 % 16 % 49 % 22 % Idle MSC Chemicals West Coast Clean USG Crude Oil

Seaborne products transport from Gulf Coast to East Coast is very consistent (Mbbls per month)

Increasing Clean Product Volumes

8 Sources: EIA

10 15 20 25

Mbbl

East Coast (PADD 1) Receipts by Tanker and Barge from Gulf Coast (PADD 3) of Total Petroleum Products

Intra PADD 3 Crude Oil Moves by Area of Loading, (KBD’s) PADD 3 to PADD 1 Crude Oil Moves by Tanker and Barge (Mbbls per month)

Crude Shipping Volumes Stabilizing Intra Gulf whilst Returning to Peak Levels on East Coast

9 Source: ClipperData December 2017, EIA, Marine Traffic and AMSC analysis

• JA USG loading of 650m bbls per day utilizes

~11 vessels for USG crude trade (assuming 5 days roundtrip)

• Volumes poised to recover
• Volumes in East Coast trade is back to ~5

tankers, up from ~1 tanker

• Volumes driven by spread in pricing of US oil vs

international alternatives

• Argus Houston vs. Bonny Light

1 2 3 4 5 6 jan‐2013 mar‐2013 mai‐2013 jul‐2013 sep‐2013 nov‐2013 jan‐2014 mar‐2014 mai‐2014 jul‐2014 sep‐2014 nov‐2014 jan‐2015 mar‐2015 mai‐2015 jul‐2015 sep‐2015 nov‐2015 jan‐2016 mar‐2016 mai‐2016 jul‐2016 sep‐2016 nov‐2016 jan‐2017 mar‐2017 mai‐2017 jul‐2017 sep‐2017 nov‐2017 jan‐2018

Mbbl

PADD 3 to PADD 1 Crude Oil Moves

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

Oil Price Spread - Key Driver for Increase in PADD 3 to PADD 1 Crude Shipping Volumes

10 Source: Bloomberg, Pareto

• Steady cargo growth in Q4 2017
• ~ 5 tankers in shuttle activity from U.S. Gulf up

to North East refineries

• YTD 10x cargoes delivered or in transit
• Crude loaded in Houston vs. West Africa needs

to be minimum $1.50 cheaper to be competitive for U.S. East Coast Refiners

• Spread has been sufficiently wide since

Aug/Sept 2017

‐2 ‐1,5 ‐1 ‐0,5 0,5 1 1,5 2 2,5 3

• feb. 16
• mar. 16
• apr. 16
• mai. 16
• jun. 16
• jul. 16
• aug. 16
• sep. 16
• kt. 16
• nov. 16
• des. 16
• jan. 17
• feb. 17
• mar. 17
• apr. 17
• mai. 17
• jun. 17
• jul. 17
• aug. 17
• sep. 17
• kt. 17
• nov. 17
• des. 17

1 2 3 4 5 6 7 8 9 aug.17 sep.17

• kt.17

nov.17 des.17 jan.18 YTD feb.18

Candidates for scrapping

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

Limited Remaining Fleet Growth and Scrapping Continues

1 2 3 4 5 6 7 8 9 10 11 25 5 10 1 50 30 45 15 40 35 20 # vessels Scrap/lay up AMSC Tankers ATBs

11 Source: Navigistics’ Wilson Gillette Report Dec 2017, broker reports and AMSC analysis

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

Actual Projected Kbbls Capacity 2015 levels

Income Statement (unaudited)

*Applicable to common stockholders of the parent company

Figures in USD million (except share and per share information) Q4 2017 Q4 2016

Operating revenues 22.1 22.1 Operating expenses (0.9) (0.6) Operating profit before depreciation - EBITDA 21.2 21.5 Depreciation (8.3) (8.7) Operating profit - EBIT 12.9 12.8 Gain on investments (0.5) 2.2 Net interest expense (10.2) (9.2) Unrealized gain/(loss) on interest swaps 1.8 6.3 Net foreign exchange gain/(loss) 0.0 0.0 Profit/(loss) before income tax 4.0 12.1 Income tax expense (2.3) 0.0 Non-cash income tax expense 4.7 (4.6) Net profit for the period * 6.4 7.5 Average number of common shares 60,616,505 60,616,505 Earnings/(loss) per share (USD) 0.11 0.12

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Balance Sheet (unaudited)

Figures in USD millions 31.12.2017 31.12.2016

Vessels 745.6 779.5 Interest-bearing long term receivables (DPO) 28.7 30.6 Other non current assets 16.6 27.6 Derivative financial assets 1.7 0.0 Trade and other receivables 0.2 0.3 Cash held for specified uses 2.3 2.3 Cash and cash equivalents 52.0 49.1 TOTAL ASSETS 847.1 889.4 Total equity 183.3 195.7 Deferred tax liabilities 15.2 17.4 Interest-bearing long term debt 600.1 636.1 Derivative financial liabilities 0.0 0.1 Interest-bearing short term debt 28.3 28.3 Deferred revenues and other payables 20.2 11.8 TOTAL EQUITY AND LIABILITIES 847.1 889.4

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Cash position increased during the quarter

CASH DEVELOPMENT IN 4Q 17 (USD millions)

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21.2 4.3 7.3 4.8 54.3 0.8 48.7

Interest Dividends CB Cash EBITDA Amortization Other OB Cash

Investment Highlights

Highlights Comments

• Increased crude shipments from U.S. Gulf to the U.S. North East
• Intra gulf volumes of crude shipments stabilizing
• Clean products trade to U.S. East Coast increased over last 18 months

INCREASED DEMAND IN KEY TRADES NO NEW VESSEL ORDERS LEADING MARKET POSITION WITH STABLE CASH FLOWS

• Final MR tanker delivered and only 2 smaller ATBs entering the market in 2018
• No vessel orders for the past 3 years
• Scrapping / lay-up of older tonnage continues
• AMSC has the most cost efficient modern Jones Act tanker fleet
• Stable cash flow from fixed rate bareboat contracts and upside potential from

profit share arrangement

• Committed to returning capital to shareholders through dividends, whilst

prudently managing the balance sheet and maintaining financial flexibility

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