American Shipping Company ASA Presentation of Q3 2018 15 November - - PowerPoint PPT Presentation

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American Shipping Company ASA Presentation of Q3 2018 15 November - - PowerPoint PPT Presentation

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American Shipping Company ASA Presentation of Q3 2018 15 November 2018 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 2018

15 November 2018

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 2018 Highlights

▪ Adjusted net profit of USD 2.4 million* ▪ Normalized EBITDA** of USD 22.2 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 21 November 2018 with payment on or about 30th

November 2018

  • Classified as a return of paid in capital

▪ Improved market conditions for Jones Act tankers

  • Crude volumes to U.S. Northeast further increased
  • Increased number of time charter fixture in the market
  • Seasonal weaker spot market
  • Limited supply growth going forward

* 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 18 is USD 21.3 million

3

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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 22.2 million in Q3 18 (USD 22.4 million in Q3 17)
  • No profit share in Q3 18 or Q3 17
  • DPO of USD 0.9 in Q3 18 (USD 0.9 million in Q3 17)

* Including Profit Share (except 2017 where profit share was 0 for the full year) and DPO. Reported EBITDA for Q3 18 is USD 21.3 million

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

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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

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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)

4

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 BridgeTex Q3 ’18 0.04 3.34 Permian Express III Q3 ’18 0.05 3.39 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 2Q ’20 0.10 5.38 Source: Navigistics’ Wilson Gillette Report Sep 2018

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

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

7 Source: Navigistics’ Wilson Gillette Report Sep 2018 and AMSC analysis Note: 1) Idle capacity refers only to old ATBs

Majority of Fleet Carry Clean Products

8% 17% 36% 36% 3%

MSC Clean USG

0%

Idle1) West Coast Chemicals Crude Oil

8% 17% 22% 45% 3% 5%

MSC Chemicals Idle1) West Coast Crude Oil Clean USG

2015

Total capacity: ~20 mbbls

Significant upside potential for Jones Act deployment in Crude Oil

Aug 2018

Total capacity: ~27.5 mbbls

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

Increasing 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

10 15 20 25

Mbbl

PADD 1 Receipts of Products by Tanker and Barge from PADD 3

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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

6

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 Mar-2013 May-2013 Jul-2013 Sep-2013 Nov-2013 Jan-2014 Mar-2014 May-2014 Jul-2014 Sep-2014 Nov-2014 Jan-2015 Mar-2015 May-2015 Jul-2015 Sep-2015 Nov-2015 Jan-2016 Mar-2016 May-2016 Jul-2016 Sep-2016 Nov-2016 Jan-2017 Mar-2017 May-2017 Jul-2017 Sep-2017 Nov-2017 Jan-2018 Mar-2018 May-2018 Jul-2018 Sep-2018

Mbbl

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

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Intra PADD 3 Crude Oil Volumes Intra Gulf Trades are mainly Crude Oil from Texas into Louisiana, Alabama and Mississippi

10 Source: ClipperData October 2018 and AMSC analysis

PADD 1

3

PADD 3 PADD 2

Jacksonville Port Everglades Tampa Corpus Christi Houston Beaumont New Orleans Pascagoula

KBD’s

Intra Gulf Crude Shipping Volumes Stabilizing

▪ Jones Act U.S. Gulf loading has stabilized at 500k barrels per day

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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

11 Source: Argus and Marine Traffic

▪ On average 8 MR voyages per month of crude to U.S. Northeast refineries ▪ Record thirteen voyages in September 2018 ▪ 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

  • 1.00

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 Jan 2017 Apr 2017 Jul 2017 Oct 2017 Jan 2018 Apr 2018 Jul 2018 Oct 2018

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1 2 3 4 5 6 7 8 9 10 11 12

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

20 30 40 25 45 35 15 10 5 1

Scrap/lay up ATBs Tankers AMSC

12 Source: Navigistics’ Wilson Gillette Report Sep 2018, broker reports and AMSC analysis

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

Actual Projected 2015 levels

Fleet Reduction as Scrapping Continues

Number of vessels

Candidates for scrapping

Kbbls capacity

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Income Statement (unaudited)

*Applicable to common stockholders of the parent company

Figures in USD million (except share and per share information) Q3 2018 Q3 2017

Operating revenues 22.1 22.1 Operating expenses (0.8) (0.6) Operating profit before depreciation - EBITDA 21.3 21.5 Depreciation (8.5) (8.6) Operating profit - EBIT 12.8 12.9 Gain on investments

  • 2.3

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

  • 0.1

Profit/(loss) before income tax 2.5 5.0 Income tax expense

  • (1.0)

Non-cash income tax expense (0.1) (0.5) Net profit / (loss) for the period * 2.4 3.5 Average number of common shares 60,616,505 60,616,505 Earnings/(loss) per share (USD) 0.04 0.06

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Balance Sheet (unaudited)

Figures in USD millions 30.09.2018 30.09.2017

Vessels 720.3 753.9 Interest-bearing long term receivables (DPO) 27.2 29.2 Other non current assets 16.4 17.7 Derivative financial assets 4.2

  • Trade and other receivables

0.1 0.6 Cash held for specified uses 2.2 2.4 Cash and cash equivalents 47.3 46.3 TOTAL ASSETS 817.7 850.1 Total equity 180.6 181.8 Deferred tax liabilities 12.3 20.0 Interest-bearing long term debt 580.7 606.6 Derivative financial liabilities

  • 0.1

Interest-bearing short term debt 28.3 28.3 Deferred revenues and other payables 15.8 13.3 TOTAL EQUITY AND LIABILITIES 817.7 850.1

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Cash position decreased during the quarter due to semi-annual bond interest payment

CASH DEVELOPMENT IN 3Q 18 (USD millions)

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54.1 49.5 21.3 15.8 7.1 4.8

Other EBITDA OB Cash Interest Amortization Dividends CB Cash

1.8

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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 volumes into Florida ▪ Jones Act rates are increasing towards peak levels seen in 2014/15 levels

REDUCING FLEET CAPACITY

▪ Scrapping of older tonnage continues with 3 MR equivalents retired year to date ▪ 15 tankers and ATBs approaching 35 years or older in 2020; with Special Surveys coming up ▪ Slim orderbook with only one ATB 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

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