S.D. Standard Drilling Plc. Investor Presentation NOK 275m Private - - PowerPoint PPT Presentation

S.D. Standard Drilling Plc.

Investor Presentation NOK 275m Private Placement 8 December 2016

2

Disclaimer

This presentation dated 8 December 2016 (the “Presentation”) has been produced by S.D. Standard Drilling Plc. (the “Company” or “SDSD”), solely for use in its dialogue with possible investors in a contemplated private placement of new shares by the Company (the “New Shares”) to Norwegian investors, international institutional investors and professional investors and other investors in such other jurisdictions as are permitted or catered for by exemption rules under applicable securities laws (the “Private Placement”) and may not be reproduced or redistributed, in whole or in part, to any other person. This Presentation is for information purposes only and does not in itself constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein. To the best of the knowledge of the Company, its officers and directors, the information contained in this Presentation is in all material respect in accordance with the facts as of the date hereof and contains no material

• missions likely to affect its importance. Please note that no representation of warranty (express or implied) is made as to, and no reliance should be placed on, any forward looking statements, including projections,

estimates, targets and opinions, contained herein. To the extent permitted by law, the Company, its parent or subsidiary undertakings, Clarksons Platou Securities AS (the “Manager”) or any such person’s officers, directors, or employees disclaim all liability whatsoever arising directly or indirectly from the use of this Presentation. This Presentation contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates. Forward-looking statements concern future circumstances, not historical facts and are 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 Presentation (including assumptions, opinions and views of the Company or opinions cited from third party sources) are subject to risks, uncertainties and
• ther factors that may cause actual events to differ materially from any anticipated development. None of the Company, any of its parent or subsidiary undertakings, the Manager or any such person’s officers,

directors, or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors, nor does any of them accept any responsibility for the future accuracy of the

• pinions expressed in this Presentation or the actual occurrence of the forecasted developments described herein. If at any time prior to the pricing and application for the New Shares an event occurs which the

Company, based on its knowledge, reasonably expect would affect the assessment of the New Shares, or as a result of which this Presentation would be misleading, include any untrue statement of any material fact

• r omit to state any material fact necessary to make the statements therein, the Company will promptly notify in sufficient detail, through the Manager, the potential applicants of the New Shares.

The Presentation contains information obtained from third parties. Such information has been accurately reproduced and, as far as the Company is aware of and able to ascertain from the information published by that third party, no facts have been omitted that would render the reproduced information to be inaccurate or misleading in any material respect. AN INVESTMENT IN THE COMPANY INVOLVES RISK. SEVERAL FACTORS COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAY BE PREDICTED OR IMPLIED BY STATEMENTS AND INFORMATION IN THIS PRESENTATION, INCLUDING, BUT NOT LIMITED TO, RISKS OR UNCERTAINTIES ASSOCIATED WITH THE COMPANY’S BUSINESS, DEVELOPMENT, GROWTH MANAGEMENT, FINANCING, MARKET ACCEPTANCE AND RELATIONS WITH CUSTOMERS AND, MORE GENERALLY, ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN DOMESTIC AND FOREIGN LAWS AND REGULATIONS, TAXES, CHANGES IN COMPETITION AND PRICING ENVIRONMENTS, FLUCTUATIONS IN CURRENCY EXCHANGE AND INTEREST RATES AND OTHER FACTORS. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALISE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, THE ACTUAL RESULTS OF THE COMPANY MAY VARY MATERIALLY FROM THOSE FORECASTED IN THIS PRESENTATION. By attending or receiving this Presentation recipients acknowledge that they will be solely responsible for their own assessment of the Company and its shares as an investment and that they will conduct their own analysis and be solely responsible for forming their own view of the potential future performance of the Company and its business. The distribution of this Presentation may, in certain jurisdictions, be restricted by law. Persons in possession of this Presentation are required to inform themselves about and to observe any such

• restrictions. No action has been taken or will be taken in any jurisdiction by the Company or the Manager that would permit the possession or distribution of any documents or any amendment or

supplement thereto (including but not limited to this Presentation) in any country or jurisdiction where specific action for that purpose is required. In relation to the United States and U.S. Persons, this Presentation is strictly confidential and is being furnished to investors solely in reliance on applicable exemptions from the registration requirements under the U.S. Securities Act of 1933, as amended (the “US Securities Act”). The shares of the Company have not and will not be registered under the U.S. Securities Act or any state securities law and may not be offered or sold within the United States unless an exemption from the registration requirements of the U.S. Securities Act is available. Accordingly, any offer or sale of shares in the Company will only be offered or sold (i) within the United Sates to Qualified Institutional Buyers (“QIBs”) in a private placement transaction not involving a public offering and (ii) outside the United States in offshore transactions in accordance with Regulations S of the U.S. Securities Act. Neither the U.S. Securities and Exchange Commission, nor any other U.S. authority, has approved this Presentation. This Presentation is being communicated in the United Kingdom to persons who have professional experience, knowledge and expertise in matters relating to investments and who are "investment professionals" for the purposes of article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 and only in circumstances where, in accordance with section 86(1) of the Financial and Services Markets Act 2000 ("FSMA"), the requirement to provide an approved prospectus in accordance with the requirement under section 85 FSMA does not apply. Consequently, investors understand that the shares to be issued in the Private Placement may be offered only to "qualified investors" for the purposes of sections 86(1) and 86(7) FSMA, or to a limited number of UK investors, or only where minima are placed on the consideration or denomination of securities that can be made available (all such persons being referred to as "relevant persons"). The contents of this Presentation shall not be construed as legal, business, or tax advice. Each reader of this Presentation should consult its own legal, business or tax advisor as to legal, business or tax advice. If you are in doubt about the contents of this Presentation, you should consult your stockbroker, bank manager, lawyer, accountant, or other professional adviser. This Presentation speaks as of 8 December 2016. Neither the delivery of this Presentation nor any further discussions by the Company or the Manager with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date. This Presentation shall be governed by Norwegian law. Any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of the Norwegian courts with the Oslo City Court as legal venue.

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Risk factors (1/3)

Investing in Standard Drilling involves inherent risks. Prospective investors should consider, among other things, the risk factors set out below before making an investment

• decision. The risks described below are not the only ones facing the Company. Additional risks not presently known to the Company or that the Company currently deems

immaterial may also impair the Company’s business operations and adversely affect the price of the Company’s Shares and ability to service its debt. If any of the following risks actually occur, Standard Drilling’s business, financial position and operating results could be materially and adversely affected. A prospective investor should consider carefully the factors set forth below, and elsewhere in the Investor Presentation, and should consult his or her own expert advisors as to the suitability of an investment in the shares of the

• Company. An investment in the New Shares is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or

part of the investment. RISKS RELATED TO THE COMPANY AND THE INDUSTRY IN WHICH IT OPERATES Derivative investment risks



The business activity of the Company is investments in offshore supply and/ or offshore drilling assets. The Company currently owns a 20% ownership interest in each of PSV Opportunity I and II DIS through Norwegian wholly owned subsidiary Wanax AS. Although the Company has no direct exposure to the mentioned markets, the Company has derivative risks related to the operation and performance of the companies Standard Drilling has invested in. As a consequence of these derivate risks and the minority stake held in each of PSV Opportunity I and II DIS, the Company cannot fully control or influence the operations and performance of the companies Standard Drilling has invested in. There can be no assurance that the investments of the Company will provide a positive return and the investments of Standard Drilling may, in a worst-case scenario, be lost in their entirety. Key personnel and investment philosophy risk



Investing in the Company, may be seen as an investment in the competences of its employees and the investment philosophy, investment process and risk management of the

• Company. There is therefore a risk that key personnel may leave the Company and/ or that the board of directors determines that the Company shall change its investment

philosophy, investment process and risk management procedures. Economic developments



The general development of and prospective future of the economy, and in particular the oil and offshore industry, may affect the profitability of the companies SDSD has invested in. Negative economic developments may lead to a downturn in the future prospects of the companies and sectors Standard Drilling has invested in, and may also make it more difficult to raise equity or loan capital which may affect the operations of the Company. These risks may lead to a loss of whole or parts of the Company's investments in such companies. FINANCIAL RISK Interest rate and currency fluctuations



The Company will be exposed to risks due to fluctuations in interest and currency exchange rates and may attempt to minimise these risks by implementing hedging arrangements as appropriate, but will not be able to avoid these risks.



Financial reporting, including income and expenses, of the Company are primarily in USD. Currency fluctuations may influence the value of the Company’s shares. Borrowing and leverage



The Company does not currently have any interest bearing debt. However, the Company may finance its investments through debt. Borrowings and leverage normally generate interest costs which may cause significant negative impact to the Company’s financial accounts. Repayment of debt may be challenging and cause the Company to enter into bankruptcy proceedings.

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Risk factors (2/3)

Existing financing risk



As of 30 September 2016, the Company had no interest bearing debt. Potential debt facilities impose debt service obligations and significant operating and financial restrictions on the Company, which may prevent the Company from capitalizing on business opportunities or adversely affect the Company’s ability to operate its business. Although the Company intend to replace these financings as deemed necessary or appropriate, any new sources of financing are subject to conditions in the credit market, which are currently volatile. There can be no assurance that the Company will be able to procure new financing or that the terms of any new financing will be favourable. If the Company is unable to procure new financing or the terms of any new financing is less favourable, the results of operations or financial condition could adversely be affected and there could also be a risk that the Company are forced to enter into bankruptcy proceedings. Tax risk



Dividends declared and capital gains derived from a Cyprus company may be subject to local tax in the shareholder’s home country, and each investor should make such investigations for himself/herself as Cyprus could potentially be considered as a low tax jurisdiction. In the view of the Company the low tax exceptions under the Norwegian participation exemption method for Norwegian resident corporate shareholders do not apply as long as the Company’s tax burden is similar to what it would have been in

• Norway. The Company is also of the view that it is genuinely established and carries out business activities in Cyprus, which means that dividends and capital gains will qualify

under the Norwegian participation exemption method. If any tax authority successfully challenges the Company's conclusions, the applicable tax on dividend declared, shareholders capital gain and the Company's income could increase substantially, adversely affecting tax payables for the shareholders and the Company as well as the value of the Company's shares. RISK IN CONNECTION WITH THE COMPANY’S SHARES Investment and trading risks



Any investment in the Company’s shares is associated with an element of risk. The Company operates in a market featuring open and fierce competition, and a number of factors outside the Company’s control may affect its performance.



The trading price of the Company’s shares could fluctuate significantly in response to quarterly variations in operating results, adverse business developments, interest rates, changes in financial estimates, or a variety of other factors outside the control of the company. Shareholders outside of Norway are also subject to exchange rate risk.



The Company’s shares are not registered under US securities laws and the Company does not expect to do so in the future. The shares may not be offered or sold in the United States or to US residents, unless an exemption from the applicable registration requirements is available or the offer or sale of the shares occurs in connection with a transaction that is not subject to these provisions.



Beneficial owners of Shares that are registered in a nominee account or otherwise through a nominee arrangement (such as through brokers, dealers or other third parties) will not be able to vote for such shares unless (a) their ownership is re-registered in their names in the VPS, as the branch register, prior to the Company’s general meetings (i.e. the registered nominee holder transfers legal ownership to the beneficial owner), or (b) the registered nominee holder grants a proxy to such beneficial owner. Any persons that hold their shares through a nominee arrangement should consult with the nominee to ensure that any shares beneficially held are voted in the manner desired by such beneficial owner.



Since the Company is incorporated in Cyprus, shareholders may have less recourse against the Company or its directors than shareholders have against the directors of companies domiciled elsewhere.

5

Risk factors (3/3)

RISKS RELATED TO THE PSV MARKET The Company has recently completed investments in PSV Opportunity I & II DIS ("PSV"), corresponding to a 20 % ownership in each company. The following risk factors provide an

• verview of certain material risks related to this investment. If any of the risks materialise, this could have an adverse effect on Standard Drilling's investment in PSV.

Downturn in offshore market



The offshore market in which PSV operates is currently experiencing a downturn. The market for offshore vessels is characterized by supply far exceeding demand. As a consequence of low fleet utilization and rates achieved, many platform supply vessels have generated revenue below operating expenses. If the downturn in the market continues, this will have a material adverse effect on PSV's business, financial condition, results of operation and cash flow. Fluctuating value of the fleet



The value of the vessels owned by PSV may fluctuate with market conditions. Any downturn in the market could have a material adverse effect on PSV's asset value. In such a case, sales of PSV’s assets could be forced at prices that may represent a potential loss of value. Dependence on activity in the offshore oil and gas industry



PSV's business, results of operations, financial condition, and ability to pay dividends depend on the level of activity in the offshore oil and gas industry, which is significantly affected by, among other things, volatile oil and gas prices. PSV may be unable to attract a sufficient number of customers



PSV may in the future not be able to attract a sufficient number of customers to generate adequate revenues to cover its operating expenses and/ or service its debts. Inability to attract a sufficient number of customers may have a material adverse effect on PSV's business, results of operations, financial condition and prospects.

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I. Transaction details II. Company overview III. Investment case IV. Appendix

Agenda

7

Transaction summary

Amount:

• Gross proceeds of up to NOK 275m.

Subscription price:

• NOK 0.65 per share.

Number of offer shares:

• 423,076,924 common shares, each with a par value of USD

0.01. Current # of shares

• utstanding:
• 262,000,000 common shares, each with a par value of USD

0.01. Listing and ticker:

• Oslo Axess (OAX); SDSD.

Use of proceeds:

• Oil service investment opportunities, directly into companies,

securities and/or assets, with the aim to control a larger fleet

• f assets – all purchased at distressed values .
• Min. order and

allocation amount:

• NOK equivalent of EUR 100,000.

Existing shareholders subscriptions, lock-up and EGM voting undertaking

• The Company's four largest shareholders together controlling

approximately 96.67% of the shares in the Company will subscribe for and be allocated minimum 38,461,538 shares in the Private Placement. The shares will be allocated according to their current pro rata holdings.

• Saga Tankers ASA, Strata Marine & Offshore AS, QVT

Financial LP, Apollo Asset Management Limited and HRF Marine LLC representing 96.67% of the Company’s shares has signed lock up agreements on existing shareholding for 180 days as of 8 December 2016.

• Voting undertakings in favor of the private placement has

been received from 96.67% of the Company’s shareholders. Allocation:

• Allocation criteria such as (but not limited to): Existing
• wnership, perceived investor quality and investment

horizon.

Note: Please refer to the application agreement for further details

Application period:

• Start of application period: 8 December 2016 at 16:30 CET.
• End of application period: 9 December 2016 at 08:00 CET.
• Book may be closed earlier or later at the Company’s

discretion. Notification of allocation:

• On or about 9 December 2016.

Settlement:

• Payment date: On or about 5 January 2017.
• Delivery Date: On or about 10 January 2017.

Closing conditions:

• Corporate resolutions of the Company.
• Extraordinary general meeting to be held on 4 January 2017.

Possible subsequent

• ffering:
• The Company will propose to the EGM to carry out a

subsequent share offering towards certain eligible shareholders as of 8 December 2016, which shall exclude U.S. persons, who were not allocated offer shares in the Private Placement. Share lending:

• Subscribers in the Private Placement may receive partial

settlement by way of already issued, existing and tradable shares made available through a lending or other arrangement with certain existing shareholders. Trading on Oslo Axess:

• On or about end of January 2017, subject to listing

prospectus approved by the Financial Supervisory Authority in Norway. Pending such listing, the Offer Shares may be listed on the NOTC or Merkur Market. Documentation:

• This Presentation, application agreement and term sheet,

dated 8 December 2016. Manager and Bookrunner:

• Clarksons Platou Securities AS.

8

All-time low

Entry into the offshore market through distressed situations

Significant upside

2016, PSV investments at 82% and 65% discount to newbuild parity

Access to opportunities

Sponsors and management with unique industry insight and network

Low break-even

All equity financed, ensures industry low break-even and no debt costs

Proven track record

2010-13, ordered and re-sold seven Keppel FELS Mod V-B’s generating on avg. 55% annualized return

Investment summary

9 Aggressive growth Selective growth Divestment of assets

Strategy

• To own or control a large fleet of oil service assets purchased at distressed valuations

Investment Phase Recovery phase Monetizing phase



Acquire high quality oil service tonnage at all time low distressed prices



Lowest possible entry with significant upside potential



All equity, no debt



Company strategy illustrated by the success of the 2010-13 investment cycle with 7x KFELS Mod V- B jack-ups ordered and re- sold pre delivery

Time Value All equity financing Industry low opex Aggressive, but disciplined investment approach Run assets for cash yield Selective growth Accretive M&A deals Asset sales Consolidation

10

Agenda

I. Transaction details II. Company overview III. Investment case IV. Appendix

11

SDSD – Overview



Company founded in 2010



Cypriot public limited liability company



Listed on Oslo Axess since March 2011 (ticker: SDSD)



Investment platform that invests directly into established companies and/or independent asset’s for future sale and/or operation



Current ownership interest (20%) in five (5) mid-size PSV vessels (VS 470 MK II DP1 and UT 755 LN DP2 design)



Recently invested ~USD 2m in corporate bonds

Company background Previous capital markets activity



The Company has since its inception completed two (2) equity private placements, totaling ~USD 372m:



Dec-10: USD 42m equity private placement issued at USD 1/share. Net proceeds used to order and initiate the construction of one (1) jack-up newbuild at KFELS in Singapore



Apr-11: USD 330m equity private placement issued at USD 1.5/share. Net proceeds used to acquire two (2) jack-up newbuild contracts from Clearwater Capital Partners and simultaneously

• rdered and initiated the construction of four (4)

jack-up newbuilds at KFELS in Singapore



The Company has since its inception made five (5) distributions to its shareholders, totaling ~USD 467m:



Jan-13: USD 0.14/share (total of ~USD 36.7m)



May-13: USD 1.22/share (total of ~USD 320m)



May-13: USD 0.26/share (total of ~USD 68.1m)



Aug-15: USD 0.035/share (total of ~USD 9.2m)



Oct-15: USD 0.126/share (total of ~USD 33m)

Current portfolio of vessels

20% investment in PSV Opportunity II DIS 20% investment in PSV Opportunity I DIS

FS Kristiansand (2005) FS Bergen (2006) FS Arendal (2006) FS Abergeldie (2008) FS Aberdour (2009)

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SDSD – Timeline of events

2010:



Ordered and initiated the construction of one (1) KFELS MOD V-B jack-up rig (B319)



Completed a USD 42m equity private placement



Company converted from a private limited company to a public limited company 2012-2013:



Sold the remaining six (6) Keppel FELS jack-up rigs (B324, B325, B337, B338, B339 and B340) prior to delivery 2016:



20% investment in PSV Opportunity I & II DIS, and received corresponding ownership in five (5) mid-size PSVs



Invested ~USD 2m in corporate bonds 2011:



Listed on Oslo Axess (ticker “SDSD”)



Acquired two (2) jack-ups from Clearwater Capital Partners (B324 and B325). Furthermore, the company ordered and initiated the construction of four (4) KFELS MOD V-B jack-up rigs (B337, B338, B339 and B340)



Completed a USD 330m equity private placement



Sold the company’s initial Keppel FELS newbuild contract (B319) prior to delivery 2014:



Purchased 24m shares in Prospector Offshore Drilling (25.37% of all outstanding shares)



Later disposed of all shares in Prospector Offshore Drilling due to negative development in the drilling space, hence were able to cut losses before the

• ffshore drilling market tumbled

PSV Opportunity I & II DIS Seven (7) jack-ups ordered from Keppel FELS in Singapore Prospector Offshore Drilling

13 Unaudited Unaudited Current Change Change Change Pro-forma ASSETS (USDm) 30.sep.16 (a) (b) (c) 30.sep.16 Equipment and machinery 0,0 0,0 Investment in associate 2,1 2,7 4,8 Total non-current assets 2,1 2,7

• 4,8

Trade and other receivables 0,0 0,0 Available-for-sale financial assets 0,0 0,0 Current tax asset 0,0 0,0 Marketable securities

• 2,0

2,0 Cash and bank balances 6,7 (2,7) (2,0) 32,7 34,7 Total current assets 6,7 (2,7)

• 32,7

36,8 Total assets 8,8

• 32,7

41,6 Current Change Change Change Pro-forma EQUITY AND LIABILITIES (USDm) 30.sep.16 (a) (b) (c) 30.sep.16 Total equity 8,8 32,7 41,5 Trade and other payables 0,0 0,0 Total current liabilities 0,0

• 0,0

Total equity and liabilities 8,8

• 32,7

41,6

SDSD – Balance Sheet as per 30 Sep-16



Cash position as per 30 Sep-16 equal to ~USD 6.7m



Pro-forma Balance Sheet includes effects from the below outlined transactions following the reporting date: a) Oct-16: Acquisition of 20% interest in PSV Opportunity II DIS for a total cash consideration of USD 2.7m b) Nov-16: Invested ~USD 2m in corporate bonds c) Dec-16: Contemplated equity private placement raising gross proceeds of NOK 275m (1)



Following the above, the estimated pro- forma cash position equals ~USD 34.7m



No interest bearing debt on the Balance Sheet

Balance Sheet – Current and pro-forma Commentary

(1) Assumed USDNOK of 8.40x. Excluding any transaction related fees and expenses

14

0,00 0,20 0,40 0,60 0,80 1,00 1,20 1,40 1,60 1,80 2,00

SDSD – Share price versus cash per share

Share price versus cash per share

Distribution to shareholders:

• 3 Jan-13, USD 0.14/share, USD 36.7m
• 2 May-13, USD 1.22/share, USD 320m
• 24 May-13, USD 0.26/share, USD 68.1m
• 28 Aug-15, USD 0.035/share, USD 9.17m
• 30 Oct-15, USD 0.126/share, USD 33.012m

Cash per share

Source: Bloomberg

0,00 0,20 0,40 0,60 0,80 1,00 1,20 1,40 1,60 1,80 2,00 USD/share Share Price

Investment in PROS Investment in PSVs & corporate bonds Investment in seven (7) jack-ups

15

SDSD – Realized jack-up investments 2010-2013

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 B319 B324 B325 B337 B338 B339 B340

11 months 15 months 16 months 21 months 23 months 20 months 26 months 179 220 125% 180 214 67% 180 213.5 63% 192 222.5 38% 192 215 26% 192 220 37% 192 223 30%

Purchase of jack-up Sale of jack-up Delivery of jack-up

(1) Annualized return (%) over the ‘holding period’, assuming 20% down-payment on each jack-up, net of estimated project management cost and transaction fees and expenses

16

SDSD – Realized jack-up investment 2014 and current PSV investment



During Sep-14, the Company re-entered the jack-up market with a 25.37% investment in Prospector Offshore Drilling S.A. (“PROS”) for a total consideration of USD 65m



PROS was listed on Oslo Axess, owned two F&G JU2000E high specification/harsh environment jack-ups, both which were contracted by Total, with contracts secured for the construction and delivery of three additional rigs of the same design



It became evident that the investment was made too early, as such, the position was quickly sold off at a small loss



During Nov-14, the Company received a total consideration of USD 51m from the sale and recorded a net loss of USD 14m

Acquired ~25% of Prospector Offshore Drilling S.A.



During Aug-16, the Company entered the PSV market with a 20% investment in PSV Opportunity I DIS (“PSVOI) for a total consideration of USD 2.4m



PSVOI is a private company that owns three (3) mid-size PSV vessels of the design VS 470 MK II



During Oct-16, the Company increased its PSV exposure with a 20% investment in PSV Opportunity II DIS (“PSVOII”) for a total consideration of USD 2.7m



PSVOII is a private company that owns two (2) mid-size PSV vessels of the design UT 755 LN

Acquired 20% of five mid-size PSV vessels

PSV Opportunity II DIS PSV Opportunity I DIS

17

Agenda

I. Transaction details II. Company overview III. Investment case IV. Appendix

18

5 10 15 20 25 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 25 Year Parity 30 Year Parity

PSV Opportunity I&II DIS – Vessels purchased 82% & 65% below newbuild parity

USDm Vessel Age

PSVOI: 82% below 25-year NB parity, USD 13.5m (10 year old vessel) PSVOII: 65% below 25-year NB parity, USD 15.3m (8 year old vessel)

USDm

PSV Opportunity I DIS

Norwegian built mid-size PSV newbuild parity Mid-size PSV values (500-750m2)

PSV Opportunity II DIS

27m 23m 15,3m 5,4m 13,5m 2,5m 5 10 15 20 25 30

• Avg. NB

Price NB Price NB 25 year Parity PSVOII Purchase Price PSVOII NB 25 year Parity PSVOI Purchase Price PSVOI

psv)

Note: Purchase Price for the five (5) vessels excludes any additional working capital contributed to the SPV Source: Clarksons Research Services Limited

19

• 5

10 15 20 25 30 35 40 45 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 USDm

Secondhand value 500-750m2 PSV

Newbuild RESALE 5 year old 10-year old

PSV Opportunity I&II DIS – Lowest recorded agreed purchase price to date for similar PSVs

(2) (1) 

PSV values have dropped 80% since 2014, as a result of the decline in oil price and cut in E&P spending



The average value over the last 15 years for a 10-year old midsize PSV is USD 18.6m

Secondhand value 500-750m2 PSV Highlights

1) Last 15 years: Avg. USD 18.6m per 10 year old vessel 2) PSVOII: Avg. USD 5.4m per 8 year old vessel 3) PSVOI: USD 2.5m per 10 year old vessel

(3)

Source: Clarksons Research Services Limited

20

5 10 15 20 25 30 35 USD('000) PSV Dayrates

PSV Opportunity I&II DIS – Depressed dayrates, yet above opex

Weighted average break-even for PSV Opportunity I & II of ~USD 5,925/day Last 10 year avg. ~USD 18,200/day Current market rate ~USD 6,150/day

Mid-size PSV term rates

Last 5 year avg. ~USD 16,000/day

Source: Clarksons Research Services Limited

21 Dayrate scenario Current market Break-even Last 5 year average Last 10 year average Dayrate USD/d 6 150 6 975 16 000 18 200 Utilization % 85 % 85 % 85 % 85 % Cash break-even, avg. " (5 925) (5 925) (5 925) (5 925)

• No. of vessels

# 1 1 1 1 EBITDA, per vessel USDm (0,3) 0,0 2,8 3,5 All-in cost, per vessel " 5,1 5,1 5,1 5,1 Cash yield %

• 5,0 %

0,0 % 55 % 68 %

• 5,0 %

0,0 % 55% 68%

• 10%

0% 10% 20% 30% 40% 50% 60% 70% 80% 6 150 6 975 16 000 18 200 Current market Break-even Last 5 year average Last 10 year average Cash yield

PSV Opportunity I&II DIS – Significant yield potential on new investment



Current market dayrate (USD 6,150/day) at historical low, solid estimated increase in cash yield as market recovers to last 5 and/or 10 year historical average



Attractive cash yield potential due to low all-in cost and 100% equity financing



The Company owns 20% of the five (5) mid-size PSV’s

Main assumptions and cash yield calculation Estimated cash yield

22

Agenda

I. Transaction details II. Company overview III. Investment case IV. Appendix

23

Name Citizenship # of shares ('000) % SAGA TANKERS ASA Norway 120 564 46,02 % EUROCLEAR BANK N.V. Belgium 78 338 29,90 % APOLLO ASSET LIMITED Monaco 27 000 10,31 % HRF MARINE LLC USA 27 000 10,31 % PARK LANE FAMILY OFFICE AS Norway 1 850 0,71 % OCULOMOTORIUS AS Norway 967 0,37 % SPONTEL AS Norway 616 0,24 % EL INVESTMENT AS Norway 461 0,18 % HANEKAMB INVEST AS Norway 411 0,16 % STRATA MARINE & OFFSHORE AS Norway 381 0,15 % VERPENTANGEN AS Norway 340 0,13 % CITIBANK, N.A. UK 274 0,10 % JOHANSEN Luxembourg 250 0,10 % SPAREBANKEN SOGN OG FJORDANE Norway 222 0,08 % CLEARSTREAM BANKING S.A. Luxembourg 214 0,08 % KLAUSEN Norway 149 0,06 % BRONKEN Norway 143 0,05 % SØRENSEN Norway 133 0,05 % PROFOND AS Norway 128 0,05 % NORDNET LIVSFORSIKRING AS Norway 128 0,05 % OTHERS

• 2 432

0,93 % Total

• 262 000

100 %

Overview of shareholders



262 million common shares outstanding



The Spetalen-sphere through Saga Tankers and Strata Marine & Offshore owns and controls ~46% of the total outstanding amount of common shares



QVT Financial L.P. owns and controls ~30%

• f the total outstanding amount of

common shares



Arne Fredly through Apollo Asset Limited

• wns and controls ~10% of the total
• utstanding amount of common shares



Herman Flinder through HRF Marine LLC

• wns and controls ~10% of the total
• utstanding amount of common shares



The four (4) largest shareholders represent close to ~97% of the total

• utstanding amount of common shares



The top 20 shareholders represent more than ~99% of the total outstanding amount of common shares

Shareholders as per Dec-16 Commentary

24

Legal structure

S.D. Standard Drilling Plc.

(Cyprus)

Wanax AS

(Norway) 20% investment in PSV Opportunity I DIS 20% investment in PSV Opportunity II DIS

FS Kristiansand (2005) FS Bergen (2006) FS Arendal (2006) FS Abergeldie (2008) FS Aberdour (2009)

Investment in corporate bonds

Note: Subsidiary (Wanax AS) currently in the process of being incorporated

25

Management and Board of Directors

Martin Nes – Chairman of the Board



• Mr. Nes has been involved in the company since its incorporation in 2010 and was

re-appointed Chairman in Aug-13. He is well versed in the company having previously held the roles of Chairman and Acting CEO



• Mr. Nes is CEO of Ferncliff Tih AS, one of Norway’s largest investment companies,

and has previously worked for law firms Wikborg Rein and Evensen & Co



• Mr. Nes has extensive corporate and board experience and serves as chairman/

board member in a number of listed and unlisted companies



• Mr. Nes holds a law degree from University of Oslo and a Master of laws’ degree from

University of Southampton, England

Arne Fredly- Non-Executive Director



• Mr. Fredly was appointed to the board of directors in Jan-16



• Mr. Fredly is an independent professional investor and was previously senior partner

and the second largest shareholder of ABG Sundal Collier, an independent Nordic Investment bank, where he was head of equity sales and trading. Mr. Fredly has also worked for Alfred Berg



• Mr. Fredly holds a Master of Science in Finance from the Norwegian School of

Economics and Business Administration

George Crystallis – Independent Director



• Mr. Crystallis was appointed to the board of directors in Dec-10



George Crystallis is Managing Director of M.G. Crystallis & Co Limited, a Cyprus trading company ,and the founder and owner of Odos Athinon, an Art and Culture Centre in Limassol



• Mr. Crystallis has extensive board experience and serves on the boards of several

Cypriot companies



• Mr. Crystallis holds a degree in Economics from the University of Freiburg, Germany

Management Board of Directors

Evangelia Panagide- General Manager



• Ms. Panagide was elected general manager in Sept-13



• Mr. Panagide is based in the Company's headquarter in Cyprus

and has run this office since 2011

Espen Lundaas – Interim Chief Financial Officer (CFO)



• Mr. Lundaas was re-appointed to serve as interim CFO in Sept-
• 13. He is well versed in the company having previously held the

role of Acting CFO



• Mr. Lundaas is CFO of Ferncliff TIH AS, one of Norway’s largest

investment companies



• Mr. Lundaas is CEO and CFO of Saga Tankers ASA



• Mr. Lundaas holds a Master of Business and Economics from the

Norwegian School of Management (1997-2001)

26 Standard Drilling ASA

• Founded in 2006 by Spetalen under the name

Standard Drilling

• Standard Drilling originally contracted four (4)

jack-up rigs at Labroy at a total contract value

• f USD 600m
• Rig #2 and #4 were sold to Saipem in 2008 for

USD 200m, on average

• Rig #1 and #3 were sold to UMW with final

settlement in December 2009 for USD 170m

• n average (UMW acquired a 51 % stake in

the two rigs in 2007/2008) Songa Offshore

• Spetalen was a founder with a 37.5 % stake in

the acquisition of two (2) semi-submersible rigs (Songa Venus and Songa Mercur) from the Mexican company IPC in 2004 Ferncliff Drilling

• Founded by Spetalen in 2006
• Ferncliff Drilling ordered a USD 540m

deepwater drillship (+ one (1) option) at Samsung in South Korea

• The company was sold to the Ofer Group two

months later valuing Ferncliff Drilling at NOK 800m

Standard Drilling ASA Songa Offshore Ferncliff Drilling

Global Tender Barges

• Ferncliff participated in the refinancing of

GGS in 2007

• GGS acquired three (3) tender rigs from Pride

International for USD 215m in 2008

• GGS was split into two listed companies in

June 2008

• Spectrum (Seismic)
• Global Tender Barges (Tender barges

+ Iran Seismic)

• GTB sold the three (3) tender rigs for a total

consideration of USD 245m in 2009 Offshore Rig Services

• Spetalen invested NOK 67m in the start-up

phase of OFFRIG in 2005

• OFFRIG had two (2) semi-submersible rigs

under order + two (2) options at Yantai Raffles Shipyard in China

• OFFRIG was sold to Awilco Offshore in 2006

with a significant return on investment to initial shareholders Noble Denton

• Ferncliff acquired Noble Denton in 2006
• Acquired SEAS and Brevik Engineering in 2008
• Acquired Indec, PMC and Lowe Offshore in

2009

• Noble Denton was sold to Germanischer

Lloyds AG for USD 178m in 2009

Global Geo Services

Offshore Rig Services Noble Denton

Source: Ferncliff

A selection of Ferncliff case studies

27 Yard Kleven, Norway Ship Type VS 470 MK II (23 pax accommodation) Deck Space 700 m², 51m x 13.8m Deck Load 5t/m² Dwt/GT/NT 3,544 mt/2,579/774 Dynamic Positioning DP2 in ERK, DP1 in ERB/ERA Main Engine Wärtsila Vasa 6R32LND 2x 2,250 kW(14 kn) Last Drydock/SS FSB 2011, FSA 2014, FSK 2016 Next SPS FSB Due, FSA 2019, FSK 2021

20% investment in PSV Opportunity I & II DIS (1/3)

PSV Opportunity I DIS Kleven-built sister vessel specs

 Built: 2005  Location: UK Continental Shelf  Status: On a 3-6 month time charter  Purchase price: USD 2.5m  Inspection report: Very Good Condition FS Kristiansand (FSK) FS Bergen (FSB)  Built: 2006  Location: Edinburgh (Leith), Scotland  Status: Laid-Up  Purchase price: USD 2.5m  Inspection report: Good Condition FS Arendal (FSA)  Built: 2006  Location: Aberdeen, Scotland  Status: Between time charter contracts  Purchase price: USD 2.5m  Inspection report: Good Condition

Previous long-term (>1,5 years) charter clients:

• FS Kristiansand is working on the UKCS on a 3-6 month charter,

taking her through the winter months

• FS Bergen is currently laid-up in Leith, Scotland and will be put

through class when considered advantageous

• FS Arendal is currently between jobs after having worked for

Repsol/Talisman on the UKCS

• Kleven Verft have built more than 80 vessels over the past 10

years illustrating the yards track-record and throughput

Source: Clarksons Research Services Limited

28 Yard Aukra, Norway Ship Type UT 755 LN Deck Space 680 m², 51m x 13.3m Deck Load 5t/m² Dwt/GT/NT 3,270 mt/2,180/1074 Dynamic Positioning DP2 (DGPS, DGNS, Cyscan) Main Engine MaK 6M25, 2x 2690 BHP Last Drydock/SS ABG 2013, ABD 2014 Next SPS ABG 2018, ABD 2019

20% investment in PSV Opportunity I & II DIS (2/3)

PSV Opportunity II DIS Aukra-built sister vessel specs

• FS Abergeldie is currently laid-up in Trinidad & Tobago and will

be moved to the UK sector for temporary lay-up or work when it is considered advantageous

• FS Aberdour has just completed her journey from Trinidad &

Tobago and is cleaned and ready for work on the UKCS

• The vessels have been very well looked after and the technical

manager was impressed by the condition, when compared to

• ther medium sized supply vessels
• The UT 755 LN is a well known design that is being operated all
• ver the world within all main areas of the offshore industry

FS Abergeldie (ABG)  Built: 2008  Location: Trinidad & Tobago  Status: Laid-Up  Purchase price: USD 5.1m  Inspection report: Very good Condition FS Aberdour (ABD)  Built: 2009  Location: Aberdeen, Scotland  Status: Ready and competing for work  Purchase price: USD 5.7m  Inspection report: Very good condition

Previous long-term (>1 years) charter clients:

Source: Clarksons Research Services Limited

29 

Vessels acquired at distressed asset values, the financing banks sold the vessels at a significant loss



100% equity capital structure allows for lowest possible break-even dayrate



The project is 100% equity financed and includes a significant upgrade/repositioning/working capital cash buffer of USD 4.5m and USD 2.7m for Opportunity I and II, respectively



With no debt and low opex, the vessels can be offered to oil companies at highly competitive cash positive rates



Experienced North Sea operator and commercial manager with high utilization track record



Fletcher has extensive experience in owning and operating medium sized supply vessels



Opportunity I Vessels have sailed to Scotland for Class Renewal, DP2 upgrades and to be restored to North Sea standards, before being put into lay-up or work on the UKCS



Opportunity II vessels have/will sail from Trinidad & Tobago to Scotland where they will be restored to North Sea standards and put into lay-up or work on the UKCS



Five (5) similar Norwegian built vessels of well-known designs



The vessels are recognized as good work-horses and the design is familiar to every oil major and charterer



Fletcher will utilize their good name and network of charterers to find employment for the vessels



Two out of five vessels have already found work in today's depressed offshore market

Source: Clarksons Research Services Limited

20% investment in PSV Opportunity I & II DIS (3/3)