USA INVESTOR PRESENTATION JUNE 2018 FORWARD LOOKING STATEMENTS - - PowerPoint PPT Presentation

USA INVESTOR PRESENTATION

JUNE 2018

FORWARD LOOKING STATEMENTS

Matters discussed in this presentation may constitute forward-looking statements under U.S. federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect the Company’s current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. All statements,

• ther than statements of historical facts, that address activities, events or developments that the Company expects, projects,

believes or anticipates will or may occur in the future, including, without limitation, the delivery of vessels, the outlook for tanker shipping rates, general industry conditions future operating results of the Company’s vessels, capital expenditures, expansion and growth opportunities, bank borrowings, financing activities and other such matters, are forward-looking statements. Although the Company believes that its expectations stated in this presentation are based on reasonable assumptions, actual results may differ from those projected in the forward-looking statements. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the failure of counterparties to fully perform their

• bligations to us, the strength of the world economies and currencies, general market conditions, including changes in tanker vessel

charter hire rates and vessel values, changes in demand for tankers, changes in our vessel operating expenses, including dry- docking, crewing and insurance costs, or actions taken by regulatory authorities, ability of customers of our pools to perform their

• bligations under charter contracts on a timely basis, potential liability from future litigation, domestic and international political

conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists. We undertake no

• bligation to publicly update or revise any forward looking statement contained in this presentation, whether as a result of new

information, future events or otherwise, except as required by law. In light of the risks, uncertainties and assumptions, the forward looking events discussed in this presentation might not occur, and our actual results could differ materially from those anticipated in these forward-looking statements.

2

EURONAV – WHO WE ARE

2 FSO

3 million barrels Stripped water capacity

The world’s largest, independent quoted crude tanker platform 3,900 EMPLOYEES

• Approx. 3, 720 seafarers of many different nationalities
• Approx. 180 shore employees

International company – internationally connected

76 VESSELS*

2 V-Plus**

3 million barrels Over 441,000 dwt Only 2 in world fleet

43 VLCC

2 million barrels Up to 330,000 dwt

27 Suezmax

1 million barrels 150,000 – 165,000 dwt

3

Fleet summary

Fixed 23% Spot 77%

• Leading provider of

transportation and storage of crude oil

• Hybrid operating

platform with mix of integrated &

• utsourced ship

managers

• Strong relationships to
• il majors and leading

energy firms

• Market capitalization
• f USD ~2 billion

*plus 2 panamax vessels **including V-Plus bought from INSW June 2018

Actively managed high quality fleet…

EURONAV STRATEGY

Strong balance sheet hedge towards cyclicality Liquidity end June 2018 (USDm) $817m

• Tanker business is cyclical, towards which the only cure

is to have a strong balance sheet and liquidity pool

• Policy to retain at least two years of operational

liquidity at all times and maintain strong banking relationships

As evidenced by:

Capital allocation key to growth strategy

1 2

Acquisition criteria Since 2014

• 1. Keep strong balance sheet – leverage c 50%
• 2. Retain liquidity runway at least 2 years
• 3. Keep or lower average break-even
• 25 vessels acquisition + 21 Vessels merger
• High dividend yield adjusted to fixed dividend
• Maintain strong balance sheet ≈ 50% (leverage)
• Maintain a high liquidity position

4 132 817 650 35

100 200 300 400 500 600 700 800 900 Cash Undrawn Secured Revolver Undrawn Unecured Revolver Total

$m

TANKER MARKET STRUCTURE

5

Seasonal Cyclical Few customers, lots of suppliers

Oil Companies Traders

Ship Broker

Refiners

• wner
• wner
• wner
• wner

Pool

• wner

43,198 39,614 37,161 32,318 34,942 36,082 35,102 28,823 30,293 35,783 44,969 49,777 25,000 30,000 35,000 40,000 45,000 50,000 55,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Average monthly VLCC rate 1990- 2017 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000

1990 1992 1994 1997 1999 2002 2004 2006 2009 2011 2014 2016 Monthly TCE rate

OPERATIONALLY GEARED

VLCC TCE rates

$25,000 $30,000 $40,000 $50,000 $80,000

Suezmax TCE rates

$20,000 $25,000 $35,000 $45,000 $75,000

Each $5,000 uplift in both VLCC and Suezmax rates improves net revenue and EBITDA by $112mm

BASE $112 $336 $560 $1,232 +$5,000 per day +$15,000 per day +$25,000 per day +$55,000 per day

FSO 5 year contract to 2022 Long term TC 7 year contract to 2024 Commercial TC relationships

+

6

GENER8 TRANSACTION

7

15 6

Gener8

VLCC Suezmax

43 27

Combined

VLCC Suezmax

28 21

Euronav

VLCC Suezmax

COMBINED BUSINESS

MAJOR POWERHOUSE IN LARGE CRUDE TANKERS SEGMENT

8

18.9 million DWT in total in pro-forma combined business*

* For total pro-forma business including FSO

5 10 15 20

Total Fleet DWT

+ 2 FSO, 2 ULCC & 2 LR2s

VALUE CREATION AND POTENTIAL FROM LARGER LIQUID PLATFORM

NAV GNRT NAV EURN Asset Asset Cash Cash Vessels Vessels FSO Extension + Residual Value Brand value as crude transporter of choice Never defaulted Customer quality and reliability Debt Debt Loans Loans Bonds Bonds Transaction Costs Transaction Costs

FIRST INDUSTRIAL BIG TANKER PLAYER : Pure play Big market cap High liquidity (ADTV) Best in class corporate governance No related party / conflict of interest Best in class operation Best in class chartering Big enough to have an impact on markets Maximize optionality – play the tanker earnings cycle

9

CONCLUSION

7.3% 7.2% 4.3% 4.2% 3.7% 3.5% 0.5% 69.3% Saverco NV Châteauban SA Oaktree Victrix NV M&G (Prudential) Fidelity Euronav (treasury shares) Other Shareholders

Euronav post- merger top holders

• 1. KEEP STRONG BALANCE SHEET
• Leverage less than 50% on completion
• 2. RETAIN SUFFICIENT LIQUIDITY

FOR CYCLE

• Liquidity >$800m
• 3. RETAIN OR LOWER AVERAGE

BREAK EVEN FOR FLEET

• VLCC break even reduced on pro-forma basis;

Suezmax flat

MARKET CAP

$1.5B $2.0B*

*@$9.10

10

STRONG PRO FORMA FINANCIALS

Leverage

• Credit margins between 1.225% and 2.25% (Bond

7.5%)

• Most of the secured bank debt is revolving
• Strong relationships with the leading international

shipping banks

• No material debt maturities until 2020
• Revolving credit facilities reduce by $138m/year
• Cash debt amortizations on term loans: $55m/year

Highlights Repayment schedule and RCF reductions Strong & supporting banking relations Covenants

• Liquidity (minimum USD 54.3 million):

USD 817 million (Q1-18)

• Equity Ratio (minimum 30%):

64.5% (Q1-18)

• Working Capital (positive):

USD 662.8 million (Q1-18)

100 200 300 400 500 600 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Millions Bond Maturity Undrawn balloon to be refinanced Balloon to be refinanced Repayments Reductions (non- cash)

11

INDUSTRY AND MARKET OVERVIEW

OUTLOOK

Demand for Oil ROBUST Supply of Oil OPEC CUTS EXPORTS EXTENDED

Vessel Supply S/TERM HEADWINDS L/TERM MANAGEABLE

Ton Miles US EXPORTS GROW Financing & Regulation BARRIER TO ENTRY

13

DEMAND FOR OIL – ROBUST AND STEADY

Y/Y Change in global demand for oil – consistently growing

Average 1.1 million barrels per day

Source IEA

14

Annual demand growth VLCC Equivalents (mbpd)

1.6 49 1.5 46 1.4 43 1.3 40 1.2 37 1.1 33 1 30 0.9 27 0.8 24 0.7 21

Demand for Oil

0.3 1 0.5 0.3 1 1.5 1.9 2 0.3 1.7 0.8 0.7 0.7 1.5 3.1 1.4 1 1.6

• 0.7
• 0.9

3.1 0.8 1.1 1.3 0.7 1.8 1.6 1.6 1.4 1.4 1.2

• 1.5
• 1
• 0.5

0.5 1 1.5 2 2.5 3 3.5 M bpd Demand growth

20 40 60 80 100 120

OIL PRICE IMPACT ON DEMAND

Oil price outlook

Price is too high/demand is impacted

Demand Destructive Demand Stimulating Demand Disruptive

Price is too low/long-term supply impacted/CAPEX cuts in E&P

Neutral

USD per barrel

Source: Bloomberg

15

Oil supply increase coming 2019+

REFINERY GROWTH UNDERPINS DEMAND

16

0.5 1 1.5 2 2.5 3 3.5 2016 2017 2018 2019 2020

Million bpd

North America Europe FSU Africa Middle East India China Other Asia

Refinery Capacity expansion projects 2016-20: +7.5m bpd next three years

Source: Clarksons, Citi

SUPPLY OF OIL – OPEC & NON OPEC

17 200 400 600 800 1000 1200 1400 1600 1800 2000 K bpd YoY growth of annual average Brazil Canada Russia US

Potential non OPEC oil supply growth

Source: Stifel Source: Citi

Supply of Oil

OPEC to “normalise” would mean 730k bpd+

• 0.25
• 0.3

0.62 0.25 0.15 0.14 0.13

• 1
• 0.5

0.5 1 1.5 1 M bpd change if reverted to pre Vienna agreement levels Kuwait UAE Iraq Russia Saudi Arabia Venezuela Iran

2017 2018 2019 2020 2021 2022

TON MILES - INCREASING

Demand growth all from Far East – key for tankers is where supply is sourced from

1.6 mbpd x 365 days = 548m barrels 584m barrels / 2m capacity per VLCC = 292 cargoes 292 cargoes / 9 annual journeys for VLCC MEG – F East = 32 VLCCs 1.6 mbpd x 365 days = 548m barrels 584m barrels / 2m capacity per VLCC = 292 cargoes 292 cargoes / 4.5 annual journeys for VLCC Atlantic – F East = 65 VLCCs

Exporter

Supply Demand Demand Supply Source Euronav, Morgan Stanley, Fearnley

West Africa US/LatAm / Caribs Middle East Asia Pacific China

32 VLCCs 65 VLCCs

Atlantic Basin – Far East route Middle East - Asia Pacific route

18

49

Annual demand growth VLCC equivalents (mbpd)

1.6 49 1.5 46 1.4 43 1.3 40 1.2 37 1.1 33 1 30 0.9 27 0.8 24 0.7 21

Importer

West of Suez will provide 81%

• f new oil production to 2023

East of Suez will provide 81%

• f new oil consumption & 74%

new refinery capacity to 2023

VESSEL SUPPLY REMAINS UNBALANCED

CONTRACTED so far in 2018 for delivery 2020/1

ORDER BOOK TOTAL DUE for DELIVERY 2018 OPERATIONAL FLEET – moved from storage to general fleet so far

RECYCLED so far in 2018

Source: Clarksons, Pareto

19

27 48 10

16

• 26
• 43

1.4m bpd DEMAND should absorb

Number of VLCCS

2020 pro forma new

• rders

2018 impact

• 11

• 7
• 7
• 7
• 1
• 1
• 1
• 1
• 3
• 6
• 1
• 1
• 1

7 4 4 6 2 4 3 2 5 1 1 8 4 1 1 3 2 3 4 2 4 7 1 1 4

• 10
• 5

5 10 ACOL BW Group Capital Marine Cosco DHT Drytank Embiricos Frontline HMM Hyundai Lino Kyklades Lemos Lykiradopoulo NYK Onassis Sentek Shandong Sinokor TCC Guggenheim Hunter Kuwait Kyoei Korea Line

CONTRACTING – DRIVEN BY INDUSTRIAL REPLACEMENT & “CHEAP” PRICES

VLCC below $80m attracted buyers Supply of Vessels

2 4 6 8 10 12 70 75 80 85 90 95 2016 2017 2018 No of VLCCs contracted $m New Build VLCC VLCC contracting VLCC new build price

37 90 VLCCs aged 15yr+ VLCCs ordered

Net contracted orders over past 18 months = 53

Speculative

20

ORDERBOOK – MANAGEABLE IN SIZE TERMS….

21 10 20 30 40 50 60 Orderbook as % of fleet VLCC Orderbook % Fleet Suezmax Orderbook % Fleet

15% 8%

Source Clarksons

Supply of Vessels

….BUT CONCENTRATED DELIVERY SCHEDULE EXPLAINS CURRENT LOW FREIGHT RATES

22

Source Clarksons

Supply of Vessels

14 13 12 10 11 10 5 4 6 8 2 8 4 5 7 4 11 12 12 12 18 11 13 8 8 12 11 14 13 12 13 13 9 5 6 5 2 4 6 8 10 12 14 16 18 20 No of VLCCs delivered per quarter

• 4
• 2

2 4 6 8 10 20 30 40 50 60 70 2015 2016 2017 2018 Contango/Backwardation $ p/b/mth No of VLCCs Vlccs in floating storage Contango/Backwardation 23

Contango Backwardation

FLOATING STORAGE – EXTRA SUPPLY OF SHIPS POST BACKWARDATION

Source Clarksons

Supply of Vessels

TWO TIER MARKET CONFIRMED BY FREIGHT RATES AND ASSET PRICES

Source: Clarksons, Tankers International

Earnings for older tonnage Asset prices – 15 year old vessels = scrap

10 20 30 40 50 60 70 80 90 100

• 2

2 4 6 8 10 12 14 16 18 20 22

USDm VLCC Age

Parity line Pareto quotes 2017 2018

Source: Pareto

5,000 10,000 15,000 20,000 25,000 30,000 Jul 17 Oct 17 Jan 18 VLCC Earnings TI Pool VLCC Earnings 15 yr + earnings 24

DECISION TIME FOR OWNERS

Source Euronav

25

Ballast Water systems = $1.5-2m post Sept 19 IMO sulphur cap: older ships penalized more due to higher consumption

Incoming Regulatory costs Negative cash flow worsens with age Supply of Vessels

2,000 4,000 6,000 8,000 10,000 12,000 15 16 17 18 19 20 22 23 Average VLCC rates Q3 17 to Q1 18 Vessel Age VLCC

Source Tankers International

LARGE TANKER FLEETS – LARGELY IN BALANCE

26

10 20 30 40 50 60 70

• 3
• 1

2 4 6 8 10 12 14 16 18 20 22 24

Number of VLCCs Age VLCC

99 629 108

Source Clarksons

10 20 30 40 50 60

• 3
• 1

2 4 6 8 10 12 14 16 18 20 22 24 26

Number of Suezmaxes Age of Suezmax

40 512 70

27 5 10 15 20 25 30 35 40 1h 03 2h 03 1h 04 2h 04 1h 05 2h 05 1h 06 2h 06 1h 07 2h 07 1h 08 2h 08 1h 09 2h 09 1h 10 2h 10 1h 11 2h 11 1h 12 2h 12 1h 13 2h 13 1h 14 2h 14 1h 15 2h 15 1h 16 2h 16 1h 17 2h 17 1h 18 No of VLCC & Suezmax recycled per half year

Largely single hull conversion & offshore

Source: Clarksons

RECYCLING – IN PROGRESS

26 VLCC, 8 Suez so far in 2018

FINANCIALS & REGULATION – STRUCTURAL CHANGE

Global end of the year loan shipping portfolio

• Banks under increasing

commercial & regulatory pressure

• Regulations starting to bite –

Basel 4 in particular

Source Petrofin

Around USD 94bn withdrawn from shipping sector since 2010

28

Financing & Regulation

• From Sept 2019, to be installed

upon the next Dry Dock (5 yr) Euronav Fleet:

• 21 VLCC BWTS ready
• 8 Suezmax BWTS ready

Ballast Water Treatment systems

WHY HAVE FREIGHT RATES BEEN SO CHALLENGED?

STRONG FLEET GROWTH UNTIL RECENTLY SINCE 2015

30 460 480 500 520 540 560 580 590 610 630 650 670 690 710 730 750 2013 2014 2015 2016 2017 2018 no of suezmax in global fleet no of vlcc in global fleet VLCC Double Hull Tanker Fleet Development Suezmax Double Hull Tanker Fleet Development

Source Clarksons

COMBINED WITH INVENTORY DRAWDOWN

31

• 2
• 1.5
• 1
• 0.5

0.5 1 1.5 2 2.5 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Global implied oil stock change Average VLCC earnings Global implied oil stock change VLCC average earnings by Quarter

Source Clarksons Fearnley

If OPEC maintain Jan 18

• utput

AND SUPPLY ARTIFICIALLY LOW DUE TO OPEC CUTS

32

• 2000
• 1500
• 1000
• 500

500 1000 1500 2000 2500 3000 20,000 40,000 60,000 80,000 100,000 120,000 2012 2013 2014 2015 2016 2017 OPEC oil production Y/Y change mbpd Average VLCC earnings y/y growth in OPEC production Average VLCC earnings

Source Clarksons, Bloomberg

CONCLUSION

Source Clarksons, Gibsons *VLCC equivalent = 1 VLCC = 2 Suezmax

SUPPLY DEMAND

LARGE TANKER MARKET – MOVING TOWARD EQUILIBRIUM

Demand and supply interaction on VLCC equivalents 2016-2020

34

Annual demand growth VLCC equivalents (mbpd) 1.6 49 1.5 46 1.4 43 1.3 40 1.2 37 1.1 33 1 30 0.9 27 0.8 24 0.7 21

2016 2017 2018 2019 2020 Total VLCC to be delivered 47 50 48 51 25 Total Suezmax to be delivered 27 57 40 18 1 VLCC equivalents to be delivered* 61 79 68 60 26 +/- Recycling forecast

• 3
• 21
• 40
• 25
• 27

IEA demand forecast bpd m 1.6 1.6 1.4 1.4 1.2

• Demand based on IEA forecast
• 49
• 49
• 43
• 43
• 37

= Yearly Net Surplus/(Deficit) 9 9

• 15
• 8
• 39

Cumulative Surplus/(Deficit) 9 17 2

• 6
• 45

VLCC Equivalent fleet (assuming no scrapping) 910 989 1057 1117 1143

35