Scorpio Tankers Inc. · NYSE:STNG
Scorpio Tankers — Noble Conference 2018
34 slides from Scorpio Tankers's conference presentation, Jan 29, 2018
Slide 1: Noble Conference Presentation
Noble Conference Presentation January 29, 2018 1 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement This document may contain forward-looking statements that reflects management’s expectations for the future. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospecti
Slide 3: Company Overview
Company Overview Key Facts Fleet Profile Owned TC/BB Chartered-In Scorpio Tankers Inc. is the world’s largest and 60 youngest product tanker company • Pure product tanker play offering all asset classes • 109 owned ECO product tankers on the 50 9 water with an average age of 2.5 years • 19 time/bare
Slide 4: Company Profile
Company Profile Top Shareholders Market Cap ($m) # Holder Ownership $1,200 1 Wellington Management Company 5.3% 2 Dimensional Fund Advisors 5.2% $1,000 3 Fidelity Management & Research Company 3.4% $800 4 Monarch Alternative Capital 2.9% 5 BlackRock Fund Advisors 2.7% $600 6 Magallanes Value Investo
Slide 5: Largest & Youngest Product Tanker Fleet
Largest & Youngest Product Tanker Fleet Largest & Youngest Product Tanker Fleet Scorpio Average Age vs. Worldwide Fleet HM & MR LR1 LR2 Avg. Age of Vessels Scorpio Tankers (Owned Fleet Only) Active Fleet 140 14 12.9 120 12 109 100 10 9.3 9.5 38 8.0 80 75 8 8 12 7 60 56 56 55 6 52 11 11 6 14 4 40 11
Slide 6: Scorpio Pools Provide World's Largest Operating Platform
Scorpio Pools Provide World’s Largest Operating Platform • Scorpio’s trading platform operates the largest product tanker fleet in the market with over 160 vessels under commercial management Top Product Tanker Operators Top HM & MR Operators Top LR1 & LR2 Operators 120 60 109 109 180 52 51 160 100
Slide 7: Scorpio Pools Have Consistently Outperformed Market
Scorpio Pools Have Consistently Outperformed Market Pool Performance ($/day) $30,000 $20,000 Scorpio Handymax Tanker $10,000 Pool (SHTP) $0 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Scorpio Handymax Pool Handymax Benchmark (TD16 - TD18 - TC6 - BALTIC/CONT) $30,000 $20,000 Scorpio MR Tank
Slide 8: Significant Operating Leverage to a Market Recovery
Significant Operating Leverage to a Market Recovery • Only taking into consideration the Company’s 109 owned vessels, a $1,000/day change in rates equates to $39.7 million in annualized cash flow or $0.12/share • Applying the actual TCE rates earned by the Company in 2015 to its larger fleet today,
Slide 9: One Year Time Charter Rates
One Year Time Charter Rates $35,000 HM MR LR1 LR2 $30,000 $25,000 $/day $20,000 $15,000 $10,000 $5,000 $0 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Source: Clarksons Research Services, January 2018 9 9
Slide 10: Reduction in European Diesel Inventories
Reduction in European Diesel Inventories 40 36.1 ARA gasoil inventory has 5 Yr Avg declined 19.3% yoy and 39.6% since their 2015 peak 35 25.8 30 Million barrels 25 21.6 20 15 As inventories continue to fall, consumption will have to be met by imports rather than being subsidized by inventory draw do
Slide 11: Asset Values Starting to Recover
Asset Values Starting to Recover $65 HM MR LR1 LR2 $60 $55 $50 Million $USD $45 $40 $35 $30 $25 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Resale Values Source: Clarksons Research Services, January 2018 11 11
Slide 12: Ballast Water Treatment Systems
Ballast Water Treatment Systems BWTS Filtering Unit • In July 2017, the IMO extended ballast water treatment until the first statutory dry docking survey after 2019. • Ship operators will need to install type-approved ballast water treatment systems by the time the International Oil Pollution Preven
Slide 13: Sulfur Emission Regulations
Sulfur Emission Regulations • On October 27, 2016 the International Maritime Organization's (IMO) Marine Environmental Protection Committee announced the results from a vote to ratify and formalize regulations mandating a reduction in sulfur emissions from 3.5% currently to 0.5% as of the beginning
Slide 14: Long Term Developments
Cconrio Tankers Inc. Long Term Developments
Slide 15: Fundamentals Overview
Fundamentals Overview Increasing Ton Mile Demand and Seaborne Exports ✓ Since 2000 seaborne product ton miles have increased at a CAGR of 4.2% Increasing Exports to Brazil and Australia ✓ Since 2013 gasoline and diesel imports to Brazil and Australia have increased 55% and 123%, respectively(1) Dema
Slide 16: Ton Mile Demand Continues to Grow
Ton Mile Demand Continues to Grow • Ton miles, the quantity of cargo multiplied by the distance it travels, has increased at a CAGR of 4.2% since 2000 Seaborne Product Ton Miles 3,500 3,000 Billion Ton Miles 2,500 2,000 1,500 1,000 500 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20
Slide 17: Ton Mile Demand Drivers
Ton Mile Demand Drivers Brazil Diesel & Gasoline Imports (kb/d) Australia Diesel & Gasoline Imports (kb/d) 500 Diesel Gasoline 477 500 Diesel Gasoline 451 411 411 400 384 400 115 348 335 245 119 110 313 300 300 291 205 69 64 202 214 216 200 200 68 336 292 301 243 232 227 100 100 179 146 146 119 0 0
Slide 18: Seaborne Refined Product Exports
Seaborne Refined Product Exports 2000 2016 % Change CAGR mb/d mb/d Global Oil Demand 100.0 Global Oil 90.0 76.9 96.6 25% 1.4% Demand 80.0 70.0 Seaborne Crude Exports 40.0 Seaborne Crude 33.7 39.3 17% 1.0% 35.0 Exports 30.0 Seaborne Exports of Refined Products 25.0 Seaborne 20.0 Refined Product 12.2
Slide 19: Demand to Outpace Supply Growth in 2018
Demand to Outpace Supply Growth in 2018 12.0% Net Fleet Growth Demand Growth 11.0% 10.0% 8.5% 8.0% 6.1% 6.0% 5.8% 5.2% 4.6% 5.2% 4.4% 3.9% 4.0% 2.8% 2.8% 2.4% 2.0% 0.0% 2014 2015 2016 2017E 2018E 2019E STIFEL estimates assume scrapping and slippage. Source: STIFEL, January 2018 19 19
Slide 20: MR's Turning 15 vs Newbuild Deliveries
MR’s Turning 15 vs Newbuild Deliveries MR's Turning 15 Years Old MR NB Deliveries 100 93 78 61 57 53 10 -19 -16 -29 -35 -56 -79 -87 2014 2015 2016 2017 2018 2019 2020 For the first time more MR’s will turn 15 years old than are delivered Assumes newbuildings are delivered as scheduled. Source: Clark
Slide 21: Fleet Age Profile & Scrap Prices
Fleet Age Profile & Scrap Prices Fleet Age Profile 0-4 5-9 10-14 15-19 20+ Environmental regulations and 100% 3% 1% attractive scrap prices likely to 8% 4% 6% 12% increase scrapping of older 90% 8% tonnage 80% 18% 19% 39% 27% 70% 60% 500 39% $445 50% 38% 450 33% 40% 400 42% 30% ($/ldt) 350 20% 20% 3
Slide 22: US Remains Worlds Largest Product Exporter
US Remains Worlds Largest Product Exporter U.S. Crude Oil Production U.S. Imports and Exports of Finished Oil Products (mb/d) (mb/d) 6.0 12.0 5.0 10.0 4.0 8.0 3.0 6.0 2.0 4.0 1.0 2.0 0.0 0.0 Imports Exports U.S. Diesel Exports 2017 YTD Diesel Exports By Country (mb/d) 1.8 Mexico 17% 1.6 Other 1.4 31
Slide 23: Middle Eastern Refinery Expansions Continue
Middle Eastern Refinery Expansions Continue Middle East expected to add 1.5 mb/d from 2018-2021 12.0 11.2 10.6 10.3 10.0 9.6 9.7 9.3 9.3 9.5 8.4 4.4 8.2 3.4 3.8 8.0 3.3 3.4 3.3 3.3 3.4 3.2 3.5 (mb/d) 6.0 2.3 2.3 2.3 2.0 2.0 2.0 2.2 2.2 2.0 4.0 1.1 1.1 1.1 2.0 1.1 1.1 1.1 1.1 1.1 0.7 0.7 2.0 3.3 3.3
Slide 24: Saudi Aramco Increasing Product Exports
Saudi Aramco Increasing Product Exports Saudi Aramco Domestic Refining Capacity • Saudi Aramco refined product exports Operational Refinery Capacity (kb/d) have increased 144% since 2013 1967 Jiddah 77 1979 Yanbu 243 • 800 kb/d of refining capacity added in 1981 Riyadh 126 2014 from export oriented
Slide 25: Regional Imbalances Drive Product Tanker Demand Growth
Regional Imbalances Drive Product Tanker Demand Growth (k.bpd) FSU 1,100 1,200 Europe 1,000 1,000 800 800 1,200 700 Americas 900 200 200 400 50 200 -1,720-1,730 -520 -490 700 Asia Middle East 1,300 1,200 700 700 -340 -670 -1,180 -1,030 -1,720 -260 -510 Africa Latin America 200 0 60 -40 -290 -300 -24
Slide 26: Refinery Capacity Expansions (2017-2022)
Refinery Capacity Expansions (2017-2022) FSU + 263 kb/d Europe North America + 200 kb/d + 233 kb/d Asia Middle East + 1,482 kb/d + 1,905 kb/d China + 2,200 kb/d Africa + 650 kb/d South America + 73 kb/d Source: International Energy Agency (IEA) 26 26
Slide 27: Incremental Supply Needed to Meet New Capacity
Incremental Supply Needed to Meet New Capacity Product Tankers Needed to Meet New Capacity Growth AG-FE Illustrative Example Incremental Refining Capacity 500,000 Growth(bbl/d) HM/MR Carrying Capacity (bbl) 250,000 LR1/LR2 Carrying Capacity (bbl) 600,000 Far East Laden Speed (knots) 12.5 Ballast Spe
Slide 28: Company Highlights
Company Highlights 1 World’s largest product tanker fleet, of which, all are ECO-design product tankers Modern, fuel- ECO-design vessels have substantially lower fuel costs than prior generation vessels efficient fleet World’s youngest fleet (average age of 2.5 years), built at high quality ya
Slide 29: Appendix
Appendix CccRrio 29
Slide 30: Product Tankers in the Oil Supply Chain
Product Tankers in the Oil Supply Chain • Crude Tankers provide the marine transportation of the crude oil to the refineries. • Product Tankers provide the marine transportation of the refined products to areas of demand. • Structural demand drivers in the product tanker industry: • US has emerged a
Slide 31: Product and Crude Tankers
Product and Crude Tankers Tankers “Dirty” “Clean” Crude Products Vessel VLCC Suezmax Aframax Panamax Handysize LR2 LR1 Hmx/MR Handysize (200,000 + (120,000 - (80,000 - (60,000 - (< 60,000 (80,000- (60,000- (25,000- (<25,000 Size DWT) 200,000 DWT) 120,000 DWT) 80,000 DWT) DWT) 120,000 DWT) 80,000 DWT
Slide 32: Product Tanker Specifications
Product Tanker Specifications IMO Classes I, II, & III IMO Class I Chemical IMO Class I refers to the transportation of the most hazardous, Tankers very acidic, chemicals. The tanks can be stainless steel, epoxy or marine-line coated. IMO Class II Chemical & Product Tankers IMO Class II carries Veg
Slide 33: New Design Features on Scorpio Product Tankers
New Design Features on Scorpio Product Tankers 33 33
Slide 34: Fleet List
Fleet List Owned Vessels Name Year DWT Type Name Year DWT Type Name Year DWT Type STI Comandante May-14 38,734 HM STI Soho Dec-14 49,990 MR STI Broadway Nov-14 109,999 LR2 STI Brixton Jun-14 38,734 HM STI Tribeca Jan-15 49,990 MR STI Condotti Nov-14 109,999 LR2 STI Pimlico Jul-14 38,734 HM STI Grame