Slide 1: Full Year 2017 Earnings Update
Full Year 2017 Earnings Update February 8, 2018 © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com
Slide 2: Disclaimer
Disclaimer The companies in which SBM Offshore N.V. directly and indirectly owns investments are separate legal entities. In this presentation “SBM Offshore” and “SBM” are sometimes used for convenience where references are made to SBM Offshore N.V. and its subsidiaries in general. These expressions
Slide 3: Leading Global FPSO Contractor
Leading Global FPSO Contractor 99.0% > 1 million TOTAL HISTORICAL OIL PRODUCTION barrels UPTIME DAILY OIL PRODUCTION c. 300 years US$ 16.8 billion CUMULATIVE OPERATING BACKLOG EXPERIENCE > 50 US$ 3.6 billion FLOATING PRODUCTION MARKET CAP SYSTEMS DELIVERED All data as of 31 December 2017 © SBM Offsh
Slide 4: 2017 Summary
2017 Summary Liza and Strong Castberg Performance Awards Transform Experience Matters Stable Backlog Upgraded Compliance Reporting Progress © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com 4
Slide 5: FY 2017 Review
FY 2017 Review Macro View Company Positioning FY 2017 Financials Outlook © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com
Slide 6: Major Project Awards
Major Project Awards FPSO Liza – ExxonMobil Topsides fabrication started, VLCC arrived for conversion US$ 720m project financing secured 10-year firm L&O contract, 10-year extension options Expected start-up by 2020 source: SBM Offshore Turret for Johan Castberg FPSO – Statoil EPC contract; planned
Slide 7: Total Overview
Total Overview Directional1 Revenue (US$ millions) EBITDA (US$ millions) Underlying 2,013 EBITDA 806 778 1,676 725 596 FY 2016 FY 2017 FY 2016 FY 2017 Pro-Forma Backlog (US$ billions) Net Debt (US$ billions) 17.1 16.8 3.1 2.7 FY 2016 FY 2017 FY 2016 FY 2017 (1) Directional view, presented under IFRS
Slide 8: HSSE
HSSE Health & Safety Environment Gas flared per 1.6 Total Recordable Injury Frequency Rate production2 1.4 (per 200 k man-hours) GHG Emissions 1.2 200.0 21.7 2016 1.0 150.0 0.8 100.0 0.6 0.5 Flaring 0.43 0.37 0.38 0.4 50.0 reduction: ~50% 0.31 0.4 0.24 0.22 0.22 0.19 - 0.2 2013 2014 2015 2016 2017 0
Slide 9: Compliance
Compliance July 15, 2016 July 16, 2016 December 14, 2016 December 22, October 9, 2017 2016 • US DoJ resolution reached in 2017 • Situation in Brazil remains complex; MPF filing of Leniency Agreement is SBM Offshore reports damage claim increases uncertainty signed between that in Brazil the TCU Braz
Slide 10: Macro View
FY 2017 Review Macro View Company Positioning FY 2017 Financials Outlook © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com
Slide 11: Market Dynamics
Market Dynamics Brent Spot Price1 and Forward Curve2 75 70 65 Brent Forward Curve 60 US$ per Barrel 55 Offshore projects require: 50 45 40 • Attractive break-evens 35 30 25 Jan 2016 Jan 2017 Jan 2018 Jan 2019 Jan 2020 • Efficient solutions Oil Majors' FCF3 After Dividends (in US$ billions, LTM4) • R
Slide 12: Industry Cost Efficiency
Industry Cost Efficiency Significant cost reductions 30% efficiency gain reached Stabilization expected if… …productivity increases Source: 2017 Global Upstream Cost Survey WoodMackenzie © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com 12
Slide 13: Deep Water Reality
Deep Water Reality Break-Even Price Decline Estimates (old vs. new) 90 80 70 High-quality reservoirs sanctioned 60 US$ per bbl 50 Break-evens decreased up to 40 ~60% 30 Experienced contractors 20 Recently sanctioned projects Example of unsanctioned projects required to deliver lower 10 break-evens 0
Slide 14: Optimizing Projects: Turret Case Study Johan Castberg
Optimizing Projects Turret Case Study: Johan Castberg Feb. 2014 Dec. 2017 Work as one with client team Challenge 100% ~70% Fit for purpose scope Clarification technical standards & simplification of scope Maturing design through FEED Contractor standards Adding value © SBM Offshore 2018. All rights
Slide 15: Overall FPSO Market
Overall FPSO Market Historical and Estimated Total FPSO Market Awards 18 16 14 Rock bottom in 2016 12 10 8 2 2 6 4 7 7 Gradual recovery underway 2 0 2005 2007 2009 2011 2013 2015 2017 2019e 5 SBM Offshore Awards Non-SBM FPSO Awards Base Case Awards Total FPSO Market Bull Case Awards Total FPSO Marke
Slide 16: Delivery of Complex Projects
Delivery of Complex Projects G3 FPSO projects planned/delivered relative to schedule since 2010 All SBM Offshore’s G3 Average delay 13 months G3 FPSO Specs: • >~120,000 bopd FPSOs delivered on time • Complex gas processing • HP/HT, sour service • Advanced compression • >~18,000t topsides weight 1 in
Slide 17: Concentrated Industry Experience
Concentrated Industry Experience 250 Cumulative Operating Experience (Yrs) 200 150 Unique track record in EPC, FPSO delivery and operations 100 3 800 kboepd 50 1 600 kboepd 0 1 6 11 16 21 26 31 36 41 Cumulated FPSOs Built (as main contractor) SBM Offshore’s unique experience = Industry peers, bubble
Slide 18: Company Positioning
FY 2017 Review Macro View Company Positioning FY 2017 Financials Outlook © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com
Slide 19: We commit to optimize, transform, innovate
We commit to optimize, transform, innovate Optimize Transform Innovate Best in Class Standardization Gas & Renewables floating solutions HSSE performance On time Future growth Within budget © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com 19
Slide 20: Transforming the Organization
Transforming the Organization Global resource pool Continuous improvement, built on experience Client focus Transform in view of market uptick Retaining Turnkey capacity and leveraging experience Enhanced competitiveness © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com 20
Slide 21: Lease and Operate
Lease and Operate Fleet Uptime 99.2% 99.4% 99.1% 99.1% 96.8% 98.3% Building upon our strong operational track record 2012 2013 2014 2015 2016 2017 Daily oil production exceeded Average annual oil production ~1 million barrels per day 1,000,000 800,000 Represents 600,000 ~10% of global Deep 400,000 W
Slide 22: Digital FPSO
Digital FPSO Digitalization existing FPSO fleet Optimizing operations with Big Data: Analytics and Modelling data analytics Machine learning maintenance Proof of Concept: Digital Twin FPSO Aiming at reliability & safety Transforming fleet operations © SBM Offshore 2018. All rights reserved. www.sbm
Slide 23: Fast4Ward Gaining Traction
Fast4WardTM Gaining Traction Faster, safer and more predictable Module catalogue Up to 12 months schedule gain Hull committed Multiple client interest Experience to adapt + + = Solution for the industry revival © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com 23
Slide 24: Gas Technology
Gas Technology FLNG FEED Award Encana– Deep Prelude Ichthys Sanha LPG FPSO Panuke Turret Turret 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Long history in gas SBM Offshore Twin Hull FLNG Market Segments Multiple FEEDs completed New build Target market LNG-2-Wire (electricity) i
Slide 25: Floating Wind
Floating Wind Floating wind projects 5-6 GW Pilot project for EDF on-track; OF EXPECTED FLOATING WIND CAPACITY INSTALLED FID scheduled early 2019 BY 2030 Under (pre-)construction Planned Increased global interest Offshore Wind Segmentation Leveraging floating Water depth: <30m 30-50m >50m experience
Slide 26: FY 2017 Financials
FY 2017 Review Macro View Company Positioning FY 2017 Financials Outlook © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com
Slide 27: Total Overview
Total Overview Directional (US$ millions) Revenue EBITDA EBIT 2,013 1,676 Underlying EBITDA 778 806 Underlying EBIT 344 328 725 596 290 117 FY 2016 FY 2017 FY 2016 FY 2017 FY 2016 FY 2017 © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com 27
Slide 28: Lease and Operate P&L
Lease and Operate P&L (US$ millions) Directional FY 2016 FY 2017 Variance Revenue 1,310 1,501 191 Gross Margin 423 514 91 EBIT 398 487 89 Underlying EBIT 398 487 89 Depreciation, amortization and impairment 425 467 (43) EBITDA 823 954 132 Underlying EBITDA 823 954 132 Directional Comments Vessels In
Slide 29: Turnkey P&L
Turnkey P&L (US$ millions) Directional FY 2016 FY 2017 Variance Revenue 702 175 (528) Gross Margin 142 (2) (140) EBIT (22) 11 33 Underlying EBIT 9 (97) (106) Depreciation, amortization and impairment (9) (10) (1) EBITDA (14) 21 35 Underlying EBITDA 18 (86) (104) Directional Comments Projects In Liza
Slide 30: Group P&L
Group P&L (US$ millions) Directional FY 2016 FY 2017 Variance Revenue 2,013 1,676 (337) Gross Margin 565 516 (49) Overheads (209) (200) 9 Other operating income / (expense) (66) (199) (133) EBIT 290 117 (173) Underlying EBIT 344 328 (16) Depreciation, amortization and impairment (435) (478) (44) EBI
Slide 31: Overheads
Overheads (US$ millions) Directional Expense Bridge 350 307 299 300 250 209 (11) 4 200 (2) 200 150 100 50 0 FY 2014 FY 2015 FY 2016 General & Sales & Research & FY 2017 Administrative Marketing Development General & Administrative Sales & Marketing Research & Development One-off Items Reduction of o
Slide 32: Group Cash Position
Group Cash Position (US$ millions) Directional Cash Flow 2,000 664 (381) 1,500 (47) (172) 1,000 (96) 44 878 823 (238) 281 500 0 Cash Cash from Repayment of Shareholder Net interest Capex Non-recurring: Non-recurring: Other Cash Dec-31-16 operating borrowings returns paid DoJ Settlement YME Dec-31-17
Slide 33: Group Balance Sheet Directional
Group Balance Sheet Directional (US$ millions) Dec-31-16 Dec-31-17 Variance Comment Depreciation and FPSO Turritella reclassified in Property, plant & equipment and 5,447 4,692 (754) assets held for sale (AHFS) partially offset by FPSO Intangibles Liza project Capex Investments in associates and 328
Slide 34: Cashflow Model and Dividend
Cashflow Model and Dividend Company Cash Flows * RCF may also be used for M&A and general corporate purposes 2017 Dividend and Shareholder Returns 2017 Dividend Proposal 2015 2016 2017 • US$ 0.25 per share Annual Dividend (US$/share) 0.21 0.23 0.25 • c. 9% year-on-year increase Y-o-Y Dividend Increa
Slide 35: Creating Funding Optionality
Creating Funding Optionality Optimizing Capital Structure New platform to facilitate alternative funding SBM Offshore N.V. SBM Holding + FPSO HoldCo Unlocking value, facilitating future growth Future FPSOs Current Review short-term funding FPSOs Possibility to transfer selected FPSOs Capital structu
Slide 36: Outlook
FY 2017 Review Macro View Company Positioning FY 2017 Financials Outlook © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com
Slide 37: Backlog and Debt Repayment
Backlog and Debt Repayment As of December 31, 2017 (US$ billions) Pro-forma Directional Backlog(1) US$ 16.8 bn Average of 63% of L&O backlog represents operating cash flow 1.6 L&O Average Portfolio Duration: 11.6 years(2) 1.4 16.2 1.2 1 0.8 0.6 0.4 0.2 0.6 0 Lease & Operate Turnkey 2018 2020 2022 20
Slide 38: 2018 Guidance
2018 Guidance 2018 Directional Revenue guidance around US$1.9 billion – Turnkey around US$0.6 billion – Lease & Operate around US$1.3 billion 2018 Directional EBITDA guidance of around US$750 million, excluding: – Turritella gain on sale for US$213 million – Expected positive impact IFRS16 early ado
Slide 39: 2017 Summary
2017 Summary Liza and Strong Castberg Performance Awards Transform Experience Matters Stable Backlog Compliance Upgraded Progress Reporting © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com 39
Slide 40: Appendix
Appendix © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com
Slide 41: P&L: Underlying Items 2016/2017
P&L: Underlying Items 2016/2017 (US$ millions) Directional Underlying Items FY 2016 FY 2017 Impact P&L Segment Total Underlying Items (126) (283) YME insurance claim N/A 125 EBITDA Turnkey SBM Installer onerous contract revision (30) (17) EBITDA Turnkey Turritella partner compensation N/A (80) EBITD
Slide 42: Cash Flow Statement
Cash Flow Statement (US$ millions) Directional FY 2017 EBITDA 596 Addition/(release) provision and non-cash items 304 Changes in operating assets and liabilities (163) Income taxes paid (30) Net cash flows from (used in) operating activities 707 Capital expenditures (96) Other investing activities 6
Slide 43: IFRS 10 & 11
IFRS 10 & 11 Lease Contract Joint Ventures SBM Share % Directional IFRS Type FPSO N’Goma FPSO FL 50% Proportional Equity FPSO Saxi Batuque FL 50% Proportional Equity FPSO Mondo FL 50% Proportional Equity FPSO Cdde de Ilhabela FL 62.25% Proportional Full consolidation FPSO Cdde de Maricá FL 56% Propo
Slide 44: Group Loans & Borrowings
Group Loans & Borrowings (US$ millions) Net Book Value as of December 31, 2017 Full Amount IFRS Directional PROJECT FINANCE FACILITIES DRAWN FPSO Cidade de Paraty $ 622 $ 622 $ 314 MOPU Deep Panuke 264 264 264 FPSO Cidade de Anchieta 368 368 368 FPSO Cidade de Ilhabela 902 902 561 FPSO N’Goma FPSO 3
Slide 45: Revolving Credit Facility
Revolving Credit Facility Key Characteristics Covenant Calculations Historical and Estimated Awards Amount US$1.0 billion Tangible Net Worth divided by Total 6 years + one-year extension Solvency Tangible Assets Tenor Ratio Min 1H17 FY17 Door-to-door maturity of 7 years 25% 34.2% 32.5% Accordion SBM
Slide 46: Revised RCF Covenant Definitions
Revised RCF Covenant Definitions Key Financial Covenant Definition Solvency Ratio Tangible Net Worth(1) divided by Total Tangible Assets(2) > 25% Leverage Ratio Consolidated Net Borrowings(3) divided by Adjusted EBITDA(4) – <4.25x at December 31, 2017 – <3.75x thereafter Interest Cover Ratio Adjuste
Slide 47: SBM Lease and Operate Portfolio
SBM Lease and Operate Portfolio L&O Portfolio Average Duration: 11.6 years(1) Vessel Name Field Name Client Country 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 LEASE AND
Slide 48: Directional Group Net Debt and Borrowings
Directional Group Net Debt and Borrowings (US$ millions) Directional Net Debt Average Cost of Debt 4,000 4.8% 4.6% 3,000 2,000 3,107 2,687 1,000 0 FY16 FY17 (1,000) FY16 FY17 Bridge Loans Revolving Credit Other Project Finance Cash FY17 Borrowings(1) FY17 Undrawn Facilities + Cash FY17 FY17 $3,562 $
Slide 49: Delivering the Full Product Lifecycle
Delivering the Full Product Lifecycle Engineering Procurement 60 years of industry firsts Integrated supply chain Leading edge technology Global efficiencies Local sourcing Product Life Extension Construction Leader in FPSO relocation Strategic partnerships World class after sales Unrivalled project
Slide 50: © SBM Offshore 2018. All rights reserved. www.sbmoffshore.com
© SBM Offshore 2018. All rights reserved. www.sbmoffshore.com