Cmb.tech Nv · EURONEXT:CMBT

Cmb.tech Nv — Euronav — Jefferies investor update (April 2020)

28 slides from Cmb.tech Nv's conference presentation, April 2020

  1. Slide 1: Investor Update - Jefferies

    INVESTOR UPDATE - JEFFERIES APRIL 2020

  2. Slide 2: Euronav – Who We Are

    EURONAV EURONAV – WHO – WHO WE ARE WE ARE The world’s largest, independent quoted crude tanker platform 46 VLCC inc 4 N/B 26 Suezmax* 2% International company – internationally connected 16% 24% 23% Av Age 45% Av Age 15% Headquarters in Antwerp 7.3 Yrs 11.1 Yrs 29% 46% Euronav offices 0-5 yrs 6-10 y

  3. Slide 3: Euronav Strategy – Shareholder Focus

    EURONAV STRATEGY – SHAREHOLDER FOCUS Shareholder returns since 2014 Repayment schedule and RCF reductions 400 USD 3.11 DPS 600 Leverage: Millions since 2015* 45%* book 300 500 value 270 $1.035bn $m net Income, Dividend & Buy back dividend paid 400 200 since 2004 123 $16.95 p/s 300 100 77 45 23 32 7

  4. Slide 4: Euronav Strategy – Liquidity Focus

    EURONAV STRATEGY – LIQUIDITY FOCUS +$220m 3x VLCC DELIVERY Q4 20 Q1 21 4

  5. Slide 5: Operational Leverage with Contractual Income Support

    EURONAV OPERATIONAL LEVERAGE WITH CONTRACTUAL INCOME SUPPORT Each $5,000 uplift in both VLCC and Suezmax rates improves net revenue and EBITDA by $112mm $1,232 $560 $336 $112 BASE +$5,000 +$15,000 +$25,000 +$55,000 per day per day per day per day VLCC TCE rates $25,000 $30,000 $40,000 $50,000 $80,00

  6. Slide 6: Production Growth Good for Ton Miles - Fearnleys

    PRODUCTION GROWTH GOOD FOR TON MILES - FEARNLEYS 6

  7. Slide 7: Saudi to US – Forgotten Trade Lane

    SAUDI TO US – FORGOTTEN TRADE LANE SAUDI CRUDE EXPORTS MOVED FROM 1M BPD TO ALMOST ZERO – LIKELY RETURN TO AT LEAST 1M BPD+ 7

  8. Slide 8: US Crude Exports

    US CRUDE EXPORTS US EXPORTS AVERAGE 3.15MBPD PAST 12 MONTHS – LIKELY UNDER PRESSURE 2021 AS US SHALE HEDGES COME OFF Average 3.15m bpd 8

  9. Slide 9: Contango History – Still > 2015

    CONTANGO HISTORY – STILL > 2015 $5 CONTANGO OVER 6 MONTHS $0.83 PER MONTH 9

  10. Slide 10: Contango 2020 Steeper and Quicker than 2008 Cousin

    CONTANGO 2020 STEEPER AND QUICKER THAN 2008 COUSIN 10

  11. Slide 11: Contango - History Suggests Can Make a Difference…and Persists

    CONTANGO - HISTORY SUGGESTS CAN MAKE A DIFFERENCE…AND PERSISTS 35 6 33 32 31 30 5 30 27 4 26 26 No of VLCCs in market storage 25 24 23 23 3 Spread $ p/b per month 2 20 1 15 0 10 -1 -2 5 -3 0 -4 2015 2016 2017 2018 storage contango Source: Clarksons 11

  12. Slide 12: What Could Floating Storage Look Like?

    WHAT COULD FLOATING STORAGE LOOK LIKE? 180 25% 168 160 20% 140 120 15% % of VLC fleet No of VLCC 100 80 70 10% 60 38 40 5% 20 20 20 20 0 0% Iranian IMO/fuel Structural Current Potential Total sanctioned oil storage storage contango contango VLCC storage storage # VLCC % of fleet 12

  13. Slide 13: Caveat – Tanker Market Will Need Demand to Gain Traction Post Stock Build

    CAVEAT – TANKER MARKET WILL NEED DEMAND TO GAIN TRACTION POST STOCK BUILD 13

  14. Slide 14: Ton Miles – Changing Lanes

    TON MILES – CHANGING LANES Demand growth all from Far East – but Saudi move sees return of Middle East to US Atlantic Basin – Far East route Middle East - Asia Pacific route Super utilisation 1mbpd x 365 days = 365m barrels 365m barrels / 2m capacity per VLCC = 183 cargoes 1mbpd x 365 days = 365m ba

  15. Slide 15: VLCC Freight Rates and Contango – Close Correlation

    100,000 120,000 140,000 20,000 40,000 60,000 80,000 0 Q1-2008 Q2-2008 Q3-2008 Q4-2008 Q1-2009 Q2-2009 Q3-2009 Q4-2009 Q1-2010 Q2-2010 Q3-2010 Q4-2010 Q1-2011 Q2-2011 Q3-2011 Q4-2011 Q1-2012 Q2-2012 Q3-2012 Q4-2012 VLCCrate Q1-2013 Q2-2013 Q3-2013 CLOSE CORRELATION Q4-2013 Q1-2014 Q2-2014 Q3-2014 Q4-

  16. Slide 16: Tanker Rates Perform Historically During Inventory Builds

    VLCC rates 100,000 120,000 140,000 160,000 180,000 20,000 40,000 60,000 80,000 0 Q2-2001 Q4-2001 Q2-2002 Q4-2002 Q2-2003 Q4-2003 Q2-2004 Q4-2004 Q2-2005 Q4-2005 Q2-2006 Q4-2006 Q2-2007 Q4-2007 Q2-2008 Q4-2008 Q2-2009 vlcc rates Q4-2009 Q2-2010 Q4-2010 Q2-2011 Q4-2011 Q2-2012 Q4-2012 Q2-2013 Q4-2013

  17. Slide 17: Crude Demand – What Happened in 2008/9 Financial Crisis

    CRUDE DEMAND – WHAT HAPPENED IN 2008/9 FINANCIAL CRISIS 17

  18. Slide 18: VLCC Age and Orderbook Dynamics Will Drive Adjustment if Rates Fall

    Orderbook as % of fleet 10 20 30 40 50 60 0 Jan-05 Jun-05 Nov-05 Apr-06 Sep-06 Feb-07 Jul-07 Dec-07 May-08 Oct-08 Mar-09 Aug-09 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 VLCC Orderbook % Fleet Jul-12 Dec-12 May-13 Oct-13 Mar-14 Aug-14 Jan-15 Jun-15 Nov-15 Apr-16 Average Age VLCC fleet Sep-16 Feb-17

  19. Slide 19: Over Past Decade VLCC Fleet Quickly Adjusted to Lower Freight Rates

    OVER PAST DECADE VLCC FLEET QUICKLY ADJUSTED TO LOWER FREIGHT RATES When freight rates low since 40,000 2013 seen fleet adjustment 10 9 35,000 8 30,000 7 No of VLCC recycled 25,000 6 VLCC rates 20,000 5 4 15,000 3 10,000 2 5,000 1 0 0 VLCC leaving fleet VLCC rates 19

  20. Slide 20: ...Meantime Fleet Supply Looks Good

    ...MEANTIME FLEET SUPPLY LOOKS GOOD CONTRACTING FLEET AGE RISING BARRIERS ORDER BOOK 23 YR LOW AVG AGE RISING (VLCC) 20 YEAR SURVEY (VLCC) FINANCING 10.0 40 60 37 BANKS & CAPITAL 36 MARKETS 35 9.5 50 30 Orderbook as % of VLCC fleet 28 28 REGULATION 40 9.0 25 IMO 2030, 22 BASEL IV 30 8.5 20 15 20 8.0

  21. Slide 21: Age Profile Will Drive Adjustment Should Freight Rates Struggle

    AGE PROFILE WILL DRIVE ADJUSTMENT SHOULD FREIGHT RATES STRUGGLE 50 0% 0 today end 2020 end 2021 end 2022 -5% % of VLCC fleet -50 -10% No of VLCCs -100 -106 -15% -150 -144 -170 -20% -200 -192 -250 -25% VLCC >17.5 years old VLCC to be delivered VLCC >17.5 years old % of fleet 21

  22. Slide 22: Outlook

    OUTLOOK WHAT IS CHANGING Demand for Supply Vessel Oil Ton miles Supply IMO 2020 of Oil Saudi/UAE/ 2020 -ve Switch to AG IMO to help Flexible Russia from Q4 Change ST Coronavirus ST Positive Neutral No Change No Change 22

  23. Slide 23: Appendix

    APPENDIX EURONAV. APRIL 2020

  24. Slide 24: Global Oil Inventory – Been Rising Largely Since 2015

    GLOBAL OIL INVENTORY – BEEN RISING LARGELY SINCE 2015 Oil inventory 550 500 M bbls global oil inventory 450 400 350 300 250 24

  25. Slide 25: Past Inventory Builds: Asian Crisis

    PAST INVENTORY BUILDS: Oil demand fell 0.5m bpd Inventory rose 54 m bbls or 19% ASIAN CRISIS Oil price fell $21 to $15 or 29% EURN share price N/A Sept 97 - May 98 60,000 350 340 50,000 330 320 40,000 310 30,000 300 290 20,000 280 270 10,000 260 0 250 19/09/1997 19/10/1997 19/11/1997 19/12/1997 19/0

  26. Slide 26: Past Inventory Builds: Financial Crisis

    Oil demand fell 1.3m bpd PAST INVENTORY BUILDS: Inventory rose 61 m bbls or 20% Oil price $113 to $70 fell 38% FINANCIAL CRISIS EURN share price -38% Apr 08 - Aug 09 Apr 08 - Aug 09 370 180,000 370 60 160,000 350 350 50 140,000 330 120,000 330 40 100,000 310 310 30 80,000 290 60,000 290 20 40,000 27

  27. Slide 27: Past Inventory Builds: OPEC Market Share

    PAST INVENTORY BUILDS: Oil demand ROSE 0.7m bpd Inventory rose 130 m bbls or 39% OPEC MARKET SHARE Oil price fell $91 to $59 or 35% EURN Share price +68% Sept 14 - Apr 15 Sept 14 - Apr 15 500 80,000 500 45 70,000 40 450 450 35 60,000 30 50,000 400 400 25 40,000 20 350 350 30,000 15 20,000 10 300 300

  28. Slide 28: Past Inventory Builds: OPEC Production Cuts

    PAST INVENTORY BUILDS: Oil demand fell 0.6m bpd Inventory rose 88 m bbls or 22% OPEC PRODUCTION CUTS Oil price fell$73 to $58 or 21% EURN share price +10% Sept 18 - June 19 Sept 18 - June 19 510 60,000 510 32 490 490 50,000 30 470 470 40,000 28 450 450 430 30,000 430 26 410 410 20,000 24 390 390 10,

Euronav — Jefferies investor update (April 2020) on 6ix