Cmb.tech Nv · EURONEXT:CMBT
Cmb.tech Nv — Euronav — KBC Sustainability Conference October 2020
52 slides from Cmb.tech Nv's conference presentation, October 2020
Slide 1: Investor Presentation – KBC Sustainability Conference October 2020
INVESTOR PRESENTATION K BC SUSTAINABILI TY CON FEREN CE - OCTOBER 2020 1
Slide 2: Forward Looking Statements
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
Slide 3: Euronav – Who We Are
EURONAV EURONAV – WHO – WHO WE ARE WE ARE The world’s largest, independent quoted crude tanker platform 45 VLCC incl. 4 N/B 25 Suezmax* International company – internationally connected Av Age Av Age Headquarters in Antwerp 7.4 Yrs 11.1 Yrs Euronav offices Partnerships 2 FSO* 2 ULCC Mix of time char
Slide 4: Who We Are – Liquidity Focus
WHO WE ARE – LIQUIDITY FOCUS Repayment schedule and RCF reductions Balance sheet liquidity June 2020 $1086m 600 1200 806 Millions 1000 500 800 + $270 m outstanding 1086 capex $m 400 600 400 280 300 200 0 200 Cash Undrawn Secured Total Revolver 100 Strong balance sheet =hedge against cyclicality 0 o
Slide 5: Two Year Liquidity Runway & Balance Sheet Strength
WHO WE ARE TWO YEAR LIQUIDITY RUNWAY & BALANCE SHEET STRENGTH 56% 1200 54% 1000 52% 1994to market leverage 800 $m available liquidity 50% 48% 600 % marked 46% 2011 1990 1994 2017 2017 2013 400 1992 44% 200 42% 40% 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2016 2016 2017 2017 2017 2017 2018 2018
Slide 6: Operational Leverage
FSO 7 years +5 years WHO WE ARE OPERATIONAL LEVERAGE $1,188 Each $5,000 uplift in Long-term 20 years both VLCC and Suezmax rates improves net niche market revenue and EBITDA by $108mm $540 $324 $108 BASE +$5,000 +$15,000 +$25,000 +$55,000 per day per day per day per day VLCC TCE rates $25,000 $30,00
Slide 7: Tanker Market Structure
TANKER MARKET STRUCTURE Seasonal Few customers, lots of suppliers Source: Clarksons 48 Quarterly average Thousands 46 VLCC rate 1990-2019 Traders 44 42 40 38 36 34 32 Oil Refiners 30 Companies Q1 Q2 Q3 Q4 Cyclical Ship Source: Clarksons Broker 100,000 90,000 Quarterly average 1 Year 80,000 TCE rate
Slide 8: Current Market Conditions
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Slide 9: Tanker Markets Are Seasonal
TANKER MARKETS ARE SEASONAL 30 YEAR RECORD IMPLIES RATE LOW IN MID SEPT 60,000 55,000 50,000 Average VLCC spot rate since 1990 45,000 40,000 35,000 30,000 25,000 20,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Clarksons 9
Slide 10: Crude Demand – Recovery Forecast
CRUDE DEMAND – RECOVERY FORECAST TRAJECTORY DEPENDENT ON COVID IMPACT & TRANSPORTATION RECOVERY 105 102.1 102.4 101.0 M bpd EIA global oil consumption data and forecast 100 99.4 98.6 98.6 98.2 97.1 97.4 96.6 96.7 96.4 96.0 95 94.3 93.3 91.2 90.2 90 85 84.1 80.9 80 75 Source: EIA 10
Slide 11: Demand for Oil
DEMAND FOR OIL TRANSPORT HEAVY SO RECOVERY LIKELY PROLONGED 45 40 35 Oil demand m bpd by sector 2018 30 25 20 15 10 5 0 Road transport Aviation & Shipping Industry & Petrochemicals Buildings & Power Other sectors Source: Kepler Cheuvreux, WEO 2019 11
Slide 12: Crude Demand Recovery Last Time
CRUDE DEMAND RECOVERY LAST TIME WHAT HAPPENED IN 2008/9 FINANCIAL CRISIS Recovery took time globally Source: IEA 12
Slide 13: Peak Oil Demand – Here Already?
PEAK OIL DEMAND – HERE ALREADY? TRAJECTORY SUGGESTS FLAT TO 2025 BP ENERGY REVIEW - PEAK OIL DEMAND? WILL EXPERIENCE WORSE THAN THIS FOR FULL YEAR 2020 100 98 96 Global oil demand m bpd 94 92 90 88 86 84 2015 2018 2025 2030 2020 Rapid Scenario Business As Usual EIA 2020 Demand IEA 2020 Demand OPEC 2
Slide 14: Storage Disruption Did Not Materialise
STORAGE DISRUPTION DID NOT MATERIALISE Source: Clarksons 14
Slide 15: Floating Storage
FLOATING STORAGE AN INEXACT SCIENCE AND STILL NEEDS TO UNWIND 400 “excess” or market storage 350 = 98m bbls 300 250 242m bbl m bbls storage 28 Sep 2020 200 150 146m bbl start 2020 100 50 0 VLCC Suezmax Aframax Source: Clarksons 15
Slide 16: Floating Storage
FLOATING STORAGE OVERHANG IS REAL BUT LIMITED 120 100 80 28 VLCC No of Vessels 60 40 20 Suezmax 20 20 Aframax 0 VLCC Suezmax Aframax Source: Clarksons 16
Slide 17: VLCC - Disruption Remains Positive
VLCC - DISRUPTION REMAINS POSITIVE BUT LESS IMPACTFUL 0 -5 -10 -15 -20 -25 -30 -35 -40 -45 -50 Iranian Perm Storage Vz trade Market storage China congestion Ocean tankers Aug 8 2020 Sept 28 2020 Source: Clarksons 17
Slide 18: Crude Supply
CRUDE SUPPLY OPEC CUTS VERSUS USA RESILIENCE OPEC AG EXPORTS – REMAIN CHALLENGING US CRUDE EXPORTS – RESILIENT AT 3M BPD 20,000 5,000 14,000 19,000 4,500 12,000 18,000 4,000 10,000 US crude production m bpd 17,000 3,500 US crude exports m bpd k bpd crude exports 16,000 3,000 8,000 15,000 2,500 6,000
Slide 19: Vessel Supply Contracting
VESSEL SUPPLY CONTRACTING VERY LIMITED AND BELOW HISTORICAL RUN RATE 30 28 25 21 20 16 15 12 10 5 0 -5 -10 -15 Jan-2020 Feb-2020 Mar-2020 Apr-2020 May-2020 Jun-2020 Jul-2020 Aug-2020 Total 2020 Avg since 1996* VLCC exits UL/VLCC Contracting Suezmax Contracting Suezmax exits * Average since 1996 to e
Slide 20: Vessel Prices – Under Pressure
VESSEL PRICES – UNDER PRESSURE 120 100 80.00 80 $m 60 40 20 0 VLCC 5 year old VLCC new build Source: Clarksons 20
Slide 21: Time Charters
TIME CHARTERS REMAINS AN ILLIQUID MARKET DESPITE STORAGE FRENZY 25 20 No of longer time charters agreed 15 10 5 0 6m-12m 12m-24m 24m+ 6m-12m 12m-24m 24m+ VLCC Suezmax 2019 2020 Source: Bloomberg 21
Slide 22: Crude Inventory
CRUDE INVENTORY EIA FORECAST BACK TO PRE COVID 19 LEVELS END 2021 3500 45 3400 3300 40 OECD crude inventory bbls k (EIA) EIA days of demand for inventory 3200 3100 35 3000 2900 30 2800 2700 25 2600 2500 20 OECD Inventory Days of Demand Source: EIA 22
Slide 23: Contango
CONTANGO REMAINS A SUPPORTIVE FEATURE FOR NOW 6 month Brent contango based on spot and 6 month forward price VLCC breakeven* per day (nominal) $60k $30k *does not include insurance & other costs for break even Source: Bloomberg 23
Slide 24: Fuel Spreads – Continue to Contract
FUEL SPREADS – CONTINUE TO CONTRACT Oil price Fuel Spread for 2020 Fuel Spread for 2021 Source: Bloomberg 24
Slide 25: Vessel Supply Dynamic
VESSEL SUPPLY DYNAMIC POSITIVE MEDIUM & LONG TERM DRIVER 25
Slide 26: Vessel Supply
VESSEL SUPPLY BALANCE & OUTLOOK STRUCTURALLY IMPROVING Increasingly restricted financing CONTRACTING NEW + new technology to meet VESSELS environmental targets cap orders ORDER BOOK VLCC /Fleet = 8% Suezmax /Fleet = 10% ORDER BOOK c. 20-year lows 168 VLCCs/21% of fleet needs OPERATIONAL FLEET specia
Slide 27: Little Contracting and Order Book at Year Low
LITTLE CONTRACTING AND ORDER BOOK AT 20 YEAR LOW 140,000 60 # of VLCC ordered & Orderbook as % of fleet 120,000 50 100,000 40 VLCC rates 80,000 30 60,000 20 40,000 10 20,000 0 0 Orderbook as % of fleet No of VLCC ordered VLCC earnings Source: Clarksons 27
Slide 28: Newbuilding Orders Constrained
NEWBUILDING ORDERS CONSTRAINED NEWBUILDING CONTRACTS RISING BARRIERS ORDER BOOK CURRENTLY 23 YR LOW 60 FINANCING BANKS & CAPITAL 50 MARKETS 40 REGULATION IMO 2030, BASEL IV 30 20 TECHNOLOGY IN FUEL PROPULSION 10 LONG TERM 0 CRUDE DEMAND VLCC Orderbook % Fleet % Suezmax Orderbook % Fleet % Source: Cl
Slide 29: Fleet Ageing
FLEET AGEING FLEET AGE BACK AT LEVELS NOT SEEN SINCE 2002 Large tanker average age @ 10 years of age – last seen in 2002 10.5 10.0 Average Age of Global Fleet 9.5 9.0 8.5 8.0 7.5 7.0 VLCC Fleet - Average Age Suezmax Fleet - Average Age Source: Clarksons 29
Slide 30: Large Tanker Shipping – Regulated
LARGE TANKER SHIPPING – REGULATED 6 5 1.5 100% utilisation $m cost of special surveys 4 1.5 1.5 3 1.5 1.5 2 4 3.25 2.5 1 2 1.5 0 Year 5 - Spec Survey#1 Year 10 - Spec Survey#2 Year 15 - Spec Survey#3 Year 17.5 - Intermediate Year 20 - Spec Survey#5 survey 5 year survey cycle 30 month survey cycle Ba
Slide 31: VLCC Fleet Structure
25-21 yrs 3% 20-16 yrs 18% VLCC FLEET STRUCTURE 15-11 yrs 10-6 yrs 21% 28% 5-0 yrs 30% Orderbook 8% Current fleet 80 18% survey pool Under construction 70 60 50 # of VLCCs 40 65 68 30 59 19 51 49 47 50 20 39 39 34 36 26 29 31 29 30 28 24 21 10 20 18 20 8 11 7 0 2 3 Year of Build 31
Slide 32: Suezmax Fleet Structure
29-21 yrs 8% 20-16 yrs 19% SUEZMAX FLEET STRUCTURE 15-11 yrs 10-6 yrs 25% 23% 5-0 yrs 25% Orderbook 10% 60 Current fleet 18% survey pool Under construction 50 40 # of VLCCs 30 50 44 43 44 20 37 28 26 14 23 25 24 10 21 20 20 22 18 18 16 13 13 12 8 8 9 5 6 0 2 1 1 2 2 1 Year of Build Source: Clarksons
Slide 33: Key Supply Issue
KEY SUPPLY ISSUE POTENTIAL CATALYSTS FROM 186 SURVEYS NEXT 2 YEARS Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Total % of fleet Over 20 years 7 5 8 17 9 11 4 18 79 10% Over 17.5 years 14 20 13 29 14 17 7 28 142 18% Over 15 years 18 28 18 36 15 26 8 37 186 24% 40 35 No of VLCC to
Slide 34: Shipowners Dilemma
SHIPOWNERS DILEMMA Illustrative maths – older vessels have lower addressable market Scrap Scrap Revenue Factor in Cash BE @ Special VLCC Today VLCC over 50% $15k Survey Net Return 900 days utilisation Value $m* Value $m* Rate $m $m 900 days $m Cost $m $m 16 13.7 OR 20,000 18 9 13.5 4 -8.5 16 13.7 30
Slide 35: Scrapping Outlook
SCRAPPING OUTLOOK STEEL PRICES RISING - FORECAST TO REMAIN HIGHER 5000 22 20 4500 Steel price composite index CNY/tonne 18 4000 VLCC scrap price $m 16 3500 14.7 14 3000 12 2500 10 2000 8 Composite Steel price index & Future price VLCC scrap price 35
Slide 36: Scrapping
SCRAPPING VLCC RATES GO BELOW P&L BREAK EVEN = 5% FLEET DEPARTS VLCC fleet 804 @ start of year = 40 VLCC or 53 VLCC equivalents 9% 30,000 8% 25,000 7% % of VLCC fleet scrapped 6% 20,000 VLCC rates 5% 15,000 4% 3% 10,000 Average age 2% 20.0 19.2 20.0 22.0 21.3 18.2 19.9 20.4 24.2 20.8 25.9 22.1 20.4
Slide 37: Large Tanker Re-sizing
LARGE TANKER RE-SIZING WHAT COULD THAT MEAN? State of play end 2019 Global IEA Seaborne Required Required IEA Crude VLCC Trading Seaborne Demand Trade VLCC Resizing Demand Fleet = Crude m bpd m bpd fleet # vessels 99.9m bpd #742 40m bpd 98 39.6 703 -60 97.4 39.2 685 -78 IEA demand forecast for 2021
Slide 38: Outlook
OUTLOOK TANKER MARKET IN TRANSITION PHASE Demand for Supply Vessel Euronav Oil Ton miles Balance of Oil Supply sheet Q4 19 Rating Restrictions lower OPEC+ driving US export growth Orderbook to fleet Liquidity of $1bn Q2 demand but supply cuts but oil to ameliorate but ratios at + share buyback recov
Slide 39: Sustainability at Euronav
SUSTAINABILITY AT EURONAV 39
Slide 40: Shipping's Positioning on Emissions
SHIPPING’S POSITIONING ON EMISSIONS IN STRONG RELATIVE POSITION Shipping – low relative emissions Air 425 Road 80 2.7% of global CO2 emissions Rail 35 Shipping 5 0 50 100 150 200 250 300 350 400 450 gCO2/ton-km(1,2,3) Source: IMO GHG study 2009. Notes: 1) Energy-efficient transport is much dependent
Slide 41: And Crude Is Central to the Energy Transition
AND CRUDE IS CENTRAL TO THE ENERGY TRANSITION Crude remains core part of energy mix IEA forecast crude expansion to 2040 120 Million bpd consumption estimate by IEA 4.3% 6.4% 100 13 12 9 5.0% 33.1% 80 13 23 60 18 16 12 27.0% 40 20 41 45 24.2% 0 2017 2040 Road Transport Aviation & Shipping Oil Gas Co
Slide 42: Shipping Already Has Track Record
SHIPPING ALREADY HAS TRACK RECORD IMPROVING TRAJECTORY IN POLLUTION INCIDENCES… 30 25 No of spills above 700t from 1970 20 15 10 5 0 1970-9 1980-9 1990-9 2000-9 2010-9 Source: ITOPF - International Tanker Owners Pollution Federation 42
Slide 43: …And on Marine Life and Emissions…
…AND ON MARINE LIFE AND EMISSIONS… SINGLE HULL TO DOUBLE HULL BALLAST WATER TREATMENT IMO 2020 – 85% CUT TO SO2 TRANSITION SYSTEMS EMISSIONS Mandatory since Sept 2019 28% VLCC global fleet dwt 60% 72% 35% 5% 1990 1996 2013 2017 Q1 2020 single hull double hull HFO Marine Gasoil VLSFO 1990 1996 2013 2
Slide 44: …With More to Come
…WITH MORE TO COME A PATHWAY TO REDUCE CO2 BY 2030 Business as usual Emission pathway emissions in line with IMO’s GHG strategy 2008 base year Emission Gap Zero emissions as soon as possible within the century Intensity 40% Total: 50% reduction reduction Intensity 70% 2008 2020 2030 2040 2050 44
Slide 45: What Does ESG Mean at Euronav?
WHAT DOES ESG MEAN AT EURONAV? 45
Slide 46: ESG – It's in Our DNA
ESG – IT’S IN OUR DNA Supervisory Board 6 members 3 Male 3 Female Oversee all strategic actions 5 independents - No executive on Sup Board Management Board ESG & Climate Change Ctte 7 members 6 members 5 Male 2 Female 4 Male 2 Female Take the day to day Only shipping or tanker responsibility of comp
Slide 47: ESG – Social
ESG CANNOT DO E WITHOUT STRONG AND ROBUST S&G Social Highest social equality standards across company… …and at boardroom level too 60% % of board = female 50% 40% 30% 20% Female board 10% Representation 0% 2014 2015 2016 2017 2018 2019 2020 Source Euronav 47
Slide 48: ESG – Governance
ESG CANNOT DO E WITHOUT STRONG AND ROBUST S&G Governance 100% Euronav percentile ranking in shipping governance scorecard 95% 6th out of 52 in 2H 2020 90% 85% 80% 75% 70% H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020 Source Wells Fargo/Webber research 48
Slide 49: Case Studies
CASE STUDIES EURONAV TARGETING BETTER THAN POSEIDON PRINCIPLES VLCC Trajectory Values 2.50 2.40 2.37 2.33 2.31 2.30 2.27 2.25 2.21 2.19 2.20 2.15 2.13 2.10 2.08 2.07 2.02 2.00 1.90 1.80 2020 2021 2022 2023 2024 2025 POSPRI EURONAV 49
Slide 50: Case Studies – Premium Antifouling Paints
CASE STUDIES PREMIUM ANTIFOULING PAINTS Potential relative emission savings in CO2 tons for a five year period 14000 12000 10000 8000 $400k investment $300k investment 6000 4000 2000 0 VLCC Suezmax 50
Slide 51: ESG in Action – Financing
ESG IN ACTION – FINANCING Ship Financing – the past Ship Financing – the future Emission targets > IMO All banks to agree $469m revolver Euronav and its bank partners finalize the first $713m sustainable linked loan on sustainable September 10th, 2020 linked loan $244m term loan Independent measurem
Slide 52: Sustainability Needs All E, S and G
Environmental Accomplishments Sustainability needs all 3 E, S and G Tangible 2020-25 emission targets set • to work effectively and • not in isolation Emissions data since 17 Opportunities Social More disclosure, targets & route to zero carbon Accomplishments Governance Accomplishments Bloomberg Ind