Northern Ocean Ltd. · OSL:NOL
Northern Ocean — Investor Presentation (December 2019)
33 slides from Northern Ocean's investor presentation, Dec 3, 2019
Slide 1: Company Presentation
Company Presentation 3 December 2019 KLIKK FOR Å REDIGERE UNDERTITTELSTIL I MALEN
Slide 2: Important Information
IMPORTANT INFORMATION IMPORTANT INFORMATION. THIS DOCUMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES OF AMERICA, ITS TERRITORIES OR POSSESSIONS, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA OR TO ANY RESIDENT THEREO
Slide 3: Contemplated company structure
Contemplated company structure Current structure Transaction steps 1) Northern Ocean to reorganize to be the owner of 2x HE semis and related Hemen Public float operating companies 39% 61% 2) Northern Ocean to raise USD 100m in equity and increase bank debt with USD 50m at similar terms as existing
Slide 4: Sources & Uses and Pro Forma Capitalization
Sources & Uses and Pro Forma Capitalization Sources & Uses Pro forma capitalization Sources USDm Cash USDm Opening cash balance 31 Existing cash on balance sheet 31 New equity 100 Proceeds from equity offering 100 Increased bank debt 50 Proceeds from increased bank debt 50 Total sources 181 Total ca
Slide 5: Company highlights
Company highlights 1 Premium, high-end asset Fleet an ideal candidate for M&A 2 Attractive entry point Initial pricing of Northern Ocean at discount to peers 3 USD ~350m in contracted backlog, NIBD of USD ~230m per fully Best in class balance sheet delivered rig and no unfunded capex commitments or
Slide 6: Some of the world's most sophisticated high-end semis
Best in class balance Underlying market in Lean set-up with strong Premium, high-end asset Attractive entry point Dividend potential sheet strong recovery Sponsor support Some of the world’s most sophisticated high-end semis West Mira Ultra high-end harsh environment World’s first hybrid offshore ri
Slide 7: Highly attractive entry point for Tier 1 harsh environment rigs
Best in class balance Underlying market in Lean set-up with strong Premium, high-end asset Attractive entry point Dividend potential sheet strong recovery Sponsor support Highly attractive entry point for Tier 1 harsh environment rigs Northern Ocean implied rig value at deep discount Northern Ocean
Slide 8: Best in class balance sheet
Best in class balance Underlying market in Lean set-up with strong Premium, high-end asset Attractive entry point Dividend potential sheet strong recovery Sponsor support Best in class balance sheet Low leverage on 6G harsh environment semis relative to peers Fully invested net debt and capex1 per 6
Slide 9: Attractive debt terms
Best in class balance Underlying market in Lean set-up with strong Premium, high-end asset Attractive entry point Dividend potential sheet strong recovery Sponsor support Attractive debt terms West Mira facility West Bollsta facility New RCF facility1 Sterna facility1 Type Senior secured term loan S
Slide 10: Significant upside potential already with current day rates
Best in class balance Underlying market in Lean set-up with strong Premium, high-end asset Attractive entry point Dividend potential sheet strong recovery Sponsor support Significant upside potential already with current day rates Illustrative cash flow sensitivity (Northern Ocean)1 Equity upside at
Slide 11: Ideally positioned in a recovering market niche
Best in class balance Underlying market in Lean set-up with strong Premium, high-end asset Attractive entry point Dividend potential sheet strong recovery Sponsor support Ideally positioned in a recovering market niche… Harsh environment market recovery is well underway Preference for modern rigs Ob
Slide 12: …with high barriers to entry based on build cost alone
Best in class balance Underlying market in Lean set-up with strong Premium, high-end asset Attractive entry point Dividend potential sheet strong recovery Sponsor support …with high barriers to entry based on build cost alone No Tier 11 newbuild HE semis in current market environment Build cost mode
Slide 13: Northern Ocean perfectly positioned for M&A
Best in class balance Underlying market in Lean set-up with strong Premium, high-end asset Attractive entry point Dividend potential sheet strong recovery Sponsor support Northern Ocean perfectly positioned for M&A Concentrated ownership of Tier 1 modern harsh environment semis1 Modern harsh environ
Slide 14: Leverage the Group's abilities and relationships to keep costs at a minimum
Best in class balance Underlying market in Lean set-up with strong Premium, high-end asset Attractive entry point Dividend potential sheet strong recovery Sponsor support Leverage the Group’s abilities and relationships to keep costs at a minimum and maintain a lean operating structure Simplified co
Slide 15: Appendix
Appendix KLIKK FOR Å REDIGERE UNDERTITTELSTIL I MALEN 15
Slide 16: West Mira contract with Wintershall
West Mira contract with Wintershall 6+4+6 well contract1 announced June 2018 with Wintershall for the Nova field in Norway ‒ Post announcement all 4 front end options have been exercised Contract commencement first week of Nov-19 ‒ Technical utilization of 96.8% since commencement 10 firm well
Slide 17: Hybrid Power Battery on the West Mira
Hybrid Power Battery on the West Mira Hybrid technology provides Significant emission savings vs standard configuration First modern offshore drilling operating hybrid power plant using Lithium-ion batteries as spinning reserve in dynamic 16,000 hrs less p.a. positioning (DP) operations Supplies
Slide 18: West Bollsta contract with Lundin Petroleum
West Bollsta contract with Lundin Petroleum 10 well firm contract1 for Lundin Petroleum for Luno II and other development fields outside Norway announced in February 2019 ‒ Expected duration of 655 days ~ close to 2 years ‒ Additional follow-on options for close to one year at Market Index Linked
Slide 19: Energy Efficient Solutions on the West Bollsta
Energy Efficient Solutions on the West Bollsta SCR & CBT technology provides Significant emission savings vs standard configuration 8x diesel engines are use Selective Catalytic Reduction (SCR) on the exhaust piping generating cleaner emissions 16,500 hrs less p.a. High voltage switchboards run
Slide 20: Some of the world's most sophisticated high-end semis
Some of the world’s most sophisticated high-end semis West Mira West Bollsta Ultra high-end harsh environment semisubmersible rigs State of the art topside and large deck space/load capacity Design Moss Maritime CS-60E (NCS compliant) Drilling equipment Single + offline Both rigs equipped with 2 BoP
Slide 21: Transaction at discount to implied values of peers
Transaction at discount to implied values of peers Implied rig value per 6G harsh environment semis 480 Peer average of USD 465m 461 452 399 Awilco Drilling Transocean Odfjell Drilling Northern Ocean1 Source: DNB Markets, Bloomberg (3 December 2019), Company filings KLIKK FOR Å REDIGERE UNDERTITTELS
Slide 22: Pricing power already exists for Tier 1 semis
Pricing power already exists for Tier 1 semis Norway capable semis supply and demand balance1 Tier 1 availability next 3 years2 Delivered Cold stacked Newbuilds Booked Free and available # of rigs 100% 18% 50 Peak demand 80% 32% 45% Tier 1 market almost 60% sold out when 59% 41 40% 82% factoring in
Slide 23: Growing production on the back of significant cost reductions
Growing production on the back of significant cost reductions Annual production volume (mmboe/d) Average annual cost (USD per barrel)1 Historical Reserves Resources in fields Resources in discoveries Forecast Forecast 5.0 45 +15.5% 40 4.0 35 -51.3% 30 3.0 25 20 2.0 15 10 1.0 5 0.0 0 2010 2011 2012 2
Slide 24: Leadership team
Leadership team Scott McReaken was appointed CEO of Northern Drilling in December 2018. Mr McReaken has over 15 years of experience in the offshore drilling industry. Prior to this appointment Mr McReaken has been a part of the Seadrill group companies since 2012, where he served as Chief Executive
Slide 25: Risk factors (1/8)
Risk factors (1/8) Risks Relating to the Reorganisation, Offers and Listing Finalisation of Reorganisation The Reorganisation consists of many aspects, including transfer of subsidiaries and assets and liabilities, conversion of intra-group debt to equity and entering into new agreements for the Gro
Slide 26: Risk factors (2/8)
Risk factors (2/8) Risks Relating to the Reorganisation, Offers and Listing (continued) Bermuda approvals The Company requires certain consents from authorities on Bermuda for, amongst others, for the issue of and transferability of its shares. It is a risk that such consents may not be renewed or n
Slide 27: Risk factors (3/8)
Risk factors (3/8) Risks Relating to the Group and its Business (continued) Liquidity and dependency on The Company is a pure holding company without operating revenues of its own. The ability of the Company to fulfil its financial obligations thus divided from subsidiaries depends on dividend distr
Slide 28: Risk factors (4/8)
Risk factors (4/8) Risks Relating to the Group and its Business (continued) Terms of financing agreements The Group has financing agreements and arrangements with various lenders, including Sterna which is a related party to Hemen. Such agreements and arrangements contain many terms, conditions and
Slide 29: Risk factors (5/8)
Risk factors (5/8) Risks Relating to the Group and its Business (continued) Uncertainty relating to drilling unit Acquisition of drilling units is an important component of the Company’s business strategy, and such acquisitions present a number of risks, including risks acquisitions of delay or cost
Slide 30: Risk factors (6/8)
Risk factors (6/8) Risks Relating to the Industry in which the Group Operates Changes in activity within The success and growth of the Company`s business depends on the level of activity in the offshore oil and gas industry generally, and the drilling offshore oil and gas industry specifically, whic
Slide 31: Risk factors (7/8)
Risk factors (7/8) Risks relating to Contractual and Legislative Frameworks (continued) Litigation risk The Group may from time to time be subject to litigation, arbitration and other proceedings that could have an adverse effect on the Group. Environmental and climate risk The Group is subject to c
Slide 32: Risk factors (8/8)
Risk factors (8/8) Risks Relating to the Shares Lack of liquid market and There can be no assurance that an active and liquid market for the Shares will develop and the price of the Shares may be volatile, especially if the volatile prices Shares do not become listed on a regulated market. Even if t
Slide 33: KLIKK FOR Å REDIGERE UNDERTITTELSTIL I MALEN
KLIKK FOR Å REDIGERE UNDERTITTELSTIL I MALEN 33
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