I.M. Skaugen SE Result 2014 Presentation February 2015 1
Agenda Highlights Core business Financials 2
Restructuring efforts continued with positive effects USDm Leading to reduced financial expenses and a lower cost base Feb 2015 - Extended maturity of IMSK12 Net interest bearing debt reduced with USD 21mill to USD96 mill. Financial expenses in 2014 reduced with USD4 mill; o o excess liquiduity used to reduce bond debt with USD18.5 mill - buying back bonds in the market two vessels sold and leased back on bare boat charters, generating a net cash flow of USD40.8 mill «Centralize and simplify program» delivering tangible results leading to USD7 mill in reduced overhead and shore based expenses in 2015 compared to 2013 No ships purchased or on order Equity ratio stable throughout the year Book equity per share at USD 1.63 (NOK 12.10) by year end Agreed with bondholders to extend maturity of IMSK12 to June 2016 Secured extension of cross currency swap in line with IMSK12 with no cash or material P&L effect Providing sufficient working capital to execute on strategy and create value for stakeholders 40 35 30 25 20 15 10 2,0 No debt maturing until June 2016 Maturity profile 17,9 19,5 35,2 33,7 5 0 8 2,0 2,0 2,0 1q15E 2q15E 3q15E 4q15E 1q16E 2q16E 3q16E 4q16E 1q17E 2q17E IMSK12 Amended IMSK12 Secured derivatives Bank debt IMSK13 Sources:IMS Note: 3
Right decision to reposition the fleet in late 2013 Now on the right track for growth 800 700 600 500 400 300 200 100 0 Vessel earnings improving jan feb mar apr may jun jul aug sep oct nov dec Norgas TCE index Average brokers' index - 12 Mth TC Average brokers' index - spot Improving trend as of 2Q14 increasing number of vessel earning days October best month of the year Short term dip in Nov/Dec due to plunge in Oil price 1Q15 back on track Utilisation improving coming from an oversupplied market for vessels in our segment From Middle east and ethylene focus to a more balaced portfolio products as well as geographies 100 % 90 % 80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 % 0 % 2H 2013 2H 2014 LPG 7 % PPL 18 % WOS VCM 9 % Others 6 % EOS LNG 1 % BTD/C4 30 % ETH 29 % Sources: IMS/Norgas Note: 4
Fleet utilisation expected to continue to improve '000 US $ per month Million Metric Tons Limited orderbook for vessels in our segment demand growth in liquefied gas trade 1 100 1 000 Limited orderbook in our segment of the market Ethylene Sailing Orderbook Fleet & orderbook No. Cbm Avg. built No. Cbm OB % Built >20,000 cbm 7 152 465 2004 20 485 060 318% 2016 15-20,000 cbm 10 169 700 2008 4 68 000 40% 2016 ~12,000 cbm 12 145 068 2007 11 132 000 91% 2015 ~10,000 cbm 11 113 652 1998 0 0 0% 8-10,000 cbm 43 368 439 2005 0 0 0% 5-7,000 cbm 38 244 217 2005 0 0 0% Below 5k 33 107 674 1992 0 0 0% TOTAL 154 1 301 215 2002 35 685 060 53% 2016 Improvement in TC rates for the larger 20kcbm vessels is attractive for absorbing additional tonnage 900 800 700 600 500 400 Fearngas Eth 10k cbm Spot Clarksons SR 20.5k cbm 12 Mth TC US export capacity expected to be fully utilised 35 30 25 20 15 10 5 0 2012 2013 2014 2015 2016 2017 Targa Sunoco Phillip 66 Sage/Haven «Outlook for small LPG carriers increasingly attractive for 2015-2016. Given the underlying attractiveness for LPG shipping in general through 2016 with the global LPG trade expected to expand by at least 15% pa in 2015 and 2016, we believe the outlook for small LPG carriers is increasingly attractive over the next 12-24 months as the increase in VLGC deliveries beginning in mid-2015 is likely to translate to increased demand for StealthGas' "last mile" small LPG carriers.» Source: Jefferies LLP, 27 Feb 2015 Enterprise Expansion Occidental Sources: Clarksons, Fearngas, Jefferies LLP, Note: 5
Aim to become the go-to specialists for regional LNG distribution FSRU Multigas Multigas FSU Terminal Offering a unique value proposition combining the Norgas LNG capable vessels with the competence of the Group s SPT company Company s key focus areas and opportunities The IMS group is in the process of migrating its business towards the energy markets with a focus on new business areas like Small Scale LNG ( SSLNG ) in particular. Goal is to become a leading and "go-to" specialist for regional LNG logistics solutions within the next few years. IMS offers value creating proposals for selected clients to deliver natural gas in the form of LNG replacing diesel / and/or naphtha for power generation and industrial use. IMS is dialog with several parties for the long term commitment and chartering of both 100% owned LNG vessels and its other LNG capable ships under control. Norgas SPT 3rd party IMS in the Small Scale LNG value chain SPT SPT SP T LNG Production plant «Stranded» customer LNG customer o Prospective contracts will be attractive compared to employment in the petrochemical trade of the Norgas Pool, both in terms of rates and contract duration. SPT 6
Outlook - Encouraging signals of improvement Positive trend in demand for liquefied gas trade derived from US shale- oil&gas Lower oil price making energy more affordable supporting GDP growth and demand for energy in developing economies - the form of gas and delivered as LNG Focus on liquefied gas transportation and growth from new LNG projects Growth trend in our core markets seen in 2014 - likely to continue in 2015 Vessel supply&demand balance in our niche of the market expected to increase utilisation Our smaller sized combination carriers now on time charter with clients who can utilise their combined petchem&chems capacity improved and more stable earnings Fleet of six LNG vessels - well positioned to capture projects scheduled for start-up in 2015/16 No major CAPEX commitment in 2015 7
Agenda Highlights Core business Financials 8
Our modern fleet of 15 advanced gas carriers LPG LPG/E LPG/E/LNG Transporting the full range of liquefied gases including LNG Liquefied gases and their origin Natural Gas production Liquefaction plant Liquefaction plant LNG What we transport Boiling temp -163 Vessel type Our fleet LPG/E/LNG 2 x 12,000cbm 4 x 10,000cbm Methane Ethane Propane Butane Naphta Gas Oil Petroleum Refinery Crude Oil, petroleum refinery Steam cracker Steam cracker Petchem gases Ethane -89 Ethylene Propylene VCM -104-48 -15 Butadiene -4 LPG -43 LPG/E 2 x 10,000cbm 4 x 8,500cbm LPG/E/Chemical s 3 x 5,800cbm LPG/E or 9,600cbm chemicals Superior capabilities to efficiently change between products transported, creating new opportunities 9
Small scale LNG market A growing market and with a proven premium time charter equivalent rate over petrochemicals The small scale LNG market is growing IMS 6 x Multigas Existing market, proven technologies Oil majors now on the scene Terminals being developed Switch to gas driven by economics and emission legislation Developed in Scandinavia last 15 years. China and South East Asia fastest growing markets. Oil & Gas majors officially going for SSLNG; Shell, GdF Suez and Gazprom. Conventional terminals developing new business from re-loading to ships. Smaller import terminals for re-distribution are being built. Stranded power plants converted from oil/diesel to gas (Indonesia, India, Central America and Malta). LNG as fuel for shipping growing from 0.1 to 5 million tons per year by 2020 due to ECA zones. Largest SSLNG tonnage provider and only one with available ships. Premium achieved on 2 X charters (USD1m TCE per month on a 10k cbm Multigas vessel). Achievable due to SSLNG value chain economics driven by the favorable cost difference between LNG and alternative fuels (i.e. diesel and naphtha). 10
IMS focus areas for Small Scale LNG ECA zone as of 1 Jan 2015 Import terminals ready for re-loads Additional smaller re-distribution terminals being built NWE Growing energy demand and push for lower emissions Regional imbalances for LNG supply Infrastructure for LNG in place and growing China India Indonesia Growing energy demand and lowering of fuel subsidies Lack of pipeline infrastructure Import terminals ready for re-loads 11
1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023 2026 2029 2032 2035 2038 US shale development impacting our line of business Already have and will provide more opportunities in the future Surplus of all gasses US natural gas production by source (tcf) Surplus of LPG Fast growing export requiring more and more gas carriers also smaller tonnage Growth in new PDH plants (propylene directly from LPG) both in the US and Asia increased trade in propylene 35,0 30,0 25,0 Alaska Coalbed Methane Offshore Onshore Conventional Tight gas Shale Gas Surplus of ethane Driving investment in new ethylene plant capacity and export of ethylene Which leads to structural shortage of butadiene to be imported Regional exports of ethane as feed stock or as fuel for power plants 20,0 15,0 10,0 Surplus of natural gas Provides source for future export of LNG regionally 5,0 - Sources: EIA 12
Lower oil price should be positive for petchem demand Ethylene Spot Price ($/MT) Leading to higher trade volumes for IMS vessels $2 500 Demand destruction due to 2x higher prices Ratio of World GDP growth to World Ethylene demand growth 3,00 $2 000 2,50 $1 500 $1 000 2,00 1,50 1,00? $500 $0 Source: Argus DeWitt 0,50 - Ethylene Spot CFR - NEA Asia Pacific Spot Avg $/MT Ethylene Spot CFR - SEA Asia Pacific Spot Avg $/MT GDP Elastity Factor - Base Case Source: Morgan Stanley 5 Year Average 13 Sources: Argus DeWitt amd IMF / Nexant Chemsystems 13
No competition from newbuilds within core segments Limited order book for smaller ethylene carriers and small scale LNG Comments The current order book for the entire ethylene fleet is at ~50%, but the vast majority of this is related to the larger vessel types, over 12,000 cbm. We expect the majority of these vessels to transport LPG initially (like the Navigator Gas vessels) rather than to compete in the ethylene trades IMSK s fleet is focused towards the smaller vessel types, mainly 5,000-10,000 cbm, which is a segment with no new vessels on order IMSK is the predominant player within small-scale LNG, with its fleet of 6 vessels in the 10,000-12,000 cbm segment. There are currently no vessels on order within this segment Fleet and orderbook global ethylene capable fleet Ethylene Sailing Orderbook Fleet & orderbook No. Cbm Avg. built No. Cbm OB % Built >20,000 cbm 7 152 465 2004 20 485 060 318% 2016 15-20,000 cbm 10 169 700 2008 4 68 000 40% 2016 ~12,000 cbm 12 145 068 2007 11 132 000 91% 2015 ~10,000 cbm 11 113 652 1998 0 0 0% 8-10,000 cbm 43 368 439 2005 0 0 0% 5-7,000 cbm 38 244 217 2005 0 0 0% Below 5k 33 107 674 1992 0 0 0% TOTAL 154 1 301 215 2002 35 685 060 53% 2016 Fleet and orderbook global LNG fleet LNG Sailing Orderbook Fleet & orderbook No. Cbm Avg. built No. Cbm OB % Built >100,000 cbm 169 29 391k 2010 129 21 719k 74% 2016 20-100,000 cbm 1 75 558 2008 14 416 000 551% 2016 14-20,000 cbm 1 15 600 2012 1 14 000 90% 2015 ~12,000 cbm 2 24 022 2011 0 0 0% ~10,000 cbm 4 40 120 2011 0 0 0% 5-8,000 cbm 2 14 000 2011 2 11 600 83% 2017 Below 5k 5 11 336 2003 1 2 200 19% 2016 TOTAL 184 29 572k 2004 147 22 163k 75% 2016 Sources: Clarksons 14
Agenda Highlights Core business Financials 15
Business structure aligned with core business Liquefied gas transportation and handling IM Skaugen SE (Oslo - IMSK) 100% IMS 50% IMS ( 50% Teekay) Norgas Gas Activities (Singapore) World leading gas transportation company established in 1982, operating 15 vessels focused on seaborne transportation of liquefied gases: LPG, Petchems (e.g. Ethylene) and LNG. SPT - Marine Transfer Activities (Houston / Sunderland) Fully dedicated ship to ship (STS) cargo transfer company operating with global reach. With nearly 30 years of transfer experience. Business areas Vessels Business areas Vessels Small scale LNG 6 x 10/12k cbm LNG ship-to-ship LPG / Petchem 6 x 8/10k cbm LNG Terminal Management 7 support vessels LPG / Petchems / Chemicals 3 x 6/9k cbm Crude-oil Lightering 16
Highlights - 2014 USD mill (except per share data) FY 4Q 2014 2013 2012 2014 2013 EBIT (14.2) 23.6 0.1 (4.7) (4.7) Financial items, investments, associates and tax (12.9) (4.5) (16.0) (4.5) 7.0 Net result (27.1) 18.4 (15.9) (9.2) 1.7 Total assets 173.5 262.6 211.8 173.5 262.6 Net debt 70.9 94.2 93.8 70.9 94.2 Net interest bearing debt (incl. derivatives) 96.1 117.3 121.2 96.1 117.3 Interest rate coverage ratio (1.0) 0.2 1.0 (0.6) 0.2 Total liquidity 26.5 59.4 22.6 26.5 59.4 Equity ratio * 25.4% 27.2% 25% 25.4% 27.2% Book equity 44.1 71.3 52.7 44.1 71.3 Book equity per share 1.63 2.63 1.9 1.63 2.63 EPS (1.00) 0.68 (0.59) (0.99) 0.68 * book equity/total assets Sources: I.M. Skaugen 17
Segment reporting - 2014 USD'000 FY 4Q 2014 2013 2012 2014 2013 Gross Revenue gas transportation activities managed by IMS 130 245 172 042 239 891 30 314 35 904 EBITDA gas transportation activites managed by IMS 4 218 21 451 45 848 1 546 (2 572) Gross Freight Revenue-Gas Transportation Activity 81 064 110 652 165 912 16 626 21 056 Revenues gas transportation activities 81 064 110 652 165 912 16 626 21 056 Voyage related expenses (32 182) (37 939) (71 864) (5 568) (7 700) Charter hire (23 504) (22 730) (26 280) (6 500) (5 612) Other operating cost (31 522) (41 576) (43 681) (5 729) (9 199) Depreciation and amortization (6 038) (9 574) (11 399) (1 519) (1 967) Gains/losses from restructuring and sale of assets 3 696 31 783 2 048 1 610 2 359 Segment operating profit (EBIT) (8 486) 30 616 14 736 (1 079) (1 063) General administration and legal expenses (5 526) (2 493) (2 847) (3 440) (639) Depreciation (97) (212) (687) (22) (212) Share of investments in other joint ventures 288 4 896 (4 913) (271) 6 647 Financial revenues 443 4 753 1 165 (30) 1 863 Financial expenses (12 985) (18 455) (23 218) (3 615) (4 249) Other (757) (681) (208) (757) (681) Net result (27 120) 18 424 (15 972) (9 214) 1 666 Sources: I.M. Skaugen 18
The Norgas Fleet young and versatile Norgas Fleet No. Vessel CBM Built Age DWT LOA Beam No.of tanks Vessel type Press Bar (Max) Temp (Min) Flag Country of build CS Owner Charterer 1 Norgas Unikum 12,000 2011 3 12,570 152.3 19.8 2 SR/E/LNG 5.2-163 Singapore China GL Teekay IMS 2 Bahrain Vision 12,000 2011 3 12,570 152.3 19.8 2 SR/E/LNG 5.2-163 Singapore China GL Teekay IMS 3 Norgas Invention 10,000 2011 3 10,609 137.1 19.8 2 SR/E/LNG 5.2-163 Singapore China GL IMS 4 Norgas Conception 10,000 2011 3 10,609 137.1 19.8 2 SR/E/LNG 5.2-163 Singapore China GL GATX 5 Norgas Camilla 5,820 2011 3 10,200 109.5 21 4 SR/E/CHEM 3-104 Singapore China GL Teekay IMS 6 Norgas Innovation 10,000 2010 4 10,609 137.1 19.8 2 SR/E/LNG 5.2-163 Singapore China GL GATX 7 Norgas Creation 10,000 2010 4 10,609 137.1 19.8 2 SR/E/LNG 5.2-163 Singapore China GL IMS 8 Norgas Pan 5,820 2009 5 10,200 109.5 21 4 SR/E/CHEM 3-104 Singapore China GL Teekay IMS 9 Norgas Cathinka 5,820 2009 5 10,200 109.5 21 4 SR/E/CHEM 3-104 Singapore China GL Teekay IMS 10 Norgas Shasta 10,098 2003 11 10,770 137.1 19.8 2 SR/E 7-104 Singapore China GL GATX 11 Norgas Napa 10,098 2003 11 10,770 137.1 19.8 2 SR/E 7-104 Singapore China GL Teekay IMS 12 Norgas Alameda 8,461 2003 11 9,260 124.9 19.8 2 SR/E 7-104 Singapore China GL GATX 13 Norgas Petaluma 8,461 2003 11 9,260 124.9 19.8 2 SR/E 7-104 Singapore China GL GasMar IMS 14 Norgas Sonoma 8,461 2003 11 9,260 124.8 19.8 2 SR/E 7-104 Singapore China GL SGPC 15 Norgas Orinda 8,461 2002 12 9,260 124.9 19.8 2 SR/E 7-104 Singapore China GL GATX Vessel type: SR = Semi Ref, E = Ethylene, LNG, CHEM = Chemicals In addition to the gas tank, there are 7 coated tanks for chemical carriage on the Wintergas vessels Norgas Pan, Norgas Cathinka and Norgas Camilla. Total chemical tank capacity of 3,870 cbm Sources: Norgas 19
Integrity honesty in all we do Teamwork the way we ensure our success 20