American Shipping Company ASA. Aker Credit Markets Day

Transcription

1 American Shipping Company ASA Aker Credit Markets Day November 21 st, 216

2 Important information This Company Presentation is current as of November 216. Nothing herein shall create any implication that there has been no change in the affairs of American Shipping Company ASA ("AMSC" or the "Company") since such date. This Company Presentation contains forward-looking statements relating to the Company's business, the Company's prospects, potential future performance and demand for the Company's assets, the Jones Act tanker market and other forward-looking statements. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes", "expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward-looking statements contained in this Company Presentation, including assumptions, opinions and views of the Company or cited from third party sources, are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. 2

3 Long Term Contracts Returning Stable Cash Flow American Shipping Company Bareboat charter to OSG s to blue chip charterers* Beyond Spot - 9yrs** Charterer S&P rating Options Options A Options Options A- Options Options AA- Options Options BBB+ ** Options Opt. BB+ Bareboat Charter (fixed rate of USD ~88m/year) + DPO (fixed deferred charter hire, USD ~4m/year) + Profit Split (variable 5/5 sharing of profits) = Stable cash flows *Illustrative contract duration **Tampa was converted to a shuttle tanker and is on a 1 year backed by a 1 year 3

4 AMSC Key Financial Highlights TTM NORMALIZED EBITDA* PER 3Q (MUSD) Listed on OSE - Enterprise Value ~ $8m - MCAP ~ $18m - Aker ASA has ~ 49% economic interest Firm Revenue of $88m Normalized TTM EBITDA of ~ $12m - Reported EBITDA of $86m - Deferred Payment Obligation (DPO) of $4m - Profit share of $12m TTM 3Q 14 TTM 3Q 15 TTM 3Q 16 DPO Profit Share Reported EBITDA * Reported EBITDA + profit share + DPO 4

5 Existing Debt Facilities Current debt structure (USD million) Key terms on funding Subordinated loan Unsecured bond MUSD 15 facility (First Lien Secured) MUSD 3 facility (First Lien Secured) Q3 216 Bank debt Facilities entered into in Q4 215 Average weighted tenor: 6 years (8% of the loan amount with 5 year tenor and 2% with a 1 year tenor) Average weighted interest cost: Libor bps margin Total annual installments: Y1: USD 8.3m Y2-4: Y5: Unsecured bond USD 28.3m (annually) USD 44.3m (expect to refinance after year 4) Interest cost: LIBOR + 6 bps margin Maturity 28 February 218 Subordinated loan Accruing interest of 1.25% with maturity in 4Q 22 Will be repaid by proceeds from Philly Tankers 5

6 Contracted revenue provides solid cash flow buffer for debt servicing Simplified illustration of AMSC s annual cash-flow EXCLUDING profit share (USDm) Fixed revenue Fixed DPO avg SG&A Bank debt service avg Existing Bond Coupon Buffer / Cash Flow to equity Existing debt service covered with only 7% of current minimum fixed contracted cash flow 6

7 The Jones Act - a stable business environment The Jones Act has been in place since 192 Passed in 192, the Jones Act generally restricts the marine transportation of cargo and passengers between points in the United States to vessels that meet the following criteria: - Built in the United States - Registered under the U.S. flag - Manned predominately by U.S. crews - At least 75% owned and controlled by U.S. citizens Essential feature of U.S. national security, ensuring non- dependency of ships controlled by foreign nations AMSC s operation in the Jones Act market is made possible by the lease finance exception of the Jones Act and the Jones Act is here to stay! 1,,, USD 1bn contribution to the U.S. domestic economy 3,,, USD 3bn total investments in over 4, vessels 4, # jobs directly and indirectly impacted by the U.S. maritime industry Source: American Maritime Partnership and U.S. Maritime Administration 7

8 # of JA vessels The AMSC fleet is an integrated part of OSG s Jones Act fleet and strategy OSG s Jones Act fleet AMSC is the core of OSG s Jones Act fleet 3 OSG to spin-off on its international tanker business into a separate public entity International Seaways OSG post spin-off will be a pure US Flag shipping company, implying continued need for the AMSC fleet AMSC s 1 vessels are an important part of OSG s Jones Act tanker fleet The AMSC fleet is the most cost-efficient fleet in the Jones Act fleet due to favourable construction cost compared to newbuilds delivered today 5 1 The 1 AMSC vessels represent ~3% of of the total modern Jones Act fleet AMSC owned MRs OSG owned MRs ATBs Lightering ATBs MSP tankers Total OSG controlled 8

9 AMSC fleet comes with a significant cost advantage AMSC has a modern fleet acquired at a lower cost providing significantly lower break-even costs Cost Newbuild prices Transaction values 157 Bareboat costs USD/d 45, 148 3) 142 5) 4, 35, 134 1) 134 2) 13 4) 135 3, 25, 2, 15, 1, 17 5, New regulation American Philly Phoenix Tankers AMSC 8.% 8.5% 9.% 9.5% 1.% 1.5% 11.% Annual bareboat costs given various total capital IRRs with newbuild USD 134m Notes: Source: 1) Based on Philly Tankers 2) Based on newbuild cost for the tankers delivered to American Petroleum Tankers (Golden State excluded due to cost overrun) 3) New regulation adds NOx emission requirement that estimated will increase cost to USD m 4) Based on total consideration for 9 vessels, including additional expenses incurred by Kinder Morgan for taking delivery 5) Based on average price for 4 vessels Company materials 9

10 7 Tankers entering fleet.. but scrapping has started Yard delivery schedules Vessel age since delivery Vessel Philly Tankers PT1 Philly Tankers PT2 Philly Tankers PT3 Philly Tankers PT4 Matson container 1 Matson container Yard 221 Contracted 222 n/a n/a Contracted # vessels Candidates for 6 scrapping 5 Scrapped ATBs Tankers AMSC Seacor PT 2 4 Seacor PT 3 Kinder Morgan PT5 3 2 Matson Con Ro 1 Matson Con Ro 2 No new orders for product tankers for more than two years Scrapping has started with more to come in the near future n/a n/a Source: Navigistics Wilson Gillette Report and AMSC analysis 1

11 US Transportation of Crude and Products The link between Oilfields and Refineries Onshore shale oil resources mainly located inlands Refineries mainly located along the coast US Oilfields and Transportation links 3 BAKKEN Combination of pipelines, trains, tankers/barges and trucks necessary to transport oil from fields to refineries and products from refineries to end markets 5 2 PERMIAN Transport Modes EAGLE FORD 4 PIPELINES VESSELS Key US Oilfields Corpus Christi Pipeline Barges US GULF TRUCKS TRAIN Jones Act Tanker Routes: 1 Gulf Coast refineries to Florida and East Coast 2 Mid-Atlantic to New England 3 Intra-west coast movements 4 Cross-Gulf movements 5 Delaware Bay Lightening 6 Crude by shuttle tankers from deep water U.S. Gulf to Gulf Coast Refineries 7 MPSs trade internationally (not shown) 8 Crude from Corpus Christi, TX to LOOP (not shown) 11

12 Stable fleet deployment over time current shift back to clean products trade Current Jones Act tank fleet deployment by main trades (Tankers and ATBs) Historical Jones Act tank fleet deployment by main trades (Tankers and ATBs) 25% 8% West Coast MSC Clean US Gulf 17% 48% Chemicals Crude oil 2% % Mar-13 Oct-13 May-14 Dec-14 Jul-15 Feb-16 Sep-16 MSC Chemicals Clean US Gulf Crude Oil West Coast Source: Navigistics Wilson Gillette Report and AMSC analysis 12

13 jan-2 okt-2 jul-21 apr-22 jan-23 okt-23 jul-24 apr-25 jan-26 okt-26 jul-27 apr-28 jan-29 okt-29 jul-21 apr-211 jan-212 okt-212 jul-213 apr-214 jan-215 okt-215 jul-216 Demand for clean products is stable over time U.S. Annual Gasoline Consumption (Mbbld) PADD 3 to PADD 1 Waterborne Product Movements and Florida Gasoline Sales (Kbbld) 1, 9, 8, 7, 6, 5, 4, 3, 2, 1,, Maritime Product movement per day (kbbls) Gasoline sales per day (kbbls) Gasoline is the largest clean petroleum product moving in the cross U.S. Gulf (USG) Jones Act trade o U.S. Gasoline consumption has historically been steady Waterborne product movement to PADD 1 consists mainly of products from USG to Florida as Florida has no pipeline access. o Tanker and barge transportation to Florida is steady and in line with stable gasoline consumption Sources: EIA AEO report 216, Navigistics September 216 Report, 13

14 Softer market short term, but positive long term supply and demand balance Product tanker medium/long term time charter development and recent spot fixtures Projected Supply and Demand for Jones Act tanker transportation USDk/d KBBLs 3, 25, 2, 15, 1, 5, Long/medium-term contract rate Recent spot fixtures Demand Supply Source: Navigistics Wilson Gillette Report, and AMSC analysis 14

15 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Kbblspd Kbblspd Reduced crude transportation due to lower shale production - expected to rebound Corpus Christi Shipment Volumes YoY Liquids Production Additions by Top American Shale and Tight Plays Corpus Christi Outbound Crude (Left) Eagle Ford Production (Right) Bakken Eagle Ford Permian Midland Permian Delaware Other Liquids Plays Shale oil production is going from strong growth over the past 5 years to contracting in 216, but production may increase again in 217 and forward as oil price recovers Reduced crude production, especially from Eagle Ford, leads to reduced shipments from Corpus Christi Shipments out of Corpus Christi will likely increase as Eagle Ford production increase Sources: Rystad Energy, Arctic Securities, EIA 15

16 Summary SECURED CASH FLOWS Backlog of secured bareboat revenue of $366m with average weighted tenor of 3.8 years per Q3 216 Evergreen charter extensions are deep in the money for OSG Blue chip end users LEADING MARKET POSITION Pure play Jones Act tanker exposure Second largest Jones Act product tanker owner Modern fleet built at cost substantially below current newbuilding prices, providing lowest break-even cost of modern Jones Act tankers STABLE U.S. JONES ACT TANKER MARKET Increased demand for clean products as fuel price has dropped US shale production expected to rebound Market is currently softer, but shipping remains a competitive alternative 16

17 THANK YOU! 17