Investor Presentation. July 2014

Transcription

1 Investor Presentation July 2014

2 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 Forward-looking statements reflect the Company s current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. All statements, other than statements of historical facts, that address activities, events or developments that the Company expects, projects, believes or anticipates will or may occur in the future, including, without limitation, the delivery of vessels, the outlook for tanker shipping rates, general industry conditions future operating results of the Company s vessels, capital expenditures, expansion and growth opportunities, bank borrowings, financing activities and other such matters, are forward-looking statements. Although the Company believes that its expectations stated in this presentation are based on reasonable assumptions, actual results may differ from those projected in the forward-looking statements. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the failure of counterparties to fully perform their obligations to us, the strength of the world economies and currencies, general market conditions, including changes in tanker vessel charter hire rates and vessel values, changes in demand for tankers, changes in our vessel operating expenses when the are delivered to us, including dry-docking, crewing and insurance costs, or actions taken by regulatory authorities, ability of customers of our pools to perform their obligations under charter contracts on a timely basis, potential liability from future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists. We undertake no obligation to publicly update or revise any forward-looking statement contained in this presentation, whether as a result of new information, future events or otherwise, except as required by law. In light of the risks, uncertainties and assumptions, the forward looking events discussed in this presentation might not occur, and our actual results could differ materially from those anticipated in these forward-looking statements. 1

3 Euronav at a glance Large in-the-water crude oil tanker operator (55 modern tankers, $1.6Bn+ Market Cap) Vertically integrated operator with no related party transactions, no hidden fees or commissions More than 70% of fleet exposed to the spot market allowing for strong cash generation potential Strong relationships with high quality charterers Management (75 years of combined tanker shipping experience) focus on one company Pro forma fleet mix 29 VLCC, 23 Suezmax, 1 ULCC, 2 FSOs Suezmax 23 Fleet FSO 2 ULCC 1 VLCC 29 Current industry themes Demand Increased Ton-Miles Supply Lowest order book since 2003 Cyclical low in rates and asset values 55 vessels 13.9mm dwt 6.7 year avg. age Proven growth track record with strong access to capital vessels 3.0 mm dwt Bank debt raised $4,928 M Convertible bond issuance $275 M Bond issuance $235 M Equity issuance $625 M vessels 13.9mm dwt One of the largest independent owners & operators of crude oil tankers in the world Note: Market data as of Sept

4 Agenda Industry overview Company overview Financial overview Conclusion 3

5 Industry overview

6 A. Demand shifting to non-oecd (mb/day) 25.0 Global oil demand is growing (mb/day) and increasingly moving to non-oecd countries (mb/day) OECD demand Non-OECD demand overtaking OECD demand Total World (rhs) United States China India European Union Source: BP historical figures, IEA World Energy Outlook 2013 forecast figures Non-OECD demand Source: IEA World Energy Outlook 2013 Future VLCC demand by region over the next two years (2014E-2016E) Number of vessels (25) (50) (20) (7) (12) (39) US & Canada Europe, Lat Amer & Africa Japan China India SE Asia Net estimated demand for VLCCs next two years ~ 53 Net estimated additional demand ~ 53 VLCCs (92-39) by 2016 compared to net expected fleet growth of 4 vessels 5

7 B. Far East oil imports driving positive ton-mile demand growth Crude traffic generally moving East Miles moved per ton transported to China (a) US Gulf Europe Mid East-Europe Mid East Asia Arabian Gulf 5,500 TM West Africa 9,650 TM South America 11,500 TM Refinery expansion in Middle East and Asia Ton-mile demand growth, 2009 to 2013 Capacity additions (mbd) 3,500 3,000 2,500 2,000 1,500 1, , ,182 Billions of ton-mile 10,000 9,000 8,000 7,000 6,000 8,512 8,908 8,803 9,159 9, Asia Pacific Middle East Source: Wood-Mackenzie 5, (a) Average ton-miles based on 2013 tons transported to China Source: Drewry, Clarksons 6

8 B. U.S. shale oil and potential U.S export A positive for tankers Crude supply sources (mb/d) Rising US production reducing crude imports and spurring exports No of applications US crude export applications and approvals (to 25 th February 2014 plus estimate) Domestic production Gross imports Exports USA producing more and more Applications Approvals Approvals to Canada Approvals ex-canada and is exporting already could be 1m bpd by end of 2014 Estimates US oil imports barrels per day Arabian Gulf Africa Source: EIA. 7

9 B. Overall impact is more ton miles Indirect benefit LR2/Aframax will export condensate but positive knock on effect for VLCC, Suezmax Heavy crude imports remain intact Middle East to USA Heavy crude unchanged since 2005 & to remain Displacement drives further increase in ton miles Latam/WAF to USA will now go Latam/WAF to Far East LATAM to USA 2,500 miles & WAF to USA 5,000 miles LATAM to China 11,500 miles & WAF to China 9,650 miles 8

10 C. Global VLCC and Suezmax fleet supply dynamics VLCC Suezmax 80 World Fleet 1 Jan 2014 = 615 Vessels 8% 50 World Fleet 1 Jan 2014 = 471 Vessels 10% No. of vessels % 6% 5% 4% 3% 2% 1% 0% (1%) % 6% 4% 2% 0% Net change (2%) % Note: August 2014 Source: Clarksons Delivered Forecast Deliveries Scrapped/Removed Removals Scenario % Fleet Growth (RH AXIS) Orderbook for crude tankers is near historic lows 9

11 What does A-B-C mean? Two stage rocket super cycle coming CYCLICAL RECOVERY Stage 1 Negative fleet growth for first time since 2003 drives restricted supply Non-OECD demand drives 2-3m bpd growth No. of vessels Stage 2 STRUCTURAL EXPANSION Crude routes restructured via - Refinery expansion M East & China - Asian demand and US not importing Structural growth >2016 could mean a further estimated 270 VLCCs are required M East refinery expansion hard plans to expand capacity by 4m bpd by 2018 means a decrease in exports from Middle East Atlantic Supply 3-5m bpd Russian, US, North Sea, WAF, Brazil Oil into Atlantic as US not importing Asian Demand continues end user demand & refinery expansion LIKELY SHIFT Asian refiners NOT getting M East crude ~ 5mbpd Euro refiners not buying NSea/WAF crude ~ 2-3 mbpd Additional Atlantic crude supply (WAF/Brazil) ~ 2mbpd SENSITIVITIES 1m bpd supplied to Asia from WAF instead of Middle East ~ 17 VLCC 1m bpd additional supplied to Asia from WAF ~ 40 VLCC 1m bpd additional supplied to Asia from Carib ~ 45 VLCC CONCLUSIONS (spread over 3 scenarios) 5m bpd ~ 170 VLCC 8m bpd ~ 270 VLCC TOTAL SHIFT ~5-8m bpd from M East to Atlantic 10

12 D. Freight High volatility & price inelasticity Daily average tankers freight rate over 10 years USD/DAY Average TCE = $71,000 per day Notional Break Even jan/04 jul/04 jan/05 jul/05 jan/06 jul/06 jan/07 jul/07 jan/08 jul/08 jan/09 jul/09 jan/10 jul/10 jan/11 jul/11 jan/12 jul/12 jan/13 jul/13 jan/ Average VLCC 2000-built Average VLCC 2010-built Average Suezmax 2000-built Average Suezmax 2010-built Source: Clarksons 11

13 E. Cyclical play Stock Price Performance (a) vs. VLCC Rates (b) and Asset Values (Indexed Rates and Asset Values) 250% (Indexed Stock Price Performance) 500% 200% 400% 150% 300% 100% 200% 50% 100% 0% '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 YTD 0% Spot Rates 1-Year TC Newbuild Price 5-Year Price Stock Price (a) Average annual indexed stock price; index includes DHT, EURN, FRO, NAT, TNK and TNP (b) Rates and asset values are period averages Source: Clarksons, Capital IQ Strong correlation between asset, VLCC and share prices 12

14 E. Cyclical play Asset values VLCC ($mm) Newbuild 5 Year Old 10 yr avg yr avg Suezmax ($mm) Newbuild 5 Year Old 10 yr avg yr avg VLCCs acquired yr avg Current yr avg Current VLCCs acquired 120 (mm USD) Suezmax New Building Prices Suezmax 5 Year Old Secondhand Prices VLCC New Building Prices VLCC 5 Year Old Secondhand Prices Asset prices have appreciated since H but still remain well below long term medians 13

15 Cyclical play followed by structural expansion A Demand Emerging markets driving expansion B Ton-miles structural changes in refining already driving multiplier effect C Supply Lowest Order Book to Fleet Ratio since 1997 D Volatility freight cost does not stop crude price moves E Cyclical play just above cycle lows with strong earnings correlation 14

16 Company overview

17 A fully transparent operating platform Long established player (started 1989) Large in-the-water crude oil tanker operator (Pro forma: 55 modern tankers, $1.6Bn+ Market Cap) Vertically integrated with no related party transactions, no hidden fees or hidden commissions More than 70% of the fleet exposed to the spot market allowing for strong cash generation Strong relationships with high quality charterers Management focus on one company & 75 years of combined tanker shipping experience A real proxy to play the crude tanker market 16

18 Long established player Acquisition 15 VLCC Delivery of FSO Asia and FSO Africa vessels 13.9mm dwt Started doing business under the name Euronav as a subsidiary of CNN Tankers International Pool founded 2000 April: Merger with 16 Vessels with Tanklog March: Acquired 4 VLCCs Lists on NYSE Euronext Brussels TI Asia & TI Africa Conversion Acquisition 4 VLCC Added 5 Suez & 3 VLCC newbuilds Six double hull VLCCs ordered, initiating Euronav's focus on larger sized and modern vessels Acquires 4 ULCC vessels from Hellespont in JV Proven history operating in the crude tanker industry 17

19 Spot exposure Chartering strategy overview Chartering strategy seeks to maximize returns through optimal mix of spot and fixed charters Overview of the Tankers International ( TI ) Pool Euronav has deliberately positioned itself toward more spot exposure at this stage of the cycle Look to opportunistically employ crude carriers as crude storage units, to take advantage of rates in offshore sector Overseas Shipholding Group Reederei Nord Oak Maritime (HK) Exposure to spot market DHT Holdings, Inc Onhire days (2008) Onhire days (Year end 2014) Euronav was a founding member in 2000 Fixed Spot 43% 57% 74% 26% Largest spot market-oriented VLCC pool in which ship owners with vessels of similar sizes and quality participate Currently comprised of 36 vessels Chartering strategy allows Euronav to capitalize on increasing rate environment Source: Company filings; Clarksons 1 1-year timecharter rate 310,000 dwt D/H modern tanker; 2 1-year timecharter rate 150,000 dwt D/H modern tanker 18

20 Strong and strategic relationships with high quality charterers Selected customer relationships Many customers been repeatedly served by us for more than 20 years Source: Company filings and website 19

21 Euronav has consistently outperformed charter indices VLCC Average TCE over 2 years* (TI) Suezmax Average Average TCE over TCE over 2 years 2 years* (spot) (spot) TI Index 2010 blt. Euronav Index 2000 blt. Index 2010 blt. Index 2000 blt ,866 12,403 15, Our vessels achieve higher average TCE rates in the TI pool or on the spot market Source: Clarksons, Euronav, TI Pool * Two years to April

22 FSO Offshore market Opportunistic capability Conversion Floating storage and offloading units ( FSOs ) market overview In 2008, Euronav undertook conversions of 2 ULCC into the largest FSOs in the world Fixed income Service contract delivering USD 52 million EBITDA annually until 2017 Life expectancy of Vessel extended to 2027; contract in place until 2017 Potential for contract extension 21

23 Acquisition Strategy Strategic consolidation at attractive prices We aim to selectively buy and sell vessels at attractive prices to consolidate and strengthen our operating platform Focus on cash flow potential and ultimate returns on invested capital in each investment decision NIOC Mitsui O.S.K. Fredriksen (a) Euronav Teekay Corp Dynacom Tankers Nordic American Euronav (a) Rest of market Nippon Rest of market SCF Angelicoussis Fredriksen VLCC SK Shipping Bahri Suezmax Tsakos Marmaras (a) Pro forma for Maersk acquisition Note: Charts represent total DWT Source: Clarksons Oman Shipping Sinotrans Princimar Knutsen Active Consolidation Focus on ships/fleets on water NOT new buildings Look to use equity as currency when accretive opportunities arise Foster Partnerships Engaged in developing alliances and other partner relationships Revenue sharing agreements and operate fleet for 3 rd party Co-operation via Pools TI Pool undertaking leadership role Greater membership of Pools should lead to information flow and better pricing for crude sector Top 10 players make up <50% of market 22

24 Proven track record of acquisitions/disposals Sale of Bourgogne 15 vessels from Maersk 4 vessels from Maersk MUSD VLCCs 4 VLCCs 16 vessels from Tanklog merger Sale of TI Guardian Sale of Savoie Sale of Namur Sale of Pacific Lagoon Sale of Algarve Sale of Cap Isabella Sale of Luxembourg Sale of Antarctica Sale of Olympia Sale of Ardenne Venture Suezmax 5 D/H Year 160K Old Vessel DWT Prices 5 Year Old Secondhand Prices VLCC 5 D/H Year 310K Old Vessel DWT 5 Prices Year old Secondhand Prices Vessel acquisition = Profitable vessel sale = Loss-making vessel sale (a) Note: (a) Represents loss in terms of cash 23

25 Our fleet is enhanced with recent VLCC acquisitions Acquisition 1-15 VLCCs In January 2014, we agreed to acquire 15 VLCCs from Maersk Tankers for $980mm from Maersk Tankers Average age of ~4 years Took delivery of 14 vessels with one vessel coming in 1Q 2015 Transaction rationale Enables Euronav to capitalize on potential near-term improvements in tanker charter rates Attractive investment opportunity to grow revenue and earnings at bottom of the cycle asset prices Acquisition 2-4 VLCCs In July 2014, we agreed to acquire an additional 4 VLCCs from Maersk Tankers for $342mm Three of the four vessels to be delivered in 3Q and 4Q 2014 with last vessel coming in 2Q 2015 Acquisitions are fully financed 15 VLCCs - $980mm $500mm senior secured credit facility $235mm principal amount unsecured bond $350mm equity 4 VLCCs - $342mm $205 mm senior secured credit facility planned $125mm equity 24

26 Financial overview

27 Earnings and dividends track record and well positioned for future Historical earnings and dividends ($mm) ($ / day) 100,000 90,000 80, (18) (96) (119) (90) EBITDA Net profit Dividends Avg VLCC TCE Avg Suezmax TCE 70,000 60,000 50,000 40,000 30,000 20,000 10, ,000-20,000-30, Leverage 50% 56% 52% 52% 47% 55% 54% 55% 54% 59% No of Vessels % fleet = spot Payout ratio 70% 50% 51% 56% 27% N/A 35% N/A N/A N/A Since 2004, Euronav has returned $657 million in dividends and $50 million in share buy back to shareholders out of cumulative net results of $865 million 26

28 Powerful cash generation potential 2015 spot days exposure = 19,600 days Each $5,000 uplift in rates in VLCC and Suezmax improves EBITDA and Net Revenue by $98M Pro forma fleet earnings sensitivity Euronav well positioned Pro-forma earnings capability Breakeven (including debt service) c. $29k for VLCC c. $22k for Suezmax for every $5k average daily rate increase roughly 7 pts on ROCE VLCC TCE rates 25,000 40,000 50,000 80,000 Suezmax TCE rates 20,000 35,000 45,000 75,000 EBITDA $m Based on full year contribution of 55 ships FSO $52mm EBITDA consistent, high quality income stream 27

29 First half financial highlights 1H 2014 operating environment Q1 was first positive earnings quarter since the beginning of the global financial crisis on the back of continued strong tanker demand, less tanker capacity and a meaningfully higher rate environment Q2 was dominated with one of the longest and deepest turnaround seasons for refineries we have seen which reduced demand for crude oil and resulted in weaker TCE rates Outlook Limited tonnage increase forecasted Market is expected to be volatile but if current momentum is maintained into Q3 then the winter (in northern hemisphere) will get off to a strong start Rates in both VLCC and Suezmax categories have improved significantly during June and July We believe crude tanker rates will remain strong in the coming months due to positive seasonal demand factors and improving ton-mile demand fundamentals 28

30 Strong balance sheet position ($mm) Capitalization Actual Dec. 31, 2013 As adjusted June 30, 2014 Cash $74 $274 Secured debt $847 $874 Senior notes $0 $207 Convertible bonds $126 $23 Total debt $1,120 $1,255 Shareholders equity $801 $1,374 Key balance sheet movements 2014 $705m of credit facilities raised* not fully drawn yet Liquidity ($mm) As of July 23, 2014 Cash $175 Undrawn credit facilities - Undrawn credit facility $126 - Undrawn Revolving credit facility $130 - New undrawn credit facility * $205 Total liquidity $636 Acquisition capex As of Conversion of $110mm in convertible bonds into ordinary shares $235mm Bond raised to finance acquisitions Equity issuances of $475mm to finance acquisitions Remaining VLCC capex New Building capex July 23, 2014 $453 $0 We maintain a strong liquidity position post recent acquisitions * to be finalised and to be used to finance the 4 VLCCs acquisition announced on 8 July

31 Conclusion

32 Experienced, proven management team Proven growth track record with strong access to capital vessels 3.0 mm dwt Bank debt raised $4,928 M Convertible bond issuance $275 M Bond issuance $235 M Equity issuance $625 M vessels 13.9mm dwt 363% increase in on-water capacity (dwt) Paddy Rogers CEO Hugo De Stoop CFO Captain Alex Staring COO 2000 Today BOD/Executive Committee since June 2003 CFO since 2008 COO since 2005 CEO since 2000 Executive committee since 2006 Executive committee since 2005 CFO Deputy CFO and Head of IR since 2004 ExCo: 75 years combined experience 25 years maritime experience Ability to optimize fleet size and access to financing with $5.7bn of debt and equity issuance since 2013 despite industry headwinds 31

33 Euronav well positioned for the coming cyclical upswing A pure play tanker company with a sustainable business model Best in class operating platform Re-capitalised balance sheet - positioned to act as industry consolidator Experienced management team with a proven track record of growth Current strategy leverages Euronav to a strong uptick in crude tanker market Attractive stage of the cycle Containers Product Tankers LPG Dry Bulk Car Carriers Chemicals Crude tankers LNG Time 32

34 Appendix

35 Tankers International Pool App providing transparency Trade AG = Arabian Gulf USG = US Gulf WAF = West Africa RS = Red Sea FE = Far East UKCM = Europe WS = Worldscale The New Worldwide Tanker Nominal Freight Scale is a catalogue of theoretical freight rates expressed as USD per ton for most of the conceivable spot voyages in the tanker trade. Laycan - An abbreviation of "layday cancelling date" or "laydays cancelling referring to the period of time when the charterer must commence loading the cargo and the cancelling date (being the date after which the charterer may repudiate the charterparty if the vessel has not then arrived at the specified port. This period is typically expressed as two dates, eg laycan 25 March/2 April", meaning that the charterer may not be obliged to commence loading earlier than 25 March even if the ship has arrived at the specified port or place of loading by that date, and that he may cancel the charterparty if the ship has not arrived there by 2 April. TCE time charter equivalent TCE revenues which are voyage revenues less voyage expenses serve as an industry standard for measuring fleet revenue and comparing results between geographical regions & competitors. Speed - expressed in knots per hr when ballast and when laden Ballast laden port split between the 3 for a voyage Demurrage Additional revenue paid to the shipowner on its Voyage Charters for delays experienced in loading and/or unloading cargo that are not deemed to be the responsibility of the shipowner, calculated in accordance with specific Charter terms. 34

36 Summary of equity capital structure changes Date Description New share capital Number of shares 14-Jul-14 Capital increase of approx. USD 125M USD 142,440, ,050, Apr-14 Conversion of convertible bonds USD 130,966, ,493, Mar-14 Conversion of convertible bonds USD 130,950, ,479, Feb-14 Conversion of convertible bonds USD 130,230, ,816, Feb-14 Capital increase of approx. USD 300M USD 130,084, ,682, Feb-14 Contribution in kind (PCPs) USD 94,388, ,840, Feb-14 Conversion of convertible bonds USD 84,106, ,381, Jan-14 Conversion of convertible bonds USD 75,584, ,540, Jan-14 Capital increase of approx. USD 50M USD 73,759, ,861, Jan-14 Conversion of convertible bonds USD 67,809, ,387, Dec-13 Conversion of convertible bonds USD 58,936, ,223, Nov-13 Conversion of convertible bonds USD 57,804, ,182,210 35

37 VLCC rate calendar 36

38 Suezmax rate calendar 37