www.polarcus.com 1
4-5 September, 2013
Rolf Ronningen, CEO
Tom Henrik Sundby, CFO
Polarcus Limited
www.polarcus.com 2
Disclaimer
This Presentation of Polarcus Limited (the “Company”) has been prepared solely for informati...
www.polarcus.com 3
Agenda
Highlights
Financials
Operations & Market update
Summary & Q&A
Appendices
1
2
3
4
5
www.polarcus.com 4
Polarcus in brief
• Seven high-end 3D seismic vessels ~11% market share
• Youngest most uniform fleet i...
www.polarcus.com 5
Highlights H1 2013
• A company in growth
– Revenues of USD 275.3 million, up 28% from H1 2012
– EBITDA ...
www.polarcus.com 6
Agenda
Highlights
Financials
Operations & Market update
Summary & Q&A
Appendices
1
2
3
4
5
www.polarcus.com 7
Key financials
Quarter ended Six months ended
Year ended
(In millions of USD) 30-Jun-13 30-Jun-12 30-Ju...
www.polarcus.com 8
Key financials – historic development
114.3 130.5
-
50
100
150
200
Q1-10
Q2-10
Q3-10
Q4-10
Q1-11
Q2-11
...
www.polarcus.com 9
Fleet Utilization – 85% in H1 - 13
55%
81% 79%
89%
85%
73%
53%
73%
77%
81%
86%
63%
72% 72%
30%
8% 3%
8%...
www.polarcus.com 10
15
30 30 30 30 30 30 303
6 7 7 9 12
120
125
95
40
35
H2-13 2014 2015 2016 2017 2018 2019 2020
Bank deb...
www.polarcus.com 11
Update on lawsuit filed by WesternGeco
• On 15 August 2013 WesternGeco filed a lawsuit in Texas, USA, ...
www.polarcus.com 12
Polarcus share information
• Listed on the Oslo Stock
Exchange
• Market Cap USD ~400 million
• Include...
www.polarcus.com 13
Agenda
Highlights
Financials
Operations & Market update
Summary & Q&A
Appendices
1
2
3
4
5
www.polarcus.com 14
Operational performance
• Technical downtime < 5% for Q2
• Completion of 12 month Woodside
project in ...
www.polarcus.com 15
Polarcus Nadia & Naila propulsion upgrade
• Polarcus Nadia and Naila are the only vessels with thruste...
www.polarcus.com 16
Multi-client library in the making
• MC Project Library now ~ 25,000 km² 3D data
• Established a new ‘...
www.polarcus.com 17
Global 3D Seismic Fleet Capacity
201320142015
60 60 61 62
0
10
20
30
40
50
60
70
2012 2013 2014 2015
E...
www.polarcus.com 18
Robust E&P demand
• Robust E&P growth expected
YOY for the coming few years
• Marine seismic represent...
www.polarcus.com 19
Global seismic outlook
Russian Arctic: Rosneft &
Gazprom awarded extensive
acreage
Australasia: Strong...
www.polarcus.com 20
0
5,000
10,000
15,000
20,000
25,000
2012 2013 2014 2015 2016 2017 2018
3Dinkm²
Black Sea
Far East
Arct...
www.polarcus.com 21
Backlog
• USD ~215 million contract backlog*
• Contract backlog secured in the range of
USD 260k-330k/...
www.polarcus.com 22
Agenda
Highlights
Financials
Operations & Market update
Summary & Q&A
Appendices
1
2
3
4
5
www.polarcus.com 23
RIGHTSIZE, RIGHTDESIGN, RIGHTPLAN
• Strong operational performance
• Strengthening the balance sheet
•...
www.polarcus.com 24
Agenda
Highlights
Financials
Operations & Market update
Summary & Q&A
Appendices
1
2
4
5
3
www.polarcus.com 25
RIGHTSIZE RIGHTDESIGN RIGHTPLAN
Polarcus Nadia Polarcus Naila
Type 3D Vessel Type 3D Vessel
Design Uls...
www.polarcus.com 26
First
Pass 
Wide tow
High
Density
3D
Base-
line 4D
High
density
4D
4D
Monitor
Multi-
vessel
3D
Multi-...
www.polarcus.com 27
Awards through RIGHTDESIGN
ICE-1A or 1A* Class1
Safe Arctic operations
1 POLARCUS ASIMA, ALIMA,
SAMUR,...
www.polarcus.com 28
Pioneering environmental leadership
DNV’s Triple-E™ is a voluntary environmental
performance rating sc...
www.polarcus.com 29
Debt overview
Debt Security Size
Balance
30 June 2013
Tenure Maturity Interest
Convertible bond Unsecu...
www.polarcus.com 30
Potential Arctic oil and gas resources
• The region within the Arctic circle covers
6% of the worlds s...
www.polarcus.com 31
Attractiveness of Russian Arctic
• The new offshore tax regime represents a major break-through in Rus...
www.polarcus.com 32
New offshore tax regime in Russia
• Offshore taxation represents a major break-
through in Russian oil...
www.polarcus.com 33
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Polarcus Pareto Securities Oil & Offshore Conference Sept 2013

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Polarcus Pareto Securities Oil & Offshore Conference Sept 2013

  1. 1. www.polarcus.com 1 4-5 September, 2013 Rolf Ronningen, CEO Tom Henrik Sundby, CFO Polarcus Limited
  2. 2. www.polarcus.com 2 Disclaimer This Presentation of Polarcus Limited (the “Company”) has been prepared solely for information purposes. This Presentation may not be distributed, reproduced or used without the consent of the Company. The information contained herein does not purport to contain all information concerning the Company. No party has made any kind of independent verification of any of the information set forth herein, including any statements with respect to projections or prospects of the business or the assumptions on which such statements are based. The Company nor any of its subsidiaries make any representations or warranty, express or implied, as to the accuracy, reliability or completeness of this Presentation or of the information contained herein and shall have no liability for the information contained in, or any omissions from, this Presentation. Included in this Presentation are various “forward-looking statements”, including statements regarding the intent, opinion, belief or current expectations of the Company or its management. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance and outcomes to be materially different from any future results, performance or outcomes expressed or implied by such forward-looking statements, including, among others, risks or uncertainties associated with the Company’s business, segments, development, growth management, financing, market acceptance and relations with customers, and, more generally, general economic and business conditions, changes in domestic and foreign laws and regulations, taxes, changes in competition and pricing environments, fluctuations in currency exchange rates and interest rates and other factors, including lack of operating history. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this document. No information contained herein constitutes, or shall be relied upon as constituting, any advice relating to the future performance of the Company. The Company undertakes no obligation to publicly update or revise any forward-looking statements included in this Presentation.
  3. 3. www.polarcus.com 3 Agenda Highlights Financials Operations & Market update Summary & Q&A Appendices 1 2 3 4 5
  4. 4. www.polarcus.com 4 Polarcus in brief • Seven high-end 3D seismic vessels ~11% market share • Youngest most uniform fleet in industry • 500+ professionals and global presence • State of the art technology with complete broadband solution • Specialized Arctic and low environmental impact offerings • Clear strategy for delivering and delevering • Listed on Oslo Børs Main List – Market Cap USD ~400 million 2008 2009 2010 Polarcus launched 2008 20122011 Polarcus Asima in operation offshore west Greenland
  5. 5. www.polarcus.com 5 Highlights H1 2013 • A company in growth – Revenues of USD 275.3 million, up 28% from H1 2012 – EBITDA of USD 104.0 million, up 51% from H1 2012 – EBIT of USD 57.9 million, up 84% from H1 2012 – Net Cash Flow from operating activities of USD 130.5 million, up 39% from H1 2012 • Strengthening the balance sheet – Sale of Polarcus Samur to TPAO with a long term collaboration arrangement – Reduced average interest rate to 7.1% through refinancing • Strong operational performance – Technical downtime < 5%
  6. 6. www.polarcus.com 6 Agenda Highlights Financials Operations & Market update Summary & Q&A Appendices 1 2 3 4 5
  7. 7. www.polarcus.com 7 Key financials Quarter ended Six months ended Year ended (In millions of USD) 30-Jun-13 30-Jun-12 30-Jun-13 30-Jun-12 31-Dec-12 Revenues 130.5 114.3 275.3 214.2 529.3 Vessel operating expenses (71.3) (65.3) (155.4) (133.3) (312.7) EBITDA 51.1 42.9 104.0 69.0 190.2 EBIT excluding impairment charges* 26.7 21.9 57.9 31.4 98.8 Net Financial Income/(Expenses) (20.4) (25.0) (41.6) (43.0) (83.4) Net profit / (loss) for the period 6.3 3.4 16.1 (8.0) 9.8 Basic earnings / (loss) per share (USD) 0.012 0.007 0.032 (0.016) 0.020 Net cash flows from operating activities 90.1 47.8 130.5 93.9 203.7 Total assets (period end) 1,337.2 1,377.8 1,337.2 1,377.8 1,372.4 Total liabilities (period end) 838.1 915.9 838.1 915.9 891.0 Total Equity (period end) 499.1 461.9 499.1 461.9 481.4 Equity Ratio 37% 34% 37% 34% 35% Capital expenditures 29.8 118.8 41.4 191.2 311.2 Cash and cash equivalents (period end) 145.5 59.5 145.5 59.5 43.8 Net interest bearing debt (period end) 591.7 749.9 591.7 749.9 749.8
  8. 8. www.polarcus.com 8 Key financials – historic development 114.3 130.5 - 50 100 150 200 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Revenues 21.9 26.7 (10) - 10 20 30 40 50 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 EBIT 20% 19% 42.9 51.1 (10) - 10 20 30 40 50 60 70 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 EBITDA 39% 38% 47.7 90.1 (20) - 20 40 60 80 100 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Cash from operations
  9. 9. www.polarcus.com 9 Fleet Utilization – 85% in H1 - 13 55% 81% 79% 89% 85% 73% 53% 73% 77% 81% 86% 63% 72% 72% 30% 8% 3% 8% 6% 16% 13% 13% 35% 9% 17% 10% 13% 25% 13% 16% 18% 7% 7% 19% 13% 14% 10% 10% 4% 1% 2% 3% 5% 3% 2% 4% 1% 2% 2% 1% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Yard stay (including shakedown) Transit Multi-Client Seismic Contract Exclusive Seismic Contract
  10. 10. www.polarcus.com 10 15 30 30 30 30 30 30 303 6 7 7 9 12 120 125 95 40 35 H2-13 2014 2015 2016 2017 2018 2019 2020 Bank debt Sale leaseback USD 125m CB USD 95m bond NOK 230m bond USD 35m CB Robust balance sheet 10 110 (repurchasing The vessels is Optional) • Long term fleet bank facility with fixed interest of 5.6% • New USD 95m bond with 8% interest to refinance: – USD 60 million 2nd lien 2011/2016 bond with 12.5% interest – USD 35 million 2008/2013 Convertible bond with 8.5% interest • Improved terms on sale- lease back from 12% to 10.8% implied interest rate • Average interest rate reduced to 7.1% New debt maturity profile
  11. 11. www.polarcus.com 11 Update on lawsuit filed by WesternGeco • On 15 August 2013 WesternGeco filed a lawsuit in Texas, USA, for alleged US patent infringement against Polarcus US Inc. and Polarcus Limited • Applies to four method and apparatus patents for streamer steering and positioning related to the DigiFIN™ lateral streamer control systems purchased from ION Geophysical Corporation • Polarcus believes that it has strong and valid defenses – Polarcus' activities have not and do not infringe the US Patents – Serious doubt as to whether US courts have jurisdiction over Polarcus • Polarcus is confident that the lawsuit will not disrupt operational activities
  12. 12. www.polarcus.com 12 Polarcus share information • Listed on the Oslo Stock Exchange • Market Cap USD ~400 million • Included in the OBX and OSEBX indices from June 2013 • ~2500 shareholders • Free float ~85% Shareholder Share % ZICKERMAN HOLDING LT 40,571,476 8.00 VARMA MUTUAL PENSION 23,648,025 4.66 ZICKERMAN GROUP LTD 23,178,081 4.57 LOCAL TAPIOLA MUTUAL 21,600,000 4.26 SEB PRIVATE BANK S.A 16,284,410 3.21 VERDIPAPIRFONDET DNB 15,189,948 2.99 JP MORGAN CLEARING C 12,798,472 2.52 SKANDINAVISKA ENSKIL 11,855,191 2.34 EUROCLEAR BANK S.A./ 11,444,816 2.26 GOLDMAN SACHS & CO E 11,103,192 2.19 CLEARSTREAM BANKING 10,449,768 2.06 OYSTER 10,427,100 2.06 BLKRCK GLBL SMALLCAP 9,013,991 1.78 VERDIPAPIRFONDET DNB 8,100,000 1.60 STATE STREET BANK & 6,758,158 1.33 BNP PARIBAS SEC. SER 6,402,843 1.26 BNP PARIBAS SEC. SER 6,100,000 1.20 TVETERAAS EIENDOMSSE 5,673,362 1.12 SKANDINAVISKA ENSKIL 5,465,934 1.08 RAIFFEISEN BANK INTE 5,200,000 1.03 Top 20 Shareholders 261,264,767 52% Other shareholders 245,931,412 48% Total 507,196,179 100% Top 20 Shareholders (as per 26 Aug)
  13. 13. www.polarcus.com 13 Agenda Highlights Financials Operations & Market update Summary & Q&A Appendices 1 2 3 4 5
  14. 14. www.polarcus.com 14 Operational performance • Technical downtime < 5% for Q2 • Completion of 12 month Woodside project in Q2 (~22,000 sq.km in 11 months) – Production record of >2900sq.km in 30 days • Deflector upgrade to reduce drag and increase streamer spread – Currently operating 10 long streamers with 150m separation or 1350 m lateral spread • Polarcus Naila back in solid production after 1 month off hire in Q3 13 due to thruster replacement End August Polarcus Naila Polarcus Nadia Polarcus AlimaPolarcus Amani Polarcus Adira Polarcus Samur Current vessel locations Vessel under Management Polarcus Asima
  15. 15. www.polarcus.com 15 Polarcus Nadia & Naila propulsion upgrade • Polarcus Nadia and Naila are the only vessels with thruster units in the PLCS fleet. • Upgrade to Berg Propulsion Twin Fin™ conventional straight shaft is planned for H1 and H2 2014 • CAPEX of MUSD 10 per vessel • 6 weeks at yard per vessel • Significant improvement in fuel efficiency and bollard pull • Upgrade to full 12 streamer capability Prefabrication Installation Completion
  16. 16. www.polarcus.com 16 Multi-client library in the making • MC Project Library now ~ 25,000 km² 3D data • Established a new ‘core area’ in the UK Southern Gas Basin in Q2 ‘13 – Strong revenues forecast for Q4 following the 27th Round second tranche • E.ON announced the largest UK gas basin discovery for many years in Q3 ‘13 – Tolmount discovery on southern flank of core area – Highly positive for exploration interest • Project library NBV at USD 73.3 million end Q2 E.ON Tolmount gas discovery ‘Catcher’ Projects ~6,100 sq. km ‘Ravenspurn’ Projects ~5,400 sq. km
  17. 17. www.polarcus.com 17 Global 3D Seismic Fleet Capacity 201320142015 60 60 61 62 0 10 20 30 40 50 60 70 2012 2013 2014 2015 Excludes COSL (3 vessels) & Sinopec (1 vessel) • Estimated seismic fleet growth 2013 – 2015 net 2% YOY assuming vessel retirement • Lead time for new build capacity traditionally between 24 – 36 months • Further fleet retirement expected as >20% of the global 3D fleet is older than 20 years * Vessel name may vary though are based on Polarcus interpretation of peer groups fleet retirement plans. Estimated seismic fleet growth No. Vessels Company Vessel Streamer cap. 1 PGS Ramform Titan 16 1 Dolphin Sanco Swift 12 1 PGS Ramform Atlas 16 -1 Reflect Geowave Comander -8 -1 CGG Geo Barents -6 -1 Western Geco Western Patriot -8 0 Net growth 22 1 Dolphin Sanco Sword 12 1 Western Geco Amazon 1 16 1 Western Geco Amazon 2 16 -1 Western Geco Western Pride* -8 -1 PGS Pacific Explorer* -8 1 Net growth 28 1 PGS Ramform Opt 1 16 1 Dolphin Super Duke 16 1 PGS Ramform Opt. 2 16 -1 PGS Atlantic Explorer* -8 -1 CGG Artemis Arctic -6 1 Net growth 34
  18. 18. www.polarcus.com 18 Robust E&P demand • Robust E&P growth expected YOY for the coming few years • Marine seismic representing ~ 3% of Global Offshore E&P spend • Seismic demand projected to grow ~10 % YOY 2013 – 2015 • Current oil price well within the comfort zone for continued E&P spending 0 20 40 60 80 100 120 140 2007 Report 2008 Report 2009 Report 2010 Report 2011 Report 2012 Report 2013 USD/bbl Comfort zone Brent crude oil Source: DNB Markets
  19. 19. www.polarcus.com 19 Global seismic outlook Russian Arctic: Rosneft & Gazprom awarded extensive acreage Australasia: Strong outlook for Myanmar, current industry issues with permits in Australia normalizing West Africa: Continued high activity with further growth potentials, Namibia, Angola, Gabon and S Africa South America: Significant activity in Uruguay and Falklands and new activity firming up in Brazil. North America: Increased focus from Supermajors and new WAZ surveys in Nova Scotia Central America: Strong activity in Caribbean and northern S America (Suriname, Guyana) Mediterranean: Activity in Med and Black Sea Polarcus vessels NW Europe: Consistent high activity for MC and Contract behind active license rounds East Africa: Oil-majors planning large surveys Vessels under management
  20. 20. www.polarcus.com 20 0 5,000 10,000 15,000 20,000 25,000 2012 2013 2014 2015 2016 2017 2018 3Dinkm² Black Sea Far East Arctic Projected increasing due to: - New licensing - Correction of existing exploration plans Russia 3D market outlook 2013-18 • Russian Arctic ~ 4 x the size of Gulf of Mexico • Significantly improved tax regime accelerates interest • Super majors partnering with Rosneft & Gazprom • Russian Arctic potentially holds ~ 10X the BOE of the US GOM • Russia is expected to absorb ~ 10% of the global fleet seasonally from 2014 1,500,000 354,000 74,700 R U S S I A N L I C E N C E D A C R A G E Y T D 3 D R E Q U I R E M E N T T O C O V E R G E O L O G I C A L S T R U C T U R E S I N I T I A L 3 D C O M I T M E N T S 2 0 1 3 - 2 0 1 8 The New Russian offshore 3D Seismic market in km² km² Projected 3D demand Source: NOC’s and Oil Companies exposed to the region
  21. 21. www.polarcus.com 21 Backlog • USD ~215 million contract backlog* • Contract backlog secured in the range of USD 260k-330k/day • Booked capacity Q3 2013 - 100% • Booked capacity Q4 2013 - 55% • Booked capacity Q1 2014 - 30% * Inclusive of bareboat charter of Vyacheslav Tikhonov to SCF Received contract tenders in USD million (As of Aug) - 50 100 150 200 250 300 350 400 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Millions
  22. 22. www.polarcus.com 22 Agenda Highlights Financials Operations & Market update Summary & Q&A Appendices 1 2 3 4 5
  23. 23. www.polarcus.com 23 RIGHTSIZE, RIGHTDESIGN, RIGHTPLAN • Strong operational performance • Strengthening the balance sheet • Focus on improving margins and generating cash
  24. 24. www.polarcus.com 24 Agenda Highlights Financials Operations & Market update Summary & Q&A Appendices 1 2 4 5 3
  25. 25. www.polarcus.com 25 RIGHTSIZE RIGHTDESIGN RIGHTPLAN Polarcus Nadia Polarcus Naila Type 3D Vessel Type 3D Vessel Design Ulstein SX124 Design Ulstein SX124 LOA 88.8m LOA 88.8m Beam 19.0m Beam 19.0m Streamer cap 12 Streamer cap 12 Speed 14.0 knots Speed 14.0 knots Ice class ICE-C Ice class ICE-C Year delivered 2009 Year delivered 2009 Ownership On sale lease back with purchase option Ownership On sale lease back with purchase option Polarcus Amani Polarcus Adira Type 3D Vessel Type 3D Vessel Design Ulstein SX134 Design Ulstein SX134 LOA 92.0m LOA 92.0m Beam 21.0m Beam 21.0m Streamer cap 14 Streamer cap 14 Speed 15.0 knots Speed 15.0 knots Ice class ICE-1A* Ice class ICE-1A* Year delivered 2012 Year delivered 2012 Ownership 100% Ownership 100% Polarcus Asima Polarcus Alima Type 3D Vessel Type 3D Vessel Design Ulstein SX134 Design Ulstein SX134 LOA 92.0m LOA 92.0m Beam 21.0m Beam 21.0m Streamer cap 12 Streamer cap 12 Speed 15.0 knots Speed 15.0 knots Ice class ICE-1A Ice class ICE-1A Year delivered 2010 Year delivered 2011 Ownership 100% Ownership 100% Barbaros Hayreddin Paşa Vyacheslav Tikhonov Type 3D Vessel Type 3D Vessel Design Ulstein SX133 Design Ulstein SX133 LOA 84.2m LOA 84.2m Beam 17.0m Beam 17.0m Streamer cap 8 Streamer cap 8 Speed 18.0 knots Speed 18.0 knots Ice class ICE-1A Ice class ICE-1A Year delivered 2011 Year delivered 2011 Ownership Sold Ownership 100% Under management
  26. 26. www.polarcus.com 26 First Pass  Wide tow High Density 3D Base- line 4D High density 4D 4D Monitor Multi- vessel 3D Multi- vessel 4D Monitor Arctic Operations Multi Azimuth Vessel + Equipment          Personnel + Procedures          Acquisition Portfolio          Broadband Solutions Polarcus offering
  27. 27. www.polarcus.com 27 Awards through RIGHTDESIGN ICE-1A or 1A* Class1 Safe Arctic operations 1 POLARCUS ASIMA, ALIMA, SAMUR, SELMA, AMANI & ADIRA ULSTEIN X-BOW® Improved efficiency and reduced emissions Fuel: MGO with low sulfur content BWM-T 2 Removal of invasive species from ballast water 2 POLARCUS ASIMA, ALIMA, SAMUR, SELMA, AMANI & ADIRA IMO Green Passport Multiple main engines and independent propellers in case of failure DYNPOS-AUTR Systems redundancy with DP2 CLEAN DESIGN High specification exhaust catalysts Double hull – no oil contact with outer skin Bilge water cleaning system to reduce contaminants to <5ppm Triple – E™ Environmental & Energy Efficiency Sentinel® solid streamers
  28. 28. www.polarcus.com 28 Pioneering environmental leadership DNV’s Triple-E™ is a voluntary environmental performance rating scheme for ships, independent of class, age and flag Key measures of Energy & Environmental Efficiency : – Environmental management practices – Fuel efficient operations – Energy efficient vessel design – Verifiable monitoring, measurement and documentation Triple-E™ has four levels with ‘1’ as the highest Leading Sustained Heightened awareness Systemized 1 2 3 4 First Triple-E™ ‘Level 1’ in the world
  29. 29. www.polarcus.com 29 Debt overview Debt Security Size Balance 30 June 2013 Tenure Maturity Interest Convertible bond Unsecured USD 35m USD 35m 5 years Fully paid Jul-13 8.50% Unsecured bond Unsecured NOK 230m NOK 230m 3 years Nov-14 14.00% Unsecured bond Unsecured USD 95m USD 95m 5 years Jun-18 8.00% Senior secured convertible bond Selma USD 125m USD 125m 5 years Apr-16 2.88% Sale lease back Nadia & Naila USD 180m USD 165m 10 years Sep-19 ~10.8% Fleet bank facility Tranche 1 Asima USD 80m USD 64m 12 years Aug-22 6.20% Fleet bank facility Tranche 2 Alima USD 55m USD 46m 12 years Mar-23 5.10% Fleet bank facility Tranche 3 Amani USD 114m USD 105m 12 years Mar-24 5.60% Fleet bank facility Tranche 4 Adira USD 114m USD 109m 12 years Jun-24 5.60%
  30. 30. www.polarcus.com 30 Potential Arctic oil and gas resources • The region within the Arctic circle covers 6% of the worlds surface, though a USGS study estimated that the Arctic could hold about 20% of the world’s undiscovered but recoverable oil and natural gas resources. • Russia is estimated to hold more than half of the total Arctic resources Potential Arctic oil and gas resources: 84% is estimated to be offshore Source: E&Y calculations from US DOE and USGS data
  31. 31. www.polarcus.com 31 Attractiveness of Russian Arctic • The new offshore tax regime represents a major break-through in Russian oil sector • Specific tax rate has been reduced from 87% to 5 - 15% in the Arctic; guaranteed for 10 – 15 years – making the IRR very attractive for the oil companies even at a moderate oil price. Attractiveness of Arctic opportunities by country
  32. 32. www.polarcus.com 32 New offshore tax regime in Russia • Offshore taxation represents a major break- through in Russian oil sector taxation. The overall marginal oil & gas specific tax rate has reduced from 87% for brownfields to 5%-30% for offshore projects, depending on the area. • With the new tax regime, it is believed that the Russian offshore projects can generate IRRs exceeding 25% (depending on oil price assumptions), which looks competitive compared with the global deep-water average of 24% for other regions. • While it is too early to say whether there are any commercial development opportunities in Russian offshore, the area looks extremely promising given the interest from international majors and the fact that it is a geological continuation of the West Siberian oil province, where some of the world’s largest fields were discovered.
  33. 33. www.polarcus.com 33

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