Cmb.tech Nv · EURONEXT:CMBT
Cmb.tech Nv — Euronav — Pareto Conference 2016
32 slides from Cmb.tech Nv's conference presentation, September 2016
Slide 1: Investor Presentation – Pareto Conference
Investor Presentation – Pareto Conference September 2016 1
Slide 2: Forward Looking Statements
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 1995. Forward-looking statements reflect the Company’s current views with respect to future events
Slide 3: Euronav at a Glance
Section 1 Euronav at a Glance 2 3
Slide 4: Euronav – Largest Tanker Company in the World
Euronav – Largest Tanker Company in the World CURRENT FLEET – TOTAL 55 VESSELS – 13.7 MM DWT WHO WE ARE 1 V – PLUS (1) 2 FSO 20 SUEZMAX 30 VLCC (+2 TBD) Over 441,000 DWT 380k barrels Leading pure-play tanker company 150,000 – 165,000 DWT Up to 330,000 DWT with best-in-class operating platform Only 4
Slide 5: Shipping – access to finance is key in the "new normal"
Shipping– access to finance is key in the “new normal” Tanker sector remain CYCLICAL but……………… Financing becoming STRUCTURALLY restricted 14% 100 Mid to long term outlook positive 12% 95 % growth YOY VLCC fleet m barrels consumed per day 10% 90 8% 85 6% 80 4% • “New Normal” financing restricts amo
Slide 6: Oil Tankers Five Key Drivers
Oil Tankers 2015 – All Green 2016-2017 – Mixed Long Term – All Green Five Key Drivers Demand for Oil Supply of Oil Ton Miles Supply of Vessels Financing ROBUST BALANCED REDUCED S/TERM NEW BARRIER HEADWINDS TO ENTRY • Oil demand growing last 25 years with Yearly • OPEC supply growth = • Atlantic sour
Slide 7: Current trading
EURO The ocean is our environment Section 2 7) pis Current trading
Slide 8: REMEMBER – Tankers remains a Seasonal Business
REMEMBER – Tankers remains a Seasonal Business SEASONALITY BUILT IN – EVERY Q2 DEMAND RETREATS AS REFINERY TANKER RATES SEASONAL BY NATURE – VLCC EARNINGS 2009-2016 MAINTENANCE & NORTHERN HEMISPHERE INTO SUMMER Million barrels per day 120,000 97 $ USD / Day 96 100,000 2011 95 2012 80,000 94 2013 201
Slide 9: Ton Mile Dislocation
Ton Mile Dislocation DISLOCATION IN VLCC EQUIVALENT TERMS = LOSS OF APPROX 20 VLCCS (ANNUALISED) 1 mbpd x 365 days = 365m barrels Arabian Gulf to China 21 days 365m barrels / 2m capacity per VLCC = 183 cargoes 5,500 miles 183 cargoes / 9 annual journeys for VLCC MEG – F East = 20 VLCCs West Africa t
Slide 10: Q3 Impacts and Response, Q4 Beyond
Q4 BEYOND Q3 IMPACTS AND RESPONSE • Reduction of delays in key ports Q2 Q3 • Weather impact less prevalent than previous CONGESTION summers (Mid East / Caribs) • One time negative impact on supply • Seasonality built into tanker sector • Cargo count all times high during 2016 SEASONALITY • Q4 rate
Slide 11: Industry Dynamics
Section 3 Industry Dynamics 5 11
Slide 12: Oil Price – Impact on Demand
Oil Price – Impact on Demand 1 Demand for Oil OIL PRICE OUTLOOK 90 Lack of disruption/market share game Demand Destructive Iran and other supply remain high USD per barrel Shale - as swing producer increases 2009 - 2014 proved in this oil 80 output price range that demand was destroyed 70 Neutral 60
Slide 13: Demand – steady, robust and diversified
Demand – steady, robust and diversified 1 Demand for Oil GLOBAL OIL DEMAND 1990-2016 (MB/D) CHINA CRUDE OIL IMPORT DIVERSIFICATION CONTINUES Average oil demand growth 1990-2015 =1.1 mbpd Russia 14% Other 20% 3.5 3.1 3.1 Million barrels per day Source IEA 3 Est. Libya 1% Saudi Arabia 14% 2.5 Kzakhsta
Slide 14: VLCC fleet age profile
VLCC fleet age profile 4 Supply of Vessels VLCC TRADING FLEET AGE PROFILE Idle/On storage Fleet <= Sept 2001 Fleet Sept 2001-2016 On Order 70 No of Vessels 60 50 34 16% 40 80% 63 30 20% 3 52 56 49 39 39 36 37 20 38 39 25 29 16 24 31 29 30 29 24 10 18 20 5 8 10 5 7 5 3 4 4 4 3 3 3 3 2 2 3 2 0 1 1 1 1
Slide 15: Suezmax fleet age profile
Suezmax fleet age profile 4 Supply of Vessels SUEZMAX TRADING FLEET AGE PROFILE 60 Idle/On storage Fleet <= Sept 2001 Fleet Sept 2001-2016 On Order No of Vessels 17% 50 40 81% 30 51 45 46 21 42 19% 20 38 2 25 23 23 23 10 20 17 18 18 18 11 14 9 9 12 8 9 2 3 5 4 5 6 3 2 2 0 1 1 1 1 1 0 Total <= Sept 2
Slide 16: Scrapping Decision Making Process
Scrapping Decision Making Process: Supply of Vessels 4 Driver=Time Catalyst=Rates TANKER SHIPPING – A HIGHLY REGULATED INDUSTRY Costs of surveys increase during tanker life leading to scrapping decision USD 4m Average cumulative SS #5 survey cost 100% utilisation (17.5 21 years) USD 3.25m > USD 7
Slide 17: Asset price background encouraging on several levels
Asset price background encouraging on several levels ADJUSTED FOR INFLATION ASSET VALUES CLOSE TO 30 YEAR LOWS REPLACEMENT RATIO FOR VLCC FLEET AT HISTORIC LOWS 160 Ratio of order book/vessel >15 years old Asset price (in millions) 250% 140 200% 120 100 150% 80 Source Evercore 100% 60 40 50% 20 0 0%
Slide 18: China & Oil Tankers – Four Reasons for Confidence
China & Oil Tankers – Four Reasons for Confidence 1 Demand for Oil OPERATIONAL ECONOMY STRATEGIC PETROLEUM RESERVE (SPR) Chinese oil imports (2006-2016) • BASE EFFECT – 600 • Storage 1 China consumes 11.8 mbpd 500 classification change June 16 (source: IEA) so million barrels 400 small % change • Ch
Slide 19: Oil supply high - shale the new swing producer
Oil supply high - shale the new swing producer 2 Supply of Oil WHO IS GOING TO MATERIALLY CUT? NEED CO-ORDINATION BETWEEN THE TOP 10 PRODUCERS = 60% WORLD SUPPLY MOST SHALE PRODUCTION KICKS IN AGAIN USD 50-60 FSU ex Kuwait 2.8 million barrels per day 12.0 Russia 2.9 U.S. shale crude and condensate p
Slide 20: Increasing Barriers to Entry
Increasing Barriers to Entry 5 Financing HUGE REDUCTION REGULATIONS PRIVATE SHIP OWNERS SHIPYARD IN SHIPPING FORCE EQUITY IN UNDER PRESSURE TO BANK LEVERAGE RETREAT PRESSURE RESTRUCTURE EXPOSURE DOWN & REDUCE Around USD 100bn CAPACITY • Banks lending • Other shipping withdrawn from shipping flexibil
Slide 21: Our Strategy
EURO The ocean is our environment Section 4 oad . 7 “e Our Strategy
Slide 22: Maximizing Value Through Information
Maximizing Value Through Information BARRIER TO ENTRY – INFORMATION SIZE IS CRITICAL TO IMPROVE MARKET KNOWLEDGE Differentiate spot players vs industrial players 55 1 Ship Owner, 37 Vessels 2 Ship Owner, 52 NIOC, 38 China Merchants Grp, 37 Bahri, 36 3 Ship Owner, 27 37 18 COSCO Group, 32 Top 10 Owne
Slide 23: Capital allocation strategy
Capital allocation strategy CAPITAL ALLOCATION Strong balance sheet Leverage 1 • Maintain strong balance sheet • Target 30% to 50% leverage through cycle according to where we are in the cycle Capex Liquidity reserve 2 • USD 169m for 2 VLCC • TWO years of operational liquidity • Approximately USD 20
Slide 24: Supplemental Materials
Section 4 Supplemental Materials 22 24
Slide 25: Appendix
Appendix MOST TANKER OWNERS HEAVILY EXPOSED TO OTHER SHIPPING ORDER BOOK AS % OF FLEET – MANAGEABLE 60 20++ VLCCs LNG 35% Containers 32% 50 VLCC Dry bulk 33% 15-19 VLCCs Suezmax 40 10-14 VLCCs 30 17% 5-9 VLCCs 20 16% 1-5 VLCCs 10 Source Clarksons 0 200 400 600 800 1000 0 Container Dry Bulk Product A
Slide 26: Appendix
Appendix Q4 SEASONAL PEAK CAN BE EXTREME – AVERAGE VLCC RATE 1990-2016 GLOBAL REFINERY BUILD OUT UNDERPINS DEMAND GROWTH $55,000 kbd 7,000 6582 $51,236 $50,000 6,000 $45,944 5,000 $45,000 $43,372 FSU Middle East $40,048 4,000 $40,000 $37,962 Asia/Pacific $36,851 $35,887 $36,315 $35,652 3,000 Africa
Slide 27: Euronav - Most Liquid VLCC/Suezmax Player
Euronav - Most Liquid VLCC/Suezmax Player LIQUIDITY GIVES SHAREHOLDERS OPTIONALITY More Trading Hours Euronext Brussels: 9 a.m. – 5. 30 p.m. (CET) Ticker Symbol: EURN NYSE: 9.30 a.m. – 4 p.m. (EST) TOTAL TRADED VALUE OF EURONAV US AND BB SHARES (SAME SHARE) - EURN US EQUITY & EURN BB EQUITY 100% 90%
Slide 28: Appendix – Average Speeds VLCC & Suezmax (total voyage)
Appendix – Average Speeds VLCC & Suezmax (total voyage) 10.5 Knots per hour 10 9.5 9 VLCC Suezmax 8.5 8 7.5 Source Bloomberg Energy 28
Slide 29: Appendix - China's Strategic Petroleum Reserve (SPR) – some facts
Appendix - China’s Strategic Petroleum Reserve (SPR) – some facts 2009 - China stated objective to comply with IEA best 1 practice on SPR IEA guidance – SPR = 90 days of previous years net oil 2 imports; SPR therefore not a static number nor a luxury Imports Days SPR target (mbpd)* (cover) (mbbls) 2
Slide 30: Appendix - Commercial Crude Inventory – an issue but manageable
Appendix - Commercial Crude Inventory– an issue but manageable CRUDE INVENTORY GLOBAL “EXCESS” 200M BBLS – PRIMARILY STORED IN USA & EUROPE AND NOT WHERE INCREMENTAL DEMAND GROWTH LOCATED IN FAR EAST Euronav view 1.4 • 200m barrels “excess” of crude 200m barrels / 2m VLCC capacity = 100 cargoes Thou
Slide 31: VLCC Order Book Dynamics
VLCC Order Book Dynamics 4 Supply of Vessels VLCC – ADDITIONS, SCRAPPING, REMOVALS IMPLIED BUFFER 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 56 32 29 65 46 60 40 16 62 54 49 48 45 20 30 29 24 23 2 0 -5 -8 -7 -8 -13 -11 -1 -25 -22 -8 -10 -20 -16 -48 -25 Additions Forecast Additions 56 -40 Sc
Slide 32: Suezmax Order Book Dynamics
Suezmax Order Book Dynamics 4 Supply of Vessels SUEZMAX – ADDITIONS, SCRAPPING, REMOVALS IMPLIED BUFFER 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 55 63 29 15 39 61 45 Q1=3 35 Q2=4 Q3=2 Q4=1 25 43 45 45 38 15 15 27 18 5 10 12 8 0 -3 -7 -7 -6 -7 -5 -9 -11 -19 -20 -15 -5 -8 -17 -15 Additions