Akastor company presentation

© 2015 Akastor © 2015 Akastor

Creating value through

active ownership

London | 17 March 2015

Frank O. Reite and Leif Borge

© 2015 Akastor

THIS IS AKASTOR Frank O. Reite

CEO

March 17, 2015 Slide 2

Agenda

FINANCIALS Leif Borge

CFO

© 2015 Akastor Slide 3

Akastor is set up to create value through active ownership

Our portfolio

Oilfield services investment

company with a flexible mandate

for long-term value creation

Value creation through active

ownership combining a range of

strategic, operational and

financial measures

Portfolio companies with

multiple levers for growth and

improvements

Our mandate

Our approach

March 17, 2015

© 2015 Akastor

8 Portfolio

companies

13.0 Billion NOK

net capital employed*

7,600 Employees

worldwide

Akastor - the investment portfolio

21.4 Billion NOK

revenue*

*2014 numbers


© 2015 Akastor

MHWIRTH

Global provider of drilling systems,

products and services

AKOFS OFFSHORE

Well construction and intervention

services to the oil and gas industry

FJORDS PROCESSING Global provider of process systems

and services for oil, gas and water

treatment

KOP SURFACE PRODUCTS

Provider of surface wellheads and

trees in APAC and MENA

FRONTICA BUSINESS

SOLUTIONS

Global provider of business and

corporate services

REAL ESTATE AND

FINANCIAL HOLDINGS

Our investments – eight stand-alone companies

FIRST GEO

Petroleum sub-surface consultancy

STEP OILTOOLS Provider of Drilling Waste

Management products and services


© 2015 Akastor March 17, 2015 Slide 6

AKOFS

MHWirth

Real Estate

and other

KOP

Fjords Processing Frontica

The Akastor portfolio of investments

NET CAPITAL EMPLOYED

13 Billion NOK (2014)

REVENUE

21.4 Billion NOK (2014)

MHWirth

Real Estate and other

KOP

AKOFS

Fjords

Processing

Frontica

© 2015 Akastor

• Dialogue with stakeholders

• Financial and operational

benchmarking

• Assessment of historic

performance and strategy

• Identify areas for improvement,

short-, mid- and long term

• Decide on time horizon and

actions

• Define metrics and milestones

• Close interaction with

management

• Frequent reporting

• Corrective actions

• Focus on speed in execution

and simplicity (80/20)


Systematic value creation “the Akastor way”

ASSESS SITUATION

DEFINE VALUE

CREATION PLAN

EXECUTE, ADJUST

AND FOLLOW-UP

2

3

1


Corporate governance established:

A set of tools and reports developed to support

execution and measurability

• Tool-box of reporting standards giving…

…a continuous detailed understanding of the

development of the investment

…a defined system of authority between

management and the owner / the Board

• Reporting procedures allowing us to:

…closely monitor each company

• The current market environment puts

pressure on terms and financing

… Net current operating assets

… Cash generation

… Net interesting bearing debt

For illustrative purposes only. Not Akastor data


Experienced teams with track record of execution

PROFESSIONALS:

INVESTMENT TEAM

CFO & SUPPORT FUNCTIONS

A TRACK RECORD OF VALUE CREATION

CEOS, HEADING EACH

PORTFOLIO COMPANY

CAPABLE MANAGEMENT WITH

INDUSTRIAL EXPERIENCE

8

23

© 2015 Akastor

MHWirth

MHWirth is a leading global provider of first-class drilling solutions, equipment and services.

One of only two providers of complete topside packages and riser systems for floaters.

10,681 Million NOK

Revenue in 2014

941 Million NOK

EBITDA in 2014

4,237 Employees

Real Estate

© 2015 Akastor

Installed base supports long term life cycle business

CURRENT INSTALLED BASE BY REGION PER END 2014 78 in total

13

18

30

9

8

US

Brazil

Africa

Europe

Asia/ MENA

INSTALLED BASE DEVELOPMENT

55 58 67

72 74 78 88

95

2009 2010 2011 2012 2013 2014 2015 2016

Number of drilling packages

+8%

INSTALLED BASE BY AGE AND TYPE

37

20

15 6

JU

Semi

Fixed

platforms

Drillship 23

23

16

16

5-10

>20

0-5

10-20

By type By age


Real Estate


Substantial oversupply in floater market

Source: RS Platou Rig Monthly, 17 February 2015

ACTIVE SUPPLY AND REGIONAL DEMAND

Floaters

FLOATERS SCRAPPED (2005-2015)

• Steep drop in utilization due to oversupply

• Currently a total of 394 floaters in service and

on book (278 active, 31 passive fleet, 84 on

order)

• Demand recovery estimated at 280-290 units

• As per 17.2.2015 owners have announced

intent to remove/scrap 23 floaters

RIG UTILIZATION

Active Supply

No. of

rigs

No. of

rigs

Flo

ate

rs

Real Estate


NEAR TERM

• Very challenging market with a low activity level

resulting in capacity costs and pressure on

margins

• Cost base and capital discipline

• Initiated capacity reduction process aiming

to reduce 500-750 personnel

• Estimated NOK 500-600 million annual

cost reduction

• Managing Brazilian exposure

ROADMAP FOR VALUE CREATION

• Protect DLS business

• Standardization and streamlining

• Strengthening customer relations

• Organizational effectiveness

• Challenging markets may create interesting

opportunities

MHWirth: Focusing on the core

March 17, 2015

Real Estate

© 2015 Akastor

AKOFS Offshore

AKOFS Offshore is a global provider of vessel based subsea well construction and intervention

services to the oil and gas industry.

1,542 Million NOK

Revenue in 2014

175 Million NOK

EBITDA in 2014

115 Employees

Real Estate

© 2015 Akastor

STRONG PERFORMANCE IN SUBSEA INSTALLATION

• Skandi Santos secured 5yr contract

(98% utilization in 2014 – currently docking)

• Aker Wayfarer secured 5+5yr contract

(89% utilization in 2014, 100% YTD2015)

(current work extended through July 2015)

• Focus on operational excellence and

re-building of Aker Wayfarer

AKOFS SEAFARER: TOP PRIORITY TO SECURE WORK

• Purchase of hull completed in February for

MUSD 122.5, all financed with new bank debt

• Significantly reduced OPEX level

• All opportunities to secure work being pursued


• Capitalize on Brazilian business

• Fix AKOFS Seafarer

AKOFS Offshore


Real Estate


3,000 IT users

managed daily

300,000 Pay checks processed

per year

Frontica Business Solutions

Frontica Business Solutions provides cost efficient corporate services that enable companies to

become faster and more efficient.

5,753 Million NOK

Revenue in 2014

315 Million NOK

EBITDA in 2014

1,356 Employees

Real Estate

© 2015 Akastor

Frontica Business Solutions

COMPETITIVE POSITION

• Manpower, and Service provider to the

Oil & Gas industry

• Portfolio of 3 000 highly skilled

engineering consultants

• Managing 30 000 IT users

• Global delivery model, local presence


• Leverage current platform

• Cost optimisation

• Gradually broaden customer base


Real Estate

© 2015 Akastor

Fjords Processing

Fjords Processing provides well stream processing technology, systems, and services to the

upstream oil and gas industry

2,322 Million NOK

Revenue in 2014

52 Million NOK

EBITDA in 2014

617 Employees

Real Estate

© 2015 Akastor

Fjords Processing


• Provider of complete processing systems,

both onshore and offshore

• Comprehensive product portfolio

• World leading processing technologies

within defined niches


• Increase profitability through improving

and streamlining operations

• Grow Lifecycle Services

• Secure technology differentiation


Real Estate

© 2015 Akastor

KOP Surface Products

KOP Surface Products is a provider of surface-installed wellheads, Xmas trees, valves and

actuators for offshore and land-based oil and gas production

1,119 Million NOK

Revenue in 2014

156 Million NOK

EBITDA in 2014

854 Employees

Real Estate

© 2015 Akastor

77 94

131 148

12

17

29

0

5

10

15

20

0

20

40

60

80

100

120

140

160

180

17

KOP Surface Products


• Reliable products

• Competitive manufacturing capabilities

• Strong foothold in APAC


• Expand manufacturing capacity with

minimal capex

• Increase profitability through identified

cost potential

• Enter and grow in the Middle-East

+26%

2014

177

2013

149

2012

111

2011

89

EBITDA% Hardware revenues SLS revenues

MUSD %

A REMARKABLE GROWTH STORY


Real Estate


Real Estate

REAL ESTATE Includes a portfolio of 8 real estate

assets in Norway

FIRST GEO Leading provider of operations and

wellsite geology services in Norway with

activities within geophysical

interpretation, geological modelling,

petrophysics and reservoir engineering.

STEP OILTOOLS Step Oiltools is an independent

provider of quality Drilling Waste

Management products and services.

Real Estate and other holdings

OTHER HOLDINGS DOF Deepwater, Ezra Holdings,

Aker Pension Fund Company and

Aker Insurance Company.

© 2015 Akastor

THIS IS AKASTOR Frank O. Reite

CEO


Agenda

FINANCIALS Leif Borge

CFO


NET CAPITAL EMPLOYED NOK 13 BILLION PER 4Q 2014

AKOFS

4,239

MHWirth

5,603

Other 1,127

KOP Surface 674

Fjords Processing 436 Frontica 374

The Akastor portfolio

NOK million

Fixed

assets

Intangible

assets

NCOA

Other

Equity

NIBD

1) Including leased asset of NOK 1 500 million

Real Estate 541

AKOFS Seafarer

AKOFS Wayfarer

Skandi Santos

Fixed assets 1,572

Intangible assets 2,163

NCOA 2,573

Other -705

Net capital employed 5,603

2,253

1,397

337

Other 252

7 176

3 336

2 422

60

9 378

3 617

4 700

12 995 12 995

Net capital

employed

Funding Market cap AKA

13.02.1513.03.15

March 17, 2015

© 2015 Akastor

NET INTEREST BEARING DEBT NOK 3.6 BILLION

PER 4Q 2014

Slide 25

Capital structure

NOK million

1,376

3 617

70

2,500

1,082 1 075

336

Gross debt Cash Interest

bearing assets

Net interest

bearing debt

Other

Term loan

Brazil

Aker Wayfarer

financial lease

FUNDING

COMMENTS

Disposal of MHWirth triggers repayment of Term loan and

Revolving credit facility

Disposal of other assets triggers repayment of Term loan

with 50% of proceeds

Separate financing of other assets triggers repayment of

Term loan with financed amount

Aker Wayfarer financial lease: Financial costs of NOK

205m in 2015

Term loan Revolving

credit

facility

AKOFS

Seafarer

facility*

Brazil

facility

Size NOK 2.5

billion

NOK 2.0

billion

USD 125m BRL 129m

Maturity September

2017

September

2019

February

2017

December

2021

Margin 1.4%-2.3% 1.3%-2.2% 1.4%-1.8% 6.1%

average

total cost

*Loan to Akastor ASA with same terms and conditions as term loan

March 17, 2015

© 2015 Akastor © 2015 Akastor March 17, 2015 Slide 26

www.akastor.com


Copyright and disclaimer

Copyright Copyright of all published material including photographs, drawings and images in this document remains vested in

Akastor and third party contributors as appropriate. Accordingly, neither the whole nor any part of this document shall

be reproduced in any form nor used in any manner without express prior permission and applicable

acknowledgements. No trademark, copyright or other notice shall be altered or removed from any reproduction.

Disclaimer This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to

risks and uncertainties that could cause actual results to differ. These statements and this Presentation are based on

current expectations, estimates and projections about global economic conditions, the economic conditions of the

regions and industries that are major markets for Akastor ASA and Akastor ASA’s (including subsidiaries and affiliates)

lines of business. These expectations, estimates and projections are generally identifiable by statements containing

words such as “expects”, “believes”, “estimates” or similar expressions. Important factors that could cause actual

results to differ materially from those expectations include, among others, economic and market conditions in the

geographic areas and industries that are or will be major markets for Akastor ASA. oil prices, market acceptance of

new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange

rates and such other factors as may be discussed from time to time in the Presentation. Although Akastor ASA believes

that its expectations and the Presentation are based upon reasonable assumptions, it can give no assurance that

those expectations will be achieved or that the actual results will be as set out in the Presentation. Akastor ASA is

making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the

Presentation, and neither Akastor ASA nor any of its directors, officers or employees will have any liability to you or any

other persons resulting from your use.

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Akastor company presentation