MODEC, Inc.

2014 Financial Results

Analysts Presentation

February 16, 2015

2014 Full-Year

Highlight

Market Review & Outlook

Financial Results

2

FY2014 : Highlight

3

Revenue New Orders

New Order 395.7 billion JPY

New orders for 1 FPSO (Petrobras

Tartaruga MV29: EPCI + Charter) and

1 TLP (Hess Stampede: ECM)

Revenue hit a record high of 378.5

billion JPY

EPCI progressed well on MV25

(Tullow TEN), MV26 (Petrobras

Iracema Norte) and MV27 (Petrobras

Carioca); revenue from EPCI was an

all-time high of approx. 290 billion JPY

173.8

277.7

342.6

518.4

395.7

0

200

400

600

2010 2011 2012 2013 2014

(billion JPY)

146.6 129.9

186.8

254.4

378.5

0

100

200

300

400

2010 2011 2012 2013 2014

(billion JPY)

FY2014 : Highlight

4

3.5

0.2

3.4 3.7

8.5

0

5

10

2010 2011 2012 2013 2014

(billion JPY)

81.52 77.74

86.56

105.37

120.56

70.00

80.00

90.00

100.00

110.00

120.00

130.00

2010 2011 2012 2013 2014

(yen)

Exchange Rate on Closing Dates ($/¥) Net Income

2.7 3.0

5.1 4.9 5.4

0

2

4

6

2010 2011 2012 2013 2014

(billion JPY)

6.1 5.0

9.2

15.8

18.3

0

10

20

2010 2011 2012 2013 2014

(billion JPY)

Operating profit, ordinary profit, net

income, all hit record highs

Ordinary Profit Operating Profit

FY2014 : Highlight

Equity

53.6 47.3

54.1

70.8

96.7

0

50

100

2010 2011 2012 2013 2014

(billion JPY)

31.3

10.7 6.9

26.5 23.3

0

20

40

2010 2011 2012 2013 2014

(billion JPY) 32.50

0

5

10

15

20

25

30

35

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

(yen)

Interest-Bearing Debt

Raised approx. 20 billion JPY by public

offering and third-party allotment;

equity increased to 96.7 billion JPY

Accounts receivable and payable increased

by approx. 83 billion JPY and 72 billion JPY

respectively, due to EPCI progress and

timing difference between progress

recognition and actual cash settlement

Proposed annual dividends: 32.50 yen per

share

Dividends increased 10 years in a row

Dividends per Share

5

FY2014: New Awards

6

Hess Stampede TLP

Hess Stampede TLP Project (October 2014)

Client: Hess Corporation

Contract: Engineering, Procurement

Management and Construction Management

Location: Stampede field

(US GOM)

Water Depth: 1,070m

Start Production: 2018 (planned)

Oil Production: 80,000 bopd

Water Injection: 100,000 bwpd

Gas Production: 80 MMscfd

Petrobras Tartaruga MV29 FPSO

Petrobras Tartaruga Verde / Tartaruga Mestiça FPSO

Project (November 2014)

Client: Petrobras

Contract: EPCI + Time Charter (20 years)

Location: Tartaruga Verde & Tartaruga Mestiça

fields (Brazil)

Water Depth: 765m

Delivery: 2017 3Q (planned)

Oil Production: 150,000 bopd

Water Injection: 200,000 bwpd

Gas Production: 176 MMscfd

Storage Capacity: 1,600,000 bbls

FY2014: EPCI Projects FPSO

Cidade de

Mangaratiba

MV24

FPSO

Cidade de

Itaguai

MV26

FPSO

Prof. John

Evans Atta Mills

(MV25)

FPSO

Cidade de

Caraguatatuba

MV27

Petrobras

Tartaruga Verde

MV29 FPSO

Hess

Stampede

TLP

Client Petrobras Petrobras Tullow Petrobras

Petrobras

Hess

Contract EPC + Time Charter

(20 yrs)

EPCI + Time Charter

(20 yrs)

EPCI + Time Charter

(10 yrs + ten 1-year

options)

EPCI + Time Charter

(20 yrs)

EPCI + Time Charter

(20 yrs)

ECM

First Oil/

Delivery

2014 October Planned 2015 4Q Planned 2016 2Q Planned 2016 3Q Planned 2017 3Q Planned 2018

Field Iracema Sul Iracema Norte T.E.N. (Tweneboa/

Enyenra/Ntomme)

Carioca Tartaruga Verde &

Tartaruga Mestiça

Stampede

Location Brazil Brazil Ghana Brazil Brazil GOM

Storage/

Production

1,600,000 bbls

150,000 bopd

1,600,000 bbls

150,000 bopd

1,700,000 bbls

80,000 bopd

1,600,000 bbls

100,000 bopd

1,600,000 bbls

150,000 bopd

80,000 bopd

80 mmscfd

Percentage

of

Completion

n/a

7

New Award New Award

8

Time Charter / O&M Period

20y

20y

10y

20y

20y

20y

15y

12y

9y

9y

5y

10y

20y

8y

7y

10y

5y

15y

10y

15y

13y

Time Charter fixed period

Time Charter option period

O&M period

owned by (%)

Affiliates accounted for by the equity method

Consolidated subsidiary

20

03

20

05

20

07

20

09

20

11

20

13

20

15

20

17

20

19

20

21

20

23

20

25

20

27

20

29

1 TBD Petrobras Tartaruga Verde MV29 FPSO Petrobras

2 25.0 FPSO Cidade de Caraguatatuba MV27 Petrobras

3 25.0 FPSO Prof. John Evans Atta Mills Tullow

4 25.0 FPSO Cidade de Itaguai MV26 Petrobras

5 25.0 FPSO Cidade de Mangaratiba MV24 Petrobras

6 34.0 FPSO Cidade de Sao Paulo MV23 Petrobras

7 42.5 FPSO Cidade de Angra dos Reis MV22 Petrobras

8 50.0 FPSO Cidade de Santos MV20 Petrobras

9 45.0 FPSO Cidade de Niteroi MV18 Petrobras

10 65.0 FSO Rang Dong MV17 JVPC

11 50.0 FPSO Song Doc Pride MV19 PEPC

12 40.0 FPSO Stybarrow Venture MV16 BHPB

13 40.6 FSO Cidade de Macae MV15 Petrobras

14 40.6 FPSO Cidade do Rio de Janeiro MV14 Petrobras

15 42.0 FSO Rong Doi MV12 KNOC

16 50.0 FPSO Baobab Ivoirien MV10 CNR

17 60.0 FPSO MODEC Venture 11 Santos

18 n/a FPSO Raroa OMV

19 n/a FPSO Kwame Nkrumah MV21 Tullow

20 n/a FPSO Pyrenees Venture BHPB

21 n/a FPSO Fluminense Shell

As of February 2015

Time Charter (Own & Operate)

in operation 13 units 10 FPSOs

3 FSOs

under construction 4 FPSOs

O&M (Operate)

in operation 4 FPSOs

2014 Full-Year

Highlight

Market Review & Outlook

Financial Results

9

10

FY2014: Market Review

Source: Floating Production Systems Outlook Report (EMA)

0

50,000

100,000

150,000

200,000

0 500 1,000 1,500 2,000 2,500

Production (bopd)

Water depth (m)

Brazil Africa Europe Asia

Tartaruga Verde FPSO

16

4 5 3 3

3 4

3

2 4

4 3

4

3 2 2

2

26

12

14 13

11

2010 2011 2012 2013 2014

GOM Europe Pacific Asia Africa Brazil

Includes Petrobras

8 serial FPSOs

FPU (gas)

FPSO Awards FPSO Awards in 2014

1 2

1 1 1

1 1 2

1 2

1

2010 2011 2012 2013 2014• Guara MV23 • Iracema Sul

MV24

• OSX-3

• Iracema Norte

MV26

• TEN MV25

• Carioca

MV27

• Tartaruga

MV29

2 1 2 2 4

1 2 1 2 1

11 9

20 21

14 14

7

26

12

14

12 11

0

10

20

30

MODEC FPSO awards Total FPSO awards

0

20

40

60

80

100

120

140

USD/bbl Number of units

WTI

FY2014: Market Review

Oil Price (WTI) & Number of FPSO Awards

Source: Floating Production Systems Outlook Report (EMA), EIA website

11

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Unconventional

Tight oil (shale, oil sands)

Other unconventional oil

Conventional

NGLs

EOR

Fields yet-to-be found

Fields yet-to-be developed

Existing fields

FY2014: Market Review

12

Source: World Energy Outlook 2014 (IEA) Source: World Energy Outlook 2014 (IEA)

* Offshore ratio: MODEC analysis based on various data

Oil

Gas

Coal

Bioenergy

Nuclear Other renewables Hydro

0

1,000

2,000

3,000

4,000

5,000

1990 2000 2010 2020 2030 2040

Mtoe

56.8 57.8 58.7 58.9 58.9

24.3 24.8 25.1 25.3 25.3

3.2 5.3 6.4 7.7 9.2

2.9 5.5 6.2 6.6 6.4

0

20

40

60

80

100

1990 2013 2020 2025 2030 2035 2040

Mb/d

Energy Demand Oil Production

Source: World Energy Outlook 2014 (IEA)

Source: by MODEC based on Rystad Energy research and analysis data

Oil Production Cost Curve

Onshore Middle East

Onshore Russia

Onshore other

Offshore Shelf

Deep water

Ultra Deep water

Extra Heavy

Oil

NAM Shale

Oil Sands

0

20

40

60

80

100

USD/bbl Average breakeven

67.3 52.8

43 35.1 29.1

13.2 17.4

18.7 19.3

0.5 5.5 10.3

13.8

0

20

40

60

80

100

1990 2013 2020 2025 2030 2035 2040

Mb/d

88

62 57 55 54 53 48

40

25

Unconventional

Tight oil (shale, oil sands)

Other unconventional oil

Conventional

Offshore

1990 = 20%*

2013&onwards = 30%*

Onshore

Prospective Projects

13

Africa

South

America

Asia

&

Pacific

North America

Indonesia

• FPSO (EPCI + Charter)

• FPU (EPCI + Charter)

• FLNG

Vietnam

• FPSO (EPCI + Charter)

• TLP

India

• FPSO (EPCI + Charter)

Australia

• FPSO (EPCI + Charter)

• FLNG

Ghana

• FPSO (TBD)

• TLP

Angola

• FPSO (EPCI)

• FPSO (EPCI + O&M)

• FPSO (EPCI + Charter)

South Africa

• FPSO (EPCI + Charter)

Brazil

• 8 Petrobras FPSOs

(EPCI + Charter)

• 1 non-Petrobras FPSO

(EPCI + Charter)

• FLNG

Falkland

• FPSO (EPCI + Charter)

• TLP

Europe

UK

• FSO (EPCI + O&M)

Norway

• TLP

FY2015 : Outlook

14

Revenue

129.9

186.8

254.4

378.5

300.0

0

200

400

2011 2012 2013 2014 2015(F)

(billion JPY)

Ordinary Profit

Operating Profit

0.2

3.4 3.7

8.5

3.0

0

5

10

2011 2012 2013 2014 2015(F)

(billion JPY)

5.0

9.2

15.8

18.3

9.0

0

5

10

15

20

2011 2012 2013 2014 2015(F)

(billion JPY)

Net Income

3.0

5.1 4.9 5.4

3.0

0

2

4

6

2011 2012 2013 2014 2015(F)

(billion JPY)

Exchange Rate on Closing Dates ($/¥)

2011 2012 2013 2014 2015(F)

77.74 86.56 105.37 120.56 110.00

15

2014 Full-Year

Highlight

Market Review & Outlook

Financial Results

Profit & Loss

16

2013 2014 Variance (million JPY)

Revenue 254,401 378,523 124,122 - EPCI projects progressed well

Gross Profit 16,713 21,958 5,245

Selling, General and Administrative Expenses 13,009 13,391 382

Operating Profit 3,704 8,566 4,862

Other Income (A) 12,963 10,941 (2,022)

Other Expense (B) 847 1,170 323

Total Other Income/Expenses (C=A-B) 12,116 9,771 (2,345)

(Equity in Earnings of Affiliates and Unconsolidated

Subsidiaries included in C)5,622 6,694 1,072

(Exchange gain/loss and Gain/loss on revaluation of

derivatives included in C)3,849 236 (3,613)

Ordinary Profit 15,820 18,337 2,517

Extraordinary Profit 101 - (101)

Extraordinary Loss 4,261 2,027 (2,234)- Recognized loss on disposal of property and

equipment relating to the skwid

Income before Income Taxes and Minority

Interests11,659 16,309 4,650 - Write-off of deferred tax assets at US subsidiary

Net Income 4,922 5,422 500

Exchange Rate (USD) ¥105.37 ¥120.56 ¥15.19

- Gross profit increased due to higher POC achieved

in EPCI projects

- Costs incurred for crew cost escalation and asset

maitenance in Brazil

- Exchange gain from dollar-denominated assets

due to depreciation of Japanese yen was offset by

exchange loss due to depreciation of Brazilian real

Revenue

17

Revenue Project Timeline

146.6 129.9

186.8

254.4

378.5

0

100

200

300

400

2010 2011 2012 2013 2014

(billion JPY)

MV29

MV27

MV25

MV26

MV24

EPCI Period Time Charter Period

2011 2012 2013 2014 2015 2016 2017 2018 Main EPCI

projects

• MV24

• MV26

• MV25

• MV27

• MV29

Ordinary Profit

18

Ordinary Profit Influence of Deferred Profits

-4.3

-1.0 -2.0

-3.0

-7.6

0.4 0.9 0.6

3.0 3.3

10.3 10.5 11.9 11.9

16.2

-10

-5

0

5

10

15

20

2010 2011 2012 2013 2014

(billion JPY)

Deferred Realized Balance

6.1 5.0

9.2

15.8

18.3

10.0

5.1

10.6

15.8

22.6

0

5

10

15

20

25

2010 2011 2012 2013 2014

(billion JPY)

Ordinary Profit

Ordinary Profit before Deferred ProfitsAdjustment

New Orders & Order Backlogs

19

New Orders Order Backlogs

173.8

277.7

342.6

518.4

395.7

0

200

400

600

2010 2011 2012 2013 2014

(billion JPY)

229.9

359.3

543.6

896.6 987.9

0

500

1,000

2010 2011 2012 2013 2014

(billion JPY)

144.7 186.7

350.3

551.2

703.8

0

500

1,000

2010 2011 2012 2013 2014

Order Backlogs

Equity Method Portion

Balance Sheet

20

2013 2014 Variance (million JPY)

Short-term Loans Receivable - 41,008 41,008 Total Assets:

Total Current Assets 120,889 259,992 139,103

Property and Equipment 17,602 16,924 (678)

Intangible Assets 7,394 7,795 401

Investments and Other Assets 69,788 63,763 (6,025)

Total Fixed Assets 94,785 88,484 (6,301)

Total Assets 215,674 348,477 132,803

2013 2014 Variance (million JPY)

Short-term Loans Payable 10,888 8,165 (2,723) Total Liabilities:

Total Current Liabilities 115,050 203,152 88,102

Long-term Loans Payable 15,615 15,205 (410)

Total Long-term Liabilities 20,179 35,693 15,514

Total Liabilities 135,230 238,845 103,615

Total Shareholders Equity 71,628 95,311 23,683 Total Net Assets:

Total Accumulated Losses from

Valuation and Translation Adjustments(817) 1,464 2,281

- Equity increased due to new share issuance

Minority Interests in Consolidated Subsidiaries 9,633 12,855 3,222

Total Net Assets 80,444 109,631 29,187

Total Liabilities, Net Assets 215,674 348,477 132,803

- Accounts receivable temporarily increased in

accordance with EPCI progress

- Reclassification of loans to MV24 (from long-term

to short-term)

- Increase in construction loan to MV29

- Accounts payable temporarily increased in

accordance with EPCI progress

Cash Flow

21

7.5

4.7

22.8

-12.9

12.3

-21.6

21.4

-3.2

-19.5 -18.0

7.6

-20.6

-5.8

11.3 11.7

-30

-20

-10

0

10

20

30

2010 2011 2012 2013 2014(billion JPY)

Cash Flow from Operating Activities

Cash Flow from Investing Activities

Cash Flow from Financing Activities

Spending

increased due to

capital injection

and loans to SPCs

Cash Flow

Increased due to

increase in

income before tax

Increased due to

share issuance

Key Financial Figures

22

Interest-Bearing Debt Operating Profit & EBITDA

ROE

6.0 6.5

10.1

7.9

6.5

2.0

6.0

10.0

2010 2011 2012 2013 2014

(%)

ROA Equity Ratio

1.7

2.4

3.7

2.7

1.9

0.0

2.0

4.0

2010 2011 2012 2013 2014

(%)

36.6 38.1

35.1

32.8

27.8

25.0

30.0

35.0

40.0

2010 2011 2012 2013 2014

(%)

6.6

13.6

8.2 12.9

15.7 18.5

21.4 23.7

31.9

43.9

10.0

3.4

5.8 6.7

7.7

2.0

4.0

6.0

8.0

10.0

12.0

0

10

20

30

40

50

2010 2011 2012 2013 2014

(x times) (billion JPY)

Operating profit (equity method portion)

EBITDA (after adjustment)

EBITDA Interest Coverage Ratio

91.0 76.2

89.3

115.3

222.7

4.9

3.6 3.8

3.6

5.1

0.0

3.0

6.0

0

100

200

2010 2011 2012 2013 2014

(x times) (billion JPY)

Total interest-bearing debt (after adjustment)

Total interest-bearing debt/EBITDA