Slide 0 - Euronav.com

Investor Presentation
May 2014
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 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
TODAY’S PRESENTERS
Paddy Rodgers
Chief Executive Officer
● Appointed CEO in 2000
● BOD/Executive Committee since 2003
● Served as CFO from 1998 – 2000
Hugo De Stoop
Chief Financial Officer
● CFO since 2008
● Executive Committee since 2008
● Investor Relations from 2004
Brian Gallagher
Head of Investor Relations
● Joined Euronav in 2014
● 20 years in capital markets
● Extensive buy side experience
2
● Largest public pure-play tanker company focused exclusively on crude
● Market capitalization: ~$1.5bn, Fleet average age ~ 7 years
SUEZMAX
SUEZMAX
VLCC
VLCC
VV PLUS
PLUS
FSO
FSO
125,000-180,000 DWT
Up to 320,000 DWT
Over 441,000 DWT
Stripped water capacity 380k barrels
1 Million barrels
2 Million barrels
3 Million barrels
2.8 Million barrels
Vessel count
Overview
EURONAV AT A GLANCE
Fleet: 53 vessels
27
23
1
2
Proven growth track record with strong access to capital
2003
10 vessels
3.0 mm dwt
Bank debt
raised
Convertible
bond issuance
Bond issuance
$4,723 M
$275 M
$235 M
Equity & PCP
issuance
$500 M
2014
53 vessels
13.1mm dwt
ONE OF THE LARGEST INDEPENDENT OWNERS & OPERATORS OF CRUDE OIL TANKERS IN THE WORLD
Note: Market data as of 05/05/14
3
AGENDA
● Industry Themes
A. Supply of ships tightens
B.
C.
D.
E.
F.
Demand increases with growth in non-OECD
Ton-mile multiplier to Demand
Volatility coupled with freight cost inelastic to demand
Cyclical play
Consolidation
● Company Overview
● Financial Overview
● Conclusion
4
Industry themes
A. SUPPLY - VLCC & SUEZMAX GLOBAL FLEET
VLCC
80
Suezmax
50
World Fleet 1 Jan 2014 = 615 Vessels
40
60
30
No. of vessels
40
53
54
62
20
49
20
31
-24
-29
-20
-16
-21
-18
45
39
42
45
35
14
6
-3
0
27
10
12
-21
0
-22
-7
-47
-10
-40
-60
World Fleet 1 Jan 2014 = 471 Vessels
-15
-17
30
22
-7
8
2
-1
7
10
-10
-11
-12
-1
-4
-2
-20
-20
24
7
38
30
10
-1
-9
13
2009
2010
2011
2012
2013
2014
2015
2016
Delivered
Forecast Deliveries
Net change
Scrapped/Removed
-30
35
25
20
2009 2010 2011 2012 2013 2014 2015 2016
Removals Scenario
% Fleet Growth (RH AXIS)
NEGATIVE FLEET GROWTH FOR FIRST TIME SINCE 2003 (start of last super cycle)
LOWEST ORDER BOOK TO FLEET RATIO SINCE 1997
Note: Updated start of April 2014
Source: Clarksons
6
B. DEMAND SHIFTING TO NON-OECD
Global oil demand is growing …
(mb/day)
25.0
… and increasingly moving to non-OECD countries
(mb/day)
60.0
(mb/day)
120.0
55.0
100.0
20.0
50.0
80.0
15.0
45.0
OECD demand
60.0
Non-OECD demand
overtaking OECD
demand
40.0
10.0
40.0
5.0
0.0
1990
1995
2000
Total World (rhs)
2005
2010
2015
2020
China
United States
2025
2030
India
35.0
20.0
30.0
0.0
25.0
Non-OECD demand
2035
20.0
European Union
2000
Source: BP historical figures, IEA World Energy Outlook 2013 forecast figures
2012
2020
2025
2030
2035
Source: IEA World Energy Outlook 2013
Future VLCC demand by region over the next two years (2014E-2016E)
92
10
17
100
Number of vessels
75
Net demand
increase of 53
VLCCs by 2016
NET DEMAND FOR
VLCCS NEXT TWO
YEARS = 53
50
65
25
0
(20)
(7)
(12)
(25)
(50)
US & Canada
(39)
Europe, Lat Amer & Africa
Japan
China
India
SE Asia
NET ADDITIONAL DEMAND : 53 VLCCs BY 2016 COMPARED TO NET
EXPECTED FLEET GROWTH OF 4 VESSELS
7
C. REFINERY EXPANSION
Refinery expansion in Middle East and Asia act as key driver for increased Ton-Miles
Next 2-3 years
●
Oil demand: China up 2mbd, other Asia up 1.6mbd
3,000
●
European refineries closing: Import down 6-7 mbd
2,500
●
US refineries: demand up 2.5 mbd since 2009 but
will not reach capacity and domestic production up
but “wrong quality”
●
Middle East refinery expansion of 4 mbd crude by
2018 if production flat -> actual export are down
●
Atlantic supply up by 3-5 mbd. Russian oil to
Atlantic US, North Sea extending Brazil, WAfrica
●
Brazil and Nigeria, production flat to up – possibly
2mbd.
3,500
Capacity additions (mbd)
3,040
2,000
1,500
1,182
907
1,000
500
728
410
551
400
-57
'14 '15 '16
-500
299
214
'14 '15 '16
3
123
101 186
'14 '15 '16
'14 '15 '16
'14 '15 '16
Europe
North America
ROW
Source: Wood-Mackenzie
Asia Pacific
Middle East
CHANGE IN TRADING PATTERN LIKELY TO CONTINUE LEADING TO INCREASED TON-MILES
8
C. REFINERY CHANGES – IMPACT ON TON MILE –>
MULTIPLIER EFFECT ON DEMAND
Miles moved per tonne
transported to China
Arabian Gulf
West Africa
South America
5,500 NM
9,650 NM
11,500 NM
9
WHAT DOES IT ALL MEAN? TWO STAGE ROCKET – SUPER
CYCLE COMING
2014 NEGATIVE FLEET GROWTH FOR FIRST TIME SINCE 2003 (the
start of the last super cycle?) - NEXT 2-3 YEARS
Stage
1
NON – OECD DEMAND DRIVING 2-3M BARRELS PER DAY GROWTH
Stage
2
STRUCTURAL CHANGES IN CRUDE OIL TRANSPORTATION
PATTERN ACT AS MULTIPLER ON DEMAND – NEXT 1-5 YEARS
Cyclical recovery 2014-2016
80
Sensitivities: 1mbd crude from ME to WAF = 17 VLCC
1mbd crude supplied to Asia from WAF = 40 VLCC
1mbd crude supplied to Asia from Venez.= 45 VLCC
Outcomes: 5mbd 1/3 each = 170 VLCC 8mbd 1/3 each = 270 VLCC
60
No. of vessels
40
53
54
62
49
20
31
0
-24
-29
-16
-21
35
14
6
-3
-20
Structural growth 2016+ = 270 ships required
-18
12
-21
Conclusion - Likely shift of 5-8 mbd ME to Atlantic
-22
Bottom line – UP TO 270 VLCC SHIPS REQUIRED
-47
-40
-60
2009
2010
2011
2012
2013
2014
2015
2016
Or 27% to 43% of existing VLCC fleet with just 14% in the
current order book
10
D. FREIGHT: HIGH VOLATILITY & PRICE INELASTICITY
Daily average tankers freight rate over 10 years
250000
200000
Average TCE 5 years – 71K
100000
50000
jan/14
jul/13
jan/13
jul/12
jan/12
jul/11
jan/11
jul/10
jan/10
jul/09
jan/09
jul/08
jan/08
jul/07
jan/07
jul/06
jan/06
jul/05
jan/05
jul/04
Notional Break Even
0
jan/04
USD/DAY
150000
-50000
Average VLCC 2000-built
Average VLCC 2010-built
Average Suezmax 2000-built
Average Suezmax 2010-built
Source: Clarksons
11
E. CYCLICAL PLAY
Stock Price Performance 1 vs. VLCC Rates 2
$100
$80
Stock Price Performance 1 vs. VLCC Asset Values 2
600%
$160
600%
500%
$140
500%
400%
$120
400%
300%
$100
300%
200%
$80
200%
100%
$60
100%
0%
$40
$60
$40
$20
$0
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 YTD
1-Year TC
Spot Rates
Stock Price
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 YTD
5-Year Price
Newbuild Price
0%
Stock Price
STRONG CORRELATION BETWEEN ASSET, VLCC AND SHARE PRICES
12
E. CYCLICAL PLAY - ASSET VALUES
180
VLCC
Newbuild
115
100
93
160
($mm)
10 yr avg
5 yr avg
1 yr avg
140
5 Year Old
96
72
61
Suezmax
Newbuild
71
62
59
($mm)
10 yr avg
5 yr avg
1 yr avg
5 Year Old
66
51
43
MUSD
120
Maersk acquisition
100
80
60
40
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Suezmax 156-158K DWT NB Prices
VLCC 315-320K DWT NB Prices
Suezmax D/H 160K DWT 5 Year Old Secondhand Prices
VLCC D/H 310K DWT 5 Year old Secondhand Prices
2013
2014
ASSET PRICES HAVE APPRECIATED SINCE H2 2013 BUT STILL REMAIN WELL BELOW LONG
TERM MEDIANS
13
F. CONSOLIDATION – LARGER TANKER MARKET FRAGMENTED
VLCC
Suezmax
Teekay Corp
NIOC
Dynacom
Tankers
Mitsui O.S.K.
Nordic
American
Fredriksen
Euronav
Rest of
market
(a)
Nippon
Euronav
(a)
Rest of
market
SCF
Angelicoussis
Fredriksen
SK Shipping
Tsakos
Bahri
(a) Pro forma for Maersk acquisition
Note: Charts represent total DWT
Source: Clarksons
Oman
Shipping
Marmaras
Sinotrans
Top 10 players make up <50% of market
Princimar
Knutsen
Top 10 players make up <50% of market
● Total number of ships the key factor not percentages
● Global VLCC Fleet 630 vessels & Global Suezmax 430 Vessels
● 54% of VLCC market made of shipowners with less than 8 vessels
● Consolidation has started
14
EURONAV’S FLEET IS ENHANCED WITH MAERSK DEAL
Acquisition highlights
Transaction rationale
● In January 2014 Euronav agreed to acquire 15 VLCCs 
● Paid ~$65.3mm on average per 4-year old VLCC
from Maersk Tankers for $980mm
– Average age of ~4 years
● Took delivery of 3 vessels so far
– Expect to take delivery of 12 of the remaining
vessels during 2014
– All vessels acquired on charter-free basis; expect to
employ all vessels in the TI Pool
● Transaction is fully financed

compared to current price of $100mm for a newbuild
VLCC
● Positions Euronav as an active consolidator in

fragmented market
● Attractive investment opportunity to grow revenue and
earnings at a favorable price
Fleet
(Pre deal)
Fleet
(Pro forma)
2
2
Benefits of consolidation
12
● 15 ships on the water adds 6,500 days over

the next 12 months
● Shareholder Capital allocated at $65.3mm

23
25
27
1
1
per ship – compared to present new build of
$104.5mm
● Returns focus of experienced management
team proven
39 vessels
9.1mm dwt
~8 year avg. age
53 vessels
13.7mm dwt
6.8 year avg. age
TRANSACTION REPRESENTS DELIVERY OF SHAREHOLDER VALUE
15
CYCLICAL GROWTH FOLLOWED BY STRUCTURAL EXPANSION
A
SUPPLY – Lowest Order Book to Fleet Ratio since 1997
B
DEMAND – Emerging markets driving expansion
C
TON-MILES – structural changes in refining already driving multiplier effect
D
VOLATILITY – freight cost does not stop crude price moves
E
CYCLICAL PLAY – just above cycle lows with strong earnings correlation
F
CONSOLIDATION – strong potential; positive for industry discipline
16
Company overview
WHAT YOU SEE IS WHAT YOU GET
A fully transparent platform: a different way of doing business in shipping
● Long established player (started 1989)
● Large in-the-water crude oil tanker operator (53 Vessels, $1.5B+ 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 experience
A REAL PROXY TO PLAY THE CRUDE TANKER MARKET
18
LONG ESTABLISHED PLAYER
Maersk
acquisition –
15 VLCCs
2014
TI Africa Conversion
Delivery of FSO Asia and
FSO Africa
2005 2014
April: Acquired 15
SUEZMAX from Tanklog
Started doing business
under the name “Euronav”
as a subsidiary of CNN
2008
Tankers
International
Pool founded
2005
TI Asia
Conversion
2005
2004
2000
1989
Added 5 Suez & 3
VLCC new builds
2009
March: Acquired 4 VLCC from
Metrostar
1997
Six double hull VLCCs ordered, initiating
Euronav's focus on larger sized and modern
vessels
Lists on NYSE Euronext Brussels &
acquires 4 V+ vessels from Hellespoint
PROVEN HISTORY OPERATING IN THE CRUDE TANKER INDUSTRY
19
SPOT EXPOSURE
Chartering strategy overview
● Chartering strategy seeks to maximize returns through
Overview of the Tankers International (“TI”) Pool
optimal mix of spot and fixed charters
● Long-term charters provide a stable base of cash flows
and high utilization rates
● Euronav has deliberately positioned itself toward more
spot exposure at this stage of the cycle
● Look to opportunistically employ crude carriers as crude
Reederei “Nord”
Overseas Shipholding
Group
storage units, to take advantage of rates in offshore sector
Exposure to spot market
Onhire days
(2008)
$73,413
VLCC spot rate 1
Suezmax spot rate 2 $47,192
DHT Holdings, Inc
Onhire days
(Year end 2014)
$34,777 end Q1 ‘14
$26,800 end Q1 ‘14
Fixed
23%
43%
Spot
Oak Maritime (HK)
● Spot market-oriented VLCC pool in which other
ship owners with vessels of similar sizes and
quality participate
● Euronav was a founding member in 2000
● Currently comprised of 30 vessels, including 12
Euronav vessels(a)
57%
77%
CHARTERING STRATEGY ALLOWS EURONAV TO CAPITALISE ON INCREASING RATE ENVIRONMENT
(a) Acquired Maersk vessels expected to be employed in pool
Source: Company filings; Clarksons
1 1-year timecharter rate 310,000 dwt D/H modern tanker; 2 1-year timecharter rate 150,000 dwt D/H modern tanker
20
EURONAV HAS CONSISTENTLY OUTPERFORMED CHARTER
INDICIES
SUEZMAX
VLCC
Average TCE over 2 years (TI)
TI
Average TCE over 2 years (spot)
Euronav
Index
2010 blt.
Index
2010 blt.
Index
2000 blt.
20.127
15,573
17,866
Index
2000 blt.
12,403
19.006
17.668
OUR VESSELS ACHIEVE HIGHER, AVERAGE TCE RATES IN THE TI POOL OR ON THE SPOT
MARKET
21
STRONG AND STRATEGIC RELATIONSHIPS WITH HIGH
QUALITY CHARTERERS
Selected customer relationships
MANY CUSTOMERS BEEN REPEATEDLY SERVED BY US FOR MORE THAN 20 YEARS
Source: Company filings and website
22
FSO – OFFSHORE MARKET – OPPORTUNISTIC CAPABILITY
Conversion
Floating storage and offloading units (“FSOs”) market overview
● FSO’s serve as offshore containers for oil transported by smaller vessels to ultimate end user
● In 2008, Euronav undertook conversions of 2 ULCC into the largest FSOs in the world
● Fixed income Service contract delivering USD 52 million EBITDA annually until 2017
● Life expectancy of Vessel extended to 2027; contract in place until 2017
● High potential for contract extension
23
EARNINGS AND DIVIDEND TRACK RECORD
Historical earnings and dividends
($mm)
700
657
600
500
432
100
344
303
300
200
402
372
400
237
176
104
101
57
260
218
209
187
118
101
195
128
138
121
65
7
0
20 7
0
0
0
0
(18)
-100
(96)
(119)
2011
2012
-200
2003
2004
2005
2006
2007
EBITDA
2008
Net profit
2009
Dividends
2010
(90)
2013
Since 2003, Euronav has paid $660 million in dividends (gross) and completed $50 million in share buy-backs
Leverage *
No of Vessels
% fleet on
spot
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013**
50%
56%
52%
52%
47%
55%
54%
55%
54%
59%
27
31
28
29
32
35
34
34
36
53
31
65
50
59
41
57
47
59
61
•
Leverage – year end Total Debt to Total Asset ratio source Bloomberg
** includes Maersk fleet
24
POWERFUL CASH GENERATION
• Euronav 2015 exposed Days in Crude Tanker market for both VLCC
and Suezmax = up to 18,250
• Each $5,000 uplift in rates in VLCC and Suezmax improves Euronav
EBITDA and Net Revenue up to $91.25M
Pro forma fleet earnings sensitivity
Euronav well positioned
•
Breakeven (including debt service)
• c. $27k for VLCC
• c. $22k for Suezmax
 for every 5k average daily rate increase roughly
7 pts on ROCE
•
Pro-forma earnings capability
VLCC TCE rates
Suezmax TCE rates
EBITDA $m
25,000
20,000
40,000
35,000
50,000
45,000
80,000
75,000
226
457
610
1068
Based on full year contribution of 50 ships
FSO – $52mm EBITDA consistent, high quality
income stream
25
Financial overview
Q1 2014 financial highlights
Q1 2014 operating environment
● Euronav had first positive quarter since the beginning of the global financial crisis on the back of continued
strong demand, less tanker capacity and a meaningfully higher rate environment
● We continued to see fewer cargoes transported from West Africa and the Arabian Gulf to the US but increased
cargoes headed east to support China and India's continued strong demand for crude
● As a result of these east-bound cargoes originating out of the Atlantic Basin, the Company witnessed
proportionately greater ton-mile demand than in previous quarters
Q1 2014 results
● For the quarter, we generated total revenue of $106.1 million, an increase of 35% over Q1 2013
● We also generated EBITDA of $47.3 million (proportionate method $64.1 million), representing a margin of
44.6% and an increase of 62% vs. Q1 2013
● Our net income for the quarter was $1.4 million, our first positive net results since Q1 2011
● During the quarter, we took delivery of two of the 15 Maersk Tanker’s VLCCs and expect to take delivery of 12
of the remaining vessels during over the summer of 2014
Outlook
● We expect the tanker market to continue to be volatile and the VLCC and Suezmax global fleets to grow
marginally over the next 18 - 24 months
● We believe that a more balanced capacity environment coupled with the impact of increased ton-miles should
help to further improve the state of the tanker market for the rest of 2014
27
STRONG BALANCE SHEET
Balance Sheet Pro-Forma Maersk
Non Current Assets
Current Assets
Total Assets
Equity
Capitalization
$mm
2,841
484
3,324
As of March 31, 2014 ($mm)
Cash
$360
Secured debt
$794
Senior notes
$235
Convertible bonds
$24
Total debt
$1,413
Shareholders equity
$1,395
Liquidity
1,377
As of March 31, 2014 ($mm)
Non Current Liabilities
1,655
Cash
$360
Undrawn credit facilities
Current Liabilities
Total Equity and Liabilities
292
3,324
Equity value of Euronav = $1.71bn (based on 8.90 Euro share price)
Equity Book Value of Euronav = $1.38bn (based at 31 March 2014)
- Revolving credit facility
$240
- Maersk acquisition facility
$500
Total liquidity
$1,100
Maersk acquisition capex
Remaining Maersk VLCC capex
$800
EURONAV MAINTAIN A STRONG LIQUIDITY POSITION POST MAERSK ACQUISTION
28
Conclusion
EXPERIENCED, PROVEN MANAGEMENT TEAM
Proven growth track record with strong access to capital
2003
10 vessels
3.0 mm dwt
Bank debt
raised
Convertible
bond issuance
Bond issuance
$4,723 M
$275 M
$235 M
Equity & PCP
issuance
2014
53 vessels
$500 M
13.1mm dwt
336% increase in on-water capacity (dwt)
Paddy Rogers
CEO
Hugo De Stoop
CFO
Alex Staring
Chief Offshore Officer
2000
Today
● BOD/Executive Committee since June 2003
● CFO since 2008
● COO since 2005
● Appointed CEO in 2000
● Executive committee since 2006
● Executive committee since 2005
● Appointed CFO in 1998
● Deputy CFO and Head of IR since 2004
● Extensive industry experience
ExCo: 75 years combined experience
ABILITY TO OPTIMISE FLEET SIZE AND ACCESS TO FINANCING WITH $5.7BN OF DEBT
AND EQUITY ISSUANCE SINCE 2003 DESPITE INDUSTRY HEADWINDS
30
CONCLUSION – WELL POSITIONED FOR THE CYCLE
A pure play tanker company with a
sustainable business model
Best in class operating platform
Well capitalised balance sheet positioned to act as an industry
consolidator
Experienced management team with a
proven growth track record
Current strategy leverages
Euronav to a strong uptick in crude
tanker market
Source: DNB
31