MMA Offshore Limited

2017 Financial Year Results Presentation

28 August 2017

Disclaimer

This document contains general background information about the activities of MMA Offshore Limited (MMA) current at the date this document was released to the Australian Securities Exchange (ASX). It is information in a summary form only and does not contain all the information necessary to fully evaluate any transaction or investment. It should be read in conjunction with MMA's other periodic and continuous disclosure announcements to the ASX available at www.asx.com.au.

MMA makes no representation or warranty (express or implied) as to the accuracy, reliability or completeness of this document. MMA and its directors, officers, employees, agents and associates will have no liability for any statements, opinions, information or matters (express or implied) arising out of, or contained in or derived from, or for any omissions from this document, except liability under statute that cannot be excluded.

Not a prospectus: This document is not a prospectus or a product disclosure statement under the Corporations Act 2001 (Cth) and has not been lodged with the Australian Securities and Investment Commission (ASIC). Not investment advice: The information provided in this document is not intended to be relied upon as advice to investors or potential investors and has been prepared without taking into account the recipient's investment objectives, financial circumstances or particular needs. Any investment decision should be made based solely upon appropriate due diligence. Recipients of this document are advised to consult their own professional advisers. An investment in any listed company, including MMA, is subject to significant risks of loss of income and capital. Future performance: This document contains certain forward-looking statements. The words 'anticipate', 'believe', 'expect', 'project', 'forecast', 'estimate', 'likely', 'intend', 'should', 'could', 'may', 'target', 'plan' and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of MMA, and its officers, employees, agents and associates, that may cause actual results to differ materially from those expressed or implied in such statements. Actual results, performance or outcomes may differ materially from any projections and forward-looking statements and the assumptions on which those assumptions are based. You should not place undue reliance on forward-looking statements and neither MMA nor any of its directors, employees, servants, advisers or agents assume any obligation to update such information. Risks: An investment in MMA Securities is subject to investment and other known and unknown risks, some of which are beyond the control of MMA and MMA's directors, employees, servants, advisers or agents. MMA does not guarantee any particular rate of return or the performance of MMA nor does it guarantee the repayment of capital from MMA or any particular tax treatment.

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Overview

Trading Update

  • Industry conditions remain challenging although market sentiment is improving

  • Overall vessel utilisation and rates remained at historic lows during FY17 however utilisation of our core vessel fleet was relatively firm with a number of long term contracts and demand for our newbuild IMR vessels

  • MMA's strategy to dispose of non-core vessels from the fleet is being executed - sold 13 non-core vessels during FY17 and FY18 YTD with a further 10 vessels earmarked for sale

  • Vessel impairment charge of $254m booked in Dec-16 with a further $33.5m booked in Jun-17, reflecting the impact of the current market conditions on asset values

  • Whilst conditions remain difficult we are seeing early signs of increased activity at the front end of the value chain which should translate to increase vessel demand over time

Disposal of Supply Bases

  • Strategic decision made to dispose of MMA's Supply Base and Slipway assets to focus on the core vessel business

  • Sale of Dampier Supply Base and Slipway assets completed in Jun-17; sale of MMA's 50% share of the Broome Supply Base completed in Apr-17

  • Transition has been smooth with no impact on MMA's vessel operations

Balance Sheet

  • MMA continues to have the support of its Banking Syndicate

  • In Feb-17 MMA agreed a range of amendments to the company's Banking Facilities including a reduced amortisation profile and extension of the term of the facility

  • Total debt repayments during FY17 - $67.3m. No further compulsory amortisation required until the expiry of the facility in Sep-19

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Macro Conditions

Some positive sentiment returning to the offshore vessel market
  • Oil markets rebalancing but ongoing volatility expected

    • OPEC production and export cuts having an impact

    • Global inventory levels declining

    • US shale production remains resilient

    • Global oil demand is robust - increasingly non-OECD driven

  • Investment needs to increase to offset reserve depletion

    • E&P spending, which has been drastically cut in recent years is not enough to meet future demand growth and offset reserve depletion

      OSV demand has increased in 2017

      Vessels (#) 4,000

      3,500

      3,000

      2,500

      2,000

      1,500

      1,000

      500

      ‐

      Utilisation

      100%

      80%

      60%

      40%

      20%

      ‐

      • IEA forecasting a global supply shortage by 2020 if underinvestment continues

      • Indications of an increase in FEED and FID activity

  • OSV market remains challenging but sentiment has become more positive

    • Increased tendering activity particularly around seismic and IMR scopes and in the Middle East region, jack up fixing showing signs of recovery

    • A large proportion of the global cold stacked fleet is not expected to return to service eliminating some of the supply overhang

    • It will take some time for the vessel market to come back into balance, however the early signs are encouraging for a market recovery

2001 2003 2005 2007 2009 2011 2013 2015 2017

Term Spot Idle Utilization

Source: Pareto, August 2017

Oil company capex has begun to increase

Source: Pareto, August 2017

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MMA Offshore Limited published this content on 28 August 2017 and is solely responsible for the information contained herein.
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