Fred. Olsen Energy ASA2Q 2018 results presentation

Disclaimer

This presentation has been produced by Fred. Olsen Energy ASA (the "Company") based on information which is publicly available. This presentation is for information purposes only. Further to the aforementioned, this presentation is the result of an effort of the Company to present certain information which the Company has deemed relevant in an accessible format. The presentation is not intended to contain an exhaustive overview of the Company's present or future financial condition and there are several other facts and circumstances relevant to the Company and its present and future financial condition that has not been included in the this presentation. No representation or warranty (express or implied) is made or intended to be made as to the accuracy or completeness of any or all of the information contained herein and it should not be relied upon as such. The recipient of this presentation acknowledges that it will be solely responsible for its own assessment of the information.

This presentation contains forward-looking statements. Such forward-looking statements give the Company's current expectations and projections relating to its financial condition, the market in which it operates and the future performance of the Company. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the Company's actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company’s present and future business strategies and the environment in which it will operate in the future.

Neither the Company's nor any of its affiliates (nor any department in any of those entities), nor any such person’s directors, officers, employees, advisors or representatives (collectively the "Representatives"), in any capacity, shall have any liability whatsoever arising directly or indirectly from the use of this presentation, including (but not limited to) as a result of any liability for errors, inaccuracies, omissions or misleading statements in this presentation.

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FINANCIAL RESULTS MARKET OPERATIONS SUMMARY

Income statement – key figures

(USD mill) 2Q 2018 1Q 2018 Change

Operating revenues 17,2 69,5 (52,3)Recharged income 0,1 1,9 (1,8)Total revenues 17,3 71,4 (54,1)

Operating costs (68,7) (37,7) (31,0)Recharged expenses - (1,9) 1,9 Total operating expenses (68,7) (39,6) (29,1)

Oper. result before depr. (EBITDA) (51,4) 31,8 (83,2)

Depreciation (53,4) (56,4) 3,0 Impairment (96,7) - (96,7)Operating result (EBIT) (201,5) (24,6) (176,9)

Net financial items (6,2) (18,2) 12,0 Result before tax (207,7) (42,8) (164,9)

Estimated tax 0,5 0,2 0,3 Net result (207,2) (42,6) (164,6)

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EBITDA comparison 2Q 2018 vs. 1Q 2018

Offshore Drilling Segment

(USD mill) 2Q 2018 1Q 2018 Change

Operating revenues 5,9 61,8 (55,9)Recharged income - 1,9 (1,9)Total revenues 5,9 63,7 (57,8)

Operating costs (52,1) (28,1) (24,0)Recharged expenses - (1,9) 1,9 Total operating expenses (52,1) (30,0) (22,1)

Oper. result before depr. (EBITDA) (46,2) 33,7 (79,9)

Depreciation (53,0) (55,9) 2,9 Impairment (96,7) - (96,7)

Operating result (EBIT) (195,9) (22,2) (173,7)

Engineering & Fabrication Segment

(USD mill) 2Q 2018 1Q 2018 Change

Operating revenues (external) 11,4 7,7 3,7 Inter-segment revenues - - - Total operating revenues 11,4 7,7 3,7

Operating costs (16,6) (9,6) (7,0)Oper. result before depr. (EBITDA) (5,2) (1,9) (3,3)

Depreciation (0,4) (0,5) 0,1

Operating result (EBIT) (5,6) (2,4) (3,2)

Financial Items Breakdown

(USD mill) 2Q 2018 1Q 2018 Change

Interest income 0,9 1,1 (0,2)Gains on financial instruments 0,2 0,4 (0,2)Financial income 1,1 1,5 (0,4)

Interest expenses (9,0) (8,1) (0,9)Losses on financial instruments (0,1) (0,2) 0,1 Other financial expenses (5,6) (1,8) (3,8)Financial expenses (14,7) (10,1) (4,6)

Net foreign currency loss 7,4 (9,6) 17,0

Net financial items (6,2) (18,2) 12,0

Consolidated Balance Sheet

(USD mill) 30 Jun 2018 31 Mar 2018 Change

Property, plant & equipment 886,1 1 026,8 (140,7)Other non-current assets 1,6 1,5 0,1 Total non-current assets 887,7 1 028,3 (140,6)

Other current assets 106,9 121,7 (14,8)Cash and cash equivalents 192,6 253,5 (60,9)Total current assets 299,5 375,2 (75,7)Total assets 1 187,2 1 403,5 (216,3)

Equity 344,8 552,4 (207,6)

Non-current interest bearing debt - 546,9 (546,9)Other non-current liabilities 60,5 64,3 (3,8)Total non-current liabilities 60,5 611,2 (550,7)

Current interest bearing debt 737,0 190,9 546,1 Other current liabilities 44,9 49,0 (4,1)Total current liabilities 781,9 239,9 542,0 Total equity and liabilities 1 187,2 1 403,5 (216,3)

Consolidated Cash Flow

(USD mill) 2Q 2018 1Q 2018 Change

Profit before income taxes (207,7) (42,8) (164,9)Depreciation and impairment 150,1 56,4 93,7 Interest expense 10,4 9,4 1,0 Changes in working capital 26,9 10,7 16,2 Bolette termination fee amortized - (61,7) 61,7 Unrealized loss/(gain) financial instruments (6,4) 6,5 (12,9)Cash generated from operations (26,7) (21,5) (5,2)Interest paid (8,0) (9,2) 1,2 Taxes paid (6,7) (0,8) (5,9)Net cash flow from operating activities (41,4) (31,5) (9,9)

Net investment in fixed assets (16,2) (5,6) (10,6)

Cash flow from/used in investment activities (16,2) (5,6) (10,6)

Repayments of interest bearing loans - (147,5) 147,5 Cash flow used in financing activities - (147,5) 147,5

Foreign currency (3,3) 3,1 (6,4)Net change in cash and cash equivalents (57,6) (184,6) 127,0 Cash at beginning of period 253,5 435,0 (181,5)Cash at end of period 192,6 253,5 (60,9)

Offshore drilling EBITDA and margin

Fleet status

RIG DESIGN W DEPTH LOCATION CLIENT CONTRACT STATUS DAY RATE NEXT CRS

Bolette Dolphin DS/ Gusto P10' 12 000 Tenerife Termination for convenience Termination fee USD 96 million

Blackford Dolphin SS / Aker H-3 7 000 UK BP May-October 2018 GBP 98 900 2Q 2020**Options: October- December

Belford Dolphin DS / LMG Marin 10 000 Malaysia Preserved and maintained

Bideford Dolphin SS / Aker H-3 1 500 Norway Smart stacked 4Q 2019*

Borgland Dolphin SS / Aker H-3 1 500 Norway Smart stacked 4Q 2021*

Bredford Dolphin SS / Aker H-3 1 500 Norway Preserved and maintained

Byford Dolphin SS / Aker H-3 1 500 Norway (UK compliant) Smart stacked 1Q 2022*

* Will be further postponed if further smart stacking period** Limited work remains for the renewal in 2Q 2020

MID WATER FLOATERS NORWAY

MID WATER FLOATERS UK

ULTRA- / DEEPWATER UNITS

Update on the financial position

The waiver period expired 30 June 2018 with no extension granted by the Company's financial creditors on terms acceptable to the Company

In order to preserve the liquidity reserves of the Fred. Olsen Energy group, the Company resolved to stop its service of interest and amortizations to its financial creditors with effect from 3 July 2018 at which date USD 95.5 million plus interests were due under the bank facility

The Fred. Olsen Energy group's operations will otherwise continue in their ordinary course. All suppliers and trade creditors will be paid in the ordinary course of business

Constructive discussions are continuing with the financial creditors

It is expected that a long term solution will require new equity and amendments to the Company's bank and bond facilities, including impairments of debt, in order to secure a viable financial foundation for the purpose of safeguarding the Company's position in the market

FINANCIAL RESULTS MARKET OPERATIONS SUMMARY

The positive market trend has continued during the quarter with new requests and contract fixtures mainly targeting 2019 and 2020 work

The emerging recovery has been seen in the harsh environment, and now also followed by ultra deepwater

An increased number of tenders have emerged in the UDW market, some with scopes of 1-2 years duration

Based on the fleet composition in the midwater segment, the market is expected to rebalance in 2019

Global marketFloating units

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Dayrates- worldwide

New contracts have been awarded for work in 2019 and 2020, predominantly for field development activities

Further sanctioning of field development projects are expected over the next years

This has resulted in an increase in the dayrates in the North Sea market, in particular for the field development work in 2019-2020

Exploration and appraisal activity is also expected to increase into 2019

Norwegian floater market

Source: IHS/DNB

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NameWest NavigatorBredford DolphinPolar PioneerWest VentureWest AlphaSonga DeeBorgland DolphinSonga DeltaScarabeo 5Bideford DolphinIsland InnovatorCOSLInnovatorWest HerculesScarabeo 8Deepsea BergenLeiv EirikssonDeepsea StavangerTransocean ArcticCOSLPromoterDeepsea AtlanticWest PhoenixWest MiraTransocean SpitsbergenDeepsea NordkappSonga EnduranceSonga EncourageSonga EquinoxSonga Enabler

Contract Option Idle/yard/const

2018 2019Q4Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2020

Average dayrates Norway

Several contracts have been awarded during the recent quarters

Focus has now switched to work in 2019

Blackford Dolphin commenced the contract with BP Exploration Operating Company Ltd. mid May. Duration of the firm contract is estimated until mid October

Borgland Dolphin has a safety case and is also marketed in UK

A safety case is also being prepared for Bideford Dolphin

UK floater market

Source: IHS/DNB

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NameWilHunterSedco 711Sedco 714Byford DolphinStena DonOcean GuardianCOSLProspectorTransocean 712Blackford DolphinTransocean LeaderCOSLPioneerPaul B. Loyd, Jr.WilPhoenixOcean ValiantParagon MSS1Ocean EndeavorStena SpeyDeepsea AberdeenOcean Patriot

Contract Option Idle/yard/const

2018 2019 2020Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Average dayrates UK

FINANCIAL RESULTS MARKET OPERATIONS SUMMARY

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Blackford Dolphin Setting a new standard

Smart Stacking – proven conceptRe-activation delivered as

plannedSuccessful start up for BPSmarter classification

demonstrated

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Re-activation and preparation for operation of BlackfordDolphin Delivered in less than four months

Smart stacking proven concept No surprises experienced Certificates prolonged to mid 2020

Re-activation and preparation for operation on target Executed in less than four months Total cost USD 14 million including planned

corrective maintenance

Strong and dedicated Dolphin Drilling team mobilized Predominantly former crew was rehired

Start up on time with no serious incidents

Setting a new standard in reactivation

The regulatory framework is opening up the 5 year cycle whereby class related work can be performed in different time intervals

Smarter classification optimises the timing and cost of a class renewal

The major part of the next cycle CRS completed at a total cost of USD 12 million

The remaining part planned completed offshore within 2Q 2020 for an estimated cost of USD 5 million

The next cycle certificates will expire in 2025, with next inshore inspection in 2023

Smarter classification is also being implementedfor Bideford Dolphin

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Smarter classification of Blackford Dolphin A new approach to main certificate renewal

Hull and Structure

Drilling equipment (load path)

BOP

Electric power system (main)

Propulsion

Anchoring

Offshore Cranes

Life-saving appliances

Sea inlets and discharges

Class Renewal Period 2 – Planned during operations

Class Renewal Period 1 – Undertaken during re-activation

BOP crane

Helideck

Cementing system

Bulk and mud systems

Rotational components

Anti-recoil valves

Fail-safe valves

Tensioners

Marine Riser

High operational performance - High technical condition

Fit for purpose Ready for operations

The core fleet

Bideford Dolphin

Total rebuild ‘98

Drilling & completion workhorse

Consistent top performer for Statoil

BorglandDolphin

BlackfordDolphin

Byford Dolphin

Bolette Dolphin

Total rebuild ‘99

Drilling & completion workhorse

Top performance for a variety of customers

Total rebuild ’08

High spec UK rig

Versatile, DW capable

The last 6 years with BP in UK

Mix of drilling and completion/work-over

12pts mooring

High spec. 7G UDW

Consistent top performance

Proven MPD operations

v

Norway UK

v

International

Main focus to redeploy core units in a recovering market

Bolette Dolphin targeting work in South America and West Africa

Blackford Dolphin a candidate for UK and International assignments

Bideford Dolphin primarily NCS focus

Borgland Dolphin being marketed in both NCS and UKCS

Byford Dolphin targeting UK work

Aggressively pursuing new contract opportunities

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Unit

Bolette Anadarko Continuous class during operations

Blackford Chevron Smart stacked BP

Bideford Statoil Statoil

Borgland Smart stacked

Byford Smart stacked

Belford Preserved and maintained

Bredford Preserved and maintained

Original CRS date Current CRS date if operations restarted today

Certificates prolonged 2 years

if 2 yrs smart stacked (potentially 3 years)

Firm contract Terminated for convenience Option

Class renewal survey scheduleContract schedule2017 2018 2019 2020 2021 2022

Harland & Wolff

The yard experienced increased activity during the quarter

Work has mainly been construction and assembly of substructures for offshore windfarm development as well as a number of dockings

FINANCIAL RESULTS MARKET OPERATIONS SUMMARY

Summary

Revenues were USD 17 million

EBITDA was negative USD 51 million

Profit after tax was negative USD 207 million

Financial

Operational

Smart stacking of units continues with high focus on technical condition and preparation for efficient restart

Smarter classification regime demonstrated for Blackford Dolphin, significantly reducing total CRS cost. Now also being implemented on Bideford Dolphin

MarketBlackford Dolphin commenced its contract with BP

New contract opportunities are pursued aggressively

Q&A

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