Fred.Olsen Production ASA

DnB NOR Markets SMB seminar

29. March 2011

THE COMPANY

“Who we are”

Company overview

Floating ProductionEst. 1994

Ganger Rolf ASA(listed OSE)

Bonheur ASA(listed OSE)

Cruise LineSince 1901

Renewable EnergyEst. 1996

Crude Oil TankersShipping Since 1848

DrillingEst. 1973

Fred. Olsen Production First Olsen &Knock Tankers

Fred. Olsen Energy &Dolphin Drilling

Fred. Olsen Renewables / Fred. Olsen Windcarrier

Fred. Olsen CruiseLines

Over 150 years of history and experience in shipping and offshore

Fred. Olsen Production – in brief

• Established FPS contractor since 1994

• FOP listed on Oslo Stock Exchange May 2007

• Strong track record – 10 projects delivered

• Fleet of 4 production units:

– 3 FPSO’s

– 1 MOPU operation

• Top tier uptime performance

• Strong HSSEQ performance

• FOP/FOM: ISO 9001, 14001 and 18001

• Approx. 450 personnel

• Core business in West Africa; worldwide presence

Track record

FSO ConversionKnock Taggart

Abacam - Nigeria

FSO ConversionKnock Nevis

Maersk - Qatar

FSO ConversionKnock Dee Soekor - SA

FPSO ConversionKnock TaggartAddax - Nigeria

FPSO UpgradePetróleo NautipaVaalco - Gabon

2009200820072006200520042003200220012000199919981997199619951994 2010

Jack-Up UpgradeBorgen Dolphin/Marc LorenceauAddax - Nigeria

Jack-Up ConversionBorgen Dolphin MOPU

Mobil Oil - Nigeria

FPSO ConversionPetróleo Nautipa

Ranger Oil - Angola

FPSO ConversionKnock Allan

CNR – Gabon

FPSO ConversionKnock Adoon

Addax - Nigeria

10 largest shareholders as per 31st December 2010

Name of Shareholder # of shares in %

FIRST OLSEN LTD 65 191 200 61,5 %

SKANDINAVISKA ENSKILDA BANKEN AB 7 925 135 7,5 %

GEVERAN TRADING CO LTD 7 546 837 7,1 %

SKANDINAVISKA ENSKILDA BANKEN 4 755 000 4,5 %

ODIN OFFSHORE 3 008 400 2,8 %

SKAGEN VEKST 3 000 000 2,8 %

MORGAN STANLEY & CO INC. NEW YORK 2 288 600 2,2 %

SABARO INVESTMENTS LTD 1 407 700 1,3 %

HOLBERG NORGE 1 248 200 1,2 %

MARUBENI CORPORATION 692 200 0,7 %

Sum 10 largest Shareholders 97 063 272 91,6 %

105 930 000

OPERATION

“What we do”

Current fleet & offices

Houston

Nigeria

Gabon

Oslo

Singapore

OfficeUnit

Port Harcourt

Port Gentil

Knock AllanFPSO Oil: 25,000 BOPDGas: 80 MMCFDPower 2 x 27MW

Knock AdoonFPSOOil: 60’000 BOPDGas: 10 MMCFDWI: 100’000 BWPD

Knock MuirAframax 93 builtTrading tanker in The Far East/India range

Petróleo NautipaFPSO (50% owned)Oil: 30,000 BOPDGas: 10 MMCFD

Marc LorenceauMOPU (management)Oil: 40,000 BOPDGas: 70 MMCFD

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Petroléo Nautipa

Knock Adoon

Knock Allan

Knock Muir

Marc Lorenceau

Long term contracted cashflow

Addax Petroleum - Nigeria 8y option

Addax (operations)

Vaalco - Gabon 2y option

Upgrade / Conversion

Option

Call-off option

Canadian Natural Resources – Gabon – 10 yrs (10y option)

Operations

Short term tanker T/C / Spot market

Quality of operation is core for a FPSO operator

Robust HSSEQ performance

Excellent uptime record

Advantages from combination of maritime and offshore cultures

Vessel management and operation by Fred. Olsen Marine Services (FOM)

Full & effective integration of local staff in onshore and offshore organization (up to 90% local staff on some units)

ISO 9001, 14001 and OSHAS 18001 certified management systems

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HSE Performance

TRCF

H-value

Current company up-date

• Knock Allan

Gas compressors performance issues not fully resolved

In full production, but not at peak capacity

• Knock Adoon

Average oil-production 50–55,000 bopd

Additional reserves sanctioned to be developed through Knock Adoon

Field production horizon is beyond 2018

• Petróleo Nautipa

Average oil-production 20–22,000 bopd

Field production horizon now extends past 2017; 2021 is likely

Current company up-date

• Mark Lorenceau

Service contract on 30 days termination notice since 3q 2008, contract extension in discussion

• Knock Muir

Operating spot in a poor tanker market

Remains as conversion candidate for Far East FPSO projects

• Business & development

Extended field horizons for PetróleoNautipa and Knock Adoon; possible variation orders to contract

Currently tendering for one project in Far East

Several business development project in different development stages

Financial snapshot

2010 2009 2008

Turnover/revenue 116,8 115,0 80,9

EBITDA 53,1 50,7 30,7

Total assets 472,4 554,7 523,5

Book equity 254,7 264,6 263,3

Market capitalization 186,5 130,2 65,1

Enterprise value 305,1 257,1 191,1

USD million

EBITDA-margin 45,5 % 44,1 % 37,9 %

EV/EBITDA 5,7 5,1 6,2

FOP share price development; last 24 months

FPSO shares indexed to 100, last 24 months

Financing capability

Financial capacity to fund medium size FPSO project(s)

USD 500 million Secured Revolving Credit Facility in place

USD 183 million drawn per 31.12.2010

Borrowing base structure

6.5 years remaining duration until 2017

Annually USD 50 million reduction of the facility from 2013

Interest margin 1.00% above US Libor

Predictable key covenants (consolidated)

Per 31.12. 2010

– NIBD to EBITDA <=4.5 2.2

– Book equity >= USD 150 million USD 255 million

– Free cash >= USD 50 million USD 64 million

Proposed dividend payment of NOK 0.50/share

THE FPSO MARKET

“..and where do we fit?”

FPSO market demand

• General market outlook

World energy demand increasing, fueled by emerging markets

In foreseeable future oil and gas will remain key source for energy and transportation

Oil and gas developments must replace current production

The increased oil price makes marginal fields economical

FPS’s are viable production solutions offshore; shallow and deep water, marginal and large fields

• FPSO market; looking back (last 12 months)

1Q 2011 – 3 contract awards (2 FSO leases and1 turn-key FPSO)

1Q-4Q 2010 contract activity (10 awards total, excluding 8 Petrobrashulls + topsides EPC’s):

Turn-key deliveries (EPC) – 2

Leases – 3

Redeployment – 5

FPSO market Demand

General FPSO outlook:

External forecasts are back to 2007 levels (16-20+ per year)

Estimated annual growth of 5-10%

Leased vs. owned FPS solutions indicated split 50/50%

The leased projects mix split is estimated 70/30% new lease/redeploy

Recovery from 2008 financial crisis is evident, including access to financing

African market now being revitalized

FOP’s FPSO market outlook

Opportunities in mid-range (FOP) segment are presently limited –expected to pick up in 2011; FOP is not in EPC market

Currently following some twenty project opportunities, in discussions on five

Market Supply

Vessel supply:

New build vessels increasingly competitive vs conversions for long contracts – due to current shipping market

Redeployment has picked up but almost entirely on shorter contracts (5y or less)

7 vessels with contract ending in 2011, unless extended; of these 3 are 1970’s and all are 25 years old or older; further scrapping is likely

Competitive Picture:

Competitive field is reduced due to bankruptcies and retrenchment due to refinancing

Increased openings for raising capital, refinancing ongoing

FPSO Operators – Total Projects

FPSO Operators - Units

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Market segregation

The FPSO market is segregating into three main categories:

Top-end mega-projects (e.g. sub-salt in Brazil):

Capital intensive (CAPEX > $750 mill)

Highly complex vessels, high project execution risk

Resource intensive – large in-house teams

Mid range:

(Less) capital intensive ($250-700 mill)

Clients with balance sheet to match commitments

Complex but more flexible project execution model

Low end :

Short contract commitment

Increased residual value risk

Client credit risk

SUMMARY

Fred. Olsen Production ASA:

Long term cash flow

Excellent operational track record

Cost efficient operation, tight cost control

Existing contracts have strong potential to add value

Asset portfolio tidied-up in 2009/10

Trading Aframax tanker as FPSO/FSO conversion candidate

Attractive long term financing in place

Low balance sheet gearing

Strategic and financial partner in place

Well positioned to expand portfolio in mid range segment

Market value 70% of book value

Annual dividend proposed for the AGM