Bringing Together Aker Solutions and Kvaerner
Investor Presentation
July, 2020
2020 © Aker Solutions Complementary Capabilities Create Stronger Offering
A leading provider of engineering, procurement Creating a leading execution partner and construction (EPC) to deliver low-carbon oil and gas and services to the energy industry renewables projects
A leading global provider of products, front-end, engineering, project management and services to the energy industry
© 2020 A New Era for an Industry in Transition July 17, 2020 Slide 2 Transaction Summary – A Merger of Equals
■ Aker Solutions and Kvaerner to merge to gain size, combine capabilities and strengthen balance sheet to accelerate transition to sustainable energy production ■ Exchange ratio will be based on one month volume-weighted average price (VWAP) ■ The merger is subject to customary regulatory approvals
© 2020 A New Era for an Industry in Transition July 17, 2020 Slide 3 Industrial Rationale
Revitalizing growth ■ Mid-term robustness in global Oil & Gas ■ Reposition with size and capabilities to succeed in current market ■ Industry partner for decarbonization and electrification ■ Stable aftermarket service business ■ Forceful transition into Renewables – with integrated solutions
Realize customer value and operational excellence ■ Digitalization to reduce cost and increase competitiveness ■ Value chain integration to drive industrialization and value creation ■ Customer Alliances and value chain partnerships to remove inefficiencies
Unlock shareholder value by improved cash conversion ■ Optimize footprint ■ Reduce CAPEX ■ Lean organization ■ Operational leverage
© 2020 A New Era for an Industry in Transition July 17, 2020 Slide 4 A Supplier Accelerating the Transition to Sustainable Energy Production
Enable low-carbon oil and gas Drive differentiation and efficiency in Provide integrated solutions production, building on alliances our industries through technologies for renewable energy with customers and partners and digital solutions industries
2020 © Aker Solutions Positioning for Growth at a Pivotal Time for our Industry
Accelerating Transition Radical Improve Efficiency in to Renewables Oil & Gas Deliveries ▪ Broaden portfolio of capabilities & activities ▪ Digitally transform engineering, construction and project management ▪ Differentiation through Front End, system integration & project execution capabilities ▪ Value chain management to optimize time, risk and cost
Aker Solutions
Leveraging Industrial Building Strategic Software & Digital Technology Partnerships and Alliances ▪ Complementary execution capability in a ▪ Integrated collaboration with customers and digital ecosystem business partners ▪ Embed a digital scalable delivery model to ▪ Extend global reach from existing footprint extend asset value and partnerships
© 2020 A New Era for an Industry in Transition July 17, 2020 Slide 6 Energy Outlook - Dual Challenge
More Energy
Lower Carbon
© 2020 A New Era for an Industry in Transition July 17, 2020 Slide 7 Decarbonizing Offshore Oil and Gas
Low-Carbon Solutions Electrification Energy Optimization
2020 © Aker Solutions Integrated Offering Covering Asset Lifecycle
Integrated offering Partial offering
Feasibility Marine Hook Up & Maintenance Decommissioning Engineering Procurement Construction & FEED Operations commissioning & modification & recycling
Topsides & Floaters
Substructures
Subsea Production Systems
SURF
2020 © Aker Solutions July 17, 2020 Slide 11 Johan Sverdrup Showcasing Our Capabilities
Living Quarters Production Platform 1 Drilling Platform Riser Platform Production Platform 2
Feasibility Optimize FEED Engineering Procurement Construction Transportation Hook Up Commissioning
Field EPMA Aker Solutions Aker Solutions
Living Quarters Kvaerner / KBR Kvaerner Other Production Platform 1 Aker Solutions & Kvaerner Aker Solutions Other Riser Platform Aker Solutions Other Aker Solutions & Kvaerner
Drilling Platform Other Other Other Aker Solutions Production Platform 2 Other Other Other
Jacket structures* Kvaerner Other Kvaerner
SURF 1 Aker Solutions Other Other
SURF 2 Other Other Other Subsea Production System Other Other Other
Riser Platform Modification Aker Solutions & Kvaerner
Photo:2020 © Equinor Aker Solutions* EPC contract for 3 out of 4 jacket substructures (90% of tonnage) Selected Ongoing Oil & Gas Projects
Johan Sverdrup RP Njord Upgrade Hod UWHP
Customer: Equinor Customer: Equinor Customer: AkerBP Country: Norway Country: Norway Country: Norway
MMO frame agreementsExxon Guyana SPS Breidablikk Lingshui
Customers: Several Customer: Equinor Customer: CNOOC Country: Norway, Canada, Brunei, Angola Country: Norway Country: China
© 2020 A New Era for an Industry in Transition July 17, 2020 Slide 13 Well Positioned for Several Major O&G Prospects
NOAKA EPC Wisting FPSO Jackdaw WHP
Customer: Equinor / Aker BP Customer: Equinor Customer: Shell Country: Norway Country: Norway Country: UK
Troll West Electrification Exxon Guyana SPS Jansz SSC
Customer: Equinor Customer: Exxon Customer: Chevron Country: Norway Country: Guyana Country: Australia
© 2020 A New Era for an Industry in Transition July 17, 2020 Slide 14 Solid Foundation for Transition to Renewable Energy
Our Core Capabilities… ...are needed in emerging industries
Photo: C. Thomas Photo: N. Doherty
© 2020 A New Era for an Industry in Transition July 17, 2020 Slide 15 Combining Complimentary Capabilities Within Renewables
Offshore Wind CCUS Hydrogen
Offering Offering Offering ▪ Integrated delivery of: ▪ Delivery of carbon capture plants ▪ Capabilities to deliver hydrogen ▪ Wind substructures ▪ Project management production facilities ▪ Converter- and substations ▪ Engineering, Procurement and ▪ FEED and project execution ▪ Dynamic cables Construction ▪ System integration - Balance of Plant ▪ Close collaboration with Aker Carbon ▪ Partnership with Aker Offshore Wind Capture
Key activities Key activities Key activities ▪ Hywind Tampen, Norway ▪ Norcem, Norway ▪ Nel collaboration ▪ Empire Wind, USA ▪ Twence, Netherlands ▪ ZEEDS
© 2020 A New Era for an Industry in Transition July 17, 2020 Slide 16 Leading Supplier to Offshore Wind Project: Hywind Tampen (ongoing)
▪ World’s largest floating offshore wind park (88 MW) ▪ Will supply power to five oil and gas platforms
▪ 200,000 metric tons reduced CO2 per year ▪ EPCI delivery of 11 concrete floating foundations
© 2020 A New Era for an Industry in Transition July 17, 2020 Slide 17 Leading Supplier to Carbon Capture Project: Norcem
▪ Integrated project delivery with Aker Carbon Capture
▪ 400,000 tons CO2 captured p.a. ▪ Planned operation in 2024
© 2020 A New Era for an Industry in Transition July 17, 2020 Slide 18 Digital Solutions to Reshape the Industry
▪ Reducing project execution time ▪ Enabling automated operations, saving cost and improving HSSE ▪ Unlock insight and information transparency ▪ Drive standardization to improve efficiency and minimize risk ▪ Reduce cost by enabling predictive maintenance ▪ Create digital interaction through the value chain ▪ Enabler for new business and contract models
2020 © Aker Solutions Building Strong Collaborations and Integrated Deliveries
Decarbonizing Aker Solutions Renewables Oil & Gas Attractive Engineering and project realization partner based on core competence, system knowledge and 180 years of industry experience
Leverage core customer relationships to transform together…
…and collaborate with peers and suppliers for sustainable technology solutions and execution footprint
© 2020 A New Era for an Industry in Transition July 17, 2020 Slide 20 Global Presence in Key Energy Hubs
Proven model for regional Norway execution with local partners Finland
United Kingdom Russia Canada
United States Italy Cyprus
Qatar Saudi Arabia China UAE
India
Ghana Brunei Nigeria Malaysia Republic of Congo 25 Countries Tanzania Brazil Angola Mozambique
50+ Locations Australia 15,000 Employees
© 2020 A New Era for an Industry in Transition July 17, 2020 Slide 21 Main Businesses
Front End and Renewables Topsides and Subsea Electrification, Engineering Facilities Maintenance and Modifications
▪ Software-enabled ▪ Offshore and floating wind ▪ One-stop-shop for oil & ▪ Extensive product and ▪ Solutions for the engineering house with products and services; gas and onshore service offering for subsea electrification of existing oil suite of methods and processing facilities; oil and gas projects; and gas infrastructure ▪ Turbine foundations digital solutions for efficient ▪ Power infrastructure incl. ▪ Floating production units ▪ Subsea production ▪ Specialized on efficient engineering process substations, converter ▪ Topsides and modules systems execution of minor ▪ World class Front End, platforms and cables ▪ Substructures ▪ Subsea processing, maintenance and engineering and system ▪ Project management and ▪ Onshore processing plants boosting and compression modification services marine operations capability with in-depth ▪ Large upgrades and ▪ Subsea power distribution ▪ Engineering, project modifications ▪ Intervention and workover ▪ Digitally enabled asset technical niche execution and delivery of systems and tools integrity services and competences Carbon Capture, Storage ▪ Subsea life cycle services solutions Developing the energy ▪ and Utilization and solutions of the future ▪ Demolition and recycling Hydrogen energy solutions
© 2020 A New Era for an Industry in Transition July 17, 2020 Slide 22 Unaudited proforma figures Solid Financial Performance and Value Creation
Revenue NOK Billion Oil & Gas Renewables CAPEX NOK Billion
38 1.1 34 ~29
0.6 0.4
2019a 2020 estimate 2023 target 2025 ambition 2019a 2020 estimate 2023 target 2025 ambition
■ Ambition to grow revenue base by approximately ■ CAPEX expected to decline by 60% from 2019 to 2023 10% annually towards 2025 ■ Leverage on historical capital investments for future growth ■ Stable oil and gas aftermarket business ■ Partnerships for technology development ■ NOK 36 billion in backlog per Q2 2020 ■ Spin-off of capital intensive business units ■ Strong position for transition into renewables ■ Strong CAPEX discipline
© 2020 A New Era for an Industry in Transition July 17, 2020 Slide 23 Unaudited proforma figures Merger to Accelerate Cost Reduction
Expected to deliver NOK 1.5 billion in pre-tax cost savings Cost-Saving Initiatives NOK Billion
~30% Cost-Saving Initiatives ■ Optimized internal capacity to expected activity levels ■ Footprint adjustment ■ Reduction of overlapping functions ■ Improved efficiency through the use of digital tools and solutions ■ Collaboration models with sub-suppliers and partners Overhead FY19 Cost improvements Target overhead 2020-21 costs FY21
© 2020 A New Era for an Industry in Transition July 17, 2020 Slide 24 Unaudited proforma figures Improved Financial Capacity and Cash Conversion
Expected to deliver NOK 1 billion+ in annual free cash flow Pro-Forma Capital Structure NOK Billion Aker Solutions Kvaerner ~3** Main Initiatives and Targets New Aker Solutions ■ Significant deleveraging of balance sheet ~3** ■ Positive credit profile impact 0.4 ■ Strong cash conversion 0.2* 1.7 4.8
2.5
Ambition Target cash cash Gross Cash NIBD generation generation debt Q2’20 Q2’20 Q3’20-YE’23 2024-25
* Cash position in jointly controlled entities ** excl. dividend (dividend policy to be decided)
© 2020 A New Era for an Industry in Transition July 17, 2020 Slide 25 Governance Structure
Management Board of Directors*
Leif-Arne Øyvind Kjell Inge Langøy Eriksen Røkke Kjetel Digre Idar Eikrem Chairman Director Director CEO, Aker Solutions CFO, Aker Solutions
New Executive Management Team
EVP EVP EVP EVP EVP EVP Jan Arve Birgit Aagaard- Lone Fønss Torill EMT to be appointed Haugan Svendsen Schrøder Widvey Director Director Director Director
*Proposed by nomination committee
© 2020 A New Era for an Industry in Transition July 17, 2020 Slide 26 High-Level Timeline and Regulatory Process
JUL Announcement to the Oslo Stock Exchange about the planned merger and transactions Notice of EGM: Distribution of shares for Aker Offshore Wind and Aker Carbon Capture
AUG EGM: Aker Offshore Wind and Aker Carbon Capture Distribution of shares and listing of Aker Offshore Wind and Aker Carbon Capture at Merkur Market Notice of EGM: Merger between Aker Solutions and Kvaerner
SEP EGM: Merger between Aker Solutions and Kvaerner
OCT End creditor notice period
NOV Deadline for competition authorities First day for merged Aker Solutions
© 2020 A New Era for an Industry in Transition July 17, 2020 Slide 27 Bringing Together Aker Solutions and Kvaerner
2020 © Aker Solutions July 17, 2020 Slide 28