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Scorpio Tankers Inc. Company Presentation June 2018

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Scorpio Tankers Inc. Company Presentation June 2018 Scorpio Tankers Inc. Company Presentation June 2018 1 1 Company Overview Key Facts Fleet Profile Scorpio Tankers Inc. is the world’s largest and Owned TC/BB Chartered-In youngest product tanker company 60 • Pure product tanker play offering all asset classes • 109 owned ECO product tankers on the 50 water with an average age of 2.8 years 8 • 17 time/bareboat charters-in vessels 40 • NYSE-compliant governance and transparency, 2 listed under the ticker “STNG” • Headquartered in Monaco, incorporated in the 30 Marshall Islands and is not subject to US income tax 45 20 38 • Vessels employed in well-established Scorpio 7 pools with a track record of outperforming the market 10 14 • Merged with Navig8 Product Tankers, acquiring 27 12 ECO-spec product tankers 0 Handymax MR LR1 LR2 2 2 Company Profile Shareholders # Holder Ownership 1 Dimensional Fund Advisors 6.6% 2 Wellington Management Company 5.9% 3 Scorpio Services Holding Limited 4.5% 4 Magallanes Value Investor 4.1% 5 Bestinver Gestión 4.0% 6 BlackRock Fund Advisors 3.3% 7 Fidelity Management & Research Company 3.0% 8 Hosking Partners 3.0% 9 BNY Mellon Asset Management 3.0% 10 Monarch Alternative Capital 2.8% Market Cap ($m) Liquidity Per Day ($m pd) $1,500 $12 $10 $1,000 $8 $6 $500 $4 $2 $0 $0 Euronav Frontline Scorpio DHT Gener8 NAT Ardmore Scorpio Frontline Euronav NAT DHT Gener8 Ardmore Tankers Tankers Source: Fearnleys June 8th, 2018 3 3 Product Tankers in the Oil Supply Chain • Crude Tankers provide the marine transportation of the crude oil to the refineries. • Product Tankers provide the marine transportation of the refined products to areas of demand. • Structural demand drivers in the product tanker industry: • US has emerged as a refined products powerhouse, becoming the worlds largest product exporter • Changes in refinery locations, expansion of refining capacity in Asia and Middle East as well as a reduction in OECD refining capacity (Europe & Australia). • Changes in consumption demand growth in Latin America, Africa, and non-China/Japan Asia and lack of corresponding growth in refining capacity • Balance of trade: needs of each particular region- gasoline/diesel trade between U.S./Europe is a prime example of this given significantly different diesel penetration rates for light vehicles • Europe imports surplus diesel from the United States, and exports surplus gasoline to the United States. Exploration & Crude Transportation Refining Products Terminalling & Production Transportation Distribution Refined products are moved from Terminals are located closer to Oil production includes drilling, Crude oil is transported to the Refineries convert the crude oil the refinery to the end users via transportation hubs and are the extraction, and recovery of oil refinery for processing by crude into a wide range of consumable product tankers, railcars, final staging point for the refined from underground. tankers, rail cars, and pipelines. products. pipelines and trucks. fuel before the point of sale. 4 4 Product and Crude Tankers Tankers “Dirty” “Clean” Crude Products Vessel VLCC Suezmax Aframax Panamax Handysize LR2 LR1 Hmx/MR Handysize Size (200,000 + (120,000 - (80,000 - (60,000 - (< 60,000 (80,000- (60,000- (25,000- (<25,000 DWT) 200,000 DWT) 120,000 DWT) 80,000 DWT) DWT) 120,000 DWT) 80,000 DWT) 60,000 DWT) DWT) Cargo 2,000,000 1,000,000 500,000- 350,000- <=350,000 615,000- 345,000- 200,000- <=200,000 Size bbls bbls 800,000 bbls 500,000 bbls bbls 800,000 bbls 615,000 bbls 345,000 bbls bbls Chemicals Naphtha Clean Clean Condensate Products Jet Fuels - Kerosene - Gasoline - Vegoil - Gasoils - Diesels Dirty Cycle Oils Fuel Oils Products Crude Oil 5 5 Cargo Carriage 2017 MR Cargo Carriage 2017 LR2 Cargo Carriage 2017 Condensate, Edible Oil, 1.7% 1.4% Other, 0.5% Other, 2.1% Kerosene/Jet, 5.8% Kerosene/Jet, 8.9% Gasoline, 11.3% Naphtha, 9.2% Gasoline, 41.2% Diesel/Gas Oil, 52.1% Naphtha, Diesel/Gas Oil, 28.8% 25.3% 6 6 Company Highlights • 109 owned ECO product tankers on the water with an average age of Youngest & largest product 2.8 years tanker fleet in the world ✓ Vessels employed in Scorpio • The worlds largest product tanker operating platform with track record of pools ✓ consistently outperforming the market Significant operating • A $1,000/day change in rates equates to $39.7 million in annualized leverage ✓ cash flow • Reduction in global inventories means further consumption will have to be met by imports rather than being subsidized by inventory drawdowns Short term drivers support • Asset values and time charter rates have increased y-o-y reflecting market inflection point ✓ improving market fundamentals • Remaining orderbook provides favorable supply / demand Positive long term market • Refinery capacity expansions continue to move closer to the well head, fundamentals ✓ increasing ton mile demand 7 7 Scorpio has the Largest & Youngest Product Tanker Fleet Largest & Youngest Product Tanker Fleet Scorpio Average Age vs. Worldwide Fleet 14 HM & MR LR1 LR2 Total Avg. Age of Vessels 13.0 Scorpio Tankers 120 (Owned Fleet Only) Active Fleet 12 100 10 9.6 38 9.5 80 8.1 8 11 12 7 60 6 11 11 5 4 13 40 10 4 3.7 3.4 59 59 41 2.6 2.1 20 34 33 36 2 11.1 9.8 10.1 8.0 2.8 3.8 0 0 Scorpio TORM SCF Group COSCO Sinokor A.P. Moller Handymax MR LR1 LR2 Tankers Figures do not include newbuilding vessels on order. Source: Clarksons Research Services, June 2018 8 8 Scorpio Pools Provide World’s Largest Operating Platform • Scorpio’s trading platform operates the largest product tanker fleet in the market with over 165 vessels under commercial management Top Product Tanker Operators Top HM/MR Operators Top LR Operators 180 120 70 165 106 160 102 59 60 100 53 140 81 50 120 120 115 80 67 40 100 60 81 80 30 26 22 60 40 20 40 20 10 20 0 0 0 Scorpio Hafnia/Straits Maersk Norient Scorpio Maersk Norient Hafnia/Straits Scorpio Hafnia/Straits Prime Navig8 Tankers Tankers Figures do not include newbuilding vessels on order. Source: Company Websites & Vessel Values, May 2018 9 9 Scorpio Pools Have Consistently Outperformed Market Pool Performance ($/day) $30,000 Scorpio Handymax Pool Handymax Benchmark (TD16 - TD18 - TC6 - BALTIC/CONT) $20,000 Scorpio Handymax Tanker Pool (SHTP) $10,000 $0 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3-17 Q4-17 Q1-18 $30,000 Scorpio MR Clarksons MR Scorpio MR $20,000 Tanker Pool (SMRP) $10,000 $0 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4-17 Q1-18 $50,000 Scorpio LR2 LR2 Benchmark (AG/EAST - AG/WEST - UKC/EAST) $40,000 Scorpio LR2 $30,000 Tanker Pool $20,000 (SLR2P) $10,000 $0 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4-17 Q1-18 10 10 What if STNG Earned the 2015 Daily Rates in 2017? LR2 LR1 MR Hmx Total Average Vessels: Owned 27.5 4.9 41.7 14.0 88.1 TC-in/BB-in 1.2 0.4 8.8 8.1 18.5 28.7 5.3 50.5 22.1 106.6 Days in the Year 365 365 365 365 365 Number of Days 10,476 1,935 18,433 8,067 38,909 2015 Daily TCE $30,544 $21,804 $21,803 $19,686 2017 Daily TCE $14,849 $11,409 $12,975 $11,706 Difference in Daily TCE $15,695 $10,395 $8,828 $7,980 Incremental Rev/Income $164,412,973 $20,109,128 $162,722,110 $64,370,670 $411,614,880 2017 Weighted Avg Shares 215,333,402 Incremental EPS and Cash Flow per Share $1.91 Applying the average fleet in 2017 to the Company TCE earnings in 2015 generates an EPS of $1.91 11 11 Significant Operating Leverage to a Market Recovery • Only taking into consideration the Company’s 109 owned vessels, a $1,000/day change in rates equates to $39.7 million in annualized cash flow • Applying the actual TCE rates earned by the Company in 2015 to its larger fleet today, the Company would generate $978 million 2015A Rates Annualized Revenue Class # of Vessels Days/Yr Total Days ($/day) (Millions $USD) HM 14 365 5,110 $19,686 $101 MR 45 365 16,425 $21,803 $358 LR1 12 365 4,380 $21,804 $96 LR2 38 365 13,870 $30,544 $424 109 39,785 Total Revenue $978 Historical One Year TC Rates ($/day): 2003-2017 Implied Revenue from Historical TC Rates $1,400 Class Min Avg Max $1,208 $1,200 HM $11,430 $16,204 $24,683 $1,000 $794 $800 MR $13,160 $17,784 $27,000 $600 $531 LR1 $12,995 $20,937 $31,904 $400 $200 LR2 $14,391 $23,615 $35,950 $0 Min Avg Max The one year time charter rate “TC rate” is the rate paid per day to contract a vessel out for one year, and the time charter equivalent rate (“TCE”) which is the earnings per day for a vessel operating in the spot market. 12 Source: Clarksons Research Services 12 Asset Values & Time Charter Rates Newbuilding Prices One Year TC Rate ($/day) $60 $35,000 $55 $30,000 $50 $25,000 $45 $20,000 Million $USD Million $40 $15,000 $35 $10,000 $30 $5,000 $25 $0 May-14 Nov-14 May-15 Nov-15 May-16 Nov-16 May-17 Nov-17 May-18 May-14 Nov-14 May-15 Nov-15 May-16 Nov-16 May-17 Nov-17 May-18 HM MR LR1 LR2 HM MR LR1 LR2 Resale Prices Baltic Clean Tanker Index $70 800 $65 750 $60 700 $55 650 $50 600 $45 550 Million $USD Million $40 500 $35 450 $30 400 $25 350 $20 May-14 Nov-14 May-15 Nov-15 May-16 Nov-16 May-17 Nov-17 May-18 300 Apr-14 Sep-14 Feb-15 Jul-15 Dec-15 May-16 Oct-16 Mar-17 Aug-17 Jan-18 Jun-18 HM MR LR1 LR2 Source: Clarksons Research Services, June 2018 13 13 Ballast Water Treatment Systems • The IMO will require all vessels trading internationally to a install ballast water treatment system (BWTS) after September 8, 2019 at their next special survey.
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