Pareto World Wide Offshore AS - Pareto Project Finance
Pareto World Wide Offshore AS - Pareto Project Finance
Pareto World Wide Offshore AS - Pareto Project Finance
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<strong>Pareto</strong> <strong>World</strong> <strong>Wide</strong><br />
<strong>Offshore</strong> <strong>AS</strong><br />
2nd quarter report 2013<br />
Link: www.paretoprojectfinance.no/avdelinger/forvaltning/offshorefond
Executive Summary<br />
NAV NOK 117/share<br />
(as of 30.06.2013)<br />
The offshore oil services markets have continued to strengthen this year, with some of the lagging<br />
segments really coming to life. On the other hand, rising costs and increased undertainty about the<br />
global economic outlook are putting a damper on the oil industry’s investment appetite. The portfolio is<br />
performing well due to a high contract coverage and ways to realise underlying assets are constantly<br />
being monitored.<br />
Market Development<br />
<strong>Offshore</strong> oil service activity levels have continued to<br />
rise this year, with the most notable feature being<br />
some of the lagging segments of 2012 finally<br />
catching up. Particularly for offshore support<br />
vessels, the year to date performance has been<br />
particularly strong.<br />
The outlook continues to be promising, with rising<br />
order back-logs among industry players adding<br />
valuable visibility. On the other hand, the oil<br />
industry appears to be reacting to rising<br />
exploration- and production-costs, as well as<br />
heightened uncertainty about economic growth in<br />
emerging markets.<br />
So far, we have seen a few projects being put on<br />
hold, and consensus for global growth in exploration<br />
and production spending has come down. It<br />
appears that we should expect this to be in the<br />
5%-10% range in the near term, rather than double<br />
digit.<br />
During the summer, BassDrill Alpha has completed a<br />
USD 90m bond issue, to refinance existing bank<br />
debt. This exercise will free up significant capital to<br />
be paid out to the shareholders in the company. As<br />
a result, PWWO is in a position to make a large,<br />
extraordinary payment to its shareholders in<br />
September 2013. It is proposed that NOK 16 per<br />
share which will be proposed as a repayment of paid<br />
in capital to an extraordinary general assembly 28 th<br />
of August 2013 and paid out during the following<br />
days.<br />
The way forward<br />
The term of PWWO was extended to July 2015 at<br />
the Annual General Meeting in June 2013. The<br />
Manager and the Board are working to provide<br />
shareholders with stable realisation proceeds in the<br />
coming years, but shareholders should expect the<br />
term of PWWO to be extended further to enable a<br />
realisation of the portfolio at maximum value.<br />
Newbuild activity is also more subdued than what<br />
was the case last year. On the one hand, the<br />
swelling orderbooks for new rigs and modern subsea<br />
vessels will pose a challenge when it comes to<br />
absorbing the new capacity. Secondly, financing<br />
conditions are still difficult, which reduces the<br />
appetite for speculative newbuildings. In turn, this is<br />
positive for the longer term market balance.<br />
Portfolio<br />
PWWO retains a high contract coverage, currently at<br />
91% with an average contract length of 3.9 years.<br />
The bulk of the backlog is against solid and<br />
profitable counterparts.<br />
The portfolio is focused on modern assets and is<br />
well spread across several market segments and<br />
geographic regions. The high contract coverage is<br />
expected to result in an increase in incoming cash<br />
flow, which in turn will take down asset exposure<br />
and pave the way for increasing pay-outs to<br />
shareholders.
Net Asset Value Development (PWWO)<br />
NAV in PWWO was up 11% during H1’13, due to a strengthened USD and an overall increase in value<br />
of the portfolio. Overall, PWWO is likely to continue to benefit from underlying cash flows, while<br />
improving market conditions in oil services indicate an upside in asset values in the coming years.<br />
NAV development<br />
An increase in the value of the portfolio contributed<br />
to a 4% increase in NAV during H1’13, with the<br />
remaining being down to a strengthening of the<br />
USD. As a result, NAV ended up at NOK 117 per<br />
share at the end of Q2’13, adjusted for a NOK 10<br />
per share dividend that was approved in June and<br />
paid in July 2013.<br />
PWWO makes semi-annual NAV calculations.<br />
Accordingly, the next NAV will be published as of<br />
31.12.2013 and will be reported to investors in the<br />
report for the fourth quarter 2013.<br />
NAV is down 26% since inception in 2007. This poor<br />
return reflects the cyclical timing of PWWO’s<br />
inception, which started investing at the peak of the<br />
previous cycle, just as we headed straight into the<br />
2008 financial crisis. This is reflected in the fact that<br />
oil service stocks on the Oslo Stock Exchange are<br />
down 11% in the same period. That being said, the<br />
performance since the bottom has been reasonably<br />
good with NAV rising 56% since the end of 2009.<br />
This reflects the intense work to turn around<br />
troublesome projects with exit and contract<br />
opportunities having improved along with better<br />
markets.<br />
As seen in the graph below, the estimated values of<br />
the charters, charter free values, cash and debt in<br />
the projects constitute NOK 109 per share in PWWO.<br />
Cash, tax positions and cost provisions at the<br />
holding company net a positive NOK 22 per share.<br />
Direct yield<br />
PWWO strives to make cash distributions to<br />
shareholders as we move towards the end of the<br />
company’s life cycle in 2015. As a result, NOK 10<br />
per share was paid out in July 2013. An<br />
extraordinary distribution of NOK 16 is expected in<br />
September 2013 following the refinancing of<br />
BassDrill Alpha. All distributions have been<br />
repayments of paid in capital.<br />
Last 6 mths Last 12 mths Last 24 mths Since inception<br />
PWWO 11,4% 7,6% 21,1% -25,5 %<br />
Oslo Stock Exchange 5,6% 15,2% 11,3% -8,2%<br />
<strong>Offshore</strong> Index * -2,7% 7,5% 5,0% -11,7%<br />
* Based on OSE101010 Energy Equipment & Service<br />
260<br />
240<br />
220<br />
PWWO - NAV development<br />
NAV per share<br />
NAV per share (dividend adjusted)<br />
200<br />
PWWO - NAV Composition per share (NOK)<br />
Value of<br />
charters<br />
Cash in<br />
SPVs<br />
12<br />
Debt in<br />
SPVs<br />
200<br />
180<br />
160<br />
140<br />
120<br />
150<br />
100<br />
Charter<br />
free<br />
values<br />
70<br />
86<br />
Sellers'<br />
credit<br />
3<br />
Cash in<br />
PWWO<br />
12<br />
Tax<br />
14<br />
Other<br />
costs<br />
4<br />
NAV<br />
PWWO<br />
100<br />
80<br />
60<br />
Sep-07 Apr-08 Nov-08 Jun-09 Jan-10 Aug-10 Mar-11 Oct-11 May-12 Dec-12<br />
50<br />
116 117<br />
0
Net Asset Value Development (POK)<br />
NAV in the feeder company <strong>Pareto</strong> <strong>Offshore</strong>kapital <strong>AS</strong>A («POK») increased by 11,5% during H1’13 and<br />
is up 7,4% in the past 12 months. POK currently has more than 1,600 shareholders and the company<br />
acts as the main marketplace for second hand transactions for small, non-institutional investors.<br />
NAV development<br />
NAV as of 30.06.2013 was NOK 53, up 11,5% on the<br />
previous NAV as of 31.12.2012 and up 7,4% for the<br />
past year, both adjusted for the repayments of capital<br />
made to shareholders (NOK 5 per share in Q2’13).<br />
Direct yield<br />
PWWO strives to make cash distributions to<br />
shareholders as we move towards the end of the<br />
company’s life cycle in 2015. As a result, NOK 5 per<br />
share was approved in June and paid in July 2013. An<br />
extraordinary distribution of NOK 6 per share is<br />
expected in September 2013 following the refinancing<br />
of BassDrill Alpha. All distributions have been<br />
repayments of paid in capital.<br />
Last 6 mths Last 12 mths Last 24 mths Since inception<br />
POK 11,5% 7,4% 17,6% -27,1 %<br />
Oslo Stock Exchange 5,6% 15,2% 11,3% -8,2%<br />
<strong>Offshore</strong> Index * -2,7% 7,5% 5,0% -11,7%<br />
* Based on OSE101010 Energy Equipment & Service<br />
140<br />
POK - NAV development<br />
NAV per share<br />
NAV per share (dividend adjusted)<br />
120<br />
100<br />
80<br />
60<br />
40<br />
20<br />
Sep-07 Apr-08 Nov-08 Jun-09 Jan-10 Aug-10 Mar-11 Oct-11 May-12 Dec-12
Portfolio News<br />
PWWO is invested in a broad range of offshore projects, which implies a significant diversification<br />
across different asset types and market segments. This section provides an update on the quarter’s<br />
most important news flow related to the underlying investments.<br />
BassDrill Alpha Ltd<br />
The rig continues on a contract which will extend until<br />
well into 2015. The company has recently completed a<br />
USD 90m bond issue to refinance its currently<br />
outstanding USD 46m of bank debt. As a result of the<br />
increased leverage, the shareholders received a<br />
repayment of invested capital of USD 33m. This<br />
enables a significant capital distribution to PWWO’s<br />
shareholders in Sept’13. The bond loan has a 5-year<br />
term and carries interest of 7.5% p.a.<br />
Neptune Subsea IS<br />
Both vessels are employed on shorter term contracts in<br />
West Africa and Italy. The charterer appears to be<br />
struggling with its profitability, but has the backing of<br />
two very strong shareholders and are exposed to a very<br />
promising segment.<br />
Neptune <strong>Offshore</strong> <strong>AS</strong><br />
The company has been demerged so that PWWO is<br />
taken out of its position in the organisation and the<br />
underlying seismic project, while increasing its share in<br />
Neptune Subsea from 9,4% to 23,8%. This has been a<br />
significant part of PWWO’s exit-strategy and take down<br />
the operational and commercial risk of the portfolio.<br />
made available for new contracts and the response<br />
from the market so far has been good. We are<br />
therefore optimistic in seeing the vessel on a new<br />
charter in the near term. The project has a low level of<br />
debt and is financially sound.<br />
3B <strong>Offshore</strong> IS<br />
PWWO has already received NOK 300,000 in dividends<br />
from this project, which was acquired in Q4’12.<br />
New investments<br />
PWWO does not plan to make new investments, but<br />
may consider value adding follow up investments<br />
should they arise. The focus now is on realising the<br />
portfolio.<br />
<strong>Project</strong> sales<br />
There have been no straight project sales during H1’13.<br />
Payments from projects<br />
During H1’13, PWWO received dividend payments of<br />
NOK 1.5m from underlying projects. The funds from<br />
BassDrill Alpha have been received in Q3’13.<br />
Master & Commander IS<br />
The Phoenix continues on bareboat charter to CGG until<br />
2019. The Commander’s charter to Reflect Geophysical<br />
was cancelled in the spring as Reflect went into<br />
liquidation. The vessel is now in Singapore and ready<br />
for new contracts or alternatively a sale. The charter<br />
hire from CGG is more than sufficient to cover the debt<br />
obligation.<br />
Asian <strong>Offshore</strong> III IS<br />
The pool of 15 AHTS continues to operate to<br />
satisfaction. The first quarter of 2013 was very strong<br />
and the outlook for the rest of the year is good, after a<br />
temporary lull in Q2. The pool participants are close to<br />
finalising a working capital bank facility, which will<br />
significantly ease the burden of a significant amount of<br />
receivables outstanding.<br />
Vestland Seismic IS<br />
The end charterer of the vessel in this project, RXT<br />
Geophysical, has gone into liquidation and the charter<br />
has therefore been terminated. The vessel is now being
Portfolio<br />
The portfolio is highly robust, with most assets on long term contracts. There is only one newbuilding<br />
project. Assets on long term contracts make up 91% of the total exposure and are well distributed<br />
across the different offshore oil services segments.<br />
Investments and capital<br />
PWWO’s portfolio consists of 12 projects which owns<br />
stakes in 26 units. The average contract length is 3.9<br />
years and the contract coverage is 91%.<br />
The gross nominal value of the contract backlog is<br />
roughly NOK 610m and sufficient to cover all debt<br />
service costs and projected operating costs. Total debt<br />
in the projects amounts to around NOK 397m. The<br />
backlog is primarily made up by solid counterparts.<br />
PWWO had a cash holding of NOK 53m as of 30.06.13.<br />
There are only minor capital requirements in the<br />
underlying projects. However, the company has made<br />
an allocation for a dispute with Larsen Oil & Gas in<br />
connection with the Songa Eclipse. Overall, there is<br />
adequate capital available to make cash distributions<br />
to shareholders and to consider value adding follow up<br />
investments, should they arise.<br />
Charterparty Distribution based on NAV+commited<br />
Timecharter<br />
39 %<br />
Bareboat<br />
47 %<br />
Spot/Asset Play<br />
14 %<br />
Segment Distribution based on NAV+commited<br />
The life cycle of PWWO expires 1 July 2015, after the<br />
term was extended by one year at the general meeting<br />
in June 2013. The underlying projects are expected to<br />
yield good cash flow until then. Asset and/or portfolio<br />
sales will be considered at the opportune time to<br />
provide shareholders with the best possible exit<br />
values. Current market conditions indicate that exits<br />
should be made as late as possible to maximize<br />
values.<br />
The contracted cash flow is evenly spread across five<br />
main segments; rigs, supply, accommodation, seismic<br />
and subsea.<br />
Seismic<br />
9%<br />
Subsea<br />
28%<br />
Tender Rig<br />
39%<br />
PSV/AHTS (Asia)<br />
9%<br />
Accommodation PSV/AHTS<br />
12% (Europe)<br />
3%<br />
Asset sales from the underlying investments are<br />
planned upon the exit of existing contracts, which will<br />
primarily take place from 2015 and onwards.<br />
Therefore, PWWO does not need to expose itself to the<br />
current market conditions, where asset values are yet<br />
to reach their full potential.<br />
Charter hire backlog by counterpart<br />
Reef Subsea<br />
16%<br />
Swiber<br />
14%<br />
African <strong>Offshore</strong><br />
Services<br />
23%<br />
CGG<br />
4% Bourbon<br />
2%<br />
Total / CNR<br />
42%
Portfolio (continued)<br />
<strong>Project</strong> / company Contract Charterparty Charterer<br />
Proportion<br />
of NAV<br />
Bassdrill Alpha Ltd Dec-15 Timecharter Total / CNR 39,8 %<br />
Neptune Subsea IS Feb-17 Bareboat Reef Subsea 25,9 %<br />
ParBarge IS Jul-23 Bareboat African <strong>Offshore</strong> Services 8,7 %<br />
Vestland Seismic IS Sep-18 Spot/Asset play Albatross Shipping Ltd. 6,4 %<br />
Bukhit Timah <strong>Offshore</strong> DIS Jul-20 Bareboat Swiber <strong>Offshore</strong> Marine Pte 4,5 %<br />
Asian <strong>Offshore</strong> III IS Spot/Asset play 5,1 %<br />
<strong>Offshore</strong> Accommodation IS Dec-21 Bareboat African <strong>Offshore</strong> Services 3,1 %<br />
Master and Commander IS Mar-19 Bareboat CGG 2,5 %<br />
Iceman IS Spot/Asset play 1,4 %<br />
3B <strong>Offshore</strong> IS Nov-17 Bareboat Bourbon 1,2 %<br />
Carlisle Subsea IS Oct-15 Bareboat Hallin Marine Subsea International Ltd 1,4 %<br />
1000<br />
800<br />
600<br />
PWWO - Cash flow composition vs debt service, NOKm<br />
Capex (-) / Sale of assets (+)<br />
Spot EBITDA<br />
Contracted EBITDA<br />
Debt service<br />
PWWO - EBITDA composition<br />
Rigs<br />
16 %<br />
400<br />
200<br />
0<br />
Oil Service<br />
57 %<br />
Supply<br />
27 %<br />
-200<br />
2013 2014 2015 2016 - 2029<br />
500<br />
PWWO - Debt in projects, NOKm<br />
PWWO - Duration of contract backlog<br />
450<br />
400<br />
350<br />
300<br />
13<br />
13<br />
13<br />
Sellers credit<br />
Bank debt<br />
13<br />
1-2 years<br />
11 %<br />
250<br />
200<br />
150<br />
378<br />
460<br />
397<br />
325<br />
Later<br />
43 %<br />
3-4 years<br />
46 %<br />
100<br />
50<br />
0<br />
2013 2014 2015 2016 - 2029
Price per share<br />
Volume (Thousand NOK)<br />
Second Hand Market and Share Liquidity<br />
As of 30.06.2013 PWWO had 4.37m shares outstanding. <strong>Pareto</strong> <strong>Project</strong> <strong>Finance</strong> <strong>AS</strong> (”PPF”) strives to<br />
facilitate an active second hand market for shares. 80% of the shares in PWWO is owned by <strong>Pareto</strong><br />
<strong>Offshore</strong>kapital (POK), where the last trading price was NOK 33 per share (after the repayment of NOK<br />
5 per share). Investors who wish to buy or sell shares should contact their advisors.<br />
POK<br />
As of 30.06.2013 POK had 5.46m shares<br />
outstanding. The last trading price in POK was NOK<br />
33 per share and the previous five trades are<br />
displayed in the table below.<br />
From what brokers and investors tell us, this steep<br />
decline seems primarily driven by investors’<br />
preference for liquidity rather than future upside.<br />
The investment manager and the board will take<br />
this into consideration when working on the exit<br />
strategy.<br />
Date Share price No. of shares Volume (NOK)<br />
13.08.13 33 980 32 340<br />
09.08.13 33 6 861 226 413<br />
11.07.13 33 30 000 990 000<br />
05.07.13 33 980 32 340<br />
03.07.13 33 9 095 300 135<br />
Number of trades since startup: 472<br />
Volume traded since startup (NOK): 79 844 918<br />
200<br />
175<br />
150<br />
125<br />
<strong>Pareto</strong> <strong>Offshore</strong>kapital <strong>AS</strong>A - Second Hand Trades<br />
Volume traded<br />
Nav per share<br />
NAV per share (dividend adjusted)<br />
Second hand price per share<br />
10 000<br />
9 000<br />
8 000<br />
7 000<br />
6 000<br />
100<br />
5 000<br />
75<br />
50<br />
25<br />
4 000<br />
3 000<br />
2 000<br />
1 000<br />
0<br />
Jun-07 Jan-08 Aug-08 Mar-09 Oct-09 May-10 Dec-10 Jul-11 Feb-12 Sep-12 Apr-13<br />
Date<br />
0
The offshore oil services market<br />
The activity growth continues unabated, despite oil price volatility and uncertain financial markets. The oil industry<br />
is planning for the long term, driven by reserve replacement needs and production growth ambitions. In fact, the<br />
most negative factor this year has been project delays on political hurdles or late delivery of equipment, but this<br />
only adds to pent up demand going forward. Overall, there is reason to remain positive on this market in the future.<br />
The oil and gas markets<br />
The oil price has been range bound between USD 100-<br />
120/b in the past two years. This year, it has been in<br />
the low end of this range, primarily owing to<br />
uncertainty about economic growth, particularly in<br />
China.<br />
Source: EIA<br />
Overall, global upstream investments were up by 13%<br />
in 2012 and initial budgets call for a 10% increase in<br />
2013. This year’s plans were based on an average<br />
planning price of USD 98/b (Brent), which is USD 2/b<br />
higher than for 2012 and below the current oil price.<br />
However, rising costs for the oil companies may curtail<br />
the investment plans in the near term, so we have<br />
seen consensus forecasts for 2013 E&P spending<br />
growth drift downwards to 5%, more in line with the<br />
oil industry’s revised budgets for the year.<br />
Source: <strong>Pareto</strong> Securities<br />
Favourable supply / demand outlook<br />
The average growth in global E&P spending has been<br />
12% during the past twelve years. The activity growth<br />
in offshore oil services has averaged 14% in the same<br />
period, so it seems we can continue to expect robust<br />
market growth, based on the oil industry’s investment<br />
budgets.<br />
Source: <strong>Pareto</strong> Research<br />
Demand and capacity growth in oil services<br />
Capacity Grow th<br />
Avg demand<br />
grow th 2000-12 2013e 2014e<br />
PSV > 3,000 dw t 16% 26% 13%<br />
AHTS > 15,000 BHP 13% 13% 6%<br />
UDW rigs 17% 12% 19%<br />
Subsea, vsls > 90m LOA 13% 11% 8%<br />
High end seismic vsls 9% 4% 7%<br />
Average 14% 13% 11%<br />
Source: <strong>Pareto</strong> Research<br />
Since our previous report, the drilling markets have<br />
been stable at a very strong levels. There has been a<br />
solid improvement in the seismic markets, with the<br />
players filling up the capacity for this year early and at<br />
good prices. In the subsea market, the order intake<br />
remains strong, which should mean that the vessel<br />
markets are set for an uptick in activity from 2014 and<br />
onwards.<br />
The AHTS and PSV markets have fared much better<br />
than feared this year. A lot of the spot market PSVs in<br />
the North Sea was taken on term contracts by the oil<br />
companies early and at reasonably good rates. As a<br />
result, the remaining vessels in the spot market have<br />
seen a recovery in rates. AHTS rates were lacklustre at<br />
the start of the year, but have now jumped to high<br />
levels. The order book for new AHTS is low, while it is<br />
still significant for PSVs and continue to represent a<br />
potential drag on rates.<br />
Overall, the difficult financing conditions should reduce<br />
the appetite for speculative newbuildings.
The offshore oil services market<br />
Seismic market outlook<br />
The seismic market has been brisk this year with high<br />
day rates and utilization. The tendering activity<br />
remains at a high level, although day rate expectations<br />
for the upcoming winter season has been trimmed<br />
somewhat, following an active fixture period in the<br />
spring. Overall, the outlook remains positive, although<br />
maybe not as bullish as some may have expected. On<br />
a positive note, though, the supply growth in the<br />
industry is relatively limited, so the market balance<br />
should remain tight.<br />
Subsea outlook<br />
Source: PGS, <strong>Pareto</strong> Research<br />
The strong book-to-bill ratio of 1.3x during 2012 for<br />
the large subsea contractors indicate substantial<br />
growth in this market in the coming years. The order<br />
intake has continued in recent months, with Subsea7<br />
racing in more than USD 1bn of orders in the past<br />
month alone. There was a substantial speculative<br />
newbuild ordering activity last year, primarily from<br />
Norwegian owners, but it is still expected that there<br />
will be some capacity shortage in the coming years.<br />
Supply vessel outlook<br />
Source: ODS Petrodata, <strong>Pareto</strong> Research<br />
The AHTS market has surged in Q2’13, apparently<br />
catching up on work that was delayed from 2012. The<br />
number of vessels active in the North Sea spot market<br />
is unchanged from a year ago, and so the rate<br />
increases come from an increase in demand, primarily<br />
related to more rig moves. It is expected that the<br />
market will remain tight going forward and in the long<br />
term, the outlook is positive as there is limited new<br />
capacity coming in.<br />
The PSV market has been held as a weak spot, but has<br />
surprised positively this year. A significant chunk of<br />
the available spot fleet was fixed early this year as the<br />
oil companies took the opportunity to lock in<br />
significant capacity for their programs. Statoil alone<br />
took 15 vessels on term contracts, with other players<br />
following suit, It is expected that the market will<br />
remain tight towards the end of the year. So far, there<br />
has been limited ordering of new capacity this year, at<br />
least for North Sea spec vessels.<br />
Source: ODS Petrodata, <strong>Pareto</strong> Research
Fund Management Team<br />
Johan Anker-Rasch<br />
Richard Jansen<br />
Head of Fund Management<br />
Head of Fund Management<br />
Real Estate<br />
Shipping/<strong>Offshore</strong><br />
Phone: + 47 22 01 58 73 Phone: + 47 22 01 58 96<br />
E-mail: jar@pareto.no<br />
E-email: richard.jansen@pareto.no<br />
Jonathan Andreas Barfod<br />
Patrick Kartevoll<br />
Fund Manager<br />
Fund Manager<br />
Real Estate<br />
Shipping/<strong>Offshore</strong><br />
Phone: + 47 22 01 58 46 Phone: + 47 22 01 58 79<br />
E-mail: jab@pareto.no<br />
E-mail: patrick@pareto.no<br />
Dronning Mauds Gate 3, P.O. Box 1396 Vika, NO-0114 Oslo, Norway, Tlf: 22 87 87 00, www.pareto.no
Disclaimer<br />
This Quarterly Report has been prepared in order to<br />
provide information about <strong>Pareto</strong> <strong>World</strong> <strong>Wide</strong> <strong>Offshore</strong><br />
<strong>AS</strong> (“PWWO” or the “Company”) and must not be<br />
considered an offer to trade in the shares of the<br />
Company.<br />
actual events to differ materially from any anticipated<br />
development. All investors must verify these<br />
assumptions themselves. The company cannot give any<br />
assurance as to the correctness of such information and<br />
statements.<br />
Information contained in this Quarterly Report is<br />
obtained by <strong>Pareto</strong> <strong>Project</strong> <strong>Finance</strong> <strong>AS</strong> (“<strong>Pareto</strong> <strong>Project</strong><br />
<strong>Finance</strong>”, “<strong>Pareto</strong>”, or “PPF”). Information is presented<br />
to the best of our efforts and knowledge, but <strong>Pareto</strong><br />
<strong>Project</strong> <strong>Finance</strong> <strong>AS</strong> cannot guarantee that the<br />
information is correct or all inclusive. <strong>Pareto</strong> <strong>Project</strong><br />
<strong>Finance</strong> <strong>AS</strong> takes no responsibility for any loss caused<br />
by information given being misleading, wrongful or<br />
incomplete nor for any other loss suffered as a<br />
consequence of investments made in the Company.<br />
Historic returns and return forecasts do not constitute<br />
any guarantee for future returns. Returns may vary as<br />
a consequence of fluctuations in currency exchange<br />
rates. Investors should be aware that there is<br />
significant uncertainty related to valuations in the<br />
current volatile market. The valuation process is<br />
described in PPF’s market report as per February 2013.<br />
Risks and costs are further described in the prospectus<br />
(information memorandum) produced in relation to<br />
share issues in the Company.<br />
This Quarterly Report includes and is based on, among<br />
other things, forward-looking information and<br />
statements. Such forward-looking information and<br />
statements are based on the current expectations,<br />
estimates and projection of the company or<br />
assumptions based on information available to the<br />
company and <strong>Pareto</strong> <strong>Project</strong> <strong>Finance</strong> <strong>AS</strong>. Such forwardlooking<br />
information and statements reflect current<br />
views with respect to future events and are subject to<br />
risks, uncertainties and assumptions that may cause<br />
The contents of this presentation are not to be<br />
construed as legal, business, investment or tax advice.<br />
Each recipient should consult with its legal-, business-,<br />
investment-, and tax advisors as to legal, business,<br />
investment and tax advice. Specifically, <strong>Pareto</strong> <strong>Project</strong><br />
<strong>Finance</strong> <strong>AS</strong> has been engaged as the company’s<br />
financial advisor and does not render – and shall not be<br />
deemed to render – any advice or recommendations as<br />
to a transaction.