SBM Offshore 2015 Full-Year Earnings

Positive free cash allows return to dividend

SBM Offshore is pleased to report revenue and net debt reduction in line with expectations. Although industry challenges have led to continued postponement of client investment decisions, the Company’s predominant activity of leasing, operating and maintaining FPSOs is generating positive cash flows. Consequently, following a five year hiatus, a cash dividend payment of US$0.21 per share is being proposed. Additionally, discussions with Brazilian authorities have progressed to the point of making a compliance settlement provision.

Bruno Chabas, CEO of SBM Offshore, commented:

“Looking back, much was accomplished over the last year. Complex projects progressed according to client schedule, safety performance continued to improve, the lease fleet continued its strong record of reliability, project financing was obtained at attractive prices and net debt targets were surpassed. In-line with developments in the industry, Turnkey backlog continues to decrease providing lower visibility in the short-term. Meanwhile, the Lease and Operate segment is generating positive income, turning SBM Offshore’s Free Cash Flow positive in 2016. The reorganization of the Company continued in 2015 with the intention to reduce costs while retaining the core competencies that are the bedrock to recovery in a market upturn. It is critical that we protect our future and have the ability and the people to be well placed to benefit from the expected recovery.”

Financial Highlights

• Directional[1] revenue in line with expectations at US$2.6 billion
• Underlying Directional[1]EBIT of US$348 million and underlying EPS of $0.85 per share
• Proportional net debt at the end of December stood at US$3,147 million
• US$245 million provision for settlement in Brazil
• Project financing totaling US$2.35 billion secured
• Reinstatement of cash dividend of US$0.21 per share

2015 COMPANY OVERVIEW

Corporate Social Responsibility

The Company has continued to achieve improved safety performance in 2015 with the lowest frequencies of recordable injuries and lost time injuries since 2007. Total Recordable Injury Frequency Rate (TRIFR) remained flat year-on-year at 0.22, while the Lost Time Injury Frequency Rate (LTIFR) improved by 40% to 0.03 in 2015 from 0.05 at the end of 2014.

The volume of gas flared was 26% better than target, however GHG emissions per unit of production increased 38% compared to 2014 mainly due to the absence of gas export infrastructure in Angola. Offshore energy consumption and oil discharged from produced water improved compared to last year and was 64% better than the industry benchmark.

For the sixth consecutive year running, SBM Offshore has been included in the Dow Jones Sustainability Index with an overall improved position. This is credit to efforts to incorporate all Environmental, Social and Governance elements in the Company’s day-to-day business and how it deals with all its stakeholders.

In addition, the Company received notification in December 2015 of its inclusion in the Euronext Vigeo Benelux 20 Index, which includes the 20 most advanced companies in the Benelux region in terms of Environmental, Social and Governance performances.

Compliance

Over the course of 2015 discussions with Brazilian authorities and Petrobras have progressed to the point where the Company is providing US$245 million for a possible settlement. While discussions are at an advanced stage, timing of a settlement announcement as well as the size of any potential final settlement amount remain to be confirmed.

On December 17, 2015 the Brazilian Public Prosecutor’s Office made allegations regarding several people in Brazil and abroad, including a number of current and former employees of the Company, of whom one is a U.S. citizen.

On January 15, 2016, the Company was informed that the judge in Brazil referred the above allegations with regard to the Company’s CEO and a member of its Supervisory Board back to the Public Prosecutor to propose an out-of-court settlement, on a no admission of guilt basis, as is common for misdemeanors of the kind alleged.

On January 25, 2016, the Company announced the settlement of the allegations made regarding the Company’s CEO and a member of its Supervisory Board. This settlement is still subject to approval by the court.

Subsequently, the United States Department of Justice has informed SBM Offshore that it has re-opened its past inquiry of the Company and has made information requests in connection with that inquiry. The Company is seeking further clarification about the scope of the inquiry. The Company remains committed to close-out discussions on this legacy issue which the Company self-reported to the authorities in 2012 and for which it reached a settlement with the Dutch Public Prosecutor in 2014.

Project Review

FPSO Cidade de Maricá (Brazil)

Cidade de Maricá topside integration work at the joint venture Brasa yard outside of Rio de Janeiro has been completed. The vessel sailed away from the Brasa yard on December 19, 2015 and is on location undergoing first oil readiness acceptance testing. The charter contract includes an initial period of 20 years. Delivery of the vessel to client Petrobras is scheduled for first quarter 2016.

FPSO Cidade de Saquarema (Brazil)

Construction is ongoing for the finance leased vessel. Cidade de Saquarema has been undergoing topside module integration at the joint venture Brasa yard outside of Rio de Janeiro since December 20, 2015. The charter contract for the vessel includes an initial period of 20 years. Delivery to client Petrobras is scheduled for mid-2016.

FPSO Turritella (US Gulf of Mexico)

Construction was completed on the finance leased vessel at the yard in Singapore. The vessel has arrived on location in the U.S. Gulf of Mexico. Start-up of the facility is expected in mid-2016. The charter contract includes an initial period of 10 years with extension options up to a total of 20 years.

FPSO Marlim Sul (Brazil)

Decommissioning confirmation was received from the client. Decommissioning activities have recommenced and are expected to be completed in the first quarter of 2016. The vessel received a decommissioning dayrate through the end of the third quarter of 2015. Following its decommissioning, the vessel will be marketed for future conversion opportunities.

Turrets & Mooring Systems

The two large, complex turrets for Prelude FLNG and FPSO Ichthys were delivered to the respective yards for integration during the period. Commissioning is underway in accordance with clients’ schedules and contractual planning for both. BP’s FPSO Glen Lyon, for which the Company successfully delivered the Quad204 turret, is now on location in the North Sea.

Main Projects Overview

Turritella Joint Venture

Effective June 30, 2015 SBM Offshore completed the divestment of a 45% stake in the Turritella project to joint venture partners Mitsubishi Corporation and Nippon Yusen Kabushiki Kaisha. The total partners’ cash contribution to the Turritella project is expected to amount to approximately US$590 million, of which US$488 million was received in fiscal year 2015.

Directional[1] Backlog

Directional[1]backlog at the end of December 2015 came in at US$18.9 billion compared to US$21.8 billion at the end of 2014. While this reflects US$2.6 billion of revenue generated in 2015 and the low level of order intake for the Turnkey segment, it also emphasizes the resilience and excellent long-term visibility of the Lease and Operate portfolio revenue.

Directional[1]Turnkey backlog decreased to US$0.5 billion compared to US$1.1 billion in 2014 as no major Turnkey orders were signed in 2015. As market conditions continue to deteriorate, order intake continued to be impacted by delays in client final investment decisions.

Order Intake

Total order intake in 2015 amounted to US$0.4 billion including new orders signed for US$0.2 billion. No major new orders were signed during the period.

Funding

As of December 31, 2015, SBM Offshore had cash and undrawn committed credit facilities totaling US$2,681 million (IFRS).

New project financings were secured for both FPSOs Cidade de Saquarema and Turritella joint ventures at attractive rates in the amounts of US$1.55 billion and US$800 million, respectively.

Proportional net debt at year-end amounted to US$3,147 million versus US$3,298 million in the year-ago period. The decrease is mainly related to the funding provided by the new joint-venture partners in the FPSO Turritella project and strong cash flow generation of the Lease and Operate segment. This was partially offset by the ongoing investments in the three FPSOs under construction (Directional[1]capital expenditure of US$443 million) and a strong reduction in accounts payable. Net gearing (net debt to equity) at the end of the year stood at 150%, slightly lower than in 2014. As in previous years, the Company has no off-balance sheet financings. The year-end 2015 average cost of debt stood at 4.1% versus 4.2% at year-end 2014.

Investing in the Future

In 2015, SBM Offshore completed an in-depth review of its ways of working, its global presence and the size of its workforce. The Company concluded that to retain the ability to win and execute FPSO, FPU and Turret contract awards, it needed to specialize and concentrate knowledge by product line, which are now assigned to its regions. Although each region has seen substantial workforce reductions, no regional engineering center closures are planned.

Workforce reductions over 2015 totaled approximately 3,200 positions. Approximately 1,500 were full-time employees and contractor staff. The remaining 1,700 were construction yard positions related to the winding down of projects under construction. Restructuring costs totaled US$55 million over 2015. Overall restructuring costs of US$63 million, including US$8 million of charges in 2014, are expected to generate annualized savings of approximately US$80 million.

Given the prolonged downturn a further 400 positions are expected to be eliminated in 2016 at a cost of US$30 million. This additional action is expected to generate a further US$40 million of annualized cost savings in addition to the previously announced savings of US$80 million beginning in 2016.

While client investment decisions continue to be postponed, the Company has taken a view that a recovery is unlikely before 2018. Nevertheless, the Company will maintain an engineering overcapacity to position itself for a future market upturn. This leads to cumulative Directional[1]Turnkey EBIT losses of approximately US$150 million over 2016 and 2017. Should the industry downturn persist additional steps will be considered to manage the Company’s cost base.

Dividend

The Company has elected to reinstate a cash dividend, to be approved at the Annual General Meeting (AGM) of Shareholders on April 6, 2016, totaling US$45 million or US$0.21 per share. This corresponds to 25% of the Company’s US$180 million underlying Directional[1]net income, which is exceptionally adjusted for non-recurring compliance related events.

The annual dividend will be calculated in US Dollars, but will be payable in Euros. The conversion into Euros will be effected on the basis of the exchange rate on April 6, 2016. Given the Company’s strong cash position, the dividend will be fully paid in cash.

Management & Supervisory Board

On November 4, 2015 during the Extraordinary General Meeting of Shareholders, Bruno Chabas was re-elected with 99.75% of the votes and reappointed as a member of the Management Board for a second term of four years up to the Annual General Meeting (AGM) of Shareholders in 2020. Mr. Chabas has been designated by the Supervisory Board to continue his role as Chief Executive Officer of the Company.

Mr. P.M. van Rossum’s first term as Management Board member and CFO expires at the Company’s Annual General Meeting of Shareholders on April 6, 2016. The Supervisory Board will propose to the Company’s 2016 AGM to reappoint Mr. van Rossum as a member of the Management Board for a new four year term. Mr. van Rossum has indicated his intention to retire after the 2017 AGM subject to a successor being in place. Consequently, the Company will start the selection process for a successor.

Messrs. F.G.H. Deckers and T.M.E. Ehret will complete their second term as Supervisory Board members during the AGM on April 6, 2016. SBM Offshore’s Supervisory Board will propose to the Company’s 2016 AGM that both are reappointed for a third and final term of four years as Supervisory Board members.

Outlook and Guidance 2016

The downturn persists and client investment decisions are postponed further. Management maintains its positive medium to long-term outlook as the Company considers offshore development to be a crucial component of the overall energy mix to meet future demand.

The Company is providing 2016 Directional[1]revenue guidance of US$2.0 billion, of which US$0.6-0.7 billion is expected in the Turnkey segment and US$1.3-1.4 billion in the Lease and Operate segment. The Company has also elected to introduce 2016 Directional[1]EBITDA guidance of around US$750 million.

Directional[1]capital expenditure guidance for the remaining three finance lease vessels under construction is expected to be approximately US$90 million. Directional[1] capital expenditure excludes changes in net working capital and is presented net of SBM Offshore’s share of upfront client payments for FPSOs Cidade de Maricá and Cidade de Saquarema.

Master Limited Partnership[2]

Following the completion of a strategic review of alternatives, the Company announced on November 13, 2014 its intent to pursue the development of a master limited partnership (MLP). Structuring work is progressing with the Company working towards receiving the required regulatory approvals and filing a registration statement with the Securities and Exchange Commission. The contemplated initial public offering of common units is subject to market conditions, which are not encouraging at the moment.

Post-Period Event

Sea Lion FPSO FEED

Premier Oil plc (Premier) awarded the Company the Front-End Engineering and Design (FEED) contract for an FPSO for Phase 1 of its Sea Lion development in the North Falkland Basin.

The 18-month contract awarded to SBM Offshore covers the FEED elements of the proposed FPSO. The asset will be a converted FPSO with a throughput capacity of approximately 85,000 barrels per day and will operate in 450 meters of water.

Annual Report 2015

SBM Offshore has published its 2015 audited statutory Annual Report on its website today, which includes the full financial statements and notes to the accounts. The Company will also file the 2015 Statutory Annual Report with the Dutch Financial Markets Authority.

FINANCIAL REVIEW

Highlights – Directional[1]Performance

Directional[1]consolidated net income for 2015 came in at US$24 million versus US$84 million in 2014. This result includes non-recurring items which generated a net loss of US$157 million in 2015 compared to a net loss of US$265 million in 2014. Excluding non-recurring items all relating to compliance issues, 2015 underlying consolidated Directional[1]net income attributable to shareholders stood at US$180 million, a decrease from US$349 million in the year-ago period, mainly attributable to lower Turnkey segment activity.

Reported consolidated 2015 IFRS total net income was US$110 million versus US$652 million in 2014. IFRS net income attributable to shareholders amounts to US$29 million compared to US$575 million in 2014.

Directional[1]earnings per share (EPS) in 2015 amounted to US$0.11 compared to US$0.40 per share in 2014. Adjusted for non-recurring items, underlying Directional[1]EPS decreased by 49% year-on-year from US$1.67 in 2014 to US$0.85.

IFRS Net Debt at the year-end totaled US$5,208 million versus US$4,775 million in 2014. All bank covenants were met and available cash and undrawn committed credit facilities stood at US$2,681 million.

New orders for the year totaled US$248 million as a result of current market downturn, which compares to US$3,124 million achieved in 2014.

Directional[1]revenue decreased by 26% to US$2,618 million compared to US$3,545 million in the year-ago period. IFRS revenue decreased by 51% to US$2,705 million versus US$5,482 million in 2014. This was mainly attributable to lower Turnkey segment revenues.

Directional[1]backlog at the end of 2015 remained high at US$18.9 billion compared to US$21.8 billion at the end of 2014. This reflects a significantly reduced level of order intake in 2015 and a predominant Lease and Operate portfolio consisting of US$18.3 billion at year-end.

Directional[1]EBITDA amounted to US$561 million, representing a 16% increase compared to US$486 million in 2014. This figure includes non-recurring net costs totalling US$157 million.

IFRS EBITDA amounted to US$462 million, representing a 50% decrease compared to US$925 million in 2014. This figure includes non-recurring net costs totalling US$157 million.

Directional[1]EBIT decreased slightly to US$191 million after non-recurring net costs of US$157 million. This compares to US$201 million in 2014 which included US$236 million of non-recurring costs.

IFRS EBIT decreased sharply to US$239 million after non-recurring net costs of US$157 million. This compares to 2014 EBIT of US$726 million, which included US$227 million of non-recurring costs.

The year was marked by the following financial highlights:

• Low level of new orders of US$248 million impacted by the market downturn driving Directional[1] backlog to US$18.9 billion.
• On June 30, 2015 SBM Offshore completed the divestment of a 45% stake in the Turritella project to joint venture partners Mitsubishi Corporation (MC) and Nippon Yusen Kabushiki Kaisha (NYK Line). The total joint venture partners’ cash contribution to the Turritella project for their share in the construction costs is expected to amount to approximately US$590 million.
• On March 16, 2015, the Company signed a Memorandum of Understanding (MoU) with the Brazilian Comptroller General’s Office (Controladoria-Geral da União – “CGU”) and the Attorney General’s Office (Advocacia-Geral da União – “AGU”), setting a framework between the Company, the CGU and the AGU for discussions on a potential mutually acceptable settlement and for the disclosure by SBM Offshore of information relevant to the CGU’s investigations. Whilst these discussions, which also include the Public Prosecutor’s Office (Ministério Público Federal – “MPF”) and Petrobras, are still ongoing, it has become sufficiently clear that a resolution of the issues will have a financial component. Consequently, based on information currently available to it, SBM Offshore has recorded a provision of US$245 million in the year-end financial results of 2015. While discussions are at an advanced stage, timing of a settlement announcement as well as the size of any potential final settlement amount remain to be confirmed.
• Workforce reductions over 2015 totaled 3,200 positions as a result of a thorough review of the cost structure in light of the current market downturn. Restructuring costs of US$55 million were recorded during the period and the Company anticipates realizing annualized savings of approximately US$80 million. The adaptation to market developments is focused on retaining core competencies. While expectations for order intake remain subdued, maintaining an adequate engineering capacity remains crucial to properly address today’s market downturn whilst preparing for a future market upturn.
• Although all payments to sales consultants were suspended from February 2012 onwards, the Company continued to accrue over the period 2012 to 2014 for potential liabilities under contracts with those sales consultants that were under internal investigation. Most of these accruals relate to Equatorial Guinea, Angola and Brazil. The Company has continuously reviewed the contractual situation of these sales consultants in light of the findings of its own internal investigation and those from the Dutch Public Prosecutor (“OM”). In 2015, the Company completed the action to terminate the consultancy contracts relating to Equatorial Guinea and Angola. More recently, it completed its review of the contractual situation in relation to its former main consultant in Brazil in light of the developments in Brazil in relation to that consultant, including the recent criminal charges filed by the Brazilian Public Prosecutor’s Office (Ministério Público Federal – “MPF”) against that consultant. Based on the various reviews referenced above, the Company has decided that there now is sufficient evidence to conclude that the consultants who represented the Group in Equatorial Guinea and Angola in the period 2007-2011 and the main consultant who represented the Group in Brazil in that period acted in breach of applicable laws, and thus, in contravention of their obligations. As a result, the Company concluded that it has no more liability towards these sales consultantsIn 2015, the amount of US$51.8 million was accordingly released to the gross margin of the Turnkey segment and US$36.7 million was released to the Gross margin of the Lease and Operate segment.
• Following the signature on September 16, 2014 of a Production Handling Agreement (PHA) with Noble Energy to produce the Big Bend and Dantzler fields to the Thunder Hawk DeepDraft™ Semi located in 6,060 feet of water in the Gulf of Mexico (GoM), first oil was respectively achieved on October 26, 2015 and November 1, 2015 with a production output in line with expectations.
• Capital expenditure and investments in finance leases amounted to US$775 million in 2015, well below 2014 level of US$2,396 million. The decrease is primarily attributable to the lower level of investments in the current finance lease projects under construction.
• New project financing agreements totaling US$2.35 billion were put in place in the period and project financing has now been secured on all finance lease projects currently under construction. On July 27, 2015 the project financing for FPSO Cidade de Saquarema was secured for a total of US$1.55 billion, at a weighted average cost of debt of 5.1% at the joint-venture level, from a consortium of sixteen international banks with insurance cover from four Export Credit Agencies (ECA). The financing consisted of three tranches, two with ECA insurance cover and one commercial, with fourteen year post-completion maturities. on December 18, 2015, the project financing of FPSO Turritella was secured for a total of US$800 million with a consortium of twelve international banks with an average cost of debt at the joint-venture level of 3.3% over the ten year post-completion maturity.
• Cash and undrawn committed credit facilities amounted to US$2.7 billion at the end of December 2015 compared to US$2.0 billion in 2014.

Fiscal year 2015 segmental information regarding the two core business segments of the Company is provided in the detailed financial analysis section of the press release. Revenue by geography is also included in the notes to the Financial Statements.

Directional[1]Backlog

Directional[1]backlog at the end of 2015 remained healthy at US$18.9 billion compared US$21.8 billion at the end of 2014. This reflects both the low level of order intake for the Turnkey segment and the resilience of the Lease and Operate portfolio. Approximately 37% of total future bareboat revenues will be generated from the lease contracts which have yet to commence operations. Those include FPSOs Cidade de Maricá, Cidade de Saquarema and Turritella.

Directional[1]Turnkey backlog decreased to US$0.5 billion compared to US$1.1 billion in 2014 as no major Turnkey orders were signed in 2015. As market conditions continue to deteriorate, the level of tendering activity experienced by the Company became lower than in 2014 and the order intake continued to be impacted by structural delays in client final investment decisions.

Backlog as of December 31, 2015 is expected to be executed as per the below table:

Revenue

Directional[1]Revenue decreased by 26% year-on-year despite an increase by 4% for the Lease & Operate segment:

Third party Directional[1]Turnkey revenue came down 39% year-over-year to US$1,512 million, representing 58% of total 2015 revenue. This compares to US$2,487 million, or 70% of total revenue, in 2014. The decrease is mostly attributable to nearing the completion stage on a number of projects under construction, such as FPSOs Cidade de Maricá and Cidade de Saquarema, Turritella, very low order intake in 2014 and 2015 as a result of the market downturn, and the completion of FPSOs Cidade de Ilhabela and N’Goma FPSO in 2014, partially offset by additional revenue invoiced to the new partners in the Turritella joint venture company.

Construction of FPSO Turritella was completed in 2015 with sail away from the Keppel yard in Singapore in November 2015, and arrival in the Gulf of Mexico at year end. During the period, the Company’s share in the Lease and Operate joint ventures was reduced from 100% to 55%, and as a result the Company has started to generate revenue and gross margin under Directional[1]reporting related to the partners’ 45% share of the EPCI contract of the FPSO supplied by SBM Offshore to the lease and operate joint venture. Start-up of the facility is expected in the first half of 2016. On the other hand, IFRS revenue recognition remains based 100% on the fair value of the lease and on a percentage of completion basis.

Construction was completed for FPSOs Cidade de Maricá in December 2015 while it remains ongoing for FPSO Cidade de Saquarema. First oil for FPSO Cidade de Maricá is expected in the first quarter of 2016 and integration works for FPSO Cidade de Saquarema are concurrently taking place at the Brasa yard in Brazil, with an expected start-up of the facility in the middle of 2016. The joint ventures are fully controlled, as per IFRS 10, by the Company which owns 56% of the shares and is fully consolidated under IFRS. As a result, recognized Directional[1]revenue

BP’s Quad 204 turret was delivered on time on October 2015 and fabrication work on the Ichthys and Prelude turrets were completed during the period and commissioning is underway in accordance with contractual planning for both.

Directional¹ Lease and Operate revenue increased by 4% to US$1,105 million, representing