Ship Finance International Limited 4Q 2016 Results February 28, - PowerPoint PPT Presentation

Ship Finance International Limited 4Q 2016 Results February 28, 2017 1

FORWARD LOOKING STATEMENTS This presentation contains forward looking statements. These statements are based upon various assumptions, many of which are based, in turn, upon further assumptions, including Ship Finance management's examination of historical operating trends, data contained in the Company’s records and other data available from third parties. Although Ship Finance believes that these assumptions were reasonable when made, because assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond its control, Ship Finance cannot give assurance that it will achieve or accomplish these expectations, beliefs or intentions. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward looking statements include the strength of world economies, fluctuations in currencies and interest rates, general market conditions including fluctuations in charter hire rates and vessel values, changes in demand in the markets in which we operate, changes in demand resulting from changes in OPEC's petroleum production levels and world wide oil consumption and storage, developments regarding the technologies relating to oil exploration, changes in market demand in countries which import commodities and finished goods and changes in the amount and location of the production of those commodities and finished goods, increased inspection procedures and more restrictive import and export controls, changes in our operating expenses, including bunker prices, dry-docking and insurance costs, performance of our charterers and other counterparties with whom we deal, timely delivery of vessels under construction within the contracted price, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, and other important factors described from time to time in the reports filed by the Company with the Securities and Exchange Commission. 2

4Q 2016 Highlights Quarterly dividend of $0.45 per share 12.3% dividend yield (1) • Net income of $28.5m ($0.31/share) for the quarter Aggregate charter revenue of $154m ($1.64/share) (2) • Adjusted EBITDA (3) of $121m ($1.29/share) • Successful placement of $225 million convertible notes, due 2021 Primarily used to repurchase a part of our $350m convertible note due 2018 • Approximately $40 million net cash proceeds • TANKERS DRY BULK LINERS OFFSHORE Charter revenues 4Q-16 18% 24% 34% 24% 1) Quarterly cash dividend, annualized / SFL share price $14.65 as of Feb 27, 2017. 2) Charter revenues include total charter hire from all vessels and rigs, including assets in 100% owned subsidiaries classified as ‘Investment in associates’ and accrued profit share. 3) Adjusted EBITDA is a non-GAAP measure and includes assets in 100% owned subsidiaries classified as 'Investment in associates'. For more details please see 4Q-16 press release Appendix 1: Reconciliation of Net Income to Adjusted EBITDA. 3

Recent Events 2 x 19,200 TEU container vessels 15 year bareboat charters to MSC • First vessel delivered in December 2016 and second expected in • March 2017 Total EBITDA contribution estimated to ~ $31m per year after delivery • 2 x 114,000 dwt LR2 product tankers 7 year time charters to Phillips 66 • Expected delivery from Korean shipyard during second half of 2017 • Total EBITDA contribution estimated to ~ $11m per year after delivery • Sale of 19 year old tanker VLCC Front Century (1998), expected delivery to new owners in • March 2017 4

Drilling Assets Positioned for a Market Downturn We West Hercule les - 200 2008 West st T Taurus - 200 2008 Frontload aded ed charter er r rev even enues (3) $350 000 $300 000 15 year charters, but ~70% of aggregate charter $250 000 hire already received $200 000 6th gen. semi 6th gen. semi $150 000 (1) – 2023 (1) – 2023 BB to Seadrill BB to Seadrill $100 000 Current debt (2) : $274m Current debt (2) : $245m SFL guarantee: $75m SFL guarantee: $75m $50 000 Hercules/Taurus: Average charter rate per day $0 2009 2011 2013 2015 2017E 2019E 2021E 2023E Year West st Li Linus s - 2014 Soe oehan anah ah - 200 2007 Limited c corporate guarantees Initial l Debt t $2. $2.0bn Heavy-duty jackup 375ft jackup (1) – 2029 BB to Seadrill Currently Idle Current debt (2) : $348m Current debt: $0m Corporate guarantees: SFL guarantee: $90m SFL guarantee: n/a $240m, only 28% 1) Charter fully guaranteed by Seadrill Limited. 2) Current Debt as of 28 Feb 2017. 5 3) For illustrative purposes only - average bareboat charter hire for West Hercules and West Taurus, based on actual hire received until 4Q 2016 and estimate of future average hire with adjustments based on current interest rate levels. The charter on West Linus is structured with a similar frontloaded profile, but with different charter rate levels during the charter.

Modern Liner Vessels with Long Term Contracts 2 x 19, 19,20 200 T TEU Built lt: 2016 - 2017 $990 rer: MSC #2 liner worldwide (1) Chartere EBITDA DA: ~$31 million/year million of contracted revenue (2) 3 x 9,500 T 00 TEU Built lt: 2015 – 2016 rer: Maersk Line #1 liner worldwide (1) Chartere 9.3 EBITDA DA: ~$32 million/year Average length of current 4 x 8,700 T 00 TEU Built lt: 2014 - 2015 charters in years (2) rer: Hamburg Süd #7 liner worldwide (1) Chartere EBITDA DA: ~$46 million/year 150,000 Other lin liner v vessels w with ith lo long t g term c contr tracts ts Ty Type Quanti tity ty x S x Size Contr tract e t expi xpiry Ch Charterer Aggregate TEU (3) Container 2 x 1,700 TEU 2020 Heung-A Container 7 x 4,100 TEU 2019 - 2020 MSC Container 2 x 5,800 TEU 2019 MSC Car carrier 2 x 6,500 CEU 2017 Hyundai Glovis . 1) Based on operating fleet. Source: Alphaliner 6 2) As of Dec 31, 2016. Average length weighted by charter revenues and excluding option periods. 3) Approximate capacity, as of Dec 31, 2016, including newbuildings.

Tankers: Continued Profit Share Potential 12 x x ve vessels ls t to Frontli line • 10 x VLCCs: $20,000 base rate $740 • 2 x Suezmax: $15,000 base rate 50% profit share above daily base rates, paid quarterly • million of contracted 2 x x Suezma max t tankers s 2009/2010 built vessels with eco upgrade • revenue (1) Trading in pool with sister vessels owned by Frontline and significant • charter coverage in 2017 7.7 Other t r tanker ve r vessels ls 2 x 2008 built Chemical tankers on bareboat charters until 2018 • 2 x 114dwt LR2 Product tankers on time charters until 2024 • Average length of current charters in years (1) Contracted Profit Share/Spot 3.9 Million aggregate dwt (2) $36 $36M $23 $23M 63 % 63 % 37 % 37 % 4Q-16 Contracted Revenue 4Q-16 Actual Revenue 1) As of Dec 31, 2016. Average length weighted by charter revenues and excluding option periods. 7 2) Approximate capacity, as of Dec 31, 2016, including newbuildings.

Early Signs of Recovery in the Dry Bulk Market Significa cant u upside o optionality f from l larger C Capesize v vessels $590 8 x Capesize vessels delivered in 3Q 2015 • 10 year charters with Golden Ocean • 33% profit share above daily base rates, paid quarterly • Million of contracted revenue (2) Historical Capesize earnings 2003 - Jan 2017 (1) 7.4 90,000 80,000 70,000 Average length of current 60,000 50,000 charters in years (2) 40,000 30,000 20,000 2.1 10,000 0 2003 2005 2007 2009 2011 2013 2015 2017 Million aggregate DWT (3) Capesize Earnings SFL avg base rate Other d dry b bulk v vessels w with ith lo long t g term c contr tracts ts Kamsarmax 2 x 82,000 DWT 2022 Sinochart Supramax 5 x 57,000 DWT 2018 - 2022 Hyundai Glovis 1) Source: Clarksons Platou. 8 2) As of Dec 31, 2016 – average length weighted by charter revenues and excluding option periods. 3) Approximate capacity, as of Dec 31, 2016, including newbuildings.

Contribution from Projects last 12 months (1) Large performing fleet generating significant cash flows $503m adjusted EBITDA-equivalent last twelve months $221m net cash flow from projects after interest and debt amortization (3) $ mill. 700 52 600 137 500 589 97 400 184 300 221 76% 200 100 168 0 Charter Profit Share OPEX+ G&A Net interest Loan Amort. Distributable Dividend (3) (2) Revenues Cash 1) Not as accounted per US GAAP and including cash flow in subsidiaries accounted for as ‘investment in associate‘. 9 2) Charter revenues and return on financial investments, including dividend from Frontline. 3) Ordinary installments relating to the Company’s projects. Excluding prepayments when vessels are sold.