Siem Offshore : Financial Report

SIEM OFFSHORE INC.

REPORT FOR FIRST QUARTER 2022

On 31 May 2022 - Siem Offshore Inc. (the "Company"; Oslo Stock Exchange: SIOFF) announces results for first quarter ended 31 March 2022.

SELECTED FINANCIAL INFORMATION

	2022	2021	2021
(Amounts in USD millions)	1Q	1Q	Jan-Dec
	Unaudited	Unaudited	Audited
Operating revenues	61.0	56.3	254.5
Operating margin	16.7	20.7	100.6
Operating margin, %	27%	37%	40%
Operating profit (loss)	0.8	4.7	38.2
Profit (loss) before taxes	6.1	-9.0	101.9
Net profit (loss)	6.6	-9.6	102.9
Net profit (loss) attributable to shareholders	8.0	-7.7	107.9
Net cash flow before debt repayment	0.9	1.3	120.8
Net interest bearing debt	532.8	925.2	532.4
Repayment of interest bearing debt	11.8	0.9	124.3

HIGHLIGHTS FOR THE FIRST QUARTER

• Vessels' supply-demand balance is shifting in a positive trend for all segments.
• Awarded a 6-month extension for the Canadian vessel "Avalon Sea", securing continued operations well into Q4 2022.
• Entered into agreements with Helix Energy Solutions Group Inc. for the Well Intervention Vessels "Siem Helix 1" and "Siem Helix 2". The agreements will replace the existing contracts and the new firm period will be 3 years for "Siem Helix 1" and 5 years for "Siem Helix 2" with subsequent options for both vessels.
  Commencement will be in direct continuation of present contracts within the first quarter of 2022.
• Appointed Jon August Houge as a new ESG Director as part of the Company's increased focus on sustainability.
• Awarded a new contract for the OSCV "Siem Spearfish", securing continued operations well into the second quarter of 2022.
• Signed a new contract for the AHTS "Siem Sapphire" for operations in Taiwan, securing firm utilization well into the third quarter of 2022, plus options.

SUBSEQUENT EVENTS

• Received status on vessel class compliance from the classification society DNV, confirming that Siem Offshore has over the recent years consistently performed better than its peers on technical issues (CC?), non-conformities and findings from Port State Inspections.
• Awarded a new contract for the OSCV "Siem Spearfish", securing firm utilization until the end of 2023.
• The Annual General Meeting of Siem Offshore Inc. was held 20 May 2022. All proposed resolutions were unanimously approved. Following the AGM and a subsequent Board meeting, the Board is: Mr. Kristian Siem, Chairman. Ms. Celina Midelfart, Director. Mr. Christen Sveaas, Director. Mr. Barry Ridings, Director. These Directors will hold office until the next Annual General Meeting of the Company.

MARKET AND OUTLOOK

The first quarter came off to a slow start for the North Sea PSV and AHTS markets, however markets gradually improved throughout the quarter, which is normal for this time of the year. March was a particularly strong month for the AHTS segment, where several development projects took place in parallel. For the first time in several years we commenced a 6-month term contract on the Norwegian shelf for an AHTS vessel, whilst one of our PSVs was reintroduced to the Norwegian spot market after a long-term contract. The OCV market was considerably more active than seen in previous years, and the fleet was almost sold out towards the end of the quarter, with day rates improving and strong vessel utilization. Longer term contracts are now becoming more frequent for the OSCV segment as confirmed by the latest contract for "Siem Spearfish". This is a shift after many years of having traded through shorter term contracts, and a trend that has been expected on the basis of rising demand from oil & gas- subsea contractors. The combination of increased oil & gas activity and Offshore Wind campaigns is beneficial for all segments, especially the OSCV fleet. We currently employ three of our four OSCVs in the Offshore wind segment in the UK and in Taiwan areas. During the first quarter we also secured a Walk-to-work ("W2W") contract for an AHTS in the Taiwanese offshore wind market, which is a positive confirmation of the capabilities of our multipurpose fleet.

The long-term extension of our well intervention vessels "Siem Helix 1" and "Siem Helix 2" was a considerable event and strengthens the Company's contract backlog, and a reaffirmation of the vessels' value creating potential for their end-clients.

Although oversupply is still a topic on a global basis, the supply-demand balance is shifting in a positive trend for all segments. A particular note should be directed towards the increased sale and purchase activity, where North Sea owners have divested a number of medium sized AHTS to the domestic Chinese market during the past year. Although most of these assets are not considered to be competitive to our high-end AHTS fleet, it's still a positive development leading to an improved supply situation for the global AHTS fleet. There are only few laid-up assets in the North Sea region which we consider competitive to our AHTS, PSV and OSCV fleets.

The long-term fundamentals and outlook for the OSV market continue to improve on the back of a strong increase in the oil price, as well as continued demand from the offshore renewable energy sector. New drilling campaigns and offshore wind projects are being sanctioned, which over time are expected to further improve the overall demand for OSV's after the long downturn. We have a particular interest in the floating wind market, which is expected to be a positive demand driver for the AHTS segment after 2025. Price increases due to high inflation for

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raw materials, requires a substantial increase in dayrates to justify new-buildings. For the medium-term, we see an increased number of planned projects compared to the activity of previous years, specifically in Brazil, West Africa and the North Sea.

We continue to reiterate that consolidation is a necessity to further improve the operating results of the world's OSV fleet. That being said, the Company is well-positioned to compete with its peers based on its modern fleet, quality backlog, strong operating record, positive reputation, and its proven ability to provide employment on a global scale within the fossil and renewable energy markets.

RISKS, FINANCE PLAN AND GOING CONCERN

The financial statements have been prepared under the assumption that the Company and the Parent are going concerns. The assumption is based on the Company's strong equity position, cash position and forecasted cash flows. No debt will mature till end of 2024, except for debt that will be subject to cash sweep if applicable. The volatile market conditions and the impact of the COVID-19 pandemic on vessel operation and world economy may continue to have a negative influence. Estimated COVID-19 negative effects on operating margin in the quarter was around USD2.0 million. The Company is exposed to a number of risks. One of the most important risk factors is the demand for its services.

The OSV market is now in its 9th year of depressed conditions, however early indicators of improvement are observed. The Company expects the market to remain volatile going forward. The increase in offshore activities and demand for offshore vessels that we have seen lately is positive and gives hope that the market will recover faster than earlier expected. Still, there are too many offshore vessels available worldwide which may have an adverse effect on uplifts in charter rates and vessel utilization.

Total Equity (inclusive of non-controlling interests) is USD349.1 million on 31 March 2022 and the cash balance was USD80.2 million.

The COVID-19 pandemic situation, which has affected world economies and resulted in volatile global demand for our oil related services and our ability to operate under normal conditions is still causing concerns. The acts of war in Ukraine could impact the operations and outlook for the Company's fleet. The potential effects are uncertain and premature to assess.

The Company is working with its unions and crews to secure safe and reliable operations of its vessels. An additional risk is that vessel operations could be impaired by shortage of qualified crew. Provided COVID-19 measurements last for an extended time, there is a potential risk of contract cancellations with negative effects on earnings and cash flow. The Company takes all reasonable precautions to minimize such risk. Governmental regulations are frequently being revised. While some nations have cancelled their COVID-19 restrictions, extensive regulations are still in force in some geographical areas. It is a challenge to move crews, spare parts, and service-personnel around the globe to attend to our vessels. Spare part lead times and global inflation are major concerns and are believed to add additional risk to vessel maintenance programs for a prolonged time.

The Company is exposed to credit risk due to the financial position of counterparties.

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The COVID-19 pandemic, actions of war in Ukraine and fluctuations in the energy prices have resulted in volatility in currency exchange rates. The USD has strengthened against other currencies. The BRL currency in particular is extremely volatile against the USD. As part of the financial restructuring in 2021, the Company cancelled all currency and interest rate hedging agreements with its lenders. No new derivatives have been entered into.. Thus, the Company is exposed to changes in currency rates and interest rates on its loans going forward.

RESULTS AND FINANCE

Income Statements (1Q 2022 over 1Q 2021)

Operating revenues were USD61.0 million (2021: USD56.3million). The operating margin was USD16.7 million

(2021: USD20.7 million). The increase in revenues from 1Q 2021 is mainly due to higher revenues from the OSCV

and WIV fleet. Administrative expenses were USD5.3 million (2021: USD4.9 million).

Operating profit/(loss) was USD0.8 million (2021: USD4.7 million) after depreciation and amortization expenses

of USD15.9 million (2021: USD16.1 million). No impairment charge was recognized in 1Q 2022 (1Q 2021: USD0.0 million). The Company closed all of its currency hedging derivatives in 2Q 2021 (currency exchange gain/(loss) recorded on currency derivative contracts in 1Q 2021: USD-0.06 million, of which USD2.2 million was unrealized).

Net financial items were USD5.2 million (2021: USD-13.3 million) and include a net revaluation gain/(loss) of non-

USD currency items of USD9.7 million (2021: USD-6.9 million) of which USD11.8 million was unrealized (2021:

USD-6.5 million). The financial expenses of USD5.2 million (2021: USD7.4 million) include no unrealized gain/(loss) from mark-to-market valuation of interest rate swap agreements as these were closed in April 2021 (2021: USD1.8 million). Non-USD currency items are held to match short- and long-term liabilities in similar currencies.

The natural currency hedge program related to financing of vessels in Brazil is recognized in Other Comprehensive income, and recorded a gain of USD10.8 million (2021: USD-4.9 million).

The net profit/(loss) attributable to shareholders was USD8.0 million (2021: USD-7.7 million), representing

USD0.03 per share (2021: USD-0.82 per share adjusted for the 100:1 reverse split that became effective in May 2021).

Statements of Financial Position and Cash Flows

Shareholders' equity was USD351.1 million before non-controlling interest on 31 March 2022 (31 December 2021: USD340.8 million), equivalent to USD1.47 per share (2021: USD 1.42 per share). Non-controlling interest is USD-

2.0 million. Net cash flow from operating activities for the first three months 2022 was USD14.3 million and the cash position on 31 March 2022 was USD80.2 million.

The gross interest-bearing debt is equivalent to USD613.0 million. In the first three months 2022, the Company made principal repayments of USD11.8 million according to the cash sweep mechanisms in the loan agreements with the European lenders and made interest payments of USD4.9 million.

The weighted average cost of debt for the Company was approximately 3.3% p.a. on 31 March 2022. The Company has terminated all debt-related derivatives such as interest rate swaps and cross currency swaps.

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The share capital is USD238.852 million representing a total of 238,852,052 shares with a nominal value of USD1.00 per share.

Health, Safety, Environment & Quality (HSEQ)

The Company has not experienced any serious injuries nor any serious environmental incidents in the first quarter of 2022. There has been a continuously positive safety and environmental trend throughout this quarter. The quarterly safety campaign has focused on "Situational awareness and risk perception", developed and streamlined in cooperation with a major client. This was a success and shows the good cooperation between Clients and the Company. Leadership engagements on board the vessels have picked up as the Covid-19 restrictions and being relaxed somewhat in certain geographical areas.

Clients are very satisfied with our operational and safety performance, which reflects professional crew and a well- developed safety culture throughout the Company and its fleet.

The global COVID-19 Pandemic has affected the Company in many ways and a dedicated Task Force has constant focus on developing and advising of mitigating actions to avoid virus outbreak amongst crew on board vessels, and crew and staff at home or in transit. Some restrictions are now being relaxed.

The conflict in Ukraine is challenging in many ways, primarily the hardships of the people directly involved. Many of our seafarers are residents of Ukraine. We maintain close contact with our seafarers and offer support where needed.

The Fleet

On 31 March 2022, the fleet totaled 28 vessels (2021: 30 vessels), including partly owned vessels. 4 vessels were in

lay-up at the end of the quarter (2021: 7). In addition to its own fleet of 28 vessels, the Company performs ship- management services for 3 vessels.

Results for the First Quarter 2022

Platform Supply Vessels (PSVs)

The Company had 6 PSVs in the fleet at the end of the quarter (2021: 7). The PSVs recorded operating revenues

of USD5.8 million and had 65% utilization (2021: USD12.5 million and 92%). The operating margin before

administrative expenses for these PSVs was USD-0.4 million (2021: USD6.5 million). First quarter last year the margin on the PSVs were affected by a termination fee of USD 3.1 million received from a client. This quarter we saw lower utilization and increased opex due to battery system installations, upgrades, dry-dockings and steaming of one vessel from the North Sea to Australia.

Offshore Subsea Construction Vessels (OSCVs) and Well-Intervention Vessels (WIVs)

The Company had 4 OSCVs and 2 WIVs at the end of the quarter (2021: 4 OSCVs and 2 WIVs). The OSCVs and

WIVs earned operating revenues of USD31.1 million and had 91% utilization (2021: USD19.7 million and 67%).

The operating margin before administrative expenses was USD14.5 million (2021: USD10.9 million).

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