February 2016

Company Presentation

1

This presentation has been prepared by Island Offshore Shipholding LP (“IOSH” or the “Company”, and together with its subsidiaries, the “Group”) for information purposes only and does not constitute, and shall not be construed as, any offer or invitation or recommendation to buy or sell any securities.

The information contained in this presentation has not been independently verified. No representation or warranty, express or implied, is made by the Company, its affiliates or representatives as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein, for any purpose whatsoever. Neither the Company nor any of its affiliates or representatives shall have any responsibility or liability whatsoever (for negligence or otherwise) for any loss whatsoever and howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation. All information in this presentation is subject to updating, revision, verification, correction, completion , amendment and may change materially and without notice. In giving this presentation, none of the Company, its affiliates or representatives undertake any obligation to provide the recipient with access to any additional information or to update this presentation or any information or to correct any inaccuracies in any such information.

This presentation contains forward-looking statements, including statements about the Group’s markets and its strategy, future operations and results thereof. Forward-looking statements include statements about expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not statements of historical fact, and are sometimes identified by the words “believes”, expects”, “predicts”, “intends”, “projects”, “plans”, “estimates”, “aims”, “foresees”, “anticipates”, “targets”, and similar expressions. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements.

The information contained in this presentation should be considered in the context of the circumstances prevailing at the time and has not been, and will not be, updated to reflect material developments which may occur after the date of the presentation.

No action has been taken to allow the distribution of this presentation in any jurisdictions. The presentation has not been reviewed or registered with, or approved by, any public authority, stock exchange or regulated market. The distribution of this presentation, as well as any subscription, purchase, sale or transfer of securities related to the Company, may be restricted by law in certain jurisdictions, and persons into whose possession this presentation comes are required by the Company to inform themselves about and comply with any such restrictions. None of the Company, its affiliates or representatives shall have any responsibility for any violations of such restrictions.

This presentation is subject to Norwegian law, and any dispute arising in respect of this presentation is subject to the exclusive jurisdiction of the Norwegian courts.

Important information

2

3

Table of contents

1 Introduction

2 Company update

4

Overview of the Company’s situation

Market adversely affected by reduced spending and increased focus on cash flow amongst oil companies

Significant overcapacity of vessels in most segments have resulted in pressure on rates and utilization, and fierce competition between owners especially within the PSV and AHTS segments

Consequently, IOSH is evaluating measures to improve its financial position

IOSH operates a large, modern and diversified fleet with focus on RLWI, SCV, Well stimulation, AHTS and PSV segments

Leading position in the Riserless Well Intervention (“RLWI”) market, a niche market with high barriers to entry due to substantial CAPEX requirements, high intensity of technology and demand for proven track record

Background

1

Company review

2

Contract situation/

opportunities

3 Order backlog excluding options totals NOK 5.1 billion (as of Q3 2015)

Secured additional backlog, comprising extensions and new business in PSV, W2W and SCV segments

Intensified international marketing and tender activities for RLWI through new business development function. Focus on successful application of new technology to broaden range of vessel services

5

Steps to improve financial situation

Two vessels sold, strengthening the Company’s liquidity position by NOK 400 million Divestment

1

Agreed with Vard Breivik to delay delivery of Island Victory

Island Defender, Discoverer and Diligence kept and financed outside the IOSH Group removing capex commitments

Renegotiated the shipbuilding contract with Kawasaki Heavy Industries for Island Navigator, with significantly improved terms

Improved newbuilding

schedule

2

Operational measures

Lay up of 3 vessels and additional 4 vessels stacked for winter season reducing operating costs to a minimum

– Further lay ups are continuously assessed for vessels completing current term contracts

Reduced working hours with 10%

Re-negotiation of all significant vendor agreements

3

Carnegie and DNB Markets engaged as financial advisors

Terms of proposed solution agreed with secured creditors

The company has been in dialogue with a group of bondholders representing a large portion of the voting bonds and agreed the terms of a proposed solution with the bondholders as set out in the Summons dated on or about 1 March 2016

Shareholders contribution to an overall solution is subject to final acceptance of the proposal from both secured and unsecured creditors

Addressing the capital structure

4

6

Table of contents

1 Introduction

2 Company update

• The Island Offshore Group owns and operates a modern and versatile fleet of advanced and high quality service vessels for the offshore oil industry

• Established by the Borgstein-side of the Ulstein-family led by Morten and Håvard Ulstein, both with a long history within the Ulstein, Vickers and Rolls Royce Marine group

• Their history within the offshore service vessel industry dates back to 1974, when they were co-investors in OSV’s through the Ulstein group

• In April 2004 the Edison Chouest Offshore Group (Gary Chouest and his family) of Louisiana, USA became partners and co-owners

• Today, the Island Offshore Group offers a range of complex services to the offshore industry including:

• Subsea installation and maintenance

• Well stimulation

• Light well intervention

• Plug and abandonment

• Supply and logistics

• Anchor handling

• Engineering and supporting services

Ownership structure Background

7

Group overview

1) General Partner

Borgstein Skipsinvest AS

Island Investment LLC

Amnor LLC (GP1 in IOSH LP)

Borgstein AS Edison Chouest

Island Offshore Shipholding LP

100% 100%

50% 50%

49.5% 49.5%

1%

8

Group structure

The ownership percentages presented above includes indirect ownerships through the General Partners

Borgstein Skipsinvest AS Island Investment LLC

Nor Management LLC

Island Offshore Management AS

(“IOM”)

Island Offshore Subsea AS (“IOSS”)

50% 50%

80%

100%

IOM serves as the end-client interface. Through a management agreement, IOM is further responsible for marine and technical operations and crewing of the Group’s fleet.

Substantial amount of 3rd party contracts are with IOM

IOSS is a technology and engineering company and is responsible for RLWI operations

Affiliated companies

50%

Island Offshore Shipholding LP

IO VIII KS IO LNG

Invest KS IO III KS IO X KS

IO Pioneer KS

IO XII Ship AS

Contender

Crusader

Spirit

Empress

Earl

Express

Endeavour

Patriot

Commander

Chieftain

Challenger

Vanguard

Valiant

Crown

Wellserver

Constructor

57% 62% 70% 51%

Centurion

Pride Frontier

IO LNG KS

70%

Dragon

Ocean Int.

Dawn

Duke

Duchess

Clipper

100%

Captain

51%

Performer

Condor

Victory (NB)

Island Offshore UK Limited

Island Offshore Subsea UK

Limited

Island Venture 4 AS

100%

100% 100%

Island Navigator I

KS

Navigator (NB)

100%

Island Offshore International Shipping AS

99%

50%

9

Fleet overview

RLWI = Riserless Light Well Intervention, SCV = Subsea Construction Vessel ,PSV = Platform Supply Vessel, AHTS = Anchor Handling Tug Supply vessel. 1) Average charter free valuations from 2 independent shipbrokers per 30.06.2015

RLWI

4 vessels and 1 on order

Specializes in developing and implementing innovative engineered solutions for RLWI to obtain increased oil recovery

3 of 4 vessels on long-term contracts

Statoil did not exercise their option for two of the vessels, may negatively effect earnings in Q4 2015

~18% of EBITDA 2014

Backlog: NOK 3,016 mill.

Avg. age: 7.3 years

Value1: NOK 3,494 mill.

SCV

4 vessels

Operates a fleet of advanced and versatile vessels with subsea capabilities

Island Spirit in lay-up for the winter season due to poor market conditions

~27% of EBITDA 2014

Backlog: NOK 448 mill.

Avg. age: 5.5 years

Value1: NOK 1,525 mill.

Well Stimulation

3 vessels

Operates 3 well stimulation vessels especially equipped for transporting and handling liquid cargo and chemicals for use in well stimulation operations

~14% of EBITDA 2014

Backlog: NOK 997 mill.

Avg. age: 5.8 years

Value1: NOK 1,215 mill.

AHTS

2 vessels and 1 on order

Operates 2 mid size AHTS vessels with UT 787 CD design

The vessels are equipped for deep water anchor handling with fully integrated work ROV support and subsea capabilities

Satisfactory earnings in Q3 following award of subsea construction work

~12% of EBITDA 2014

Backlog: NOK 3.8 mill.

Avg. age: 8.0 years

Value1: NOK 1,040 mill.

PSV

16 vessels

North Sea fleet of advanced and flexible PSV vessels

Currently 3 vessels are laid up due to the weak market

With the market continuing to be soft and volatile, further lay-ups are continuously being evaluated

~29% of EBITDA 2014

Backlog: NOK 674 mill.

Avg. age: 4.3 years

Value1: NOK 3,825 mill.

• 77% utilization Q3 2015 in line with 1H 2015 but weaker than previous years due to

• Planned maintenance and upgrade activities

• Soft offshore supply market resulting in lay up of 3 PSV vessels

• Utilization has improved for both AHTS and RLWI vessels in Q2 and Q3

• Fierce competition, especially within PSV segment, is expected to continue until ship owners contribute by laying up additional vessels

• Island Offshore will continuously evaluate further lay ups as vessels complete current term contracts

• The RLWI units Island Frontier and Island Wellserver are winter stacked from mid-October as until 1st April 2016 as Statoil have not declared its options for 165 days work

• 9 of the vessels in the fleet operate in the spot market, mainly in the PSV and AHTS segment

Comments

10

Operational update – fleet utilization (as of Q3 2015)

Utilization (%)

93 95 91 90 88 90 90

86 87 92

96

85 78 78 77

0

20

40

60

80

100

120

Q112

Q212

Q312

Q412

Q113

Q213

Q313

Q413

Q114

Q214

Q314

Q414

Q115

Q215

Q315

11

Vessel contract coverage as of Q3 2015

Note: The RLWI contracts with Statoil for Frontier and Wellserver only guarantees 200 days utilization per year. Navigator to be delivered between 31.01.18-31.01.19 depending on contract status. Agreement for delivery of Island Victory in Q2 2018 yet to be formalized

Contract Option Framework agreement

Delivery

Expiry

30.03.2020

30.03.2020

13.10.2021

13.12.2019

13.12.2021

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

IO III Contructor RLWI

IOSHLP Frontier RLWI Stato il Stato il Stato il Stato il

Wellserver RLWI Stato il Stato il Stato il Stato il

Champion PSV

Centurion Well Stim

Crown W2W

Pride SCV

Clipper PSV

Navigator THD

IO VIII Spirit SCV

Express PSV

Empress PSV

Earl PSV

Endeavour PSV

Commander PSV

Chieftain PSV

Challenger PSV

Patriot Well Stim

IOX OI III SCV

Duke PSV

Duchess PSV

Dawn PSV

Dragon PSV

Performer LWI

Condor PSV

IOXII Vanguard AHTS

Valiant AHTS

Victory DWIV

IOLNG I Captain Well Stim

IOLNG Crusader PSV LNG

Contender PSV LNG

20192016 2017 2018

Order backlog (NOK million)

12

Order backlog of NOK 5.1 billion as of Q3 2015 (ex options)

IOSH Group Firm contract split inside / outside IOSH

433

1455

1114 960 886

156 136

170

495

812

673

589

989 1010

0

500

1000

1500

2000

2500

Q4 2015 2016 2017 2018 2019 2020 2021

Contracted Option

235

798

630 626 632

156 136

198

655

484

334 254

0

200

400

600

800

1000

1200

1400

1600

Q4 2015 2016 2017 2018 2019 2020 2021

Contracts outside IOSH Contracts inside IOSH

• The consolidated cash position was NOK 204 million at the end of Q3 2015

• Value adjusted book equity is estimated to NOK 4,154 million, equal to a ratio of 33%

• Vessel values down approximately 9% on average since year end 2014

Key financials Comments

13

Key financials

1) Adjusted for CIRR loans/deposits

2010 2011 2012 2013 2014 Q1-Q3

2015

Profit and loss

Operating income 1 520 1 708 1 954 2 181 2 740 1 743

Expenses -970 -1044 -1180 -1294 -1 469 -921

EBITDA 550 663 774 886 1 270 822

EBIT 379 479 552 636 970 563

Net profit (before tax) 175 312 350 360 406 88

Balance sheet Fixed assets 5 521 7 413 8 411 9 219 10 912 11 187

Cash 55 129 36 432 390 204

Total assets 5 916 7 893 9 102 10 388 12 810 12 734

Equity 1 600 1 922 2 300 2 640 2 949 3 028

Non current liabilities 4 129 5 818 6 423 7 296 9 059 8 896

Current liabilities 163 140 237 330 696 679

Total equity and liabilities 5 916 7 893 9 102 10 388 12 810 12 734

Net interest bearing debt1 4 129 4 316 5 108 5 781 7 830 7 188

Key credit ratios

Equity ratio1 27.0 % 29.3 % 29.5 % 29.7 % 25.0 % 26.0 % NIBD / EBITDA1 7.5 6.5 6.6 6.5 6.2 6.3

EBITDA margin 36.2 % 38.8 % 39.6 % 40.6 % 46.4 % 47.2 %

• RLWI and Well Stimulation have shown considerable growth through 2009-2013

• As of Q3 2015, RLWI and Well stimulation represent ~50% of revenue and 40% of EBITDA

• Revenue and EBITDA contribution has gradually shifted from offshore supply to more advanced vessel segments

• Strong PSV and SCV revenue and EBITDA contribution in 2014 partly due to sales gain of the vessels Island Champion and Island Pioneer

Revenue split

EBITDA split

14

Segment contribution

20% 22% 16% 16% 20% 28% 24%

18% 12% 14% 11% 10%

10% 6%

18% 13%

11% 11% 14% 18%

17%

45% 49%

50% 50% 45% 34% 42%

0% 4% 9% 12% 11% 11% 10%

0 %

20 %

40 %

60 %

80 %

100 %

2009 2010 2011 2012 2013 2014 Q1-Q32015

PSV AHTS SCV RLWI Well Stim

25% 27% 14% 15% 20% 29% 19%

28% 16% 20% 13% 11%

12%

4%

19% 17%

11% 12% 14%

27%

26%

28% 35%

42% 45% 39% 18%

38%

0% 5% 13% 16% 16% 14% 13%

0 %

20 %

40 %

60 %

80 %

100 %

2009 2010 2011 2012 2013 2014 Q1-Q32015

PSV AHTS SCV RLWI Well Stim

• Agreement with Vard to defer delivery of 3 PSV newbuildings (outside IOSH Group) and 1 AHTS

• Capex includes Island Victory and Island Navigator

• NOK 53 million capex in 2016 might be postponed

• The DWIV, Island Victory, is expected to be further postponed to Q2 20181

• Capex for Island Navigator reduced from initial USD 355 million to USD 305 million

• USD 2.5 million paid October 2015. Another USD 10 million to be paid at either 6m after contract or at the latest 12m after delivery

• To be delivered between 31.01.18-31.01.19 depending on contract status

• Fully financed through Japanese financing institutions

• Maintenance capex according to condition of class and maintenance programs for components

Committed capex (NOK million) Comments

15

Capex commitments

32 48 76 97 20 53

997

0

200

400

600

800

1000

1200

Q4 2015 2016 2017 2018

Maintenance Newbuildings

1) Agreement for postponed delivery of Island Victory in Q2 2018 is yet to be formalised

Debt Maturity profile – Post deferrals of instalments and bond amendments (NOK million)

16

Debt maturity profile

Note: Assumes maturity of mezzanine debt in December 2018. NOK 470 million Tranche A bonds mature in October 2018 and NOK 230 million Tranche B bonds mature 6 months later. NOK 80 million 2nd Lien loan in Island Performer maturing in 2016 not included as the loan is in process of being repaid.

IOSH IOSH Group

120 160 201

249

626

219

470

0

200

400

600

800

1000

1200

1400

1600

2016 2017 2018

Installments Balloons Mezzanine Bond

512 560 630

418

1446

274

470

0

500

1000

1500

2000

2500

3000

2016 2017 2018

Installments Balloons Mezzanine Bond

17

Financing structure (Q3 2015)1

1) Excluding any intercompany debt in subsidiaries 2) NOK 115m is related to financings of vessels owned by IO X KS, which again IOSH L.P. has provided to IO X KS as an internal loan 3) NOK 127m unsecured loan from Island Venture 4 LLC , related to the financing of Island Performer 4) Including NOK 197m loan from Island Offshore Management 5) Pledge of participating interest of Island Offshore VII KS and Island Offshore LNG KS and pro rata guarantees by Limited Partners

Island Offshore Shipholding LP

IO VIII KS IO LNG

Invest KS IO III KS IO X KS

IO Pioneer KS

IO XII Ship AS

Contender

Crusader

Spirit

Empress

Earl

Express

Endeavour

Patriot

Commander

Chieftain

Challenger

Vanguard

Valiant

Crown

Wellserver

Constructor

57% 62% 70% 51%

Centurion

Pride Frontier

IO LNG KS

70%

Dragon

Ocean Int.

Dawn

Duke

Duchess

Clipper

100%

Captain

51%

Performer

Condor

Victory (NB)

Island Navigator I

KS

Navigator (NB)

100%

Island Offshore Shipholding LP • 1st Lien bank facility: NOK 2,046m • 2nd Lien seller credit / mezzanine: NOK 219m2

• Unsecure bond: NOK 700m • Unsecured seller credits / mezzanine: NOK 242m3

• Intercompany loans: NOK 359m4

Guara

nte

ed b

y I

OSH

IO VIII KS • 1st Lien bank facility: NOK 774m • 2nd Lien bank facility: NOK 39m

IO X KS • 1st Lien bank facility: NOK 1,878m • 2nd Lien seller credit / mezzanine: NOK 20m

IO XII Ship AS 1st Lien bank facility: NOK 360m

IO III 1st Lien bank facility: NOK 398m

IO LNG Invest KS • 1st Lien bank facility: NOK 246m • Security pledge mezzanine: NOK

230m5

IO LNG KS • 1st Lien bank

facility: NOK 456m

TBN-SPC Firm commitment from Japanese financial institutions of up to 90% of construction cost, on a non-recourse basis