Market segmentation, trends in pricing power and future opportunities in the marine heavy transport industry. DnB NOR Conference, March 2011

Transcription

1 Market segmentation, trends in pricing power and future opportunities in the marine heavy transport industry DnB NOR Conference, March 2011

2 Fairstar Heavy Transport NV Fairstar Heavy Transport NV was incorporated in 2005 and has been publicly listed on the Oslo Stock Exchange (OSE) since 2006 Owns and operates four semi-submersible vessels FJORD and FJELL, FORTE and FINESSE (the latter two are scheduled for delivery from Guangzhou shipyards in 2012) Core competitive strengths: In-house fleet management Experienced Dutch officers and crew Project engineering executed in-house Strong risk management culture Fairstar has established a reputation in the European and North American Capital Markets as a welldisciplined, transparent, and profitable company 2

3 The marine heavy transport industry is now divided into three clear segments Commoditised heavy transport Time charter rates now close to Opex USD 30 to 50 thousand per day Dominated by converted oil tankers Specialised single voyage ultra heavy cargoes Mostly offshore platforms and semi-submersible hulls Time charter rates range from USD 65 to 100 thousand per day Dominated by Dockwise s Blue and Black Marlin Integrated, high value marine heavy transport Multiple voyage, one to two year contracts, modern true open stern ships supported by in house project management and engineering High barriers to entry due to stringent safety and environmental regulations Time charter rates USD 80 to 110 thousand per day 3

4 Fairstar s Red Box Strategy High Value Specialist Marine Heavy Transport Single voyage Massive and often unique Cargo s Beam 60m plus, 60 k tonnes or more cargoes USD k /day Integrated Marine Heavy Transport Multiple voyage contracts Complex engineering Safety and environmental regulations Stable returns USD k /day Low Value Commoditized Marine Heavy Transport Spot market driven Price Competition USD 30-50k /day Low Frequency High Frequency 4

5 5 Specialist Marine Heavy Transport Fairstar s Red Box Strategy Low Value High Value Integrated Marine Heavy Transport Commoditized Marine Heavy Transport Low Frequency High Frequency Shtokman Valemon Wheat stone Tubular Bells Jack St Malo Mars B Goliath Curtis Panama lock doors Browse Claire Ridge Ichthys Brass LNG = Rigs and Jack ups = Harbour Cranes and equipement = Dredgers and barges Pluto 2 Gorgon Pluto 3

6 Number of Vessels - Fairstar s Red Box Strategy High Value Specialist Marine Heavy Transport Blue Marlin, Black Marlin, Type Zero, Mega Passion Integrated Marine Heavy Transport FJORD, FJELL, FORTE, FINESSE, Cosco Newbuild 1 and 2, Mighty Servant 3 Commoditized Marine Heavy Transport Low Value Kang Sheng Kou, Tai An Kou, Mighty Servant 1, Transshelf, Swan, Swift, Talisman, Target, Teal, Tern, Transporter, Treasure, Triumph, Trustee, HeavyLift Osprey, HeavyLift Eagle, HeavyLift Falcon, HeavyLift Hawk, Yuanjian, Yuanjing, Zhen Hua 22, Zhen Hua 28, Zhen Hua New 1 Zhen Hua New 2, Mega Trust, Mega Innovation, Mega Caravan, Mega Integrity, Wish Way, Development Way, Dong Bang Giant 1, Dong Bang Giant 2, Guangzhou New 1, Aura, Sea Baron, NYK New 1, NYK New 2, STX Rose 1, Asian Atlas Low Frequency High Frequency 6

7 Australian-Chinese LNG Relationship Will Have the Biggest Impact on Demand for Modern Semi-submersible Open Stern Vessels Australia s gas reserves (trillion cubic feet) LNG Projects Bonaparte 279 Browse 303 Gladstone Curtis Island Project Field Operator Est cost USD Targeted approval Production Gorgon Carnarvon Chevron 43bn Approved 2014 Pluto 2 Carnarvon Woodside 4bn Ichthys Browse Inpex 32bn Gladstone LNG* Surat-Bowen Santos 11bn Carnarvon 8175 Perth 138 Cooper 75 Surat 75 Curtis Island LNG* Surat-Bowen BG Group 12bn APLNG* Fisherman`s Landing* Surat-Bowen Origin/ ConocoPhillips 12bn Surat-Bowen LNG/Arrow 500m Pluto 3 Carnarvon Woodside 4bn Otway 24 Gippsland Bass Wheatstone Carnarvon Chevron 13bn Sunrise Bonaparte Woodside 12bn Browse Browse Woodside 30bn TOTAL 174bn Source: AFP and SEB Enskilda *) Planned LNG production from coal seam gas piped to Gladstone Analysis and proponents agree that the projects will need to consolidate and cannot all go ahead at current time frames and sizes 7

8 Projected vessel demand to service module transportation for onshore energy projects (LNG) and offshore projects (field production) predicts a shortage Total number of vessels required Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 4 vessels 4 vessels 4 vessels 7 vessels 3 vessels 4 vessels Vessels required OFFSHORE Vessels required ONSHORE 8

9 Newly built open-stern semi-submersible ships require a two to three year planning, investment and construction timeframe Number of vessels required based on known projects In 2012, 2013 and 2014 there is a potential shortfall of as many as 20 open-stern vessels Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q vessels This shortfall will require a significant increase in capital investments as well as closer planning with project owners and participants Vessels required OFFSHORE Vessels required ONSHORE 9

10 Investment criteria for investment in new semisubmersible heavy transport vessels What are the characteristics of future market demand? What are the barriers to entry? What is the true cost of a new vessel? Prudent leverage Permanent Sustainable Leverage Investment return hurdles should demonstrate an IRR of at least 15% per annum for the twenty-five year life of the vessel Transparent Capex and maintenance program Sensitivity to cyclicality Conclusion the marine heavy transport industry has demonstrated a disconnect between vessel supply and future demand Beware! 10

11 Contact details - Fairstar Heavy Transport NV Postal address Visiting address PO Box 2225 Weena , Tower A 3000 CE Rotterdam 3012 NJ Rotterdam The Netherlands The Netherlands Contact T +31 (0) F +31 (0) I wwwfairstarcom E fairstar@fairstarcom Philip Adkins (CEO) Ingmar den Blanken (Treasurer) M +44 (779) M +31 (0) E philipadkins@fairstarcom E ingmardenblanken@fairstarcom This material has been prepared by Fairstar Heavy Transport NV ( FHT") This material is for distribution only under such circumstances as may be permitted by applicable law It has no regard to the specific investment objectives, financial situation or particular needs of any recipient It is published solely for informational purposes No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in the materials It should not be regarded by recipients as a substitute for the exercise of their own judgement Any opinions expressed in this material are subject to change without notice and may differ or be contrary to opinions expressed by other business areas or groups of FHT as a result of using different assumptions and criteria FHT is under no obligation to update or keep current the information contained herein Neither FHT nor any of its affiliates, nor any of FHT s or any of its affiliates, directors, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of this material 2011 Fairstar Heavy Transport NV All rights reserved Fairstar Heavy Transport NV specifically prohibits the redistribution of this material and accepts no liability whatsoever for the actions of third parties in this respect 11