Overview of the Offshore Supply Vessel Industry May 2012
Contents Macro Drivers to Offshore Support Vessel Demand Growth Offshore Support Vessel Industry - Overview Fleet Development and Age Profile Orderbook and Deliveries Demolition (Scrapping) Asset Values OSV to Rig ratio Regional Outlook US GoM Latin America West Africa Middle East North Sea Asia Pacific Market Outlook Disclaimer 1
Offshore Support Vessel Demand - Macro Drivers 2
Macro Drivers prompting Offshore Support Vessel Demand Oil Consumption vs. GDP Growth WTI Crude Oil Prices % growth US$ /bbl 6% 160 5% 140 3% 120 2% 100 0% 80-2% 60-3% 40 2005 2006 2007 2008 GDP Growth 2009 2010 2011 2012E Oil Demand Growth 2013E 20 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Source: IMF, World Economic Outlook (Aprill 2012) Source: Bloomberg, EIA - Short Term Energy Outlook (March 2012) High Energy demand & Oil prices High E&P Capex Increasing Offshore activity as onshore fields mature Robust OSV Demand 3
E&P Spend by Major Oil and Gas Companies Top 10 Global E&P Spenders US$ million 5,000 25,000 45,000 65,000 Petrochina Exxon Mobil Royal Dutch/Shell Chevron Corp. Petrobras BP plc Pemex Eni Spa» Top 10 E&P spenders globally accounted for nearly 44% of the total E&P spending in 2011» All of them are expected to increase capex during 2012, by an average 29% ConocoPhillips Petronas 2012E 2011 Source: Company filings, Clarkson Capital Markets 4
Offshore fields to provide increasing share in the global oil supply Global Offshore E&P Capex US$ billion 2011E 90 113 140 154 137 137 155 173 195 214 85% 15% Shallow water CAPEX Deepwater CAPEX 2014E 2005 2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 78% 22% Shallow water CAPEX Deepwater CAPEX» Exploration trend shifting towards offshore oil fields and away from onshore fields: Offshore oil production contribution expected to grow ~37% by 2018, up from 35% in 2010, driven by contribution from deepwater (water depths >= 600 feet) Source: Clarkson Capital Markets, Douglas Westwood, The World Deepwater Market Report 2011-2015 (May 2011) 5
Deepwater Capex to reach new highs - fuelling the demand for OSVs US$ billion 70 Deepwater Capex by Component 60 50 40 30 20 10 Major proportion constituted by drilling activity Golden Triangle 0 2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E SURF Subsea Processing Subsea Production Pipelines Floating Platf orm Drilling» Majority of Capex is directed towards Deepwater Activities: Global Deepwater Capex is forecasted to reach $62 billion by 2015 from ~$22 billion in 2010, indicating a CAGR of ~23%, driven by advancement in seismic and drilling technologies Deepwater activity is mainly carried out in the Golden Triangle - West Africa, the US GoM and Brazil Source: Douglas Westwood, The World Deepwater Market Report 2011-2015 (May 2011) 6
Exploration Trend - Deeper and Deeper Country Number of Offshore Fields Average Water Depth (feet) Distance from Shore (km) Angola 10 4,970 156 U.S. 25 4,751 173 Brazil 30 3,514 156 Nigeria 7 2,054 63 Malaysia 8 1,171 99 Norway 18 761 141 Australia 7 499 149 United Kingdom 14 361 122 India 16 230 100 China P.R. 7 226 38 Others 39 666 83 Total 181 1,896 126» Majority of the offshore activity is concentrated in the deepwater regions such as: Angola, U.S., Brazil, Nigeria, Malaysia and Norway Source: Clarkson Research, The Offshore Oil Market (March 2012) 7
Significant Hydrocarbon Discoveries in the Deepwater Regions US GoM: Big Foot, Water depth 5,330 ft, Chevron, Jack/St. Malo, Water depth 7,042 ft, Chevron Lucius, Water depth 7,168 ft, Anadarko Greater Chinook Area, Water Depth 8,877 ft, Petrobras Gunnison, Water Depth 3,138 ft, Anadarko Auger, Water Depth 2,878 ft, Marathon Oil Europe - North Sea: Greater Norne Area, Water Depth 1,254 ft, Statoil Knarr (Jordbaer), Water Depth 1,320 ft, BG Esperanza, Water Depth 297 ft, BG Erne, Water Depth 5,562 ft, Antrim Ettrick, Water Depth 363 ft, Nexen Asia Pacific: Gajah Baru, Water Depth 271 ft, Premier Oil Chim Sao, Water Depth 380 ft, Premier Oil Benjarong, Water Depth 10,626 ft, Coastal Energy Laverda, Water Depth 2,640 ft, Woodside Janglau, Water Depth 10,761 ft, Lundin South America: Marlim Leste, Water depth 6,336 ft, Petrobas Barracuda, Water depth 3,630 ft, Petrobas Tupi, Water Depth 7,161 ft, Petrobas Guara Sul, Water Depth 7,065 ft, Petrobas Espadarte, Water Depth 2,805 ft, Petrobas Zaedyus, Water Depth 6,758 ft, Shell Albacora Leste, Water depth 200 ft, BPZ Energy Africa: Makore, Water Depth 4,646 ft, Kosmos Energy Ten Cluster, Water Depth 3,788 ft, Tullow Narina, Water Depth 3,772 ft, African Petroleum Corp. Independence discovery, Water Depth N/A, Vanco Jupiter, Water Depth 21,335 ft, Anadarko Azul, Water Depth 3,046 ft, Maersk Oil Offshore Oil Field:- Prospects, Discoveries (Drilled/Appraised), Under Development Fields (2011 April 2012) Source: SubseaIQ (division of Rigzone), Hornbeck Offshore Investor Presentation (March 2012), Clarkson Capital Markets 8
Offshore Support Vessel Industry - Overview 9
OSV fleet growing, and growing younger Fleet Development, by number of vessels 3,700 2,900 2,100 1,300 500 1,155 1,259 1,344 1,075 1,026 969 892 763 798 832 939 1,014 1,118 1,239 1,409 1,609 1,755 1,864 1,927 1,952 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E» At March-end 2012, the total count of OSV fleet stood at 2,967 vessels compared to 2,830 at December-end 2011» Young Fleet: Approx. 70% of the existing fleet is under 20 years of age AHTS PSV Source: MarineBase, Clarkson Capital Markets estimates Age Profile, by number of vessels, At March-end 2012 1,600 2,115 vessels <= 20 yrs. 1,400 1,284 1,200 1,000 800 600 517 423 400 257 182 161 200 57 65 21 0 0-5 6-10 11-15 16-20 21-25 26-30 31-35 36-39 40+ Source: MarineBase, Clarkson Capital Markets estimates Under 20 years Fleet, by vessel type, At March-end 2012 1,200 1,000 842 800 600 442 400 275 242 200 122 135 24 33 0 0-5 6-10 11-15 16-20 AHTS PSV Source: MarineBase, Clarkson Capital Markets estimates 10
as healthy orderbook promises future fleet growth Annual Orderbook, by number of vessels, At March-end 2012 250 200 150 123» Global OSV orderbook comprised over 14% of the fleet at March-end 2012 100 105 50 107 61 48 0 19 2012E 2013E 2014E AHTS PSV Source: MarineBase, Clarkson Capital Markets estimates» Amongst yards, Sinopacific holds the top position with 12% share, or 48 newbuilds on order placed by Bourbon and Deep Sea Supply, followed by ABG shipyard with 5% share Global Orderbook, by Yards, At March-end 2012 Annual Deliveries, by number of vessels 100% = 411 vessels 450 74% Sinopacific Eastern Shipbuilding Remontowa Source: MarineBase, Clarkson Capital Markets estimates 12% 2% ABG Shipyard Bharati Others 5% 3% 3% 360 270 93 87 180 97 70 62 90 209 198 112 128 146 0 2007 2008 2009 2010 2011 AHTS PSV Source: MarineBase, Clarkson Capital Markets estimates 11
and high scrapping reduces average fleet age Offshore Fleet - Demolition, by number of vessels 40 35 30 25 20 15 10 5 0 34 31 15 19 20 11 3 1 5 6 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E Demolitions to increase in the coming years 8 5 2 23 1 15 9 5 2011 2012E 2013E 2014E AHTS Demolition PSV Demolition» Historically, the OSV sector has witnessed low scrapping, except for 2009 where the demolitions touched a record high with 34 vessels» Over the forecast period, we expect the demolitions to increase, driven by: NOCs demand for younger vessels for long-term charters Competition from higher specifications vessels Source: Clarksons, MarineBase, Clarkson Capital Markets estimates 12
Asset values strengthened for newbuilds and modern 5-year old units Small AHTS (80t BP) Values Medium AHTS (120t BP) Values US$ million $30 Median Newbuild(NB): $16.9 10yr-old: $10.0 5yr-old: $15.4 20yr-old: $5.3 US$ million $45 Median Newbuild(NB): $30.5 10yr-old: $14.8 5yr-old: $27.4 20yr-old: $9.5 $20 $10 $18.0 $15.8 $10.0 $30 $15 $31.8 $26.8 $15.0 $ 5.0 $ 8.3 $0 $0 Jan-08 Aug-08 Mar-09 Oct-09 May-10 Dec-10 Jul-11 Jan-08 Aug-08 Mar-09 Oct-09 May-10 Dec-10 Jul-11 NB 5-yr-old 10-yr-old 20-yr-old NB 5-yr-old 10-yr-old 20-yr-old» In 1Q 2010, the asset values strengthened for newbuilds and modern 5-year old units, while a contrary trend was observed for the 10 and 20 year old vessels» The 10 and 20 year old vessel values have either trended downwards and stayed nearly flat, indicating reduced relative demand for older vessels Source: Clarksons 13
in contrast to a decline witnessed for their older counterparts Large AHTS (200t BP) Values Medium PSV (3,200t dwt) Values US$ million $95 Median Newbuild(NB): $62.6 10yr-old: $38.0 5yr-old: $56.4 20yr-old: $27.0 US$ million $45 Median Newbuild(NB): $27.3 10yr-old: $14.0 5yr-old: $25.0 20yr-old: $9.9 $70 $45 $20 $64.0 $56.0 $38.0 $ 27.0 $30 $15 $0 $29.3 $24.9 $13.5 $ 8.3 Jan-08 Aug-08 Mar-09 Oct-09 May-10 Dec-10 Jul-11 Jan-08 Aug-08 Mar-09 Oct-09 May-10 Dec-10 Jul-11 NB 5-yr-old 10-yr-old 20-yr-old NB 5-yr-old 10-yr-old 20-yr-old Very Large AHTS (240t BP) Values Large PSV (4,000t dwt) Values US$ million $150 Median Newbuild(NB): $84.8 5yr-old: $78.1 US$ million $75 Median Newbuild(NB): $44.0 10yr-old: $24.2 5yr-old: $37.0 20yr-old: $12.5 $100 $50 $91.3 $79.0 $50 $25 $45.8 $35.0 $23.0 $ 8.8 $0 $0 Jan-08 Aug-08 Mar-09 Oct-09 May-10 Dec-10 Jul-11 Jan-08 Aug-08 Mar-09 Oct-09 May-10 Dec-10 Jul-11 Source: Clarksons NB 5-yr-old NB 5-yr-old 10-yr-old 20-yr-old 14
Market expected to turn in favor of vessel owners OSV to Rig Ratio CCM OSV Index (1) vs. WTI Crude Oil Prices 4.5x 4.0x 3.5x 3.0x Mar 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q2014 2Q2014 3Q2014 4Q2014 Indexed Price Correlation = 0.94x, R-Squared = 0.84x 160 140 120 100 80 60 40 20 0 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 CCM OSV Index (31.2%) WTI Crude Oil Index (31.3%) Source: ODS-Petrodata, Clarkson Capital Markets estimates Source: Bloomberg; Clarkson Capital Markets 1. CCM OSV index comprising of the four companies under our coverage - Tidewater, Gulfmark Offshore Inc. Bourbon and Hornbeck Offshore» OSV to Rig ratio is expected to fall below 3.9 by 2014 from 4.1 as of March 2012, reflecting a tilt in market balance in favor of vessel owners 15
Regional Markets 16
US GoM is the most actively explored Leading Vessel Operators» Potential deepwater discoveries (Jack/St. Malo 66% 13% 6% 6% 5% 4% and the Big Foot) would continue to drive E&P activity in the region» Top 5 Operators: Shell, BP, Chevron, Apache and Anadarko Shell BP plc Chevron Apache Anadarko Others» Leading Managers: The contracting side is more top heavy with Seacor Marine and Edison Chouest constituting maximum share Leading AHTS Players Leading PSV Players 29% 13% 35% 13% 3% 7% 52% 6% 15% 7% 11% 9% Source: MarineBase Seacor Marine Edison Chouest Tidewater Harvey Gulf KG Offshore Others Edison Chouest Abdon Callais Hornbeck Tidewater Odyssea Others 17
and drilled offshore basins 100% Utilization - AHTS and PSV» Utilization: Utilization for AHTS remained 80% 60% volatile while that of PSV has increased» Dayrates: AHTS rates are highest in the region. The AHTS dayrates improved strongly 40% in 3Q 2011, and maintained those levels 20% thereafter. However, an opposite trend was 1Q 2007 1Q 2008 AHTS 1Q 2009 1Q 2010 PSV 1Q 2011 1Q 2012 visible in the PSV rates which declined post 3Q 2011. For 2012, the OSV average dayrates would probably down $90,000 AHTS Average earned Dayrates $18,000 PSV Average earned Dayrates $70,000 $16,000 $50,000 $14,000 $30,000 $12,000 $10,000 $10,000 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011 1Q 2012 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011 1Q 2012 Source: Clarksons 18
Latin America is one of the important OSV markets Leading Vessel Operators 64%» Continued development of Brazil s large offshore basins like the Campos, Santos, Espirito de Santos, and prospects like the 13% 2% 2%2% 17% Atlantic Margins, to support the OSV demand» Top 5 Operators: Petrobras, Pemex, BP, OGX Petrobras Pemex BP plc OGX Shell Others and Shell» Leading Managers: Tidewater, Maersk Supply and Edison Chouest Leading AHTS Players Leading PSV Players 61% 15% 4% 3% 10% 7% 78% 8% 5% 4% 3% 2% Source: MarineBase Tidewater Maersk Supply Edison Chouest Deep Sea Bourbon Others Edison Chouest Tidewater Hornbeck CBO Bourbon Others 19
given its huge growth potential over the next 10 years 100% 80% Utilization - AHTS and PSV» Utilization: The utilization levels in the region have remained fairly consistent 60% 40%» Dayrates: Tend to be higher in Brazil relative to Mexico, as it is more expensive to work in Brazil. Overall, the dayrates have shown a 20% 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011 1Q 2012 gradual improvement over the last few years and are expected to maintain the trend in 2012 AHTS PSV $35,000 AHTS Average earned Dayrates $18,000 PSV Average earned Dayrates $30,000 $25,000 $20,000 $16,000 $14,000 $15,000 $12,000 $10,000 $10,000 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011 1Q 2012 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011 1Q 2012 Source: Clarksons 20
West African region is both a shallow Leading Vessel Operators» The incremental demand for OSV activity is 19% likely to come from deepwater projects in 16% Angola, Nigeria and Ghana 37% 14%» Top 5 Operators: Total, Chevron, ExxonMobil, 6% 8% ENI and Perenco Total S.A. Chevron ExxonMobil Eni Perenco Others» Leading Managers: The vessels market is top heavy, with Tidewater, Bourbon and Sanko Line forming ~16-36% share of the market Leading AHTS Players Leading PSV Players 20% 45% 16% 81% 10% 6% 4% 7% 8% 1% 1% 1% Source: MarineBase Tidewater Bourbon Sanko Line Swire Pacific Maersk Supply Others Tidewater Bourbon Sanko Line Swire Pacific Edison Chouest Others 21
and deepwater play 100% 80% 60% 40% Utilization - AHTS and PSV» Utilization: The AHTS and PSV utilization in the region has declined gradually from high levels.» Dayrates: The AHTS dayrates have nearly halved over the last two years. In contrast, the 20% 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011 1Q 2012 average dayrates earned by PSV stabilized after declining sharply AHTS PSV AHTS Average earned Dayrates PSV Average earned Dayrates $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $30,000 $26,000 $22,000 $18,000 $14,000 $10,000 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011 1Q 2012 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011 1Q 2012 Source: Clarksons 22
Middle East region is primarily Leading Vessel Operators» In the region, the jack up rig count is a more important driver of OSV activity and demand 58% Saudi Aramco Maersk Belayim Petroleum 25% 5% 4% 4% 4% Iranian Offshore Qatar Petroleum Others» Top 5 Operators: Saudi Aramco, Iranian Offshore, Maersk, Qatar and Belayim» Leading Managers: In the AHTS market, Zamil and Tidewater hold the majority share while the PSV market is significantly fragmented Leading AHTS Players Leading PSV Players 68% 10% 9% 5% 4% 4% 94% 2% 2% 1% 0.5% 0.5% Zamil Co. Whitesea Shipping Halul Offshore Source: MarineBase Tidewater Topaz Marine Others Tidewater Topaz Marine Halul Of f shore Zakher Marine Intermarine Others 23
a shallow water play 100% Utilization - AHTS and PSV» Utilization: Both the PSV and AHTS 80% 60% 40% utilization levels have decreased gradually from high levels over the last few years» Dayrates: Rates in this region are among the lowest in the world, due to shallow waters in 20% the region and Saudi Aramco s ability to 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011 1Q 2012 dictate pricing AHTS PSV AHTS Average earned Dayrates PSV Average earned Dayrates $10,000 $10,000 $9,000 $9,000 $8,000 $8,000 $7,000 $7,000 $6,000 $6,000 $5,000 $5,000 1Q 2007 Source: Clarksons 1Q 2008 1Q 2009 1Q 2010 1Q 2011 1Q 2012 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011 1Q 2012 24
North Sea is one of the oldest and most explored offshore... 65% Leading Vessel Operators 14% 8% 5% 4% 4% Statoil BP plc Peterson ConocoPhillips Shell Others» Application of enhanced oil recovery techniques is expected to drive future demand for OSVs in the region» Top 5 Operators: Statoil, BP, Peterson, ConocoPhilips and Shell» Leading Managers: Gulf Offshore, a subsidiary of Gulfmark, Simon Offshore and Siem Offshore Leading AHTS Players Leading PSV Players 71% 7% 6% 6% 5% 5% 78% 9% 4% 3% 3% 3% Simon Mokster Siem Of f shore Maersk Supply Solstad Havila Others Source: MarineBase Gulf Offshore Simon Mokster Island Offshore Havila Rem Maritime Others 25
oil and gas basins 100% 80% Utilization - AHTS and PSV» Utilization: The AHTS and PSV utilization levels have remained volatile over the last few years 60%» Dayrates: While the average dayrates earned 40% by AHTS have relatively subdued, the PSV 20% dayrates have displayed consistency 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011 1Q 2012 AHTS PSV AHTS Average earned Dayrates PSV Average earned Dayrates $40,000 $28,000 $35,000 $25,000 $30,000 $22,000 $25,000 $19,000 $20,000 $16,000 $15,000 $13,000 $10,000 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011 1Q 2012 $10,000 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011 1Q 2012 Source: Clarksons 26
Asia Pacific region offshore production has witnessed rapid 66% Leading Vessel Operators 14% 9% 6% 3% 2%» Offshore production in the region has witnessed rapid growth over the years, driven by a wide array of geographic developments» Top 5 Operators: CNOOC, Petronas, Chevron, PTT and Vietsovpetro CNOOC Chevron Vietsovpetro Petronas Carigali PTT Others» Leading Managers: China Oilfield and Tidewater hold the majority share of the AHTS market,while the PSV market is fragmented Leading AHTS Players Leading PSV Players 75% 7% 6% 4% 4% 4% 94% 2% 1% 1% 1% 1% China Oilfield Tidewater Swire Pacific Yantai Salvage Pacific Richfield Others Source: MarineBase Tidewater Farstad China Oilfield Bourbon Swire Pacific Others 27
growth over the years 100% 80% 60% 40% Utilization - AHTS and PSV» Utilization: The AHTS and PSV utilization have declined from moderately high levels and stayed broadly flat over 2011. However, over the next 12 months rates are expected to remain stable or tread downwards 20%» Dayrates: Post 1Q 2011, the average dayrates 1Q 2007 1Q 2008 AHTS 1Q 2009 1Q 2010 PSV 1Q 2011 1Q 2012 have declined, however, for 2012 they are projected to continue sideways to down AHTS Average earned Dayrates PSV Average earned Dayrates $30,000 $18,000 $26,000 $16,000 $22,000 $18,000 $14,000 $14,000 $12,000 $10,000 $10,000 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011 1Q 2012 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011 1Q 2012 Source: Clarksons 28
Market Outlook 29
AHTS: Strong outlook for 2012 AHTS- Global 2009 2010 2011 2012E 2013E Supply 1,409 1,609 1,755 1,864 1,927 Growth % 14% 9% 6% 3% Demand 1,098 1,128 1,297 1,586 1,624 Growth % 2% 15% 22% 2% Utilization 78% 70% 74% 85% 84% 1,800 1,600 1,400 1,200 1,000 AHTS Global Demand and Utilization 85% 84% 78% 74% 70% 1,586 1,624 1,297 1,098 1,128 90% 80% 70% 60% OUTLOOK We anticipate the AHTS market to tighten in favor of vessels in 2012 Utilization is expected to reach peak levels from 800 2009 2010 2011 2012E 2013E 50% 2009-10 AHTS Demand Utilization Source: MarineBase, Clarkson Capital Markets estimates 30
PSV: Robust in 2012 PSV- Global 2009 2010 2011 2012E 2013E Supply 969 1,026 1,075 1,155 1,259 Growth % 7% 5% 7% 9% Demand 703 721 776 898 937 Growth % 4% 8% 10% 6% Utilization 73% 70% 72% 78% 74% PSV Global Demand and Utilization 1,000 900 73% 70% 72% 78% 74% 80% 70% Utilization to mount in 2012, however, the PSV 800 700 703 721 776 898 937 60% OUTLOOK market is expected to come under supply side pressure in 2013 600 2009 2010 2011 2012E 2013E 50% PSV Demand Utilization Source: MarineBase, Clarkson Capital Markets estimates 31
THANK YOU 32
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