UNO Offshore

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Subsea Operations Conference 2018- Subsea Vessel Market Overview

Agenda

» Introduction

» Subsea vessel market at a glance

» Market Prospects

» Offshore Wind

» Vessel utilisation

» S&P

» Attrition

» Summary

Our Systems

» UNO Offshore have access to unique online tools for the OSV and subsea market to further improveour service to clients

» Market cycle of; 7 good years and 7 bad years?

» Despite industry downturn – utilisation kept at impressive levels

» Costs are down – and will remain down for an extendedperiod to drive activity levels

» Day rates slightly increased from last year

» Demand Improving / high tendering activity

» Tier 1 Contractors with stable back log

» Few term contracts concluded, but contracts are secured

» Contracts basis «We Work You Work»

» Refinancing / Restructuring

» Vroon, Bourbon, Pacific Radiance

» Tidewater / Gulfmark / Harvey Gulf

Subsea vessel market at a glance

«Most brutal downturn in recent Offshore history»

» Increased project activity

» FID from 12 in 2016 to 24 in 2017

» Estimated up to 40 in 2018

» So far this year estimated 30FIDs in 2019

» Subsea trees

» High end tonnage / SPS

» Harsh environments / Brazil / WAF

» Oil price – steady or slightly increased longterm forecast

Market Prospects

Johan Sverdrup tow out 31.05.2018

Offshore Wind

» Renewable remains a rising star; particularly offshore wind

» Offshore wind installation with appetite for subsea vessels, for development and production phases

» Other geographical areas will follow; Taiwan – 1st phasecontract already awarded

» Service Operation Vessels (SOVs) still ordered

» What happen when O&G recovers?

Ulstein SX195 ordered by Bernhard Schulte to support GE Renewable Energy at the German wind farm Merkur Offshore

Offshore Wind Installations (in GW)

Subsea vessel utilisation - Survey Vessels (crane < 100t)

Segment Present ratelevel kUSD/day

1 yearforecast

2 - 3 yearsforecast

Pax < 60 / World Wide 15 – 20 → ↗

Pax ≥ 60 / World Wide 15 – 20 → ↗

Fleet statistics Total

Total fleet 124

Utilization – Aug ‘18 66%

Under Construction 0

+20 years age 16 (13%)

In lay up 30 (24%)

Average age 12.0 years

02468

1012

197

6

197

8

198

0

198

2

198

4

198

6

198

8

199

0

199

2

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4

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6

199

8

200

0

200

2

200

4

200

6

200

8

201

0

201

2

201

4

201

6

201

8

Fleet Age Profile

Olympic Artemis MT6021, b. 2015

Subsea vessel utilisation - Light OCV (crane 100→199t)

Segment Present ratelevel

kUSD/day

1 year forecast

2 - 3 years forecast

Worldwide tonnage

20 – 30 → ↗

Fleet statistics Total

Total fleet 97

Utilization – Aug ’18 78,0%

Under Construction 3 (3%)

+20 years age 2 (2%)

In lay up 10 (10%)

Average age 8,6 years

0

2

4

6

8

10

12

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

Fleet Age Profile

Havila Subsea HY855, b. 2011

Subsea vessel utilisation – OCV (crane ≥ 200t)

Segment Present ratelevel kUSD/day

1 year forecast

2 - 3 yearforecast

Norw sector 30 – 40 → ↗

Worldwide tonnage 30 – 40 → ↗

Fleet statistics Total

Total fleet 77

Utilization – Aug ’18 81,8%

Under Construction 6 (8%)

+20 years age 0

In lay up 5 (6,5%)

Average age 5.4 years

0

2

4

6

8

10

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

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201

4

201

5

201

6

201

7

201

8

Fleet Age Profile

Edda Freya Salt 304OCV, b. 2016

Subsea vessel utilisation – SAT Diving Vessels

Fleet statistics Total

Total fleet 45

Utilization – Aug ’18 71%

Under Construction 1 (2%)

+20 years age 13 (24%)

In lay up 7 (15%)

Average age 15 years

0

1

2

3

4

5

6

19

76

19

78

19

80

19

83

19

86

19

89

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

20

13

20

15

20

17

Fleet Age Profile - DSV

Seven Kestrel VS4725 DSV, b. 2017

» Not many S&P deals concluded ww within subsea vesselsegments and far less then in 2017;

Fortitude HX102 design (ex Toisa Patroklos)

Well Servicer

Bourbon Altair

Vissolela

» Newbuild availabilities:

» Haldane VARD303, Søviknes

» 2 x SALT 305 ROV, Qingdao Wuchuan, China

» + DSV «Toisa Pelagic» Shanghai Zhenhua Yard

» Edda Forties, Ulsan Korea

» Oriental Dragon (ST246DSV, Huangpu Wenchong)

» Second hand vessel values remain strong compared to OSV transactions where reduced prices and fire sales have been recorded

S&P

The Ulstein-owned vessel, ‘Kasteelborg’, has been awarded a 6-year contract by Wagenborg Offshore to support Nederlandse AardolieMaatschappij (NAM) and SHELL UK Exploration & Production (Shell UK) with their offshore operations in the Southern North Sea. (ERRV and W2W)

» Seven Osprey b. 1984

» Seven Condor b. 1982

» Kommandor 3000 b. 1984

» Deep Pioneer b. 1984

» Orelia b. 1984

» Sunrise 2000 b. 1984

» Bar Protector b. 1981

» Agile b. 1978

» Revelation b. 1975

Demolition is a necessary evil

New Orleans; Tidewater loading 4 x PSVs (b. 1998-2001) of UT755 design + 3 AHTS (b. 2005-06) of VS486 design onboard «Xiang YunKou» for transportation to breakers in India

Attrition

Significant increase in scrapping

Attrition

Decommissioning

“Atlantic Challenger” b. 1990 “Rockwater 1” b. 1983

Attrition

» Decommissioning

Maersk Searcher & Maersk Shipper capsized and sank in the Bay of Biscay en route to Aliaga, Turkey for recycling

Cyclone «Vardah» Chennai, India wrecked 13 OSV newbuilds in December 2016 at Larsen & Toubro’s yard

Alternative markets; Powerships

Karadeniz purchased vessels from Siem, Solstad, Møkster and Maersk

Fully integrated floating power plants by Karadeniz

Attrition

Alternative Markets; Aquaculture

Shellfish Harvester «Belle Carnell» ex. Siddis Skipper VS 470 b.2004 same Buyer also purchased «Anne Risley» ex. Siddis Supplier of same design b.2010 from O.H. Meling

Sea farm service vessel «Martin» ex. Havila Princess VS470 b. 2005 purchased by Bakkafrost . Same Buyer also purchased «Roland» ex Skandi Waveney UT755 b.2001 from Havila and DOF respectively

Attrition

Rigs

Cromarthy Firth, Scotland “TransOcean Winner” grounding at Dalmore beach, on the Isle of Lewis, UK 8th August 2016

Attrition

Summary

» Market activity for 2019

» indicated quotes proving Owners being more confident

» Increased Demand

» other geographical areas to follow

» Long lead time is expected for many projects

» Short Supply of High end subsea tonnage

» Attrition – some vessels unlikely to return to service

» Subsea vessels are there for the future

Thank You!

«The Future’s So Bright, You Gotta Wear Shades»

Timbuk3