Thinking outside the North Sea When is global domination not global domination? February 2011
ODS-Petrodata is recognised as the leading provider of market intelligence to the global oil and gas industry News I Databases I Consulting ODS-Petrodata is an independent market intelligence company 130+ employees - market reporters, specialists and analysts - Houston, Aberdeen, Oslo, Singapore and Dubai Our knowledge base stretches from pre-exploration through field abandonment - Well Services, Field Development, LNG, Onshore Production and Downstream, as well as Offshore Seismic, Drilling and Marine Operations Page 2
Thinking outside the North Sea The North Sea is still the key region for subsea work But with subsea installation competition increasing, where else can contractors look? Three vessel types: - Diving support (DP 2+) - ROV support (DP 2+) - Multiservice (DP 2+) Page 3
Vessel Days Rumours of the North Sea s decline are exaggerated Subsea Vessel Days By Region (2007-2010) 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 31% 26% 22% 23% 2007 2008 2009 2010 South America Russia & Caspian North America Med. & Middle East Europe Central America Asia-Pacific Africa Europe Protected by Copyright (c) 1986-2011 ODS-Petrodata Ltd. Source: ODS-Petrodata, www.constructionvesselbase.com, January 2011 Page 4
Vessel Days but a smaller share of an expanding global market Subsea Vessel Days By Region (2011-2014) 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 For more information please contact your ODS-Petrodata account manager 25% 24% 26% 27% 2011 2012 2013 2014 South America Russia & Caspian North America Med. & Middle East Europe Central America Asia-Pacific Africa Europe Protected by Copyright (c) 1986-2011 ODS-Petrodata Ltd. Source: ODS-Petrodata, www.constructionvesselbase.com, January 2011 Page 5
Vessel Days Supply has increased much faster over the same period Subsea Vessel Supply By Region (2007-2010) 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 2007 2008 2009 2010 Africa Asia-Pacific Central America Europe Med. & Middle East North America Russia & Caspian South America Protected by Copyright (c) 1986-2011 ODS-Petrodata Ltd. Source: ODS-Petrodata, www.constructionvesselbase.com, February 2011 Page 6
Utilisation % European utilisation is flattening after downturn Subsea Vessel Utilisation By Region (2007-2010) 100 90 80 70 60 50 Africa Asia-Pacific Central America Europe Med. & Middle East North America Russia & Caspian South America 40 2007 2008 2009 2010 Protected by Copyright (c) 1986-2011 ODS-Petrodata Ltd. Source: ODS-Petrodata, www.constructionvesselbase.com, February 2011 Page 7
Big Three dominate European subsea vessels market Subsea Vessel Market Shares (Europe 2007-2010) Others 41% Subsea 7 31% Trico/DeepOcean/CTC 13% Technip 15% Protected by Copyright (c) 1986-2011 ODS-Petrodata Ltd. Source: ODS-Petrodata, www.constructionvesselbase.com, January 2011 Page 8
but this domination is not worldwide Regional Subsea Vessels Market Share In Vessel Days 2007-2010 Subsea 7: 3% Technip: 3% Trico: 0% Subsea 7: 2% Technip: 3% Trico: 10% Subsea 7: 27% Technip: 6% Trico: 1% Subsea 7: 31% Technip: 14% Trico:13% Subsea 7: 17% Technip: 5% Trico: 1% Subsea 7: 0% Technip: 0% Trico: 0% Subsea 7: 1% Technip: 6% Trico: 7% Subsea 7: 3% Technip: 12% Trico: 5% Page 9
Russ. & Casp. SOCAR DOF N Most markets are dominated by regional players 100% Subsea Vessel Regional Market Shares (2007-2010) Other Other Other 50% Maersk Supply Service Saipem SBM Other Other Bibby Offshore DOF Subsea Trico Other Other Toisa Fugro DOF Subsea Subsea 7 Bourbon Allied Marine Hallin Marine TSMarine DOF Subsea Technip MMM Oceanografia Condux Trico Cotemar Technip Subsea 7 Technip Trico Qatar Subsea Algosaibi Saipem Saipem Global Industries Veolia Environmental Services Algosaibi Oceaneering Sealion Subsea 7 0% 0% Africa Asia- Pacific Central America 50% Europe Med. & Middle East North America South America 100% Page 10
Why the gaps in global coverage? Asia-Pacific - Shallow and benign waters. DP vessels achieve higher rates elsewhere Central America - PEMEX favours Mexican contractors to meet local content requirements - Generally shallow waters in Mexican Gulf of Mexico very low day rates North America - The Jones Act US-built and US-flagged vessels owned and crewed by US citizens South America - Regulatory hurdles in Brazil for foreign companies seeking to bid - Important to establish a relationship with Petrobras Page 11
How can these doors be opened? Asia-Pacific - Opportunity is there if contractors are willing to accept lower day rates - Deeper waters offshore Australia will be key area going forward Central America - Hire Mexican workers for vessels, and also accept lower day rates North America - Toughest regional market for a foreign contractor to enter - Charter vessels and crew from US-based companies South America - Winning long-term contracts with Petrobras is key to becoming established - Partnering a local company to bid for work Page 12
Another option mergers and acquisitions ODS-Petrodata forecasts a busy year for mergers and acquisitions At least five big deals (>USD 1 billion each) in 2011 Three or more of these deals will involve offshore or services companies Technip acquired Subocean January 2011 2010 paved the way - Acergy/Subsea 7 - Ezra/Aker Marine Contractors - Fugro/Riise Page 13
Which companies are potential takeover targets? Cal Dive Global Industries Trico Marine/ DeepOcean / CTC Key Subsea Regions Asia-Pacific Med. & Middle East North America Med. & Middle East North America Asia-Pacific Central America Europe Med. & Middle East 12 ROV Support Subsea Vessels Managed 1 Diving Support 1 Multiservice 2 Diving Support 2 ROV Support 1 Multiservice 2 ROV Support Newbuilds Vessel Utilisation 2010 40% 64% 60% Net Profit Margin 2009 9% 8% -23% Backlog Q3 2010 USD 233.4 million USD 274.5 million - Vessel Data Source: ODS-Petrodata, www.constructionvesselbase.com, February 2, 2011 Page 14
Buying individual vessels may be another option One Subsea 7 diving support vessel to be divested - North Sea competition concerns SBM may be considering selling Dynamic Installer - Africa entry point for new contractor? Break-up of Trico fleet could continue - Trico Sabre and Trico Star already sold to Ezra Vessels may be available at knockdown prices Page 15
Summary A future beyond the North Sea? The North Sea is still the world s largest subsea region - Typically between one third and one quarter of the global market each year But its share of an expanding global market is shrinking - Asia-Pacific a particularly strong market for diving work Competition is fiercer in the North Sea than anywhere else - 50 of the 126 global contractors operate in the North Sea Contractors seeking new horizons face varying hurdles - In a tight but expanding market, few will be able to rest on their laurels The North Sea is key, but the potential rewards elsewhere are huge Page 16
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