Capital Markets Day 31st of May DOF Group Brazil
Index I. DOF in Brazil II. Brazilian Offshore Market III. Challenges in Brazil IV. Present/Future outlook DOF ASA 2
DOF ASA DOF Group Brazil
Group structure in Brazil... High end offshore solutions 5 PSVs Skandi Leblon DOF Brazil 10 AHTSs Skandi Rio DOF Subsea Brasil Norskan 7 CSVs/RSVs 290 employees 99,3% local labour 922 employees 98% local labour 2 PLSV Skandi Salvador SK Niteóri/SK Vittória 4 NEWBUILDS (AHTSs) Skandi Iguaçu DOF ASA 4
Strategically located to support BR offshore market... Macae base Rio de Janeiro office DOF ASA 5
A leading operator in the region... Providing support, construction vessels, offshore and subsea support services to the Brazilian offshore oil and gas industry Skandi Rio ROV launching Skandi Salvador Large and diversified state of the art fleet Leading position in Offshore Subsea and Support Vessels Strong Brazilian local presence Long-term contract coverage with first class clients Access to attractive longterm financing Experienced and qualified management team and employees Long-term relationship with shipyards and suppliers Experienced and committed founding shareholders DOF ASA 6
With a state-of-art fleet... SKANDI IGUAÇU/AMAZONAS SKANDI NITERÓI/VITÓRIA SKANDI SALVADOR SKANDI SANTOS Largest AHTS ordered in Brazil. Customized to meet the extreme requirements demanded by Pre-Salt Environmentally friendly The first 2 PLSV s built in Brazil. JV with Technip Both in a long-term contract with Petrobras The first CSV built in Brazil. Support Chevron to develop Frade field Main task: x-mas tree installation In long-term contract with Petrobras Scope of work x-tree installation Petrobras ranks SK Santos as the best vessel in their subsea fleet DOF ASA 7
Unique solutions for offshore subsea market Capacity to delivery full package solutions for subsea operations. Provides specialized survey, subsea construction and inspection repair and maintenance ( IRM ) Flexible fleet of modern subsea construction and survey vessels. Vessel Fleet equipped with high technology equipment (AHC Cranes, AHC winchs, high end ROV fleet and Survey equipment) to meet increasing deepwater challenges in Brazilian market. Skandi Salvador: Chevron Brasil Vessel Spread support all offshore Installation and IMR activities to expand and maintain the subsea field Project : FRADE Water depth: 1,300m Contract Term: 3+1+1 year Survey Tree Installation and Intervention Jumper & FLs Installation Routine Inspection and Maintenance Strong expertise on delivering ROV and survey services during anchor-handling operations. 12 Work Class ROV s (4 to come), 4 Observation ROV s, full spread of survey equipment, 7 vessels from DOF Subsea fleet currently operating in Brazil. DOF ASA 8
Contract coverage FIRM CONTRACTS OPTIONAL PERIOD UNDER CONSTRUCTION NORSKAN DOF SUPPLY DOF SUBSEA DOF ASA 9
Focus on long-term relationship with clients and suppliers... Key E&P Clients Key Subsea Engineering Clients Key Suppliers DOF ASA 10
Brazilian offshore market DOF ASA
Brazil is a booming upstream market... Growth particularly in deep-and ultra-deepwater Target of 6.000 bpd by 2020 vs. 2.200 bpd today OSV demand is expected undertake an expressive growth until 2020. The current fleet in Brazil of 433 vessels (176 Brazilian flagged and 257 foreign flagged). Petrobras has announced the construction of146 new vessels (Prorefam/PB OSV Renovation fleet program 2008-2014). Demand excludes pre-salt needs. Other estimates say there will be a 200-vessel demand within the next 10 years Strong strategic commitment by Brazilian government and Petrobras to ensure high Brazilian content. (priority to BR flagged vessels) OSV demand shifting towards larger and more sophisticated vessels DOF ASA 12
Pre-salt depths demand more sophisticated OSV s... Pre-salt oil reservoirs are located in water depths as deep as 7,000 meters 709m Enchova Marimbá Marlim Marlim Sul Marlim Sul Roncador Roncador Tupi Technological challenges 1.000m Distance: approximately 300km from the coast. Pre-salt reservoir measures 800km in length and 200km in width 2.629m 1977 1.825m 1983 3.318m 1988 2.930m 1992 3.230m 1994 3.167m 1997 3.759m 1999 4.343m 2003 2.000m 3.000m 4.000m 5.000m Depth: long path to cover to reach the oil. It is necessary to go through 2 km of water and to drill through 1 km of pre-salt layer rocks Thickness: it is also necessary to drill through 2 km of salt 7.000m 2007 Santos Basin (Tupi) 6.000m 7.000m High impact on specification of vessels (type, size, speed) as well as shift to floating production system Harsh conditions demand a greater number of technologically-advanced and larger offshore support vessels DOF ASA 13
Petrobras is the top investment source... Petrobras E&P Investments in bi US$ (2011-2015) Espirito Santo 64,3 bi USD 53,4 bi USD São Paulo Rio de Janeiro Pre-salt Post-salt Source: Petrobras Business plan 2011-2015 3 main offshore basins in Brazil: Santos, Campos and Espirito Santo DOF ASA 14
IOC s are increasing their roles in E&P activities... Production phase 8; 10 % IOC s own 8 blocks in production phase Development phase 7; 19 % IOC s own 7 blocks in development phase 59; 33 % Exploration phase IOC s own 59 blocks in exploration phase 76; 90 % 30; 81 % 121; 67 % IOC s TOP 8 non-petrobras operators Petrobras Source: ANP statistic review/end of 2010 DOF ASA 15
Overview of the Brazilian fleet BRA OSV fleet BRA OSV fleet sorted by vessel type MPSV 1% WSV 1% ORSV 2% 41 % Foreign flag (257) BRA flag (176) PLSV CREW/FSV DSV/RSV 3% 5% 6% 59 % LH/SV 13% AHTS 25% PSV 44% 0% 10% 20% 30% 40% 50% Source: ABEAM 2012 DOF ASA 16
Top 4 in the brazilian market FARSTAD W.SONS SEACOR CBO BOURBON MARÉ ALTA MAERSK NORSKAN / DOF BRAZBUNKER/S MIGUEL ASTROMARÍTIMA EDISON CHOUEST/BRAM 0 10 20 30 40 50 60 BRA FLAG FOREIGN FLAG Source: ABEAM 2012 DOF ASA 17
DOF ASA Challenges
Regulation reinforces protectionist rules... The Brazilian government is committed to developing Brazil through local content and instituting favorable policies for those who commit to the country s growth Circularization (Res. 192/04) Circularization gives priority to Brazilian-flagged vessels over foreign vessels Foreign vessels operating in Brazil need to undergo circularization each year, where contracts will be taken over by Brazilian-flagged vessels if available Local Content Requirement 27% 25% 48% 42% 28% 54% 40% 39% 86% 89% 86% 81% 79% 74% 84% 77% 79% 69% 1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th Exploration Phase Development Phase ANP (National Agency for Oil and Biofuels) bidding rounds Source: ANP Note: 8 th ANP bidding round auction is still under discussion Special Brazilian Regime (REB) Fleet in Operation For each vessel ton built in Brazil by a Brazilian shipping company, 0.5x additional tons are allowed to be imported, with the privilege of a Brazilian flag (ex. Skandi YARE) For each vessel ton under construction, twice the vessel tonnage of the same type is temporarily allowed to be imported with the privilege of a Brazilian flag Obs. ANP has been very strict to ensure high levels of local content with alloperators DOF ASA 19
Challenging environment... Industry framework... Cost in Brazil (hot market) Lack of personnel Lack of reliable suppliers/spare parts/quality Shipyards for repair/docking Contract structure... Long term contracts (typical 5 + 5 year) Risk of penalties Others Cultural differences Complex tax regime Bureuacracy Incipient spot market DOF ASA 20
Present/Future outlook DOF ASA
We are positioned to capitalize BR opportunities... High Growth Brazilian Oil & Gas Market Leading position in offshore subsea and support vessels Offshore Supply Vessel Shortage Long-term relationship with shipyards and suppliers Need for a High Tech Fleet Large and Diversified State-of-the-art Fleet Key Regulation in the Brazilian Sector Strong Brazilian local presence DOF ASA 22
With competitive advantages One of the youngest fleets in the industry Unique best-in-class Brazilianflagged vessels One of the largest tonnage capacities in the Brazilian offshore industry to benefit from REB regime Capacity to import 6 to 8 additional high-end vessels (through REB) Providing services to a large number of highly-active clients Strong Brazilian local presence DOF ASA 23
Working on 7 focus points... Safety Improve safety awareness Result oriented Safety Culture Company culture Ensure key elements of company culture in order to promote loyalty and ensure low turnover Group alignment Company culture Leader Project oriented Ensure right quality of leaders in all positions offshore and onshore Implement a project oriented structure to ensure control of contractual deliveries Max synergies Leadership Synergy Take advantage of all possible synergies between the two companies Project oriented Group align Align operation and procedures to rest of group to ensure DOF group standardization Result orient Find smarter ways to work and ensure high focus on maximizing earnings and keeping cost within budget DOF ASA 24
DOF Brazil key targets... Strong focus on International Oil Companies Develop subsea engineering capabilities Increase presence in survey services Consolidate position in anchorhandling (vessel+rov+survey) services in order to meet Pre-sal requiments DOF ASA 25
Opportunities Pre-salt will have high impact on specification of vessels (type, size and speed) driving up the demand for OSV. Deepwater subsea projects will bring significant technological and logistic challenges. 11th ANP round is expected to bid 174 new O&G blocks from which 87 are located offshore. The main player in the Non-Petrobras market is OGX which had in 2011 6 drilling rigs and 11 OSV under term charter. Other main players are Shell, BP and Statoil. Sonangol and Repsol are expected to undertake a major growth in the next years. Several tenders out from Petrobras, OGX and other IOCs. DOF ASA 26
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