How to get through tough times? Incentra Holmen Fjordhotel, Astrid - - PowerPoint PPT Presentation

Incentra Holmen Fjordhotel, Astrid P. Nordtorp, DNB 6 September, 2016

How to get through tough times?

“There are risk and costs to a program of action. But they are far less than the long- range risks and costs of comfortable inact ction ion»

John F. Kennedy

The oil field value chain:

Seismic assessment Exploration drilling Field development engineering Equipment manufacturing Subsea construction Production drilling Floating production (FPSO) Shuttle tanker transportation

OSV support OSV support OSV support OSV support Semi-sub rig Jack-up rig Seismic vessel w/streamers Semi-sub rig Pipe-lay vessel Subsea construction vessel OSV support OSV support FPSO

• 30%
• 20%
• 10%
• 10%

20% 30% 40% 50% 60% 70% 2008 2009 2010 2011 2012 2013 2014 2015 2016e 2017e*

Offshore Supply, Seismic and Subsea construction Deepwater and Jack-up Rigs Offshore E&P Spending

Over building Absorption Over building Balance

The negative effect of oversupply continues:

Source: DNB Markets Research

Low rig utilization is expected through 2017…

Source: Clarksons Research (February 2016)

0% 20% 40% 60% 80% 100% 120% 200 400 600 800 1000 2013 2014 2015 E2016 E2017 Jack-ups and floaters demand Jack-ups and floaters supply Jack-ups utilization Floaters utilization

… and even lower utilization for OSV!

Source: Clarksons Research (February 2016)

50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 200 400 600 800 1000 1200 1400 1600 1800 2000 2200 2008 2009 2010 2011 2012 2013 2014 2015 E2016 E2017

• No. Units

PSV and AHTS demand PSV and AHTS supply Large OSV Utilization

It’s not only about the oil price…

Over- supply Cost- cutting Drop in oil price Brazil and Mexico Techn-

• logy

…its also about too much debt in the OSV sector

34% 25% 25% 28% 15% 66% 75% 75% 72% 85% 95% 95%

31/12/2014 31/12/2015 31/12/2010 31/12/2013

5%

31/12/2011 31/12/2012 11,957 11,849 12,980

100%

05/04/2016 12,178 9,687 7,980

5%

7,980 Net debt Market Cap

Note: Capital structure shown aggregated for Deep Sea Supply, DOF, Eidesvik Offshore, Farstad Shipping, Havila Shipping, Siem Offshore and Solstad Offshore Source: FactSet

It’s not about runway through 2020

This industry needs structural change

(within our outside this value chain):

Seismic assessment Exploration drilling Field development engineering Equipment manufacturing Subsea construction Production drilling Floating production (FPSO) Shuttle tanker transportation

OSV support OSV support OSV support OSV support Semi-sub rig Jack-up rig Seismic vessel w/streamers Semi-sub rig Pipe-lay vessel Subsea construction vessel OSV support OSV support FPSO

This industry needs more scrapping to bridge the gap between demand and supply

This industry needs

• wners that focus

beyond ownership:

Med Aker på laget vil Solstad bruke nedturen til å vokse – Nå kan vi finne på noe, sier Lars Peder Solstad.

This industry needs owners that focus beyond their current

• peration:

This industry needs lower gearing

The industry needs to be re-capitalized

Market Outlook Management / Sponsor Corporate Governance Size and liquidity

We’re in this boat together

Thank you