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

How to get through tough times? Incentra Holmen Fjordhotel, Astrid P. Nordtorp, DNB 6 September, 2016

“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: OSV support Semi-sub rig Jack-up rig Semi-sub rig OSV support OSV support OSV support Field Floating Seismic Exploration Equipment Subsea Production Shuttle tanker development production assessment drilling manufacturing construction drilling transportation engineering (FPSO) Seismic vessel Pipe-lay vessel OSV support w/streamers FPSO Subsea construction OSV support vessel

The negative effect of oversupply continues: 70% Over building Absorption Balance Over building 60% 50% 40% 30% 20% 10% - -10% -20% -30% 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 Source: DNB Markets Research

Low rig utilization is expected through 2017… 1000 120% 100% 800 80% 600 60% 400 40% 200 20% 0 0% 2013 2014 2015 E2016 E2017 Jack-ups and floaters demand Jack-ups and floaters supply Jack-ups utilization Floaters utilization Source: Clarksons Research (February 2016)

… and even lower utilization for OSV! 2200 95% 2000 90% 1800 85% 1600 80% 1400 No. Units 75% 1200 1000 70% 800 65% 600 60% 400 55% 200 0 50% 2008 2009 2010 2011 2012 2013 2014 2015 E2016 E2017 PSV and AHTS demand PSV and AHTS supply Large OSV Utilization Source: Clarksons Research (February 2016)

It’s not only about the oil price… Techn- Cost- Drop in oil Brazil and Over- cutting price Mexico ology supply

…its also about too much debt in the OSV sector 11,957 11,849 12,980 12,178 9,687 7,980 7,980 100% 66% 72% 75% 75% 85% 95% 95% 34% 28% 25% 25% 15% 5% 5% 31/12/2010 31/12/2011 31/12/2012 31/12/2013 31/12/2014 31/12/2015 05/04/2016 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): OSV support Semi-sub rig Jack-up rig Semi-sub rig OSV support OSV support OSV support Field Floating Seismic Exploration Equipment Subsea Production Shuttle tanker development production assessment drilling manufacturing construction drilling transportation engineering (FPSO) Seismic vessel Pipe-lay vessel w/streamers OSV support FPSO Subsea construction OSV support vessel

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

This industry needs owners 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 operation:

This industry needs lower gearing

The industry needs to be re-capitalized Market Outlook Management / Sponsor Corporate Governance Size and liquidit y

We’re in this boat together

Thank you