Shipping Overview CMA Luncheon - October 27, 2010 Presentation by - - PowerPoint PPT Presentation

Shipping Overview

CMA Luncheon - October 27, 2010 Presentation by Mr. George Economou

Drybulk Market

(All market sources from Clarkson’s)

Freight Rates Overview

60,000 120,000 180,000 240,000 300,000 2000-01 2000-07 2001-01 2001-07 2002-01 2002-07 2003-01 2003-07 2004-01 2004-07 2005-01 2005-07 2006-01 2006-07 2007-01 2007-07 2008-01 2008-07 2009-01 2009-07 2010-01 2010-07

Drybulk Freight Rates (in $/day)

4TC Capesize Monthly Average 4TC Panamax Monthly Average

Demand & Supply Overview

Supply - Demand Gr Supply - Demand Gr Supply - Demand Growth: Drybulk Sector (in mill tons)

• wth: Drybulk Sector (in mill tons)
• wth: Drybulk Sector (in mill tons)
• wth: Drybulk Sector (in mill tons)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Iron Ore 447 450 480 516 587 658 721 781 840 907 1,007 Coal 516 550 573 619 660 688 729 772 797 792 822 Other 2,626 2,648 2,789 2,899 3,061 3,170 3,318 3,434 3,541 3,204 3,381 Total Demand 3,589 3,648 3,842 4,034 4,308 4,516 4,768 4,987 5,178 4,903 5,210 YoY % Chg 7.97% 1.64% 5.32% 5.00% 6.79% 4.83% 5.58% 4.59% 3.83%

• 5.31%

6.26% Drybulk Fleet 274.9 286.9 294.7 302.0 322.5 345.0 368.4 392.4 418.1 459.6 515.3 YoY % Chg 3.00% 4.37% 2.72% 2.48% 6.79% 6.98% 6.78% 6.51% 6.55% 9.93% 12.12%

• 7.50%
• 3.75%

0% 3.75% 7.50% 11.25% 15.00% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Demand/Supply - Annual % Change

Demand YoY %Chg Supply YoY % Chg

• 30.0%
• 22.5%
• 15.0%
• 7.5%

0% 7.5% 15.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

4.97% 2.25% 4.85% 7.37% 7.38% 5.23% 4.03% 2.10%

• 0.61%
• 15.85%
• 21.71%

Cumulative imbalance between Supply-Demand growth

CAGR - Supply 5.88% CAGR - Demand 3.45%

China: Key Driver

175 350 525 700 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(Est)

Chinese Imported Volumes (in mill tons)

Iron Ore Total Coal

375 750 1,125 1,500 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(Est)

Chinese Iron Ore Imports vs Total (in mill tons)

Iron Ore Imported in China ROW Iron Ore (ex China)

In 2000 China’s share was 15.6% In 2010 China’s share est 62%

Newbuilding Orderbook

200 400 600 800 2003 2004 2005 2006 2007 2008 2009 2010(f)

Drybulk Orderbook vs Fleet

Drybulk Fleet Drybulk NB Orderbook

38 75 113 150 2003 2004 2005 2006 2007 2008 2009 2010(f) 2011(f) 2012(f)

Drybulk Vessel Deliveries (in mill DWT)

Drybulk Deliveries

Current Orderbook is 53.8% of Fleet In 2003 Orderbook was 18.5% of Fleet

Investment Overview

Vessel Type Capesize Year Built 2005 Purchase Price $54 mill Investment Period 5 Years OPEX $6500/day Loan Facility 60% Debt @ 5.50% All in Interest Residual Value $38.3 mill (Straight Line Depreciation) Expected ROE 10% Average Required Rate $26,670/day Vessel Type Panamax Year Built 2005 Purchase Price $38 mill Investment Period 5 Years OPEX $6500/day Loan Facility 60% Debt @ 5.50% All in Interest Residual Value $27.2 mill (Straight Line Depreciation) Expected ROE 10% Average Required Rate $20,362/day

Slippage: Good or Bad?

Drybulk Fleet 397.8 Orderbook 222.5 Estimated Deliveries in 2008 30.4 Estimated Deliveries in 2009 55.2 Data reported on Clarkson’s Drybulk T s Drybulk Trade Outlook Jan 2008 rade Outlook Jan 2008

On December 31st 2007:

Drybulk Fleet 422.4 Orderbook 294.8 Actual Deliveries in 2008 29.7 Estimated Deliveries in 2009 71.3 Estimated Deliveries in 2010 111.7 Data reported on Clarkson’s Drybulk T s Drybulk Trade Outlook Jan 2009 rade Outlook Jan 2009

On December 31st 2008:

Drybulk Fleet 461.8 Orderbook 272.2 Actual Deliveries in 2009 42.5 Estimated Deliveries in 2010 125.6 Data reported on Clarkson’s Drybulk T s Drybulk Trade Outlook Jan 2010 rade Outlook Jan 2010

On December 31st 2009:

Drybulk Fleet 509.7 Orderbook 275.9 Estimated Deliveries in 2010 77.2 Estimated Deliveries in 2011 119.2 Data reported on Clarkson’s Drybulk T s Drybulk Trade Outlook Sept 2010 rade Outlook Sept 2010

On August 31st 2010: Delivery Slippage in 2008 2.30% Delivery Slippage in 2009 40.39% Delivery Slippage in 2010 38.54%

Drybulk Sector

Surviving a high speed crash!

The Drivers are alive!

Tanker Market

(All market sources from Clarkson’s)

Freight Rates Overview

60,000 120,000 180,000 240,000 300,000 2000-01 2000-07 2001-01 2001-07 2002-01 2002-07 2003-01 2003-07 2004-01 2004-07 2005-01 2005-07 2006-01 2006-07 2007-01 2007-07 2008-01 2008-07 2009-01 2009-07 2010-01 2010-07

Crude Tanker Freight Rates (in $/day)

VLCC Monthly Average Suezmax Monthly Average Aframax Monthly Average

Demand & Supply Overview

• 4%
• 2%

0% 2% 4% 6% 8% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Demand/Supply - Annual % Change

Demand YoY %Chg Supply YoY % Chg

• 25%
• 20%
• 15%
• 10%
• 5%
• 0%

5% 10% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

0.86% 5.18% 1.49% 6.06% 6.24% 2.63% 0.38%

• 2.71%
• 8.43%
• 19.52%
• 18.81%

Cumulative imbalance between Supply-Demand growth

Supply - Demand Gr Supply - Demand Gr Supply - Demand Growth: Tanker Sector (in mill tons) anker Sector (in mill tons) anker Sector (in mill tons) anker Sector (in mill tons)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Crude Oil 1,656 1,684 1,667 1,770 1,850 1,885 1,933 1,984 1,964 1,883 1,933 Products 523 553 586 586 636 691 736 763 781 756 774 Total Demand 2,179 2,237 2,253 2,356 2,486 2,576 2,669 2,747 2,745 2,639 2,707 YoY % Chg 3.32% 2.66% 0.72% 4.57% 5.52% 3.62% 3.61% 2.92%

• 0.07%
• 3.86%

2.58% Tanker Fleet 295.5 290.6 303.4 303.4 319.6 342.7 362.8 384.6 406.3 435.7 443.8 YoY % Chg 2.46%

• 1.66%

4.40% 0.00% 5.34% 7.23% 5.87% 6.01% 5.64% 7.24% 1.86%

CAGR - Supply 1.99% CAGR - Demand 3.77%

China: Oil Demand

1,000 2,000 3,000 4,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Chinese Imported Oil Volumes (in mill bpd)

Crude Products

15,000 30,000 45,000 60,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Chinese Seaborne Imported Oil vs Global (in mill bpd)

Seaborne Oil Imports in China Seaborne Oil Trade (ex China)

In 2000 China’s share was 3.5% In 2009 China’s share was 7.6%

Newbuilding Orderbook

Current Orderbook is 28.6% of Fleet In 2003 Orderbook was 25% of Fleet

150 300 450 600 2003 2004 2005 2006 2007 2008 2009 2010(f)

Tanker Orderbook vs Fleet (in mill DWT)

Tanker Fleet Tanker NB Orderbook

17.5 35.0 52.5 70.0 2003 2004 2005 2006 2007 2008 2009 2010(f) 2011(f) 2012(f) 2013+(f)

Tanker Vessel Deliveries (in mill DWT)

Tanker Deliveries

Investment Overview

Vessel Type VLCC Year Built 2005 Purchase Price $90 mill Investment Period 5 Years OPEX $10,000/day Loan Facility 60% Debt @ 5.50% All in Interest Residual Value $65.7 mill (Straight Line Depreciation) Expected ROE 10% Average Required Rate $44.450/day Vessel Type Suezmax Year Built 2005 Purchase Price $65 mill Investment Period 5 Years OPEX $8500/day Loan Facility 60% Debt @ 5.50% All in Interest Residual Value $46.9 mill (Straight Line Depreciation) Expected ROE 10% Average Required Rate $32,742/day

Slippage: Good or Bad?

Tanker Fleet 383.6 Orderbook 157.5 Estimated Deliveries in 2008 40.5 Estimated Deliveries in 2009 57.7 Data reported on Clarkson’s Oil & Tanker T s Oil & Tanker Trade Outlook Jan 2008 rade Outlook Jan 2008

On December 31st 2007:

Tanker Fleet 404.0 Orderbook 175.2 Actual Deliveries in 2008 36.3 Estimated Deliveries in 2009 64.3 Estimated Deliveries in 2010 51.4 Data reported on Clarkson’s Oil & T s Oil & Tanker Trade Outlook Jan 2009 rade Outlook Jan 2009

On December 31st 2008:

Tanker Fleet 434.4 Orderbook 131.8 Actual Deliveries in 2009 48.3 Estimated Deliveries in 2010 64.5 Data reported on Clarkson’s Oil & Tanker T s Oil & Tanker Trade Outlook Jan 2010 rade Outlook Jan 2010

On December 31st 2009:

Tanker Fleet 448.0 Orderbook 123.8 Estimated Deliveries in 2010 45.2 Estimated Deliveries in 2011 60.5 Data reported on Clarkson’s Oil & Tanker T s Oil & Tanker Trade Outlook Oct 2010 rade Outlook Oct 2010

On September 30th 2010: Delivery Slippage in 2008 10.37% Delivery Slippage in 2009 24.88% Delivery Slippage in 2010 29.92%

Tanker Sector

Slow sinking boat... is it sunk?

Container Market

(All market sources from Howe Robinson)

6M-2010 Review: Significant Recovery

Total East -West Trade Q1 2009 4,814,222 Q1 2010 5,518,507 %Chg 14.63%

100 200 300 400 2002 2003 2004 2005 2006 2007 2008 2009 2010(f)

Containership Scrapping

Actual TEU (in‘000s) Expected TEU (in ‘000s)

Slow Steaming Increased Demand Idle Supply Scrapping

TEU Deliveries

3500 7000 10500 14000 2002 2003 2004 2005 2006 2007 2008 2009 2010(f)

Container Fleet Development

TEU (in ‘000s)

500 1,000 1,500 2,000 2002 2003 2004 2005 2006 2007 2008 2009 2010(f) 2011(f) 2012(f)

Container Deliveries

Actual TEU (in‘000s) Expected TEU (in ‘000s)

Market Prospects

2011 2012 2013 2014 2015 Starting Fleet 13,431,500 14,529,253 15,388,610 16,479,697 17,620,110 Additions 1,533,398 1,251,465 1,449,822 1,240,413 1,082,857 Removals (Scrapping, Delays) (435,645) (389,109) (361,735) (100,000) (100,000) Available Fleet 14,529,253 15,391,609 16,476,697 17,620,110 18,602,967 YoY % Chg 7.60% 5.60% 6.60% 6.50% 5.30% Slow Steaming Adjustment (150,000) (100,000) (61,000) (61,000) (61,000) Fleet Available (Including Slow Steaming) 14,379,253 15,291,609 16,415,697 17,559,110 18,541,967 YoY % Chg 6.50% 5.00% 6.20% 6.10% 5.00%

Supply

2011 2012 2013 2014 2015 Asia -Europe 5.00% 6.10% 7.20% 6.90% 6.90% Transpacific 5.40% 9.20% 7.40% 7.40% 7.40% Transatlantic 1.30% 2.30% 1.90% 2.60% 2.60% North/South 5.70% 7.70% 7.50% 7.50% 7.50% Feeder/Regional 6.50% 7.50% 7.50% 7.50% 7.50% YoY % Chg 5.90% 7.50% 7.50% 7.50% 7.50%

Demand

When matching supply with demand it looks as the market is oversupplied in 2011, but this impact could be softened by additional slow steaming.

High like a Kite!

Offshore UDW Market

(All market sources from Fearnley Offshore)

5 10 15 20 25 30

Transocean Seadrill Noble Ensco OCR Diamond Stena Odfjell Pacific Drilling Pride

Major UDW Drilling Contractors

Number of Units

UDW Players

UDW Fleet Development

38 75 113 150 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 UDW Fleet Development (in # of Units)

UDW Typical Fixtures

Date Sep-05 Rig Operator Contractor WD (ft) Region Rate Start-Up Duration (Mths) Belford Dolphin Anadarko Fred Olsen 10,000 GoM $420,000 Jan-07 36 Dec-05 Jul-06 Oct-06 Jan-07 Nov-07 Feb-08 Mar-08 Jul-08 Mar-09 Sep-09 Mar-10 Apr-10 Deepwater Discovery Devon Transocean 10,000 SAM $425,000 Nov-08 36 Stena Carron Chevron Stena 10,000 NS $515,000 Aug-08 36 West Polaris ExxonMobil Seadrill 10,000 WW $525,000 Jul-08 36 West Hercules Husky Seadrill 7,500 SEA $520,000 Jul-08 36 Belford Dolphin Anadarko Fred Olsen 10,000 GOM $525,000 Apr-10 36 Eirik Raude Tullow Ocean Rig 6,000 WAFR $637,000 Sept-08 36 Deepwater Nautilus Shell Transocean 8,000 GOM $535,000 Feb-09 36 Deepwater Expedition Petronas Transocean 10,000 SEA $630,000 Sep-10 36 Leiv Eirikson Petrobras Ocean Rig 8,200 MED $540,000 Sep-09 36 Deepwater Horizon BP Transocean 8,000 GoM $497,000 Sep-10 36 Ocean Valor Petrobras Diamond Offshore 7,500 SAM $450,000 Jul-10 36 West Phoenix Total Seadrill 10,000 NS $445,000 Jan-12 36 8 15 23 30 2005 2006 2007 2008 2009 2010YTD Number of UDW Fixtures

UDW Rate Development

Everlasting Journey!

Concept: America World City

• Know your math
• Get your feet wet
• Have conviction
• Be flexible

• Mr. PhD!

B r e a t h e !