THE OFFSHORE REPORT. No Offshore Support and Specialized Vessels.

Transcription

1 THE OFFSHORE REPORT No Offshore Support and Specialized Vessels 30 th September 2015

2 TABLE OF CONTENTS 1.0 FRANKLY SPEAKING 2.0 SPOTLIGHT 3.0 FROM THE TIGER S MOUTH 4.0 FROM DEEP DOWN TO SKY HIGH 5.0 PERIOD MARKET 6.0 ON THE ROAD UNCOVERED REQUIREMENTS 8.0 CORPORATE 9.0 THE SALE & PURCHASE MARKET 10.0 THE NEWBUILDING MARKET 11.0 IN THE WAKE 12.0 COMPANY INFO FEARNLEY OFFSHORE SUPPLY AS Copyright 2015 Fearnley Offshore Supply AS. Reproduction in any form is strictly forbidden without direct licensed permission from Fearnley Offshore Supply AS. While information is presented in good faith, Fearnley Offshore Supply AS cannot accept liability for any errors of fact or opinion. No liability can be accepted for any loss incurred in any way whatsoever by any person who may seek to rely on the information contained herein. The images used in this reports originate from our clients, or from press releases/web pages which are assumed to be in the public domain and displayable under the fair use principle. We provide information on the image s source and photographer where possible. If you are the owner of the images and believe that the use is in violation of any copyright law, please contact us. ON THE SIDE We welcome onboard Mr. Martin Hestnes as part of our crew in Oslo. Martin has been hired as a senior shipbroker and is part of our subsea and project team. He was previously the managing broker for the offshore department at E.A. Gibson Shipbrokers Ltd in London, and was prior that working for Boa Offshore, Norway. He holds a Bachelor in Nautical Science from the University of Vestfold and a Master of Science in International Shipping from Plymouth University, UK. Front page photo: With courtesy of photographer Oddgeir Refvik. Page 2

3 1.0 FRANKLY SPEAKING We are approaching what is feared to be the most depressing winter season in years. Owners and contractors are not holding much hope for the winter, which is expected to be not only as calm as the previous year, but also the beginning of a very challenging year generally. If the prediction about 2016 proves to be correct, industry players ability to withstand long lasting headwinds will be put to the test. E&P spending is expected down another % from 2015 to 2016 and with less demand and a growing fleet it will create a charterers market with lower day rates and more unfavourable terms for owners. Both the PSV and AHTS market have been severely hit during the last 1,5 years as the demand for drilling support has been significantly reduced. The rig fleet utilisation has plummeted from about 90 % in February 2014 to about 70 % today, reducing the number of active rigs demanding vessel support with about 130 units. During the same period, the support vessel fleet has increased by about 150 PSVs and 70 AHTS vessels. Needless to say, the competition for term tenders is fierce. For a recent multiyear tender for four mid-size PSVs and 2 large PSVs for support of DS8 and Ocean Rig Skyros, Total Angola has expectedly received in excess of 100 vessel offers. There was also massive interest for Tullow Ghana s tender for several vessels for support of Stena DrillMax. Award levels for both tenders are expected below break-even levels. The situation in Brazil has caused headaches for owners. Petrobras needs to cut costs and is releasing a large amount of vessels coming to the end of their firm contracts. The number of chartered in vessels has already been reduced by some vessels, and the same number of contracts is expected to cease before year-end. Local vessels (Brazilian flagged) coming available are in position to block international tonnage already on charter causing unease amongst owners. According to Petrobras the vessels will be off hire when they are blocked and no termination fees are payable when/if the contracts for the blocked vessels are terminated. As consequence, vessels have to leave Brazil to fight for international opportunities and many vessels are steaming back to the North Sea either to work in the dismal spot market or to enter lay-up. For vessel owners with exposure to the subsea market, the counter-party risk increases every day. Many vessels are chartered by smaller service companies that are coming under pressure because of dropping backlogs. Subsea activity is expected down 30 % from 2015 to In addition market analysts are concerned about the fact that few SURF prospects are planned for 2017 and If the subsea activity does not pick up before 2019, subsea contractors will need to undertake drastic cost cuts to avoid going belly-up. The latest company to fall into administration is the Goldman Sachs backed Ceona. As consequence, Polar Onyx has returned to GC Rieber Shipping and the inhouse Ceona Amazon will need to find new owners. The North Sea spot market has deteriorated for owners. Utilisation is down to about 80 % for PSVs and 70 % for AHTS, with year-to-date average rates at about GBP 5,000/day for large PSVs and GBP 18,000/day for large AHTS. For AHTS, dismal day rates have prevailed at UK side for several months, but fixing on the Norwegian side has dropped to UK levels, with latest fixing on NOK 50,000 per day. Page 3

4 2.0 SPOTLIGHT In our last report from 8 th July, we noted that the number of ships in lay-up gave some relief to the availability list, but limited impact on rates. Since then, there was indeed some improvement in PSV rates peaking at NOK 150,000 but it did not last. Almost daily we read about new vessels, mainly PSVs and AHTS but also other types of offshore service vessels, going into lay-up. More than 100 vessels are currently without charter, either prompt available or laid-up. It seems the greatest effect of putting vessels in layup is reducing cost for that specific ship, but it has so far had a limited impact on the PSV rates which still are in the GBP 5-6,000 range. Further, we note that vessels in layup are actively bid, and some fixed, on the few term requirements in the market. For the AHTS vessels in the region there have been short periods with rate increases, in fact up to approximately GBP 40,000, but the majority of fixing has been done at considerably lower rates. Today most ships are currently fixing at GBP 4-7,000 per day. There are several rigs without contract being towed inshore in UK, Norway and Denmark which has reduced the number of rig-moves requirements and has also had a negative impact on the market in general. Looking ahead we expect this to continue, with fierce competition for both spot and term jobs. The imbalance in the market is likely to stay with us for the foreseeable future. Island Empress and Island Dawn, with courtesy of Oddgeir Refvik Please find below the high and low North Sea spot market ranges July - September (Rates in Pounds Sterling per day excl. fuel) Exchange rates Per 29 th September USD/NOK GBP/NOK July 2015 August 2015 September 2015 AHTS 16,500 bhp + 4,700-31,700 5,100-39,000 3,950-13,000 AHTS 10-16,499 bhp 5,900-15,900 5,350-15,000 5,000-7,550 PSV (Deck 750m2 +) 2,300-10,000 2,500-11,700 3,450-10,000 PSV (Deck - 750m2) 3,000-7,000 2,800-4,000 6,250-10,000 To follow the North Sea Spot market more closely, visit our web-site for spot positions and the latest fixtures: Page 4

5 3.0 FROM THE TIGER S MOUTH Haze has again crept in over Singapore, with thick smoke from Indonesian forest fires engulfing the island and hiding from view a growing fleet of available vessels in the anchorage. As with the haze, the oil & gas market has gone from bad to worse since the summer. Rigs are completing their drilling programmes around the region and heading to Labuan and Batam for lay up or to Chinese yards for scrap. Short term keeping larger anchor handlers busy with towage duties, but long term reducing potential demand. Mid and deepwater tendering activity is close to zero giving little hope of any near term revival. The production and construction side is also seeing reduced activity adding pressure on rates and utilization for the shallow water fleet, with rates falling to a dollar per brake horse power. The bright spots in terms of tendering activity have been India and Middle East markets. ONGC are in the process of committing twenty vessels to serve their ongoing production and exploration on the East and West coast. Awarded rates are barely covering costs, but the contracts give term utilization in a downward market. Saudi Aramco has hit the market with a fourteen vessel tender for three year duration and rumours have it that a second tender will follow shortly for another eight to ten vessels. Some are new positions, but majority are to replace incumbent vessel with newer vessels with better station keeping capabilities. Maersk Oil in Qatar has recently closed two tenders, one for a medium sized MSV and one tender for five PSVs and two standby vessels, all up against incumbent vessels. In addition to these multi vessel tenders we are seeing steady chartering activity for short to medium term in the Middle East. Once the haze clears in Singapore the anchorage may be that little bit less crowded as Owners direct their boats towards hope in the Middle East. Thoughts on the looming Asian PSV fleet Oversupply, a word that is used on a daily basis by every analyst and report writer from North Europe to South East Asia. And they are correct, we are facing a situation where oversupply is a factor that is contributing to lower utilisation and reduced dayrates. Reports differ on the size of the looming PSV fleet sitting in Chinese shipyards awaiting a home: is it 50? Is it 100? Is it more? Whilst the precise number is impossible to corroborate, all commentators agree with the principle: It s a lot. This looming fleet is worrisome to many, particularly the existing PSV owners in and around South East Asia, but perhaps it s time to take a fresh look at the problem? How real is the threat of this looming fleet? For the sake of argument we shall assume that 100 vessels is the correct number. There are 100 medium sized PSVs sitting ready up and down the Chinese coast and the fear is that they all deliver into a subdued market. The PSV market in Asia is already at a point of oversupply, the larger vessel have till now seen softened rates, but tolerable utilization, while the medium sized fleet has started to feel the pinch in both rates and utilisation. Add 100 ships into the mix and any form of equilibrium falls apart. Rates fall to below opex (forget about covering Page 5

6 Capex), and the utilization falls off the edge of a cliff. But now assume that only 3, 5, or 10 of those ships deliver into the market and the outcome is far less powerful. Consider the case of the recent ONGC tender and awards in India. Several of the looming fleet were bid into that project in India, and a few were successful. Accordingly there was some sale and purchase activity, a couple of ships were successfully financed and delivered into the market, but then went straight into long term contracts thereby not impacting the current supply/demand scenario. But it s very clear to most operators in this region that the tenders for long term business are few and far between and cannot be considered a viable route to market for 100 ships. So If not the long term tender, then what other routes to market do exist? Dramatically reduced pricing? Shipyards becoming owners? Management companies taking a more active role as technical and commercial managers for these ships until a buyer can be found? All are possible, but they require one thing: Financing. Banks are essentially closed for all but the strongest of credits, and even they require an underlying contract. So if there is no financing without term jobs, and no term jobs available, are there any routes to market at all? There are always operators that need ships on a case-by-case basis. There is always spot demand, or specific circumstances that make the need for a vessel urgent. The recent bareboat charter from VARD to DOF for their PSV 1 08 vessel from Vietnam shows that there are always opportunities, but that will be one ship, two ships, three ships, not 70, 80, or 100. The final point to consider is quality and maintenance. When the need arises, or the requirement strikes, a buyer is faced with a pool of 100 vessels from which to choose. Of course commercial terms will drive the vessel selection but quality and maintenance will become increasingly important. Inspection reports for many of the looming fleet have been deteriorating for some time, and as each day passes, and another vessel joins the fleet, the ships that have been looming the longest, look the worst. That which looms longest, gets picked last. In summary, there is no dispute that the looming fleet will cause a problem, and were all 100 ships to deliver the market would take a massive beating. But given the financing restrictions, and the demand for ships falling, we suspect that the fleet may continue to loom, rather than deliver, until perhaps many cease to be workable at all? Page 6

7 4.0 FROM DEEP DOWN TO SKY HIGH More and more vessels in the form of newbuildings and redeliveries are flooding the subsea IMR and construction markets with oversupply. Although everyone involved in offshore equipment sale, from nuts and bolts to vessels, have great concerns about today s market, the really poor results have not yet been published. This is mainly a result of the 2015 season being just a busy as in 2014, and some contractors even report higher activity and more work carried out than any previous year. Still, we all know that this is shortly coming to an end with vessels most like coming available some time before Christmas. Contractors see that 2016, and most likely 2017, may be worse than they have ever seen in the past, and owners can no longer hope for 3-5 year time charters on their subsea tonnage. The owners are left battling for project work on a worldwide basis, with rates at or below break-even levels. Examples are Viking Neptun which is heading for Ghana and Far Sleipner working in Congo, both on project charters for Technip. One more Technip tender for a large subsea vessel in West Africa is still outstanding and these two units are obvious candidates. Møkster is also awarded a West African contract from Van Oord for the Stril Server to carry out work on their project in Gabon. Stril Server Viking Neptun Both Olympic Delta and Far Sentinel, which suffered idle periods after delivery in July, have finally pricked up project work in the North Sea. Far Sentinel is carrying out accommodation support for Enquest, while Olympic Delta is heading for the DanTysk wind farm in Germany. Speaking of wind, the vessel demand from the wind industry is continuing its role as a savior for several subsea operators. Havila Phoenix and Aker Wayfarer have been carrying out windfarm support for quite a while now. Although Siemens, Statoil and DONG (soon) have secured vessels for long term maintenance charters, they will still require more (subsea) tonnage on these windfarms in the years to come. It is still of course a very limited market and cannot be looked at as the savior for all vessel operators in subsea. In the midst of a struggling market, TOPAZ has placed an order at VARD for two IMR vessels. The prices are just above USD 100 million for the two, which we consider as competitive prices. The IMR market is maybe one of the more interesting segments. DOF Subsea was recently awarded a 10 year IMR contract with Husky in Canada and there are currently various IMR tenders pending worldwide. One can hope that a larger portion of these IMR awards picks up existing tonnage. Still, with low yard prices, especially from Norway, we understand the temptation of contracting special-purpose newbuildings. It will may therefore still take a long time before we see any balance between supply and demand. Page 7

8 5.0 PERIOD MARKET - a selection of representative fixtures 8 th July - 30 th September North Sea/Europe: Charterer Vessel Period Del. Day Rate (Abt.) BG, UK PSV Highland Prince (4,826 dwt) 6 months firm + opts RNR Centrica UK PSV Sol Viking (3,600 dwt) 28 days firm + 4x1 week opt GBP 4,000 Chevron UK PSV Normand Flipper (4,340 dwt) PSV Stril Odin (4,300 dwt) 15 months firm+3x6 month opt. 6 months firm + 6x1 month GBP 6,000 GBP 6,000 opt. Chrysoar, UK PSV Energy Insula (4,900 dwt) 1 well firm GBP 6,500 ENI Norge AHTS Njord Viking (19,040 bhp) 17 months + 2 x 6 months ext RNR Enquest, UK PSV World Diamond (3,300 dwt) 28d days firm + opts. GBP 4,100 Fairfield Energy, UK PSV Viking Dynamic (4,500 dwt) PSV Viking Dynamic (4,500 dwt) 60 days firm + 30 daily opt. 6 months firm + opt GBP 5,250 GBP 5,500 GDF Suez UK (Engie) PSV Far Spica (4,000 dwt) 14 months firm + 6x1 month GBP 7,500 opt. Nexen, UK PSV Edda Frigg (4,200 dwt) 4 weeks firm + 4x1 weekly GBP 5,500 Premier Oil, UK PSV KL Brisfjord (5,100 dwt) 90 days firm + opts GBP 6,500 PSE Seven Heads, Ireland Ross Offshore, Norway PSV Far Serenade (5,206 dwt) AHTS Siem Topaz (28,000 bhp) PSV Troms Artemis (5,549 dwt) PSV Rem Arctic (4,900 dwt) PSV Volstad Supplier (4,876 dwt) 1 well firm 1 well firm 4 weeks firm+8x1 week opt.+d/d 10 1 well + opt 1 well + opt Saipem, UK AHTS Skandi Iceman (25,560 bhp) 1 month - towage of S44 from Spain to UK Statoil, Norway ERRV Havila Troll (4,000 dwt) PSV Olympic Energy (5,066 dwt) 1 years + 1 x 2 years opt. ext. 12 months ext GBP 6,500 GBP 14,000 NOK 65,000 RNR RNR GBP 15, RNR RNR Page 8

9 5.2 Asia/Australasia/Sakhalin/Middle East: Charterer Vessel Period Del.(mm.yy) Alam Swiber, Malaysia AHTS "Omni Anteia" (5,150 bhp) 1 month Chevron, Thailand AHTS "VOS Olympian" (5,150 bhp) AHTS VOS Zeus" (5,150 bhp) AHTS "VOS Helios" (5,150 bhp) AHTS "VOS Hecate" (5,150 bhp) AHTS "VOS Thalia" (5,150 bhp) AHTS "VOS Themis" (5,150 bhp) 3 months 3 months 3 months 3 months 3 months 3 months CNOOC, Indonesia AHTS "Swiber Venturer" (5,150 bhp) 6 months Coastal Energy, Thailand AHTS "MP Manuver" (6,500 bhp) 3 years CPOC, Malaysia AHTS "Omni Emery 1" (4,200bhp) 50 days Deme, Russia PSV Olympic Orion (4,800 dwt) AHTS Normand borg (16,800 bhp) DOF, Singapore NB PSV TBN Skandi Responder (4,000 dwt) Hyundai Heavy Industries, Malaysia NPCC, UAE AHT "Magellan II" (8,200 bhp) AHTS Nor Spring (8,000 bhp) Petronas Carigali, Malaysia 90 days + opt months months + 4 months opt. bareboat charter AHTS "Stanford Alpha 5" (5,150 bhp) Aug early AHTS "Icon Sophia" (5,150 bhp) AHTS "Icon Samudera" (5,220 bhp) AHTS KAS Marine 1 (5,004 bhp) AHTS Lewek Pelican (10,880 bhp) 245 days 120 days + opt. 2 years 2 years 60 days ( + 15 day options) 7 months Premier Oil, Vietnam AHTS "PTSC Tien Phong" (7,000 bhp) 4 months PTSC, Vietnam AHTS "ENA Commander" (10,800 bhp) 6 months SapuraKencana, Malaysia AHTS "Mary K" (5,150 bhp) 2 months Talisman, Malaysia PSV "PTSC Huong Giang" (3,000 dwt) 4 months TLO, Malaysia AHTS "Cecilie K" (5,000 bhp) 1 month Total Austral, Argentina AHTS "Skandi Pacific" (16,092 bhp) 9 months ( + 3 one-month options) Total, Brunei AHT "Miclyn Victory" (5,000 bhp) 2 months ( + 2 months options) VietGazprom, Vietnam PSV "POSH Puffin" (3,200 dwt) 11 months Yinson Production AS, Gabon AHTS "Yinson Hermes" (5,150 bhp) 4 years Page 9

10 Fearnley Offshore Supply USD Term fixture rates - South East Asia AHTS 12-16,499 BHP PSV larger than 750m2 deck PSV less than 750m2 deck AHTS 10-11,999 BHP AHTS 7-9,999 BHP AHTS 5-6,999 BHP Page 10

11 5.3 Other Areas Charterer Vessel Period Del. Day Rate (Abt.) ENI, Angola ENI, Ghana AHTS Lewek Teal (21,000 bhp) PSV Lewek Aquarius (5,200 dwt) PSV POSH Sincero (3,250 dwt) PSV Pacific Gannet (4,000 dwt) 2 years + 1 year opt. 2 years + 1 year opt. 3 years 3 years Total, Nigeria PSV Energy Scout (3,200 dwt) Abt. 4 months + opt. RNR RNR RNR RNR RNR 5.4 Americas/Canada Charterer Vessel Period Del. Day Rate (Abt.) MSC, USA CLV Responder 1 month + opt P&C Shell, Canada PSV Skandi Flora (5,150 dwt) 2 wells (130 days each) RNR Statoil, Brazil AHTS Skandi Peregrino (16,000 bhp) 2 years + 2 x 1 years opt USD 40,000 Total, Argentina AHTS Skandi Pacific (16,300 bhp) 9 months + 3 x 1 months opt RNR 5.5 Subsea/Specialized fixtures worldwide - A selection of representative fixtures 8 th July - 30 h September 2015 Charterer Vessel Period Del. Acta Marine Offshore MSV Stril Server 10 weeks accommodation support Chevron, US Gulf CON Boa Deep C 2 months, accommodation Enquest, UK CON Far Sentinel 30 days + 35 days opt KD Marine, UK AHTS Island Vanguard 40 days firm + 40 days opt. walk-to-work Petrobras, Brazil ROV Support Geoholm 18 months ext. Protexa, Mexico Accomm. Jascon days + opt Prysmian AHTS Normand Progress 4 months - trenching J/V Reach Subsea/MMT ROV support Edda Fonn 60 days Sweden Saipem, Brazil Accommodation Jascon-28 4 months Saudi Aramco, Middle East LCV POSH Endeavour LCV POSH Enterprise years years Subsea 7, North Sea CON Skandi Acergy 3 years Technip, Ghana CON Viking Neptun 50 days + 50 days opt. 4Q.15 Van Oord/Shell, Gabon MSV Stril Server 3 months + 8 weeks opt Perenco, UK PSV Island Condor Abt. 1 year Walk-to-work accomm. Acta Marine Offshore MSV Stril Server 10 weeks accommodation support Page 11

12 6.0 FOS ON THE ROAD Icebreaker Serkeborg seen in Leer, Germany AHTS Siem Diamond and Siem Aquamarine seen in Arendal, Norway CON Far Sentinel Naming Ceremony in July in Ålesund,Norway PSV HOS Dominator seen offshore Catalina Island, California Old versus Modern in port of Ciudad del Carmen Page 12

13 AHTS Archon Tide seen in Singapore Accommodation vessel ENA Habitat seen in Singapore, recently delivered from yard PSV Toisa Sonata seen in Singapore AHTS/ERRV Nor Solan recently delivered from yard in China and seen in Singapore, preparing for departure to the North Sea Vessel photos taken by FOSAS colleagues on the road 7.0 UNCOVERED REQUIREMENTS (North Sea/North Atlantic Rim) Apache UK is in the market for 1 x PSV 800m2 plus for 6 or 14 months firm + options. For more details about uncovered requirements worldwide, please don t hesitate to contact: Fearnley Offshore Supply AS, Oslo, for Asia/Middle East/Australia: Fearnley Offshore Supply Pte. Ltd., Singapore Page 13

14 8.0 CORPORATE A.P.Møller Maersk Group and ESE Holding A/S AS has completed the sale of ESVAGT to the 2 investment companies 3i Infrastructure plc and AMP Capital 50/50. Reportedly, the sale amounts to a value of approx. DKK 4,1 Billion (approx. USD 610 million). With headquarters in Esbjerg, Denmark, Esvagt is a leading provider of Standby Rescue and offshore support vessels. The Esvagt fleet consist of 43 vessels and employs more than 900 people. BOA IMR AS (a subsidiary of Boa Offshore and Calexco) has sent the yard a cancellation note for the newbuilding contract with Noryards Fosen AS for a light construction/imr vessel. The hull is being built at Tersan Shipyard, Turkey and the outfitting should take place at Noryard s shipyard in Fosen, Norway. The contractual delivery date of the vessel was March 2017 and the reported cost was about NOK 700 million. 9.0 THE SALE & PURCHASE MARKET MPSV Red7 Tonjer (2,490 dwt, built 1983, UT-705) has been sold to Atlantic Marine & Aviation, UK and renamed Atlantic Tonjer. The sales price is reportedly GBP 2 million. Red7 Reel (ex DP Reel ) has reportedly been sold to Jade Dienst, Germany. The vessel has been delivered to buyers and has been renamed DPV Supporter. The sales price is reportedly in the region of USD 1.5 million. AHTS Pacific Banner (UT-720 design, 12,240 bhp, built Ulstein Verft 1998) has reportedly been sold to TAG Offshore, India at a price about USD 15 million and has been renamed TAG-19. Seismic vessel European Supporter (built 1996, VS 492 design) has been sold to Bina Nusantara Perkasa, Indonesia from Eidesvik; Norway and will deliver in October in Gibraltar. The sale will generate a gain of about NOK 100 million to Eidesvik. (about USD 12,5 million.) Eidesvik has also sold the Seismic vessel Viking II (built 1999, VS 492SRV design) to undisclosed buyers for an undisclosed price. Well Stimulation vessel Skandi Fjord (built 1983, 7,200 bhp, TMV 4000 design) has been sold from DOF to Eagle Shipping and renamed Eagle Fjord. The vessel is expected to trade outside of the offshore industry. AHT Swissco Sabre (built 2010, 4,200 bhp) has been sold from Swissco to Multraship Towage & Salvage BV reportedly for USD 5.25 million. The vessel has been renamed Gajaja. PSV Highland Trader (built 1996, 3,115 dwt, UT 755) has been sold from GulfMark to Tag Offshore, India and has been renamed TAG-18. TUG Bamse Tug (built 1985, 4,845 bhp) has been sold by Bukser og Berging, Norway to Seløy Undervannservice, Norway for an undisclosed price. Page 14

15 Cal Dive assets has reportedly been sold on auction: DSV Texas (built 1983) including contract interest and subsidiary has been sold to Arendal of Mexico for USD 4.53 million. SOLD FOR SCRAP AHTS Jade Fish (built 1982, 8,000 bhp) was sold for scrap in India at a price of USD 300 per ton. Everest Hill has picked up the unites Mystic Viking (built 1983), Cal Diver-1 (built 1974), Midnight Star (built 1975) and Rider (built 1996) for approximately USD 10 million. DSV Kestrel and Cal Diver-2 both built 1977, Pipelay/ Bury Barges Brave and Pecos both build 1970 Sold for scrap to Modern American Recycling for USD 1.25 million. Pipelay/Bury Barge Lone Star and DSV American Constitution (built 1974) were bought by Marine Environmental for USD 0.85 million respectively USD 0.2 million each. Page 15

16 10.0 THE NEWBUILDING MARKET ABB has placed an order at Kleven Verft, Norway for a Cable Lay Vessel og SALT 306 CLV design. The vessel will have 140 m loa, 30 m beam, DP 3, 3 Azipod Thrusters and will deliver in Sembcorp Marine / Heerema Marine Contractors following the letter of intent reported in March for building a new the world s largest DP3 semi-submersible crane vessel, the construction contract is now signed. The vessel will be built at Sembcorp s Marine Tuas Boulevard Yard. The cost is reportedly approximately USD 1 Billion with scheduled time of delivery ex yard in 4th quarter The vessel will hav 220 m loa, 102 m width, 273,700 mt, 2 x Huisman cranes with 10,000 mt lifting capacity each. Bugsier -, Reederi und Bergungs-Gesellschaft, Hamburg has ordered 2 new tugs, 1 in Turkey and 1 in Holland. The one ordered in Turkey (most likely TBN BUG- SIER 11 ) will be built at Bogazici, Istanbul. This tug is of Cintranaval design and will be equipped with 2 x Schottles each 2,500 KW giving the tug a Bollard Pull of 80 Tons. In addition tug will have open stern and Fi-Fi 1. The harbour tug has been ordered from Damen Shipyard and is of the ASD 2411 type with 2 x Azimuths each 2,100 KW giving her a Bollard Pull of 65/70 Tons. Jumeirah Offshore, Singapore has ordered a Diving Vessel of ST-246 design at Huangpu Wenchong Shipyard, China. The vessel will have 124 m loa, accommodation for 120 person, DP 3, 250 ts crane and diving system for 24 persons with two bells installed. Delivery in Topaz Energy and Marine has placed an order for 2 x Construction Vessels at Vard Brattvaag with deliveries scheduled for 3Q 2017 and 4Q 2017 respectively. The vessels will have 98.1 m loa, 20 m beam, DP 2, 120 ts AHC crane, moonpool, helideck, accommodation for 82 persons. Both vessels will be prepared for two ROVs and be built according to latest SPS regulations. The contract value is approximately NOK 450 million for each vessel. Page 16

17 AHTS, PSV AND SUBSEA VESSELS CURRENTLY UNDER CONSTRUCTION WORLD WIDE Newbuild AHTS worldwide BHP Total <8k k-12k k-16k k Total Newbuild PSV worldwide DWT Total <1.5k k k k k Total Newbuild SUBSEA VESSELS worldwide TYPE Total CLV CON DSV Heavylift/ Pipelay LAYSV LCV MPSV MSV ROV Total Correction from our last report, we wrongly wrote as follows: Kreuz (Swiber) has placed an order for a DSV from Vard Søviknes, Norway. The vessel will be of VARD 3 17 design with 91.2 m loa, 21.5 m beam, 100ts crane, DP2 and Sat dive syster. Delivery is scheduled during 2nd quarter There is no longer any association, connection or link between Kreuz and Swiber. Back in November 2013, SEA9 Pte. Ltd. (now known as Kreuz Subsea Group Pte. Ltd.) acquired all the issued and paid-up ordinary shares of Kreuz Holdings Limited (the Company ) by way of a scheme of arrangement and since then, the Company is the wholly-owned subsidiary of Kreuz Subsea Group Pte. Ltd. We sincerely apologize for the error. Page 17

18 11.0 IN THE WAKE An American investment banker was at the pier of a small coastal Greek village when a small boat with just one fisherman docked. Inside the small boat were several large yellow fin tuna. The American complimented the Greek on the quality of his fish and asked, How long does it take to catch them? The Greek replied: Only a little while. The American then asked why didn t he stay out longer and catch more fish? The Greek said he had enough to support his family s immediate needs. The American then asked, But what do you do with the rest of your time? The Greek fisherman said, I sleep late, fish a little, play with my children, take siesta with my wife, Maria, stroll into the village each evening where I sip wine and play cards with my friends, I have a full and busy life. The American scoffed, I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat with the proceeds from the bigger boat you could buy several boats, eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing and distribution. You would need to leave this small coastal fishing village and move to Athens, then London and eventually New York where you will run your expanding enterprise. The Greek fisherman asked, But, how long will this all take? To which the American replied, years. But what then? The American laughed and said that s the best part. When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions. Millions Then what? The American said, Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the village in the evenings where you could sip wine and play cards with your friends. Page 18

19 12.0 COMPANY INFO 24 hour service: Oslo office: Direct Lines: Mobile: Tor A. Widing Erik C. Askvig Harald F. Askvig Espen Boger Sigrid Ramuz Bomann-Larsen Henrik Eckhoff Anders Engeset Øyvind S. Hansen Martin Hestnes Nina Johannessen Kristian Kjølhamar Edward Paulsen eep@fearnleys.no Nina Skeie ns@fearnleys.no Johnny Smaavik js@fearnleys.no Fredrik Stang-Lund fsl@fearnleys.no Singapore office: Direct Lines: Mobile: Harald P. Løvik hpl@fearnleys.sg Aileen Chong chm@fearnleys.sg Tom Fairclough tf@fearnleys.sg Jonathan Norfolk jno@fearnleys.sg Andrew Tang ata@fearnleys.sg Houston office: Rachel Guillerman Direct Lines: +1 (713) Mobile: - r.guillerman@fearnleys.no Page 19

20 Fearnley Offshore Supply AS P.O.Box 1158 Sentrum N-0107 Oslo, Norway Phone: Fearnley Offshore Supply Pte. Ltd. Winsland House I 3 Killiney Road, #04-06/07 Singapore Phone: supply@fearnleys.com.sg Fearnley Offshore L.L.C. One Riverway, Suite 1810 Houston, Texas Phone: Fax: supply.offshore@fearnleys.no