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 Group Brazil DOF ASA
Group structure in Brazil... High end offshore solutions 5 PSVs Skandi Leblon DOF Brazil 10 AHTSs Skandi Rio 7 CSVs/RSVs DOF Subsea Brasil Norskan Skandi Salvador 290 employees 922 employees 99,3% local labour 98% local labour 2 PLSV 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 Leading Long-term Experienced Long-term Experienced Large and position in contract Access to and qualified Strong Brazilian relationship and committed diversified state Offshore coverage with attractive long- management local presence with shipyards founding of the art fleet Subsea and first class term financing team and and suppliers shareholders Support Vessels clients employees DOF ASA 6
With a state-of-art fleet... SKANDI SKANDI SKANDI SALVADOR SKANDI SANTOS IGUAÇU/AMAZONAS NITERÓI/VITÓRIA The first CSV built in In long-term contract Largest AHTS ordered Brazil. The first 2 PLSV´s built with Petrobras in Brazil. in Brazil. Support Chevron to Scope of work x-tree Customized to meet develop Frade field JV with Technip installation the extreme Main task: x-mas tree Both in a long-term requirements Petrobras ranks SK installation contract with Petrobras demanded by Pre-Salt Santos as the best Environmentally vessel in their friendly subsea fleet DOF ASA 7
Unique solutions for offshore subsea market… •Capacity to delivery full package solutions Skandi Salvador: Chevron Brasil for subsea operations. Vessel Spread support all offshore Installation and IMR activities to • Provides specialized survey, subsea expand and maintain the subsea field construction and inspection repair and Project : FRADE maintenance (“IRM”) Water depth: 1,300m •Flexible fleet of modern subsea Contract Term: 3+1+1 year construction and survey vessels. Survey • Vessel Fleet equipped with high Tree Installation and Intervention technology equipment (AHC Cranes, AHC Jumper & FLs Installation winchs, high end ROV fleet and Survey Routine Inspection and Maintenance equipment) to meet increasing deepwater challenges in Brazilian market. •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 NORSKAN FIRM CONTRACTS OPTIONAL PERIOD UNDER CONSTRUCTION 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 Marlim Roncador Roncador Tupi Technological challenges Sul Sul • Distance: approximately 300km from the coast. Pre-salt reservoir 1.000m measures 800km in length and 200km in width • Depth: long path to cover to 2.000m reach the oil. It is necessary to go through 2 km of water and to drill through 1 km of pre-salt 3.000m layer rocks 1.825m 2.930m • Thickness: it is also necessary to 2.629m 1983 4.000m 1992 3.230m 3.167m 3.318m 1977 drill through 2 km of salt 3.759m 1994 1997 1988 1999 5.000m 4.343m 2003 6.000m High impact on specification of vessels (type, size, speed) 7.000m 7.000m as well as shift to floating 2007 production system Santos Basin (Tupi) Harsh conditions demand a greater number of technologically-advanced and larger offshore support vessels DOF ASA 13
Petrobras is the top investment source... Espirito Petrobras E&P Santo Investments in bi US$ (2011-2015) São Paulo Rio de 53,4 bi Janeiro USD 64,3 bi USD Pre-salt Post-salt 3 main offshore basins in Brazil: Santos, Campos and Espirito Santo Source: Petrobras Business plan 2011-2015 DOF ASA 14
IOC ´ s are increasing their roles in E&P activities... Production phase Exploration phase Development phase IOC´s own 8 IOC´s own 7 IOC´s own 59 blocks in blocks in blocks in production development exploration phase 8; 10 % phase phase 7; 19 % 59; 33 % 121; 67 % 76; 90 30; 81 % % Petrobras IOC ´ s Source: ANP statistic review/end of 2010 TOP 8 non-Petrobras operators DOF ASA 15
Overview of the Brazilian fleet BRA OSV fleet BRA OSV fleet sorted by vessel type 1% MPSV 1% WSV 2% ORSV 3% PLSV 41 % Foreign flag (257) 5% CREW/FSV BRA flag (176) 6% DSV/RSV 59 % 13% LH/SV 25% AHTS 44% PSV 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
Challenges DOF ASA
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) Local Content Requirement Special Brazilian Regime (REB) 89% 84% 86% 86% ● “Circularization” gives priority to 81% 79% 79% 77% 74% Fleet in Operation 69% Brazilian-flagged vessels over foreign 54% vessels 48% ● For each vessel ton built in Brazil by a Brazilian 42% 40% 39% shipping company, 0.5x additional tons are 27% 28% ● Foreign vessels operating in Brazil 25% allowed to be imported, with the privilege of a need to undergo “circularization” Brazilian flag (ex. Skandi YARE) each year, where contracts will be 1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th ● For each vessel ton under construction, twice the taken over by Brazilian-flagged vessel tonnage of the same type is temporarily Exploration Phase Development Phase vessels if available allowed to be imported with the privilege of a ANP (National Agency for Oil and Biofuels) bidding rounds Brazilian flag Source: ANP Note: 8 th ANP bidding round auction is still under discussion Obs. ANP has been very strict to ensure high levels of local content with alloperators DOF ASA 19
Challenging environment... Industry framework... Contract Others structure... • Cost in Brazil (hot market) • Cultural differences • Lack of personnel • Complex tax regime • Long term contracts • Lack of reliable (typical 5 + 5 year) suppliers/spare • Bureuacracy parts/quality • Risk of penalties • Incipient spot market • Shipyards for repair/docking DOF ASA 20
Present/Future outlook DOF ASA
We are positioned to capitalize BR opportunities... Leading position in offshore subsea and High Growth Brazilian Oil & Gas Market support vessels Long-term relationship with shipyards and Offshore Supply Vessel Shortage suppliers Large and Diversified Need for a High Tech Fleet State-of-the-art Fleet Key Regulation in the Brazilian Sector Strong Brazilian local presence DOF ASA 22
With competitive advantages… Capacity to import 6 to 8 One of the youngest fleets additional high-end vessels in the industry (through REB) Unique “best-in-class” Brazilian- flagged vessels Providing services to a large number of highly-active clients One of the largest tonnage capacities in the Brazilian offshore industry to benefit from REB Strong Brazilian local presence regime DOF ASA 23
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