Offshore Research AS 1 Offshore Markets

Offshore Research AS 2 Business concept Data from several reliable sources are processed, interpreted and reported to deliver relevant information and forecasts for decision makers in the offshore sector.

Offshore Research AS 3 Offshore Markets & Services Both demand and supply are continuously being more and more integrated

Offshore Research AS 4 Planned oil & gas prod. growth

Offshore Research AS 5 How can Oil & Gas companies increase production ? Develop new reserves Increased oil recovery from existing fields Acquisition of other oil & gas companies

Offshore Research AS 6 ”Big 5” Oil companies – cash flow

Offshore Research AS 7 Production growth

Offshore Research AS 8 Oil & gas in Russia Russia oil & gas is today mostly onshore BP has acquired 50% of TNK-BP for USD 6.8 bn. (USD 4 per barrel proven reserve) ExxonMobil and/or ChevronTexaco consider to acquire 40% of Yukos for USD 25 bn. Comparable acquisitions are Amoco (USD 8/barrel and Enterprise (USD 10/barrel Domestic oil & gas prices are approx % of Europe, CAPEX is approx. 50% of BP average and OPEX is comparable to BP average

Offshore Research AS 9 Oil & gas risks in Russia Future tax level –Corporate tax is 24%, but effective rate significantly lower –Arm length principle between upstream & downstream Production licence for limited period –15 year licences –Assume companies will have to pay market price for new licenses Future export capacity for oil & gas –Government controls 100% of oil & gas export pipelines –Government appreciate low domestic prices and high export prices General political risks

Offshore Research AS 10 Summary oil & gas companies Opportunities: Historic high oil & gas prices Actual production lower than planned Investments lower than necessary for sustainable growth Offshore means diversified supply and reduced political risk Threats: Volatile energy prices Lack of macro economy growth Preference for onshore investments in Russia and Iraq etc. Lack of offshore prospects

Offshore Research AS 11 Source: Infield Offshore field development trend: From few fixed scheme elephants in shallow water  many multi scheme smaller fields in deeper waters!

Offshore Research AS 12 The world-wide floating rig market Assumptions: Exploration increases 5% p.a. Development according to subsea well forecast No newbuilding of rigs Well intervention is constant

Offshore Research AS 13 Source: Infield/Offshore Research

Offshore Research AS 14 Summary drilling market Positive: Historic high oil & gas prices are so far not reflected in rig activity Jack-ups close to peak Strong growth expected in development drilling Scrapping of older units Negative: Oil & gas companies continue to delay their plans Priority on onshore Due to present low utilisation for floating rigs, a peak is at least 2 years ahead

Offshore Research AS 15 World-wide subsea vessel market (DP2+)

Offshore Research AS 16 Subsea vessel fleet

Offshore Research AS 17 Source: Infield/Offshore Research Int. pipelines = NWECS + Australia > 100 meter + rest of world in wd > 200 m

Offshore Research AS 18 Source: Infield/Offshore Research

Offshore Research AS 19 Subsea fibre optic cables Source: KMI Statements in July 2003 from CEO Phil Metcalf, Global Marine Systems: The long-distance market is in coma, and I don’t believe it will recover before 2010 Due to overcapacity, standby vessels for repair can be reduced

Offshore Research AS 20 Cable vessels 12 vessels left the cable market in 2002, 5 vessels in 1H-03 and additional 10 vessels are announced for sale Phil Metcalf: Installation ships are highly specialized and cannot be easily converted to other purposes. Conversion costs would be in the region of USD 10 mill.

Offshore Research AS 21 Summary subsea market Positive: Continuous growing market for 10 years, and growth will continue Demand for gas is growing, and gas is the most important demand driver Increasing part of field developments are moved to the seabed Scrapping of vessels Negative Overcapacity as too many new vessels delivered too fast Forecasted plans for the coming years not enough to balance demand and supply Conversions from cable and seismic vessel markets

Offshore Research AS 22 Approx. 1,400 vessels worldwide AHTS > 10,000 BHP * PSV > 2,000 DWT * DWT BHP * No. of vessels + newbuildings as per % ”State of the art” supply vessels

Offshore Research AS 23 Age of world-wide ”state of the art” supply vessel fleet Average fleet age for AHTS > 10,000 HP and PSV > 2,000 DWT are 7.8 years in 2003

Offshore Research AS 24 AHTS<12.000HP & PSV<2.000 DWT in service 03/2002 AHTS<5.000 BHP 5.000<AHTS<8.000 BHP Between BHP *The green line shows the corresponding delivery profile 317 in service Av. age: in service Av. age: in service Av. age: 19 2 on order 24 on order 8 on order 597 in service Av. age: on order PSV < 2.000DWT Source: Rolls-Royce

Offshore Research AS 25 Supply market in NWECS Prod. Support demand 2003 is reduced with 10 vessel years Good market in 2004 requires net export of 20 vessels

Offshore Research AS 26 Demand for AHTS > 10,000 HK and PSV > 2,000 DWT Model assumptions excl. NWECS: –0.75 vessel per floating rig and 0.75 vessel per fixed and floating field in water depth > 100 m in US Gulf of Mexico and Brazil/Petrobras –2 vessels per floating rig and 2 vessels per fixed and floating field in water depth > 100 m in rest of the world (max 1 field per operator per country) –No pipe carrier activity outside NWECS

Offshore Research AS 27 Max 1 field per operator per country except from USGM and Brazil-Petrobras Fixed & floating fiields in NWECS was 155 in 1996 and 232 in 2002

Offshore Research AS 28 Forecasted activity growth = 12% p.a.

Offshore Research AS 29 AHTS > 10,000 HK & PSV > 2,000 DWT outside NWECS Actual: Model:

Offshore Research AS 30 Summary supply market Positive: Strong demand growth expected (12% +) Negative: Demand growth is subject to demand growth for floating drilling rigs (10%+) Poor market expected in 2004 due to present oversupply. Pool arrangements/ coordination  increased efficiency in production support

Offshore Research AS 31 Contact Offshore Research: Web-site:offshore-research.no Address:Offshore Research AS c/o MRS & Co Kalfarveien 57 A N-5018 Bergen Phone:Fax: Mobile:(+47) Office:(+47) Private:(+47)