OUTLOOK FOR FPSO ORDERS OVER THE NEXT FIVE YEARS Presentation by Jim McCaul at the Global FPSO Forum 25 September 2014

Pros and Cons of FPSOs PRO Has field storage and can be used in remote locations – self contained Can operate on shallow or ultra-deepwater fields -- now in 20 to 2900 meters water Less weight sensitive than other types of FPSs Deck area allows flexibility in process plant layout Quick disconnect turrets enable emergency relocation Leasing is common practice -- transfers some risk from field operator to contractor Can be modified/redeployed following field depletion CON Subsea tiebacks create higher well maintenance costs Thin resale market for FPSOs – e.g., OSX 1 & 2 Cost and delay surprises when converting tankers to FPSOs Redeploying an FPSO not as easy as it may appear -- e.g. Enquest Producer Source: BWO

Number of FPSOs Ordered Over the Past Ten Years

Future growth in global oil/gas demand Future need to find new sources of oil/gas Perceived risk of conventional supply disruption Future oil/gas price expectations Competitiveness of deepwater as a source of future supply Relative financial return from deepwater investment Capex budgets of oil companies Availability of adequate drilling equipment for deepwater E&D Constraints in the supply chain Cost escalation in deepwater development Access to financing of deepwater equipment Major environmental incident involving deepwater production Business Drivers that will Determine Future FPSO Investment Tempo

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