FUTURE FPSO PROJECTS IN THE DECISION-MAKING PROCESS Presentation by Jim McCaul at the Emerging FPSO Forum 25 September 2013

OUTLINE OF PRESENTATION The Pros and Cons of FPSOs Profile of FPSO use worldwide FPSO Projects in the Planning Stage Our Forecast of FPSO Orders Issues Impacting Outlook

FPSO PROS AND CONS PRO CON Has field storage and can be used in remote locations – self contained Can operate on shallow or ultra-deepwater fields Less weight sensitive than other types of FPSs Leasing transfers some risk from field operator to contractor Assumed residual value used as a competitive tool in leasing bids Deck area allows flexibility in process plant layout Surplus/aging tankers can be used for conversion Can be modified/redeployed following field depletion Quick disconnect turrets enable emergency relocation CON Subsea tiebacks create higher well maintenance costs Turret/swivel machinery complex and failure a major problem Cost and delay surprises when converting tankers to FPSOs Redeploying an FPSO not as easy as it may appear Source: BWO

204 FPSOs ARE IN SERVICE, AVAILABLE OR ON ORDER (number of units as of September 2013) 27% of FPSOs are offshore Brazil 21% are located offshore Africa 14% are off Northern Europe 12% are in Southeast Asia 7% are off China 7% are off Australia/NZ 5% are in other locations 7% are without field assignment * * * * 13 FPSOs are currently off field and looking for work 1 FPSO being built has no field assignment Note: Data exclude 4 small FPSOs used for well test in the GOM and 2 FPSOs built for emergency spill recovery On Order Existing

84% MORE FPSOs IN SERVICE THAN 10 YEARS AGO – WITH 123% MORE OIL PROCESSING CAPACITY Number of FPSOs in Service Total Oil Processing Capacity on FPSOs (000s b/d) Avg. FPSO Oil Processing Capacity (000s b/d) Avg. Water Depth of FPSO Installations (meters) 2003 2013 % Chg. Africa 18 38 111% 1396 4390 214% 78 116 49% 208 678 226% Australia/NZ 9 12 33% 657 979 73 82 12% 152 290 91% Brazil 37 311% 845 3937 366% 94 106 13% 826 1075 30% Canada 1 2 100% 150 250 67% 125 -17% 90 105 17% China 11 13 18% 734 902 23% 67 69 4% 77 -27% Gulf of Mexico n.a. 280 140 1339 India 120 60 643 Mediterranean 5 3 -40% 174 -56% 35 26 -26% 228 321 41% N. Europe 19 22 16% 1783 1884 6% 86 -9% 167 159 -5% SE Asia 401 877 119% 36 40 9% 137 104% Global Total 83 153 84% 6140 13696 123% 74 21% 227 534 135% Note: Data exclude 13 FPSOs currently without field contract, a spill recovery FPSO and 4 small FPSOs used for well test on the Mexico side of GOM.

44% OF FPSOs IN SERVICE OR ON ORDER ARE LEASED Total FPSOs Owned Units Leased Units % Leased Africa 42 23 19 45% Australia/NZ 14 9 5 36% Brazil 56 31 25 Canada 2 0% China Gulf of Mexico 3 100% India Mediterranean 1 33% N. Europe 28 16 12 43% SE Asia 10 15 60% Global Total 190 107 83 44% Note: Data exclude 14 existing and on order FPSOs without field contract, 2 spill recovery FPSOs and 4 small FPSOs used for well test on the Mexico side of GOM.

MORE THAN 120 FPSO PROJECTS ARE IN THE VISIBLE PLANNING STAGE These are announced discoveries where an FPSO is either planned or logical production solution given the location and field characteristics ~25% are in the bidding or final design stage ~75% are in the planning and study phase Taking into account projects requiring multiple production units, development of the discoveries could require 135 to 140 FPSOs Another 20+ discoveries could require an FPSO, BARGE, MOPU/FSO, SUBSEA or other system

WHERE FPSO PROJECTS ARE BEING PLANNED Brazil is clearly the major location for future FPSO projects – 51 projects in planning stage Africa is next in line – with 13 projects in Angola, 11 Nigeria and 9 elsewhere SE Asia is in 3rd place with 11 projects No. Europe is in 4th place with 8 projects In 5th place is the GOM – 6 projects, all on the Mexican side

EXAMPLES OF FPSO PROJECTS IN THE PLANNING STAGE Discovery Country Field Operator Water Depth Estimated Production Start Africa (meters) Blk 32 -- Kaombo GG Angola Total 1600 2016/17 Bonga Southwest Nigeria Shell 1200 2017/19 Nsiko Chevron 1768 2018/20 Elephant Congo CNOOC 550 2020/25 Bobo 2480 Brazil   Oliva/Atlanta BS-4 Queiroz Galvao 1560 Carioca BM-S-9 Petrobras 2150 2016 Carcara BM-S-8 2027 2018 Espadarte Module III 750 2020 Libra Complex Petrobras/ANP 2200 Franco Leste 1800 2019 Other Regions Ayatsil/Tekel Mexico Pemex 115 2016/18 El Perdido 2500-3000 2018/22 Kraken 9/2b UK EnQuest 100 Gohta Norway Lundin 342 Sea Lion Falklands Premier 450 Belud Malaysia Hess 155 2015/16 Bunga Dahlia/Teratai Petronas 65-70 Ubah 1430 D-56 India BP/Reliance 1743 2019-22 EXAMPLES OF FPSO PROJECTS IN THE PLANNING STAGE

LOCATION AND TIMING OF VISIBLE FPSO PROJECTS Visible Projects Likely Production Start Number FPSOs Required 2014/20 2020+ Africa 33 17 16 Australia/NZ 1 Brazil 51 29 22 36 Canada 2 China Gulf of Mexico 6 4 Mediterranean 3 N. Europe 8 7 Other So. Amer SE Asia 11 SW Asia Global Total 123 79 44 58

PROCESSING PLANT CAPACITY IN VISIBLE FUTURE FPSO PROJECTS (b/d in 000’s) 58% require topside plants with 100,000 to 200,000 b/d oil processing capability 21% require topside plants with 50,000 to 100,000 b/d capacity 10% involve small FPSOs with less than 50,000 b/d plants 3% are mega- FPSOs with more than 200,000 b/d processing capacity 7% are primarily gas FPSOs

FPSOs Required Between 2014-2020 BREAKDOWN OF PROCESSING CAPACITY REQUIRED FOR VISIBLE FUTURE FPSO PROJECTS (b/d in 000’s) FPSOs Required Between 2014-2020 FPSOs Required 2020+ <50 b/d 50 to 100 b/d 100 to 150 b/d 150 to 200 b/d 200+ b/d Gas Africa 5 7 2 1 4 Australia/NZ Brazil 15 9 3 12 21 Canada China Gulf of Mexico Mediterranean N. Europe Other So. Amer SE Asia 6 SW Asia Global Total 14 19 24 11 8 10 20 25

WHAT WILL DRIVE THE PACE OF FUTURE FPSO ORDERS? Underlying market conditions Smaller FPSOs for marginal fields are influenced by near term oil price expectations and availability of financing Large FPSOs intended for major developments tend to be less sensitive to oil price and financing Passing the FID hurdle But even the biggest oil company has to make choices -- there are budget constraints and limits on available personnel to manage project implementation Whether an FPSO project gets into the CAPEX plan depends on its ranking in terms of expected return on investment This will be determined by the project economics – and the economics of other investment possibilities

MARCH 2013 FORECAST OF FPSO ORDERS OVER THE NEXT 5 YEARS Most Likely Forecast Assumptions Global economic growth averages 3 to 4 percent annually over next few years Oil demand growth remains around 1 percent per year Mideast tensions continue, but no major oil supply interruption Oil price expectations hover in $90 to $110 range Some cost growth and delivery bottlenecks in the FPSO supply base, but not enough to slow major project starts or erode contractor profits No major environmental incident involving an FPSO No major impact from shale oil on deepwater investment

ASSUMPTIONS UNDERLYING THE HIGH AND LOW FORECASTS Low Forecast Assumptions China and/or India economies falter, Europe/U.S. economies continue to stagnate over next few years World GDP growth turns downward Global oil demand growth falls as economic activity and world output slows Tight oil, shale oil finds grow internationally, technology advances lower cost Oil price expectations fall to $70 to $90 range, negating commercial viability of many visible marginal floating production projects Contractors experience supply constraints, raising costs, creating delivery delays High Forecast Assumptions Global economic rebound accelerates quickly from 2013 onward, rises to 4 %+ per year Oil demand growth tracks upward with economic growth Mideast tensions grow, oil supply interrupted Shale oil and/or tight oil projects meet worldwide opposition, delaying project starts Many unconventional onshore fuel projects encounter continuing logistics constraints Oil prices spike to $150+ and expectations remain above $120, making most visible marginal floating production projects commercially viable Little cost growth, few delivery constraints in the floater supply chain

THE LOW END OF THE MARCH FORECAST IS NOW LOOKING MORE LIKELY Portfolio of potential FPSO projects has been growing But new project starts have slowed – 9 FPSOs have been ordered thus far in 2013, an average of 1 order/month Cost growth, access to financing, market barriers, other issues seem to be creating barriers We now see the low end of the forecast range – i.e., ~90 FPSOs – as the most likely forecast of FPSO orders

ISSUES Local content requirements are Creating market entry barriers and limiting competition Raising costs – e.g., Egina FPSO $3.1 billion! Clogging the supply chain Shale oil/tight oil growth is a threat to deepwater Added supply could result in lower oil prices Shale oil projects could draw investment resources from deepwater Deepwater costs are increasing – shale oil/tight oil cost are falling

Thank You If you would like to discuss any aspect of this presentation or get further details on the FPSO market, please contact Jim McCaul imaassoc@msn.com or 1 202 333 8501 Our website has further information that you may find useful. Please give us a visit. www.imastudies.com