NSRV10

BRAEMAR SEASCOPE OFFSHORE MONTHLY MAGAZINE Aug 2012

ISSUE: 54

MARKET NEWS & ANALYSIS VESSEL DAYRATE CHARTS RIG NEWS

©Braemar Seascope Offshore

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Subsea Market Latest

Welcome to the latest edition of the Braemar Seascope Offshore North Sea Vessel Report. As the market moves into the latter third of 2012 vessel dayrates continue to remain subdued with little sign of long-term relief.

An indication of the slack in the market can be seen in BP Norway’s recent fixtures when the operator secured eight AHTS vessels in one day to support the Polar Pioneer and West Alpha rigs. Despite the quantity of vessels fixed the rates did not go above GBP 8,000 due to a further 12 vessels being available.

turn for the worse and hampers rig move schedules and lengthens cargo runs. However, this can not be expected to be sustained in the long term.

Average dayrates for spot AHTS fixtures in July were GBP 22,049 and GBP 17,955 for large and medium vessels respectively. Meanwhile, PSV rates were GBP 10,552 and GBP 8,937. August average rates are expected to come in lower than those for July.

Sean Bate Market Analysis Manager research@seascope.co.uk

The coming weeks may provide a temporary spike in spot dayrates as the North Sea weather takes its seasonal

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For the latest on the subsea construction and survey vessel availabilities please contact us for a copy of our Subsea Vessel Market Summary. We are constantly monitoring the requirements, fixtures and availability of the North Sea fleet. For more information please email us.

Market Commentary

T

he continuing influx of newbuilds on to the North Sea sport market is continuing to subdue vessel dayrates in the region particularly for PSVs. A large number of high specification PSVs ordered primarily by Norwegian owners have delivered onto the market and more are set to come in the remainder of 2012 and 2013. With many of these vessels ordered at the peak of the market they are expensive sophisticated vessels that have breakeven levels to match.

Despite the fact that there are more than a dozen medium and term requirements on the market there are also more than 20 PSVs and a further 20 AHTS vessels currently sitting prompt on the North Sea spot market as the report goes to press.

In addition the UT-712L designed AHTS Olympic Octopus, which has previously been carrying out term work offshore Brazil for Shell, is heading back to North Sea. The vessel is expected to arrive before the end of August and is currently charter free.

Siem has also just been awarded a contract for a newbuild vessel to take a up a charter with Total Norway / MLS for four years plus four additional one year op-

tions. The VS-4410 LNG designed vessel is expected to commence the contract upon delivery in 2014. It is understood that the order for the vessel is in the process of being placed but the owners currently do not have a yard selected.

The Standby market also continues to operate at almost full capacity with the scarcity of vessels sustaining high rates. As new vessels arrive on the market older tonnage is being withdrawn keeping the market tight.

SPEC BOX Olympic Octopus Design: UT 712 L Owner: Olympic Shipping LOA: 78.3m BP: 180 tonnes DP: 2 Deck Area: 510m続 Breadth: 17.20m Max Draught: 7.0m Click here for full spec

Chartering

Long-Term Requirements

There are four outstanding long-term requirements 1 x PSV / Nexen / 1 year + 1 x 9 mnth opt / Sept-Oct 2012 1 x PSV / MOG / 1 year + 1 year opt / comm 1st Oct 2012 1 x PSV / BP N / 5 years + 5 x 1 year opts / 2013-2015 2-3 AHTS / Exxon Canada / 2 years + 3 x 1 year opts / comm 2012-2013.

Medium-Term Requirements There are eight outstanding medium-term requirements: 1 x PSV ConocoPhillips UK / 2 wells / comm Aug 1 x PSV / Suncor UK / 2 wells (150 days) /comm Aug-Sept 1 x PSV / ASCO / 5 months + 4 wk + 14 d/opts / Aug-Sept 1 x PSV / MLS / 100-120 days / comm Early Sept 1 x PSV / DONG / 2 wells firm 90-110 days / Sept-Oct 1-2 PSV / ENI N/ 88 days / late Sept /Oct 1 X AHTS / Saipem / Towing Castoro 7 / 55 days / Late Sept /Oct 2-3 x PSV / Statoil / 3,6 or 12 months + opt / Sept-Dec 1 x PSV/ERRV / AGR N / 1 well c 90 days / May 2013

Nitrogen Pumping Role for Olympic Electra The multipurpose field support vessel Olympic Electra has been fixed for a Nitrogen Pumping workrole with Centrica that could see it working for up to a month in the Southern North Sea. The Olympic Electra proved suitable for the role which required a vessel with enough accommodation for charterers personnel and needed to be suitable to run out of Great Yarmouth. The MT6009 L designed vessel has accommodation for 40 personnel and a deck area of around 745 square metres.

Bourbon Sapphire Fixed for 10 Months The large PSV Bourbon Sapphire has been fixed for ten months firm plus additional options for 80 days with ConocoPhillips. The vessel will be replacing the North Promise which had been on long term charter with the oil company and is expected back on the North Sea spot market in the middle of September. The Bourbon Sapphire is an Ulstein P105 and is equipped with a deck area of around 990 square metres, DP2 and Oil Recovery. The dayrate was between NOK 145,000 and 155,000. ŠCopyright Braemar Seascope Offshore 2012

Chartering

North Truck Given 18-Month Charter

ConocoPhillips has fixed the large PSV North Truck for 18 months. The vessel will be supporting the drilling campaign of the Maersk Resolve rig out of Great Yarmouth.

The North Truck is a 1983-built UT-705 designed vessel which is equipped with a deck area of around 893 square metres and has tanks suitable for the simultaneous carriage of brine, liquid mud and base oil with dedicated tanks, pipelines and pumps.

FD Incomparable Secures Enquest Work The medium sized PSV FD Incomparable has been chartered by Enquest for seven wells and will be carrying out general pool support. The vessel is UT-755 XL designed and is equipped with DP2, a deck area of around 716 square metres, oil recovery and fire fighting. The vessel also has three sister ships: FD Honorable (on charter with BP until mid Sept), FD Remarkable (also on charter to Enquest) and the FD Indomitable (on term with Taqa).

Ross Takes on the Viking Prince The Viking Prince has been chartered to support the Maersk Guardian rig for one well plus additional options with Ross Offshore. The vessel, which was launched earlier this year, is a VS489 PSV with DP2, standby and a deck area of around 1021 square metres. The Viking Prince was fixed at a dayrate of around GBP 19,500. The vessel could return to the North Sea spot market as soon as September dependent on the execution of options.

FD Honorable with BP UK Until September The medium sized PSV FD Honorable has been fixed to BP until around the middle of September. The vessel was chartered for five weeks firm plus options to carry out general pool support for the super-major’s North Sea operations. The 2010-built UT-755L vessel has DP2 and a deck area of around 716 square metres. The FD Honorable is expected to rejoin the North Sea spot market at the end of the charter. ŠCopyright Braemar Seascope Offshore 2012

Chartering

Toisa Invincible Supporting GSP Falcon

The large PSV Toisa Invincible has been fixed by GSP to support work being carried out by the pipelay vessel GSP Falcon. The pipelay vessel is currently working with Wintershall in the Southern North Sea. The Toisa Invincible has been fixed for a period of around 15 days firm plus 15 additional daily options. The day rate for the contract is understood to be around GBP 18,000. The VS-483 designed Toisa Invincible is equipped with a deck area of around 936 square metres and DP2.

Siem Vessels Assigned to Gryphon FPSO The Gryphon FPSO is set to be re-positioned back on site in the coming weeks. The large AHTS vessels Normand Neptun, Siem Aquamarine and Siem Amethyst will tow the unit onto location and are expected to mobilise shortly to begin the work that could last until the end of August or possibly the middle of September. Maersk Oil’s Gryphon FPSO was moved off the field after a heavy storm in October 2011 broke four of ten anchor chains.

Maiden Charter for Ma Devi Chellsea’s recently acquired medium sized PSV Ma Devi (ex VOS Premier) has been fixed for its first fixture since being renamed. The UT-755 LN designed vessel will be carrying out work for Heerema until around the end of August before returning to the North Sea spot market.

The Ma Devi is equipped with DP2 and a deck area of around 708 square metres. The vessel was sold for around USD 30 M.

Vessels Consider Potential Lay-up North Sea vessel owners are understood to be considering potential lay-up due to continuing low day rates. The 1983 -built NSO Spirit entered lay-up in the past couple weeks and other tonnage could follow. Dayrates in the supply vessel market have been low with weak demand in the North Sea. Between the 6th and 16th of August there were only 12 PSV requirements in Norwegian waters.

Meanwhile, as the report goes to press there are almost 20 PSVs prompt on the spot market. ©Copyright Braemar Seascope Offshore 2012

Corporate

CNOOC Announces Nexen Takeover Plan

CNOOC has announced a planned USD 15.1 billion takeover of Nexen. The transaction, which could be concluded before the end of 2012, would see the Chinese company take over the global operations including all of the Oil and Gas assets in the North Sea. It would also enhance CNOOC’s presence in Canada, the Gulf of Mexico and Nigeria. CNOOC would retain the current Nexen management team and employees.

Talisman Sells 49% of North Sea Assets In a further move by Chinese-based firms into the UK North Sea, Sinopec has announced it will buy a 49% equity interest in Talisman’s UK North Sea assets. According to Talisman the USD 1.5 billion will provide additional resources to Talisman’s UK venture and will lead to a stronger and more sustainable business. Talisman will continue to operate the assets although Sinopec will appoint select personnel to key positions within the organisation.

Support Vessels in Aberdeen Harbour up 9% Aberdeen Harbour has recorded a year-on-year rise of 9% in the number of support vessels using the port in the first six months of the year. From January until July 2012 there were 2,814 vessels using the port compared to 2,580 in 2011. The figures have been released as work commences on a GBP 5.2 million program that will see the port widened and the deepening of the navigation channel.

ATP Undertakes Financial Restructuring ATP Oil and Gas corporation has filed a voluntary petition for reorganisation under Chapter 11 of the Bankruptcy Code in the U.S. ATP believes this will provide the company with the time and flexibility it needs to fully address its financial challenges. The company has stated that the primary reason for the reorganisation is down to the moratorium on drilling in the Gulf of Mexico following the Deepwater Macando well blowout in May 2010. ©Copyright Braemar Seascope Offshore 2012

Norway Rig Ops Costlier

The rig market in the North Sea continues in the similarly strong vein as the past few months. Recent market movements include a pair of Dutch sector deals. The first deal has seen the Noble Al White extended by Total for a further 20-months for work in the region with the extended period starting from October. Secondly, next year the newbuild rig Regina Allen is due to be delivered in the first quarter before commencing a contract with GdF Suez in the second quarter of 2013 also in the Dutch sector.

Perenco has just taken on the Ensco 80 for work in the Southern North Sea that is expected to run through to January next year. This deal has pushed Ensco’s rig utilisation for 2012 to 100%.

Meanwhile, recent figures indicate that there are currently 21 semisubmersible rigs under construction. In total a third of these are expected to come to the North Sea with six destined for Norway and one for the UK. The Island Innovator (pictured above) has been fixed on a 12-well programme in Norway for Lundin commencing in the second quarter of 2013.

In Ireland, Providence Resources has been offered new licensing options adjacent to the Barryroe oil field. The options cover 500 square km adjacent to the field where seismic suggests the field may extend into. The two year option may turn in to an exploration licence with a commitment to drill.

Rig costs in Norway are about 40 per cent higher than in UK waters. A report on the costs and future availability of rigs in Norwegian waters has been released by the Norwegian Petroleum and Energy Ministry. The report also indicates that it is also harder to move rigs from the UK to the Norwegian Continental Shelf than taking them the other way. According to the report the higher costs are down to modifications required to meet Norwegian regulations and the higher operating costs imposed by Norwegian working time directives.

Rig Chart Rig Activity by Type and Country Norway UK/Irl

Drillship Jackup Semi-Sub Total

1

1

7

19

19

17

27

37

Denmark Netherlands

Stacked without future contract

Stacked with future contract Total 2

2

2

7

7

Video Update on Providence Resources

1

4

40

2

4

42

3

8

84

$140

$0

Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12

Bunker Price GBP/MT

Bunker Price 700

Bunker Price in Aberdeen 2011 to Present

650

600

550

500

450

Price courtesy of Scandinavian Bunkering, subject to supply method, volume and market fluctuations.

Oil

Price 2005 2005--2012

$120

$100

$80

$60

$40

$20

Standby/ERRV

Atlantic Secures Shell Standby Role

Atlantic Offshore Rescue Ltd have been awarded a contract

by Shell UK to provide a newbuild Class A / FSV (field support vessel) from 2014 at the Anasuria FPSO / Gannet field in the Central North Sea. The Zamakona shipyard in Spain has been selected for the Havyard 820 designed unit that has been chartered for 5-10 years. Although their Norwegian parent company has been active recently in ordering newbuilds for their own market this represents the first major investment in the UK fleet which currently consists of nine vessels.

North Star Newbuilds Committed North Star has recently taken delivery of their third newbuilding (from a series of four) from the Balenciaga shipyard in Spain. The Grampian Discovery was committed to Shell UK on a long-term basis from delivery and will initially support the Ocean Guardian which recently mobilised from Invergordon. The final vessel Grampian Defiance, is due for delivery next month and is committed to DONG Energy for a two-well programme West of Shetland with the drillship West Navigator from October.

Vroon Picks Up Centrica & Perenco Work In the East Irish Sea, Centrica has chartered the VOS Emperor to support a three to five well programme with the Noble B. Welliver from early August and in the South North Sea, Perenco has fixed the VOS Patrol for one to two wells from around the same time to support a programme with the Ensco 80. The rig/vessel package transferred in direct continuation from the preceding charterer - namely Senergy (Dana).

Standby Market Activity Remains High The Standby Market remains extremely active and the fleet has effectively been fully utilised for many months.

As a consequence and to ensure they have access to a vessel when required, Charterers have tended to commit several months in advance which is a typical characteristic when a market is as tight as it is at the moment. For example, Premier is presently tendering for a vessel from October to support an 18-24 month programme with the Wil Phoenix. ŠCopyright Braemar Seascope Offshore 2012

Subsea

N-Sea Charters Toisa Conqueror

N-Sea (formerly Noordhoek) has chartered the ROV survey support vessel Toisa Conqueror for 90 days to carry out survey and IRM work in the North Sea. The 2001-built vessel is a 74m DP2 vessel equipped with an inspection class ROV and diving spreads. It will undertake its first project at the end of July and will be carrying out diving and ROV based inspection operations for multiple major clients in both oil and gas and renewable markets.

Technip Charters Newbuild Vessel Technip has chartered a newbuild subsea construction vessel on a term charter of at least five-years. The vessel, which is being built for North Sea Shipping at Bergen Group BMV AS in Bergen, Norway, will be delivered in 2014. The charter will be for a period of five or seven years firm plus a five-year extension option, with a further purchase option. It will have an loa of 142m, a width of 27m, a 400t crane and a 2,000t carousel for storage of flexible pipe below deck.

Toisa Paladin Fixed for 3 Years Firm The dive support and construction vessel Toisa Paladin has been chartered by a strategic partnership of Fugro and Cal Dive for three years firm plus two six month options. The 2007-built DP2 vessel will be put to work on a number of subsea and construction projects commencing with work in Malaysia for Fugro TSM before moving immediately on to work for Cal Dive with an un-named oil company that will see the vessel utilised through to the end of 2012.

Subsea Market Summary Latest For the latest on the subsea construction and survey vessel availabilities please contact us for a copy of our Subsea Vessel Market Summary. We are constantly monitoring the requirements, fixtures and availability of the North Sea fleet. For more information please email: aberdeen@seascope.co.uk

ŠCopyright Braemar Seascope Offshore 2012

Renewables

A2SEA Awarded

A2Sea has been awarded a contract for installation work on the Gwynt y Mor offshore wind farm. The Sea Jack and the Sea Worker will be used to install 160 Siemens 3.6 MW turbines at the RWE project which is due to start producing power in 2014. The two jack-up barges will work in conjunction with the seabreeze class construction vessel Friedrich Ernestine that will install wind turbine foundations in 2012 and 2013.

New Jack Up For Seajacks Seajacks has placed an order for a newbuild jack-up construction vessel. The Seajacks Hydra will be a modified Gusto MSC NG2500X self elevating self propelled jack-up and will be built at Lamprell's Hamriyah facility in the UAE for delivery in 2014. The vessel is similar to the Seajacks Kraken and Leviathan. Kraken is currently on a two year well intervention contract with Shell UK and the Leviathan is working on the Sheringham Shoal offshore wind farm.

Seafox 5 Named in Singapore The Seafox 5 is has been named and is expected head to the German Sector of the North Sea soon to commence its maiden charter at the Dan Tysk offshore wind farm.

The Wind Turbine Installation Vessel has been built at Keppel Fels in Singapore and has a 1,200t heavylift crane capable of installing turbines and large foundations exceeding 800t in weight. The Seafox 5 will also have a deck area of around 3,600 square metres and is designed to carry up to twelve 3.6 MW turbines.

Renewables Report For further details of the recent movements in the renewables market please see the latest edition of our Renewables Report which can be viewed online by clicking here. If you would like to be included on the distribution list for this report please email research@seascope.co.uk . Our brokers are dealing with an increasing amount of work in the Renewables market, please feel free to get in touch with your requirements or to discuss the market in general. ŠCopyright Braemar Seascope Offshore 2012

AHTS Dayrates

Average North Sea Spot AHTS Rates 2011/12

£90,000

£80,000

£70,000

Average Spot Dayrate

£60,000

£50,000

£40,000

£30,000

£20,000

£10,000

£0 Jan

Feb

Mar

Large - AHTS (16,000+ BHP) 2011

Apr

May

Jun

Medium - AHTS (12-15,999 BHP) 2011

Jul

Aug

Large - AHTS (16,000+ BHP) 2012

PSV Dayrates

Sep

Oct

Nov

Dec

Medium - AHTS (12-15,999 BHP) 2012

Average North Sea Spot PSV Rates 2011/12

£25,000

Average Spot Dayrate

£20,000

£15,000

£10,000

£5,000

£0 Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Large PSVs (700m2+ Clear Deck) 2011

Medium PSVs (500-700m2 Clear Deck) 2011

Large PSVs (700m2+ Clear Deck) 2012

Medium PSVs (500-700m2 Clear Deck) 2012

Oct

Nov

Dec

£0

Jan-04

Large PSVs (700m2+ Clear Deck)

Medium PSVs (500-700m2 Clear Deck)

Jul-12

May-12

Mar-12

Jan-12

Nov-11

Sep-11

Jul-11

May-11

Mar-11

Jan-11

Nov-10

Sep-10

Jul-10

May-10

Mar-10

Jan-10

Nov-09

Sep-09

Jul-09

May-09

Mar-09

Jan-09

PSV Dayrates

Nov-08

Sep-08

Jul-08

May-08

Large - AHTS (16,000+ BHP)

Mar-08

Jan-08

Nov-07

Sep-07

Jul-07

May-07

Mar-07

Jan-07

Nov-06

Sep-06

Jul-06

May-06

Mar-06

Jan-06

Nov-05

Sep-05

Jul-05

May-05

Mar-05

Jan-05

Nov-04

Sep-04

Jul-04

May-04

Jul-12

May-12

Mar-12

Jan-12

Nov-11

Sep-11

Jul-11

May-11

Mar-11

Jan-11

Nov-10

Sep-10

Jul-10

May-10

Mar-10

Jan-10

Nov-09

Sep-09

Jul-09

May-09

Mar-09

Jan-09

Nov-08

Sep-08

Jul-08

May-08

Mar-08

Jan-08

Nov-07

Sep-07

Jul-07

May-07

Mar-07

Jan-07

Nov-06

Sep-06

Jul-06

May-06

Mar-06

Jan-06

Nov-05

Sep-05

Jul-05

May-05

Mar-05

Jan-05

Nov-04

Sep-04

Jul-04

May-04

Mar-04

Jan-04

£0

Mar-04

AHTS Dayrates Average North Sea Spot AHTS Rates 2004 2004--2012

£140,000

£120,000

£100,000

£80,000

£60,000

£40,000

£20,000

Medium - AHTS (12-15,999 BHP)

Average North Sea Spot PSV Rates 2004 2004--2012

£40,000

£35,000

£30,000

£25,000

£20,000

£15,000

£10,000

£5,000

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Sean Bate Market Analysis Manager 25 Carden Place Aberdeen AB10 1UQ UK Phone: +44 (0)1224 628470 Fax: +44 (0)1224 621444 E-mail: research @seascope.co.uk

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