NSRV14

BRAEMAR SEASCOPE OFFSHORE MONTHLY MAGAZINE January 2013

ISSUE: 58

MARKET NEWS & ANALYSIS VESSEL DAYRATE CHARTS RIG NEWS MARKET COMMENTARY

Picture Courtesy of Michael Bates

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Subsea Market Latest

Welcome to the latest edition of the Braemar Seascope Offshore North Sea Vessel Report and the first for 2013.

The start of the new year has continued in much the same manner as 2012 finished. Early indications point to a similar picture of heavy rig utilisation and activity in the North Sea but an oversupply of vessels. The vessel dayrates for this year are expected to remain suppressed as further newbuilds deliver and arrive on the spot market.

Traditionally market activity begins to pick-up around March with vessels being chartered for medium term requirements. On the positive side there are nine medium and long-term requirements out there at the moment includ-

ing a multi-vessel requirement with BP. Average dayrates for spot AHTS fixtures in December were GBP 10,768 and GBP 8,068 for large and medium vessels respectively. Meanwhile, PSV rates were GBP 6,741 and GBP 4,627. It is anticipated that average rates will remain around these levels for January.

We hope you find the latest edition of our report useful and look forward to hearing your feedback and comments.

The next edition of this report will be out on February the 7th.

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

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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 2013 North Sea support vessel market looks set to be defined by high rig demand combined with a significant oversupply of vessels. In terms of rigs, utilisation is very high and there is presently an active North Sea fleet of 43 rigs as this reports goes to press. Limited availability and signs of increasing demand through to 2015 are forcing a number of operators to investigate sublets and eight rigs are already in such arrangements.

The other side of the market is marked by a large scale oversupply of vessels a situation that kept the dayrates for tonnage subdued throughout 2012. This is expected to get a certain degree worse before it gets any better as a further influx of newbuildings are set to deliver throughout 2013. Indications of the expected arrivals point to around 20 large PSVs and up to eight medium PSVs which are set to join the market. We only expect half of these numbers to come to the North Sea. However, the market already suffers from too much tonnage at present and even a handful of arrivals will add to the duration of the period of low rates.

The number of term requirements presently outstanding is consistent with previous years. There are now 10 medium and long-term requirements compared to 12 this time last year and 9 in 2011. There have also been a pair of recent term fixtures including the char-

SEAN BATE

(MICS)

Offshore Market Analysis Manager

Click Here to Email Sean Research@seascope.co.uk Tel: +44 (0)20 7903 2736

“Even a handful of Vessels also continue to be chartered for passenter of the KL Brofjord to SPD for one well new vessel arrivals will ger transport roles following the ongoing susfirm plus one well oppension of Super-Puma Helicopter flights. The tion in support of the extend the period of Maritime and Coastguard Agency has extended Transocean Prospect the allowance for SPS compliant vessels to carry low dayrates.� and the VOS Power out passenger transfers until the end of May. which has been fixed The Olympic Commander is one such vessel and to Peterson SBS for a year firm plus additional options. is currently carrying out passenger transport duties for Peterson SBS is also currently out with a long-term Suncor on a d/d 10 basis at a dayrate of around GBP requirement for a further PSV for one year plus two 13,250. one year options commencing in March to April.

Looking longer term, indications are pointing to strong rig demand in the North Sea through to 2015. However, recent studies have shown that out of 66 exploration and appraisal wells drilled in the UK in 2012 only two discoveries were made. How oil companies will reflect on the returns of their North Sea exploration programmes remains to be seen. Beyond that the demand for improved fuel efficiencies and greener technology which is only really beginning to emerge could see a new-tier of top-end LNG-fuelled vessels emerging and able to demand higher rates.

Chartering

Long-Term Requirements

There are six outstanding long-term requirements: 1 x PSV / Peterson SBS / 1 year + 2 x 1yr / Mar-Apr 2013 1 x PSV / BG UK / 3 years + 2 x 1 yr/ 5yrs + 2 x1 yr Feb 2013 1-2 AHTS / Statoil / 1, 3 or 5 yrs + opt / Jun-Dec 2013 4-7 PSVs / BP UK / Various Durations / comm 2013 & 2014 1 x PSV / BP N / 5 yrs + 5 x 1 yr opts / comm 2013-2015 1 x PSV / Halliburton / Well Stim / 9 mnths+opt / Mar 2013

Medium-Term Requirements There are four outstanding medium-term requirements: 1 x PSV Senergy / 1 or 2 wells + opts / late Jan 2013 1 x PSV / RWE / 3 wells firm + 2 opt wells / early Feb 1 x PSV / E.On / 3 months + 6x1wk + d/d14 /Mid Mar 2013 1 x PSV / E.On / 2 wells firm (180 days) + 1 well opt / Feb

Newbuild Energy Insula Due on Spot Market The newbuild large PSV Energy Insula is expected to join the North Sea spot market in the last week of January. The VS485 MKII designed vessel is currently charter free. Golden Energy Offshore is understood to be seeking work for the vessel with the aim of securing term work. The Clean Design DP2 vessel was built at Hellsøy Verft and has a deck area of around 1,005 square metres.

Tor Viking Returns From Alaska Role The large ice-breaking AHTS vessel Tor Viking is set to return to the North Sea spot market in Aberdeen following completion of term work with Shell in Alaska. The vessel was serving as the primary anchor handling vessel supporting the Noble Discoverer as well as acting as an ice management vessel in the Arctic and Baltic Seas. The 2000-built Tor Viking is a MOSS808 designed vessel ICE 10 classed and equipped with a bollard pull of around 202t. ŠCopyright Braemar Seascope Offshore 2013

Chartering

Evita & Rem Leader Fixed to Lundin

The large PSV Evita and the newbuild LNG PSV Rem Leader have been chartered by Lundin to support a five-well drilling campaign with the Maersk Guardian. In addition to the five firm wells, the charterer also holds options for a further three wells. The Rem Leader is a VS-499 LNG vessel with a deck area of 1025 square metres and the Evita is a VS-485 PSV MKII designed vessel with a deck area of around 1005 square metres. Both vessels also have standby capability.

BP Extends PSV Pair for 3 Months + Opts The medium sized PSVs VOS Precious and the Mana have had their existing contracts with BP extended for a further three months plus three additional one month options. The vessels are now expected to be working for BP until at least around April depending on whether additional options are taken up. Both vessels are UT-755 LN designed with deck areas of around 680 square metres.

Falkland Vessels Returning to North Sea The large PSVs Toisa Sonata and Toisa Interpid are set to return to the North Sea spot market after completing support of a long-term drilling campaign with the Leiv Eiriksson rig in the Falkland Islands. The vessels are expected to conclude their charter with AGR Falkland by mid to end January. Meanwhile, it is understood an invitation to tender is being prepared for a drilling rig for a campaign in the Falklands for a minimum of three wells in 2014.

Talisman Sinopec Extends North Sea Giant Talisman Sinopec has extended its charter of the large construction vessel North Sea Giant. The vessel has been carrying out general support work for a drilling campaign with the WilPhoenix and could be engaged until around the end of January. The vessel has a longterm call off contract with Technip who are expected to potentially use the vessel in March although no details of the duration or workscope are currently available. ŠCopyright Braemar Seascope Offshore 2013

Chartering

Vestland Cetus Fixed for 3 Years to Maersk

The large PSV Vestland Cetus has been fixed on a longterm charter of three years plus four additional one-year options with Maersk Oil. The VS-486 MKIII designed vessel was delivered in December last year from Fjellstad AS. The Vestland Cetus is equipped with DP2, Standby Vessel (S) NMD Rescue, Fifi 1 and Deice C. It also has a deck area of around 1,004 square metres. The vessel will be supporting a drilling campaign with the Sedco 704 which Maersk has on a two-year contract starting early 2013.

MCA Extends Passenger Transfer Allowance Operators are continuing to charter vessels to carry out passenger transfer duties during the ongoing outage of Super-Puma helicopters. The Maritime and Coastguard Agency has extended its allowance for vessels to carry out these duties as long as the vessel is compliant with the Special Purpose Ships (SPS) code and the voyage is not greater than 36 hours.

This exemption will expire on May 31st 2013.

Chevron Canada Pair Set for Q1 Departure Chevron Canada has chartered a large AHTS and a large PSV to assist the Stena Carron drillship in operations offshore Newfoundland. The well support operations are expected to last for between 150 and 180 days. The VS-4622 CD designed AHTS Magne Viking will be carrying out anchor handling work and ice management. Meanwhile, the Troms Castor, which is currently on charter with ENI Norway, will carry out platform supply duties. The vessels are expected to leave the North Sea at the end of Q1 or start of Q2.

Siddis Skipper Returning to Spot Market The medium sized PSV Siddis Skipper is expected to return to the North Sea spot market in mid-January following the conclusion of a long-term charter. The VS-470 designed vessel has been working with Statoil for the past five years and will shortly be charter free. The 2004-built vessel is equipped with DP2, Standby and Fifi 1. It also has a clear deck area of around 640 square metres. ŠCopyright Braemar Seascope Offshore 2013

Corporate

ITC Changes Name to Tschudi

International Transport Contractors (ITC) has changed its name to Tschudi Offshore & Towage from the start of 2013. There has been no change to the ITC team and the business and activities will continue unchanged. ITC has been a wholly owned subsidiary of the Tschudi Group since 2003 and it is expected that the company will play an increasing role within the group and seek to increase operations in the Northern Regions, the Baltic and Russia.

STX Sells Off Shipyard Stakes Fincantieri has acquired 50.75% of STX OSV from STX Europe and will take over 10 shipyards which produce offshore vessels. Under the terms of the EUR 455 million deal Fincantieri will become one of the top five shipbuilders worldwide. Meanwhile, STX Europe has also sold STX Norway Florø AS and STX Norway Design Florø AS to Westcon Group.

Iceland Unveils Series of Offshore Licences The National Energy Authority of Iceland (Orkustofnun) has awarded a number of offshore hydrocarbon exploration licences in its second licencing round. Among the awards are one licence to Faroe Petroleum AS and Iceland Petroleum and another to Valiant Petroleum and Kolvetni.

Petoro will also hold a 25% interest in both licences. It is expected that the main activity in the region in the next few years will involve analysing seismic data and additional information ahead of potential exploration drilling.

Talisman Sinopec Energy Latest Talisman Energy (UK) has officially changed its name to Talisman Sinopec Energy UK Limited following Sinopec’s purchase of 49% of the shares in a USD 1.5 billion transaction.

Sinopec will now fund 49% of the UK capital programme which the company hopes will increase overall investment in the assets and lead to improved operational performance and a stronger UK North Sea business. ©Copyright Braemar Seascope Offshore 2013

Statoil’s Mariner Project

Image courtesy of Statoil

Market reports show that there are currently only five jack-ups and one drillship that will have any form of availability in the North Sea through 2013.

Meanwhile, the semisubmersible fleet is entirely committed for the coming year.

The Noble Lynda Bossler has had its charter with Gaz de France extended by an additional two months. The 1982built three-legged jack-up rig will now be on with GDF until around early March 2013 before commencing three wells with Dana, also in the Netherlands until around early December 2013.

Taqa/ONE then have the rig fixed until early January 2015.

The semisubmersible rig COSL Promoter has commenced its first contract and will be working for Statoil for eightyears firm. The rig will initially be working on Troll.

In addition, the Leiv Eiriksson is expected to commence its long-term charter with a consortium of companies (Rig Management Norway) shortly following its arrival in the North Sea from recent work in the Falkland Islands.

Market reports are suggesting that a tight rig market over the coming few years could lead to an increased number of sublet contracts. Eight rigs in the North Sea are currently being sublet.

Statoil has unveiled an investment decision on the Mariner project in the UK North Sea that will see a gross investment of more than USD 7 billion. The field will produce oil for around 30 years from 2017 via a production, drilling and quarters platform and a floating storage unit.

The heavy oil project is located around 150 km east of the Shetland Islands and represents Statoil’s first move into a major development field in the UK North Sea.

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

Drillship Jackup Semi-Sub Total

Denmark Netherlands

Stacked without future contract

Stacked with future contract Total

2 9

18

23

16

32

36

2 7

7

5

5

Statoil Permanent Reservoir Monitoring Plan

1

40

2

4

45

2

5

87

Bunker Price Bunker Price in Aberdeen 2011 to Present 700

Bunker Price GBP/MT

650

600

550

500

450

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

Oil $140 $120 $100 $80 $60 $40

$20 $0

Price

2005 2005--2013

Standby/ERRV

Severe Storm Damages Vessels

The severe storms around mid December were a reminder of the potential dangers involved in this sector of the offshore industry in the North Sea. Several vessels were damaged and the VOS Sailor was subsequently withdrawn from service and has been sold to a scrapyard in Denmark.

Momentum Indicates Strong 2013 Market Several medium term fixtures have kept momentum up in the buoyant ERRV market over the winter period indicating an extremely healthy 2013 from an owner’s perspective.

Shell fixed up the MRV VOS Raasay for 30-45 days from late December for support of the Leman field in the South North Sea & Hess has fixed the Grampian Prince for circa three months to support the Seawell. The Grampian Prince/Seawell are on charter to CNR at the Lyell field in the Northern North Sea and are scheduled to transfer to Hess later this month.

GDF Suez and SPD Take on Vessels GDF Suez has chartered the Grampian Dee from late January to support a one well (circa 100 days) programme on the Juliet Field in the South North Sea with the Noble Ronald Hoope. Meanwhile, SPD has contracted Esvagt to provide ERRV cover for a 1-2 well programme with the GSF Arctic III in the Northern North Sea that commenced recently. The Esvagt Connector will act as the frontrunner on this charter until a 'C' class unit is available towards the end of January.

ADTI Fixes Vessels for Outstanding Tender One of the more long term tenders outstanding has now been covered. ADTI has finalised a contract with Atlantic Offshore Rescue for a vessel to support a 5-8 well drilling programme with the Ensco 100 at the Stella Field in the Central North Sea in March. The firm period is estimated to be around 450 days. The Ocean Swift will kick off the contract until being replaced by the Ocean Swan around July. The Swan is to commence another ADTI contract with the Ensco 101 in March for a one well (circa 120 days) programme in the Southern North Sea. ŠCopyright Braemar Seascope Offshore 2013

Subsea

Reef Subsea Secures Statoil Contract

Reef Subsea has been awarded a major contract with Statoil for installation of the full seismic system of the Grane field offshore Norway. The project which is worth over GBP 22 million will run over 2013 and 2014 and will utilise the Polar Prince, Reef Larissa and a heavy HD3 plough and dredging system. The vessels will be used for a total of around 100 days in 2014.

Cecon Completes Bond Issue for Newbuilds Cecon ASA and York Capital Management Global Advisors LLC have signed a multi-tranche secured bond issue of up to USD 107 Million. The deal will provide working capital to Cecon and fund the completion of construction of Hull 717 at Chantier Davie Canada. In addition, York has made conditional construction financing available for Cecon for the completion of Hulls 718 and 719. Under the terms York shall receive 15% equity in Rever Offshore which is a Cecon Subsidiary which owns the vessels.

SeaBird Charters Geo Pacific from Fugro SeaBird Exploration has chartered the 3D seismic vessel Geo Pacific from Fugro on a four-month charter that is intended to be converted into a three-year bareboat deal with four one-year options. In addition, SeaBird will also have purchase options on the vessel in year three and potentially in year four if the vessel is extended. The Geo Pacific will join SeaBird’s other 3D vessel the Voyage Explorer which joined the SeaBird fleet in August 2011.

TPAO Strikes USD 213M Deal with Polarcus Turkish Petroleum Corporation (TPAO) has signed a deal with Polarcus that will cover long-term collaboration and sale of the 3D seismic vessel Polarcus Samur. Under the the terms the eight-streamer vessel will be reflagged and Polarcus will provide seismic data acquisition, fast-track data processing, management and crewing services for the vessel over a three year period. The total value of the arrangement over the three-year period including the sale of the vessel is USD 213 million. ŠCopyright Braemar Seascope Offshore 2013

Renewables

Turntable for Willem de Vlamingh

The Jan De Nul Group has ordered a cable turntable for the Willem de Vlamingh vessel that will be used on the Northwind offshore project. The turntable includes a 5 tonne and 10 tonne deck tensioner and has been supplied by Caley Ocean Systems along with a modular loading tower assembly including comprising loading arm, inboard chute and control cabin. The vessel is expected to be complete in the first quarter of 2013.

Sea Installer Arrives in Esbjerg The wind turbine installation vessel Sea Installer has arrived in Esbjerg following her completion at Qidong in China. The vessel sailed from Cosco Shipyard in October and will host an open vessel event in Grena in Denmark on February 19th. The vessel has been fixed for a number of projects that will see her occupied until mid2014. These include installation on Gunfleet Sands 3, the Anholt Project and the West of Duddon Sands.

FOB Swath 2 Vessel Delivered FOB Swath AS has taken delivery of a newly built FOB Swath 2 vessel from Danish Yachts shipyard. The vessel, along with its sister ship FOB Swath 3, has been chartered

by A2Sea for the next five years. The FOB Swath 1 is currently on charter with Siemens. The FOB Swath special service windfarm vessels are designed with a new system to use two trimming tanks forward and two aft to reduce the vessel’s movements in the water.

West of Duddon Sands Work to Commence Construction work on the West of Duddon Sands Offshore Wind Farm is set to commence on the 21st January. The project, which is a joint-venture between DONG and ScottishPower Renewables covers an area of 66 square kilometres and will have a total combined capacity of up to 500MW. Initial work will involve the Sandpiper carrying out filter layer placement before offshore substation installation is carried out in May. Cable work will take place between March 20132014 with installation of 108 turbines taking place from August 2013 through to June 2014. ŠCopyright Braemar Seascope Offshore 2013

Sale & Purchase

Seven Sisters Sold by Siem

Siem Offshore has sold the multi role service vessel Seven Sisters to Subsea 7. The USD 84 million deal will see the vessel delivered to its new owners in March. According to Siem the sales proceeds will be allocated to the repayment of mortgage debt and to fund equity investments in the current new building program of four subsea construction vessels due for delivery between the second quarter of 2013 and the second quarter of 2014.

Lady Cynthia Sold For Indian Role Farstad has sold the 1987 built AHTS Lady Cynthia. The 9,500 bhp vessel was delivered to its new owners in early January and will be deployed on the Indian domestic market. According to Farstad the sale of the vessel will give a booked profit of approximately NOK 3 million in the first quarter of 2013. It is understood the new owner is Sadhav Shipping. Following the sale Farstad’s fleet will consist of 55 vessels including 28 AHTS, 24 PSVs and 3 Subsea vessels.

Five PSVs and four AHTS vessels are under construction.

Nam Cheong Sells Trio of Vessels Nam Cheong has sold one PSV and two AHTS vessels for a total of USD 56.4 million. The 5,000 dwt PSV has been sold to a new customer in the Asia Pacific region. Meanwhile the two 5,150 bhp AHTS vessels have been sold to Icon Offshore Berhad which is one of Malaysia’s largest offshore support vessel groups. The PSV is 87m and equipped with DP2. The AHTS vessels are both 59m with a bollard pull of 65t and DP1. All three vessels are scheduled for delivery in the second quarter of 2013.

Asso Diciotto & Diciannove Sold Augusta Offshore has sold the 1978-built PSV Asso Diciannove and the 1982-built AHTS Asso Diciotto to Bright Sunset of Panama. The vessels were handed over to the new owners in December. The sale is understood to be part of Augusta’s investment and fleet renewal programme. The Asso Diciannove (Asso 19) is a 56.16m vessel with a clear deck area of around 318 square metres. The Asso Diciotto (Asso 18) is a UT-704 designed AHTS with an LOA of 64.40m, bollard pull of 57.8t and deck area of 363m squared. ©Copyright Braemar Seascope Offshore 2013

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

Large - AHTS (16,000+ BHP) 2011

Mar

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

Oct

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

Nov

Dec

£0

Large PSVs (700m2+ Clear Deck)

Medium PSVs (500-700m2 Clear Deck)

Oct-12

Jul-12

Apr-12

Jan-12

Oct-11

Jul-11

Apr-11

Jan-11

Oct-10

Jul-10

Apr-10

Jan-10

Oct-09

Jul-09

Apr-09

PSV Dayrates

Jan-09

Oct-08

Jul-08

Apr-08

Large - AHTS (16,000+ BHP)

Jan-08

Oct-07

Jul-07

Apr-07

Jan-07

Oct-06

Jul-06

Apr-06

Jan-06

Oct-05

Jul-05

Apr-05

Jan-05

Oct-04

Jul-04

Apr-04

Jan-04 Mar-04 May-04 Jul-04 Sep-04 Nov-04 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 Sep-12 Nov-12

£0

Jan-04

AHTS Dayrates Average North Sea Spot AHTS Rates 2004 2004--2013

£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--2013

£40,000

£35,000

£30,000

£25,000

£20,000

£15,000

£10,000

£5,000

Contact Us Braemar Seascope Offshore is a division of Our services include: Braemar Shipping Services PLC, a leading Spot and period chartering integrated provider of brokering and consultancy services to the shipping industry. Short sea and ocean towage At Braemar Seascope Offshore our aim is Newbuild and second hand sale & to provide cost effective solutions to our purchase clients' offshore programmes.

Regular advances in technology mean our Bespoke research and reports work is a direct response to constantly Corporate mergers, acquisitions & changing market needs.

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From offices in London, Aberdeen and Singapore we specialise in the worldwide off- Valuation services shore market.

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Sean Bate Market Analysis Manager 35 Cosway Street London NW1 5BT UK Phone: +44 (0)20 7903 2736 E-mail: research @seascope.co.uk

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