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Braemar Seascope Offshore - North Sea Vessel Report North Sea Vessel Report - Issue 63: June 2013

June 2013

MARKET NEWS & ANALYSIS

Issue 63

VESSEL DAYRATE CHARTS

RIG NEWS MARKET COMMENTARY

Dry Cargo

Tankers

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Containers

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New Trainee Broker

Welcome to the latest edition of the Braemar Seascope Offshore North Sea Vessel Report.

A recent spike in North Sea spot market activity has seen AHTS rates surge past the GBP 100,000 mark for the second time in the year and PSV rates also buoyant. We have seen a lot of movement in all areas of the market including in the boardroom with Tidewater’s recent acquisition of Troms Offshore Supply Group being one of the highlights.

The next edition of the North Sea Vessel Report will be out on July 1st. In the meantime, please ensure that you have our new contact details.

Aberdeen: offshore.aberdeen@braemar.com London: offshore.london@braemar.com Singapore: offshore.singapore@braemar.com Perth: offshore.perth@braemar.com Research: offshore.research@braemar.com We hope you find the latest edition of our report useful and look forward to hearing your feedback and comments.

Sean Bate Market Analysis Manager offshore.research@braemar.com

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Braemar Seascope Offshore is pleased to advise that Douglas Rickman (24) has joined our office in Aberdeen in the role of Trainee Shipbroker.

Douglas has a Degree in Business Management having studied at Leeds Metropolitan University, and has also previously worked in Kenya as a teacher.

Market Commentary

A

s we enter June with a volatile North Sea sport market it is worth reflecting on the past few weeks’ fluctuations. The market in general ended the month of April on a high, with vessels trading in both PSV and AHTS segments obtaining steady rates during the final days of the month and on into May. This was not to last, however, after a quiet few weeks, particularly in the rig move market, rendered North Sea ports jammed with tonnage - by mid-month over twenty AHTS units sat prompt between Aberdeen and Norway.

This dramatic downturn in the AHTS market was soon to be met with an equally (if not more) dramatic upturn after a string of jack-up & semi rig moves, prelay jobs and heading control requirements all but cleared out the market of tonnage by the end of the month. This tightening was aided by the fact that up to half a dozen anchor handlers have left/will be leaving the market dur-

ROSS FINLAYSON

(MICS)

Shipbroker

Click Here to Email Ross offshore.aberdeen@braemar.com Tel: +44 (0)1224 628 470

end provided the impetus ing late May/early June, for peri“Strong activity levels for dayrates (in some cases) ods ranging from several weeks to several months. The nature provided the impetus to breach the GBP 100,000 mark of these fixtures also ranges for dayrates to breach for the second time this year rates did not reach this level at all from the more conventional anchor handling type GBP 100,000 for the during the whole of 2012. In conworkscopes such as heading second time this year” trast to this exodus of tonnage, the Maersk Logger’s return from Maucontrol, through to more specialritania and the Olympic Hercules’ ised undertakings arrival back from Brazil are the only two such as trenching cases of vessels repatriating to the North and installation Sea from other regions during the month of duties. The knock-on May. effect is a reduction in the pool of Whilst the PSV market did not quite reach vessels available to such low levels of utilisation, the early and Charterers and this middle parts of the month witnessed a secoupled with strong ries of short bursts of activity, followed activity levels quickly by quieter spells and the return of towards the month tonnage.

During this period day

Market Commentary rates typically fluctuated within the GBP 9,000 to GBP 18,000 per day range, bar a handful of Norwegian Sector fixtures/extensions, where dayrates breached the GBP 20,000 mark. As with the AHTS market, however, the concluding days of the month saw a marked upturn, with medium vessels, as well as large, breaking the GBP 20,000 level.

This resurgence at the end of the month can in part be attributed to the considerable number of vessels that have left/will shortly be leaving the spot market for term contracts. These range from one well summer drilling campaigns and pipehaul projects here in the North Sea, to multi-year international fixtures.

Two vessels due to find themselves in more exotic climes in the near future are the Havyard 832 PSV Ben Nevis and the MT6009 designed Havila Fortune; both vessels fixed to Shell International to support the Drillship Noble Globetrotter II during its various drilling programmes in Africa and the Asia Pacific region. The former for 1 year + 4 x 1 year opts and the latter for around 80-

100 days as she acts as a frontrunner for the Ben Nevis’ sister vessel the Makalu, which is still under construction in Norway.

Other notable events during the month include the delivery of Atlantic’s UT755 LC Ocean Scout, and the arrival of Blue Ship Invest’s Blue Thunder, which joined the spot market mid-May, only to be fixed

by Statoil for a spot job that was then to run into the same Charterers medium term fixture of the vessel, keeping her occupied until at least October.

Given the tight market conditions as we head into June, it’s fair to say that the predicted seasonal upswing in the market has once again manifested itself this year. With a steady number of medium and long-term requirements still outstanding, and numerous other term charters having only just started, it seems that the current supply/demand dynamic is unlikely to change in the short term, though the delivery of further PSV newbuilds will offer Charterers opportunities for high-spec modern vessels which there may not otherwise be.

Chartering

Long-Term Requirements

There are five outstanding long-term requirements: 1 x PSV / Maersk Oil UK / 1 yr + 2 x 12mnth / June 2013 1 x PSV / Centrica / 1 well +4 x 1well opts / June-Jul 2013 1 x PSV / Shell N / 1,3 or 5 years / comm 15th July 1 x PSV / Wintershall N / 2 or 4 years + 4x1 yr opt /Sept 2 x PSV / Shell UK / 5 years + opts / Jan 2014

Medium-Term Requirements

There are four outstanding medium-term requirements: 1 x PSV / Hess Denmark / 2 wells + 4wells opts / June 1 x PSV / Shell N / Supply/ 4 mnths+4x1wk+D/D14 / 20th June 1 x PSV / Peterson SBS / 12 weeks+4x7d+d/d14 / 1-15 July 1 x PSV / Ross Offshore / 2 wells firm (50days each) /Jul-Oct

Far Server Goes to Nexen Until September Nexen has fixed the Havyard 832 CD designed PSV Far Server for three months firm plus further options for up to an additional six weeks. The vessel, which is currently working on the North Sea spot market, is expected to commence the term work around the middle of June and is expected to next be available for charter in September. The 2010-built Far Server is equipped with DP2, Oilrec, Clean Design and a deck area of around 800 square metres.

Shell Takes Havila Fortune to West Africa Shell International has picked up the medium sized PSV Havila Fortune to carry out support duties for the Noble Globetrotter II off Benin West Africa. The Havila Fortune left the North Sea on the 6th of June and is not expected to finish her duties with the Noble Globetrotter II until August, although Shell does hold further options on the vessel. The Havila Fortune was built in 2009 and is equipped with DP 2 and has a deck area of 683 square metres. ŠCopyright Braemar Seascope Offshore 2013

Chartering

Shell Fixes Dina Supplier for 1 Month

The medium-sized PSV Dina Supplier has been chartered

by Shell on a contract lasting 30 days firm, plus options.

The 2007-built UT-755 LC designed PSV, operated by Myklebusthaug Management, will commence the contract in the middle of June. In the meantime, it is carrying out work on the spot market for the same charterer. The vessel is expected to return to the spot market by around the middle of July.

Havila Jupiter Working for Bluewater The Havila Jupiter 22,800 bhp AHTS has been chartered by Bluewater to carry out a range of supply and construction support duties on a contract lasting approximately 50 days.

It is believed that the 2010-built vessel, owned by Havila Shipping, commenced the job before the end of May. The vessel had previously been carrying out work on the spot market for Statoil. The vessel is only expected to return to the spot market by early August.

DeepOcean Takes on Maersk Assister DeepOcean has fixed the Maersk Assister AHTS on a term contract lasting one month firm. The 23,480 bhp vessel commenced the work on June 1st. The charter is based in UK waters and will keep the 2000-built Maersk Supply Service vessel busy until around early July with further extensions possible. The vessel will be carrying out trenching duties for the duration of the charter.

Allseas Pipehaul Charter for Fanning Tide Allseas UK has fixed Tidewater's Fanning Tide 4,700 dwt PSV on a term charter lasting approximately two months firm. The contract, which started in early-June will be based in the UK sector of the North Sea. This is the first term fixture for the STX PSV-09 CD designed Fanning Tide since its delivery from the Vard Soviknes shipyard.

The vessel will be carrying out pipehaul duties.

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Chartering

Bluewater Charters BB Troll

The BB Troll was fixed away to Bluewater, she started her heading control duties on the 2nd of June. The charter period is 21 days firm with further day by day options of 21 days. The DP2 vessel was built in 2000 and has a bollard pull of 165t, a BHP of 15,000 and is Norwegian flagged.

Peterson SBS Fixes Island Endeavour The medium sized PSV Island Endeavour has been chartered by Peterson SBS on a one year contract with additional options. The UT-755 LN designed vessel will be carrying out pool support duties in the Southern North Sea. The 2008-built vessel is equipped with DP2 and a deck area of around 715 square metres.

Rem Supplier Goes to ADTI for 1 Well ADTI has chartered the medium sized PSV Rem Supplier for one-well to support operations being carried out by the jack-up rig Energy Endeavour. The vessel commenced the work at the end of May and is expected to be on charter for a total of between 50 and 80 days. The Rem Supplier is a 2010-built vessel from Dry Docks World equipped with DP2, and a deck area of around 680 square metres.

Subsea Market Summary For the latest on the subsea construction and survey vessel availabilities please contact us for a copy of our Subsea Vessel Market Summary. The list is put together weekly by Graeme Riddell who is based in our Aberdeen office. We are constantly monitoring the requirements, fixtures and availability of the North Sea fleet. For more information please email us.

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Newbuilds

Far Statesman Sold & Bareboated Back

The Far Statesman AHTS, has been delivered to Farstad Supply by Vard Langsten shipyard. The UT 731 CD designed vessel, has a bollard pull of 265t and 24,371 bhp.

Farstad Supply has sold the vessel to Ocean Yield and leased it back on a 12-year bareboat charter with the additional option of buying the vessel at the end of the contract. The Far Statesman will operate in the North Sea spot market.

Vroon Launches Vos Fabulous Vroon has launched the Emergency Response and Rescue Vessel (ERRV) Vos Fabulous at Nanjing East Star Shipyard in China. The vessel has an LOA of 50m and a beam of 13.2m. The ABS classified vessel is Class-B. The Vos Fabulous is expected to be delivered in early summer 2013 and will be operational in the North Sea later this year.

Craig Group Launches Grampian Sceptre The PSV Grampian Sceptre has been launched by Balenciaga Shipyard in Northern Spain for the Craig Group. The Company spent GBP 50M on the construction of this vessel and its sister vessel the Grampian Sovereign. They have been specifically designed for North Sea operations and are the largest ever build for the Group. Both of the vessels have secured long term contracts with Talisman Sinopec Energy UK. The Grampian Sceptre is set to commence its contract in September.

Simek Shipyard Launches North Pomor PSV The North Pomor PSV has been launched by Simek Shipyard. The ST-216 Arctic designed PSV, which is owned by Gulf Rederi, is winterised basic with ICE-1B and has been designed for operating under harsh conditions. The North Pomor has an LOA of 90.6 metres and a beam of 19.2 metres. The vessel has a top speed of 16 knots and can accommodate 40 people. The delivery date is scheduled for July 2013. ŠCopyright Braemar Seascope Offshore 2013

Corporate

Forties Alpha Satellite Platform Towed

The topside of the Forties Alpha Satellite Platform (FASP) will be towed down the Tyne to the North Sea Forties Field. This is the final part of a GBP 400M construction project which was awarded to the UK Company OGN Group, in 2010. The FASP is expected to come on stream in autumn 2013 and is designed to produce up to 25,000 bpd from the field which lies 110 miles offshore Aberdeen.

Taqa Buys BP North Sea Assets Taqa has acquired UK North Sea oil and gas assets from BP. The Company will take over the Harding field and the production platform in the Central North Sea. The assets were acquired for USD 1bn of which USD 632M were deposited on the day of the agreement. With these additions, Taqa's oil production is expected to increase by 20,000 boed.

Maersk Oil Gryphon FPSO Back in Production The Maersk Oil Gryphon FPSO has recommenced production in the North after undergoing a major overhaul following storm damage. During the repair period, Maersk Oil took the opportunity to further explore the area with a 4D seismic programme, gained operatorship of the Maclure field and carried out a drilling campaign on the Tullich field in the area. The Gryphon, North and South Gryphon, Tullich and Maclure fields are all tied back to the Gryphon Alpha FPSO.

New HQ for South Stream Pipeline The new headquarters for South Stream Transport were opened in Amsterdam. This is part of the Gazprom’s South Stream project for diversifying gas export routes. The South Stream gas pipeline will run under the Black Sea to the Bulgarian coast with a length of 900 km, 2km depth and 63bn cubic metres in capacity. Its construction started in December 2012 and is expected to finish by the end of 2015. ŠCopyright Braemar Seascope Offshore 2013

Strong Rig Market

Images courtesy of Seadrill

Rig activity in the North Sea remains high despite the number of units currently in port. There are currently a total 11 rigs not actively working in the region. However, 10 of these units have forward contracts with a number expected to start work imminently. As this report goes to press it is only the semisubmersible rig JW McLean that is stacked in Invergordon which is charter free.

Statoil has handed a development plan for the Delta 2 field in the North Sea to the Norwegian Petroleum and Energy Minister. This is part of the company's fast track development strategy to recover resources by using the current infrastructure while it is still feasible.

The oil reserves at this field are estimated at 77 million barrels of oil and exploitation is expected to begin by the end of 2014. Production will be via pipeline to the Oseberg Field Centre, increasing its production.

Mediterranean Oil and Gas and Genel Energy are to drill an exploration well offshore Malta in Area4 in the fourth quarter of 2013. The semisubmersible drilling rig Paul Romano will be utilised for the campaign. The rig is capable of drilling to a depth of 7,500 metres and will be fitted with a fifth ram to the blow out in order to comply with the latest best practice guidance for deep water operations. The rig is currently undergoing a five year class survey in Malta

Owner of Seadrill, John Fredriksen is predicting that the oil rig market will remain strong for at least the next three to five years. The company is currently in the process of taking on a further 19 new rigs.

However, he indicated that the short-term future for the crude tanker market looked bleak although dry bulk shipping and oil products markets showed some strength.

Rig Activity by Type and Country Norway UK/Irl

Drillship Jackup Semi-Sub Total

1

1

9

15

27

13

37

29

Denmark Netherlands

Stacked without future contract

Stacked with future contract Total 2

6

6

5

5

Virtual Tour of Maersk Jack-Up

5

40

1

5

46

1

10

88

Apr-13

Jan-13

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

Jan-09

Oct-08

Jul-08

Apr-08

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

Bunker Price GBP/MT

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.

$140

$120

$100

$80

$60

$40

$20

$0

Standby/ERRV

Tight ERRV Market Conditions to Continue

Although not unexpected, vessel availability is almost nonexistent at the moment and is expected to remain so for the rest of the summer. The tight market conditions will persist through the autumn and winter as well given the number of requirements now being quoted commencing in the fourth quarter so any respite from a Charterers perspective is unlikely for the foreseeable future.

Fresh Standby Requirements on Market Dana is out for a vessel from the first half of August for 9-12 wells in support of a development drilling programme with the Ocean Nomad in the Northern North Sea. GDF Suez is tendering for a vessel for 3-5 wells from mid to late October to support the GSF Monarch in the South North Sea. Nexen is also thought to be out for a vessel for 10-21 wells from late 2013 in support of the newbuild Jack-Up Ensco 120 which has been chartered for the Golden Eagle development in the Central North Sea.

Talisman & Enquest Fix Vessels Talisman Energy has chartered the Sea Sailor for 6 to 12 months from early June for support of the Rowan Stavanger in the Central North Sea. In addition, Enquest has secured the Grampian Orcades on a multi-year basis from late June for support of the Stena Spey. Meanwhile, Total is out for a vessel for 60 days from early July at the Elgin field in the Central North Sea but it is difficult to see much (or any) clear vessel availability for this programme.

Additional Vessels to Enter ERRV Market Against this background it is encouraging to see vessels entering the market so it does not become increasingly overheated or more out of balance than it already is as work may get postponed which is not in anyone's interest, Owners or Charterers alike. Atlantic Offshore recently completed the GBP 2 million conversion of the 1984-built / 12,560 bhp Ocean Troll in Hull into a Class A tanker assist / ERRV unit & Dutch based Glomar Ship Management are converting a recently acquired 1975 unit in Poland (to be named Glomar Patriot) which will be ready for the UK market in August. ŠCopyright Braemar Seascope Offshore 2013

£90,000

Large - AHTS (16 ,000+ BHP) 2011 Large - AHTS (16 ,000+ BHP) 2012 Large - AHTS (16 ,000+ BHP) 2013

£80,000

Medium - AHTS (12-15,999 BHP) 2011 Medium - AHTS (12-15,999 BHP) 2012 Medium - AHTS (12-15,999 BHP) 2013

£70,000 £60,000 £50,000 £40,000 £30,000 £20,000 £10,000 £0 Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

£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

Large PSVs (700m2+ Clear Deck) 2013

Medium PSVs (500-700m2 Clear Deck) 2013

Nov

Dec

Jan-04

£0

Large PSVs (700m2+ Clear Deck)

Medium PSVs (500-700m2 Clear Deck)

Apr-13

Jan-13

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

Jan-09

Oct-08

Large - AHTS (16,000+ BHP)

Jul-08

Apr-08

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

£0 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 Jan-13 Mar-13 May-13

£140,000

£120,000

£100,000

£80,000

£60,000

£40,000

£20,000

Medium - AHTS (12-15,999 BHP)

£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: offshore.research @braemar.com

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