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Braemar Seascope Offshore - North Sea Vessel Report North Sea Vessel Report - Issue 64: July 2013

July 2013

MARKET NEWS & ANALYSIS

Issue 64

VESSEL DAYRATE CHARTS

RIG NEWS MARKET COMMENTARY

Dry Cargo

Tankers

Email: offshore.aberdeen@braemar.com

Containers

Tel: London +44 (0)20 7903 2700

Offshore

Aberdeen: +44 (0)1224 628 470

LNG - Specialist - LPG

Sale & Purchase

Singapore: +65 6410 9013 www.braemarseascope.com

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Subsea Market Report

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

As we enter the second half of 2013, the North Sea market has seen another strong month with vessel spot rates maintaining some of the high levels attained in recent times. Average rates for large and medium AHTS vessels were GBP 51,131 and GBP 35,221 respectively. Meanwhile, PSVs averaged GBP 21,084 and GBP 20,845.

The next edition of the North Sea Vessel Report will be out on August 9th. 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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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.

Chartering

Long-Term Requirements

There are four outstanding long-term requirements: 1 x PSV / Dana / 2 years + 2 x 6 month opts / comm. 13.7 1 x PSV / Shell N / 1, 3 or 5 years / comm. 15th July 1 x PSV / Wintershall N / 2 or 4 yrs+ 4 x 1 year opts / Sept 1 x PSV / Shell UK / 5 years + opts / comm. Jan 2014

Medium-Term Requirements There are six outstanding medium-term requirements: 1 x PSV / Hess Denmark / 2 wells + 4 well opts (Maersk Resolve) / comm. June 1 x PSV / RWE / Firm until mid Oct + 4 x 1 wk + D/D 14 / 1.7 1 x PSV/ Peterson SBS / 12 wks +4 x 7 day + D/D 14 / 1-15.7 1 x PSV / Dana / 6 months + 2 x 1 month opts / comm. 14.7 1 x PSV / BG UK / 50 days + 4 x 1 + D/D 21 / comm. 18-26.7 1 x PSV / BG UK / 28 days + 2 x 1 wk + D/D 14 / comm. 30.7

Peterson SBS Fixture for Olympic Princess Peterson SBS has chartered the Olympic Princess vessel with an Ampelmann walk to work system to carry out a ten week contract in the Dutch sector of the Southern North Sea. The vessel will be carrying out work at the L2 platform.

The contract also includes additional options. The Olympic Princess is a multipurpose vessel of MT-6000 design and built in 1999. It is equipped with DP2 and a deck area of around 912 square metres.

Centrica Fixes Mana for 2 Months Centrica has fixed the Mana 3,289 dwt PSV on a supply duties charter lasting two months firm. The 2008-built medium sized PSV, of UT-755LN design, was expected to commence the charter in early June. It has previously been trading the North Sea spot market and will likely return on completion of its term work for Centrica. The rate is understood to be around GBP 11,500 with the period being one well plus four additional one well options or circa 443 days. ŠCopyright Braemar Seascope Offshore 2013

Chartering

KL Brofjord Goes to Shell N

The large PSV KL Brofjord has been fixed to Norske Shell for one month firm plus additional options. The 5,100 dwt PSV has been chartered to carry out supply duties from the 22nd June and is next expected to be available on the North Sea spot market from the end of July although there are options for a further five weeks. The 2011-built vessel is managed by K Line Offshore.

Perenco Charters Malaviya 20 The medium sized PSV Malaviya 20 has been fixed by Perenco for a charter of four weeks firm plus three additional weekly options and a further 14 daily options. The 2004built PSV, which is managed by GOL Offshore, commenced the work on June 22nd. The vessel has previously been carrying out work on the North Sea spot market for ConocoPhillips.

18-Month Shell N Charter for Rem Fortress Shell Norway has confirmed a fixture of Siem’s newbuild VS-4411 designed vessel and the large PSV Rem Fortress. The newbuild dual fuelled PSV has been chartered for three-years firm plus options while the Rem Fortress has been taken on for 18 months plus options.

It is understood the dayrate for the Rem Fortress is around GBP 21,500.

Two-Well Ross Charter for Blue Guardian The Blue Guardian has been chartered by Ross Offshore for two wells firm. The Ulstein designed PX-121 vessel will be carrying out drill support for the Maersk Giant jackup rig on the Norwegian Continental Shelf in the North Sea whilst it carries out work for Det Norske Oljeselskap and Repsol Exploration. The contract is estimated to take around four months to complete commencing around the end of July.

ŠCopyright Braemar Seascope Offshore 2013

Chartering

Maersk Oil Extension for ER Georgina

The ER Georgina has been extended by Maersk Oil for an additional year with two further yearly options. The vessel will be performing general pool support operations for the charterer. The UT-776 CD designed vessel is equipped with a deck area of 1,000 square metres, DP2, Fifi 1 and Oilrec.

ABB Windfarm Work for Siddis Skipper The Siddis Skipper has been fixed on a four-month firm plus options supply duties contract with ABB. The windfarm support work is based in the UK sector of the North Sea. The 3,600 dwt vessel has previously been carrying out spot work for Premier Oil and is expected to return to the spot market on completion of the ABB workscope. The vessel was fixed at a dayrate of circa GBP 17,500.

Floating Storage for Highland Pride The large PSV Highland Pride has been chartered to carry out floating storage at the Northern Producer location.

The vessel was fixed by Enquest for 14 days firm plus additional options for up to a further 14 days. The Highland Pride is next expected to be available in the middle to end of July. The UT-705 designed 6,600 BHP vessel is equipped with a deck area of around 880 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.

ŠCopyright Braemar Seascope Offshore 2013

Newbuilds

Polar Onyx Hull Delivered

The SX121 designed offshore construction and well intervention vessel Polar Onyx has been launched at the Zaliv Shipyard. The vessel, which is being built for Ulstein Hull AS, has an LOA of 130m and a 25m beam. The vessel will now be towed to Norway for the final completion and outfitting. Over the past six years Zaliv and Ulstein Hull AS have worked on 14 oil and gas vessels together.

Naming Ceremony for Skandi Bergen The newbuild offshore construction vessel Skandi Bergen is undergoing its naming ceremony in Bergen.

The vessel, which has an LOA of 120m, is equipped with an ROV and a 250t offshore crane. The Skandi Bergen is expected to commence Banff & Kyle reinstatement work in the UK North Sea and will be working until September ahead of potential work for Statoil.

Siem Signs Dual Fuel PSV Deal with Shell N Siem Offshore and Norske Shell have signed a contract for a newbuild large dual fuel PSV. Siem is currently in discussion with a number of shipyards for construction of the VS-4411 DF designed vessel which is due to commence the contract in the first quarter of 2015. The vessel will be fixed for three years firm with two additional one-year options. It will be supporting offshore activities at Draugen and Ormen Lange.

The vessel, which will have a deck area of 970m2 will be capable of using either Marine Diesel Oil or LNG.

Highland Defender Set to Join Spot Market The large platform supply vessel the Highland Defender is due to commence work on the North Sea spot market in Aberdeen from July 10th. The large MMC 887-designed vessel will have a deck area of around 1,000 square metres and DP2. The vessel will be joined on the spot market two days later by the UT712 CD designed Island Duke which is expected to be charter free in Stavanger from July 12th. ŠCopyright Braemar Seascope Offshore 2013

Renewables

Piriou Enters Renewables Market

Piriou Shipbuilding has entered into the offshore renewables market with a series of wind farm support ships. The company’s first deal is with BMT Nigel Gee for two units that will be available for operation in Europe at the end of 2013. The company is also set to take part in the Seawork 2013 exhibition in Southampton later in June to showcase its projects in the Marine Renewables Sector.

East Anglia Work for Oleg Strashnov The heavy lift vessel Oleg Strashnov is scheduled to carry out work on the East Anglia Offshore Windfarm for Wood Group Kenny. The vessel will be supported by the AHT Union Princess and a crew transfer vessel. The Oleg Strashnov has previously carried out installation of foundation supported by the Smit Angola and the Bremen Fighter. The new workscope which represents the second phase of the offshore operations at the site will take place over a period of two weeks depending on suitable weather. The East Anglia Zone is located off Suffolk.

Gwynt y Mor Windfarm Work Underway A fleet of vessels are currently on site at the Gwynt y Mor offshore windfarm site 15km to 20km off the coast of North Wales. The accommodation vessel the Wind Solution is to be anchored at the site and will make monthly port visits with a series of crew transfer vessels taking personnel to various locations at the site. The Stanislav Yudin heavy lift vessel will be carrying out the installation of around 160 foundation monopoles whilst deploying its eight-point anchor spread.

West of Duddon Sands Vessels at Work DONG Energy and ScottishPower Renewables are undertaking construction work at the West of Duddon Sands project.

Currently the sub-station has been installed at the site along with a number of foundation and turbine pieces.

There are two installation vessels: Pacific Orca and the Sea Installer working at the location. In addition there is the Stemat Spirit, Coastal Vanguard and the workboat Odin.

Installation of array cables is to start this month and turbine installation will run from August to June 2014.

Corporate

Subsea Template for Asgard Sails from Yard

The 1800-tonne subsea template for Statoil’s Asgard subsea gas compression project is now en route from the shipyard in Egersund to the field. The system is expected to increase recovery from the field by around 280 million barrels of oil equivalent when it comes on stream in 2015.

The work installing the 22 module compressor units is expected to take place next year.

Statoil Expects Renewables Surge by 2040 Statoil has released its latest Energy Perspective long-term Market Outlook document and expects renewables to grow to 8% of the market by 2040 from a base level of just over 1%. According to the report wind power generation capacity grew on average by 16.5% a year and solar capacity by 67% a year between 2002 and 2012. In 2012, wind solar, hydro, biomass and geothermal capacity made up 40% of the total European power generation capacity.

Mediterranean Oil & Gas Malta Campaign 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.

Pelamis Celebrates Year of Testing The Pelamis P2 wave energy converter has completed a year of testing at the European Marine Energy Centre (EMEC) in Orkney. The P2 test programme has accumulated 5,000 grid-connected operating hours and exported 160MWh of electricity to the national grid. According to the company the proven average output capability of the device is now around 100kW.

ŠCopyright Braemar Seascope Offshore 2013

Maersk FPSO Video

Images courtesy of Seadrill

The outlook for rigs in the North Sea remains strong with a series of new extensions and contracts announced that are beginning to see units chartered through to 2017 in some instances.

Rates are high and are showing little sign of falling away although it is doubtful whether they can continue to rise with such pace in the future.

Awilco is expected to secure a threeyear firm contract with Apache and Taqa that will see the semisubmersible rig chartered through to 2017. The rig, which is currently on charter with Premier who has outstanding options, could begin work under the new contract in the third quarter of 2014. The Ocean Nomad semisubmersible is now back in

the North Sea having been drilling off Latvia. The rig is undergoing a special survey prior to commencing a charter with Dana which will see it working for two-years firm plus two additional six months options.

Meanwhile, Maersk has extended its contract with the Sedco 704 semisubmersible. The rig was originally due to go on contract for two years although it will now be working for 30-months taking the unit through to December 2015.

The rig’s initial workscope is expected to include development drilling work at the Gryphon location which has recently seen the return of the FPSO following storm damage in 2011 that put it out of action.

Maersk has released a video showing the full process of the recovery, repair and upgrade work that took place on the Gryphon FPSO. The unit suffered significant damage during heavy storms in 2011 and had to undergo a large amount of remedial work before being returned to action in the North Sea. The video, which can be viewed here or by clicking the link above shows the full story.

Rig Activity by Type and Country Norway UK/Irl

Drillship Jackup Semi-Sub Total

1

1

9

17

23

15

33

33

Denmark Netherlands

Stacked without future contract

Stacked with future contract Total 2

3

3

5

5

2

1

37

2

6

46

4

7

85

Deepwater Enabler - Offshore Construction Vessel

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-13

Jun-13

May-13

Apr-13

Mar-13

Feb-13

Jan-13

Dec-12

Nov-12

Oct-12

Sep-12

Aug-12

Jul-12

Jun-12

May-12

Apr-12

Mar-12

Feb-12

Jan-12

Dec-11

Nov-11

Oct-11

Sep-11

Aug-11

Jul-11

Jun-11

May-11

Apr-11

Mar-11

Feb-11

Jan-11

450

Jul-05

Apr-05

Jan-05

Bunker Price GBP/MT

700

Bunker Price in Aberdeen 2011 to Present

650

600

550

500

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

$140

$120

$100

$80

$60

$40

$20

$0

Standby/ERRV

Atlantic Offshore Orders 3rd FSV

Atlantic Offshore Rescue has ordered a third FSV of Havyard 820 design from the Zamakona shipyard in Spain with delivery scheduled in Q2 of 2015. The EUR 25 M newbuilding will have twin daughter and is committed to Shell UK for 5-10 years from delivery. Initially the unit was to support an FPSO on Shell's Fram field however the newbuild may now be deployed elsewhere. Atlantic's other 2 newbuilds at Zamakona are scheduled for delivery in the first half of 2014 and committed to Shell UK (5-10 years) and Total Norge (4-8 years).

Ocean Clever Fixed by Shell for 2 Years Atlantic has had further success with Shell recently with the news that the 1975 built Class A Ocean Clever has been chartered for a minimum of 2 years from late July for support of the Curlew FPSO field in the Central North Sea. The tanker assist/ERRV is currently located West of Shetlands on a one well programme for Chevron with the drillship Stena Carron.

In addition, Shell has extended a regional call off frame agreement for a further two years until June 2015. The agreement which includes the provision of ERRVs in Norwegian / UK / Dutch and Irish waters has been running since 2005.

Tight UK Market Sees Little Availability The market remains extremely tight with very little or any availability of UK certified units envisaged over the next few months so it is not clear how Wintershall will cover their requirement for a vessel to support a drilling programme (circa 135 days) with the Noble George Sauvageau in the South North Sea from the first half of July. Several long term tenders remain outstanding although the outcome of the GDF Suez & Teekay Petrojarl requirements are expected to be announced shortly. GDF tendered for a vessel for 3-5 wells from October in the South North Sea for support of a drilling programme with the GSF Monarch & Teekay required a vessel for approximately 15 months plus options from September / October for support of the Banff field FPSO in the Central North Sea.

Dana & Nexen Have ERRV Requirements Dana Petroleum is understood to still be outstanding for a vessel for 9-12 wells (circa 2 years) from late July for support of a drilling programme with the Ocean Nomad in the Northern North Sea. Meanwhile, Nexen requires a vessel for 10 to 21 wells from late 2013 for support of the newbuild Jack-Up Ensco 120 which has been chartered for the Golden Eagle development in the Central North Sea. The unit has been constructed at the Keppel shipyard in Singapore.

ŠCopyright Braemar Seascope Offshore 2013

£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

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Large - AHTS (16,000+ BHP) 2011

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

Large - AHTS (16,000+ BHP) 2012

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

Large - AHTS (16,000+ BHP) 2013

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

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 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

£0

£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

Large - AHTS (16,000+ BHP)

Large PSVs (700m2+ Clear Deck)

Medium - AHTS (12-15,999 BHP)

£40,000

£35,000

£30,000

£25,000

£20,000

£15,000

£10,000

£5,000

Medium PSVs (500-700m2 Clear Deck)

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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