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Braemar Seascope Offshore - North Sea Vessel Report North Sea Vessel Report - Issue 66: September 2013

September 2013

Issue 66

MARKET NEWS & ANALYSIS VESSEL DAYRATE CHARTS RIG NEWS

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Subsea Market Report

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

Rates on the North Sea spot market have been distorted in the past month due to passenger transfers temporarily being carried out by vessels. Average rates for August were GBP 30,393 for large AHTS vessels and GBP 22,007 for medium. Meanwhile PSVs were averaging GBP 18,976 for large and 15,997 for medium sized vessels.

The next edition of the North Sea Vessel Report will be out on October 3th/4th.

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.

Market Commentary

T

he month started on a quieter note compared to the earlier part of the summer as activity slowed and we started to see the availability of both anchor handler and PSV tonnage open up. As such, the rates dropped off from the highs of the previous months and they remained flat until the ditching of a Super Puma helicopter in the UK sector and then the subsequent grounding of the fleet.

BRAEMAR SEASCOPE Offshore

This caused rates to increase significantly as Charterers turned to spot vessels with large accommodation to transfer passengers to offshore locations. This tightened both the PSV and AHTS markets and will continue to influence the market until the helicopter service returns to normal.

Due to the lack of rig moves at the beginning of the month, AHTS vessels had started to build up on both sides of the North Sea which saw levels drop below GBP 10,000 in the UK sector. They picked up to healthier rates as the month moved on however, project work aside, there were no headline rates until AHTS started to be chartered for passenger transfer. As oil compa-

nies sought methods of getting personnel to/ from offshore several vessels were fixed above GBP 50,000. This attributed heavily to average rates for the month with large and medium vessels averaging GBP 30,393 and GBP 22,007 respectively.

We saw a similar pattern with the PSVs as the highs of June and July were out of reach for most of the month. The odd fixture aside for large vessels, the front end of August saw medium vessels predominantly fixing between GBP 10-15,000 until the demand for passenger transfer saw the rates rocket with the highest recorded coming it at GBP 38,000. This extra demand for passenger transfer put a squeeze on the PSVs and for regular supply duties the rates were back up into GBP 20,000s, while Charterers also had to turn to AHTS vessels for cargo runs as the PSV market sold out. This ŠCopyright Braemar Seascope Offshore 2013

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meant rates for AHTS vessels averaged GBP 18,976 for large tonnage and GBP 15,977 for medium.

The Bourbon Topaz migrated to warmer climes in Africa to support the Cajun Express’ drilling programme for Cairn. We also witnessed another anchor handler depart the North Sea spot market as the Balder Viking headed to Greenland to undertake an ice management/seismic support workrole for TGS Nopec.

The upcoming months have historically seen PSVs spring free from seasonal work and vessels return to the spot market causing a softening of rates. However, the AHTS market can be very volatile as rigs move on from their summer drilling locations coupled with the weather deteriorating into Autumn, this has previously caused spikes in rates.

Chartering

Long-Term Requirements

There are six outstanding long-term requirements: 1 x PSV / Centrica /12mth+ 1yr +1x6 mth opt or 2.5yrs firm 1 x PSV / Centrica / 2 wells (250 days)+4x1 well opts/ Nov 1 x PSV / MOG / 1,2 or 3yrs+ opts / comm. October 2013 1 x PSV / Shell UK / 5 yrs + opts / comm. Jan 2014 1-2 PSV / Apache / 1,2,3 or 5yrs firm + opts / Q4 2013 1 x PSV / AGR N / 12 wells + 8x1 well opts / Oct 2013

Medium-Term Requirements There are four outstanding medium-term requirements: 1 x PSV / ADTI / 1 well / mid Sept 1 x PSV / Team / 6 mth + 8x1 week opts / mid-late Sept 1 x PSV / Petrofac Germany / 6 months+3x2 mnth opt / Oct 1 x PSV / Petrofac Germany / 3 months+3x1 mnth opt / Oct

Maersk Transporter Back from Africa The AHTS Maersk Transporter has returned to the North Sea spot market after relocating from West Africa. The VS-472 designed vessel has already secured work with Ecosse that will see it occupied through to the middle of September. The Maersk Transporter had previously been working offshore Equatorial Guinea since 2009.

FS Pisces Gets First Fixture The newly renamed FS Pisces has been chartered for its first job after being bought by new owner Fletcher Shipping. The UT-705 designed vessel, which was formerly the Highland Pride, is currently fixed with Taqa until around the end of the first week of September. The FS Pisces is 1992-built, equipped with a deck area of around 868 square metres and has 6,600 BHP. ŠCopyright Braemar Seascope Offshore 2013

Chartering

Cairn Fixes Bourbon Topaz for 4 Wells + 4

The large PSV Bourbon Topaz has been fixed by Cairn Energy to support the drilling campaign of the Cajun Express 5th generation deepwater semisubmersible drilling rig.

The vessel has been chartered for four wells firm at a dayrate of around GBP 23,500 with options for up to an additional four wells. The Bourbon Topaz is a P105 designed vessel equipped with a deck area of around 995 square metres, DP2 and Oil Recovery.

Energy Swan Chartered for Brage Work Wintershall Norway has awarded the large PSV Energy Swan a four year charter to perform operations in the North Sea. The ST-216L designed vessel, which is currently on charter with ConocoPhillips Norway doing pool support, will be working on the new contract until 2018. The Wintershall Norway workscope includes supporting installation work at the Brage platform. The firm contract is understood to be at a dayrate of around NOK 170,000 and there are also options for a further four one-year periods.

Troms Lyra Sets Out for Pool Support Work Troms Offshore’s 2013-built PSV Troms Lyra has set out for pool support duties potentially with the West Navigator Drillship or the Transocean Barents rig for Norske Shell. The vessel is a PSV 08 CD design with a deck area of 860 square metres and accommodation for 24. The Troms Lyra will be performing the workscope for nine weeks firm with options covering up to a further five additional one week periods.

Highland Defender Supports Ocean Nomad The Highland Defender has been employed by Dana Petroleum to support the drilling campaign of Diamond Offshore’s Ocean Nomad Rig off the Western Isles.

The large PSV has already started her two year fixture with two six month options. Gulf Offshore’s Highland Defender built this year is a MMC-887 design with a deck area of 1,000 square metres, integrated DP2 and accommodation available for 40 people. ©Copyright Braemar Seascope Offshore 2013

Chartering

North Sea Spot Market for Island Newbuild

The newbuild large PSV Island Duchess will be joining the North Sea spot market in early October. The UT 717 CD designed vessel is Island Offshore’s fourth of this design built in 2013. The Island Duchess is equipped with DP2, a deck area of 800 square metres and accommodation for 26. The vessel is set to arrive in Stavanger by around the 10th of October and is currently charter free.

Bourbon Rainbow Front-Running Dong Work The Bourbon Rainbow is currently undertaking work with Dong to support the Maersk Resolve jackup rig. The 2013built PSV is working on the contract and is expected to be replaced later on by the Bourbon Sapphire. The Bourbon Rainbow will then commence a one well charter with MLS supporting the Maersk Giant rig. The Bourbon Rainbow is a PX-105 designed vessel equipped with a deck area of around 1017 square metres.

Total Takes Maersk Pair for Passenger Role Maersk Supply Service has two AHTS vessels doing passenger transfer service for Total UK. The Maersk Logger has recently been extended 7 days on top of a previous charter and the Maersk Lifter is fixed for all duties including passenger transfer service for 18 days with one week and seven day by day options. The Maersk Logger and the Maersk Lifter are both DP2 L-Type vessels. The vessels have a bollard pull of 250 t with deck areas of 720 square metres and can accommodate up to 70 personnel.

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

Renewables

MV Markab Working on Rampion

Fugro’s multipurpose geotechnical drilling and construction support vessel MV Markab is currently working on the Rampion Offshore Windfarm. The vessel will be performing geotechnical operations for the remainder of 2013 and into early 2014 with the exact finish date dependent on weather conditions and work progress.

Seajacks Leviathan at Greater Gabbard The wind turbine installation vessel Seajacks Leviathan will be working on the Greater Gabbard Offshore Wind Farm until around early October. The vessel, which will be supported by the DP Galyna and the MCS Coromell, will be working on site for around 20 days in total. The Seajack Leviathan has a main pedestal crane which can have a lift of between 200t and 300t.

Corporate

Adriatic Oil Strikes Deal with Elixir Petroleum

Adriatic Oil has struck a deal with Elixir Petroleum to take on a further 55% stake in the UK North Sea Seaward Production Licence P1921. Under the terms of the deal Adriatic will fully fund reprocessing of 3D seismic data and take over the requirement to drill or drop the licence before February 2014. Adriatic will become the operator of the licence with an 80% stake and Elixir will retain a 20% interest.

Senergy Acquired by Lloyds Register Lloyds Register has announced the planned acquisition of Senergy. The deal will see the two businesses combine over the next three years. The plan is to provide life of field services from inception to decommissioning. Aberdeen-based Senergy will continue to operate as a separate company for the next three years and will become a member of the Lloyds Register Group. Lloyds Register will also have representation on the board of Senergy.

Sale & Purchase

Skandi Bergen Sold to International Buyers

DOF Subsea has sold its subsea construction vessel Skandi Bergen to an un-named buyer for a gain of around NOK 200 million. The vessel, which will be delivered to its new owners in early 2014, is being sold to an international buyer. The ROV construction vessel is equipped with a 250t active heave compensated crane, helideck and accommodation for up to 100 personnel.

Atlantic Offshore Buys Bourbon Eko Atlantic Offshore has completed the purchase of the Bourbon Eko. The vessel, which will be renamed the Ocean Tay will be converted to a UK registered Class A FSV in full compliance with all UK Oil and Gas Guidelines. The 1992built vessel is a multi-purpose subsea service and platform supply vessel also equipped for standby rescue. Atlantic Offshore Rescue is understood to currently be engaged in negotiations with a number of clients over potential longterm contracts for the vessel.

Bourbon Updates Sale & Bareboat Plan In its latest update on its sale and bareboat plan Bourbon has stated it has sold the first nine vessels to Chinese company IBC. The sale is part of a 51-vessel sale and bareboat commitment. These first nine vessels have commenced their 10-year bareboat charter period and the exchange of a further 15 vessels currently under operation is expected to be completed within two months and the transfer of 27 vessels currently under construction is due to take place within 10 months.

Vroon Firms Up Two PSV Newbuild Options Vroon has added a further two newbuild vessels to its existing order at Cosco Guangdong Shipyard. The company now has a total of ten PSVs under construction in China including four 4,200 DWT PX-121 designed vessels at Guangdong and six KCM designed vessels at Fujian Southeast Shipyard. All ten vessels are set for delivery during 2015 and will be managed by Vroon Offshore Services.

ŠCopyright Braemar Seascope Offshore 2013

Dana Starts Isles Project

North Sea rig utilisation remains strong as a series of further fixtures for units are firmed up. In the latest deal the Maersk Giant has secured additional work with Talisman in the Norwegian sector from around August 2014. It will be working for the operator for at least one-year with options that could see it extended into 2018. In addition, the Transocean Barents has been taken on

by Shell from September 2014 for oneyear firm.

Meanwhile, Norwegian Oil company Statoil is progressing its flagship UK Mariner Project. The scheme, which will be run out of a planned new Aberdeen base, will see more than 700 full time positions located in the city from 2016.

Also in the UK Total has fixed the GSF Galaxy I jack-up rig on a three-year firm charter with two additional options that could extend the fixture through to the end of 2018.

Ensco has just taken delivery of the latest addition to its fleet, the jackup rig Ensco 120. The unit, which was constructed at the Keppel FELS yard in Singapore, is contracted to work for Nexen in the North Sea in the fourth quarter of this year. The Ensco 120 is en-route to the North Sea where it will undergo final outfitting and crew familiarisation.

The second rig in the series, the Ensco 121, is set to be delivered later this year and will work for Wintershall in the North Sea.

Dana Petroleum has started drilling operations on its Western Isles development twomonths ahead of schedule. The USD 1.6 billion project will see the Ocean Nomad rig work on the nine well development at the Harris and Barra fields 160km east of the Shetlands and 12km west of the Tern field. View an overview of the plan here.

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

1

1

9

18

27

12

37

30

6

6

7

7

1

2

43

1

4

44

2

6

88

Ampelmann Ship to Ship Transfer Operations

May-13

Jan-13

Sep-12

May-12

Jan-12

Sep-11

May-11

Jan-11

Sep-10

May-10

Jan-10

Sep-09

May-09

Jan-09

Sep-08

May-08

Jan-08

Sep-07

May-07

Jan-07

Sep-06

May-06

Jan-06

Sep-13

Aug-13

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

Sep-05

May-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

Shell Takes 2 Newbuilds for 5-10 Years

The Class A newbuilding Ocean Osprey, equipped with twin daughter craft and 65 tonnes bollard pull, was launched a few weeks ago at the Balenciaga shipyard in Spain. Upon delivery in January the vessel (Havyard 820 design) is committed to Shell UK for 5-10 years for support of the Anasuria FPSO / Gannet in the UK Central North Sea. A sister vessel is scheduled for delivery about 12 months later from the same shipyard and this unit is also committed to Shell UK for 5-10 years.

Contract Imminent for Former Bourbon Eko Atlantic Offshore Rescue has acquired and recently taken delivery of the 1992-built Norwegian standby vessel Bourbon Eko. The vessel will be converted into a Class A ERRV and an announcement of a long term contract award is expected imminently.

Recent Requirements & Fixtures ConocoPhillips has tendered for a range of ERRV / MRVs for 5-9 years from April 2014 for support of various installations / drilling programmes in the South North Sea / Central North Sea and West Coast including the J block / Loggs and Viking field installations. The requirements are effectively against the 1976 built Putford Viking / 1975 built Putford Apollo / 1970 built Putford Puffin / 2003 built Putford Saviour & the 1999 built VOS Provider. Meanwhile, Dana Petroleum has awarded Atlantic a 2-3 year contract for support of the Ocean Nomad in the Northern North Sea. The contract commenced in August and the Norwegian coded Ocean Produce, with MCA dispensation, is initially acting as the nominated vessel. In addition, the 1957 built Ocean Swift has been chartered by Teekay Petrojarl for 3 years + options from November / December for support of the Banff FPSO in the Central North Sea.

Taqa Tendering as Nexen Near Award TAQA has circulated a tender for a vessel with a tanker assist capability to support the Harding field in the Northern North Sea for two years from January 2015. This field was previously operated by BP with ERRV support being provided via Project Jigsaw. Nexen is expected to imminently announce the winner of their tender for a vessel for 10-21 wells from December 2013 for support of the newbuild Jack-Up Ensco 120 which has been chartered for the Golden Eagle development. ŠCopyright Braemar Seascope Offshore 2013

£90,000 £80,000

£70,000

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

£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

Oct

Nov

Dec

£30,000

Average Spot Dayrate

£25,000 £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

Large PSVs (700m2+ Clear Deck) 2013

Medium PSVs (500-700m2 Clear Deck) 2013

£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 Jul-13

£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 Jul-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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