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BRAEMAR SEASCOPE OFFSHORE MONTHLY MAGAZINE Aug/Sept 2011

ISSUE: 50

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. The past few weeks have seen a turbulent time in the North Sea vessel market. Rates for AHTS vessels and PSVs rose dramatically as weather forced a number of rig move clashes on the calendar.

In addition, Shell has had to tackle an oil leak near the Gannet platform and the Offshore Europe exhibition in Aberdeen has brought vessels owners and oil field operators together with potential technology partners and clients.

The Energy Minister Charles Hendry revealed a piece of equipment designed to tackle a potential leak from a subsea

well which can work in conditions as harsh as those found West of Shetland.

The timing was apt not only due to Shell’s Gannet incident but also because of Faroe petroleum’s recent Fulla discovery.

Meanwhile, dayrates for vessels in the North Sea have reached as high as £172,000 for AHTS vessels and £35,000 for PSVs. We hope you enjoy this month’s report and look forward to hearing your feedback, comments and suggestions that will help to improve the experience of all of our readers further.

Sean Bate Market Analysis Manager

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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 The last few weeks have seen the tightest market on the North Sea spot market for a number of months with the AHTS and PSV markets being sold out at various points. Vessel dayrates climbed as the availability dried up and this was sustained for a number of days however with an increasing number of prompt vessels available the market has begun to turn once again.

Vessels leaving the region for Australia and Greenland has combined with delays caused by worsening weather offshore. This has created the situation where a number of rig moves over-ran their expected schedules and demand temporarily outstripped supply on the AHTS market. Average rates for large AHTS vessels were £52,151 although with the tightness in the market in the last few days fixtures were carried out at dayrates as high as £172,000.

Meanwhile, on the PSV market it had been anticipated that the conclusion of a number of term contracts, including a number of vessels working for Allseas, would have alleviated some of the pressure on the vessel availability. However, high winds offshore and demand as strong as ever PSV rates remained high and availability was tight. The average rates for large PSVs in August

was £17,384. Recent fixtures haves been consistently carried out at more than £20,000 with a number of cargo runs fixed in the £20,000s and the fixture of the Toisa Independent to Team was arranged at GBP 35,000 for a 10 day by day supply duties charter.

As we begin to move out of the summer weather window in the North Sea we can anticipate changeable offshore conditions but also a lower level of rig utilisation. There are a number of outstanding term requirements for vessels although many of the charter commencements have been shifted to the right with the expectation that owners rate expectations will begin to come down as we head towards the end of September and into October.

At the time of publication 12 AHTS vessels were prompt indicating that a sense of normality will return to the rig move market. In addition a pair of AHTS vessels will be joining the North Sea spot market with one on its way from Brazil and the other heading over from Vietnam.

In the coming months these will also be joined by a trio of newbuild PSVs. All of which means the peak in dayrates has probably passed at least for a while.

Spot Market BELOW: The newbuild AHTS Skandi Saigon on its way to join the North Sea market.

New Arrivals

A

series of vessels are expected to join the North Sea market in the coming weeks. These include a trio of newbuild PSVs and a pair of AHTS vessels that will be coming from overseas markets.

The large PSV Bourbon Front is expected to join the North Sea spot market before the end of September.

This PX105 vessel is currently en route to arrive in Stavanger and is charter free. It is equipped with a deck area of 1017 square metre and DP2.

In addition, the UP Jasper is also expected to arrive on the North Sea spot market before early October. The newbuild vessel is currently undergoing in-house work prior to heading to Aberdeen. The UP Jasperis a VS483 MKII with 1020 square metre deck area with DP2. At the time of going to press the vessel is charter free.

The final vessel of the newbuild PSV trio is the MT-6009 L designed Olympic Electra which is currently due on the North Sea spot market in the middle of November.

Meanwhile, the Odin Viking has begun sailing from Brazil to Las Palmas on its way to the North Sea. The MOSSMAR 424 AHTS, with a bollard pull of around

180t, could arrive in the North Sea before the end of September.

Aker DOD Deepwater’s AH-08 designed AHTS is also heading to the North Sea. The newbuild vessel, which was built at STX OSV’s Vung Tau yard is expected in Aberdeen by middle to late September. The vessel will have a bollard pull of around 180t and a deck area of 550 square metres.

SPEC BOX Olympic Electra Design: MT-6009L Builder: Myklebust Verft BHP: 6925 Max Deck: 745 square metres DP: 2 Fresh Water: 650m³ Liquid Mud: 1080m³ Accommodation: 40 Full Spec Here

Olympic Electra

Chartering

Long-Term Requirements

There are four outstanding Long-Term requirements: 1-2 PSVs / Nexen / 3 yrs or 18 mths + opt / comm Sept—Oct 1 x PSV / MOG / 1 year + 1 year opt /comm Oct 1 x PSV / Halliburton / Well Stim Duties / 3-12 months + opts / Oct 1 x PSV / Exxon Norway / 2 years + 4 x 6 month opts / comm Nov

Medium-Term Requirements There are five outstanding medium-term requirements: 1 x PSV / Team / 3 months + 3 x 1 month opts / Sept 1 x PSV or AHTS / MLS / 2 wells + 2 well opts / Aug-Sept 1 x PSV / Venture / 1 well / comm Sept 2 x PSVs / AGR Falklands / 4 wells / comm Oct

Newbuild Magne Viking Takes Top Rate The recently delivered Magne Viking has picked up the highest dayrate in the North Sea for an AHTS so far this year. The VS-4622 CD designed vessel was chartered for the rig move of the Borgland Dolphin by MLS at around GBP 172,000. The Magne Viking only arrived on the North Sea spot market in early August and has already been fixed for a series of charters for Statoil.

VOS Prevail Re-named Durga Devi The medium UT-755LN designed PSV VOS Prevail has been bought by Singapore-based shipowner Chellsea Pte. The new owner has completed the handover ceremony in Esbjerg and re-named the vessel Durga Devi. The DP2, 2010-built boat is currently on a long-term charter with PA Resources which is due for completion around early October when the vessel is expected to be re-delivered to Aberdeen charter free. ŠCopyright Braemar Seascope Offshore 2011

Chartering

Toisa Pair Prepare for Guinea Term Charter

The large PSVs Toisa Coral and Toisa Independent are currently undergoing drydock work ahead of a multi-well charter with AGR Guinea. The vessels are both expected to have left the North Sea by around the middle of September. The duration of the fixture is for one well firm plus six additional one well options. The Toisa Independent is a DP2 vessel with 1,000 square metre deck area and the Toisa Sonata is equipped with DP1 and 1,020 square metre deck area.

Normand Skarven Gets Rig Moves on Return The Normand Skarven has arrived back in the North Sea following completion of its term-work off Argentina for Repsol. The vessel has already carried out the rig move of the Ocean Nomad for BG which was understood to have been on a dayrate of GBP 60,000. The Normand Skarven is a 1986-built UT-716 designed vessel withs DP2, a bollard pull of around 156t and a deck area of 513 square metres.

Far Superior Finishes Front-Run Job The large PSV Far Superior is expected to return to the North Sea spot market following completion of a front run contract for the Far Service’s long-term charter with BP. The vessel is expected to arrive in Aberdeen where it will undergo some in-house work before being charter free on the spot market by around the middle of September. The UT-705L designed 1996-built vessel has a deck area of around 900 square metres.

Maersk Leader Secures Brazil Charter The large AHTS Maersk Leader has left the North Sea spot market to commence term work offshore Brazil. The 2009 -built vessel has been chartered by Shell Brazil for four years firm plus an additional four year options. The vessel had previously been carrying out North Sea rig moves including the move of the Energy Enhancer for Senergy and the Noble Ton van Langeveld for Maersk Oil. The Maersk Leader is a DP2 equipped vessel with a bollard pull of around 250t. ŠCopyright Braemar Seascope Offshore 2011

Chartering

Highland Citadel Extended with BG

The medium PSV Highland Citadel has had its contract extended with BG. The UT-755L designed vessel is now expected to remain on charter with the company for a further 18 months. The Highland Citadel is a 2003-built vessel with a deck area of around 690 square metres. The vessel was originally fixed for the long-term charter in June last year for around GBP 13,000 on a 12 month firm period with an 18 month option and a two-year option.

Toisa Warrior Arrives in North Sea The large PSV/ROV vessel Toisa Warrior has arrived in the North Sea to commence a six month charter carrying out renewables work. The newbuild VS-483 MK III vessel is equipped with DP2, 928 square metre deck area, helideck, accommodation for 60 and a subsea crane. The vessel was delivered earlier in the year from Wuchang shipyard in China. The Toisa Warrior is next expected to be charter free in February 2012.

Volstad Supplier Fixed with BP Norway BP Norway has chartered the large PSV Volstad Supplier.

The vessel has been fixed for 1 year firm plus two sixmonth options at dayrate of GBP 19,500. The vessel has recently completed a one-well charter with Maersk Oil Norway. The Volstad Supplier is an ST-216 L CD designed vessel equipped with a deck area of 1060 square metres and accommodation for 28.

Normand Baltic to ConocoPhillips Norway The large PSV Normand Baltic has been fixed on a medium term charter with ConocoPhillips Norway. The Aker PSV06 CD designed vessel has been chartered for 60 days firm plus 50 daily options at a rate of NOK 200,000. The vessel is currently undergoing in-house work ahead of the charter although it is expected to commence work shortly and could return to the North Sea.

ŠCopyright Braemar Seascope Offshore 2011

Newbuild

Gulfmark Orders Three Large PSVs

Gulfmark has announced plans to build three new large PSVs. Two of the vessels will be MMC887 CD designed with 1,000 square metre decks and the third will be of MMC 879 CD design with a deck area of 800 square metres. They are due to be delivered by Remontowa Shipbuilding in Gdansk, Poland in the second and third quarters of 2013. The total cost of the vessels is expected to be USD 120 million. The vessels will be actively targeted at the North Sea market.

Naming Ceremony Held for Brage Vessels A naming ceremony has been held for two PSVs being built at Cochin Shipyard. The STX 09 designed vessels formerly called BY 83 and BY 84 have been named Brage Supplier and Brage Trader respectively. The vessels are part of a four vessel series of STX 09 CD vessels being built at Cochin. The Brage Supplier is expected to be delivered around the end of September with the Brage Trader due in November.

Olympic Electra due in November Olympic Shipping’s newbuild PSV is expected to join the North Sea spot market before the end of the year. The MT -6009 designed Olympic Electra is currently due to arrive in Stavanger by around the middle of November. The vessel, which is currently charter free, will be equipped with DP2, a deck area of around 745 square metres and will be able to operate in a light ROV and Subsea role.

UP Jasper to Arrive in North Sea The large newbuild PSV UP Jasper is due to arrive in the North Sea in the middle of September. The VS-483 MKII designed DP2 vessel will be sailing to Aberdeen where it will undergo a variety of tests before joining the North Sea spot market. The vessel, which is currently charter free, has a deck area of around 1020 square metres, accommodation for 24 personnel and will be able to handle 1,225 cubic metres of Potable Water and 5,628 bbls of brine. ŠCopyright Braemar Seascope Offshore 2011

Click Here For More Details on Gannet

Fulla Hit for Faroe

Source: www.shell.co.uk

Transocean has received clearance to launch a takeover of Aker Drilling. It is understood the offer for 100% of the shares is open until September 23rd and has been pre-accepted by 59% of the total shareholders. Aker Drilling has two sixth generation semisubmersible rigs and two deepwater drillships under construction at Daewoo’s yard in South Korea. A conference call by Transocean discussing the acquisition can be found here.

Meanwhile, Shell has successfully fixed a leak in a flowline on the Gannet field.

Around 1,3000 barrels of oil is understood to have leaked into the North Sea during the incident. Divers also managed to close a relief valve which was

found to be seeping oil and a total of 72 concrete mats have been laid on the pipeline in order to secure it to the seabed.

In other developments, Ithaca is understood to have struck a deal to take on the Ensco-92 for Beatrice work. The month-long contract is expected to commence upon completion of the rig’s work for E.On Ruhrgas later this month.

The newbuild rig Rowan Norway is expected to arrive in the UK in the coming weeks. The N-Class jack-up rig has been assigned to a contract for Xcite from November to June 2012. Lundin has confirmed an extension of its Avaldsnes field following a second appraisal well on the field.

Independent exploration company Faroe Petroleum has announced the success of its first operated exploration well. The Fulla prospect in the West of Shetland area encountered a net oil column of 45ft. The company will now be evaluating potential development options that will include the Freya discovery, which is located to the South of the recent find. The well was drilled

by Awilco’s semisubmersible rig WilPhoenix.

Rig Chart Rig Activity by Type and Country Denmark Norway UK/Irl Greenland Netherlands

Drillship Jackup Semi-Sub Total

Oil $140

1

1

1

8

13

6

21

14

1

30

28

8

Stacked without future contract

Stacked with future contract Total 3

7

7

Price

3

4

41

2

2

40

5

6

84

2005 2005--2011

$120 $100 $80 $60 $40

$20

Jul-11

May-11

Jan-11

Mar-11

Nov-10

Jul-10

Sep-10

May-10

Jan-10

Mar-10

Nov-09

Jul-09

Sep-09

May-09

Jan-09

Mar-09

Nov-08

Jul-08

Sep-08

May-08

Jan-08

Mar-08

Nov-07

Jul-07

Sep-07

May-07

Jan-07

Mar-07

Nov-06

Jul-06

Sep-06

May-06

Jan-06

Mar-06

Nov-05

Jul-05

Sep-05

May-05

Jan-05

Mar-05

$0

Standby/ERRV

UK Market Demand Outstrips Supply

The UK Emergency Response & Rescue Vessel market is running at 100% capacity at the moment with short term availability almost non-existent and consequently there have been reports recently of non-UK certified units being chartered for UK sector work.

Grampian Ranger & Vos Lismore Fixed The result of a couple of long term tenders have been announced with the VOS Lismore being fixed by Nexen for three to five years to support the Buzzard field and the Grampian Ranger chartered by Teekay Petrojarl until the end of 2014 at least for support of the Banff field FPSO in the Central North Sea. The previous incumbents, namely the Ocean Searcher and VOS Mull respectively have been released.

BG Outstanding for Three Vessels BG remain outstanding for three vessels on a long term basis from the first quarter of 2012 for support of the Everest / Lomond and Armada field in the central North Sea. Full details of the UK and Irish Standby Market are available in the Braemar Seascope Offshore Standby Market Summary. There are also full fleet listings of standby owners and an overview of the newbuild and fleet replacement programmes. For further details email: research@seascope.co.uk

Standby Market Summary Chartering activity in the South North Sea has been at a high level over the last month or so as BP recently fixed the VOS Vigilant, equipped with twin daughter craft, to support a 75 day programme at the Amethyst field with the Seafox 7. RWE Dea have chartered the VOS Siren for a minimum of one-year to support production and drilling operations on the Clipper field and Wintershall have fixed the VOS Westwind to support a two-well (circa 120 days) with the Ensco 80. ŠCopyright Braemar Seascope Offshore 2011

Subsea

Ocean Installer Charters Normand Clipper

Norway-based subsea firm Ocean Installer has announced a long-term charter of the construction support vessel Normand Clipper. The deal will see the vessel fixed for a firm period of five years from second quarter of 2012 plus five additional one year options. The Normand Clipper is a 2001-built vessel with a 1,700 square metre deck area, a 250t subsea crane and accommodation for around 100 personnel.

Island Intervention SX121 Named The naming ceremony has been held for Ulstein’s newbuild SX 121 designed offshore construction vessel the Island Intervention. The vessel, which will carry out advanced operations in the Norwegian Sea this autumn, is equipped with a tower, moonpool, ROV hangar, helideck and accommodation for 100 personnel. The Island Intervention’s maiden charter will involve installing subsea trees for a Norwegian oil company.

Subsea 7 Signs 3-Years LOI Subsea 7 has agreed a Letter of Intent with Solstad offshore for the hire of the Normand Oceanic. The fixture which covers a firm charter of three years, will commence in April 2012 and will have three additional one year options. The Normand Oceanic is a 2011-built vessel equipped with a deck area of 2,100 square metres, DP3, 400t subsea crane and on-board accommodation for up to 140 personnel.

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

©Copyright Braemar Seascope Offshore 2011

Renewables

Bard Group Signs Jack-Up Barge Charter

Renewables vessels company Jack-Up Barge has announced a multi-year charter agreement with Bard Group.

The deal will see the self-elevating platforms JB-115 and JB-117 deployed on the Bard Offshore 1 windfarm in Germany. The JB-117, which is currently being outfitted at the Graha yard in Indonesia, will be transported to the Netherlands in October. The JB-117 has a 1,000 ton crane and a clear deck area of 2,500 square metres. The vessel will be working in water depths of around 40m.

Jumbo Offshore Secures Anholt Work MT Højgaard has awarded Jumbo Offshore a contract for the installation and transportation of 111 transition pieces on pre-installed monopoles at the Anholt windfarm in Denmark. One of Jumbo’s DP2 heavy lift vesselsve will be utilised for the work starting in April 2012. The 200t transition pieces will be loaded nine at a time at Aalborg before being transported to the windfarm site offshore.

Fixed Foundations for Baltic Sea Iberdrola has submitted a new application for a 400 MW fixed foundation windfarm in the Baltic Sea. The scheme replaces the original plan to utilise a floating turbine design. The project, which is located around 35km off the German coast, is expected to undergo a final planning stage by 2014 before possibly construction commencement in early 2015 with first export of electricity in the summer of 2016.

Generation of UK Wind Electricity up 9.6% According to recent figures from the UK Department of Energy and Climate Change the production of electricity from windfarms has increased almost ten per cent in the last year. This increase, which was reported in the UK Energy in Brief (click for link) 2011 document, occurred despite low speeds during 2010. The total kilowatt/hour capacity produced from UK renewables has increased almost five-fold since 1990. ©Copyright Braemar Seascope Offshore 2011

AHTS Dayrates

Average North Sea Spot AHTS Rates Feb Feb--July 2011

Average Daily North Sea Spot Cargo Run Dayrates Since February 2011 £140,000

£120,000

£100,000

SPECS BOX

£80,000

£60,000

£40,000

£20,000

£0

PSV Dayrates

Average North Sea Spot PSV Rates Feb Feb--Aug 2011

Average Daily North Sea Spot Cargo Run Dayrates Since February 2011 £35,000

£30,000

£25,000

£20,000

£15,000

£10,000

£5,000

£0

AHTS Dayrates

Average North Sea Spot AHTS Rates 2010/11

£60,000

£50,000

£40,000

£30,000

Large - AHTS (16,000+ BHP) 2010 Medium - AHTS (12-15,999 BHP) 2010

£20,000

Large - AHTS (16,000+ BHP) 2011

£10,000

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

£0

PSV Dayrates

Average North Sea Spot PSV Rates 2010/11

£35,000

£30,000

£25,000

£20,000

£15,000

£10,000

£5,000

£0

Large PSVs (700m2+ Clear Deck) 2010 Medium PSVs (500-700m2 Clear Deck) 2010

Large PSVs (700m2+ Clear Deck) 2011 Medium PSVs (500-700m2 Clear Deck) 2011

£0

Jan-04

Large PSVs (700m2+ Clear Deck)

Medium PSVs (500-700m2 Clear Deck)

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

PSV Dayrates

May-08

Mar-08

Large - AHTS (16,000+ BHP) 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

£60,000

Jan-08

Jan-04 Mar-04

£80,000

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

£0

Mar-04

AHTS Dayrates Average North Sea Spot AHTS Rates 2004 2004--2011

£140,000

£120,000

£100,000

SPECS BOX

£40,000

£20,000

Medium - AHTS (12-15,999 BHP)

Average North Sea Spot PSV Rates 2004 2004--2011

£40,000

£35,000

£30,000

£25,000

£20,000

£15,000

£10,000

£5,000

The Renewables Vessels Newsletter

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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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