Expansion of the Global Fleet of Subsea pOriented Vessels vs. the Global Market Outlook
Presented by Vice President of Subsea 7 Tor EspedalPresented by Vice President of Subsea 7, Tor Espedal
World Oil Demand
Primary Oil Demand Global Energy Situation
www.subsea7.comSubsea Partner of Choice 04.06.2008
Source: IEA, Douglas Westwood, Econ
World Oil Supply & Oil Price
Reserve Replacement Ratio
www.subsea7.comSubsea Partner of Choice 04.06.2008
Source: Handelsbanken Markets
World Oil Supply & Oil Price – Global Capex Outlook
2003 2008 - 2012
www.subsea7.comSubsea Partner of Choice 04.06.2008
World Oil Supply & Water Depth
Expected Subsea Installation Projects → 2011Subsea Well by Water Depth
www.subsea7.comSubsea Partner of Choice 04.06.2008
Source: Strategic Offshore & DnB Nor Markets
World Oil Supply & Water Depth – Top 70 Projects 2008-2012
OPEC33 %
Non-OPEC67 %
www.subsea7.comSubsea Partner of Choice 04.06.2008
E&P Spending vs. Previous Years Oil Price
“We estimate that contracts worth almost US$ 0 5 tn will beworth almost US$ 0.5 tn will be awarded to oil service companies in the next two years”
Goldman Sachs talking about the outlook for the oil service industry
www.subsea7.comSubsea Partner of Choice 04.06.2008
Source: IEA, Handelsbanken Capital Markets
Capex Trend and Capex in Subsea – Global Capex vs. Subsea Capex
“Oil Services, still early in theearly in the super-cycle”
70 000
Handelsbanken Capital Markets
40 000
50 000
60 000
$ (m
)
10 000
20 000
30 000US$
02000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Subsea Capex Total Capex
www.subsea7.comSubsea Partner of Choice 04.06.2008
Capex in Subsea
Vessel Days pr. Million Revenue
3 Yr Moving avg.
www.subsea7.comSubsea Partner of Choice 04.06.2008
Source: Market info
Oil Price
Factors Influencing the Subsea Market
• Increased demand for oil• Era of big discoveries bypassed?• Easy to reach fields already found• OPEC flow at $ 80 a barrel
Increased nationalization of oil fields• Increased nationalization of oil fields
• Advances in flow assurance• Subsea boosting & separation• Deepwater installation technology
Technological Dev.Discoveries
• Negative reserve replacement ratioincreased the need for exploration
• Increased tie backs and tale endGrowing Demand for
Subsea Vessels
• Deepwater installation technology• Heavy insulation coating and/or
electrical heating systems
• Increased tie-backs and tale end production
• Size of discoveries influence theextent of subsea work
• More discoveries deepwater.
• More acreage are searched• Increased focus on tail-end and tie-inIncreased focus on tail end and tie in projects• Introducing new exploration concepts
Rig Consortiums one example• Re-development of fields the majors have
abandoned
www.subsea7.comSubsea Partner of Choice 04.06.2008
abandoned
New Operators
Current Fleet – 197 Vessels
www.subsea7.comSubsea Partner of Choice 04.06.2008
Source: Market info
Factors that Influence Vessel Demand
• Remedial work • Survey
• Repair
• Inspection
• Maintenance
• Weather
• Pipelaying
• Tie-in projects
• Construction work
• Water depth
• Location of spool &
fabrication bases
• New construction
• Virgin ground
• Little existing
infrastructure
• Location of spool &
fabrication bases
www.subsea7.comSubsea Partner of Choice 04.06.2008
New Builds – 2008-2011
“Short-term we see potential for margin increases, but increased supply will put pressure in margins long-term.”
Diving22 % pressure in margins long term.
D B NOR M k tRigid Lay
22 %
Type of New Builds Split on Delivery
DnB NOR MarketsRigid Lay11 % Construction
67 %
“The outlook for the offshore construction industry has improved materially in recent months”months
Morgan Stanley
www.subsea7.comSubsea Partner of Choice 04.06.2008
Source: Market info
Gross Supply & Demand
Utilization Pipelay Vessels 2010 - 2012“we believe demand will still grow faster than supply.”
Morgan Stanley on demand for
construction vessels
Demand Scenarios Construction / ROV
www.subsea7.comSubsea Partner of Choice 04.06.2008
Source: Strategic Offshore, Infield, Internal
Why Difficult?
www.subsea7.comSubsea Partner of Choice 04.06.2008
The Finance Market Reaction to the Future Balance - Backlogm
illio
n$
m
www.subsea7.comSubsea Partner of Choice 04.06.2008
Source: Market info, Oslo BørsSource: Market info, Oslo Børs
5000
Subsea 7 Backlog by Region
4000
5000Asia/PacGoM
3000
4000 GoMAfricaBrazil
2000
BrazilNorwayUK
1000
02003 2004 2005 2006 2007
www.subsea7.comSubsea Partner of Choice 04.06.2008
Source: Market info, Oslo Børs
Share Price Comparison
www.subsea7.comSubsea Partner of Choice 04.06.2008
Source: Market info, Oslo Børs
Asset Investment - New Vessels
Seven Oceans
The Seven Oceans is a state-of-the-artpurpose built deepwater rigid pipelay vesselfitted with an advanced flexible pipelay system,capable of operating in water depths of3,000m, with up to 400t top tensioner and a3,500t main reel.
Seven Seas
The Seven Seas is a new flexible deepwaterpipelay and construction vessel with 400t toppipelay and construction vessel, with 400t toptensioner VLS, 400t J-lay 400/350t crane and3,000t carousel. It is capable of operating inwater depths of 3,000m.
www.subsea7.comSubsea Partner of Choice 04.06.2008
subsea partner of choice
www.subsea7.comSubsea Partner of Choice 04.06.2008