CORPORATE PROFILE & STRATEGY

GLOBAL MARKET ANALYSIS

CORPORATE AGENDA

COMPANY PROFILE

ORGANIZATION CHART

PRODUCT & SERVICES

VISION & MISSION

Our Vision & Mission

To be one of the leading company in providing a quality OFFSHORE DRILLING and MARINE SERVICES to support exploration and production of Oil and Gas by 2017

•Drilling Business•(Turnkey Project Service provider)

•Marine Business

OFFSHORE PLATFORM

Organization Chart

DRILLING & MARINE INDUSTRY

The processes of Exploration & Production

Products & Services

DRILLING & MARINE INDUSTRY

FABRICATION OF OFFSHORE STRUCTURES INDUSTRY

The processes of Exploration & Production

Related industries

GLOBAL MARKET ANALYSIS

CORPORATE AGENDA

COMPANY PROFILE

MARKET SEGMENT

PRODUCT & SERVICES

PRODUCTION vs CRUDE OIL PRICES

Historically, global capital investment in E&P has grown tremendously..

Global E&P expendituresUS$ billion

Source: OPEC, ODS-Petrodata

• The factors driving an increase in E&P activity to unprecedented levels are:

• Sustained high oil price environment; and

• Limited additional production capacity in excess of current demand

• Years of underinvestment by the upstream oil industry in the late 1990s and early 2000s led to stunted growth in oil production while oil demand continued to rise

1995 1996 1997 1998 1999 2000 2001 2002 2003 2005

26.13

16.86

20.2919.30

30.3726.00

31.09

41.44

56.51

66.04

2004 2006 2007

Expenditure Oil price (US$ per barrel)

20.56

14.36

69.00

59.3 63.975.8 84.5

66.8

94.8

126.9 132.3142.6 148.9

207.0

270.8

299.4

Production vs Crude Oil prices

However, crude oil prices have dropped by more than 50% since peaking in July 2008, …but what is the long-term view on oil price?

Crude oil pricesUS$ per barrel

2/10/2006 16/10/2008

US$

per

barr

el

Source: Bloomberg, Douglas-Westwood, Wood Mackenzie

•Oil

48.94 per barrel

•Gas

6.14 per MMBtu

Prices as of 5 January 2009US$

• Crude oil prices has been on an upward trend over the past 2 years due to:

• Geopolitical factors;• Speculation; and• Supply shortages amidst growing global demand

• However, oil prices have dropped by more than 50% since peaking in July 2008 on expectations of declining demand due to fears that the global economy will slip into recession

3/7/2008

$0

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Historical Prices Futures Prices

The long-term oil price outlook is still forecast to remain strong, with prices forecast to trade between USD $ 60 to US$80 per barrel, even with the spectre of a financial crisis looming.

Source: ODS-Petrodata, NYMEX Source: Infield

Source: WoodMac

1 2

3

•The chart shows the spot price of WTI crude against the number of fixed platform installations since the 1980’s.

•There appears to be little correlation between crude prices with the number of fixed platform installations, which is believed to be due to several factors:

– The first is that National Oil Companies (NOC) execute a large amount of their developments through fixed platforms and will continue to do so irrespective of oil price changes as their production motives are focused towards indigenous energy security i.e as contribution to their nations’ development and requirement

– Furthermore, oil demand is expected to remain strong for at least the next 20 years especially for the transport sector where non-hydrocarbon alternatives, such as hydrogen fuel cells are still years away from being a commercially realistic alternative.

•Source: Infield Systems Limited

Historically, there is no clear correlation between investment levels and oil price

Does the number of new platform installed directly related to oil price?

However, the global financial turmoil occurring at present is expected to create a more challenging environment for financing oil and gas projects

• The offshore oil and gas industry is capital intensive, and requires a substantial amount of project financing

• The majority of oil and gas projects are financed in US dollars, such as the construction of:

• Offshore drilling rigs;• Offshore production platforms; and• Offshore support vessels

• The US dollar liquidity shortage caused by the current global financial crisis will postpone or even cancel some rig construction and field development projects

• However, postponements or cancellations will therefore only tighten the demand-supply situation further and preserve a strong market outlook for the offshore oil and gas industry

• The shortage of supply of drilling assets and vessels will help to sustain dayrates

• Due to the global dollar liquidity shortage reaching a substantial scale, central banks such as the Federal Reserve have added billions of US dollars in liquidity into the banking system

• It would take a considerable amount of time and market confidence for US dollar liquidity to reach previous levels – until then, the environment for financing oil and gas projects will remain challenging

•Source: Bloomberg

US$ shortage and the US$

Global offshore capital expenditure by oil majors is forecast to increase over the medium term

• An increase in E&P activity to unprecedented levels is being driven by:

• A sustained high oil price environment, and

• Limited additional production capacity in excess of current demand

• Limited additional producing capacity would be increased in the future by raising capital expenditure of oil majors in fixed and floating production systems

• Approximately 15% of the E&P spending increase is expected to come from the Asia Pacific region, comprised of the Far East, Southeast Asia, Australia, New Zealand and the Indian Ocean

DRILLING & MARINE INDUSTRY

FABRICATION OF OFFSHORE STRUCTURES INDUSTRY

The processes of Exploration & Production

Market Segment

Related industriesreflecting the demand for drilling industries

DRILLING & MARINE INDUSTRY

The processes of Exploration & Production

Market Segment

Related industries

FABRICATION OF OFFSHORE STRUCTURES INDUSTRY

deepwatershallow water

Fabrication of offshore structure - Market segmentation

•Source: Infield Systems Limited

Asia432

Australasia25

North America484

South America138

Africa228

Middle East208

Europe116

Global demand for fixed platform units by region, 2008-2012Units

Global demand for fixed platforms is forecasted to grow in the medium term

2008 2009 2010 2011 2012

2008 2009 2010 2011 2012

2008 2009 2010 2011 2012

2008 2009 2010 2011 2012

2008 2009 2010 2011 20122008 2009 2010 2011 2012

101 94109

88 92

2328 26

1623

5039 36

4736

5 4 5 5 63226 26

34

20

7996 88 95

74

2008 2009 2010 2011 2012

46 47 46 44 45

Global fixed platform demand is worth USD 46 billion, reflecting the demand for drilling industries

In Asia , the market is in Malaysia, Indonesia & Thailand

Table 3 Asia Pacific Fixed Platform Units (Nos) by Country 2009-2012

Region 2009 2010 2011 2012 2009-2012

China 13 16 15 8 52India 14 12 14 8 48Indonesia 24 16 19 15 74Malaysia 10 13 11 13 47Russia 0 0 1 1 2Thailand 19 18 19 16 72Vietnam 8 6 8 9 31Others 10 7 9 1 27Total 98 88 96 71 353

Source: Infield, Global Perspective Report, Fixed Platforms Market Update, pg 51

Table 4 Asia Pacific Fixed Platform CAPEX (USD million) by Country 2009-2012

Source: Infield, Global Perspective Report, Fixed Platforms Market Update, pg 53

Region 2009 2010 2011 2012 2009-2012

China 868 790 473 281 2412India 1076 883 706 322 2987Indonesia 617 507 679 456 2259Malaysia 732 629 523 574 2458Russia 289 399 327 264 1279Thailand 728 563 519 360 2170Vietnam 506 302 225 279 1312Others 315 408 230 156 1109Total 5131 4481 3682 2692 15986

Table 2Global Fixed Platform CAPEX (USD millions) by Region 2009-2012

Region 2009 2010 2011 2012 2009-2012

Africa 1999 1887 1580 1685 7,151Asia Pacific 5212 4481 3682 2719 16,094Australasia 497 427 559 706 2,189Europe 1833 1439 944 704 4,920Latin America 1523 1319 1093 1076 5,011Middle East 1862 1888 2548 1730 8,028North America 880 942 701 620 3,143Total 13806 12383 11107 9240 46,536

Source: Infield, Global Perspective Report, Fixed Platforms Market Update, pg 26

Table 1 Global Fixed Platform Units (Nos.) by Region 2009-2012

Region 2009 2010 2011 2012 2009-2012

Africa 47 46 44 45 182Asia Pacific 96 88 95 74 353Australasia 4 5 5 6 20Europe 28 26 16 23 93Latin America 26 26 34 20 106Middle East 39 36 47 36 158North America 94 109 88 92 383Total 334 336 329 296 1295

Source: Infield, Global Perspective Report, Fixed Platforms Market Update, pg 25

deepwatershallow water

Malaysian Fabrication of offshore structure - Market segmentation

Deepwater solutions involves the fabrication of floating production systems

• There a 4 types of floating production systems (“FPS”):

– Tension Leg Platform (“TLP”);– Semi-submersible (“Semi-sub”);– SPAR; and– Floating Production, Storage and

Offloading (“FPSO”)• TLPs are compliant structural

systems, vertically moored and using buoyant components to maintain tension in the mooring system and can be deployed in water depths of up to around 1,500m

• Semi-subs are floating systems with support structures for the topsides consisting of pontoons and columns and is either permanently moored to the seabed or dynamically positioned; can be deployed in water depths of 3,000m+

• SPARs have circular cross-section structures that support the topsides and can be deployed in water depths of up to 2,500m

• FPSOs are tanker-type vessels that additionally have processing, storage and offloading capabilities via shuttle tankers and can be deployed in water depths of 3,000m+

TLP Semi-submersible

SPAR FPSO

deepwatershallow water

Fabrication of offshore structure- Market outlook

FABRICATION OF OFFSHORE STRUCTURES INDUSTRY

The processes of Exploration & Production

DRILLING & MARINE INDUSTRY

Source: Clarkson Research

Source: Clarkson Research

Source: Clarkson Research

■ Almost 70% of the global OMV fleet is more than 20 years old, hence, reaching maturity

■ 85% of the UB/ DSV fleet is more than 20 years old

■ The age dynamics of the vessel industry is indicating that there will be little capacity addition relative to the growing demand in view of the increase in oil & gas activities

■ The historical underinvestment has resulted not only in shortage of vessels but yard and related equipment capacity

■ This led to increasing risk of vessel availability and higher charter rates going forward

Global OMV FleetNumber of vessels by type

AHTS PSV UB / DSV Crew Others

1,971

1,489

273 195

855

Age Profile of UW / DSV FleetPercent

Less than10 years

10%5%

85%

More than20 years

10 years –20 years

Age Profile of Global OMV FleetPercent

Less than10 years

25%

7%

68%

More than20 years

10 years –20 years

UB / DSV account for 6% of OMV

fleet Primarily AHTS and PSV

68%

Market Outlook - Offshore Marine Vessel Industry

The OMV industry outlook is positive as there has been a tremendous pick-up in demand in the last 2-3 years due to:

– Increase in oil & gas related activities

– Tightness in the supply of vessels in the OMV market

The charter rates for Anchor Handling Towing Supply (AHTS) vessels has significantly tripled over the last 3 years

The UB / DSV segment have also seen rates doubling

While there has been significant investment to build more OMVs to accommodate the increasing demand, growth in supply has not been able to match the growth in demand due to:

– Average global OMV fleet is old and a number of vessels are due for decommissioning

– The underinvestment in the OMV sector over the last two decades have resulted in similar underinvestment in yard capacity, thereby leading to limited yard capacity to accommodate demand

Market Outlook - Offshore Marine Vessel Industry

Daily Charter Rate for AHTS

0100002000030000400005000060000700008000090000

Date

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AHTS Rates (7-10,000 BHP) AHTS Rates (10,000+ BHP)

Low charter rates results in

underinvestment for many years

Source: Clarkson Research

Description

• There is a shortage of offshore rigs operating within the global E&P industry which is driving the day rates upwards.

• Absence of Malaysian-owned rigs to service Petronas contracts has caused local players such as UMW, Tanjung, Sapura, Kencana and SAAG to expand their fleet aggressively to benefit from the upsurge in demand for Malaysian-flagged fleet

Acute shortageAcute shortage

• The high utilization rate of Rigs world wide and the continuous demand for additional new rigs make accessibility to new Rigs difficult and commands a high price.

• The combination of high demand for and acute shortage of Rigs has led to high EBIT margins being generated by the Rigs players

Factor

Market Outlook - Rigs

Capex of Top 4 Oil Majors vs. Oil Price

Source: Bloomberg, Exxon Mobil, R D Shell, Chevron, Total SA

Worldwide Rig Count vs. Oil Price

Source: Baker Hughes

20000

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Capex Oil price (WTI) RHS

1200

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Rig count Oil price (WTI) RHS

Capital expenditure for the top 4 oil majors have increased by almost 70% from US$38.3 billion in 2003 to US$64.3 billion in 2006. As oil prices remain high (given little oil spare capacity) the capital expenditure will continue to remain at high levels for the oil majors to benefit from the higher oil price environment

This has led to a peak in worldwide rig count which in turn will lead to high demand for all infrastructure requirement in the oil & gas value chain which include offshore structures as well as OMV

We view that oil price will remain high in the next 3-4 years in view of small spare capacity and the little progress to increase this capacity ahead

This will result in multi year high spending in capital expenditure from the oil majors to benefit from high oil price environment. The result would be high demand for O&G infrastructure requirement and with inability for the supply to catch-up, charter rates will not only remain high but will potentially increase in view of the acute shortage

Market Outlook - Rigs

Market Outlook - Rigs

New fields

• 30 new fields have been identified and being reviewed by PETRONAS and PSCs. These include shallow, marginal and deepwater. To proceed further, drilling Rigs would be required in substantial numbers and quickly.

Rig market• Existing rigs and rigs under current production are insufficient to meet the demand not only

in Malaysia but world wide. This fact is pushing up the charter day rates rapidly. PETRONAS obviously need to sign up long term contracts on an urgent basis to curtail E&P expenditure. Further, there is the impending treat of the high percentage of rig retirements in Malaysia. Rigs are mostly 25 years old.

• This situation is real and need the immediate attention of PETRONAS to “lock-in” rates to

contracts quickly.

Market Outlook - Rigs

Outlook• The outlook is very clear; Demand for rigs surpasses Supply. Currently rig count in Malaysia is 20 and

these numbers are expected to fall to 10 by end of 2008.

• Another factor that influences rig market is that rigs are mobile and move to fields that offer higher day rates and hence adversely affecting the availability of rigs in Malaysia. An example is that Atwood, Mermaid, Pride and Diamond have moved 5 of their rigs to Australia, Thailand, West Africa and India.

• One can conclude that the rig market is vibrant. Rig owners and operators are placed in low-risk high-profit structure with possible long term contracts and attractive day rates.

Market Outlook - Rigs

Rig Operators

• Currently heavy dependence is placed upon 3 major Rig players in the market. This situation is an encouragement for other international companies to be “invited” into the market. The 3 majors are: UMW, Tanjung Offshore(TOFF) and SapuraCrest.

• UMW is tied-up with Standard Drilling ASA. They are scheduled to deliver 2 new Jack-up Rigs in 2008-2009. TOFF is an Agent for an International rig operator and is expected to provide 3 rigs to any licensed operator in Malaysia. Sapura by far the largest, operates 5 jack-ups.

• Two new players are SAAG and Kencana. The latter is tied-up with Mermaid and building a Tender due in November 2009. And SAAG has 2 Jack-ups under construction.

Market Outlook - Rigs

GLOBAL MARKET ANALYSIS

CORPORATE AGENDA

INTRODUCTION

The execution of the 4 core strategies is therefore key to the future growth of the Business Unit

•Transform into integrated player

To be a regional player in providing a quality offshore drilling & marine

services to support exploration and production of Oil and Gas by

2017

•Aspiration

•Business Focus

•Average PBIT per annum (RM million)

• Drilling projectin SEA

• expanding drilling business

• Improve project costing

• Manpower capability building

• Alliance with int’al drilling equipment owner

• Strengthen drilling capabilities

• Target project in Middle East / Europe

•Integrated drilling

services• Co-owned marine fleet• Owned drilling

equipment• Integrate drilling and

Marine services• Owned O & G block

thru JV

1 2 3•Position For technology provider

• R & D in drilling Technology

• Branding and market positioning

4

•Transform into REGIONAL player •Transform into GLOBAL player

• up to • to • to • to

•Strategic Intend

•Pace •CY 2010/2011 • FY 2011/ 2014OW •FY 2014//2016 •FY 2016/2017

•Product Offerings

• rental of Jack up rigs

•Manpower supply & PMT

•Marine Services

• Marine charter

• Drilling and integrated Marine Sevices

• Sales of Crude Oil & gas

• Integrated drilling and Marine services

• Maintenance of the downholes.

•PMT

•Drilling consultant

• Fully integrated drilling services

•Deepwater drilling equipment & technology provider

2010/2017 Corporate Agenda

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