Kelvin Sam, Analyst at ODS-Petrodata, shared with us the capacity trends and expected 2011 new orders at the 2010 FPSO Congress. Kelvin will also be speaking at the 12th Annual FPSO Congress. Visit www.fpsoasia.com or enquiry@iqpc.com.sg

1. FPSOs in 2011
Double dip or capacity crunch?
Kelvin Sam
FPSO Congress 2010

2. Our Company
 ODS-Petrodata is an independent
market intelligence company
 Established over 30 years ago: 30+
years of historical data.
 130 employees including market
reporters, specialists and analysts.
 Offices in Houston, Aberdeen, Oslo,
Singapore and Dubai
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3. Market Segments are updated every 4 months and
new segments are added on an ongoing basis
Industry Conceptual
Trends Studies/FEED EPCm FPSO / FSO
© BP p.l.c.
LNG LNG Onshore
Topsides
Liquefaction Regasification Production
Fabrication
Facilities Terminals Facilities
Offshore Offshore
Offshore Onshore
Heavy Lift Installation
Pipelay Pipelay
DSV/ROVSV
Line Pipe OCTG Subsea
Drilling Fluids
Equipment
Heat Gas Oil Sands
Exchangers Gas Turbines
Compressors Mining
Inspection
Helicopter Floaters – SPAR,
Maintenance Well Logging
Services TLP, Semis...
Repair
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4. Introduction
FPSO contract awards
Newbuilds Conversions Redeployments
Normally owned Normally leased Normally leased
USD 250 – At least USD
USD 0.8 – 2 3-4 years 2-3 years 1-12 months
800 million 50 million
billion capex construction construction upgrade
capex capex
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5. Contents
1. Overview
2. Capacity Trends
3. 2011 new orders
4. Conclusion
September 28, 2010 Page 5
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6. Further consolidation needed for leasers
Asia-Pacific
Brazil Leasers Africa Leasers Europe Leasers
Leasers
• Aker FP • BW Offshore • Bumi Armada • Bluewater
• Berlian Laju Tanker • Maersk FPSO • BW Offshore • BW Offshore
• Bluewater • MODEC • Fred Olsen • Maersk FPSO
• Bumi Armada • OSX • MODEC • Saipem
• BW Offshore • Petroserv • Prosafe Production • Sevan Marine
• EOC • Prosafe Production • Saipem • Teekay Petrojarl
• M3nergy • Saipem • SBM
• Maersk FPSO • SBM
• MISC • Sevan Marine
• Mitra Rajasa • Teekay Petrojarl
• MODEC
• Premuda
• Prosafe Production
• Rubicon
• SBM
• Sea Production
• Tanker Pacific
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7. Many regions still fragmented even after BWO/PROD merger
FPSO leaser market share by region
Size of each region by number of leased FPSOs
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8. Improving results could lead to further M&A in 2011
Median* FPSO leaser net margins
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
-60%
-70%
-80%
-90%
2007 2008 2009 1H10
*Includes net margins of SBM, MODEC, BWO, Prosaf e Production and Sevan Marine
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 Almost all leasers reporting improved net margins in 2010.
 Smaller leasers should benefit from consolidation.
 Improving access to funding while qualifying them for more projects.
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9. 2010 awards already surpassing 2009 levels
FPSO contract awards
25
Redeployments
Newbuilds
20
Conversions
Awards
15
10
5
0
2003 2004 2005 2006 2007 2008 2009 2010 YTD
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 Robust recovery with both large and small projects awarded.
 Further 2010 upside with operators tendering for eight more FPSOs.
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10. Can the industry handle this recovery?
Record order Recovery begins,
Increased Costs peak,
?
book, rising contracts
competition and projects
costs, delivery awarded again,
low bids deferred, volatile
delays, cost increased
submitted oil price
overruns competition
2006 2007 2008 – 1H09 2H09-2010 2011
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11. Contents
1. Overview
2. Capacity Trends
3. 2011 new orders
4. Conclusion
September 28, 2010 Page 11
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12. Steel prices are rising again
Steel Prices
1000
900
800
700
USD per tonne
600
500
400
300
200
100
0
2003 2004 2005 2006 2007 2008 2009 2010 YTD
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 Price of steel is a leading indicator of FPSO costs.
 Steel prices increasing by 13 per cent year-on-year in 2010.
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13. Why are steel prices so important?
Steel Prices and FPSO costs
300
Steel prices FPSO newbuild costs
250
Index 2003 = 100
200
150
100
50
0
2003 2004 2005 2006 2007 2008 2009 2010 YTD
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 20 per cent steel inflation in 2010= 4 per cent FPSO inflation.
 Steel prices normally more volatile than other costs such as salaries.
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14. …but we don’t expect major cost inflation in 2011-2012
Cost Model - FPSO
Y-O-Y Change [USD based]
Cost Index (2003=100) [USD based]
25% 250
20%
Nominal Index (2003 = 100)
15% 200
Year on Year Change
10%
5% 150
0%
-5% 100
-10%
-15% 50
-20%
-25% 0
2003 2004 2005 2006 2007 2008 2009 2010f 2011f 2012f 2013f 2014f
Protected by Copyright (c) 1986-2010 ODS-Petrodata Ltd. Source: ODS-Petrodata, Date: August 23, 2010
2010-2014 cost inflation to stay low compared to 2003-2009.
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15. Deliveries keeping up with new orders
FPSOs under construction 1989-2010
 Contractors previously busy with record order book from 2006-2008.
 Slowdown in 2009 resulted in spare capacity.
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16. Shipyards having spare capacity
FPSO Shipyard Backlogs
300
250
Index 1Q06 = 100
200
150
100
50
Samsung HI DSME Hyundai HI Keppel O&M Sembcorp Marine
0
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
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 Most shipyards have smaller backlogs now.
 Hyundai HI is the exception with the company having a record order book.
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17. Idle FPSOs can be redeployed next year
Idle/ Available FPSOs with Lease Options
12
10 No extension options Extension Options
8
FPSO
6
4
2
0
Idle 2010 2011 2012 2013 2014
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 Some idle units ideal for another project.
 Falcon FPSO can be used for large developments.
 Some FPSOs coming off charter in 2010 and 2011.
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18. Capacity summary
 Deliveries still keeping up with new orders.
 FPSOs under construction still low
 New FPSO yards diversifying the supply chain.
 FPSO buyers can also redeploy existing units.
Supply conditions still good for FPSO buyers in 2011
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19. Contents
1. Overview
2. Capacity Trends
3. 2011 new orders
4. Conclusion
September 28, 2010 Page 19
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20. 4Q oil prices are a leading demand indicator?
WTI Oil Prices - Fourth Quarter 2008
120
2009 awards
100 Field Operator Country
USD per barrel spot
Shelley Premier Oil UK
80 Aseng Noble Energy Equatorial Guinea
Dua Premier Oil Vietnam
60 Kakap ConocoPhillips Indonesia
Papa-Terra Petrobras Brazil
40 Te Giac Trang Hoang Long JOC Vietnam
Aquila Agip Italy
20 Baleia Azul Petrobras Brazil
Huizhou 26-1 CNOOC China
0
Source: ODS-Petrodata
Oct-08 Nov-08 Dec-08
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Low + volatile 4Q08 oil price = low FPSO demand in 2009
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21. 4Q oil prices are a leading demand indicator?
2010 YTD awards
WTI Oil Prices - Fourth Quarter 2009 Field Operator Country
CLOV Total Angola
90 Terang Kangean Energy Indonesia
80
Parque Petrobras Brazil
USD per barrel spot
70
Roncador Petrobras Brazil
60
Macondo BP USA, Gulf of Mexico
50
Tupi Nordeste Petrobras Brazil
40
Cendor Petrofac Malaysia
30
Pagerungan Utara Kangean Energy Indonesia
20
Huntington EON Ruhr Gas UK
10
Athena Ithaca Energy UK
0
Oct-09 Nov-09 Dec-09 Goliat Eni Norway
Waimea (OGX-3) OGX Brazil
Guara Petrobras Brazil
Kitan Eni Australia
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Source: ODS-Petrodata
High+ stable oil price in 4Q09 = high FPSO demand in 2010
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22. We expect at least 15 FPSO awards in 2011
Visible 2011 FPSO demand by scope
16
Newbuild
14
Redeployment
12 Conversion
List of forecast 15 FPSO awards in 2011
10
FPSO
8
6
4
2
0
Asia-Pacific
Europe
Africa
Brazil
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 Visible demand tracked 24/7 by a global team of market reporters.
 Majority of FPSO projects likely to be conversions/redeployments in Asia
and Europe.
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23. Annual FPSO capex reaching USD 13 billion in 2014.
FPSO capital spending
 Capital spending to continue increasing.
 Spending to remain higher even after excluding cost inflation.
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24. What will drive a strong FPSO recovery in 2011?
 Favourable supply conditions
- Industry still has spare capacity with FPSO backlog staying low.
 Lower costs
- FPSO costs falling 20 per cent in 2009.
- Single digit inflation in 2010 and 2011.
 Oil prices
- Oil prices have to stay high and stable.
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25. Contact information
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The Exchange No. 1 3200 Wilcrest Dr. 3 International Business Park
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Office Address:
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Fax: +47 22 12 90 61 Fax: +971 4 3326136
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