DESEMBERKONFERANSEN 2008 - Kristian Siem

SS7 New Vessels

The Seven Oceans is a state-of-the-art purpose built deepwater rigid pipelay vessel fitted with an advanced flexible pipelay system, capable of operating in water depths of 3,000m, with up to 400t top tensioner and a 3,500t main reel.

Seven Oceans

Seven Seas

The Seven Seas is a new flexible deepwater pipelay and construction vessel, with 400t top tensioner VLS, 400t J-lay 400/350t crane and 3,000t carousel. It is capable of operating in water depths of 3,000m.

Subsea Field Development.

DISPOSISJON

1. FINANSKRISEN

2. OLJEPRISEN

3. AKTIVITETSNIVÅ FREMOVER

4. AKTIVITET PÅ NORSK SOKKEL

29.09.2008

UTVIKLING I OLJEPRISEN FRA 1985 FREM TIL JULI 2008

UTVIKLING I OLJEPRISEN SIDEN TOPPNIVÅET JULI 2008

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Oil price forecasts

E&P Spending vs. Previous Years Oil Price

Source: IEA, Handelsbanken Capital Markets

“We estimate that contracts worth 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

AKTIVITETSNIVÅ - Ability of clients to finance projects

• National oilcos– National strategic interest will often over-ride short-term economics.

– Credit Suisse survey shows marginal increase in capex plans from 2008 to 2009 for selected NOCs (excluding Russians - Gazprom & Lukoil).

• Major oilcos– Most are still cashflow positive after capex & dividends in $60-80/bbl

environment.

– Credit Suisse survey shows no noticeable decline in capex plans from 2008 to 2009.

• Independent oilcos– Most larger IOCs AA-rated & ability to leverage not particularly limited.

– Smaller IOCs typically use higher oil price hurdles & likely to have greater funding problems.

– Smaller IOCs estimated to account for only 5-10% of offshore E&P spending (but 20% of S7 revenue in 2009-12).

– Credit Suisse survey shows 29% decline in US independent capex plans from 2008 to 2009.

Source: HSBC

Project hurdle rates by project type

BP has shelved plans for its $500m Delaware LNG facility, arguing "market conditions do not support such a project near term".

Total states its Canada oil sands projects need an oil price of $90 a barrel

At current oil prices, most of S7’s target prospects are still economic but this is becoming marginal.

World Oil Supply & Oil Price

Reserve Replacement Ratio

Source: Handelsbanken Markets

Medium-term SURF World Market Demand: Annual Average Capex 2008-2012

Source: Infield Systems

$5.8bn

$2.6bn

$6.4bn

$5.3bn

$4.4bn

$1.0bn

<250m Water Depth: $14.3bn

250-1000m Water Depth: $4.3bn

1000m+ Water Depth : $7.0bn

Total Water Depth : $25.6bn

Now 2010-12

+45%

$11.2bn

$16.2bn

Subsea 7’s Target Market

Norwegian Subsea Market 2006 - 2012

The total value of the market 2008 – 2012 is estimated at $ 10,5 bn

In addition the IRM/Survey market will tender $ 6-700 million.

Norge-Subsea Market 2008 – 2012 Split on Operators

Norge-Market Value per Segment - MUSD

29.09.2008

The Siem Industries Group

Siem OffshoreNet income*: $122m

Subsea 7Net income*: $214m

STAR ReefersNet income*: $46m

Siem Car CarriersNet income*: $6.7m

German and SwedishIndustries

*2007 data

33.7% 44.9% 71.6%

88%

• Honest, High Quality and Profitable

• Reliable, Steady and Predictable Partner.

• Long term approach

• Acts quickly to understand and solve problems

The Siem Group has the financial and management strength and confidence to build businesses for the long term.

The Siem Group Values

Siem Gruppens investeringer I Norge siden 2000

NOK 1000

Fartøys ordre 24 skip NOK 11,500

Ny bedrift Vigra spolbase 150

Bygning SS7 kontor Stavanger 250

Totalt (+innkøå/utstyr) NOK 11,800

Antall ansatte 1000 personer

Kontorer: Kristiansund, Grimstad, Kristiansand, Stavanger, Bergen, Rovde, Oslo

Forskning bassert I Norge.

Luanda Spoolbase

Spoolbases / Bundle Fabrication Facilities

Wick, ScotlandLuanda, Angola

Vigra, Norway

Ubu, Brazil

Port Isabel , Texas

Vigra Welding Hall

Seven Oceans – Reeled Pipelay Vessel

Seven Oceans – Reeled Pipelay Vessel

Seven Seas - Pipelay and Construction

Seven TBN

Construction and Pipelay Vessels Vessel Owned Vessel Chartered

Kommandor 3000

Lochnagar

Seven Navica

Subsea Viking

Skandi Neptune

Toisa Perseus

Seven Oceans

Normand Seven

Seven Seas

Seven Sisters

Skandi Seven

Skandi Bergen

Diving Support Vessels Vessel Owned Vessel Chartered

Rockwater 1

Seven Pelican

Rockwater 2

Toisa Polaris

Seven Atlantic

Nødvendige aktiviteter som inngår I EPIC kontrakter

ROV support for exploration & production

Precise positioning services and solutions

Specialist welding division

Leading technology in deepwater development

Subsea Engineering Solutions

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Current Fleet – 197 Vessels

Source: Market info

New Builds – 2008-2011

Type of New Builds Split on Delivery

“Short-term we see potential for margin increases, but increased supply will put pressure in margins long-term.”

DnB NOR Markets

“The outlook for the offshore construction industry has improved materially in recent months”

Morgan Stanley

Source: Market info

Rigid Lay11 %

Diving22 %

Construction67 %

Recently Awarded Projects

Projects Client Location

Block 31 BP Africa $460m

Troll B Gas Injection StatoilHydro North Sea $100m

Grove Extension Centrica North Sea $70m

Grouse, Stamford &Chestnut P2 Venture North Sea $67m

Block 12/21c Ithaca North Sea $22m

IRM/North Sea Total E&P North Sea $60m

Sul Capixaba Petrobras Brazil $200m

Cascade / Chinook Petrobras Gulf of Mexico $50m

Skarv & Idun BP Norge AS North Sea $265m

Block 18 LOF BP Angola $80m

Hybrid Extension Petrobras Brazil $390m

Vega Troll Norsk Hydro North Sea $340m

Peregrino Norsk Hydro / Anadarko Brazil $115m

BC-10 Shell Brazil $275m

North Sea Shell North Sea $1.1bn

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UTFORDRINGER OG UTVIKLINGS TENDENSER

•Dypere vann

•Større felt

•Operasjon-personell-fokusering

•Nasjonalisme

•Sikkerhet mot terror

•Lokalt regelverk

•korrupsjon

•Skatt

NORSK SOKKEL

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Subsea 7 Awarded Contracts from 01.01.07

COPNORVarious;

14 mill.USDStatoilHydroVisund Future; 13,2 mill.USD

StatoilHydroVega;

273 mill.USD

BPSkarv

Construction; 140 mill.USD

StatoilHydroTroll 02;

61 mill.USD

BPSkarv Flowline;

125 mill.USD

Lost; 945,6

mill.USD 60 %

Won; 626,2

mill.USD; 40 %

2009 Tenders for the 09 -12 Market

Contract AwardValue Chain

Client PortfolioBusiness

DevelopmentBusiness Aquisition

Contract&Procurement

Backlog Firm ($)

$ 2318

40 %

$ 2318 $ 2318 $ 900 40%

$1,067

2009

Tender

2009

Tender

2009

Tender

2008

Firm

2009 StatoilHydro

2009 BP

2009 Shell, CoP, ENI, Other operators

2009 Tenders and Project Execution: COP + Shell + Others

STORE OMRÅDER-STORE DYP-STORE FELT

FORBEDRINGS INITIATIV

• Teknologisk utvikling

• Bedre utførelse

• Klokere arbeidsform med kunder

• Bedre kapasitets utnyttelse

SUBSEA NÆRINGEN FREMOVER

• Mest krevende og høyest risiko innen offshore entreprenør næringen

• Stor aktivitet i mange år fremover

• Dypere vann

• Fartøy balansen kan bli truet av nye konstruksjonsfartøy

• Bedre kapasitets utnyttelse - samarbeid

• Større kontrakter - konsolidering

• Korreksjon I finansmarkedet var på tide- åpner nye muligheter.

TIME FOR ACTION