Offshore opportunities Marine Money Istanbul 2012 Kristoffer Lund Sandaker Pareto Project Finance Pareto Project Finance, May 2012

The Pareto Group – What We Do Bank & Insurance Equity and Bonds/ Corporate Finance Shipping/offshore- brokering Project Financing Fund Manager/ Investment advisor Pareto Securities P. F. Bassøe Pareto Dry Cargo Johan G. Olsen Shipbrokers Pareto Wealth Management Pareto Nordic Investments Pareto Forvaltning Pareto Project Finance Pareto For- sikringsmegling Pareto Business Management Pareto Shipping Pareto Offshore Pareto Bank The Pareto Group has 578 employees, annual turnover of USD 320 mill and equity of USD 670 mill.

3 Solid track record with project financing Offshore USD 2.2 billion 47 vessels Offshore USD 2.2 billion 47 vessels Tank/Gas USD 1.6 billion 62 vessels Tank/Gas USD 1.6 billion 62 vessels Container / Ro-Ro / Reefer USD 800 million 44 vessels Container / Ro-Ro / Reefer USD 800 million 44 vessels Bulkers USD 400 million 14 vessels Bulkers USD 400 million 14 vessels Project Finance last 6 years Top ranked in ship finance in Norway

4 Offshore

5 The offshore market as a whole is fragmented

6 Seismic

7 Drillers

8 Offshore construction and subsea Dive supportSubsea construction

9 Platform supply vessels (PSV) Large-size LOA: ~88 m Deck space: ~1,000 m2 Dwt: ~4,700t Mid-size LOA: ~72 m Deck space: ~680 m2 Dwt: ~3,200t

10 Anchor handling tug supply vessels (AHTS) Large-size Mid-size

E&P spending expected to see double digit growth in 2012… 11 Source: Pareto Research

12 Main driver

13 Setting the stage

1) The world’s energy consumption will rise significantly 14 Source: Exxon Mobil Global energy consumption is expected to rise with 30% over the next 30 years, driven by non-OECD countries Increasing demand for scarce resources drives prices upwards Oil and gas will continue to cover approximately 60% of global consumption

1) The world’s energy consumption will rise significantly 15 Global energy consumption is expected to rise with 30% over the next 30 years, driven by non-OECD countries Increasing demand for scarce resources drives prices upwards Oil and gas will continue to cover approximately 60% of global consumption Source: Exxon Mobil

1) The world’s energy consumption will rise significantly 16 Global energy consumption is expected to rise with 30% over the next 30 years, driven by non-OECD countries Increasing demand for scarce resources drives prices upwards Oil and gas will continue to cover approximately 60% of global consumption Oil price (Brent) vs chinese oil imports Source: Sparebank1 Markets

17 Oil is a scarce resource and we continue to consume more of it

2) The energy resources of the future are expensive 18 75% of today’s oil production was discovered before 1980 – only 5% have been found after 2000 Future growth in oil demand will have to be covered by more expensive reserves New reserves will have to cover 30-40% of oil consumption in 2020 and 50-60% in 2030 Source: Exxon Mobil, Wood Mackenzie, Nehring Associates

2) The energy resources of the future are expensive 19 75% of today’s oil production was discovered before 1980 – only 5% have been found after 2000 Future growth in oil demand will have to be covered by more expensive reserves Source: Schlumberger New reserves will have to cover 30-40% of oil consumption in 2020 and 50-60% in 2030

2) The energy resources of the future are expensive 20 75% of today’s oil production was discovered before 1980 – only 5% have been found after 2000 Future growth in oil demand will have to be covered by more expensive reserves Source: Exxon Mobil, Wood Mackenzie, Nehring Associates New reserves will have to cover 30-40% of oil consumption in 2020 and 50-60% in 2030 Expensive reserves Cheaper reserves

3) Offshore will be the key 21 Offshore oil and gas production is expected to increase almost 60% over the next 20 years Largest recent oil discoveries has been found offshore, and 2011’s biggest was found in mature Norway Source: Rystad Energy Arctic may account for 1/5 of the world’s undiscovered recoverable oil and gas resources

3) Offshore will be the key 22 Arctic may account for 1/5 of the world’s undiscovered recoverable oil and gas resources Largest recent oil discoveries has been found offshore, and 2011’s biggest was found in mature Norway Source: Pareto Securities Offshore oil and gas production is expected to increase almost 60% over the next 20 years

3) Offshore will be the key 23 Arctic may account for 1/5 of the world’s undiscovered recoverable oil and gas resources Source: US Geological Survey, Wall Street Journal Offshore oil and gas production is expected to increase almost 60% over the next 20 years Largest recent oil discoveries has been found offshore, and 2011’s biggest was found in mature Norway

24 Rig activity leads the way

25 Rig activity leads the way

Acticity on the rise from the south 26 Source: ODS Petro-Data, Pareto  Approx. 450 new wells planned in West-Africa

27 NCS rig fleet to increase by more than 50% Source: Pareto Research, ODS-Petrodata Norwegian continental shelf rig fleet: Current + additions (firm, probable, possible)  Increased activity on the rig side translates to increased supply vessel demand *Average ratio last 10 years for the North Sea market. All sizes AHTS / all rigs.

28 Source: RS Platou, Pareto Research Supply vessel orderbook (high end) Age profile med/large PSV > 500sqm Age profile AHTS >15,000 BHP

29 Source: Johan G. Olsen Shipbrokers North Sea supply vessel temperature

30 Source: Johan G. Olsen Shipbrokers North Sea supply vessel temperature

31 Source: Johan G. Olsen Shipbrokers North Sea supply vessel temperature

32 Source: Johan G. Olsen Shipbrokers North Sea supply vessel temperature

33 Source: RS Platou North Sea annual spot rate averages AHTSPSV

Good timing to invest offshore 34  Investment opportunitities in wake of the debt crisis  Values have fallen over the past year due to few buyers, lack of financing and debt heavy sellers  Rates have risen due to beginning shortage of rigs and vessels  Low values and rising revenues is an ideal situation  Strong outlook over the next 3-4 years  Capital is a bottleneck Source: Pareto Securities, ODS-Petrodata, Pareto Project Finance

35 Interesting OSV sectors right now  Mid-size PSVs  Can be built cheaper  Second hand opportunities  Has gone more under the radar in the latest building spree  Large AHTS  More limited orderbook  Capital intensive  Subsea  As with large AHTS vessels, the orderbook is limited  Takes financial muscles and operational know-how

36 Thank you!