Capital Markets Day 10 January 2013 - Kvaerner · Lars Eide, EVP North Sea 11.15 Arctic opportunities Bjørn Gundersen, EVP Concrete Solutions 11.35 Financial update Eiliv Gjesdal,

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10.01.2013

Capital Markets Day – 10 January 2013

Time Topic Speaker

09.00 Introduction Jan Arve Haugan, President & CEO

09.20 Concept / Front End,

Engineering and

Procurement

Janne H. Rasten, EVP Project Support

Tony Allen, EVP International

09.55 Construction Sverre Myklebust, EVP Jackets


Jim Miller, EVP E&C Americas

10.35 Q&A part I

10.45 Break

11.00 Completion and

Decommissioning

Lars Eide, EVP North Sea

11.15 Arctic opportunities Bjørn Gundersen, EVP Concrete Solutions

11.35 Financial update Eiliv Gjesdal, CFO

11.55 Summary and Q&A part II

Lunch

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Copyright

Copyright of all published material including photographs, drawings and images in this document remains vested in Kvaerner and third party contributors as appropriate.

Accordingly, neither the whole nor any part of this document shall be reproduced in any form nor used in any manner without express prior permission and applicable

acknowledgements. No trademark, copyright or other notice shall be altered or removed from any reproduction.

Disclaimer

This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to

differ. These statements and this Presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the

regions and industries that are major markets for Kværner ASA and Kværner ASA’s (including subsidiaries and affiliates) lines of business. These expectations, estimates and

projections are generally identifiable by statements containing words such as “expects”, “believes”, “estimates” or similar expressions. Important factors that could cause actual

results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets

for Kvaerner’s businesses, oil prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange

rates and such other factors as may be discussed from time to time in the Presentation. Although Kværner ASA believes that its expectations and the Presentation are based

upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. Kværner ASA is

making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither Kværner ASA nor any of its directors,

officers or employees will have any liability to you or any other persons resulting from your use.

Copyright and disclaimer

Copyright

Copyright of all published material including photographs, drawings and images in this document remains vested in Kvaerner and third party contributors as appropriate.

Accordingly, neither the whole nor any part of this document shall be reproduced in any form nor used in any manner without express prior permission and applicable

acknowledgements. No trademark, copyright or other notice shall be altered or removed from any reproduction.

Disclaimer

This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to

differ. These statements and this Presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the

regions and industries that are major markets for Kværner ASA and Kværner ASA’s (including subsidiaries and affiliates) lines of business. These expectations, estimates and

projections are generally identifiable by statements containing words such as “expects”, “believes”, “estimates” or similar expressions. Important factors that could cause actual

results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets

for Kvaerner’s businesses, oil prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange

rates and such other factors as may be discussed from time to time in the Presentation. Although Kværner ASA believes that its expectations and the Presentation are based

upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. Kværner ASA is

making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither Kværner ASA nor any of its directors,

officers or employees will have any liability to you or any other persons resulting from your use.

Copyright and disclaimer

2

Concept / Front End, Engineering

and Procurement Janne H. Rasten, EVP Project Support


Capital Markets Day

10 January 2013

C F E P C C D

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NOK

~10 - 20 million

NOK

~30 - 60 million

NOK

~6 000 – 8 000

million

Project timing and estimated value1

The project journey

4

Concept FEED Engineering Procurement Construction Completion

Analysis

Concept

selection

Concept

development

Definition

Cost estimate

Requirements

Design

elements

Detailed

engineering

Materials

Labour

Sub-contractors

Construction

management

Construction

Installation

Hook-up

Pre-start up

Onshore disposal

2-3 months 6-8 months 36 months 6-8 months

Decommissioning

122 months

NOK

~1502

million

NOK

~400 - 500 million

C F E P C C D

(1) Approximate values for a generic topside of ~20 000 tonnes

(2) Typical time requirement for Kvaerner’s target scope; e.g., onshore deconstruction and disposal

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Concept selection is subject to evaluations in

the concept phase

5

Drivers1

Functional

requirements

› Oil/gas/water quantity and quality

› Pressure

› Temperature

› Production rate

› Injection requirements

› Drilling requirements

› Safety

Location › Remoteness

› Environmental conditions

› Water depth

› Soil

› Proximity to existing infrastructure

(1) Illustrative, not exhaustive

Export solution

Topside

Substructure

C F E P C C D

Edvard Grieg

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The front end process within Kvaerner

6

Concepts

most likely to

succeed

Most cost

efficient

concepts

Opportunity

Appraisal

Feasibility

studies

Concept

Selection

EPC FRONT END (Pre FEED)

Concept screening & selection

~2-3 years

FEED

Concept Definition

~0.5-1 year

System and

discipline level

Selected

concept

Improved

execution

C F E P C C D

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EPC project experience is embedded in our

front end work

7

Concept FEED Engineering Procurement Construction Completion Decommissioning

Extensive experience data base with as

built data (e.g., technical solutions, weight,

cost, schedule)

Strong knowledge of clients’ design basis

Construction resources involved

throughout the process

Understanding of full lifecycle of a field

C F E P C C D

EPC execution phase Front end work

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Engineering influences all EPC project phases

8

C F E P C C D

35 000 engineering design documents

Engineering in different phases

Engineering numbers for an EPC contract

Proxy figures for 20 000 tons topside

350 engineers at peak manning

150 purchase orders

15 000 supplier documents

C F E P C C D

System and area

engineering

Engineering for

procurement

Engineering for

fabrication

Engineering for

completion, testing

and operation

2 500 GB data stored

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Procurement is complex and require close focus

throughout the project

9

11 500 tonnes

structure steel

4 900 tonnes

mechanical

equipment

2 500 tonnes pipes

6 800 valves

340 000 metres of cable

installed

25+ nationalities 250 companies

involved

~3 900 000 working hours on site

Total of 3 500 people involved in the

project

Ormen Lange example

C F E P C C D

Note: Picture and figures from the Gjøa project delivered by Kvaerner in 2010

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Kvaerner has engineering and procurement presence

around the world

10

Kvaerner engineering and procurement locations

Norway,

Oslo

Stord

Verdal

Trondheim

US,

Canonsburg

Houston

UK,

London

Finland,

Ulvila

Russia,

Arkhangelsk

Australia,

Perth

China,

Beijing

C F E P C C D

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A flexible delivery model

11

CONCEPT FEED ENGINEERING PROCUREMENT CONSTRUCTION COMPLETION

ELDFISK (Topside)

CLAIR RIDGE(Jacket)

SAKHALIN (GBS)

HEBRON (GBS)

BROWSE (TLP)

Aker Solutions as subcontractor

+ +

Aker Solutions as subcontractor

COOEC

Peter Kiewit Peter Kiewit

Aker Solutions

Aker Solutions

Firm contract

Potential agreement; for illustrative purposes

CALPINE GARRISON (Gas fired power plant)

+ Parsons Brinckerhoff WorleyParsons and Calpine Corp.

C F E P C C D

+

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Controlling engineering

Full control

Flexibility

Efficient risk mitigation

High quality at lower

price

12

Kvaerner’s highly experienced engineers have the expertise to

efficiently manage the engineering phase

Project management

Engineering management

Engineering disciplines

Controlled by Kvaerner

Flexibility wrt. in-house vs. subcontracting

C F E P C C D

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Proven project execution model (“PEM”)

13

Feasibility &

Concept

System

Definition

Detailing &

Fabrication

Assembly &

Erection

System

completion

Contract

Completion

M1A M1B M1C M1D M2A M2B M2C M3A M3B M3C M3D M4A M4B M4C M5A M5B M5C M5D M6A M6B M6C

Execution

Control

Strategic

Tools

Tender & Kick-

off

TA TB TC TD TE

C F E P C C D

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System definition Detailing and fabrication Assembly and

erection

System

completion

Risk mitigation during project execution

14

Note: For illustrative purposes

C F E P C C D

Phase timing in months

9-12 12-24 6-12 3-9

Feasibility

&

Concept

System Definition Detailing & Fabrication Assembly &

Erection

System

completion

Contract

Completion

Project progress

Project risk

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A standardised procurement process yields good

returns over time

15

Sourcing

Need Require-

ments

Sourcing

- Audits

- Approvals

Procurement

Inquiry

process

Purchasing

process

Material

Control Logistics

Ware-

housing

Quality

surveillance

expediting

Standardised proven processes ensure risk

control and hence guaranteed delivery

Close out

Performance

evaluation

Supplier Relationship Management activities

C F E P C C D

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Strategic segmentation of suppliers to optimise

procurement activities

16

Simplified

selection (19 %)

Selective

partnerships (12 % of total

number of packages

sourced1)

Strategic

partners (4 %)

Standard

procurement

process (65 %)

Impact on project profitability

So

urc

ing

co

mp

lexity

Sourcing complexity

defined by: Criticality to project

progress

Lead time

Technology ownership

Supplier power

Impact on project profitability defined by: Category spend (MNOK)

Category value-add (impact)

(1) Total number of sourced packages on a typical topside project is 150-160

C F E P C C D

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Equipment constitutes 60-70% of procurement value,

the remainder being bulk

17

Procurement per category for sample topside project

Percentage of total procurement value

6%

9%

7%

7%

6%

21%

Structural

Electrical – bulk

Piping

24%

Pumps

14%

5%

Vessels

Generators and compressors

Other bulk

Other Equipment

Valves

Equipment

Bulk items

Typical procurement

value of NOK 3-4 billion

C F E P C C D

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EPC execution is a close interaction between the

various disciplines

18

Engineering

Contract

completion

Close-out

documentation

Project management

Critical

line

Drawings

for

fabrication

Inquiry

Final info

Prelim info

De

live

ry o

f bu

lk

De

live

ry o

f e

qu

ipm

en

t

Procurement (vendors)

Construction

Purchase order

Bid

C F E P C C D

Documents

Capital Markets Day 10 January 2013 - Kvaerner · Lars Eide, EVP North Sea 11.15 Arctic opportunities Bjørn Gundersen, EVP Concrete Solutions 11.35 Financial update Eiliv Gjesdal,