Global Subsea Market outlook to 2025...One in five vessels in Brazil Demand in Brazil against all other areas 2012-2018 quarterly 0% 5% 10% 15% 20% 25% 30% 0 50 100 150 200 250 300

Global Subsea Market outlook to 2025Searching for a new normal

S u b s e a U K p re s e ntat i o n – M a rc h 2 0 1 9

Presentation structureo Background on Strategic Offshore Research

o How did we get here? Demand review through 2018

o Supply goes mad - vessel fleet developments

o Rate review and lead indicators

o Demand forecast to 2025

o How shared around is financial pain?

o The winners and losers of market share

Global Subsea Market outlook to 2025 Strategic Offshore Research © 2019

Strategic Offshore Research – market intelligence


SOR - formed 2001

Key newswires on Subsea

and Construction/Field

Development markets

Ian McIntosh, since 1988,

has been leading market

reporter/analyst – more

than 30 years of market

experience

Newswires are the

foundation of everything

the company does

FrontRunner newsletter and research work


Twice a month FrontRunneropinion-based newsletter designed to stimulate debate

Definitive vessel focused annual long-term market forecast

Bespoke market forecasting both ad-hoc and on regular basis

Constant consulting work for financial investors either involved or looking at market

Cooling after boiling overGlobal subsea support vessel demand and supply

0

50

100

150

200

250

300

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Vess

el y

ears

Demand

Strategic Offshore Research © 2019Global Subsea Market outlook to 2025

Deep pain takes time to appearSubsea demand by depth range

0

20

40

60

80

100

120

140

Q101

Q301

Q102

Q302

Q103

Q303

Q104

Q304

Q105

Q305

Q106

Q306

Q107

Q307

Q108

Q308

Q109

Q309

Q110

Q310

Q111

Q311

Q112

Q312

Q113

Q313

Q114

Q314

Q115

Q315

Q116

Q316

Q117

Q317

Q118

Q318

Vess

els

North Sea RoW Shallow/Medium Deep


Boys of summer not aroundNorth Sea demand from 2006

0

10

20

30

40

50

60

70

80

Q106

Q306

Q107

Q307

Q108

Q308

Q109

Q309

Q110

Q310

Q111

Q311

Q112

Q312

Q113

Q313

Q114

Q314

Q115

Q315

Q116

Q316

Q117

Q317

Q118

Q318

Vess

els

DSV LAYSV ROVSV


Struggling along the floorNorth Sea demand range 2008 to 2018

0

10

20

30

40

50

60

70

80

90

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Vess

els

10-Year range Average 2018


Mind the growing gapSubsea support vessel demand and supply

0

50

100

150

200

250

300

350

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Vess

el y

ears

Demand Supply


Slightly better, but hardly goodNorth Sea vessel utilisation 2008 to 2018

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Util

isatio

n

10-Year range Average 2018


IRM remains reliable 2006 to 2018 North Sea demand by phase

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0

10

20

30

40

50

60

70

80

90

Jan06

Jan07

Jan08

Jan09

Jan10

Jan11

Jan12

Jan13

Jan14

Jan15

Jan16

Jan17

Jan18

Vess

els

Production Construction Production share


Small and new operators take up reinsNorth Sea demand by client type

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Major oil companies Other oil companies Contractors


One in five vessels in BrazilDemand in Brazil against all other areas

2012-2018 quarterly

0%

5%

10%

15%

20%

25%

30%

0

50

100

150

200

250

300

Q1 12 Q1 13 Q1 14 Q1 15 Q1 16 Q1 17 Q1 18

Vess

els

Brazil demand versus rest of world

Rest of World Brazil Brazil share

2000-2018 annually

0%

5%

10%

15%

20%

25%

0

50

100

150

200

250

300

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018Ve

ssel

yea

rs

Brazil demand versus rest of world

Rest of World Brazil Brazil share


Run and hideWind-farm related vessel demand in North Sea 2010 to 2018

0

5

10

15

20

25

30

Jan10

Jan11

Jan12

Jan13

Jan14

Jan15

Jan16

Jan17

Jan18

Vess

els

Wind


Bailing out utilisationwalk to work demand by main region by quarter

0

2

4

6

8

10

12

2012 2013 2014 2015 2016 2017 2018

Vess

el d

eman

d

North Sea Rest of World


Decom finally getting more consistentDecommissioning vessel demand in North Sea and Rest of World

0

1

2

3

4

5

6

7

Jan00

Jan01

Jan02

Jan03

Jan04

Jan05

Jan06

Jan07

Jan08

Jan09

Jan10

Jan11

Jan12

Jan13

Jan14

Jan15

Jan16

Jan17

Jan18

Vess

els

North Sea Other


Intervention feels upswing firstVessel-based well intervention demand

0

2

4

6

8

10

12

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Vess

el y

ears


Hiding ships in the deep freezeidle vessels by status

0

20

40

60

80

100

120

140

160

180

Jan 14 Jan 15 Jan 16 Jan 17 Jan 18

Vess

els

Idle Laid-up


Hoping to not wait in vainIdle vessels with length of idleness

0

20

40

60

80

100

120

14 Q1 Q2 Q3 Q4 15 Q1 Q2 Q3 Q4 16 Q1 Q2 Q3 Q4 17 Q1 Q2 Q3 Q4 18 Q1 Q2 Q3 Q4

Vess

els

Idle < 6 months Idle >= 6 months


A help, but not enough to be a fixSubsea vessels scrapped since 2010

0

2

4

6

8

10

12

2010 2011 2012 2013 2014 2015 2016 2017 2018

Vess

els

DSV LAYSV ROVSV


Just about stopped the flood Subsea newbuilds under construction

0

20

40

60

80

100

120

Jan

00Ja

n 01

Jan

02Ja

n 03

Jan

04Ja

n 05

Jan

06Ja

n 07

Jan

08Ja

n 09

Jan

10Ja

n 11

Jan

12Ja

n 13

Jan

14Ja

n 15

Jan

16Ja

n 17

Jan

18Ja

n 19

Jan

20

Vess

els

Subsea newbuilds under construction

0

10

20

30

40

50

60

70

Jan

00Ja

n 01

Jan

02Ja

n 03

Jan

04Ja

n 05

Jan

06Ja

n 07

Jan

08Ja

n 09

Jan

10Ja

n 11

Jan

12Ja

n 13

Jan

14Ja

n 15

Jan

16Ja

n 17

Jan

18Ja

n 19

Jan

20

Vess

els

Subsea newbuilds under construction

DSV

LAYSV

ROVSV


$24 billion looking for a returnValue of the fleet delivered since 2005

Newbuild values by type and delivery

0

2

4

6

8

10

12

14

16

DSV LAYSV ROVSV

$ bi

llion

Delivered 2005-2018 To be delivered 2019-2022

Newbuild values by type and delivery

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

$ bi

llion

DSV LAYSV ROVSV


Money makes the world go roundE&P Spending and subsea demand

0

50

100

150

200

250

300

0

100

200

300

400

500

600

700

800

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

EP S

pend

USD

Mill

ion

Spending Subsea demand


Rig market gets off the bottomFloating rig demand leads subsea demand

0

50

100

150

200

250

300

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Float

er/S

ubse

a de

man

d in

uni

t yea

rs

Floaters Subsea


Flat crude output for over a decadeGlobal liquids supply by type

0

10

20

30

40

50

60

70

80

90

100

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

Liq

uid

s p

rod

ucti

on

mb

/d

Conventional NGLs Shale Oil sands


Sources: IEA, EIA, OPEC, individual country statistics, oil company reports, state production data

Improvement due, but not back to peakGlobal demand by region to 2025

0

50

100

150

200

250

300

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Vess

el y

ears

Rest of World North Sea


Improvement can stickNorth Sea demand to 2025

0

10

20

30

40

50

60

70

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Vess

el y

ears


Diverless ships have most to gainGlobal demand by vessel type to 2025

0

50

100

150

200

250

300

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Vess

el y

ears

DSV LAYSV ROVSV


Deep rebound has a longer cycleGlobal demand by depth range to 2025

0

50

100

150

200

250

300

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Vess

el y

ears

Shallow/Medium Deep


Contractors think 2019 will be toughercontractor and operator net income $billions


-2.5

-2

-1.5

-1

-0.5

0

0.5

1

1.5

2

020406080

100120140160180200

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018est.

Cont

ract

ors N

et In

com

e $

Billi

on

Maj

ors N

et In

com

e $

Billi

on

Major Oil companies Saipem Subsea 7/TechnipFMC McDermott

Last good vintage contracts all donenet income margins


-30%

-20%

-10%

0%

10%

20%

30%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 est

Net

Mar

gin

%

Saipem Subsea 7/TechnipFMC Major Oil companies McDermott

Share prices follow simple trendContractor share and oil prices


0

20

40

60

80

100

120

140

160

0

10

20

30

40

50

60

70

1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Saip

em, S

ubse

a 7,

McD

erm

ott $

Tech

nip

$, B

rent

$/b

arre

l

TechnipFMC Subsea 7 Saipem Brent McDermott

A smaller market split between twoNorth Sea rigid flowline work by contractor


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

TechnipFMC Subsea 7 Others

Bibby/Rever stages a comeback North Sea DSV demand by contractor


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Subsea 7 TechnipFMC Rever (Ex Bibby) Boskalis Harkand Others

Even shares while demand’s right down North Sea ROVSV demand by contractor


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

DeepOcean Subsea 7 Fugro Others

Contact – Strategic Offshore Research

Ian McIntosh,Managing Director,Strategic Offshore Research Ltd., Phone +44 (0) 1224-4980201 Queen’s Lane South, Mobile +44 (0) 7980-744035Queen’s Cross Fax +44 (0) 1224-318333Aberdeen, AB10 6XW, Email [email protected]. Website www.StrategicOffshore.com


New all-encompassing, definitive GlobalSubsea Market to 2025 report available nowwith detailed vessel forecast horizonextended to 2025 to capture wholedeepwater cycle.

Special offer pricing available now – contactJo Slade – [email protected]

Documents

Global Subsea Market outlook to 2025...One in five vessels in Brazil Demand in Brazil against all other areas 2012-2018 quarterly 0% 5% 10% 15% 20% 25% 30% 0 50 100 150 200 250 300