Industry Overview

8. INDUSTRY OVERVIEW 8. INDUSTRY OVERVIEW 2 6 MAY 2014 The Board of Directors Icon Offshore Berhad
Level 12 A, East Wing, The Icon THE ENERGY DATA ANALYSTS No.1 Jalan 1/68F, Off Jalan Tun Razak SSOOO Kuala Lumpur, Malaysia Dear Sirs, Executive Summary of the Independent Market Research Report assessing the core markets in which Icon Offshore Berhad (“ICON”) operates We, Infield Systems Limited, have prepared the Executive Summary of the Independent Market Research Report (“Report”) on the offshore support vessel (“OSV”) market for inclusion in ICON’s Prospectus in relation to the initial public offering and the listing of and quotation for the entire enlarged issued and paid-up share capital of ICON on the Main Market of Bursa Malaysia Securities Berhad. We acknowledge that this Report will be included in the Prospectus and we further confirm that we are aware of our responsibilities under Section 21S of the Capital Markets and Services Act 2007. This research is undertaken with the purpose of providing an overview of the OSV market within the offshore oil and gas industry. The market research process for this study has been undertaken through secondary or desktop research. The analysis of exploration, development and production activity within the offshore oil and gas industry draws upon a number of sources, including our databases and modeling systems. In particular, Infield Systems Limited’s Offshore Energy Database (“OED”) which is a global database of all offshore field developments and infrastructure, and the proprietary OFFPEX'” Modeling & Forecasting System. The information and data contained within the OED and OFFPEX'” is supplemented with additional searches of Infield Systems’ in-house library, the internet and public domain sources. Infield uses its internal OFFPEX'” forecast to derive all demand charts in the Report. Supply side analysis is supported by Infield’s Specialist Vessel Database -a database containing records of over 8,SOO vessels operational and ordered for the offshore industry. We acknowledge that if we are aware of any significant changes to the accuracy of the information contained in this Report between the date of this Report and issue date of the Prospectus, or after the issue of the Prospectus and before the issue of the securities, we have an on-going obligation to either cause this Report to be updated so as to correct any inaccuracies, and, where applicable, cause ICON to issue a supplementary prospectus, or, should they fail to do so, withdraw our consent to the inclusion of this Report in the Prospectus. Infield Systems Limited has prepared this Report in an independent and object manner and has taken adequate care to ensure the accuracy and completeness of this Report. We believe that this Report presents a true and fair view of the industry within the limitation of among others, secondary statistics and primary research. Infield Systems Limited Suite 502, I Alie Street London EI 8DE, UK T: +44 (0)20 7423 5000 F: +44 (0)20 7423 5050 E: data@infield.com W: www.infield.com Registered Office as above. Registered in England No. 02596007 VAT No. GB 523 381 464 8. INDUSTRY OVERVIEW (Cont’d) Our research has been conducted with an “overall industry perspective” and may not necessariiy refiect the performance of individuai companies in this industry. We are not responsible for the decisions and/or actions ofthe readers of this Report. This Report should also not be considered as a recommendation to buy or not buy the securities of any company or companies.
Quentin Whitfield Director Infieid Systems Limited 8. INDUSTRY OVERVIEW (Cont’d) Offshore Marine Services Market Overview

8. INDUSTRY OVERVIEW (Cont’d) This Report has been prepared for inclusion in the prospectus in connection with the initial public offering of the ordinary shares of Icon Offshore Berhad (“ICON”) (“IPO”) and the listing of and quotation for the entire enlarged issued and paid-up share capital of ICON on the Main Market of Bursa Malaysia Securities Berhad. This Report is dated 26 May 2014. Some of the statements contained in this document are forward-looking statements. Forward looking statements include, but are not limited to, statements concerning estimates of recoverable hydrocarbons, expected hydrocarbon prices, expected costs, numbers of development units, statements relating to the continued advancement of the industry’s projects and other statements which are not historical facts. When used in this document, and in other published information of Infield Systems Limited, the words such as “could”, “forecast”, “estimate”, “expect”, “intend”, “may”, “potential”, “should”, and similar expressions are forward-looking statements. Although Infield Systems Limited believes that its expectations reflected in the forward-looking statements are reasonable, such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Various factors could cause actual results to differ from these forward-looking statements, including the potential for the industry’s projects to experience technical or mechanical problems or changes in financial decisions, geological conditions in the reservoir resulting in a commercial level of oil and gas production, changes in product prices and other risks not anticipated by Infield Systems Limited. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. © Infield Systems Limited 2014
8. INDUSTRY OVERVIEW (Cont’d) Table of Contents 1 General Overview 5 2 Global Energy Outlook 6 2.1 Energy Consumption 6 2.2 Oil and gas price outlook 7 2.2.1 Gas Price Outlook lD 2.3 Oil and Gas Production and Reserves 10 2.3.1 Offshore Oil and Gas Production 11 2.3.2 Top 10 Countries by Offshore Reserves 12 3 Offshore Oil and Gas Market Overview 14 3.1 Significance of Offshore E&P 14 3.1.1 Growth of Deepwater 15
3.2 Industry Structure 16 3.2.1 Offshore E&P Capex Levels 16 3.2.2 Industry structure: Upstream to downstream 17 4 Overview and Market Trends of the offshore Oil and Gas Marine Vessels Industry 20lD-19 18

4.1 Introduction and Services Provided 18 4.1.1 Introduction 18 4.1.2 Substitute Products and Services 18
4.2 Relevant Laws and Regulations 19 4.2.1 Domestic legislation in the OSV Market 19
4.3 Supply and Demand 21 4.3.1 PSV/SSV 21 4.3.2 AHTS 22 4.3.3 AWBs 23
4.4 OSV Competitive Overview 23 4.4.1 Introduction 23 4.4.2 ICON’s Fleet 23 4.4.3 Competitive Global Fleet Overview 24 4.4.4 Competitive Position of ICON 26 5 Regional Overview 2010-19 29

5.1 Malaysia 29 5.1.1 Introduction and Future Growth 29 5.1.2 Malaysian ETP and Relevant EPPs 30 5.1.3 Historical Offshore Support Vessel Supply 36 5.1.4 Forecast Domestic Supply and Demand 39 5.1.5 Domestic Competitive Landscape 40

5.2 South East Asia (Including Malaysia) 44 8. INDUSTRY OVERVIEW (Cont’d) 5.2.1 Introduction and Future Growth 44 5.2.2 SEA Supply and Demand 45 5.2.3 SEA Competitive Landscape 46

5.3 Middle East 51 5.3.1 Introduction and Future Growth 51 5.3.2 Supply and Demand 52 5.3.3 Competitive Landscape 54

5.4 Conclusion 56 5.4.1 Prospects of ICON 56 6 Appendix 57

6.1 Glossary 57 6.2 Definitions 60 8. INDUSTRY OVERVIEW (Cont’d) GENERAL OVERVIEW ICON is seeking to undertake the IPO. For purposes of complying with Paragraph 8.09 of the Prospectus Guidelines issued by the Securities Commission Malaysia and in connection with the IPO, independent market consultant Infield Systems Limited -a leading provider of transaction support, market intelligence and strategic to the offshore oil and gas industry -has compiled the following Report. The Report consists of a global economic outlook, an offshore exploration and production market analysis and forecast, as well as a comparative overview of the offshore marine service sector. [The rest of this page has been intentionally left blank]
8. INDUSTRY OVERVIEW (Cont’d) 2 GLOBAL ENERGY OUTLOOK
2.1 Energy Consumption Global primary energy demand is anticipated to grow by a CAGR of 2.0% per year throughout the rest of the decade to reach 14.7bntoe in 2020 from 12.5bntoe in 2012. The predicted growth rate of energy consumption is lower than the 2.7% registered in the first decade of the millennium, but is faster than the 1.5% recorded in the 1990s. Fossil fuels have remained the largest shares within the global primary energy mix. As of 2013, liquids and coal each account for over 30% of the total primary energy demand. Natural gas accounts for another 24%. Hydroelectricity, nuclear energy and renewables together take the remaining shares of 14%. The share of each primary resource in the energy mix is not expected to change significantly in the near future. 18,000 16.000 14.000 12.000 g10.000 “E 8.000 6.000 4.000 2.000 19’35  2000  200S  2010  l015E  lOWE  l015E  2030E  -liquids” Natural Gas'” Coal  ± NucleJr Energy III Hvdroelectricitv  -Renewables  Figure 1: Glabal Primary Energy Consumptian Forecast [Source: Infield Systems Limited; The BP Energy Outlook 2013J  Figure 2: Glabal Primary Energy Mix (2013) {Source: Infield Systems Limited; The BP Energy Outlook 2013J
Renewables are forecasted to see the fastest demand growth at a CAGR of 10.3% per year in the coming years to reach 470.6mntoe in 2020. Hydroelectricity and coal are also anticipated to grow at above average rate of 2.0% in the coming years. The demand growth forecasts for the two key types of hydrocarbon energy resources are widely different. Demand for Liquids, which consists of mainly crude oil, is projected to grow at a minimal rate of around 1.0% CAGR per year in the forecast period to reach 4,407.0mntoe by the end of the decade. Meanwhile, demand for natural gas is slated to expand significantly at 2.3% CAGR per year in the coming period to reach 3,633.2mntoe by 2020. Primary Energy Demand by Region Demand for energy fell at the end of 2008 and in 2009 in the key markets of Europe and North America, as illustrated in Figure 3. More importantly, the chart also highlights another key trend in world energy which is the emergence of soaring energy demand from Asia. Driven by an expanding manufacturing sector as well as increasing domestic consumption, this trend is widely expected to continue into the future. Asia emerged from the global recession relatively unscathed, with domestically driven economic growth in China providing buoyancy to the region. Together with India, oil demand growth from China (which is expected to continue to remain strong) will be a key driver of investment in offshore exploration and production in Asia. China’s oil demand is anticipated to grow at 3.8% per year to reach 13.8mbpd by 2020. India’s oil consumption is projected to rise at a rate of 2.7% per year to reach 4.6mbpd by 2020. Amid near record oil price levels, Asian countries have an interest in meeting as much domestic demand as possible to boost energy security. This is particularly the case not only for China and India, the region’s giants, but also other major energy producing countries including Malaysia and Indonesia who face production 18,000  12,000  – IG,OOQ 14,000 wID,ooo D ~ 8,000 2,000 o  10,000 J I I sma 1 ~OJ I ~ 6/000 -i rr E r ~ ~ 4000 ” I t ~ § ~ I ~ I’ ~ ~ ~ 2,000 J ~ ~ § ~ § §§ ~ ~ ~ ~ I ~ ~ § § ~ ~ a I ::0: 3 ~ ::0: ~  ~ ~ ~ ~ ~ ~ ~ ~ ~  & ~ ~ §§ ~ § ~ §§ ~ ~  2005 II North America  2010 \: Europe  2:015E  2:020E =Asia  2025E 2030£ ± Latin Amerlc8  1990  1995  2000  2005  2010  Z015£  2020E  2025E  II Middle East  _ Africa  00 AustrnlOlsia  IiII GECD “Non-DECO
8. INDUSTRY OVERVIEW (Cont’d) Figure 3: Global Primary Energy Consumption Forecost by Region Figure 4: Global Primary Energy Forecost by OECD and Non-DECO {Source: Infield Systems Limited; The BP Energy Outlook 2013J Economic Groups [Source: Infield Systems Limitedi The BP Energy Outlook 2013J The majority of the demand growth is forecast to be from countries who are not members of the OECD economies, with the economies of the U.S., and other OECD nations expected to produce static energy demand over the coming years. Energy Diversification in the Long-Run Often cited as one of the contributing factors to the recent globa[ economic recession are high commodity prices and the impact which inflationary pressures had on consumers spending decisions. [n recognition of this, and also factors such as global warming and the impact of extensive carbon burning, we expect to see a more diversified energy production portfolio in the future. Following the closely averted nuclear disaster at Fukushima, Japan, we are arguably unlikely to see strong investment in nuclear power in the near future. In fact, post-Fukushima, many countries have reversed policies or called for further debate on whether to install further nuclear capacity. Many governments in Europe are currently reviewing the safety of existing capacity and their plans for new instal[ations. However, we expect to see more diversification within hydrocarbon energy, as alternative category resources, such as shale gas and oil and also coal bed methane gas become more popular. Even within the oil category, we will need to see new sources of oil identified. This is likely to drive the oil industry into looking at more complex projects, or reassessing the feasibility of marginal fields, or opening up new areas for exploration and production activities. 2.2 Oil and gas price outlook Brent oil prices rose significantly throughout the first decade of the millennium to reach USD111/bbl in 2011 from around USD20/bbl in 2002. The major factors underpinning the strong long-term momentum are the unexpected demand growth from emerging economies such as Chira and India, and general underinvestment in the oil and gas industry during the 1990s due to persistent [ow oil prices. 7 decline if they do not take steps to maintain exploration and production activity. Indonesia was once a major oil exporter but is now a net oil importer. Indonesia withdrew from OPEC in 2008. Indonesia’s oil demand is anticipated to expand by 1.8% per year to reach 1.8mbpd by 2020. Malaysia’s oil consumption is slated to grow at a rate of 2.2% per year to reach 0.83mbpd by the decade end. & ~ ~ ~ ~ ~ § ~ ~ ~ § ~ ~ ::0: 2030E
8. INDUSTRY OVERVIEW (Cont’d)
However, oil prices have averaged almost identically at around USDll0/bb[ for three consecutive years from 2011 to 2013 despite a series of demand and supply shocks in the market, signalling that the oil price super-cycle has been losing momentum. In our view, the long-term rising trend has become increasingly unsustainable. During the same period from 2011 to 2013, brent oil prices have twice surpassed the USD120/bbl threshold. The price surges were mainly due to supply concerns on the MENA region. However, oil prices fell back to their usual trading range of USD100-120/bbl fairly quickly each time as the worries over supply disruption were eased. In our view, the oil price is moving towards the long-run sustainable trend as i1[ustrated in Figure 5 and Figure 7. 12:0 150 140 ~ 100 I 130 1 80
I 120 ~60 ~1l0 ~ o o !SIOO 40 90 20 30 -!
o 70 ~-~”-:-C,.–c:-C2+~’ -.~,-,­Jun/ll Jan/II ~ep/12 Sep/132004 2005 2006 Z007 Z008 2:009 2010 2011 2012 2013 1014 2015 20lfi 2017 ZOW F<::>b/ll Sep/ll May!ll Jan/l3 Mav/13 ~~”=BRENT Figure 5: Brent Oil Price Forecast Figure 6: Historical Brent Trading Range [Source: Infield Systems Limited] [Source: Infield Systems Limited} It is possible that the boom part of the commodity business cycle is over and annual average crude prices peaked in 2012 with an average price of USDll1/bbl. We believe that long-term downward pressures have been gaining strength over more recent quarters, gradually outweighing the upward pressures. The key reason for the oil price moving towards a gradual long-run sustainable trend is that high oil prices will ultimately stimulate supply while suppressing demand. Over the past decade, high oil prices have propelled substantial investments in new supply of oil (e.g. deepwater and shale oil) and alternative energy, prompted interest in oil to gas substitution, encouraged investment in energy efficiency, and suppressed consumption of oil products. Consequently, global oil demand growth fell from 2% in 2003 to 1% in 2012. On the other hand, there is a potential for a significant increase in oil production in currently underdeveloped oil rich countries such as Iraq, Mexico and Iran in the period between 2014 and 2018. Iraq has set out plans to boost production from its huge conventional resources. Mexico recently announced constitutional reform which could break the monopoly on the country’s oil and gas business and allow private capital to flow. In Iran, the US sanction on the country’s oil export might be eased given the recent, tentative, improvement in relationship between the two countries. 8
8. INDUSTRY OVERVIEW (Cont’d) 210 ~ ~80 .i U!,su,t”i; ,:o.1oi”, S”ort-Rull Spik~~ Long-Rw SClSl;;inuble Tn2Jln I 593 ….'”.a ~~~~~~-.-;-“‘~~~_.~~~~~ 2002[01 2004/01 lOGG/01 2008/J:L 2010/01 2012/01 20111101 ZC·2′;)jOlE =3rellt Hgure 7: Historical andforecast Brent 0;; Price (2002-2020) [Source: Infield Systems Limited] At the same time, demand will likely grow at a slower pace as major economies are prompting energy efficiency and aiternative energy resources (due to high oil prices). The UK’s nuciear revivai is a good example, when in 2012, the UK government announced measures including long-term contracts that give power companies guarantees to help them raise £60bn in finance for nuclear plants. The demand and suppiy factors will, in our opinion, constrain average oil price at below USDllO/bbl, the peak ievei seen in the past two years, in the upcoming decade. In fact, we may enter a deciining phase of the commodity business cycle in the rest of the decade. Oil prices may fall below USD100/bbl to reach a new equiiibrium. Nevertheless, we believe that iong-term oii prices will uniikeiy stay below USD90/bbl for the rest of the decade as the production cost of oil has increased considerably and conventional oil supply (onshore and shallow water) has been depleting quickiy. The break-even oii prices for globai shallow water developments are estimated at around USD1S/bbl to USD3S/bb!. The breakeven costs for SEA shallow water projects are estimated at between USD30/bbi and USD40/bbl, significantly lower than the long term sustainabie oii prices of USD90/bbl to 100/bbl throughout the rest of the decade. 80 Arctic Region lO 60 50 Uh:r;a· DeBpwa,er iBrazil rre·$”];:i S!lallow-Mediul11 Water (South East Asia) 3C 20 FiglAre 8: Estimated Breakeven Costs for Offshon’J Proj~cts [Source: Infield Systems Limited] In terms of voiatiiity, we beiieve that the upside risk on oii prices from the MENA instabiiity will remain in the foreseeabie future. However, we do not anticipate a long-term price surge that is driven by unrests in the oil rich region if there is no material suppiy disruption in major oil producing countries such as Saudi Arabia, Iraq and Kuwait. 8. INDUSTRY OVERVIEW (Cont’d) 2.2.1 Gas Price Outlook The scale of the shale gas boom and the impact of the Fukushima disaster have caused a major divergence in global gas prices. The global gas market has three distinct regional segments currently. US gas prices have been suppressed by abundant supply of shale gas, Asian LNG prices have been stimulated by nuclear shut-downs in Japan, whilst European gas prices have stayed somewhere in the middle, as presented in Figure 10. “pan ~////////>//////////##/#/////#//////)/////h13.’ 16.3 18 C n In. r////////////////////#/////////////////h 12.5 us 12.5Brazil W/////////#////////////////////////h 11.5 12 Indi. V//////////////////////////////////#,0 11.!::-Z013E /20Z0E 11.5iermanv W////#//#//////////#////#////,0 11 11
UK W//,0W#////////////##’v,0 ‘.3 US W///###dk.. 5.’ •• ~ “0 2 6 1012 “” $/MM8tu Figure 9: Global Gas Price Forecast (2013/2020) [Source: Infield Systems Limited}
Over the rest of the decade, we anticipate that the divergence in regional gas prices will narrow gradually. This is due to a combination of local demand dynamics, global supply increases from shale gas, and differentials in local gas market pricing contracts. However, a fully traded global gas market remains unlikely by the decade end. This is primarily due to the fact that gas trade remains highly illiquid with the vast majority still supplied via integrated pipeline systems, which provide little flexibility for inter-regional trade. Moreover, price premiums in Asia will likely remain in the long­run. This is partly because of the costs associated with shipping US gas to Asia and partly because oil­indexation remains most entrenched in Asia, not least due to the huge capital cost of new projects targeting Asian markets. 2.3 Oil and Gas Production and Reserves

o Ir;an 8ranI Qatar Norway 5auc1i USA UK Antola Malaysia Mexico .# ,p-‘ ,+-~Jf’ ~'” /’ ,,{t~… _~gt !$'<for-#-…..~b-J’ ~ ~~ G fJ” ~.#
“”‘” It 2012 ~ 2018E It 2012 ‘ 2018E Figure 11: Top 10 Countries by Offshore Production (Oil + Gos) Figure 12: Top 10 Countries by Offshore Production Growth (Oil + Gos) [Source: Infield Systems Limited] [Source: Infield Systems Limited] 8. INDUSTRY OVERVIEW (Cont’d) In 2012, the offshore industry produced 26.3mbpd of oil, or 30.0% of global production, and 19.5mboepd of gas, or 34.8% of global production. After the 2008 global financial crisis, the fall in global oil demand caused a 5.0% decline in offshore oil production during the period from 2008 to 2012. In contrast, offshore gas production increased by 28.0% during the period between 2008 and 2012 as a result of resilient gas demand from East Asia, the Middle East and North America. For the period between 2014 and 2018, we anticipate that offshore oil production will rebound strongly at a growth rate of 5.0% per annum to reach 35.3mbpd in 2018. Offshore gas production is expected to grow at 8.3% per annum to reach 31.4mboepd in 2018. The high expectation is mainly driven by persistently high oil prices globally and high gas prices in Asia and Europe, and brighter prospects for the global economy and robust investment in the offshore industry are also expected to drive oil and gas production growth. 2.3.1 Offshore Oil and Gas Production 8ased on current forecasts, Iran will likely become the largest producer of oil and gas in the world by end of 2018. The country’s offshore production is expected to surge at an annual rate of 13.1% from 2.8mboepd in 2012 to 5.9mboepd in 2018, driven by increased output from South Pars/North Dome, the world’s largest gas condensate field. 8razil is expected to become the world’s second largest offshore producer in 2018 driven by large-scale developments in its pre-salt basins such as the Marlim Sui and Lula fields. Brazil’s offshore production is expected to grow by 14.6% per annum to reach 5.6mboepd in 2018 from 2.5mboepd in 2012. Malaysia’s offshore production is expected to increase from 1.7mboepd in 2012 to 2.7mboepd in 2018, led by a number of new developments in fields such as the deepwater Gumusut-Kakap oil discovery, Kebabangan Deep gas blocks, Kasawari gas field and Ubah oil discovery. Angola’s production is expected to rise significantly over the coming years to reach 2.8mboepd in 2018 driven by deepwater and ultra-deepwater projects such as the Cameia Mound, Bavuca, Sangos and Urio. Lastly, offshore production in Mexico is predicted to be largely constant over the coming five years but the risk is to the upside as the country plans to introduce sweeping energy sector reforms that could pave the way for increased foreign investment and greater use of private production contracts. ,  !  ~ ~  ~  ~  !  ~ ~ 0 n E  1 0  il~1 ~ : ~ : ~  t~ ~ ~ ~  ~ ~ ~ ~ I~~  ~ ~ I~~ ~ ~  ~ I~~  ~ -~  ~ I~  ~ .~  ~ ~ ,~–~.,  ~’I> “”‘.” ,0  ;,<t’ c’ 0°  :;-‘1> ..0′  i:l,<  “~ ,0j….e  ,,> 0’~  b’0’C’  “0”~,>  ~ ‘.,,\1>  “0”,…”1> ,,<‘”  Figure 13: Top 10 Countries by Offshore Growth

~” II 2012 \. 2018E [Source: Infield Systems Limited] 8. INDUSTRY OVERVIEW (Cont’d) Offshore production growth in a number of Asia Pacific countries is expected to be particularly strong. Australia, Indonesia, India, Vietnam and Myanmar are each expected to see offshore production increase by 8.0% or more per year in the coming five years. Major new offshore developments in the Asia Pacific region include Australia’s Gorgon North and South natural gas projects, Indonesia’s deepwater Gendalo and Gehem developments, Vietnam’s shallow water Ruby and Su Tu Nau projects, and Myanmar’s new Yetagun, Shwe and Zawtika projects. Qatar will continue to produce a significant amount of natural gas in the coming five years led by a number of expansionary projects in the Qatar North field. Saudi Arabia’s offshore fields are expected to produce 3.8mboepd in 2018, a 46.5% increase from 2.6mboepd in 2012. The phase two development of the Manifa field alone will produce about 1.0mboepd throughout the period between 2014 and 2018. Elsewhere, Russia’s offshore production is expected to increase by 18.8% per annum to reach l.7mboepd in 2018. The strong growth will be driven by on-going development offshore Sakhalin Island and new projects in the Caspian Sea. A number of deep/ultra-deepwater gas projects in Mediterranean Sea will see Israel’s offshore production soar to 0.4mboepd in 2018. Offshore developments in Ghana, Canada and Turkmenistan will also lead to strong production increases over the next five years. 2.3.2 Top 10 Countries by Offshore Reserves Estimated at 8S.1bnbbls, 2P’offshore oil reserves in Saudi Arabia are the largest in the world. The Safaniya field and Manifa (Phase 2) together hold around 39.0bnbbls of 2P reserves, more than the combined offshore oil reserves in Mexico and Iran, which are ranked the third and the fourth by offshore oil reserves in 2012. Brazil’s offshore 2P reserves are estimated at 47.1bnbbls, boosted by the discovery of a number of large deepwater pre-salt fields such as Lula (S.Obnbbls) and Libra (6.7bnbbls). 160 1 142..1 i 851 140
100 “‘ JI 120 ·180 i 10l,1;I 95.:J. 100 I 60 l 41.1 I~ I ]. 8012 i ~ 40 1 ~ 60 jI 39’.1I 16.1 15,9 15.7 153 40 i 20 l I
L2,Q 11.l ‘-0.720 I II 1_1______I B”,——,,_IiI Ii0– o~ • Offshore Gas Reserves
[Source: Infield Systems Limited] [Source: Infield Systems Limited} Despite having been exploited for over half a century, the North Sea still holds over 30.0bnbbls of 2P oil reserves. The reserves are shared almost evenly by the UK (lS.7bnbbls) and Norway (lS.3bnbbls). The US has about 19.0bnbbls of 2P oil reserves in the GoM, offshore Alaska, California, and the East and Pacific Northwest Coast. Mexico, Iran, Abu Dhabi, Venezuela and Angola also have significant offshore oil reserves. 1 Proven and probable reserves 12

8. INDUSTRY OVERVIEW (Cont’d) Qatar (148.1bnboe), Iran (102.6bnboe), Russia (9S.3bnboe), Australia (39.1bnboe) and Indonesia (23.5bnboe) are the top five countries ranked by 2P offshore gas reserves. The gas reserves are concentrated in several giant offshore gas fields. The world’s largest gas field, the South Pars/North Dome field is located in the Persian Gulf and is shared between Iran and Qatar. The lEA estimates that the field holds an estimated 1,800.0tcf of in-situ natural gas and some SO.Obnboe of natural gas condensates. In Russia, the Shtokman field in the South 8arents 8asin and the Rusanovskoye field in the Krasnoselkupsky District together hold about 73.3bnboe of 2P oil and gas reserves. The Greater Gorgon Area offshore Australia has about 11.2bnboe of 2P gas reserves. [The rest of this page has been intentionally left blank] 8. INDUSTRY OVERVIEW (Cont’d) 3 OFFSHORE OIL AND GAS MARKET OVERVIEW 3.1 Significance of Offshore E&P Offshore E&P is playing an increasingly important roie within the oil and gas industry. As the world’s onshore basins gradually mature, operators have gone in search of offshore resources in order to replace produced reserves; first in shallow-waters «500m) then, since the turn of the century, in increasingly deeper waters. 90 1965 1970 1975 1980 1985 1990 1995 1000 2005 2010 20ISE • Onshore I; Offshore Shallow l±J Offshore Deep Figure 16: Historical and Forecast Oil Production Trends -Onshore V5. Offshore (mmbpd) (1965-2015) {Source: Infield Systems Limited] The increasing dominance of the offshore segment shows no sign of siowing. At all water depths, offshore exploration has added approximateiy 43.2bnbbls and 317.9tcf of undeveloped oil and gas reserves (2P) respectiveiy between 2008 and 2013.
31% Middle East 42’10 In terms of oil, the largest share of these new resources has come from Latin America, where 25.8bnbbis have been added, mostly derived from Brazil’s prolific pre-salt basins. The NWECS, North America and West Africa have increased their undeveioped oli resource base by 57.5%, 39.3% and 28.3% respectiveiy. The increase is iargeiy due to successful exploration in deepwater and frontier basins such as the 8arents and Norwegian Seas, West of Shetland, Lower Tertiary Guif of Mexico, West Africa’s transform margin, the deepwater Kwanza and Congo basins and the Guif of Guinea.

 

8. INDUSTRY OVERVIEW (Cont’d) In terms of gas, the largest share of new resources has been added in the Middle East where 79.7tcf of offshore gas has been discovered since 2008. However, by far the strongest reserves growth has been seen in South and East Africa where 77Atcf has been added, a 1,377.7% expansion on 2008 levels. The explosion in resources has been almost entirely down to a series of huge gas discoveries in the Rovuma basin offshore Tanzania and Mozambique. Similar high-impact finds in Southern Europe’s Levant basin also have seen strong reserves growth there, while in Brazil’s pre-salt large associated gas volumes have helped to lift undeveloped offshore gas reserves to 71.3tcf. Strong gas reserve additions have also occurred in Australasia (+29.6tcf), SEA (+18.9tcf) and the NWECS (+14.7tcf). 120% .114%

Figure 19:Undeve/oped 2P Offshore Oil Reserves Growth (2008-2013£) Figure 20:Undeve/oped 2P Offshore Gos Reserves Growth (200B-2013E by Region (%) by Region (%) [Source: Infield Systems Limited] (Source: Infield Systems Limited]
3.1.1 Growth of Deepwater As noted above, there has been particularly strong growth in deepwater reserves over recent years. In aggregate, in 2013(E) 136.6bnboe of undeveloped 2P oil and gas reserves lie in over SOOm of water, which doubled the 2008 figure and around seven times the level seen in 2000. The figures below show that, though generally not as large as super-giant shallow-water finds, deepwater exploration has yielded a much higher frequency of notable discoveries around the globe since 2000. 3,500 3,500I i
3,000 3,000I II ••2:,500 i I 2,500 I~ •.• t.c ? 2.000 I ~ g-2.000 ,I …. ‘. ..’.;.:..~ ••~ 1,500 i o•1,SOO~ ~ •••;.~.;.•••! .: .t ~~ .I “., •.•• “‘l1,000 I … .rtf·~·; “•• 1,000• .• e …… ~ ‘:. : ~ I ~ t.~ ~ 1I .. ,.:”, .~ SOD soo 0 I h …·;;N.tti~J~~ o
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Figure 21:0ffshore Oil Discovery Trends by Woter Depth (m) & Reserve Figure 22:0ffshore Gos Discovery Trends by Water Depth (m) & Reserve Size -Size ofBubbie (mbbi) Size -Size of Bubble (mboe) [Source: Infield Systems Limited] [Source: Infield Systems Limited]
In the charts above bubble sizes indicate the size of reserves, the x axis indicates the discovery date and the y axis indicates the water depth of the discovery. A bubble higher on the y axis indicates a is 100% 80~ 40% 20% l 0% 300% ..(;–~ 1378% 250% 200% 187% Si% 150% 3:9%
100% 70% 50% 36% Z.3′}i. n.% 18% 16% 13’X 11%.’ 10% 8% 0%LOL……-‘L… . • .•.• .~_~~__0% 0%._ 28%tIi_’.IL·’—‘;’L%—‘~.%~_”_· _0_%_0% 8. INDUSTRY OVERVIEW (Cont’d) deeper water discovery. In general, the charts depict a considerable movement towards deepwater exploration and production activity. Indeed, as the figures above iI[ustrate, the average water depth of g[obal oil and gas discoveries made since 2010 is 624m, compared to 422m in the 2000 to 2009 period and 183m in the 1991 to 2000 period. 1AOO 1 I
1.200 ~ 1.000 ! 800 ~ I 600 I
I I
400 1 I 200 I_ o i “”-±,.Pp­
1960·1969  1970-1979  1980-1989  1990-1999  2000-20m  2010-2013  • Africa  ” Asia  ;::;; AustralJsia  ± Europe  II latin America  • Middle East & Caspi;ln Sed  f!i North America  =Global Average  Figure 23: Histarical Oiscavery Trends by Average Water Depth

{Source: Infield Systems Limited} These deepwater discoveries have been concentrated in the ‘deepwater triangle’ of the US GoM, Brazil and West Africa, with major reserves growth also evident in Austra[asia, East Africa and the Eastern Mediterranean in recent years. Asia and the Middle East & Caspian have seen re[atively few deepwater discoveries, partly due to the relative abundance of shallow water basins in these regions. 3.2 Industry Structure 3.2.1 Offshore E&P Capex Levels After three years of limited contracting activity in the wake of the global financial crisis, industry capital expenditure rebounded in 2011 and grew significantly in 2012, driven by a resurgence in emerging market energy demand and operators’ efforts to monetise new resources in an environment of rising oil prices. Infie[d Systems Limited expects this trend to continue, with the US economic recovery and renewed drive for energy independence likely to push total E&P Capex, both offshore and onshore, to USD678bn in 2013, a 10% rise year-on-year’. Turning to offshore capital expenditure specifically, Infield Systems Limited expects overall spending to hit USD847bn over the forecast period between 2013 and 20193• Capex is slated to grow at a CAGR of 7.8% between 2013 and 2019, resulting in a total commitment of over USD142bn in 2019. The largest markets over the forecast period will remain Latin America (19.3%), Africa (18.2%), Europe (18.2%) and Asia (17.3%) but the strongest growth in Capex is expected to be in Africa (20.3%). SEA is expected to account for 11.5% of total Capex in the same period with an estimated Capex of USD97bn over the period from 2013 to 2019 with a CAGR of 4.3%. In Malaysia, the total Capex over the period between 2013 and 2019 is estimated at USD3Sbn with a CAGR of 0.8%. Offshore oil field related investment is forecast to grow strongly in West Africa, Latin America and North America whereas Capex on gas developments is expected to be strongest in Australia, the North Sea, Israel, Cyprus, Asia and the Middle East. Onshore shale gas in troe US is already posing a 2 Source; Barclays Bank PLC, Global E&P Spending Update, June 2013 31nfield Systems’ capital expenditure figures cover global engineering, procurement, construction and installation investment associated with offshore infrastructure. The data excludes non-development drilling and other exploration expenses. 16 8. INDUSTRY OVERVIEW (Cont’d) large threat to offshore gas production with the initial effect being felt In shallow water gas activity within the US GoM basin. At present, this threat is largely restricted to the US GoM because commercial shale gas production has been slow to take off in markets outside North America. Operators continue to appraise the potential of emerging shale gas basins in markets such as Australia, China, Argentina and parts of Europe but this activity has not yet damaged offshore investment. Indeed, a range of factors including relatively high costs of production, underdevelo~ed midstream links, limited onshore oilfield services capacity and widespread environmental opposition means that commercial shale gas production in these emerging basins is unlikely to reach a sufficient scale within the forecast period of this report to cannibalise offshore spending as it has in the US GoM. Within SEA, investment on conventional fixed platform infrastructure and associated pipelines are likely to account for the majority of Capex. The installation of such equipment is a direct opportunity for OSVs such as pipelayers and heavy lifters. Furthermore, the addition to the cumulative base of infrastructure is a distinct opportunity for PSV/SSVs, AHTSs and AVs. 160,000 160,000 .., 140,000 140,000 -, 120,000 ll!! 120,000 ~II I , I M IIIII~ 100,000 100,000 I ~ 1111 ~~~II III :: Ii IIII1 II1I ~ …..11111 E II1II ~ ~~80.000 BO,OOO ~~ ~ iili E I IIII ~~~~~ ~ 11111 -~ ~ ••EE ~ ~~ 1111 ~~ ~60,000 .f.lD,OOO ~ ~• mil I ~ II I ~ 1 11111 ~~ 1111 ~ ~~~ ~ 40.000 1111 40000 J ­11111 IllI’ lIIl . I ~~~~~ ~ :§ mt ~ __’~.’__’~.~’_~.~’_~LL~~ ~ ~u~20,000 ~ ~~~~~~~~ 20.000 ~~ ~~ ><~ ~~ ~~~ • II i :s:: ~ ..-~ ,.. ,.. ~~•• -‘•• ~ ~~ ,—-.”.-­0 D -2010 2011 2012 lOBE 2014E 201SE 201&E ZOl7E 2018E lOBE 2010 2011 2.012 lOBE. 2014E 201SE 201(,[ Z017E 2018E 2019E • Africa ” Asia ;;;; Australtlsia :I: Europe • Control Lin-e “Pipeline ~ Platform:!: Single Point Mooring II Sub”ea Completion II Latin Am-erica • ME & (asp. North AmeriGI Figure 24:Histarical and Forecast Offshare Capex by Region (USOm) figure Z5:H;staricaJ and farecast Offshare Capex by Object Type (USDm) (2010-2019) (2010-2019) [Source: Infield Systems Limited) [Source: Infield Systems Limited} Please refer to Section 5.1.2 for further details about the histOrical and forecast Capex for Malaysia. 3.2.2 Industry structure; Upstream to downstream The oil and gas industry is split into three principal elements: upstream, mid-stream and downstream. These divisions form an integrated supply chain from field to consumer covering a huge range of oil and gas products and raw-materials. This industry structure is illustrated in the flow chart below: _ Field development study _ ;::”;::ism:::”.:;d’:;;”:…._
__..;,::::,d:::,::::,,”:…._ Management systems for E,plotation geology & enginee,ing & project; prospecting technology Security certificatio~ and weil-reservoir-facility Maritime services Gas in pipes

Dr illi,,~ rip d”U >l1i!,> Drilling equ’~ment and systems  Platform, well, surface dllU >uu>ed ~’-lui~l”e”t Pipes  Platforms and production v~,,~:>  Suppiy ships and su~pll’ b”,~> ~­ Oil & LNG on .h;ps  Midstream  Downstream  Figure 26: Of! and Gas industry Structure [Source: Infield Systems Limited}  17
8. INDUSTRY OVERVIEW (Cont’d) 4 OVERVIEW AND MARKET TRENDS OF THE OFFSHORE OIL AND GAS MARINE VESSELS INDUSTRY 2010-19 4.1 Introduction and Services Provided 4.1.1 Introduction The range of marine vessels that supports the offshore oil and gas industry is diverse in terms of both size and function. This report focuses on those assets associated with anchor handling duties, including AHTs and AHTSs, as well as PSV/SSVs, AVs and AWBs. AHTs and AHTSs have traditionally been deployed to tow offshore rigs from one location to another and to deploy their anchors and mooring systems in order for the drilling asset to maintain a specific position during the drilling process. AHTs and AHTSs are also used to support the drilling process in terms of supply runs and safety assurances. AHTs are suited for long range voyage as most of their underdeck space is allocated for fuel tanks. In contrast, AHTSs are designed for ‘in-field support’ as the vessels have to leave space and deadweight capacity for the carriage of drilling mud, cement, base oil, drill water and other supplies. Some AHTSs are also equipped for fire fighting, rescue operations and oil spill recovery. There is additional opportunity for such vessels in the support of larger anchored construction vessels such as heavy lift assets. Demand for AHTs and AHTSs is driven by the number of rigs that are actively drilling, which is in turn driven by the need to drill wells. The need to drill wells is directly correlated to the prevailing oil price and the requirement to replace depleted reserves. A PSV/SSV is employed to transport supplies to offshore platforms and return any other cargoes to shore. PSV/SSVs typically have cargo tanks for a variety of goods. However, fuel, water and chemicals are the primary supplies required by platforms. A PSV/SSV will typically have less engine power capacity than its AHTS counterpart, as its role is more supply focussed. Demand for PSV/SSVs, which are used primarily to supply existing platforms and assist with offshore construction duties, is driven by the number of operational platforms. More platform installations will occur if oil prices are high and if expectations over future energy demand are also high. Furthermore, a high oil price context may also mean that existing platforms remain economically feasible and remain operational for a longer period of time. AV and AW8 serve as alternative berthing for offshore personnel associated with a production platform. On-site accommodation increases man-hours and reduces expensive crew shuttling. It also enables oil companies to complete construction or IMR work more quickly, ultimately bringing fields on-stream faster and reducing loss of production and revenue from a given field. 4.1.2 Substitute Products and Services Although not a direct substitute, the drillship market could be an alternative to the AHT market. Drillships do not generally require vessel support in order to move and thus would not require an AHT or its services (though anchor handling duties may be if the rig is not operating in DP mode). Whilst this should be noted, the majority of SEA’s drilling rigs are semisubs and jackups. Indeed, drillships only represent a small proportion, approximately 13% of the global market, especially in SEA where Infield Systems Limited currently tracks just three operational assets. 8. INDUSTRY OVERVIEW (Cont’d) 4.2 Relevant Laws and Regulations 4.2.1 Domestic legislation in the OSV Market Malaysian Cabotage Cabotage is a policy that reserves domestic trading of goods and passengers to ships that fly the indigenous states’ flag. A country might choose to introduce a cabotage policy to reinforce and protect the domestic shipping industry from the stronger international competition. In the case of Malaysia, the policy was introduced with the Merchant Shipping Ordinance of 19S2, which appointed the Domestic Shipping Licencing 80ard (“DSLB”) as the regulator in domestic shipping between Malaysian ports. The policy encouraged the registration of ships under the Malaysian flag but also ensured a market share for the domestic companies. In addition to these, the cabotage aimed to transfer skills and technology from the international industry to Malaysian companies, by forming bilateral agreements with more advanced industries. The DSLB would issue each vessel with an unconditional, conditional, or a temporary operating licence according to the level of compliance with a specific set of requirements. Unconditional and conditional licences would be normally given to a Malaysian-flagged vessel and would last for a maximum of two years before they got reassessed. Temporary licences are issued to Malaysian companies that are required to operate foreign flagged vessels due to the non-availability of a suitable Malaysia flagged vessel. A conditional licence could last for a maximum of six months. The cabotage policy has been adopted by the majority of member states of the ASEAN. In addition to Malaysia, Indonesia, Philippines, Myanmar, Thailand and Vietnam have applied restrictions on domestic shipping services. In comparison to the domestic benefits derived from cabotage, there is international concern with regards to the inefficiencies and adverse effects that these policies might cause if left as it is. The impact of cabotage could be more apparent in sectors that require high-end vessels (i.e. FPSOs, OSVsl, where it is more likely that the domestic vessel supply will not be fit for purpose. The ASEAN member states have already introduced exceptions for the technology sensitive industries such as the offshore oil & gas. For example, the Indonesian government has exempted vessels which perform oil & gas related functions such as survey, drilling and dredging, offshore production and support, as well as installation work. PETRONAS Licences In addition to its cabotage policy that regulates domestic shipping services, the Malaysian government regulates oil & gas related activities through the national oil company, PETRONAS. In exercise of section 7 of the Petroleum Development Act of 1974, the Petroleum Regulation Act 1974 dictates that any company offering services to the Malaysian oil and gas industry is required to obtain a licence from PETRONAS, including OSV operators. Companies issued with these licences are permitted to bid and carry out contracts related to the upstream and downstream sector of Malaysian oil and gas industry. The following key general requirements’ need to be fulfilled by a Malaysian company to apply for a licence: The company must be registered with the Registrar of Companies under a specific entity types and also registered with the statuary bodies dictated by the respective Standardised Work and Equipment Categories The company must have a stable financial background and a paid up capital of RMlOO,OOO in ordinary shares for Licence application purposes and RM10,OOO for the registration application Meet the minimum indigenous participation requirements in the equity, Board of Directors, management and employees 4http://www.petronas.com.my: Genera! Guidelines-Application For PETRONAS Licence and Registration (As at 24th April 2012) 19 172 8. INDUSTRY OVERVIEW (Cont’d) If a foreign company wants to participate in a bidding process, then the foreign company must either appoint an exclusive local agent or form a joint venture company with a local company that will in turn apply for a PETRONAS licence. The table below described the key legislation in SEA and Middle East. Not all conventions and codes described below are applicable to all OSVs and all regions; instead each has to be adopted by a country before it can be enforced on vessels within their registry. As such, not all are applicable to ICON.
SOLAS, MARPOL, ICLL,  Brunei  x  TONNAGE, COLREG,  STCW, INMARSAT  SOLAS, MARPOL, ICLL,  Cambodia  x  TONNAGE, COLREG,  STCW  Indonesia  x  x  x  x  Maritime Law No. 17/2008  SOLAS, MARPOL, ICLL, TONNAGE, COL REG, STCW, INMARSAT  Malaysia  x  x  x  Merchant Shipping Ordinance 1952 (MSO 19S2)  SOLAS, MAR POL, ICLL, TONNAGE, COLREG, STCW,INMARSAT, BWM, ISM  The Myanmar  SOLAS, MARPOL, ICLL,  Myanmar  x  Merchant Shipping Act  TONNAGE, COLREG,  (1923)  INMARSAT  Republic Act 1937,  SOLAS, MARPOL, ICLL,  Philippines  x  x  x  x  Customs And Tariff  TONNAGE, COLREG,  Code of 1978  STCW, INMARSAT, ISM  SOLAS, MAR POL, ICLL,  Singapore  x  x  COLREG, INMARSAT,  STCW, ISM  SOLAS, MARPOL, ICLL,  Thailand  x  x  x  Thai Vessels Act (1938)  TONNAGE, COLREG,  STCW,INMARSAT  Vietnam  x  x  The 1990 Maritime Code of Vietnam  SOLAS, MARPOL, ICLL, TONNAGE, COLREG, STCW, INMARSAT

SOLAS, MARPOL, ICLL,  Oman  x  TONNAGE, COLREG,  STCW, INMARSAT, ISM  SOLAS, MAR POL, ICLL,  Qatar  x  TONNAGE, COLREG,  STCW, INMARSAT, ISM  Saudi Arabia  x  SOLAS, MARPOL, ICLL, TONNAGE, COLREG,  STCW, INMARSAT  SOLAS, MAR POL, ICLL,  UAE  x  TONNAGE, COLREG,  STCW, INMARSAT  20
8. INDUSTRY OVERVIEW (Cont’d) 4.3 Supply and Demand 4.3.1 PSVjSSV Over the previous five years, the PSV/SSV market has seen an increase in demand in line with an increased base of operational infrastructure outside North America. However, the increase in supply has been disproportionate to growth in demand and, as such, utilisation fell considerably during the 2008-2010 market downturn. Post 2010, rates have recovered as newbuild deliveries have eased, but not to the point where there is a level of undersupply. Throughout the period between 2014 and 2019, Infield Systems Limited anticipates a flat utilisation rate of between 67% and 7S%. As a market average, this figure disguises the polarisation in the fleet whereby younger vessels tend to achieve higher utilisation than the conventional fleet. During the period of analysis, operators of younger tonnage would be expected to outperform the market average. On a regional basis, it is believed that Latin America, Asia and the Middle East report the highest levels of utilisation due to the prominence of long term charters. These long term charters are usually signed for five years, plus yearly options. With regards to dayrates, the PSV/SSV market came off sharply from the pre-financial crisis boom years, after the aforementioned increase in supply and a depressed short-termS market softened rates. However, the low of 2009-2011 has established a floor for the market of below USD16,000/day with rates likely to creep up to a range of between USD18,000/day and USD3S,000/day. As with utilisation, younger vessels are expected to return a premium dayrate in comparison to older tonnage, whilst also benefitting from lower Opex levels. The dayrates presented within this report are charter rates. In Malaysia, rates are expected to be higher than the global figure during the 2013 to 2019 period with the average expected to amount to a figure close to USD22,OOO/day. In addition, newer tonnage is expected to return a premium dayrate in comparison to older vessels. Please refer to Sections S.l.4 and S.2.2 for further details about the supply and demand of PSV/SSV market in Malaysia and SEA respectively. 500 ~ 90% 25,000 1 ‘30%I t 80’:1> I
~  ‘”‘:::: :::: :::: :::: :::: :::: :::: :::: ::::z  ~ :::: :::: :::: :::: :::: :::: :::: ::::  ~ :::: :::: :::: :::: :::: :::: :::: ::::’l.  ~ :::: :::: :::: :::: :::: :::: :::: :::: ~  ~ :::: :::: :::: :::: :::: :::: :::: ::::%
I400 l 70% 20,000 “I I.. /’ 60% Iri 60% c£300 ~15,OOO ..% ~ 50% .g ~ 50%.”• ‘”‘:::: ::::i ~ ‘”I Ig, ;~ 40% i:::: ::::t I 40% ~~20() ‘”‘:::: =-10,000 1:::: i c :::: :::: ~ ~I :iO%% :::: ~ 30%:::: :::: i:::: :::: :::: :::: 20%:::: ::::100 ~ r 5,000 i II 20%:::: :::::::: :::: :::: :::: :::: ~ 10% •t 10o/.~:::: :::: :::: ::::~ z % Ll O’X· o .;_. ,..~-.. _.—–1 0%~­a
2010 2011 2012 lOBE l014E 20iSE l016E l017E lOl8E 20iSE 2010 2011 2012 2D13[ l014E lOISE 201&E 2Oi7E lOISE 2019E -PSV!5SV (3k·4k OWT) Dayrate PSV!SSV Utilisation (RHA) -3,OOD-4.DOODWT5upply ..”” 3.000-4,OOODWT Demand -Utilisation (RHA} Figure 27: Historical and Forecast Global PSV/SSV Supply and Demand Figure 28: Historical and Forecast Global PSV/SSV Dayrates (USD/day) (Units) and Utilisation (RHS) (2010-19) and Utilisation (RHS) (2010-2019) [Source: Infield Systems Limited] [Source: Infield Systems Limited} The general premium of short-term market dayrates over time charter’ dayrates is expected to SShorHerm market contracts are short term, one off contracts which are immediately executed. They often carry a premium in terms of dayrate, but do not offer long term earnings visibility due to their one off nature 5 LOr’lg term contracts which can vary from one month durations to ten year deployments 21 8. INDUSTRY OVERVIEW (Cont’d) continue. This is particularly important in the North Sea and US GoM where there is a relatively well­established short-term market. Whilst this premium is clear in terms of dayrate values, it is also noted that the market is moving towards long-term charters in a number of regions, including Norway where Statoil has contracted for periods in excess of five years. Elsewhere the long-term charter remains the main procurement strategy within SEA and the Middle East. 4.3.2 AHTS A similar pattern to the PSV/SSV sector has been observed within the AHTS market, but the downturn in 2009 was more pronounced due to a lack of E&A drilling in mature regions. Consequently, utilisation fell across the various power band groups. In general, larger vessels with power outputs in excess of 12,000BHP recovered from the downturn faster than those within the 8,000-12,OOOBHP range. However, rates for the 8,OOO-12,000BHP benchmark have recovered and are expected to average over USD24,000/day during 2013. Assets with power outputs less than 8,000BHP have traded on a similar trajectory over the past three years although volatility within the market has been lower. The average dayrate for AHTS with power outputs less than 8,OOOBHP is estimated at USDll,370/day during 2013. The supply of vessels within the 8,000-12,000BHP benchmark is expected to retreat slightly over the course of the period of analysis as older, less capable vessels are retired. This dynamic will likely have a positive effect on the overall rates achievable for such tonnage, however, the declining platform base in shallow waters will have a detrimental effect on the global average rate. With the growth in demand for vessels across all classes likely to outstrip supply growth, utilisation rates for the 8,000-12,000BHP benchmark are expected to average 65% in 2013, before rising to 69% during 2017. The market is expected to retreat slightly towa rds the close of the forecast in 2019 due to a forecast reduction in commodity prices. As with PSV/SSVs, younger AHTSs have returned both premium dayrates and utilisation in comparison to older vessels (>10 years) in the fleet in addition to reporting lower Opex figures. 250 r 80% 30.000 ~ r 100% IIl 70% J _…–…. I 200 2″.000 I’.’ ,.,.””-‘——-__ I 81Y’1o 1-60% j .·_.,,_•. y.~….~a=.”” _. ‘ “l 20.000 .’, -~.”‘_””” I t 50% §~ 150 >! t6~> .1J I’3 ~~40%:~ ;:; 15.000 iI ~I § :::” I ~ r ;0% 1 …… ••••••••••…. •• ••• •• ••• ··················j4D% 10.000 1 I ~ 20% ~ t· 50 I ~ 20%~! 5.000 -t I~ t 10% ~I II 0%° o J.!—:~~—:~==~,—,;-“–Po 0% 2010 2011 2012 lOBE l014E lOISE l01GE ZOliE ZOISE 2019E 2010 lOll 20ll 20BE 2014E 2015E 2016E 2017E Z018E 2019E -8.DDo-n.OOObtlp SlJpply ..,,-‘// S.OOO-12.000bilp Demand –Utilisation tRHA) ••••••• AHTS {~8kbhp) Daylilte –_. AHT5 ~8 llkbhpj Dayrilte =”~”_..,,.,,-AHTS Utilisanon {RHAI Figure 29: Historical and Forecast Global AHTS Supply and Demand Figure 30: Historical and Forecast Global AHTS Dayrates (USDjday) and (Units) and Utilisation (RHS) (2010·19) Utilisation (RHS) (201O-2019) [Source: Infield Systems Limited] [Source: Infield Systems Limited] In terms of contract lengths, the higher ends of the market (>lO,OOOBHP) see a series of vessels operating on long-term charters that are signed for durations in excess of one year, but a growing proportion of newbuilds have entered the short-term market in regions such as Singapore and the North Sea. A number of vessels in the low ends of the market are on long term contracts, but also trade on the short-term market typically in SEA and North America. In SEA, rates have typically been in line with global averages, although charter lengths are generally longer. Additionally newer tonnage is expected to deliver a premium utilisation and dayrate in comparison to older, more 22 8. INDUSTRY OVERVIEW (Cont’d) conventional vessels. As with the PSV/SSV market, Malaysian AHTSs are expected to report a premium rate in comparison to the SEA average during the forecast period. Please refer to Sections 5.1.4 and 5.2.2 for further details about the supply and demand of AHTS market in Malaysia and SEA respectively. 4.3.3 AWBs The AWB market is expected to report an increase in utilisation throughout the forecast period as demand increases and suppiy remains relatively static. Despite a reduction in operational infrastructure within North American waters, the sector is expected to report an increase in activity during the period of analysis. The increase is broadly driven by the aforementioned growth within the Middle East and SEA. ’00
45,000r””” 180 40,000″”” 160 7″” 35,000 ~140IIi: 60%• 30,000~120 •~ > 50% -2• .325.000•~ 0100c;4O%S => :g20.000~80 ~ zoo ~ 15.000 “”” ~ 40 ~ ””’ 10,000 ~ ‘0 % ””’ 5,000 o “” o
2010 2011 2012 20nE 2014E 2015E 20161: 20nE 2018E 2019E “””
“””
7″” 60% ””’ ””’ ””’ “” -Accommodation Work Barge Oayrate Utilisation (RHA,I Figure 31: Historical and Forecast GlobalAWB Supply and Demand (Units) Figure 32: Historical and Forecast Global AWB Oayrates (USa/day) and and Utilisatian (RHS) (201D-19) Utiiisatian (RHS) (2010-2019) {Source: Infield Systems Limited] {Source: Infield Systems Limited} AWB market rates, which are expected to increase throughout the period of analysis from 2010 until a peak in 2018, have been less volatile than those presented within the AHTS and PSV/SSV markets. The lower level of volatility is a function of the length of charters. The market is weighted towards maintenance contracts which have historically been signed for multiple year terms and this has eased short term volatility in overall rates. The increase in maintenance work towards the close of the forecast in 2019 is the key driver behind the inflation in rates. Please refer to Section 5.1.3 further details about the supply of AWBs in Malaysia 4.4 OSV Competitive Overview 4.4.1 Introduction This section provides a comparative overview of the size, age, capability and strategy of 19 international vessel providers, namely, Tidewater, Bourbon, Swire, Farstad, EZRA, Alam Maritim, Swiber, MMA, Solstad, Hornbeck, Seacor, ICON, Jaya, Miclyn, CHO, POSH, Pacific Radiance, Perdana and Perisai. Together, these providers make up a significant share ofthe global support vessel fleet. 4.4.2 ICON’s Fleet As at the LPD, ICON has a total of 32 vessels available for charter, comprising of 30 owned vessels, one AHTS on a bareboat charter which is expected to be acquired by early June 2014 but is currently used as a forerunner vessel for one of our long-term charter contract and one AWB on a bareboat charter which is expected to be acquired by end June 2014. All references to ICON’s fleet within this 23 8. INDUSTRY OVERVIEW (Cont’d) Report refer to the 32 vessels available for charter as at the LPD. The fleet available for charter comprises 24 AHTjAHTSs, four SSVs, two UVs, one PSV and one AW8. ICON has a further six vessels which are currently under construction include two AW8s (expected delivery in first quarter 2015 and third quarter 2015 respectively), one PSV (expected delivery in fourth quarter 2014), one FC8 under a joint venture with an affiliate of Odfjell Eiendom AS (expected delivery in fourth quarter 2014) and two AHTSs (expected delivery in third quarter 2015). ICON is in final negotiations with shipyard for the construction of another PSV with expected delivery by first quarter 2016. As at 31 December 2013, ICON has an estimated 6% share of operational AHT/AHTSs and 2% share of operational PSV/SSVs in SEA. In its home market of Malaysia, ICON has a 15% share of AHT/AHTSs and 9% share of PSV/SSVs operational at 31 December 2013. In the Middle East market ICON has one AHTS, Omni Tigris, operating in Qatar. 4.4.3 Competitive Global Fleet Overview Persistently high oil prices have stimulated and will continue to encourage offshore drilling activity. However, the increase in support vessel demand has not been enough to balance the considerable rise in vessel supply over the last five years, thereby creating excess-supply in the short-term. However, in the coming years, a certain improvement in the AHTS segment is expected as a large number of old vessels7 are expected to be removed from the market and demand for younger, modern, and more sophisticated vessels increases rapidly. 20 600 18
8y contrast, we expect the psvjssv market to remain in a state of oversupply simply due to the tide of newbuilds set to be delivered over the forecast period. For instance, Tidewater, Swire and Hornbeck are expected to receive 18, 14 and 13 new PSV/SSVs, respectively, over the next three years. 7 Tidewater defines old vessels as those at least 25 years old and nearing or exceeding original expectations of their estimated economic lives. The global O$V market has a large number of old vessels, including about 725 vessels, or 26%, of the worldwide fleet. Of these older vessels, approximately one-third are already stacked (uncompetitive). 8. INDUSTRY OVERVIEW (Cant/d)
Another characteristic of the global support vessel market is the different dynamics in regional demand and supply. The North Sea market has been characterised by over-capacity of tonnage, however, markets such as West Africa and Brazil have seen more attractive rates and utilisation due to the rapid growth in offshore activity and relatively limited vessel deployment. Vessel operators with a global presence, sound track-record and larger fleet will have the advantage in capturing new demand in these regions. POSH, Tidewater, Swire, Bourbon, Hornbeck and Farstad are the strongest global players with support fleets over 50 vessels (including expected newbuilds) each and revenue generated from diverse geographic regions. Given the backdrop of rapid growth in deepwater activity and new regional opportunities, the strategic objectives of major support vessel operators are broadly similar. The goals are to develop a young and modern fleet of vessels, maintain a sound execution and safety track record, and pursue a growing global presence. Tidewater is currently modernising its fleet (average age 12.6 years); ordering 22 new support vessels to be delivered in 2013 and in 2014. Bourbon will build 41 new vessels, including 15 new generation PSV/SSVs, in the coming three years. Farstad will receive 12 newbuilds in the three year period from 2012 to reduce the fleet age from 7.5 years to 5.5 years. Swire has 26 new vessels under construction, which are expected to be delivered within the coming three years. Finally, COSL signed an agreement for the construction of 15 OSVs to enhance its capabilities in deepwater operations. Along with ordering larger and modern newbuilds, operators have been actively retiring or selling their oldest AHT/AHTSs, especially those built in the 1980s, to maintain a young and modern fleet. For instance, in 2012, Farstad sold five AHTSs constructed in the 1980s and Swire sold four old vessels. A number of regional contractors have increased their global presence over the past few years. EZRA, for example, has evolved from an Asia-centric operator into a global provider with nearly two­thirds of its revenue generated from outside SEA in 2012. COSL was predominately a Chinese regional vessel provider five years ago. Along with CNOOC, its parent company, COSL has now expanded rapidly into Europe, SEA and other regions. Finally, Asia-focused Bumi Armada is also establishing a presence in new markets across Asia, Latin America and Africa. With more regional­focused vessel operators expanding into international markets, we expect a further increase of competition in the global market in the coming years. 25 8. INDUSTRY OVERVIEW (Cont’d) In summary, major support vessel operators are expanding rapidly in terms of both fleet size and quality, differentiating themselves further from smaller regional vessels providers such as Pacific Radiance, Pacific Richfield Marine, and the Shipping Corporation of India. Compared with the high­powered and modern fleets of the major global operators, the vessel fleets of such smaller regional vessel providers may lack the size, track record, and capability to provide complete and competitive services on the global stage. With a young, large, and modern fleet as well as a global presence, major global operators such as Farstad, Bourbon, Swire and EZRA are well positioned to meet existing vessel demand in addition to that sourced from new and deepwater regions. However, we expect strong competition in the global support vessel market, especially in the PSV/SSV segment, as a large number of newbuilds are coming into the market over the next three years. We anticipate that operators with high-end specialised vessels, strong execution track records, and diverse regional base will thrive in this competitive environment. Table 2: Major Operators’ AHT/AHTS & PSV/SSV Fleet Overview No. of Vessels  I  Fleet AgeS  I  Power Capacity  IOperator Total Fleet  OSV~  AHT/AHTS PSV/SSV  OSV  AHT/AHTS PSV/SSV Avg. AHT!AHTS BHP  ,  Avg. PSV!SSVs OWl  Bourbon  458  153  87  66  9.5  10.3  8.4  10,300  3,082  Tidewater  328  239  133  106  12  11.7  12.4  6,100  3,220  Seacor  189  34  18  16  11.5  10.8  12.3  10,120  2,283  P05H  112  46  33  13  3.9  4.4  2.5  11,931  3,125  Swire  101  94  82  12  7.5  7.5  7.5  8,508  4,010  COSL  75  33  29  4  8  7.9  8.7  9,543  2,975  E2RA  65  39  31  8  4.5  4.5  4.5  8,000  3,175  Swiber  62  27  27  0  4  4  N/A  5,721  N/A  P. Radiance  62  14  10  4  4  4.2  3.9  6,763  3,683  Hornbeck  61  51  2  49  lD  13  9.9  6,lDO  3,197  B. Armada  61  44  19  25  6.5  6.3  6.7  5,116  3,300  Farstad  59  56  30  26  7.5  8.1  6.8  18,350  4,171  Solstad  50  31  22  9  12  13.2  9.1  15,835  4,492  A. Maritim  38  28  16  12  7  6.2  8  4,750  750  ICON  32  29  24  5  5  4.8  6.2  5,271  2,020  Jaya  28  22  20  2  4  4.3  1  7,298  5,344  Miclyn  22  14  11  3  4.5  5.6  0.5  5,681  2,000  Jasa Merln  17  17  14  3  4.8  4.1  8  7,700  1,600  Gulf Marine  16  16  12  4  lD  8  16  8,950  2,200  CHO  15  15  15  0  8  8  N/A  8,462  N/A  Perdana  13  8  8  0  5  5  N/A  9,635  N/A  Perisai  9  5  5  0  8.5  8.5  N/A  7,796  N/A
4.4.4 Competitive Position of ICON ICON is one of the largest global pure-playlO OSV operators and the largest Malaysian based pure-play OSV providers in terms of number of vessels, with a strong focus on shallow water services. In 2011, ICON also served the deepwater market through the bareboat charter of three dynamically positioned AHTSs from Jaya Offshore. 8 The average age of all the vessels in the corresponding category operated by the operators which is computed based on the total age of all the vessels in the corresponding category divided by the total number of vessels within that category. 9 Includes AHT/AHTSs and PSV/SSVs lOA Pure-Play OSV operator is defined as an operator with only AHT/AHTS, PSV/SSV and AWB assets within its fleet. The key Pure-Play operators in the SEA and Malaysian regions include CHO, Jasa Merin and ICON, of which ICON is the largest with 32 vessels. Being a Pure­Play operator should allow for higher utilisation across the fleet, lower apex levels and lower risk in terms of project completion as the work carried out is less complex.
8. INDUSTRY OVERVIEW (Cont’d) ICON operates a young fleet of tonnage designed mainly for the support of shallow water operations. As such, ICON’s key competition is the vessels operated by those players highlighted in the above, with simiiar power outputs and DWTs. Within the target market in SEA, particuiarly in Malaysia, the likes of Tidewater, Bourbon and Swire account for ICON’s key competition in addition to Bumi Armada, Swiber, Seacor, Perdana, Farstad, Miclyn, and Perisai. Within the AHT/AHTS market in SEA, ICON is particularly well positioned with a 24AHT/AHTSs strong fleet, with an average age of 4.8 years, this in comparison to the combined global average age of 10.3 years. In Malaysia there are small local players such as Sealink International Berhad, Ajang Shipping Sdn Bhd and Syarikat Borcos Shipping Sdn Bhd which operate a limited number of aged shallow water AHT/AHTSs, which are not in direct competition with ICON’s modern AHTS fleet. With a larger and younger fleet than the majority of its peers, ICON is particularly well positioned to take advantage of opportunities within the shallow water AHTS market. ICON has a smaller presence within the global PSV/SSV market. Whilst Bourbon and Tidewater each has a fleet in excess of 30 vessels, the ICON PSV/SSVs fleet currentiy amounts to five vessels. However, despite lacking the scale of its direct peers, ICON’s fleet is considerably younger, with an average age of 6.2 years as opposed to the global average of lB years .
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Infield Systems Limited defines a shallow water AHTS if its engine power capacity is iess than B,OOOBHP and a deepwater AHTS if its engine power capacity is in excess of B,OOOBHP. Infield Systems Limited defines a shallow water PSV/SSV if its cargo carrying capability is less than 2,SOODWT and a deepwater PSV/SSV if its cargo carrying capability is in excess of 2,SOODWT.
Bourbon Tidewater Hornbeck 5eacor -Snallow Water PSVs .•.–,” ,~ .. fleet Age iRHSI 27 8. INDUSTRY OVERVIEW (Cont’d) ICON’s current fleet of AHTSs and PSV/SSVs are well positioned to take advantage of the shallow water opportunities that the Malaysian and wider SEA market offer. Whilst ICON currently has a specific shallow water focus, it has one 8,000BHP DP2 AHTS in operation. In addition, all the six vessels currently under construction and another PSV in final negotiations to be constructed, are designed, built, powered and fitted with up-to-date technology such as DP systems and higher BHP engines. They provide ICON with the flexibility to meet the changing needs of its customers, capitalize on new growth opportunities including tendering for deeper water projects in Malaysia going forward. ICON is well positioned to leverage off favourable Cabotage rules in Malaysia and PETRONAS Licensing requirements in bidding and winning contracts against foreign companies. The company’s fleet of vessels also provide the opportunity for charter contracts in international markets, specifically India, the Middle East and Australasia. [The rest of this page has been intentionally left blank] 8. INDUSTRY OVERVIEW (Cont’d) REGIONAL OVERVIEW 2010-19 5.1 Malaysia 5.1.1 Introduction ond Future Growth Overview With an estimated 3. 7bn bbls of proven oil reserves and 1.3tcm of proven natural gas reserves, Malaysia is SEA’s primary source of hydrocarbons and its single largest OSV market. Indeed, in 2012 Malaysia’s oil production stood at 6S7,000bpd whilst natural gas production amounted to 6S.2bcm. These figures make Malaysia the primary combined oil and gas producer in SEA and the region’s number one oil producer and number two natural gas producer. In common with other SEA economies, oil consumption has incceased markedly in Malaysia over the past decade. Indeed, between 2002 and 2012, demand grew by 24% to 697,000bpd, while production fell by more than 11%, resulting in Malaysia becoming a net-importer of oil. In terms of gas, Malaysia was SEA’s second largest producer and the world’s second largest exporter of LNG, behind Qatar. In 2012, Malaysia exported 31.8bcm of LNG, representing a 9.7% market share of total global exports. Global events that affect the natural gas markets are therefore likely to impact upon the Malaysian industry. Indeed, the massive earthquake and closely averted nuclear disaster at Fukushima, Japan is likely to have a long-term impact on global gas markets. Whilst nuclear energy has often been viewed as a transition fuel between a hydrocarbon-fuelled economy and a more sustainable renewable-fuelled economy, increased concerns over nuclear safety have been aired in response to the potentially disastrous events in Fukushima during March 2011. At present, the most viable alternative to nuclear power is arguably gas due to its shorter lead-times and lower capital costs than oil or coal. Indeed, Japan posted recorded imports of LNG causing prices to soar by around 33% after the incident. By the end of 2011, LNG imports were up 12.2% to a then record high of 78.5 million tonnes which was subsequently passed in 2012 when imports reached 87.3 million tonnes. The impact of Fukushima is not only contained within Japan as countries across the globe have revisited their nuclear energy strategies and commitments. An increase in demand for LNG is therefore one likely outcome from this incident and this would benefit exporting countries. Whilst Malaysia has maintained a leading position in the LNG export market, the country is bracing itself for a potential downturn in natural gas and crude oil production (the latter of which peaked in 2004). Indeed, declining production rates and increasing demand for energy has prompted the Malaysian government to announce a series or incentives designed to encourage the development of the country’s marginal, deepwater, small and HPHT prospects and attract the investment of global E&P players. Another stimulus to offshore activity can be found in the Malaysian Government’s RSC which is designed to fast-track the development of small and marginal fields. The first RSC was awarded to Petrofac Energy Developments Sdn Bhd and SapuraKencana Petroleum Bhd in January 2011 for the development of the Berantai field. Concurrently, PETRONAS has placed an emphasis on EOR techniques and is seeking to improve the recovery rates on existing fields. This is likely to give the Malaysian market a dual focus of greenfield deepwater investment and brownfield shallow water life-extension which should translate to an increase in opportunities for the Malaysian oilfield services market, in particular those companies involved in OSVs, T&l and engineering services. 29 8. INDUSTRY OVERVIEW (Cont’d) 5.1.2 Malaysian ETP and Relevant EPPs The Malaysian economy has traditionally been commodities-dominated and Government-driven. Malaysian growth has been slow since the 1997/98 Asian financial crisis due to growing competition for exports and foreign investment from neighbouring countries. The New Economic Model aims to release Malaysia from the middle-income trap into a high-income nation by 2020. Since its release in 2010 the National Transformation Programme (which comprises of two components, the ETP and the GTP) has already made huge strides towards delivering its goal to increase GNI per capita to USD1S,000, keeping economic growth consistently above S%. The GTP aims to reduce corruption and ensure the public’s needs are a priority. Government Economic Transformation Programme -Overview The Malaysian Government’s ETP has highlighted 12 NKEAs areas of economic opportunity for the private sector, which could push Malaysia’s high income status and global competitiveness. The NKEAs are: Oil, Gas & Energy, Palm Oil & Rubber, Financial Services, Tourism, 8usiness Services, Electronics & Electrical, Wholesale & Retail, Education, Healthcare, Communications Content & Infrastructure, Agriculture, Greater Kuala Lumpur / Klang Volley. NKEAs have been targeted for government support due to their potential to enhance GNI, although the government still sees non-NKEAs as crucial to Malaysia’s transformation. The NKEAs are partly chosen for the ability to benefit non-NKEAs through the multiplier effect. Individual ministries look after the progress of each sector. Each NKEA offers private sector involvement and investment opportunities in the EPPs. These EPPs guide the development of the industry or sector. There is currently a list of lS9 identified EPPs, 13 of these relate to the NKEA titled Oil, Energy & Gas. EPP 1: Rejuvenating Existing Fields through Enhanced Oil Recovery -GNI by 2020: RM 16,000,000,000 EaR is a technique to improve the oil recovery rate from a field using gas, chemical injections or thermal flooding. PETRONAS plans to produce 7S0 million barrels from 14 oil fields using the EaR initiative. To do this PETRONAS is implementing new PSCs with varying complexities to attract investors to enhanced oil recovery techniques. In January 2011, PETRONAS signed two 30-year PSCs with Shell worth over USD12 billion for EaR projects off the coast of Sabah and Sarawak to develop nine and four oil fields respectively. These projects should increase the average recovery rate of the fields from 36% to SO%. In May 2012, PETRONAS awarded Talisman the contract for EaR projects in the Kinabalu Fields. The PSC has a PVB term -the share of the projects grows over the lifetime of the field -leading to investors wanting to continue producing potentially risky mature fields. ExxonMobil, along with its PSC partner PETRONAS, plans to invest USD2.6 billion in new oil and gas assets to rejuvenate mature facilities using EaR techniques in the Tapis Field. Under the project, EMEPMI and PETRONAS have signed a deal in which the partners will invest in a water-alternate-gas EaR project to boost the output of Malaysia’s largest producing oilfield. The project will include the installation of one large central processing platform with accommodation for 14S personnel and a smaller riser platform. The Tapis field lies 118 miles of Terengganu in shallow water and was discovered in 1969 and brought into production in 1980. The crude produced from Tapis is of very high quality and low sulphur content. In addition to the Tapis field, the contract holds plans to develop six other fields: Selign, Guntang, Semangkok, Irong Barat, Tabu and Palas. 8. INDUSTRY OVERVIEW (Cont’d) A large driver for the implementation of EOR projects is to stem the decline in Malaysia’s oil production by improving production and extending field life beyond 2040. The rejuvenation of existing fields through EOR will have a positive effect on the OSV market as production increases, through the increased base of operational infrastructure particularly platforms and subsea equipment. EPP 2; Developing Marginal Fields through Innovative Solutions -GNI by 2020: RM 5,500,000,000 PETRONAS is working with the 10Cs and independent oil companies to utilise the potential of Malaysia’s small fields. This is predominantly carried out using PSCs or RSCsll RSCs are awarded by PETRONAS for a fixed fee in return for the services and expertise of an E&P operator to produce the oil on the PETRONAS-owned field. The oil remains the property of PETRONAS to sell as they wish. In June 2012, PETRONAS signed three PSCs with PETRONAS Carigali Sdn Bhd, Hess Exploration and Production Malaysia B.V. to develop the detached fields in the North Malay Basin. The nine stranded gas fields will be exploited along with the development of a new gas gathering, precessing and transportation hub and 300km of pipeline. USDS.2 billion is expected to be invested in the North Malay Basin project over the next five years and the project should commercia lise 1.7 standard trillion cubic feet of gas reserves from the area. PETRONAS awarded Petrofac Energy Developments Sdn Bhd and SapuraKencana Petroleum Bhd a RSC in January 2011. Gas production began on 20 October 2012. The gas is exported by a 30km subsea pipeline to the PETRONAS Carigali operated Angsi field and from there onto the peninsula gas grid. PETRONAS has sought new tax incentives to help achieve the aims of EPP 1 and EPP 2. If the new tax incentives are incorporated into the PITA, there will be greater interest in developing new oil and gas resources, smaller fields and technically challenging resources. The development of small fields will increase the demand for OSVs in the region, particularly smaller vessels «8,000BHP) such as those operated by ICON. EPP 3: Intensifying Exploration Activities Implemented by PETRONAS, intensified exploration activities should boost the level of known resources and potential new investment. PETRONAS’ successful drilling in Block SK316, offshore Sarawak, has uncovered an estimated 2.6tcf of net gas. Intensifying exploration activities will have a positive effect on the demand for OSVs in Malaysia. AHTSs and PSV/SSVs will be needed to move and facilitate different rigs when they are employed to drill and test the wells. EPP 4: Building a Regional Storage and Trading Hub -GNI by 2020: RM 1,625,700,000 Royal Vopak N.V., Dialog Group Berhad and the State Government of Johor are partnering to invest in the development of an Independent Deepwater Petroleum Terminal at Pengerang, Johor. The storage and trading hub should have a storage capacity of around five million cubic meters of petroleum. This regional oil storage and trading hub looks to utilise many existing attributes in the region such as; Malaysia’s port locations on major shipping routes for crude oil and refined products, its location relative to Singapore, as well as Pengerang’s land availability and deep-water marine accessibility. 11 First implemented in Malaysia, the RSC departs from the PSC first introduced in 1976 and most recently revised last year as the EOR PSC which ramps up recovery rate from 26% to 40%. 8. INDUSTRY OVERVIEW (Cont’d) The project will enable the breakup of larger international crude oil and fuel cargoes into smaller loads that can be delivered to the more inaccessible destinations in SEA. Furthermore it enables traders to access arbitrage opportunities on the futures markets through hedges that require storage facilities for the oil products. The PengerJng Terminal should act as motivation for investors because it assures them that even if demand was to drop in the short term, Malaysia has new capacity for storage and hedging measures could be implemented. This increased investment in offshore oil and gas in Malaysia and in the SEA region will increase the demand for OSVs. EPP S: Unlacking Premium Gas Demand in Peninsula Malaysia -GNI by 2020: RM 2,404,000,000 Declining domestic production and increased industrial demand for natural gas in Malaysia has created a new market for the importing of LNG at competitive prices. The following projects should assist in bringing international gas supply onshore at affordable prices to fill the expected void between supply and demand. The Sungai Udang regasification terminal received its first LNG tanker in May 2013 and has a maximum capacity of 3.8 million tonnes per annum with two FSUs to receive and store LNG. A consortium comprising Vopak N.V., Dialog Group 8erhad and the State Government of Johor will invest RM4.08 billion to build the Pengerang Terminal -a LNG storage, loading and regasification terminal primarily for LNG trading and domestic gas supply purposes. The Pengerang Terminal will enable multiple LNG users to store and trade LNG simultaneously, which could position Malaysia as the LNG trading hub of Asia. The unlocking of premium gas demand in Peninsular Malaysia should not detrimentally affect investment in Malaysian oil and gas because the terminals are needed to meet the void in supply and demand. EPP 6: Attracting Multi-Natianal Carparatians ta Bring Their Glabal Oil Field Services and Equipment Operatians ta Malaysia -GNI by 2020: RM 6,124,800,000 The MPRC formed the ICC to facilitate an influx of major firms in the OFSE industry basing their business operations in Malaysia. This move should build a cost-efficient base in Malaysia for EPIC activities in the Asia Pacific region. The MPRC organised the Malaysian Pavilion at the Offshore Technology Conference in Houston to promote Malaysia’s service providers. Malaysia hosted Asia’s first OTC in March 2014.
8y contributing to a more diverse client pool EPP 6 is likely to foster increased demand for OSVs particularly in regards to the support of offshore construction activity. EPP 7: Cansalidating Damestic Fabricatars -GNI by 2020: RM 4,108,800,000 Malaysian fabricators are being encouraged to become competitive in the region through consolidation, which will increase financial resources, and knowledge and technology transfer. The fabrication industry has already been consolidated to leave seven remaining entities -MMHE Bhd, Kencana HL Bhd, Brooke Dockyard &Engineering Works Bhd, BHIC Penang Shipyard Bhd, TH Heavy Engineering Bhd, Labuan Shipyard and Engineering Sdn Bhd and Muhibbah Engineering Bhd 8. INDUSTRY OVERVIEW (Cont’d) EPP 8; Developing Engineering, Procurement and Instal/atian Capabilities and Capacity through Strategic Partnerships andJoint Ventures -GNI by 2020: RM 4,028,800,000 Global, highly advanced OFSE companies are encouraged to form joint ventures with local companies to improve local EPIC capabilities, as well as increase the international awareness of Malaysian companies. BC Petroleum Sdn Bhd, a consortium including Roc Oil Company limited, Dialog Group Berhad and PETRONAS Carigali Sdn Bhd, has invested over RM626miliion in the pre­development of the RSC for the Balai field project. TH Heavy Engineering Bhd partnered with McDermott, to enhance its engineering and installation capabilities.
Building up the local EPIC capabilities keeps more of the supply chain within Malaysia and neglects overseas fabricators. This benefits the Malaysian OSV market as they are likely to hold more contracts with local fabricators. EPP 9; Improving Energy Efficiency -GNI by 2020: RM 13,900,000,000 By improving Malaysia’s power and fuel consumption, companies become more competitive and the cost of living decreases. The government has proposed many initiatives that will dramatically reduce the demand for energy. Faber Group Berhad will lead a project for the EPMS for government entities by energy auditing five hospitals as part of the government’s move to lead by example on energy efficiency. The government aims to encourage the sale of energy efficient appliances. National utility firm TNB will be incentivised to make co-generation, the simultaneous generation of power and heat, economically viable. The government wants to regulate the insulation on newbuilds and renovated buildings. The government has encouraged the purchase of hybrid cars by extending a 0% tax incentive on sales in 2013. A huge improvement in energy efficiency would dramatically reduce demand for energy and with increased investment in alternatives to oil and gas the demand for hydrocarbons could decrease. However, this EPP looks to stem the huge increase in energy demand implemented by the NTP rather than decrease the actual demand for energy from current levels, and therefore the oil and gas market along with the OSV market should not be negatively affected. EPP 10: Building Up Renewable Energy and Solar Power Capacity -GNI by 2020; RM 457,500,000 Investing in renewable energy will reduce Malaysia’s dependence on fossil fuels and decrease the price of oil and gas. The FiT scheme for renewable energy aims to deliver 1.2GW, 7% of Malaysia’s energy mix, by 2015 and 3.1GW (14%) by 2020. The challenges surrounding the FiT are acquiring sustaining funds and providing adequate infrastructural support for the growing renewables industry. There are currently no offshore wind farms in operation around Malaysia, the renewable energy initiative is being led by a solar power through the allocation of photovoltaic cells being placed on residential and commercial rooftops. Cypark Resources Berhad leads private investment initiative to build a Renewable Energy Park in Pajam on a remediated landfill site. The park aims to harness solar, landfill gas and waste as potential resources to generate over lOMW of power. 8. INDUSTRY OVERVIEW (Cont’d) The lack of investment in offshore wind farms means that the increase in emphasis on renewables does not affect the OSV market positively. However, the renewable energy set to come online is meant to supplement the large increase in demand for energy and should not therefore act as a substitute to any energy recovery processes involving OSVs. EPP 11: Deploying Nuclear Energy for Power Generation -GNI by 2020: RM 212,300,000,000 The Nuclear Power Development Steering Committee has been created to prepare a NPIDP. It is considered that nuclear power will be needed in 2021 to meet the energy demand for Peninsular Malaysia”, and the current development time line is 11 or 12 years from a start point in 2011. This may not have a significant effect on the demand for oil and gas because the nuclear energy will be used to complement the existing energy mix. As a result the OSV market is not negatively impacted. EPP 12: Topping Malaysia’s Hydroelectricity Potentiol-GNI by 2020: RM 5,700,000,000 SEB and the RECODA will plan, construct, own and operate Sarawak’s hydroelectric dams. Sarawak will hope to attract energy intensive industries to the state to capitalise on the hydroelectric potential. The hydroelectric potential will be used to fill the energy void and, therefore, should not negatively impact the demand of OSV supported energy resources such as offshore energy. EPP 13: Increase Petrochemical Outputs EPP 13 is the only EPP yet to begin implementation. However, PETRONAS is looking to grow its petrochemical business by developing both the RAPID project in Johor and the SAMUR project. RAPID, a PETRONAS investment, is set to cost RM60 billion and would be the largest green field investment in the Asia Pacific. RAPID was launched on 13 May 2012 although construction has been delayed due to housing relocations at the site. The project should rival Singapore as Asia’s most vibrant petrochemical hub. The increase in petrochemical outputs will be taking away some of the crude supply that could be used for energy production and this increase in demand for crude benefits the OSV market through increased demand. Conclusion: The Effect of the ETP’s Oil, Gas & Energy EPPs on the Malaysian Offshore Oil and Gas Market Malaysia’s Oil, Gas & Energy EPPs are designed to facilitate rapid growth within the economy as a whole, but they hold specific themes. EPPs 2& 3 seek to cultivate new potential in order to meet the growing demand for energy EPPs 10, 11 & 12 aim to develop complimentary energy sources EPPs 1, 6, 7, 8 & 9 aim to improve existing infrastructure and use improved techniques to secure more relative output from the current resources EPPs 4 & 13 look to attract new business by increasing leverage in particular fields EPP S recognises the energy requirements of Malaysia and aims to maintain supply where local resources are insufficient to meet demand The first three EPPs show the emphasis in PETRONAS’ attempts to unlock any hydrocarbon potential in Malaysia’s mature oil fields. Deepwater drilling and exploration is expected to remain consistent over the three years, and extensive subsea oil and gas pipelines will be needed to enable more diverse locations to be monetised. Billions of ringgit are set to be spent on RSCs, exploration and 12peninsular Malaysia is the mainland between Southern Thailand and Singapore that holds over 80% of Malaysia’s population. 8. INDUSTRY OVERVIEW (Cont’d) upstream Capex. These three EPPs should have the most effect on the OSV market because they should directly increase the demand for OSVs. EPP 8 should also have a large positive effect on the OSV market as keeping the EPIC activities within the Malaysian market should promote a preference for Malaysian OSVs. The Malaysian oil and gas sector was identified as a key transformation area and PETRONAS’ RM300 billion five-year Capex plan aims to shorten the energy shortage aggravated by the economic growth stemming from the Malaysian NTP. PETRONAS’ strategy consists of a three-prong development plan to enhance oil recovery, develop marginal oilfields and rationalise its international operations. The development of marginal oil fields will use RMS billion, enhanced oil recovery will cost RM46 billion and the North Malay 8asin project RM1S billion. Downstream activities include the RMS billion Pengerang Terminal and the RM60 billion Refinery and Petrochemical Industrial Development project in southern Johor. Historical and Forecast Capex In terms of capital spending, the Malaysian offshore market experienced a growth phase shortly after the turn of the millennium during the development of fields such as Sarawak, 8unga Raya, Angsi and Jintan. The market then retracted before growing once again as Murphy Sabah Oil Company developed the deepwater Kikeh field via the deployment of an FPSO. Much like with the wider global market, offshore activity in Malaysia was adversely affected by the global financial crisis, however, Infield Systems limited expects significant growth in offshore Capex going forward. On the back of the aforementioned activities of PETRONAS, Malaysian offshore upstream Capex is expected to amount to over USD40 billion between 2010 and 2019, with the local NOC and its subsidiaries likely to account for over 4S% of investment. Post 2013 the largest projects in Malaysia include Separ’s gas phase, Sarawak KOS, 8aronia and Karawari, each of which are led by PETRONAS. Outside of the NOCs investment, Infield Systems limited expects to see considerable levels of expenditure on Shell’s Ubah field in addition to Murphy Sabah Oil Company’s developments. Capex is expected to peak relatively early in 2014 at close to USDS.4 billion, before settling somewhat and equating to an average of USD4.9 billion per annum between 201S and 2017. Infield Systems limited expects to see an increase in investment during 2018 with around USDS.3 billion invested in the market.
5,000 I (·,000 I I /,-s­..”. !iii “” 5,000 i :::;.; ;5:, flj•-­I ~~ I IllIl -11I11 “‘” II~ I4,000 i- ~ =—mr -­w ~~ ~~ !Ii!WE3,000 1 I ~~ ~ ~~ I !IIII ­~am ~ 2.,000 i I~ ~:&>: ~ 1.000o 2010 2011 2012 lOBE 2014E 2015£ 2016£ 20llE 20HIE. Z019E 2010 2011 20ll lOBE Z014E Z015E Z016E ZOl7E 2011s£ Z019E • Petronas ‘” Shell .. Murphy ± E.xxonMobil III Newfield • Pipeline'” Platform ~Control Line i: SubseJ Completion II Single Point Mooring -Talisman * EnQ<.;est ;;; Nippon Oil ,’. Others. Figure 38: Historical and Forecast Malaysian Offshore Capex (Phased Figure 39: Historical and forecast Malaysian Of/share Capex (Phased USOm) by Object Type (2010-2019) uSOm) by Operatar Graup (2010-2019) {Source: Infield Systems Limited} [Source: Infield Systems Limited]
8. INDUSTRY OVERVIEW (Cont’d) Much of the forecast Capex is expected to be directed towards the development of pipeline and platform infrastructure which will be installed to exploit the country’s shallow water reserves. Towards the latter part of the forecast, [nfield Systems Limited also expects a growth in deepwater expenditure leading to increased investment in the floating platform, control line and subsea production markets. Of PETRONAS’ USD19.6 billion Capex in offshore fields in Ma[aysia, some 89.8% or USD17.6 billion is expected to be invested on shallow water developments, highlighting the continued demand for OSVs in the sector. The residual USD2.0 billion, or 10.2%, is expected to be invested in deepwater. Deepwater Capex is expected to increase at a CAGR of 6% between 2012 and 2018. PETRONAS’ offshore investment accounts for 4S% of the offshore Capex in Malaysia. 10C’s such as Shell (18% of the total offshore Capex in Ma[aysia). ExxonMobi[ (6% of the total offshore Capex in Malaysia) and independents such as Murphy Sabah Oil Company (12% of the total offshore Capex in Ma[aysia) are also significant players in Malaysia. 6.000 5.000 4.000 I3.000 1,000 lIII 1.000 Io
6,00°1 I 5.000 -, I 4.000 i i 3.000 2.000 ··11 1.000 1 I
iio’ ­

l010 1011 2012: 2013E 2014£ 2.015E 2016E 2017E 2018£ 2019£ 2010 2011 2012 2013E 2014E 2015E 201<3E 2017E l018E 2019E II Detailed Engineering … Development Drilling ·0-99 … 100-499 ± 1000-1499 .. Install ± Procurement And Construction Figure 40: Historical and Forecast Malaysian Offshore Capex (Phased Figure 41: Historical and Forecast Malaysian Offshore Capex (Phased USDm) by Water Depth (m) (201()-2019) USDm) by Process Type (2010-2019) [Source: Infield Systems Limited} [Source: Infield Systems Limited} Offshore Capex in Ma[aysia increased 4S% to USD4,896 million in 2013 from USD3,362 million in 2012. Annual investment is expected to average at the record level of USDS,078 million in the forecast period from 2014 to 2019. The continued high level of investment, on the back of a very active 2013 which saw high levels of activity on fields including Gum usut-Kakap, Rotan and Kanowit amongst others, is expected to provide a considerable opportunity to OSVs within the Ma[aysian market. An increase in the activity within deepwater is likely to drive a market for higher end vessels, but the bulk of demand will continue to originate from shallow waters. 5.1.3 Historicol Offshore Support Vessel Supply PSV/SSV At the end of 2013 Infield Systems Limited identifies a total of S3 PSV/SSVs operational within the Malaysian market, the single largest within the wider SEA region. The bulk of these assets have been fabricated in recent years, making the fleet within the region one of the youngest in the world. Despite being fabricated recently, the general trend has been to deploy assets within a DWT range between 1,000 and 2,000mT. More recently, a series of larger vessels have entered the market including two assets with larger than 4,000DWT. 8. INDUSTRY OVERVIEW (Cont’d) 00 I -50 l iiiT 1111\iiiI}.” ~~ ~~~ ~ § ~~ 40 ~~ ~~~ ~~~~ 30 4 ~~~ ~ ~ §;;;;g ~ I ~ -~~ I ~~ ~ 20 l ~ I ~ ~~ ~ ~~~ ~~~~ 10 l ~~~ ~ ~ ~~~~ ~ ~~~~I § ~~ ~ 0 ~ ~-~ II• ••• •I 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 .2012 2013 0• UnkrlOWn …. <“1,000 1,001-2,000 :t 2,001-3,000 3,001·4,000 • >4,000 ” Figure 42: Malaysian PSV/SSV Supply (Units) by DWT Group 2002-2013 [Source: Infield Systems Limited] The average DWT of vessels operational within Malaysia at the close 2013 is 1,S77mT. The average age of vessels within the market is close to 10 years. Comparatively, the ICON fleet of five PSV/SSVs is well placed, with younger and larger vessels than its direct peers. ICON currently has one PSV under construction to be delivered in fourth quarter 2014 and is in final negotiations to build another PSV to be delivered in first quarter 2016. Of the S3 PSV/SSVs operational within the Malaysian market at the close of 2013, a total of 3S fly the domestic, Malaysian flag representing some 66% of the total fleet. The residual tonnage within the region predominantly flies the Singapore flag, whilst there is one vessel flying the 8runei and Indonesian flags respectively. The residual fleet operates under flags of convenience (Marshall Islands, Panama). The bulk of internationally flagged vessels occupy the high end of the fleet (in excess of 3,000DWT) indicating the potential replacement of high-end, international vessels by local tonnage. Tabie 3: Malaysian PSV/SSV Supply by Flag
Unknown  1  4  <=1,000  1  11  1  3  1,001-2,000  19  4  2,001-3,000  1  3,001-4,000  1  1  2  1
<4,000 ~~i!i:==~~~~~:;::;:’=~;”‘;’~;35~~~~~~~~~~::~::::::~2~;;::::::I:;;~ The presence of a series of internationally flagged vessels is considered to be an opportunity for domestic vessel operators. With the domestic cabotage (DSL8) prioritising local tonnage over internationally flagged assets there is considerable potential for operators such as ICON to replace those vessels operating under international flags. AHTS At the close of 2013 there are expected to be a total of 128 AHTSs operating within Malaysian waters, the single largest proportion of SEA supply. The fleet has grown considerably over the past decade with both newly established and incumbent operators serving to increase the fleet since 2003. 8. INDUSTRY OVERVIEW (Cont’d) 140 ,  I  120 1  m  ~  m  I 100 ‘1  iiii  ~ §  ~  ~ ;;  I 80 60 i I 40 1 I  ;;;;;;  -~ ~  ~ ;; ~ ~ ~  ~ ~ ~ ~ ~  ~ ~ ~ ~ ~ ~  ~ ~ ~ ~ ~  ~ ~ ~ ~ ~  20 0  1,, ­ .”  ~  ~ ~ ._—..  ~ ~ •  ~ ~ •  ~ •  ~ ~•  ~ ~• I  ~ I  2001  2003  2004  :W05  2006  2007  2008  1009  2010  1011  2012  20BE  Figure 43: Malaysian AHTS Supply (Units) by BHP Group 2002-2013 {Source: Infield Systems Limited]

II Unknown “<=8,000 ” 8,000-12,000 1: 12,000-16,000 II ;.16,000 Mirroring the wider SEA market, the Malaysian AHTS sector is weighted towards vessels with power outputs of less than 8,000BHP. A total of 82 vessels, or 64% of the fleet fit within this lower boundary whilst there has been some recent growth within the 8,OOO-12,0008HP benchmark and limited movement within the high ends. The average power output for all vessels in Malaysia stands at 7,16S8HP. Given that much of demand within the Malaysian market consists of the towage of jackup drilling units, the vast majority of activity can be serviced using the lower end tonnage and as such the weighting towards <8,0008HP vessels is not considered as a risk to the market. In regards to the age profile of AHTS within the Malaysian market, the average age of all such vessels, including newbuilds, stands at 5.25 years (as at 31 December 2013). This figure is considerably lower than the global average of 10.3 years, and the SEA benchmark of 7.3 years. Again, the average age of ICON’s AHTS fleet in SEA is 4.6 years, younger than the 5.7 year average of its direct peers. The likes of Petra Energy and Swire operate some of the oldest tonnage within the region whilst Go Marine operates the youngest. Of the 128 AHTSs currently operating within Malaysian waters at the end of 2013, a total of 72, or 56% fly the domestic flag whilst a further 36 fly the Singapore flag. A series of assets operate under flags of convenience including Vanuatu, Tuvalu and the 8ahamas. The internationally flagged vessels are typically larger than their domestic counterparts, with few Malaysian-flagged vessels having power outputs in excess of 12,OOO8HP. Table 4: Malaysian AHTS Supply by Flag Unknown 74 11 <=8,000 55 3 2 21 1 8,001-12,000 1 8 4 2 5 2 12,001-16,000 1 2 4 >16,000 1 1 2 ~~~~~~~~~~~
As with the P5V/SSV fleet, the presence of internationally flagged vessels is considered to be an opportunity for the domestic supply chain. The potential replacement of international tonnage with Malaysian-flagged vessels is a direct opportunity for the likes of ICON -those with PETRONAS licenses. 8. INDUSTRY OVERVIEW (Cont’d) AWBs The AWB fleet within Malaysia is relatively limited and considerably smaller than the fleet within indonesia or Singapore, however a series of newbuilds is likely to increase the fleet size considerably in 2014. The likes of Alam Maritim and Perdana are each likely to increase exposure over the coming period. 5.1.4 Forecast Domestic 5upply and Demond P5V/55V Traditionally, the Malaysian market has slightly outperformed the prevailing utilisation rates within the wider SEA market. Utilisation rates for PSV/SSVs are estimated to be close to 78% during 2013. Due to an increase in supply, rates are expected to fall slightly to 74% during 2014, but recover strongly to 80% in 2015. The forecasted increase in demand, supported by a growing installed base of platforms is expected to see utilisation rates trade within a range of 80% to 86% between 2015 and 2019. In terms of units, Infield Systems Limited expects to see a requirement for more than 42 vessels per annum between 2013 and 2019. The increased level of utilisation is likely to lead to increased dayrates during the forecast period as supply and demand tighten. Specifically, within the 3,000-4,000DWT benchmark, charter rates are expected to increase from USD19,875/day during 2013 to over USD23,500/day by 2019. Rates in Malaysia are typically some 10% higher than the SEA average. As with the global market, the rates presented here are for charter rates, as opposed to bareboat figures. SO 45 40 35 30 ‘~25 ” 20 15 10 I 5 i 0 k … 100% 25,000 1 f 100%ij 90%
t 90% iI 80% ~ 80%lo,OOOl i~ 70% f 70%It 60% <: ~ 15,000 1 ~ 60%1 .g r 50% ~~ I ~ 50%~ i~ 40% ~ ::> 10,000 1 ; 40% 1 30% I { 30% t 21)% 5,000 1 ~ 20%. .. lD% I 10%I Ii 0% 01–, 0% 101C 2011 2011 lOBE ID14E l015E ZD16E ZOllE 2018E 2019E 2010 Wll 2012 lOBE 2014[ 2:01SE l016E ZOl7E l018E l019E -PSV/SW Demand -psvtssv Utilisation (RHA) -PSV!5SV {3k-4k DWT) DaVfate “-‘, ,.,. PSV!SSV unl.sation (RHA) Figure 44: Historical and Forecast PSV/SSV Demand (Units) and Utilisation Figure 45: Historical and Forecast PSV/SSV Dayrates (USD/day) and (%) (2010-2019) Utilisation (%) (2010-2019) [Source: Infield Systems Limited] {Source: Infield Systems Limited} The typical charter length for PSV/SSVs within Malaysia is in excess of three years. During 2007 PETRONAS awarded a series of PSV/SSVs on seven year contracts whilst more recently the trend has been to award three or five year charters to vessel owners and operators. There is a limited short­term market within Malaysia as the bulk of contracts are awarded by PETRONAS on the aforementioned longer terms. AHT5 Supported by an increase in drilling and the operational fleet of rigs, the AHTS market is expected to provide a considerable level of opportunity to vessel owners within Malaysia throughout the forecast period. During 2013 the average utilisation rate for vessels within the region is estimated to exceed 80%, with a considerable increase during the forecast likely to lead to rates in excess of 85% per annum between 2015 and 2019. A peak of 89.9% is expected during 2018 as the market tightens. During the peak year a total of 115 vessels are expected to be required within the market. 39 8. INDUSTRY OVERVIEW (Cont’d)
140 120 100 …,80 .~ ~ 60 ‘0 20 o 35.000 1 -lDO% I I 30.000 , 80% J<‘ _15.000 .” ~ W% ;’ ;; I ‘0’­IU “,;;–10.000 -I I t 50% ~ I ……..
I’:S 15.000 -I~ 40% t 40%, ! Il. 30’t, ……………………………………….
10.000 20% 20% f 107S 5.000 0% o .. ‘ 0%2010 2011 2012 lOBE 2014E 2015E 2016E 2017E 2018£ 2019E 2010 2011 2011 lOBE 2014E 101)E 2016E 2017E 2018E 201~E -AHTS Demand ·~·~-~-AI-lTS Utilisation (FtHAI ••••••• AHTS «8kbhp) Dayrate —-Af-ITS (8· llkbhp) Dayfilte .~—= J\HTS (12k· 16kbhp) Dayrale AHTS Utilisation (RHA) Figure 46: Historical and Forecast AHTS Demand (Units) and Utilisation Figure 47: Historical and Forecast AHTS Dayrates (USDjday) and (%) (2010-2019) Utilisation (%) (2010-2019) [Source: Infield Systems Limited] [Source: Infield Systems Limited] An increased utilisation rate is likely to lead to increased dayrates within the sector. In 2013 AHTSs with power outputs of <8,000BHP are expected to trade at around USDlO,Ooo/day, whilst those within the 8,000-12,000BHP benchmark are close to USD22,SOO/day and those in the high end 12,000-16,000BHP benchmark sit at USD27,000/day. During the forecast period each benchmark is expected to increase considerably with the <8,000BHP, 8,000-12,000BHP and 12,000-16,000BHP series likely to report peak rates in excess of USDll,389/day, USD24,226/day and USD28,891/day respectively. As with the PSV/SSV market, AHTS rates in Malaysia are typically higher that the SEA average. Across the AHTS sector the premium attached to Malaysian tonnage in comparison to the wider SEA market varies between 6% and 14%. This premium is driven by the Cabotage policy that protects the domestic shipping industry and the expectation of high utilisation rates in Malaysia in the forecast period between 2013 and 2019. In regards to average charter lengths, the AHT/AHTS market generally displays shorter engagements. The bulk of contracts are either for one or two years, with an average of all contracts signed from 2005 to 2013 standing at 20 months. The longest contracts have been signed for seven year terms, whilst there have also been isolated cases of very short-term charters of less than three months. 5.1.5 Domestic Competitive Landscape Atam Maritim Alam Maritim is an investment holding company with subsidiaries including marine transportation support services, marine construction-related services, subsea engineering and offshore pipeline installation. Alam Maritim has a fleet of 38 OSVs. Alam Maritim has 23 vessels, 14 AHTSs and nine PSV/SSVs, operating in SEA. Only one of those vessels operates outside of Malaysia. The AHTSs have an average power output of 4,6S0BHP and an average bollard pull of 67mT. The PSV/SSVs have an average DWT of 7S0DWT, with the largest vessel reaching 1,256 DWT. The AHTSs and PSV/SSVs in the fleet have small capacity compared to the competition in SEA. 40 8. INDUSTRY OVERVIEW (Cont’d) Alam Maritim is the largest player in the Malaysian market in terms of overall OSV supply. Jasa Merin and EZRA operate more AHTSs, 14 and 13 respectively, but Alam Maritim operates 12 AHTSs and it is the leading PSV/SSV operator with nine vessels. The average age of the Alam Maritim fleet is seven years, although the average age of the PSV/SSV fleet is eight years making it the second oldest amongst the major operators. It also has the smallest average power output for AHTSs (4,7S0BHP) and the smallest average OWT for PSV/SSVs (7S0mT) among the eight leading operators. (Source: Infield Systems Limited; Alam Maritim’s Official Website) Jasa Merin Jasa Merin is a private limited company incorporated in 1980 as Jackson Marine Sdn Bhd. The company specialises in supplying OSVs to a range of oil and gas operators. Jasa Merin’s fleet consists of 17 vessels; three PSV/SSVs and 14 AHTSs. All of these vessels operate in Malaysia. Jasa Merin is a major OSV operator in Malaysia with 14 AHTSs operating in the country. The AHTSs in Malaysia have an average power output of 7,700BHP, a capacity which is the second largest among the top five operators. Jasa Merin’s Malaysian AHTS fleet is the youngest of the five major operators; the vessel has an average age of 4.1 years. Jasa Merin only operates three PSV/SSVs in Malaysia and the vessels have an average OWT of 1,600mT. The PSV/SSVs are relatively old for the region sugg~sting Jasa Merin’s concentration on AHTS services. Infield Systems Limited has identified three AHTSs that Jasa Merin have on-order to be built in 2014. The overall average bollard pull is 98mT and the 10 AHTSs built from 2010 onwards have an average bollard pull of lllmT. The largest vessels have a power output of 10,888BHP and a bollard pull of lS2mT. The two largest PSV/SSVs have a OWT of 1,800mT and the smallest has a OWT of 1229mT. (Source: Infield Systems Limited; Jasa Merin’s Official Website) ICON ICON is the largest pure-play OSV in Malaysia, which operates a total of 32 vessels as at the LPO. It also has the largest AHTS fleets within Malaysia. The fleet available for charter by ICON comprises 24 AHT/AHTSs (with 23 operating in Malaysia), one PSV (operating in Malaysia), four SSVs (with all of them operating in Malaysia) and two UVs (one of them is operating in Malaysia).
21 of its vessels are AHTSs with an average power output of S,SOOBHP. The other five OSVs currently operating in Malaysia are designated PSV/SSVs. ICON has one of the youngest fleets in the Malaysian OSV market, each vessel has an average age of S years old. The average age of the AHT/ AHTSs in the fleet is 4.7 years old and the average age ofthe PSV/SSVs in the fleet is 6.2 years old.
ICON has 20 OSV on long term charters. PETRONAS Carigali charters 14 of these vessels with contract lengths ranging between one and seven years (including optional extensions). The contracts are spread across various fields, offshore Sabah/Sarawak and Kemaman. (Source: Infield Systems Limited; ICON)
EZRA EZRA is the operating arm of EZRA Holdings Limited which was founded in 1992 and is listed on the Singapore Stock Exchange, as EZRA Holdings Limited. Since 1992 EZRA’s fleet has grown to incorporate over 6S marine assets which support exploration, anchor handling, ROV, mooring installation, transport and overall FPSO/FSO operations. EZRA has 16 OSVs operating in Malaysia. The AHTSs and the PSV/SSVs in the fleet have greater capacity than any of the other seven major players in the Malaysian OSV market. The 12 AHTSs have an average power output of greater than 9,000BHP. The PSV/SSVs also have an average OWT greater 8. INDUSTRY OVERVIEW (Cont’d) than 2,400mT, which is SO% larger than any major competitor. The average age of the AHTSs in the fleet is six years oid and the average age of the PSV/SSVs is four years old. Under Malaysian cabotage rules, E2RA’s vesseis do not have direct access to the Malaysian market as the company is a foreign operator in Malaysia without a PETRONAS license. To operate in Maiaysian waters it has to deai through an agent or joint ventures. (Source: Infield Systems Limited; E2RA’ Official Website) BumiArmada 8umi Armada was incorporated in December 1995 as a public limited company. The company is a Maiaysia-based international offshore oil services provider through its fieet of FPSOs and OSVs aiong with its capabilities within transport, installation and oilfield services. Although prominent in SEA, Bumi Armada is rapidiy expanding its international profile through operations in Latin America, Africa and the Middie East providing to companies such as Petrobras, Saudi Aramco, ExxonMobil, Shell and Total. Bumi Armada’s fieet currently consists of over 61 vesseis.
Bumi Armada has 14 OSVs operating in Malaysia. Bumi Armada is the only major Malaysian operator to have more PSV/SSVs than AHTSs. The six AHTSs have an average power output of 6,400BHP and the PSV/SSVs have an average DWT of 1,600mT. Bumi Armada has the oldest fieet among the eight major operators with an average vessei age of nine years.
8umi Armada aims to repiace the oider, lower-end and lower tonnage vessels under its ownership. Infield Systems Limited has identified at least 11 OSVs under-construction or on order that wili add to Bumi Armada’s fleet before the end of 201S. (Source: Infield Systems Limited; 8umi Armada’ Official Website)
Gut/Marine Gulf Marine Far East (Pte) Ltd (“Gulf Marine”) has an OSV fleet that is situated throughout SEA. The company has 16 OSVs; 12 AHTSs and four PSV/SSVs. The AHTSs have an average power output of 8,9S0BHP, but only the AHTSs that have been built since 2008 have a power output between 8,0008HP and 12,0008HP. The largest AHTSs have a power output of 1O,760BHP and a bollard pull of 142mT. Gulf Marine’s four PSV/SSVs have an average DWT of 2,200 with its vessel “Highland Drummer” having the largest DWT in the fleet at 3,l1SmT. Gulf Marine has the oldest fleet of the eight major operators with the average age of each vessel being 10 years old. Gulf Marine has the second oldest AHTS fieet with an average age of eight years and the oldest PSV/SSV fieet with an average age of 16 years per vessel. Gulf Marine operates three AHTSs in Malaysian waters. The assets have an average power output of 8,8168HP and an average age of close to six years. Its AHTS located in Malaysian waters are considerably younger than its tonnage located eisewhere within the SEA market (eight years). The group has no identified PSV/SSVs within Maiaysian waters. (Source: Infield Systems Limited; Company Official Website) Perdana Perdana is a Malaysian based offshore service provider which operates a fleet of 13 vesseis. The fleet includes eight AHTS, three accommodation barges and two workboats. The AHTSs have an average power output of 9,63S8HP. The iargest AHTSs have a power output of 12,240BHP. The company currently has no PSV/SSVs in operation. Similar in size to Guif Marine, Perdana operate three AHTSs within Malaysian waters. The groups’ assets have an average power output of 9,447BHP and an average age of close five years, one of the 8. INDUSTRY OVERVIEW (Cont’d) youngest fleets within the market. (Source: Infield Systems Limited; Perdana’s Official Website)
Perisoi Perisai is a Malaysian listed upstream services provider with a market capitalisation in excess of USD2S0m. The company owns and operates nine offshore support vessels including three AHTS, two AHTs, three crew boats and one heavy lift vessel. The average power capacity of Perisai’s AHT/ AHTS fleet is 7,796BHP. The average age of Perisai’s fleet is about 8.S years. The company is a SEA regional player with most of its AHT/AHTS operating in the Malaysia and Singapore. The two AHTs, Bayu Intan and Lewek Eagle, are serving the Malaysian market. The three AHTS, Lewek Swift, Lewek Emerald and Lewek mallard, are operating in Malaysia, Singapore and Taiwan, respectively. (Source: Infield Systems Limited; Perisai’s Official Website) Others Miclyn and CHO each operate a number of AHTSs within the Malaysian market. Miclyn operate two vessels with an average power output of 6,600BHP and CHO operate two vessels with an average power output of 8,SS3BHP. Miclyn’s fleet is considerably younger than its peers at three and half years old, whilst the two CHO vessels have an average age of seven years. (Source: Infield Systems Limited; Company Official Website) Conclusion There are 181 OSVs identified as operational or on-order in Malaysia; consisting of 128 AHTSs and S3 PSV/SSVs. ICON holds 14% ofthe market share (16%AHTS, 9% PSV/SSV). Alam Maritim accounts for nearly 12% of the market share (9% AHTS, 17% PSV/SSV). Jasa Merin and EZRA each have 9% of the market share (approximately 10% AHTS, 6% PSV/SSV). 8umi Armada is also a major operator in Malaysia with nearly 8% of the market share (S% AHTS, lS% PSV/SSV). Despite being active operators in the SEA region, Jaya, POSH Semco and Pacific Radiance currently have no AHTS or PSV/SSV vessels operating in Malaysian waters.
ICON  25  4.9  14%  20  16%  5,443  4.6  5  9%  2,020  6.2  Alam Maritim  21  6.7  12%  12  9%  4,746  5.5  9  17%  751  8.2  Jasa Merin  17  4.6  9%  14  11%  7,685  4  3  6%  1,610  7.5  EZRA  16  6.1  9%  13  10%  9,052  6.4  3  6%  2,433  4.8  Bum! Armada  14  9  8%  6  5%  6,378  10.5  8  15%  1,601  7.8  Gulf Marine  3  5.8  2%  3  2%  8,816  5.8  Perdana  3  4.8  2%  3  2%  9,447  4.8  Perisai  3  8.8  2%  3  2%  6,880  8.8  Miclyn  2  3.5  1%  2  2%  6,600  3.5  CHO  2  7  1%  2  2%  8,533  7  Others  75  7.3  41%  50  39%  7,642  4.8  25  47%  1,671  13.0  Industry  181  6.6  100%  128  100%  7,165  S.3  S3  100%  1,577  ‘0
13 Figures for ICON are based on April 2014, peer group based on 2013 figures 14 AHTS only market comparison 8. INDUSTRY OVERVIEW (Cont’d) 5.2 South East Asia (Including Malaysia) 5.2.1 Introduction ond Future Growth The SEA region comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. In 1990, proven oil reserves in SEA amounted to an estimated 11.6bnbbls. This figure rose to 14.7bnbbls by 2000, 17.Sonbbls by 2006, before falling in 2012 to 14.Sbnbbls. These reserves are primarily located in Malaysia, Indonesia, Vietnam and Brunei. Indonesia is still the region’s main producer, but its reserves declined from S.lbnbbls in 2000 to 3.7bnbbls in 2012. Malaysia’s oil reserves also declined from 4.Sbnbbls in 2000 to about 3.7bnbbls in 2012. In contrast, Vietnam boosted its oil reserves from 2bnbbls in 2000 to 4.4bnbbls in 2012, because of increased offshore discoveries. Reversing the trend of increased dependency on imported oil in SEA will be difficult given that the region’s oil demand is rising at twice the global average. Nonetheless, regional industry players, both national and private energy companies, are expected to continue their efforts to develop offshore oil and gas prospects within the region itself. Presently, major oil discoveries in the region are mostly located offshore, which means that the SEA offshore oil and gas market will continue to grow and investment activity is likely to be robust over the longer term. In line with the wider market, the SEA offshore oil and gas sector was adversely affected by the global financial crisis and regional capital expenditure decreased in 2008 from USD7.2 billion to USD6.6 billion in 2009. The region saw a robust rebound in 2011 and 2012, to finish at a peak of over USD9.S billion in 2012. The primary driver of this sharp recovery has been the development of pipeline and platform projects such as those on the Zawtila (Myanmar), Gumusut (Malaysia), Erawan (Thailand) and Kim Long (Vietnam) fields. Projects such as these are driving the step up in offshore oil and gas activity in the region and providing the impetus for a relatively high level of capital expenditure (around USD14 billion per annum) within the period between 2013 and 2019. 18,000 1 18.000 , 16,000 16,0001 i m
11I1 14,000 1 14.000 1 111I1 111I1 ~!iii I >& 12,000 ~ iiii >& ~ iI ~ 12:.000 1 I !!!l ~ I ~~ 10,000 1 ~~~~ ~ 10,000 .! ltt+:I~~~~ ~~ ~~3,000 -; ~ ~
~ ~~ ~ :&; 6000 ~~1~ 4,000 ” ~ 2,000 it o 8.0001 = ~ 6000 1-~~ 4.000 ‘ill~ J~ ,I2,000 1_ IIIo —~ 2010 2011 2012 20BE 2014E 2015E 2016E 2017E 20l8E 20l9E 2010 20ll 2012 20BE 2014E 2015E 2016E 20llE 2018E 2019E • Pipeline'” Platform”” Controi Line:!: Subsea Completion II Single Point Mooring ·0-99 … 100-499 ~ 500-999 :ti 1000-1499 11>1499 Figure 48: Histarical and Farecast Sauth East Asian Offshare Capex Figure 49: Histarical and Farecast South East Asian Offshare Capex (Phased USDm) by Object Type (2010-2019) (Phased USOm) by Water Oepth (2010-2019) [Source: Infield Systems Limited] [Source; Infield Systems Limited] The prospects for continued offshore E&P activity remain bright within the SEA region. Given the crude oil supply and demand dynamics, where consumption outweighs production, the countries in the region are increasingly incentivised to increase domestic production in order to curb the growth rate of crude imports. At the same time exports of natural gas in the form of LNG continue to provide vital income for Indonesia and Malaysia, and the governments of these respective countries will try to ensure that current levels are maintained. The vast majority of investment within the SEA region continues to be focused on shallow water activity. Of the USD97.Sbn expected to be invested between 2013 and 2019, USD80.0 billion (82.1%) relates to shallow water projects. 44 8. INDUSTRY OVERVIEW (Cont’d) Supported by the escalation in (apex between 2013 and 2015, Infield Systems Limited highlights a particular opportunity for OSVs within the SEA market. An increase in (apex indicates that both construction and drilling levels will rise which will in turn support an increase in the operational base of production infrastructure. 5.2.2 SEA Supply and Demand PSV/SSV Utilisation rates for both AHT/AHTSs and PSV/SSVs in SEA have declined from the high levels presented during 2007 and 2008, but have stabilised between 2011 and 2012, trading within a tight range of between 72% and 77%. 2013 had shown a substantial level of growth as the operational base of platforms continues to grow and drilling activity remains relatively high from 2012. In the PSV/SSV market, utilisation rates are expected to trade within a relatively tight range of between 77% and 80% between 2014 and 2019 as the market absorbs newbuild tonnage on the back of heightened demand. These figures remain higher than the global benchmark averages for PSV/SSVs and are reflective of a positive opportunity for vessel owners. By the close of the forecast in 2019, Infield Systems Limited expects SEA to require close to 165 PSV/SSVs per an”um. Dayrates for PSV/SSVs are expected to trade within a similarly tight range during the forecast. Rates have declined since the highs of the last market cycle but continue to be above the USD18,OOO/day threshold. During the forecast period with an increase in demand Infield Systems Limited expects to see a gentle escalation in achievable rates to over USD22,000/day by 2019. In Malaysia rates are generally higher thon the SEA average and are expected to average close to USD22,000/day between 2013 and 2019. In the same period the average rate within SEA is expected to be USD20,554/day. 180 i 90% 25.000, r 100Ji, 160 t 80% l I 90% 20.000 j ~'”~’L.”‘~· ~ 80%140 ~ 70% I.-! 1 70120 t &0% I _~ % ~ 15.000 i ~ r 60%_~'” 100 t,50% ~ I­~ Gl I ~ 50%.~J 80 j-40% ::J 10.000 i ~ 40% ~i50 ; jO% ir 30% 40 ! 20% 5,000 jt 20% 20 f 10% : ~ 10% —‘0% or ..-:’0% 1010 lOll 2012 lOBE 2014£ 2015£ 2016£ 2017E 2018£ 2019E 2010 2011 2011 lOBE W14E 1015E 2016E 1017E 2018E 2019E o -PSV/SSV De-mand -PSV/S5V Utilisation (RHA) –rSV!SSV (3k-4k OWT) Dayrate -~” P5V/SSV Utilisation (RHA) Figure 50: Histarical and Farecast SEA PSV/SSV Demand (Units) and Figure 51: Historical and Forecost SEA PSV/SSV Doyrates (USD/day) and Utilisotion (%) (2010-2019) Utilisotion (%) (2010-2019) {Source: (nfield Systems Limited) {Source: Infield Systems Limited} AHTS The AHTS market is expected to provide a considerable level of opportunities to vessel owners with an increase in drilling matched to a lack of newbuild activity. Utilisation rates are expected to increase from 82% during 2013 to an estimated peak of 90% in 2018. Some 276 AHTSs are expected to be required within SEA during 2019, a substantial increase on the 211 “essels required during 2012. The increase in utilisation over the forecast period is likely to have a positive effect on the achievable dayrates in the region. 45 8. INDUSTRY OVERVIEW (Cont’d) 200 elSO ~ 100 50 o
100% :m.ooo r 100%
I90% I 80% f r 80% 25.000 70% ,~ —————I20,000 /’….”I 60%60% , …. 50% ~fi’ 15.000 I ‘. 40% It 40% II ~ 10.000 1 ……………………………………….
30% I II
r 20% I 20%5.000 1 J 10% I 0% oT .,.–~-0% 2010 2011 2012 lOBE 2014E 20iSE ZOltiE lOVE ZOI8E 2019E 2010 lOll 2012 lOBE 2014E 20ISE Z016E ZOllE 2013E 201′:iE -AHTS Dem~nd -AHTS Utilisation (RHA) ••••••• AHTS (,skbhp) Dayeat”. —-AHTS 18· 12kbl1p) Dayrate ..,.-=–AHTS (12k· 16kbhp) Dayrate —-….. AHTS Utili,ation (RHAl Figure 52: Historical and Forecast SEA AHTS Demand (Units) and Figure 53: Historical and Forecast SEA AHTS Dayrates (USD/day) and Utilisation (%) (2010-2019) Utilisation (%) (2010-2019) [Source: Infield Systems Limited] [Source: Infield Systems Limited] Dayrates for AHTss with power outputs between 8,000BHP and 12,OOOBHP are expected to increase from an average figure of UsD21,167/day during 2013 to a figure closer to UsD23,OOO/day by the close of the forecast. AHTs rates in Malaysia are generally higher than the SEA average. The Malaysian 8,000-12,000BHP benchmark is expected to average UsD23,413/day between 2013 and 2019, in comparison to the SEA average of UsD22,026/day. The Malaysian 12,000-16,000BHP benchmark is expected to return an average of over UsD27,900/day in comparison to the SEA average of UsD26,01s in the same period. Smaller vessels with power outputs less than 8,0008HP are expected to average close to UsDll,OOO/day in comparison to the SEA average of UsD9,sOO/day. 5.2.3 SEA Competitive Landsr.ape In 2013, the total number of OsVs (AHTss and Psv/ssVs) operated by the SEA listed peers is 259, of which 176 are AHTSs and 83 are PsV/ssVs. Among the total, 174 OSVs (134 AHTss and 40 PsV/ssVs) are operating in SEA and 97 OsVs (70 AHTss and 27 PSV/ssVs) are operating in Malaysia. Please refer to Section 5.1.5 for details about pure Malaysian operators such as Jasa Merin and Perisai. EZRA EZRA began its operations in SEA and with 28 assets currently in operation, it remains the largest player in the SEA OSV market. The majority of EZRA’s assets are AHTss (24 in total) with 10 of the vessels having a power output greater than 8,0008HP. EZRA has slowed expansion within the OSV sector recently as its strategy has shifted towards being a high end provider of offshore construction services. Out of the 24 AHTss within the existing fleet operating in SEA, the average power output is 9,0008HP and the average bollard pull is 129mT; the largest being the Lewek Trogon by around 50% with a power output of 17,600BHP and a bollard pull of 220mT. Seven AHTss sit within the 8,000BHP and 12,OOOBHP category. EZRA currently operates four PsV/ssVs in SEA. The average DWT is 2,600mT and the largest PsV/ssVs in terms of DWT are the Lewek Ariel and the Lewek Antares with DWT of 3,100mT. The majority of EZRA’s SEA AHTs and PSV/SSV fleet is located in Malaysia (13 AHTss and three Psv/ssVs), and four AHTss are situated in both Singapore and Thailand. Two more AHTss operate in Brunei and one in Vietnam, whilst the remaining PsV/ssV operates in Singapore. 46 8. INDUSTRY OVERVIEW (Cont’d) The average age of the EZRA’s SEA fleet is six years old, although the four PSV/SSVs in the fleet have an average age of four years making them the youngest PSV/SSV fleet amongst the six major operators in SEA. (Source: Infield Systems Limited; EZRA’ Official Website)
ICON ICON currently operates 32 vessels in the SEA region as at the LPD, including 21 AHTSs, three AHTs, one PSV, four SSVs, two UVs and one AWB. Most of the vessels are operated locally in Malaysia, except for Tanjung Gaya which is operating in Thailand and Omni Tigris which is operating in Qatar.
The AHTSs operating in SEA have an average power output of S,1S0BHP and an average bollard pull of 6SmT. ICON’s largest operational AHTS in terms of power output and bollard pull capability is the Omni Victory, which is a 8,000BHP vessel with a 120t bollard pull. The four SSVs, Tanjung Pinang 1 to 4, have the same DWT of 16S0mT, and there is a larger PSV/SSV operational in the area, Tanjung Piai 1, with DWT of 3,SOOmT.
In addition to the AHT/AHTSs and PSV/SSVs, ICON currently operates two smaller utility vessels and one AWB. All 32 vessels available for charter by ICON as at the LPD were built after 2002. In terms of vessels operated, ICON is the largest Pure-Play OSV operator in SEA as EZRA has considerable exposure to offshore construction.
ICON’s SEA fleet has an average age of 4.9 years; the 20 AHTSs have an average age of 4.6 years, younger than the industry average of 11.2 years in SEA, and the five PSV/SSVs have an average age of 6.2 years, younger than the industry average of 17 years in SEA. (Source: Infield Systems Limited; ICON)
BumiArmada Bumi Armada has 17 AHTSs and PSV/SSVs operational in the SEA region. Six of the identified AHTSs are operating in Malaysia with the residual vessels operating in Vietnam. There are 10 identified PSV/SSVs; eight of which are working in Malaysia, one in Singapore and one in Thailand. The SEA AHTSs have an average power output of 6,6S0BHP. The Armada Tuah 8 has the largest power output at 9,800BHP with only two other AHTSs falling within the 8,000BHP to 12,000BHP region. The average OWT for the 10 identified PSV/SSVs is 1,900mT, which is skewed by the Armada Tuah 303 and a vessel under-construction, NB MPSV/SSV #1, with DWT of 3,300mT and 4,SOOmT respectively. The remaining PSV/SSVs have a DWT around 1,4S0mT highlighting the small nature of the vessels in the fleet. The Bumi Armada fleet is the second oldest fleet of the peer operators; each vessel has an average age of eight years old. The AHTSs in the fleet are considerably older than their competitors, having an average age of nine years. The PSV/SSVs in the fleet, however, have an average age of six years making them the second youngest by comparison. (Source: Infield Systems Limited; Bumi Armada’s Official Website) Gulf Marine Gulf Marine has 12 AHTSs and four PSV/SSVs operating in SEA. The AHTSs operate in Indonesia, Vietnam, Malaysia and Singapore, whilst three PSV/SSVs operate in Singapore and one in Brunei. (Source: Infield Systems Limited; Gulf Marine’s Official Website) loyo Offshore Headquartered and listed in Singapore, Jaya is an offshore services company that owns and operates 8. INDUSTRY OVERVIEW (Cont’d) a fleet of 28 vessels, including 19 AHTs, one AHT and two PSV/SSVs. The average fleet age is about four years. The average power capacities of Jaya’s AHTS fleet and PSV/SSV feet are 7,2988HP and S,344DWT, respectively. The fleet has an average age of four years, making them the youngest fleet in SEA. The 19 AHTS are 4.S years old and the two PSV/SSVs are delivered in 20B. B out of Jaya’s 21 AHTSs and PSV/SSVs are operating in SEA countries such as Singapore, Indonesia and Thailand. Three AHTS are serving the Middle Eastern markets such as Saudi Arabia and the UAE. The company also ventured into Africa markets such as Congo and Angola, with four vessels currently operating in the region. The remaining vessel, Jaya Mermaid 3, is operating in Australian waters. During FY20B, Jaya’s vessel utilisation increased to 80% from 70% in FY2012. In FY20B, Jaya took delivery of three vessels including a 16,000BHP AHTS, a S,1S0BHP AHTS and a S,1S08HP MSV. The company is anticipated to receive seven newbuilds, including two 3,SOODWT PSV/SSVs, one 12,000BHP AHTs, one 16,000BHP AHTS and two 3,000DWT ROV support vessels in 2014 and 2015. In June 20B, the group signed and sealed charter contracts for three of the four newbuild PSV/SSVs (two delivered in 20B and two to be received in 2014) amounting to a total value of about USD60 million. (Source: Infield Systems Limited; Jaya Offshore’s Official Website) Miclyn Miclyn is a Singapore based oil services provider with an OSV fleet of 22 vessels, including eight AHTs, three AHTSs, eight MSVs and three PSV/SSVs. Its vessels are mainly focused in shallow water operations. The average power capacities of Miclyn’s AHTS fleet and PSV/SSV feet are S,681BHP and 2,0008DWT, respectively. The largest AHTS has a power output of 8,2008HP and the largest PSV/SSV has a capacity of 2,000DWT. The average age of the fleet is 4.S years. The majority of Miclyn’s AHT/AHTSs and PSV/SSVs are operating in SEA waters, including five vessels in Singapore, two in Malaysia, two in Indonesia and two in Thailand. Two AHTAHTs, Miclyn power and Miclyn Orion, are operating in Saudi Arabia and one PSV/SSV, Meo Ranger, is working in the UAE. Miclyn placed an order for two 90mT bollard pull AHTS in January 20B. The vessels are due for delivery in mid-2014. The company also expects to receive two crew/utility vessels in Q1/2014. (Source: Infield Systems Limited; Miclyn’s Official Website) Perdana Perdana is a regional operator in the SEA market with a total fleet of B vessels, of which most are operating in the region. Of the eight AHTSs, four are operating in Singapore (Expedition, Horizon, Traveller and Frontier), three in Malaysia (Marathon, Voyager and Ranger), and one in Indonesia (Adventurer).
Perdana operates a relatively young OSV fleet with the oldest vessel being fabricated in 2008. The average age of the fleet is five years. It has entered into Memorandum of Agreements to purchase three new AW8s which are expected to take delivery by 2014. (Source: Infield Systems Limited; Perdana’s Official Website)
CHO CHO is a Singapore based offshore services provider with a fleet of 1S AHTSs, including seven deepwater vessels with power capacity of 12,240BHP and eight shallow water vessels with power capacity of around S,OOOBHP. All the vessels are wholly-owned by CHO. The fleet has an average age of eight years. 8. INDUSTRY OVERVIEW (Cont’d) The company’s involvement in oil and gas industry began in the early 1970s in Indonesia. Since 1980, It has served offshore markets in Indonesia (3 vessels in operation), Malaysia (2), the Philippines, Brunei (1), Thailand, Vietnam (3), Australia, the Middle East (3 in UAE), the Americas (2 in Mexico) and Africa (1 in South Africa). (Source: Infield Systems Limited; CHO’s Official Website)
POSH POSH is a Singapore-based operator which operates an international fleet of 112 vessels including 14 AHTSs, 19 AHTs, 13 PSV/SSVs, five AVs and 61 other vessels. The 14 AHTSs have an average engine power capacity of 11,931BHP and the 13 PSV/SSVs have an average cargo carrying capacity of 3,12SDWT. The average age of the AHTS and PSV/SSV fleets are 2.4 years and 2.5 years respectively. POSH’s 19 AHTs have an average engine power capacity of 8,342BHP and an average fleet age of 5.9 years. The fleet serves both deepwater and shallow water operations worldwide, with recent work completed in Asia Pacific, the Indian Ocean, West Africa, Brazil and Venezuela.
POSH has 10, or 40%, of its AHTSs and PSV/SSVs operating in SEA waters, including two vessels in Singapore, four in Indonesia and four in Vietnam. Elsewhere, the operator has nine AHT or PSV/SSV vessels operating in Mexico or Venezuela, two in Turkmenistan and four in Africa.
POSH has successfully expanded the scale of its fleet in terms of both capabilities and size. The vessels POSH operates grew from 93 vessels in 2010 to 112 vessels in 2013. 10 additional vessels are expected to be received in the period between 2014 and 2015, including an 8,000BHP AHTS (2014), a 16,300BHP AHT (2014), four 3,200DWT PSV/SSVs (three in 2014 and one in 2015), two light construction vessels and two 750 beds AVs (2014). (Source: Infield Systems Limited; POSH’s Official Website)
Pacific Radiance Pacific Radiance is a Singapore-based OSV provider with a fleet of 62 vessels, including 10 AHTSs and four PSV/SSVs. It has three AHTSs operating in SEA waters, including two (Crest Imperial and Crest Tourmaline) in Singapore and one (Crest Amethyst) in Thailand. The average age of the SEA AHTS fleet is 1.5 years and the average power output stands at 6,166BHP. All the operator’s four PSV/SSVs are operating in Africa or the Middle East. Pacific Radiance plans to invest USD800m during the period from 2014 to 2018 to expand its fleet to 100 vessels. The company currently has 17 ships on order that will be deployed in projects in Indonesia, Malaysia, Australia, Latin America and Africa. The prospective newbuilds in 2014 include two 4,900DWT PSV/SSVs and a 12,000BHP AHTS. (Source: Infield Systems Limited; Pacific Radiance’s Official Website) Contracting Overview Throughout 2013 the Malaysian OSV sector saw a high level of contracting, with a series of vessels placed charters to clients ranging from PETRONAS to ExxonMobil and Talisman Malaysia Limited. The bulk of contracts were signed for periods in excess of one year with a high number of charters including yearly options beyond firm contract durations. During the second quarter activity slowed somewhat as a number of awards were held up due to May elections but the sector recovered strongly in the third and fourth quarters of the calendar year. 8. INDUSTRY OVERVIEW (Cont’d) The bulk of contracts awarded in Malaysia throughout 2013 were secured by domestically flagged tonnage. However, a number of foreign flagged vessels secured work in the region, with the majority leaving Singaporean waters to work within Malaysia in order to take advantage of the positive earnings environment. Despite the presence of foreign flagged vessels domestic tonnage continued to account for a high proportion of activity. The PSV and AHT/AHTS sectors traded broadly in line with each other throughout the year. Both sectors saw rates comparable to 2012’s figures, although towards the close of the year vessels attracted a premium as offshore activity (drilling and construction) remained high. The high level of activity led to a high level of contracts awarded throughout the year. Conclusions Infield Systems Limited has identified 512 OSVs operating in SEA; consisting of 308 AHTSs and 204 PSV/SSVs. The five major operators account for 100 OSVs and the largest operators, ICON and EZRA, individually account for less than 6% of the industry. This small market share from the market leaders and the vast quantity of operators (close to 150) exhibits the highly fragmented nature of the SEA OSV market. In terms of AHTSs EZRA is the market leader with 8% of the market and Bumi Armada is the largest PSV/SSV owner with 5% of the market. In terms of profitability and utilisation, the average estimated 2012 EBITDA margin of these peers is 41% and the average estimated 2013 utilisation rate for these peers is 83%. Table 6: SEA Vessel Operator Overview No. of  Total  Total  AHTS16  PSVjSSV  Company  AHT5 and  AV~·s  Market  PSV!SSV  Age  Share  AHTS  Share  BHP  Age PSV/SSV  Share  OWl  Age  EZRA  28  6.3  S%  24  8%  8,435  6.6  4  2%  2,600  4.3  ICON  25  4.9  5%  20  6%  5,443  4.6  S  2%  2,020  6.2  Alam Maritim  22  6.7  4%  13  4%  4,746  5.6  9  4%  7S1  8.2  Jasa Merin  18  4.6  4%  1S  5%  7,521  4  3  1%  1,610  7.5  Bumi Armada  17  8.1  3%  7  2%  6,649  9.8  10  5%  1,876  6.9  Gulf Marine  16  10.4  3%  12  4%  8,935  8.3  4  2%  2,214  16.5  Jaya  13  3.5  3%  11  4%  6,835  4  2  1%  5,344  O.S  POSH  10  2.3  2%  9  3%  12,916  2.5  1  0%  3,200  0.5  CHO  9  8.1  2%  9  3%  8,268  8.1  Perdana  8  5.1  2%  8  3%  9,635  S.l  Miclyn  S  3.4  1%  3  1%  7,297  5  2  1%  2,000  1  P. Radiance  3  l.S  1%  3  1%  6,166  l.S  Perisai  2  9.5  0%  2  1%  11,000  9.5  Others  33617  13.9  66%  172  S6%  6,458  8.6  164  80%  1,511  19  Industry  S1Z  11.2  100%  308  100%  6,999  7.3  200  100%  1,595  ‘7
15 The average age of the AHTSs and PSV/SSVs operating in SEA 16 AHTS only market comparison 17 The number of vessels under the “Others” segment is high as there are a large number of small local operators with less than five vessels in operation. In addition, the peer group does not include internationc:1 vessel providers such as Tidewater (US) and Bourbon {Francel, which have OSVs operating in SEA SO 8. INDUSTRY OVERVIEW (Cont’d) 5.3 Middle East \ 5.3.1 Introduction ond Future Growth Middle Eastern nations control an estimated 808 bnbbls of oil and 8ltcm of naturai gas. That equates to 48.4% and 43% of global proven 011 and natural gas resources, respectively. This reserves base has been steadily growing over the last three decades, increasing at a CAGR of 2.S% (011) and 3.8% (gas) since 1980. These reserves are primarily located in Saudi Arabia (266 bnbbls, 8.2tcm), Iran (157 bnbbls, 33.ltcm), Iraq (143 bnbbls, 3.6tcm), Kuwait (102 bnbbls, 1.6tcm), UAE (98 bnbbls, 6.ltcm) and Qatar (24 bnbbls, 25tcm). Both Iran and Iraq have increased proven oil reserves sharply, by 20% and 30% respectively, over the past 10 years due mainly to revision of oil-in-place volume and field’s recovery factors. Other major Middle East oil producing countries, such as Saudi Arabia and the UAE, saw their proven oil reserves stay flat over the same period. Oil production has increased dramatically in the Middle East region, with a growth rate of 2.6% CAGR per year over the past decade. In all, the region produced 28.3mbpd in 2012, around 33% of the global total. While output has been rising, domestic demand has surged, growing 4.4% annually over the same period. Despite this rise, the region remains the most important oil exporter in the world shipping net exports of 20mbpd to international markets in 2012 [Source: BP Statistical Review 2013]. Between 2002 and 2012, gas production in the Middle East region rose sharply by an annual rate of 8.3% CAGR with consumption also increasing nearly as fast, at 6.6%. Gas production has risen in all four major Middle East gas-producing countries, namely Iran (160.Sbcm), Qatar (lS7bcm), Saudi Arabia (102.8bcm) and UAE (51.7bcm). However, despite being the third largest gas producing region in the world, its position in the global gas market is not as dominant as that of oil. A key driver for offshore development in the Middle East region has been, and will likely continue to be, the strong growth in natural gas demand in the Persian Gulf region and the broader Middle East. The Persian Gulf has an abundance of reserves of natural gas but only Qatar is a significant exporter. Indeed, Iran has the second-largest gas reserves in the world but its failure to develop an export sector to date has meant that these reserves primarily supply the domestic market. Ironically, Iran is a net importer of natural gas, and the government faces the challenge of heavy local gas consumption from its population of more than 70 million which enjoys heavily subsidised energy supplies. A raft of gas projects across the Middle Eastern region are expected to drive capital spending with developments such as Qatar’s North Field, Iran’s South Pars, Israel’s Leviathan field (Mediterranean), Saudi Arabia’s Dorra, Manifa, Hasbah and Arabiyah developments and Egypt’s Raven being key in this respect. A total of over USD70 billion is expected to be invested in the Middle Eastern market between 2010 and 2019. Whilst the Capex market is expected to show a considerable decline between 2013 and 201S a significant increase is likely post 201S as gas projects increase in size and complexity. 8. INDUSTRY OVERVIEW (Cont’d) lD,OOO
lOW 2011 2012 20BE l014E. 2015E. Z016E. Z017E Z018E l019E • Pipeline ‘I; Platform ;;; Control Line :t Subsea Completion II Single Point Mooring Figure 54: Historical and Forecast Middle Eastern Offshare Capex (Phased USDm) by Object (2010-2019) {Source: Infield Systems Limited} Future growth within the region is expected to be driven by the considerable increase in drilling activity across exploration and appraisal and development wells, in addition to an increased level of infrastructure installation as highlighted in the following sections. It is against this backdrop of substantial reserves and significant investment that the Middle Eastern OSV market is placed. An increase in offshore drilling levels has provided considerable opportunities for support vessel operators, whilst the cumulative base of infrastructure is likely to lead to strong demand for support services in the forecast. S.3.2 Supply and Demand Platfarm Supply Vessels/Straight Supply Vessels Within both the PSV/SSV and AHTS markets utilisation rates have gradually decreased from exceptionally high levels over the past few years as increased competition has been matched to a relatively static level of supply. However, a considerable increase in demand is expected to see utilisation increase considerably during the forecast period from 2013 to 2019. In 2013 PSV/SSVs are expected to see average utilisation of 82%, an increase from the 78% recorded in 2012. With a heightened level of demand forecast, the average utilisation is expected to increase to 89% between 2014 and 2019, with a peak in 2018 at over 90%. In terms of vessel units, Infield Systems Limited expects a total of 262 PSV/SSVs to be required in 2013, rising to 286 by the close of the forecast period in 2019. 8. INDUSTRY OVERVIEW (Cont’d) 350­300 250 ~ 200 L. ~ 150 lOG 50 0 2010 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2010 2011 2012 2013E 2014E 201SE 2016E Z017E 2018E 2019E -P5V!S5V Demand ~P5V/SSV Utilisation (RHA) –P5V/5SV (3k-4k D\.VT) Dayrate P5V/SSV Utilisation (RHA) Figure 55: Historical and Forecast PSV/SSV Demand (Units) and Utilisation Figure 56: Historical and Forecast PSV/SSV Dayrates (USD/day) and (%) (2010-2019) [Source: Infield Systems Limited] Utilisation (%) (2010-2019) [Source: Infield Systems Limited] OSV dayrates within the Middle Eastern region, for PSV/SSVs in particular, have traditionally traded below the global average. Much of this reflects the long term nature of the contracts signed within the market and also the relative pricing power of local NOCs in the market -particularly Saudi Aramco and the likes of ADNOC. AHTS AHT/ AHTS utilisation rates in 2013 are considerably lower than their PSV/SSV counterparts at 79%. AHT/ AHTSs in the Middle East are expected to see a drop in utilisation during 2014 before a gentle upturn commencing in 2015. By the close of the forecast period in 2019, AHT/ AHTS utilisation rates are expected to average 80%. In terms of vessel units Infield Systems Limited expects a total of 173 AHT/ AHTSs to be required during 2013, rising to 175 by 2019. 200 180 160 140 120 vi ‘E 100 =’ 80 60 40 20 100% 25,.000 90% 70%­60% § ‘J; sex, ~ ~ 40% :::J 30% 20% 5,000 10Cjt­
100% 90~·i­80% 70% 60% SO’}’c 40% 30% 20% 10% ……
~-………….-~…–………..-~=-~–~–~-~-..~-…~
0% l010 2011 l012 2013E l014E 1015E l016E 2017E l018E 2019ElO10 lOll 201l 2013E l014E 2015E 2016E 1017E 2018E l019E -AHTS Demand Utilisation (RHA) ••••••• AHTS {<8kbhp) Dayrate —-AHTS (8 -11kbhp} Dayrate -AHTS (IZk -16kbhp) Dayrate AHTS Utilisation (RHA} Figure 57: Historical and Forecast AHTS Demand (Units) and Utilisation Figure 58: Historical and Forecast AHTS Dayrates (USD/day) and (%) (2010-2019) [Source: Infield Systems Limited] Utilisation (%) (2010-2019) [Source: Infield Systems Limited] Similar to the dynamics within the PSV/SSV sector, AHT/AHTS dayrates in the Middle East tend to trade below the global average. A floor of USD11/OOO/day was set for AHTSs with 8/OOOBHP to 12,OOOBHP during 2009. Since then rates have generally recovered and are expected to average close to USD19,OOO/day during 2013. Smaller assets continue to trade at a considerable discount. AHTSs with power outputs <8,OOOBHP are expected to average close to USD8/OOO throughout the forecast period. r 100% 100%35.000 1 30.000 11:::
80% 5 t 70% 25.000 1! 60% t: c:60% 0I ,,g ~ 20.000 1 .”._——il!!!iiio——-‘,I:; t 50% rn t# ~ oII ~ :s 15.000 1 , ,/ ~ t 40% ::J 40% :::J t30% 10.000 ………………………………………
t lO% 20%I5.000t10%· 0% 8. INDUSTRY OVERVIEW (Cont’d) The relatively low rates achieved within the region are due in part to the shallow water nature of demand but also the iong term nature of contracts. The buik of work is sanctioned for multiple years, with many for five years plus options. There is a very limited short-term market within the region, but the buik of vessels operate with multiple year deployments to specific operators on specific offshore fieids. 5.3.3 Campetitive Landscape Zamil lamil was founded in 1977 and is the largest OSV provider in the Middie East with the majority of the company’s fleet on long-term charter to Saudi Aramco. lamil offers offshore marine services, ship chandeliing, ship chartering, offshore hook-up projects, offshore shipbuiiding, ship and rig repair and sea ports operation and management. Infield Systems Limited has identified that lamil currently has 38 OSVs in operation in the Middie East. It is the largest operator of AHTSs in the region, numbering 24, along with 14 PSV/SSVs. 34 of the vessels are currently iocated in Saudi Arabia with two AHTSs in Oman and Bahrain, as well as an AHTS and PSV/SSV in Dubai. The company’s AHTSs have an average power output of S,8S08HP and a boliard pull of 69mT. The largest power output of the AHTSs in the fieet is 7,200BHP. The average DWT for the PSV/SSVs is 1,050mT, with the largest being 1,312mT. lamil has updated its AHT5 fieet with all but one vessei having been built since 2005. However, the PSV/SW fleet is much older as the majority of vesseis were built before 2000. The average age of the lamil fleet is 10 years old, although the 14 PSV/SSVs have an average age of 17 years. (Source: Infieid Systems Limited; lamii’s Officiai Website)
Esnaad Esnaad is a wholly owned subsidiary of ADNOC and offers a variety of support services to the offshore industry, its parent company in particular. Esnaad currently have one P5V situated in Qatar -the rest are positioned in the UAE (16 in Abu Dhabi and five in Sharjah). The fleet has an average DWT of 2,500mT. The pre-2008 vessels have an average DWT of 7S0mT and the vessels built since 2008 have an average DWT of 1,300mT. Esnaad has stemmed any investment that would increase its exposure as there have not been any new ships built since 2009. Esnaad has the second oldest fieet of the five major operators in the Middle East with an average age of 21 years per vessel. Esnaad also have two AHTSs in operation in Abu Dhabi, although both have a power output of S,lS08HP and a bollard pull of 60mT, piacing them towards the low end of competitive supply. (Source: Infieid Systems Limited; Esnaad’s Officiai Website) ZMI lMI was founded in Abu Dhabi 1984 and is a private company. lMI currentiy operates over 3S OSVs and lnfieid Systems Limited believes 22 of these to be AHTSs or PSV/SSVs in the Middle East. lMI has 13 AHTSs in the Middle East, 11 are situated in Abu Dhabi, one in Qatar and one in Iraq. Seven PSV/SSVs are iocated in Abu Dhabi, one in Sharjah and one in Saudi Arabia. The lMI fieet has an average age of eight years which is the second youngest fleet of the five major operators. 8. INDUSTRY OVERVIEW (Cont’d) The average power output amongst the operational AHTSs is 4,8S0BHP, which is smaller than the other key players in the market, and the average bollard pull is 62mT. The largest operational vessel in terms of power output is the Zakher Power at 6,082BHP; as a result, they are relatively low end in terms of capacity. Similarly the PSV/SSVs have an average DWT of 620mT and a highest of 1,11OmT. (Source: Infield Systems Limited; ZMI’s Official Website) MOIL MOIL was founded in 1978 and its head office is in Port Said. Maritide Offshore Oil Services was established in 1987 to increase the number of marine units operated by Maridive & Oil Services. the parent company. MOIL currently operates eight AHTSs and 14 PSV/SSVs. All of the vessels are situated in Egypt except one PSV/SSV in Kuwait and one in Abu Dhabi. The fleet is particularly old in comparison to its competitors with only five AHTSs out of the entire fleet being fabricated after 1985. It is the oldest fleet in the region with the average age of each vessel being 27 years old. The AHTSs in MOIL’s fleet have an average power output of 6,000BHP and an average bollard pull of 82mT. These figures are skewed by the most recent acquisition of Maridive 704, which has a power output of 10,800BHP, over 4,000BHP more powerful than any other vessel in the fleet. The PSV/SSVs have an average DWT of 9S0mT with a range of around 300mT. (Source: Infield Systems Limited; ZMI’s Official Website) Halul Offshore Halul Offshore was formed in 2000 as a joint venture between Qatar shipping and Qatar navigation. Halul Offshore is now Qatar’s largest provider of offshore support services and all but one of its AHTSs and PSV/SSVs are located in the country, whilst the other operates in Saudi Arabia. Halul Offshore has the youngest fleet in the region with an average age of five years old. The AHTSs in the fleet have an average age of six years and the five PSV/SSVs have an average age of two years. Halul Offshore owns 13 AHTSs and five PSV/SSVs, and the entire fleet was built post 2002. The average power output for the AHTSs is S,600BHP and the average bollard pull is 68mT. The fleet has similar power capabilities as its competitors. The PSV/SSVs have an average DWT of 3,000mT. Halul Offshore does have four OSVs under construction, two AHTSs and two PSV/SSVs, which look to be larger vessels that should strengthen their position in the rna rket. (Source: Infield Systems Limited; Halul Offshore’s Official Website) Conclusion Infield Systems Limited has identified S38 OSVs operating in the Middle East; consisting of 219 AHTSs and 319 PSV/SSVs. The five largest identified operators operate 121 OSVs and the largest operator, Zamil, accounts for 7% of the industry. As with the operators in SEA, there is a highly fragmented market with a large amount of operators (137). ZOSC also holds the largest market share in the AHTS market with nearly 11%, double that of any competitor. Esnaad has the strongest hold on the PSV/SSV market with 7%, although it only operates two AHTSs in the region. ICON has a relatively limited position in the market with only Omni Tigris currently operational in Qatar. 8. INDUSTRY OVERVIEW (Cont’d) 5.4 Conclusion 5.4.1 Prospects of ICON Infield Systems Limited expects that ICON will remain as one of the strongest OSV operator in Malaysia throughout 2014-2019 with average fleet utilisation exceeding 8S%. Through the expected AHTS and PSV/SSV newbuilds, the company will likely further strengthen its position in Malaysian waters, where both the demand for AHTS and PSV/SSV are slated to rise steadily from 2015 onwards, reaching a peak utilisation rate of 90% and 86% in 2018, respectively. The strong demand outlook is driven by PETRONAS’ RM300 billion five-year Capex plan, which aims to shorten the energy shortage aggravated by the economic growth stemming from the Malaysian NTP. Soaring demand and limited competition (due to stringent cabotage rules) will likely continue to support high dayrates for ICON’s Malaysian vessels, which are young and well suited for the country’s shallow water opportunities. Infield Systems Limited believes that the OSV market will become increasingly competitive in the SEA region beyond Malaysia. In the SEA market ICON faces strong competition from a number of Singapore-based OSV providers such as E2RA, Jaya Offshore, POSH and Miclyn. These Singapore­based operators have recently strengthened their fleets with younger, modern and more sophisticated OSV vessels. However, despite strong competition, infield Systems Limited expects that ICON will likely increase its presence in the region’s shallow water segment due to the young age profile of ICON’s fleet and encouraging prospects of demand growth. Infield Systems Limited anticipates that there will be further opportunities in the shallow water Middle Eastern OSV market, especially the PSV/SSV segment, for ICON in the coming years. PSV/SSV utilisation in the region is expected to rise significantly from the 2010 to 2013 average of 80% to near 90% in 2014 to 2019. However the highly fragmented market nature, long-term contracting tendency and shallow water focus imply that the Middle East will likely remain a competitive and relatively low-margin market. The industry’s reliance on and vulnerability to imports Under current Malaysia cabotage rules, foreign OSV operators without a PETRONAS license have to deal through an agent or joint venture to enter the Malaysian market. If the rules are eased the Malaysian OSV market could face increased competition from foreign operators, driving down the relatively high dayrates charged by domestic OSV operators. In addition, major foreign vessel providers such as Bourbon, POSH and Swire could provide integrated fleet services, including stand-by and supply runs, to support large and complex offshore developments using a diverse range of vessels such as AHTjAHTSs, PSV/SSVs, HLVs, Pipelay vessels, MSV, DSV, Tugs, Barges and AVs. Increased foreign access could present a threat to domestic pure­play operators which operates mainly OSV vessels. While the Malaysian OSV market is currently dominated by domestic operators such as ICON, Perdana and Perisai, a surge in complex, deepwater developments in Malaysian waters could increase the industry’s reliance on imports due to the limited number of Malaysian-flagged deepwater OSV vessels and the lack of integrated vessel providers in the country. 8. INDUSTRY OVERVIEW (Cont’d) APPENDIX 6.1 Glossary ADNOC AHT AHTS Alam Maritim ASEAN AV AWB bbl bel bern BHP bnbbls bnboe bntoe boe Bourbon BP bpd BumiArmada BWM CAGR CHO CNOOC CDlREG COSl DP DSlB DSV DWT E&A E&P EIA EMEPMI EOR EPIC EPMS EPPs ETP ExxonMobii Ezra Farstad FCB FEED FID FiT FPSO Abu Dhabi National Oil Company Anchor handling tug Anchor hondling tug supply vessel Alam Mar/tim Resources Berhad Association ofSoutheost Asian Nations Accommodation vessel Accommodation Work Barge borrel Billion cubic feet Billion cubic metres Brake horsepower Billion barrels Billion barrels of oil equivalent Billion tonnes of oil equivalent Barrels of oil equivalent Bourbon Offshore Norway AS. BPPle Barrel per doy Bumi Armada Berhad Ballast Water and Sediments Compound onnual growth fate CH Offshore ltd China national offshore oil corporation International Regulations for Preventing Collisions at Sea China Oilfield Services Limited Dynamic Positioning Domestic Shipping Licencing Board Diving support vessel Dead-weight tonnes Exploration and appraisal Expforation and production US energy information associotion ExxonMobilExploration and Production Malaysia Inc. Enhanced oil recovery Engineering, procurement, installation and commissioning Energy Performance Management System Entry Point Projects Economic Transformation Programme Exxon Mobil Corp. EZRA Holdings Limited Farstad Shipping ASA Fast crew boat Front-end engineering and design Final investment decision feed-in-tariff Floating production, storage and offloading vessf’1 210 8. INDUSTRY OVERVIEW (Cont’d) FSO GNI Go Marine GaM GTP Gulf Marine HalulOffshore Heerema HLV Hornbeck HPHT ICC ICLL ICON lEA ILO IMO IMR INMARSAT 10C IPO ISM ITF Jasa Merin JaVa JOA LHNS LPD MARPOL mboe mboepd mbpd MENA Mic1yn MMA mmBtu mntoe MOIL MPRC MSV NKEAs NOC NPIDP NWECS OECD OFSE OPEC OSV OTC Pacific Radiance Floating storage and afflooding Gross National Income Go Marine Group Pty Ltd Gulf of Mexico Government Transformation Programme GulfMarine Far East (Pte) Ltd Haful Offshore Services Company W.L.L. Heerema Marine Contractors Heavy lift vessel Hornbeck Offshore Services Inc. High-pressure high-temperature Industry Consultative Council International Convention on Load Lines Icon Offshore Berhad International Energy Aqency International Labour Organization International Maritime Organization Inspection maintenance and repair International Maritime Sateffite Organization International Oil Company Initial public offering InternationalManagement CodefortheSafeOperation ofShipsandfor Pof/ution Prevention International Transport Federation Jasa Merin Sdn Bhd Jaya Holdings Limited Joint operating agreement Limited Amounts of Hazardous and Noxious Liguid Substances 30 April 2014, being the latest practicable date for certain information to be disclosed in this Report Prevention of Poffution from Ships Mil/ion barrels of oil equivalent Miffion barrels of oil eguivalent per day Miffion barrels of oil per day Middle East and North Africa Miclyn Express Offshore Limited Mermaid Marine Australia Limited Million British thermal units Miffion tonnes of oil equivalent Maridive & Oil Services Co. The Malaysian Petroleum Resources Corporation Multi~purpose vessel National Key Economic Areas National oil company Nuclear Power infrastructure Development Plan Northwest European Continental Shelf Organisation of Economic Co~operation and Development Oil field services and equipment Organization of the petroleum exporting countries Offshore support vessel Offshore Technology Conference Pacific Radiance Ltd 8. INDUSTRY OVERVIEW (Cont’d) PEMEX Perdana Perisai Petra Energy Petrobras PETRONAS PIB PITA Plem Plet POSH pse PSV PTTEP PVB RAPID REeODA ROI ROV RSe SAMUR Saudi Aramco SEA Seacor SEB Shell SOLAS Solstad STeW Swiber Swire T&I tcf tern Tidewater TlP TNB tntoe Total tpy Transocean Twh USD YPF Zamil PetrolesMexicano5 Perdana Petroleum Berhad Perisai Petroleum Teknologi Bhd Petra Energy Berhad Petro/eo Brosileiro S.A. Petroliam Nosional Berhad Nigerian petroleum industry bill Petroleum Income Tax Act Pipeline end manifolds Pipeline end terminals POSH Semco Pte Ltd Production sharing contract Platform supply vessel PIT Exploration and Production PIc Progress Volume-Based Refinery and Petrochemical Integrated Development Regional Corridor Development Authority Return on investment Remotely operated vehicle Risk Service Contract Sabah Ammonia Urea Saudi Arabian Oil Co. South East Asia SEACOR Marine LLC. Inc. Sarawak Energy Bhd Royol Dutch Shell pic International Convention on Safety of Ufe at Sea Solstad Offshore ASA Certification and Watchkeeping for Seafarers Swiber Limited Swire Pacific Offshore Operations Pte Ltd Transport and installations Trillion cubic feet Trillion cubic metres Tidewater Inc. Tension leg platforms Tenaga Nasional Berhad Trillion tonnes of oil equivalent Total S.A. Tonnes per year Transocean Ltd Terawatt-hours United States Dollar Yacimientos Petroliferos Fiscales Zamil Offshore Services Company 8. INDUSTRY OVERVIEW (Cont’d) 6.2 Definitions 2P reserves Capex Dayrate Deepwaters Deepwater AHT Deepwater AHTS Deepwater PSV Development well Exploration wen Installed Long term market Marine Midrange AHTS Operational Opex Possible Possible reserves Probable Probable reserves Proved reserves Pure-Play Removed ROV Shallow Water AHT Shallow Water AHTS Shallow Water PSV Short-term market Under Construction \ Proven and probable reserves Capital expenditure associated with offshore developments. lnfield Systems Limited Capex forecasts cover global engineering, procurement, construction and installation spending for the offshore sector. The data excludes non­development drilling spending and other exploration expenses The amount paid for a particular service for a day’s period. All dayrates presented in this report are charter rates based on publically disclosed contracts >SOOm An anchor handling tug vessel with engine power capacity surpassing 8,000BHP An anchor handling tug supply vessel with engine power capacity surpassing 8,000BHP A platform support vessel with cargo carrying capability exceeding 2,SOODWT Production and injection wells drilled as part of a project development Wildcat wells drilled to de-risk a prospective reservoir On site but not yet functioning Long term contracts which can vary from one year durations to ten year deployments An adjective for things relating to the sea or ocean 8,000BHP to 12,000 BHP Operating as expected Operational expenditure associated with offshore developments Part of favoured development concept for field at very early stage of evaluation. Inferred oil and gas reserves that have a 10·20% chance of commercial recovery Part of a favoured development concept for a field at development planning stage at company level. Indicated oii and gas reserves that have a 50% chance of commercial recovery Oil and gas reserves that have a 90% chance of commercia! recovery An OSV Operator with only AHTS, AHT, PSV/SSV and AWB assets within its flee·t Fully removed Remotely operated underwater vehicle An anchor handling tug vessel with engine power capacity below 8,000BHP An anchor handling tug supply vessel with engine power capacity less than 8,000BHP A platform support vessel with cargo carrying capability iess than 2,SOODWT Short term contracts with durations of less than one year Under construction but not yet in place. 213

 

 

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