DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

16 March 2017Europe/Norway

Equity ResearchOil & Gas Equipment & Services

Subsea 7 S.A. (SUBC.OL)

ACQUISITION Rating UNDERPERFORMPrice (14 Mar 17, Nkr) 127.50Target price (Nkr) (from 100.00) 110.00Market Cap (Nkr m) 41,739.3Enterprise value (Nkr m) 33,884.1Target price is for 12 months.

Research AnalystsPhillip Lindsay

44 20 7883 1644phillip.lindsay@credit-suisse.com

Gregory Brown44 20 7888 1440

gregory.brown@credit-suisse.com

The heavy lift – part II■ Deal closed: SUBC has closed the acquisition of the remaining 50%

shareholding in Seaway Heavy Lift (SHL). The deal strengthens and diversifies SUBC, taking it more into heavy lift markets including renewables and decommissioning. The initial cash consideration is USD279m, with USD40m deferred to Q1 2021, subject to performance. SHL will be reported under a new business line – Renewables & Heavy Lifting.

■ Differentiation: SHL operates two niche vessels - the 5,000mT Oleg Strashnov and the 2,500mT Stanislav Yudin. Each vessel can utilise full lift capability at a 32m length; a competitive advantage over typical renewables-focused assets with shorter lifting radius. This will become more relevant as turbines move further offshore and power generating capacities increase.

■ Lumpy: SHL is a lumpy business; 2016 EBITDA fell nearly 40% y-o-y. The deal equates to 1.4x sales, ~5x EV / EBITDA, ~6.5x EV/EBIT, and ~7.5 earnings, based on 2015/16 averages. We see a doubling of SHL revenues in 2017E (on a pro-forma basis) as the Beatrice wind farm contract ramps up. However a significant procurement scope will compress margins in 2017.

■ Blowing a gust: On a pro-forma basis, we estimate Beatrice will generate USD800m of revenue in 2017E. In addition, SHL has USD284m of other backlog which relates primarily to the Borkum II wind project. Furthermore, tendering activity is high for offshore wind work (notably in the UK, Germany and France), and we see a more sustainable revenue stream than previously.

■ Valuation: We increase EBITDA by 6% / 13% / 19% in 2017E / 18E / 19E, driving an increase in target price to NOK110 (from NOK100), despite EPS being impacted by a higher tax rate post consolidation We remain concerned about an increasingly fragile P&L in 2017/18E, and the potential for structurally lower returns / earnings in the medium term. We therefore reiterate our Underperform rating.

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Financial and valuation metricsYear 12/16A 12/17E 12/18E 12/19ERevenue (US$ m) 3,567 3,682 3,497 3,949EBITDA (US$ m) 1141.7 840.1 623.8 715.4Adjusted net income (US$ m) 526.4 270.4 146.9 223.5CS EPS (adj.) (US$) 1.54 0.79 0.43 0.65Prev. EPS (US$) - 0.90 0.45 0.51ROIC avg (%) 8.9 5.4 2.5 3.9P/E (adj.) (x) 9.7 18.8 34.6 22.7P/E rel. (%) 53.8 126.1 267.0 196.6EV/EBITDA (x) 3.2 4.7 6.2 5.0

Dividend (12/17E, US$) 0.61 Net debt/equity (12/17E,%) -16.6Dividend yield (12/17E,%) 4.1 Net debt (12/17E, US$ m) -932.8BV/share (12/17E, US$) 17.4 IC (12/17E, US$ m) 4,675.6Free float (%) 77.2 EV/IC (12/17E, (x) 0.8Source: Company data, Thomson Reuters, Credit Suisse estimates

16 March 2017

Subsea 7 S.A. (SUBC.OL) 2

Subsea 7 S.A. (SUBC.OL)Price (14 Mar 2017): Nkr127.5; Rating: UNDERPERFORM; Target Price: (from Nkr100.00) Nkr110.00; Analyst: Phillip LindsayIncome statement (US$ m) 12/16A 12/17E 12/18E 12/19ERevenue 3,567 3,682 3,497 3,949EBITDA 1,142 840 624 715Depr. & amort. (372) (420) (422) (423)EBIT 565 401 180 253Net interest exp. 11 14 13 15Associates 46 19 22 39PBT 577 434 215 307Income taxes (158) (174) (75) (92)Profit after tax 418 260 139 215Minorities 18 10 7 9Preferred dividends - - - -Associates & other 90 0 0 0Net profit 526 270 147 224Other NPAT adjustments (90) 0 0 0Reported net income 436 270 147 224Cash flow (US$ m) 12/16A 12/17E 12/18E 12/19EEBIT 565 401 180 253Net interest 11 14 13 15Cash taxes paid (141) (174) (75) (92)Change in working capital 40 (282) (30) (2)Other cash and non-cash items 570 406 409 408Cash flow from operations 1,046 366 497 582CAPEX (300) (200) (242) (311)Free cashflow to the firm 936 206 305 370Acquisitions - - - -Divestments 17 (279) 0 0Other investment/(outflows) 85 (4) (4) (5)Cash flow from investments (199) (483) (246) (316)Net share issue/(repurchase) 0 0 0 0Dividends paid (3) (199) (199) 0Issuance (retirement) of debt 0 0 0 0Cashflow from financing (121) (199) (199) 0Changes in net cash/debt 826 (316) 52 266

Net debt at start (423) (1,249) (933) (985)Change in net debt (826) 316 (52) (266)Net debt at end (1,249) (933) (985) (1,251)Balance sheet (US$ m) 12/16A 12/17E 12/18E 12/19EAssetsTotal current assets 2,565 2,507 2,573 2,944Total assets 7,803 7,851 7,783 8,109LiabilitiesTotal current liabilities 2,063 2,039 2,022 2,125Total liabilities 2,266 2,243 2,226 2,329Total equity and liabilities 7,803 7,851 7,783 8,109Per share 12/16A 12/17E 12/18E 12/19ENo. of shares (wtd avg.) (mn) 343 343 343 343CS EPS (adj.) (US$) 1.54 0.79 0.43 0.65Dividend (US$) 0.61 0.61 0.00 0.21Free cash flow per share (US$) 2.73 0.60 0.89 1.08Valuation 12/16A 12/17E 12/18E 12/19EEV/Sales (x) 1.0 1.1 1.1 0.9EV/EBITDA (x) 3.2 4.7 6.2 5.0EV/EBIT (x) 6.4 9.8 21.5 14.2Dividend yield (%) 4.12 4.12 0.00 1.39P/E (x) 9.7 18.8 34.6 22.7ROE analysis (%) 12/16A 12/17E 12/18E 12/19EROE (%) 9.6 4.8 2.6 3.9ROIC (avg.) (%) 8.9 5.4 2.5 3.9Credit ratios 12/16A 12/17E 12/18E 12/19ENet debt/equity (%) (22.6) (16.6) (17.7) (21.6)Dividend payout ratio (%) 39.7 77.3 0.0 31.6

Company BackgroundSubsea 7 is a provider of subsea to surface engineering and construction services, primarily to the offshore oil and gas industries using its fleet of offshore construction and support vessels.

Blue/Grey Sky Scenario

Our Blue Sky Scenario (Nkr) (from 147.00) 160.00For SURF & Conventional / i-tech services / Renewables & Heavy Lifting,we assume blue sky revenues +5% / +2.5% / +7.5% from our base case scenario with margins +1.5% / +1.0% / +2.0% for 2017 and beyond. In our SOTP, we assume multiples 1.5 / 2.0 / 1.0 higher than our base case for SURF & Conventional / i-tech services / Renewables & Heavy Lifting. We flex DCF for long-term growth by +.25%

Our Grey Sky Scenario (Nkr) (from 71.00) 72.00For SURF & Conventional / i-tech services / Renewables & Heavy Lifting,we assume blue sky revenues -5% / -2.5% / -7.5% from our base case scenario with margins -1.5% / -1.0% / -2.0% for 2017 and beyond. In our SOTP, we assume multiples 1.5 / 2.0 / 1.0 higher than our base case for SURF & Conventional / i-tech services / Renewables & Heavy Lifting. We flex DCF for long-term growth by -.25%

Share price performance

SUBC.OL OBX INDEX

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Source: FTI, Company data, Thomson Reuters, Credit Suisse Securities (EUROPE) LTD. Estimates

16 March 2017

Subsea 7 S.A. (SUBC.OL) 3

Key ChartsFigure 1: Fleet evolution Figure 2: Bid list from CS Project Tracker

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Figure 5: Major Project Progression

Major (over USD750m)Very Large (USD500-700m)Large (USD300-500m)Substantial (USD150-300m)Sizeable (USD50-150m)

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AtollWest Nile Delta P2

Source: Subsea 7

16 March 2017

Subsea 7 S.A. (SUBC.OL) 4

Key takeaways from roundtableThis week we attended a round table with Oyvind Mikaelsen, Executive Vice President Commercial, and Isabel Green, Investor Relations. Here’s what stood out:

The integrated subsea model continues to gain traction in the market. Increasingly operators are requesting dual-bids – traditional / independent scopes for SPS and SURF providers, plus an integrated SURF/SPS package – this is clearly driving the cost of tendering for projects up. The pipeline of projects is growing and early involvement is increasingly relevant for positioning. The integrated field design offers limited upside to single well tiebacks to existing infrastructure with ample excess capacity. Value is created on larger tiebacks and greenfield work where there is a greater opportunity to integrate technology, optimise project schedules, and minimise redundancy on field infrastructure.

There is no clear cut structure to risk apportionment between SPS and SURF provider within integrated contracts – a steering committee with representatives from both Schlumberger and SUBC is tasked with developing operating models, risk sharing and marketing. Each opportunity varies considerably in terms of the scope each party is responsible for – this determines the natural lead within the alliance for a given project. For the Dalmation project – the first EPIC awarded to the OneSubsea / SUBC alliance - the differentiating factor was the Framo pump, with SUBC’s role more of a typical T&I scope. Schlumberger was a more natural lead in this situation. For large tieback jobs with a more procurement scope, more vessel days, and so on, in theory the roles would reverse.

The OneSubsea / SUBC JV can source equipment from third parties (flexibles / umbilicals from any player for example) and SUBC management believe that not pushing a catalogue of specific kit is a competitive advantage at this stage in the market’s evolution. Furthermore, SUBC believes (and we agree) the subsea alliance has a competitive edge for subsea pumps (where Schlumberger’s Framo design is near-ubiquitous) and that its partner, OneSubsea, opens up more verticals because of the breadth of exposure offered by its parent Schlumberger. Having ownership of the new technologies in the market place is a differentiator versus traditional independent engineering houses.

The distance between the tier 1 and tier 2 contractors appears to be widening. Tier 1 players have typically remained disciplined on the quantum of risk they’re willing to take on through the downturn. A hungrier second tier has often filled the void but oil companies are now worrying about counterparty risk and whether many of these companies can survive through the 2017/18 eye of the storm in subsea markets. In current bid processes, this should favour top-tier players.

SUBC delivered a remarkable financial performance in 2016 as a perfect storm of circumstances drove significant outperformance versus consensus, and best-ever profitability – not bad amid the worst downturn for a generation. Clearly the market had underestimated several factors – the profitability and favourable terms & conditions of SUBC’s top-of-the-cycle backlog; the flawless execution of this backlog on a significant restructured cost-base; and SUBC’s ability to improve to generate incremental supply chain savings not available at the time of contract signature.

For 2017, the market appears confused – the range of EBITDA outcomes is wide with the bottom as low as ~USD400m and the top over USD1bn. We estimate 900bps of EBITDA margin erosion y-o-y and EBITDA of USD840m, but the street is looking for 1300bps and EBITDA of USD704m. Net of the Brazilian PLSV and Beatrice wind farm contracts, we estimate less than 10% of current backlog consists of work secured in the last cycle, and this is largely North Sea work. This represents a far less favourable mix for SUBC, and competitive pressures are high for new projects. Contract start-up ensures a growing

16 March 2017

Subsea 7 S.A. (SUBC.OL) 5

EBITDA contribution from Brazilian PLSV work in 2017, but the significant procurement phase of the Beatrice wind farm contract may also act as a headwind.

Seaway Heavy LiftingSeaway Heavy Lifting comprises of two heavy lift vessels – the Oleg Strashnov (built 2011) and the Stanislav Yudin (built 1985). The assets have typically worked in Europe and their low draughts allow them to work in shallow waters – making them well suited to perform installation work in the renewables space. Both assets are also well equipped to work in the traditional oil and gas space and have installed well over 150 platforms across the Black Sea, Gulf of Mexico, Barents, India, Malaysia and the North Sea.

Much of Seaway Heavy Lifting’s recent activity has been focused on the renewables, specifically, the EPCI or transport and installation for wind farm foundations. The largest contract secured thus far is the USD1.3bn Beatrice development. Beatrice, located in the Moray Firth off the North East coast of Scotland is formed of 84 wind turbines, with SUB’s scope of work covering the project management, design, engineering, fabrication and install the jacket foundation and array cables, as well as the transport and installation of the offshore transmission modules. The business is also able to offer substation jacket and topside installation, as well as jacket installation – where it has the capability to install over 250 foundation jackets per year.

Figure 6: Seaway Heavy Lift FleetVessel Oleg Strashnov Stanislav YudinBuilder Royal IHC WartsilaYear Built 2011 1985Length 183 183Gross tonnage 47426 24822Deck area 3700 2560Variable load 9000 5000Max lifting capacity 5,000mT @ 32m 2,500mT @ 32.5mSource: Company data

Each SHL vessel can utilise full lift capability at a 32m length; a competitive advantage over typical renewables-focused assets with shorter lifting radius. We think this will become more relevant as turbines move further offshore and power generating capacities increase. Although other assets in the SUBC fleet are capable of performing heavy lift work in a broader sense, each is relatively compromised. Vessels such as the Seven Oceans have relatively large cranes, but lack deck space (and so would require additional support vessels) while the Borealis has a crane with a technical capacity of lifting 5,000mT (similar to the Oleg Strashnov) but the presence of a J-Lay tower on board makes this impractical.

Renewables outlookWith the help of the Credit Suisse Utilities team, we present a summarised outlook for the renewables space below:

16 March 2017

Subsea 7 S.A. (SUBC.OL) 6

4Figure 7: Bloomberg New Energy Finance forecasts (presented by DONG): Installed offshore wind (GW)- annual installations and accumulated capacityInstalled offshore wind (GW)

2015A accum.

2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E accum.

United Kingdom 5.1 0.0 1.5 1.6 1.0 2.0 1.7 1.7 1.2 3.2 19.9Germany 3.3 1.0 1.1 1.1 — 0.5 0.8 0.8 0.8 0.8 10.8Denmark 1.1 — 0.4 0.2 0.2 — 0.6 — — — 2.5Netherlands 0.4 0.1 0.6 — 0.7 0.7 0.7 0.7 0.7 — 4.6Belgium 0.7 — — 0.8 0.5 0.2 — — — — 2.3France — — 0.0 — 1.0 0.5 1.0 0.5 1.0 1.0 5.0Sweden 0.2 — — — — 0.1 — — — — 1.0Other 0.0 0.0 0.0 0.0 — 0.4 0.0 0.9 0.5 0.4 2.7Europe total 10.8 1.1 3.6 3.7 3.4 4.4 4.8 4.6 4.2 5.4 48.8China 0.8 0.6 0.9 1.8 2.5 5.2 3.0 3.0 3.0 3.0 26.9Japan 0.0 0.0 — 0.0 0.1 0.2 0.1 0.1 0.5 0.2 1.5Taiwan — 0.0 — — 0.2 0.3 0.3 0.3 0.3 0.3 2.0Korea (Republic) 0.0 — 0.0 0.1 0.2 0.1 0.2 0.2 0.2 0.2 1.4Other — — — — — — 0.2 — 0.2 — 0.4Asia total 0.9 0.6 0.9 2.0 3.0 5.7 3.8 3.6 4.2 3.7 32.2United States — 0.0 — 0.0 0.0 0.1 0.2 0.2 0.3 — 1.1Other — — — — — — 0.1 0.1 0.1 0.1 0.6North America — 0.0 — 0.0 0.0 0.1 0.3 0.3 0.4 0.1 1.8Global 11.7 1.8 4.6 5.6 6.5 10.2 8.9 8.5 8.8 9.2 82.7Source: Bloomberg New Energy Finance, DONG

We show above the data used by DONG in their IPO prospectus. We generally think that such forecasts are very ambitious (we note similarly aggressive forecasts for onshore wind in 2007 and 2008). We make the following points:

■ UK – likely opportunity in three tenders: Offshore wind installations will grow from c0.7GW in 2009 to c6GW as of 2016, on our estimates. This is going to reach c10.8GW by 2021 given projects under construction.

The UK Government has said there will be c£730m made available for new CfDs in the current parliament. This will be spread across three auctions, with the first one being c£290m, and likely in 2017.

The Government has said that the auctions could support up to 4GW of further offshore wind, which would take the UK to c15GW of offshore wind (c19% of electricity production).

The first auction—in 2017E—will only be for less-established technologies, and we think most will go to offshore wind. There will be a cap on the price at £105/MWh, falling to £85/MWh for projects commissioning by 2026. We think the first auction will clear closer to £85/MWh, and that it could support up to 1.5GW.

We think DONG will seek to tender in remaining capacity at the Hornsea wind farm. We see competition from some of the 4.8GW at Dogger bank (SSE, Statoil, Statkraft), 1.1GW at Inchcape (EDPR, SDIC) and 0.9GW at Triton Knoll (Statkraft). The auctions will likely be >2x over-supplied, in our view.

■ Germany - returns also likely to fall: Bloomberg new Energy Finance forecasts show c6.8GW of offshore wind in Germany by 2020, all of which is under construction.

In our view, tenders in the UK in 2017

(where prices will likely fall to £85/MWh; real 2011/12 money) and

Germany will be the ones to watch for growth

16 March 2017

Subsea 7 S.A. (SUBC.OL) 7

The EEG renewable energy act has been passed in the German Parliament and will mean that there will be an auction for new offshore wind projects after it takes effect in January 2017. There is an additional c3.1GW, which the Federal Energy Ministry has proposed will be awarded in a competitive tender for 1.7GW in 2017 and 1.4GW in 2018.

From 2026, the Government will present sites itself (rather than the developer) under a centralised model to encourage competition. There will be an additional c0.84GW annually from 2026-30 in order to reach c15GW by 2030.

Alternative geographies are still less-matureDONG has flagged c2-3GW of potential in China and has a strategic ambition for some in Asia (China, Japan and Taiwan) and the US. We think better returns for pioneers may be possible, but we do not count on it. We are yet to see any large projects reach FID stage in these regions. We run through them in detail:

■ United States: The first offshore wind farm is small at just c30MW, and is set to be complete by year-end. There have been press reports of offshore projects on the Eastern Seaboard for at least the eight years that we have been covering the industry. However, legal threats and lack of regulatory support have continually delayed projects. A new energy law in Massachusetts signed on 8 August supports offshore wind and requires 1.6GW by 2028. Seaway Heavy Lift and SUBC have each performed work in the region.

■ China: Offshore wind is growing slowly. Bloomberg data presented by DONG suggest c27GW of offshore wind by 2025. Of the domestic players, only China Longyuan is a meaningful operator. Our Asian Capital Goods analyst, Edmond Huang, cites low returns as a reason the industry is held back. Our view is that China very quickly builds local champions that take the market in the OEM space, and development is done by local players.

■ France: France does not have any offshore wind, but Bloomberg forecasts c5GW by 2025. There have been two major tender rounds in 2012 and 2014. DONG was in one of the tenders with EDF but has since sold it 40% stake to Enbridge. We note that local content (e.g. turbines by Alstom and Adwen) is used. In its Q416 results presentation, Saipem earmarked offshore wind projects with EDF as order intake opportunities.

■ Taiwan: The current Government is pro-renewables and aims to phase out nuclear by 2025. It is set to revise bidding mechanisms to encourage renewables (including offshore wind). The target is 3GW of offshore wind. Earthquakes and typhoons are a risk for offshore wind projects.

16 March 2017

Subsea 7 S.A. (SUBC.OL) 8

Figure 8: Levelised cost of electricity (2016 prices). Based on a c6% hurdle rate, but with illustrative dotted lines showing what it would be under a c9% hurdle rate, €/MWh

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16 March 2017

Subsea 7 S.A. (SUBC.OL) 9

Figure 9: Key Investment contract CfDs awarded out by the UK Government (ex. EDF's Hinkley Point)

Asset Technology Owner StartLength

(yrs)Capacity

(MW)Strike price

(£/MWh)NPV of implicit subsidy (£m)*

NPV of implicit subsidy (DKK m)

DONG offshore wind CfDsBurbo Wind DONG (50%) LEGO (25%) PKA (25%) 2018 15 258 150 1,128 9,777Walney Wind DONG (100%) 2019 15 660 150 2,833 24,548Hornsea Wind DONG (100%) 2020 15 1200 140 4,744 41,104

8,705 75,429Other offshore wind CfDsDudgeon Wind Statoil (35%) Masdar (35%) Statkraft (30%) 2018 15 402 150 1,789 15,503Beatrice Wind SSE (40%) CIP (35%) SDIC (25%) 2019 15 664 140 2,657 23,019

4,446 38,522Biomass CfDsTeesside Dedicated biomass CHP Macquarie 2019 15 299 125 1,704 14,764Lynemouth Biomass conversion EPH Power 2018 to 2027 420 105 1,588 13,761Drax Biomass conversion Drax Group Plc** 2016 to 2027 645 100 2,394 20,744

5,686 49,268

Total NPV of implicit subsidy for the eight investment contracts (ex. Hinkley Point) 18,837 163,219* Using a c6% project-level discount rate** Subject to state aid approval from the European CommissionSource: Department of Business, Industrial Strategy and Energy, Credit Suisse research, Credit Suisse estimates

Subsea 7 in Project TrackerWithin our proprietary Project Tracker database we are currently tracking close to USD15bn of projects that Subsea 7 is bidding on – however, only 15 of the 36 projects that we track have a value attached to them – suggesting that the pipeline is actually considerably stronger (note: we only track a contract value when the figure is explicitly quoted in the source – we do not estimate).

The largest projects that the business is currently bidding on include the Mad Dog Phase 2 integrated SURF and SPS package, the USD2bn R-Series development and the USD1.8bn KG DWN-98/2 development, both in India.

Figure 10: SUBC Bidding Pipeline – Key Projects Figure 11: SUBC Bidding Pipeline – by Region

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SUBC and OneSubsea have been identified as the favourites for the subsea packages on BP's Mad Dog Phase 2 development, moving ahead of competition from TechnipFMC. According to Upstream, both partnerships were shortlisted for the first phase FEED work,

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Subsea 7 S.A. (SUBC.OL) 10

including the production unit installation, pipelines and risers, late last year. A second phase will incorporate detailed design later in 2017. The SPS package could include up to 24 wells, from four drill centres, and a lazy-wave steel riser system. The project will also include four risers, five umbilicals, gas lift and water injection lines and a gas export line.

Shell is set to commence engineering studies on its much delayed, and often discussed, Bonga South West Lite project, according to Upstream, 6th January. Doris Engineering looks set to secure the FEED for the FPSO work, while WorleyParsons' IntecSea will carry out the subsea scope. The FEED studies were due to commence late in 2016, but were pushed back slightly, suggesting that the work will be completed by October 2017. Shell is likely to utilize an 150,000bpd FPSO – significantly smaller than the previously muted 225,000bpd vessel. In the most recent tendering round SUBC were believed to have secured the SURF package while Hyundai were slated to deliver the FPSO and Nexans had beat competition for the umbilicals package

Aker Solutions has secured a FEED contract for VNG's Pil & Bue subsea tieback. The FEED will see Aker compete against a design from another subsea contractor, likely to be TechnipFMC. The winning design will be awarded with an EPC contract in the fourth quarter. TechnipFMC is also competing with SUBC for the SURF FEED work. The development will also call for significant modifications on the Njord platform, which is currently in dock for inspection and maintenance.

Ophir is set to take a final investment decision on the Fortuna FLNG project by mid-2017. According to Ophir, the umbrella agreement between the Fortuna joint venture and the government of Equatorial Guinea is expected to be signed in first quarter and a term sheet has been signed for the provision of the debt facility with a consortium of Chinese banks. The Fortuna joint venture sees the Schlumberger / Golar operated OneLNG venture operate a 56.3% stake in the field which is set to de developed at a cost of USD2bn. The project is set to be developed using a Golar vessel, while the SUBC / Aker Solutions and McDermott / GE consortia have each submitted joint-EPCI bids having previously performed rival FEED studies.

Cairn is set to launch a dual-track FEED for the SNE project off Senegal. Upstream, 10th March suggests that Cairn is considering separate FEED programs for the FPSO and subsea equipment, while it conducts a multi-well exploration and appraisal campaign before submitting an exploitation plan in 2018. SUBC will likely bid for the integrated SURF/SPS FEED with OneSubsea, against TechnipFMC and McDermott/GE. The SNE discovery off Senegal moved forward last year with Woodside paying USD430m for ConocoPhillips' 35% stake in the Rufisque Offshore, Sangomar and Sangomar Deep blocks.

Having been put on hold since January 2015, Total has returned to Zinia Phase 2 in Angola. Initial bids for the SPS and SURF packages came in 30% above Total's expectations but now the French IOC has gone back to contractors in an effort to take advantage of lower supply chain costs, and have been able to halve the original cost of USD2.8bn, according to AOG 6th October. Half of the cost saving came from competitive pressures while around 25% was achieved through simplifying the design of the subsea system and the rest through efficiency gains. TechnipFMC was previously considered the favourite for the SPS package but SUBC was bidding on the SURF contract. The contract package will also include brownfield modifications consisting of five new modules on the Zinia platform.

Five contractors including Seaway Heavy Lift are said to have responded to Shell's expression of interest process for the Tapti decommissioning work. As well as Seaway Heavy Lift, Boskalis, Afcons, SapuraKencana and Larsen & Toubro sent expression of

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Subsea 7 S.A. (SUBC.OL) 11

interest documents and a formal process could commence late in 2017, according to Upstream, 10th March. The USD100-150m project includes the removal and cutting of subsea pipelines, removal of wellhead platform topsides and jackets, alongside onshore transportation, disposal and post-removal surveys. With output from the Mid and South Tapti fields having declined sharply, the partners in the Panna-Mukta and Tapti areas — operator Shell, Reliance Industries and ONGC — decided last year to abandon the field.

ExxonMobil is set to develop Liza in several phases, including at least two FPSOs. At an analyst day on the 1st March, Exxon suggested that first FPSO will have production capacity of around 120,000 and be installed by 2020. The second phase facility could be larger, at around 150,000bpd, and be supported by reserves from Payara and the existing Liza discovery. Together, the two fields could hold between 1.4-2bn barrels of oil equivalent. Exxon is also considering an integrated SURF and SPS package for the field, with SUBC/OneSubsea bidding against Saipem/GE and TechnipFMC.

Aker BP will deliver a field development plan for the USD1.2bn Snadd field by the end of the year, according Petro Norway. The field, located in the Norwegian sea, is set to be phased with an initial USD700m development consisting of three wells tied back to the Skarv A template, with electrically heat trace pipe-in-pipe flowline and umbilical tied back to the Skarv FPSO. The second phase would likely include three additional wells, with potential modifications to the FPSO required. Aker BP has an ongoing collaborative effort with Aker Solutions and SUBC for its subsea portfolio.

Reliance will shortly receive revised bids for the USD3bn R-Series project in India. According to Upstream 10th February, having previously worked together in Ghana and other greenfield developments, TechnipFMC and SUBC have again bid in consortia for the SURF package and will compete against Saipem and a partnership of McDermott and Larsen & Toubro. Allseas and a consortia of Emas and SapuraKencana have also submitted bids for the project. The scope of work includes two 54km, 18-inch trunklines, eight infield flowlines and a series of risers, jumpers and umbilicals.

Daewoo has launched a competitive contest which could lead to a integrated SURF/SPS EPCI contract on the Shwe field in Myanmar. Daewoo has issued invitations to bid for an integrated SPS and umbilical, riser and flowline system to Technip/FMC, Saipem/Aker Solutions, McDermott/GE and SUBC/OneSubsea. The second phase of Shwe includes the development of Mya South and Shwe Phyu as separate three well satellites linked to the phase one CPP. TechnipFMC's subsidiary Genesis has carried conceptual engineering for the second phase, having also carried out feasibility studies for phase one which sees a central processing platform producing from 11 development wells. The FEED contract will cover five months from July until November 2017 will be followed by an EPCIC tender the same year.

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Subsea 7 S.A. (SUBC.OL) 12

Figure 12: Project Award Seasonality Figure 13: Floating Production System orders

-39%

-80%

-33%-22%

43%

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

0

5,000

10,000

15,000

20,000

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Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2014 2015 2016

y-o-

y co

mpa

rison

US

Dm

Awards to Market y-o-y comparison

0

5

10

15

20

25

30

35

1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Num

ber

of o

rder

s

FPSO Semi SPAR TLP FSRU FLNG

Source: Credit Suisse research, MEED, Upstream, © 2017 Thomson Reuters, AOG Source: Credit Suisse research, MEED, Upstream, © 2017 Thomson Reuters, AOG

Figure 14: Active bids by sector Figure 15: Active bids by region

Offshore60%

Onshore40%

Africa32%

Americas9%

Asia Pacific28%

Europe3%

Middle East28%

Source Credit Suisse research, MEED, Upstream, © 2017 Thomson Reuters, AOG Source: Credit Suisse research, MEED, Upstream, © 2017 Thomson Reuters, AOG

Figure 16: Bidding pipeline by region Figure 17: Largest onshore/offshore bids

0 20,000 40,000 60,000 80,000

Larsen & ToubroSubsea 7

CB&IMcDermott

Tecnicas ReunidasGS E&CChiyodaHyundaiPetrofac

SamsungTechnipFMC

Saipem

USDmAfrica Americas Asia Pacific Europe Middle East

0

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4,000

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8,000

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Dm

Source: Credit Suisse research, MEED, Upstream, © 2017 Thomson Reuters, AOG Source: Credit Suisse research, MEED, Upstream, © 2017 Thomson Reuters, AOG

All above data correct as of 15th March 2017

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Subsea 7 S.A. (SUBC.OL) 13

Summary forecastsBelow we show our latest forecasts for SUBC, including the incorporation of the new business line – Renewables and Heavy Lift.

Figure 18: Subsea 7 – Summary FinancialsDivisionals (USDm) 2016A 2017E 2018E 2019E 2020ESURF & Conventional Revenue 3011 2590 2590 2978 3499

growth -30% -14% 0% 15% 18%EBIT 717 363 155 238 385

growth -15% -49% -57% 53% 62%margin 23.8% 14.0% 6.0% 8.0% 11.0%

i-tech services Revenue 377 359 376 414 466growth -15% -5% 5% 10% 13%

EBIT 38 45 49 56 65growth 72.7% 17.9% 9.2% 14.2% 16.7%margin 10.1% 12.5% 13.0% 13.5% 14.0%

Renewables & Heavy Lifting Revenue 398 723 520 546 574growth -18.9% 81.8% -28.1% 5.0% 5.0%

EBIT 66 72 68 68 72growth -49.2% 9.6% -6.5% 1.0% 5.0%margin 16.6% 10.0% 13.0% 12.5% 12.5%

Corporate Revenue 178 10 10 10 10EBIT -144 -60 -70 -70 -70

P&L (USDm) 2016A 2017E 2018E 2019E 2020ERevenue 3567 3682 3497 3949 4549

growth -25% 3% -5% 13% 15%EBITDA (adj) 1142 840 624 715 881

D&A -372 -420 -422 -423 -429Share of JVs / Assoc 46 19 22 39 43

EBIT 611 420 202 292 452growth -8% -31% -52% 45% 55%margin 17.1% 11.4% 5.8% 7.4% 9.9%

Net finance expense 11 14 13 15 18Other gains / losses -46 0 0 0 0

Pre-tax profit 577 434 215 307 470Tax -158 -174 -75 -92 -141

Effective Tax rate 24% 40% 35% 30% 30%Minority Interest 18 10 7 9 10

Net profit 436 270 147 224 339Adj Net profit 526 270 147 224 339

No. Shares (FD) 343 343 343 343 343EPS (CS, Adj) 1.54 0.79 0.43 0.65 0.99

EPS (IFRS) 1.27 0.79 0.43 0.65 0.99DPS 0.61 0.61 0.00 0.21 0.31

Source: Company data, Credit Suisse estimates

Note – we include SHL from the date of acquisition – including approximately nine months contribution. The following represent pro-forma information for 2016A

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Subsea 7 S.A. (SUBC.OL) 14

- Revenue: USD3,794m, EBITDA USD1,222, EBIT USD653m, Adj Net Income USD442m.

Figure 19: Subsea 7 - Valuation SummarySOTP (USDm) 2017E 2017E EV/EBITDA EV/Sales Implied EV Implied EV

EBITDA Sales Multiple Implied 2017E 2018ESURF & Conventional 628 2590 3.7 0.90 2324 2124I-Tech Services 72 359 7.0 1.40 502 477Renewables & Heavy Lifting 110 723 4.0 0.61 441 528Corporate 30 10 3.0 9.00 90 70Total 840 3682 4.0 3357 3199Net cash / (debt) 933 985Associates / minorities 332 332Implied market value (USDm) 4621 4516Implied market value (NOKm) 38717 37841Implied value per share 113 110DCF (USDm)Assumptions: Beta Risk WACC LT Growth 2017E 2018E

premium1.60 5.50% 10.29% 2%

EV 3105 3246Net (debt) / cash 933 985Associates / minorities 332 332MV 4369 4562NOK / USD 8.38 8.38Implied value per share (NOK) 106.8 111.5Valuation summary (NOK/share) Average 2017E 2018ESOTP 112 113 110DCF 109 107 111Overall average (equally weighted) 110

Blue Sky / Grey SkyBlue sky valuation % vs base case Average 2017E 2018ESOTP 38% 154 156 153DCF 52% 166 161 172Overall average (equally weighted) 45% 160

Grey sky valuation % vs base case Average 2017E 2018ESOTP -31% 77 77 77DCF -39% 66 66 66Overall average (equally weighted) -35% 72Source: Credit Suisse estimates

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Subsea 7 S.A. (SUBC.OL) 15

Companies Mentioned (Price as of 14-Mar-2017)Adwen (Unlisted)Aker BP (AKERBP.OL, Nkr141.9)Aker Solutions (AKSOL.OL, Nkr51.8)BP (BP.L, 457.0p)Cairn Energy (CNE.L, 202.8p)DONG Energy A/S (DENERG.CO, Dkr256.0)Daewoo E&C (047040.KS, W6,370)Drax (DRX.L, 342.5p)EDP Renováveis (EDPR.LS, €6.1)Electricite de France (EDF.PA, €7.454)Enbridge Inc (ENB.N, $40.31)ExxonMobil Corporation (XOM.N, $80.99)General Electric (GE.N, $29.54)Golar LNG (GOL.NFF, Nkr170.0)Hyundai Heavy Industries (Unlisted)Larsen & Toubro Limited (Unlisted)Macquarie Group (MQG.AX, A$89.0)McDermott International (MDR.N, $6.34)Nexans (NEXS.PA, €47.455)Ophir Energy plc (OPHR.L, 87.5p)Royal Dutch Shell plc (RDSa.L, 2092.0p)SDIC Power Holdings (600886.SS, Rmb7.1)SSE (SSE.L, 1505.0p)Saipem (SPMI.MI, €0.4028)SapuraKencana Petroleum Bhd (SKPE.KL, RM1.82)Schlumberger (SLB.N, $78.38)Seaway Heavy Lift (Unlisted)Statoil (STL.OL, Nkr145.5)Subsea 7 S.A. (SUBC.OL, Nkr127.5, UNDERPERFORM, TP Nkr110.0)TechnipFMC (FTI.PA, €29.25)Total (TOTF.PA, €46.3)Wartsila (WRT1V.HE, €47.65)Woodside Petroleum (WPL.AX, A$30.94)WorleyParsons (WOR.AX, A$10.34)

Disclosure AppendixAnalyst Certification Phillip Lindsay and Gregory Brown each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

3-Year Price and Rating History for Subsea 7 S.A. (SUBC.OL)

SUBC.OL Closing Price Target Price Date (Nkr) (Nkr) Rating 11-Apr-14 105.20 133.00 N 25-Jun-14 119.50 144.00 27-Oct-14 76.00 125.00 O 13-Nov-14 74.95 120.00 08-Dec-14 64.75 100.00 N 29-Jan-15 65.00 75.00 14-May-15 89.50 NR 19-Sep-16 84.90 75.00 U * 11-Nov-16 94.00 80.00 03-Mar-17 123.50 100.00 * Asterisk signifies initiation or assumption of coverage.

Target Price Closing Price SUBC.OL

01- Jan- 2015 01- Jan- 2016 01- Jan- 201740

65

90

115

140

165

N EU T RA LO U T PERFO RM

N O T RA T EDU N D ERPERFO RM

The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activitiesAs of December 10, 2012 Analysts’ stock rating are defined as follows:Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark* over the next 12 months.Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months.Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American and non-Japan Asia stocks, ratings

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Subsea 7 S.A. (SUBC.OL) 16

are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 12-month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, which was in operation from 7 July 2011.Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.Not Rated (NR) : Credit Suisse Equity Research does not have an investment rating or view on the stock or any other securities related to the company at this time.Not Covered (NC) : Credit Suisse Equity Research does not provide ongoing coverage of the company or offer an investment rating or investment view on the equity security of the company or related products.Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation:Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months.Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months.Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months. *An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.

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Global Ratings DistributionRating Versus universe (%) Of which banking clients (%)Outperform/Buy* 45% (64% banking clients)Neutral/Hold* 39% (60% banking clients)Underperform/Sell* 14% (52% banking clients)Restricted 2%*For purposes of the NYSE and FINRA ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.

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Target Price and RatingValuation Methodology and Risks: (12 months) for Subsea 7 S.A. (SUBC.OL)

Method: We value Subsea 7 using an equally weighted combination of DCF and SOTP, using 2017e and 2018e. For DCF we assume a beta of 1.60, WACC of 10.29% and long-term growth of 2%. For SOTP we apply EBITDA multiples to each division based on business quality, comparable companies, historical multiples, cycle phasing and growth expectations. For the group, this results multiples of 4.0x / 5.1x for 2017/18e. In aggregate this derives a target price of NOK110, which is consistent with our Underperform rating given downside potential to our target price.

Risk: Risks to our NOK110 target price and Underperform rating include a sharp recovery in oil price, greater than expected resilience to brownfield/life of field competition, a stronger contract win rate, better contract margins than our expectations, and higher E&P capital expenditures by oil and gas companies vs. our current expectations. There is also a risk SUBC becomes an acquisition target.

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Subsea 7 S.A. (SUBC.OL) 17

Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures/view/selectArchive for the definitions of abbreviations typically used in the target price method and risk sections. See the Companies Mentioned section for full company names The subject company (SUBC.OL) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse.For date and time of production, dissemination and history of recommendation for the subject company(ies) featured in this report, disseminated within the past 12 months, please refer to the link: https://rave.credit-suisse.com/disclosures/view/report?i=289969&v=-392puhpikycvykw39tnp1vpnz . Important Regional Disclosures Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report.The analyst(s) involved in the preparation of this report may participate in events hosted by the subject company, including site visits. Credit Suisse does not accept or permit analysts to accept payment or reimbursement for travel expenses associated with these events.Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares.Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report.For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit https://www.credit-suisse.com/sites/disclaimers-ib/en/canada-research-policy.html.Principal is not guaranteed in the case of equities because equity prices are variable.Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that.This research report is authored by:Credit Suisse International.......................................................................................................................................Phillip Lindsay ; Gregory BrownTo the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the FINRA 2241 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.Credit Suisse International.......................................................................................................................................Phillip Lindsay ; Gregory BrownImportant disclosures regarding companies or other issuers that are the subject of this report are available on Credit Suisse’s disclosure website at https://rave.credit-suisse.com/disclosures or by calling +1 (877) 291-2683.

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Subsea 7 S.A. (SUBC.OL) 18

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