Sector Overview

Teddy H Tsai – Head of Research, Pacific Transportation Asia Pte Ltd.

October 24, 2008

Opportunities in the offshore support vessel market

2

Investment View Investment drivers

Offshore oil & gas exploration moving to deep water – High oil & gas prices makes offshore development more cost effective. Average long-term oil price assumption by E&P companies around US$55-65/bbl, lower than current levels.

E&P capex expected to grow substantially – Expect deep water E&P capex of US$20bn from 2006-2010. Although most of this would be for rigs, higher specification supply vessels would also be required.

Favorable supply side dynamics – Fleet is old for total offshore supply fleet. 45% of the fleet is over 25 years old.

JV Partner or takeover – To be determined We require an experienced team with technical expertise operating in offshore services. We aim for partners that have strong relationships with oil majors, or with national oil

companies in Asia and Mid-East. Broad range of offshore supply vessel expertise. We aim to build a fleet of different

types of high specification multi-functional offshore vessels, including PSV, AHTS, DSV, ROV, cable laying, etc.

We are evaluating possible take private transactions of listed shipyard/offshore chartering companies. (e.g. Jaya Holdings)

3

Vessel Types

Anchor Handling Towing and Supply (AHTS) vessels Fitted for deep-water anchor handling and

towing operations, equipped with a winch capable to lift a barge or other offshore vessels’ anchors.

Main duty is to move rigs, tow barges, setting anchors, and provide supply support.

Equipped with large cranes, winches, and large open deck space. Winch and engine capacity determines power. Higher horsepower is used to handle heavier gear.

4

Vessel Types

Platform Supply Vessels (PSV) Main purpose is to move cargoes and

supplies to/from offshore installations. Flexible platform structure, enables multiple-

purpose supply cargo carrying capacity Standard Type – UT755, a Rolls Royce

designed PSV, over 100 in operations

Diving Support Vessels (DSV) Helipad Diving support equipment Large Cranes

May also be used as a standby/support vessel, with fire fighting, rescue operations, or oil recovery equipment.

5

Vessel Types

Remote Operating Vessels (ROV) Support Support vessel for remote operating vessels Often equipped with a moon pool, an

opening in the floor of the hull giving access to the sea, to facilitate ROV launching.

ROVs are used for underwater activities, equipped with cameras and arms for underwater duties.

Multi-Purpose Service Vessel (MPSV) Multi-Purpose (MPP) use Equipment for sub-sea service, large crane,

winches, and/or fire fighting equipment.

May have other equipment, such as ROV support, diving support, etc.

Dynamic positioning systems

6

Vessel Types

Cable & Pipe Laying Vessels Photo is of a pipe laying vessel Used to lay underwater pipes or cables. Pipes and cables are pre-loaded on a spool

on the vessel, and conveyors and rollers move the pipe downwards into the ocean.

Standby and Rescue Vessels Standby duties are where a vessel is waiting

near offshore installations in case of emergencies, to pick up people.

Typically with helipad, fire fighting, rescue operations, or oil recovery equipment.

Typically can accommodate up a large number of passengers, up to 300 persons

Dynamic positioning (DP2) capabilities

7

Vessel Types

Seismic Survey Vessels Survey vessel with seismic prospecting

equipment, called seismic streamers. Can be capable of a range of duties including

survey, patrolling, fishery protection, emergency standby, pollution control, fire fighting, salvage, towing, etc.

Fast Supply Intervention Vessels (FSIV) A type of crew boat that has high speeds

enabling fast delivery of personnel and cargo. Fitted with fuel and water cargo capabilities. Max speeds up to 30 knots. Can have fire fighting capabilities.

8

Vessel Types

Well Stimulation Vessel Specialized vessel used to maximize oil

production by creating a more efficient reservoir flow path.

Increases oil recovery with blending, pumping, and storage systems.

Well Intervention Vessel Has specialized equipment that is used to

maintain and repair oil & gas wells, down to depths of 600 meters for this (UT767) type.

Can deploy ROV for repair operations on the seabed.

9

Key Markets / Routes

AHTS Spot Rates North Sea spot rates have increased

significantly since our last update, following the seasonality that we saw in 2006.

Strong rates due to tight utilization rates in the North Sea market for larger AHTS vessels.

Large AHTS Spot Rates

80,533

-

20,000

40,000

60,000

80,000

100,000

120,000

Jan

Feb Mar AprMay Ju

n Jul

AugSep Oct Nov

Dec

2005 2006 2007 2008

£/DayLarge PSV Spot Rates

27,225

-5,000

10,00015,00020,00025,00030,00035,00040,00045,000

Jan

Feb Mar AprMay Ju

n Jul

AugSep Oct Nov

Dec

2005 2006 2007 2008

£/Day

PSV Spot Rates North Sea spot rates have increased

significantly since our last update, but not as well as AHTS vessels.

A higher % of PSV are on term contracts, hence the lesser volatility compared to AHTS vessels.

10

Market Rate Indicators

Source: Pareto Securities

11

Technical Specifications / Definitions

Dynamic Positioning - System that enables a vessel to stay in position without the use of cables, mooring, anchoring, or arms. There are three classes (DP, DP2, DP3), based on levels of failsafe.

BHP – Brake Horse Power, measure of power for AHTS vessels BP – Bollard Pull, indicator of a tug’s power to pull or push Fi-Fi – Fire Fighting Equipment

Asset prices vary quite significantly according to cost, type, and age, ranging from <US$10mn to close to US$600mn.

Demand Environment

13

Demand Drivers

High oil prices will result in more offshore development

Offshore support vessels are driven by increasing capex on offshore oil exploration.

Approximately 25% of US oil & natural gas production comes from offshore areas, and likely to increase. Internationally, the North Sea in Europe, and oil fields in SE Asia, are key areas of offshore development.

There is a trend towards more offshore development, especially in deep waters. Infield systems forecasts deepwater capex to exceed US$20bn from 2006-2010.

Daily offshore oil & gas production, currently standing at around 43 million barrels of oil equivalent (boe), is forecast to grow to 53 million boe in 2010 and drive industry annual expenditure from $193 billion in 2006 to $248 billion by 2010, according to Energy Business Reports.

14

Commodity Prices

OPEC surplus capacity is minimal

Sustained upward pressures on price encourages investment in projects previously considered uneconomic.

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'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07

OPEC Supply OPEC Demand

mbpdCrude Oil Prices (1984-2008)

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120

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World Oil Supply

World oil supply is slowing, with the incremental growth coming from offshore areas.

Annual Change in Global Oil Production

3.58%

0.51%

1.92%

-4.70%

8.21%

-4.76%

0

10

20

30

40

50

60

70

80

90

1965 1970 1975 1980 1985 1990 1995 2000 2005

Million barrels per day

-0.09

-0.06

-0.03

0

0.03

0.06

0.09

0.12

Y-o-Y% growth

Total World Oil Production Y-o-Y % growth

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Underlying Demand Growth

World Oil Demand has been growing steadily, despite the increase in crude oil prices.

World Oil Demand Vs Crude Oil Prices

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US

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World Oil Demand Crude Oil Prices

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Ship Demand Growth

US offshore rig fleet is growing, this will increase demand for AHTS, PSV, and other support vessels to operate in the US Gulf as well. We see a similar trend here in Asia, with more offshore developments, and required # of support vessels.

1877

1550

1600

1650

1700

1750

1800

1850

1900

1950

14-Jul-06

14-Oct-06

14-Jan-07

14-Apr-07

14-Jul-07

14-Oct-07

14-Jan-08

14-Apr-08

US Rig Count

# of Rigs

Supply / Demand Outlook

19

Global Fleet SummaryOB as a

Existing Orderbook % of FleetAHTS 1562 472 30%PSV 488 196 40%Supply 669 46 7%AHT 528 30 6%MSV 139 76 55%Standby/Resc. 327 43 13%Crew Boat 263 18 7%Seis. Survey 184 25 14%C,U & FP Lay 41 5 12%Misc Offshore 40 0 0%Hvy Dk Cargo 47 2 4%Utility 184 9 5%Well Stimul. 16 4 25%Pipe Layer 14 5 36%Diving Spt 67 8 12%ROV/Sub Spt 9 8 89%Maintenance 47 11 23%

Stratification by Type (# of Ships)Fleet Replacement Profile (Total)

4707

993

2141

0

1000

2000

3000

4000

5000

Existing Orderbook >25

All All_Offshore_Supply

Orderbook delivery schedule (# of ships)

(Total)444

309

177

621 0

0100200300400500

2008 2009 2010 2011 2012 2013

All All_Offshore_Supply

s

Across all types, 45% of the fleet is older than 25 years, versus 21% of the existing fleet on order.

20

Fleet Growth

For AHTS vessels - Average fleet growth of 2.6% per annum.

Currently at the high end with 4.8% YoY growth in 2008 expected.

Historical Fleet Grow th -PSV/Supply (# of Ships)

0

200400

600

8001000

1200

1400

1600

1800

1996 1998 2000 2002 2004 2006 2008

# of

Shi

ps

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

% G

row

th

Fleet % Grow th

Historical Fleet Growth -AHT/Supply (# of Ships)

0

500

1000

1500

2000

2500

1996 1998 2000 2002 2004 2006 2008

# of

Shi

ps

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

% G

row

th

Fleet % Growth

For PSV vessels - Average fleet growth of 3.8% per annum. 2008

growth is quite reasonable at 3.9%.

21

Fleet Growth (Cont.)

For Crew boats - Average fleet growth of 2.6% per annum.

Growth in 2008 expected to be 2.1%.

For other offshore vessels - Average fleet growth of 1.9% per annum. 2008

growth is at 2.5% YoY growth.

Historical Fleet Growth -Crew/Workboat (# of Ships)

0

50

100

150

200

250

300

350

400

450

500

1996 1998 2000 2002 2004 2006 2008

# of

Shi

ps

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

% G

row

th

Fleet % Growth

Historical Fleet Growth -Other Offshore (# of Ships)

0

200

400

600

800

1000

1200

1400

1600

1800

1996 1998 2000 2002 2004 2006 2008

# of

Shi

ps

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

% G

row

th

Fleet % Growth

22

Age & Fleet Size Profile

Over 45% of the fleet is over 25 years of age, or 2.2 million dwt. This would require additional growth in fleet for replacement, as well as to fulfill growth from new demand.

As exploration moves to deeper waters, we see greater demand for larger, more complex, more powerful support vessels. This is measures in terms of brake horse power (BHP) of the engines, winches, etc. Also requirements for multi-functional equipment, such as fire fighting, diving support, etc.

Fleet age profile (Total)2141

675

174 197

621865

340

500

1000

1500

2000

2500

>25 21-25 16-20 11-15 6-10 1-5 <1

All All_Offshore_Supply

Agewise tonnage (Total)

2.2

1.0

0.4 0.3

1.5

2.0

0.10.0

1.0

2.0

3.0

>25 21-25 16-20 11-15 6-10 1-5 <1

All All_Offshore_Supply

23

Orderbook vs. % of existing fleet

For AHTS vessels - Orderbook at 25% of existing fleet is quite low

compared to other vessel types.

Historical Fleet Growth -AHT/Supply (# of Ships)

0

500

1000

1500

2000

2500

1996 1998 2000 2002 2004 2006 2008

# of

Shi

ps

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

OB

as

a %

of F

leet

Fleet OB as a % of Fleet

Historical Fleet Growth -PSV/Supply (# of Ships)

0

200

400

600

800

1000

1200

1400

1600

1800

1996 1998 2000 2002 2004 2006 2008

# of

Shi

ps

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

OB

as

a %

of F

leet

Fleet OB as a % of Fleet

For PSV vessels - Orderbook at 15.6% of existing fleet is very

low compared to other vessel types.

24

Orderbook vs. % of existing fleet

For Crew Boats - Orderbook at 5.6% of existing fleet is similar

to 1998 peak levels. Yet, this may not be enough, especially for fast intervention type vessels.

For other offshore vessels - Orderbook at 12.4% of existing fleet is at

historical high levels. This may be a bit misleading, considering that there are many specialized types of offshore vessels.

Historical Fleet Growth -Crew/Workboat (# of Ships)

0

50

100

150

200

250

300

350

400

450

500

1996 1998 2000 2002 2004 2006 2008

# of

Shi

ps

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

OB

as

a %

of F

leet

Fleet OB as a % of Fleet

Historical Fleet Growth -Other Offshore (# of Ships)

0

200

400

600

800

1000

1200

1400

1600

1800

1996 1998 2000 2002 2004 2006 2008

# of

Shi

ps

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

OB

as

a %

of F

leet

Fleet OB as a % of Fleet

25

Supply Outlook – Fleet Replacement Profile (Table)

Smallest size is most attractive in terms of fleet retirement. However, demand is focused on the larger sizes.

Fairly small orderbook provides opportunities if we can obtain the assets.

Fleet Replacem ent Profile (# of Ships)Offshore SupplyOffshore SupplyOffshore SupplyOffshore SupplyOffshore SupplyTotal0-1999 2000-3999 4000-5999 6000-7999 8000-9999

Exis ting 4633 808 213 43 16 5713New buildings 388 368 176 24 8 964>25 2590 82 18 4 3 2697>25 as a % of Exis ting 55.9% 10.1% 8.5% 9.3% 18.8% 47.2%NB as a % of Exis ting 8.4% 45.5% 82.6% 55.8% 50.0% 16.9%

Fleet Replacem ent Profile (m ln Dw t)Offshore SupplyOffshore SupplyOffshore SupplyOffshore SupplyOffshore SupplyTotal0-1999 2000-3999 4000-5999 6000-7999 8000-9999

Exis ting 3.1 2.2 1.0 0.3 0.1 6.7New buildings 0.4 1.0 0.8 0.2 0.1 2.5>25 1.5 0.2 0.1 0.0 0.0 1.9>25 as a % of Exis ting 49.8% 9.2% 8.7% 9.2% 18.1% 27.9%NB as a % of Exis ting 13.1% 46.4% 82.0% 51.5% 49.9% 36.7%

26

Top PlayersTop 50 Average

Top 50 Others Total % of Fleet AgeAHTS 967 614 1581 61% 17 PSV 438 64 502 87% 8 Supply 570 512 1082 53% 21 AHT 295 233 528 56% 20 MSV 109 33 142 77% 15 Standby/Resc. 255 75 330 77% 27 Crew Boat 148 40 188 79% 23 Seis. Survey 159 51 210 76% 25

Top 50 owners as a % of Total

AHTS Ships PSV Ships Supply Ships STANDBY Ships CREW BOAT ShipsTidewater Marine 179 Edison Chouest 49 Tidewater Marine 150 Vroon B.V. 42 Tidewater Marine 15

Swire Group 52 Tidewater Marine 44 Trico Marine 38 Seacor Holdings Inc. 29 Miclyn Express Off. 9Seacor Holdings Inc. 51 Bourbon 31 Seacor Holdings Inc. 35 Craig Group 27 Norsul Offshore 9

CNOOC 50 GulfMark Offshore 28 Hornbeck Offshore 29 A.P. Moller 19 Arabian Gulf Mech. 7A.P. Moller 47 Farstad Shipping 23 Abdon Callais 24 Nomis Shipping Ltd. 13 Seacor Holdings Inc. 6Bourbon 34 Hornbeck Offshore 19 Edison Chouest 21 Mokster Shipping 10 Kaspmornefteflot 5

Indian Govt. 31 Rigdon Marine 17 Zamil Operations 13 Al-Mojil Group 9 Lamnalco Ltd. 5Farstad Shipping 26 DOF Management 16 ESNAAD 11 Emas Laut Sdn. Bhd. 8 Apsheron Oil Fleet 4Kaspmornefteflot 23 Seacor Holdings Inc. 14 Aries Marine Corp. 10 CNOOC 8 Modest Maritime Serv 4Whitesea Shpg. 22 Marine Management 12 L & M Bo-Truc Rental 9 Ocean Mainport 7 Baruna Raya Logistic 4

Maridive & Oil Serv 22 Trico Marine 11 Bumi Armada Nav. 9 Halul Offshore 6 Syarikat Borcos Shpg 4GulfMark Offshore 21 Siem Offshore 10 NIOC 9 Thor Ltd. 5 A.A. Turki Corp 4Edison Chouest 18 A.P. Moller 8 Odyssea Marine 9 Ajang Shipping 5 Bourbon 3Zamil Operations 18 Island Offshore Mngt 8 TMM Grupo 8 ENI S.p.A. 4 Bambini Srl 3

Pertamina 16 Havila Shipping 8 Baruna Raya Logistic 8 Topaz Energy 4 Offshore Oil Serv. 3

The offshore support vessel fleet is quite concentrated.

PSV young fleet, others segments are quite old.