Industry Outlook

Offshore Support Vessels

Refer to important disclaimers at the end of this report

DBS Group Research . Asian Insights Office 17 September

24 November
2015 2017

Overall Outlook
Oil price momentum looks positive for now; 2018 Brent forecast at US$60-65/bbl. Year-to-date, Brent crude oil price
has averaged around US$53/bbl – close to 18% improvement compared to 2016’s average of US$45/bbl, and is in line
with our expectations of an increasingly balanced market. Prices have been well above the key US$50/bbl mark since
August 2017, and has recently breached the key psychological mark of US$60/bbl, driven by increasingly positive
expectations from the upcoming OPEC general meeting in November. Thus, our thesis of a recovery in oil prices in
2H17 has held firm so far, driven by falling oil inventory worldwide and continued willingness by OPEC members to
limit production and exports within decided caps. We recently raised our 2018 average Brent crude oil forecast to
US$60-65/bbl (from US$55-60 previously), as OPEC cuts look set to be extended beyond the current timeline of March
2018 and demand seems robust enough.

US shale productivity gains have plateaued and costs look set to rise. Over the last few months, we have seen US shale
drilling productivity gains (in barrels per day per well) stall, especially in the Permian basin. Major US shale producers’
cash operating costs per barrel have been inching up since 4Q16 as well, adding to evidence that the days of sharp
cost reductions are over. We think West Texas Intermediate (WTI) oil prices in excess of US$50/bbl are required for
shale producers to remain profitable, and prices below US$45/bbl may be unsustainable. This puts a higher floor on oil
prices, in our view.

Oil price trend since January 2009 Remarks

(US$/bbl)
140 1. Brent crude has broken the
psychologically important
120 US$60/bbl ceiling
100
2. OPEC likely to extend cuts
80 beyond March 2018; US
shale productivity gains
60 have plateaued; oil
demand seems robust
40

20 3. DBS forecast 2018

average: US$60-65/bbl
0
4. Long-term target: US$60-
65/bbl
Brent WTI
Source: Bloomberg Finance L.P., DBS Bank

Oil demand growth in 2017/18 is likely to be robust. We expect oil consumption to grow by around 1.4-1.5mmbpd in
2017/18, slightly higher than the demand growth seen in 2016. After a lacklustre growth of 1.0mmbpd in 1Q17, there
was acceleration in demand growth to 2.2mmbpd in 2Q17, which was followed by somewhat slower demand growth
of 1.2mmbpd in 3Q17, as US numbers suffered owing to the impact of hurricanes in September. However, this keeps
overall numbers on track with our estimates. Overall, Asia-Pacific (ex-Japan) is expected to contribute around 1.0
mmbpd of incremental demand over the next couple of years. China and India, as usual, are expected to be the largest
contributors to oil consumption growth. The Indian government’s currency demonetisation programme in late-2016
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contributed to declines in India’s oil consumption in 1Q17. However, as India’s oil consumers adjusted to the currency
changes, consumption began growing again in 2Q17.

Inventory drawdowns will continue to support gradual oil price increase. As we had expected earlier, market
rebalancing was achieved in 2017 and global inventory drawdowns – as evidenced by US inventory numbers – picked
up in 2H17. As evident from EIA data, the pace of inventory declines in 2017 is faster than in 2016, and latest
inventory readings are lower than the corresponding number last year, despite refinery closures during the hurricane
season, and can only decline further hereon during winter, when demand peaks. This is a promising signal as far as
market rebalancing is concerned and will continue to support positive oil price trajectory hereon, as long as the supply
side is wilfully capped by market participants.

Industry capital expenditure likely to climb in 2018. If we look at the capital expenditure (capex) budgets for 2017 of
the eight largest international oil companies (IOCs), they will likely end 2017 having spent less than originally envisaged
for the year. Thus, while we were earlier looking for flat capex in 2017 compared to 2016, the oil majors could end up
spending 10% less y-o-y as they get more bang for lesser bucks in the current environment. Capex budgets for 2018
haven’t been formalised across the board yet, but we estimate a single-digit improvement (6-7%) over 2017 levels,
based on early trends, which points to a revival but not a strong one. A significant capex recovery can only be expected
in 2019 onwards if oil prices stay above US$60/bbl levels in 2018. Growth in investments in North American onshore
shale basins is expected to moderate in 2018 (from around 30% capex growth in 2017 to around 10-15% capex
growth in 2018), while offshore capex should start picking up gradually. Thus, we expect offshore oil service players to
continue chugging along the bottom in the absence of an immediate capex revival, but some momentum should
gather towards 2H18 as higher capex plans are formalised.

We are seeing a topping out of OSV-to-rig ratios in 2018, which should drive a gradual recovery in utilisation and day
rates. Due to an easing supply-side glut as well as signs of a bottoming out of demand (measured in terms of the
working offshore rig count), we anticipate that 2018 will be the start of a long and gradual recovery in the OSV space.
In terms of size, because of the shift towards lower-breakeven shallow-water work since the oil-price collapse, the
larger AHTS and PSV vessels have seen the biggest increase in their vessel-to-rig ratios, as the floating rig count has
experienced a relatively larger decline on a dearth of mid-to-deepwater E&P activity.

Anchor handling tug supply (AHTS) vessel-to-rig ratio Remarks

5.6
1. Vessel-to-working rig ratio
5.1
Ratio of vessels to rigs (x)

has risen steeply, on vessel

4.6 oversupply and lower rig
4.1 utilisation
3.6
3.1 2. Larger AHTS-to-rig ratio has
caught up with the smaller
2.6
vessel ratio as more floaters
2.1 than jackups are idle, thanks
1.6 to robust shallow-water
2004

2005

2006

2009

2010

2011

2012

2013

2016

2017

2018
2007

2008

2014

2015

Current

activity

AHTS (<8,000 BHP) vs. jackups AHTS (>8,000 BHP) vs. Floaters Total AHTS to rigs

Source: Clarkson Research, DBS Bank

So far this year, the Middle East has been a refuge for OSV activity as it is primarily a shallow-water offshore region,
with term utilisation there peaking at 55% in recent months. However, that is expected to soften in the remainder of
2017 as several work programmes roll off towards the end of the year. North Sea OSV utilisation has seen an uptick in
recent months, but could see a lull in work going forward as we enter winter period, which tends to be a quieter. In
Asia-Pacific, OSV utilisation remains slightly below the 50% mark, but there looks to be some uptick in towing work in
2018, particularly in Southeast Asia, primarily driven by demand from Malaysia. The West African sector has remained
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flat, with net supply remaining constant, though utilisation remains healthy at around 66%. Day-rate wise, because
some West African tonnage have remained inactive for a while, there is potential for higher spot rates in 2018.

Platform supply vessel (PSV)-to-rig ratio Remarks

8.0
1. Supply-demand dynamics
7.0
for the large PSVs look even
Ratio of vessels to rigs (x)

6.0 worse than the AHTS

5.0 market
4.0
3.0
2.0
1.0
2004

2005

2006

2007

2010

2011

2012

2013

2016

2017

2018
2008

2009

2014

2015

Current
<3,000 dwt vs. jackups >3,000 dwt vs. Floaters Total PSV to rigs

Source: Clarkson Research, DBS Bank

Growth of supply glut has slowed, but we are still a long way from reversing the overhang. Growth in the OSV supply
glut – measured by net deliveries (additions less removals) – has decelerated in recent months, with the AHTS fleet
shrinking for the first time in years. This was due to a large proportion of deliveries having been deferred or cancelled –
in other words, lower additions to the fleet. However, because vessel retirements have not picked up in a big way as
owners opt to stack instead of scrap, the deceleration in fleet growth has yet to result in a meaningful reduction in
total fleet count. For example, the net reduction of seven AHTS vessels from 4Q16-3Q17 is insignificant versus a fleet
size of more than 2,000 vessels. Vessel owners remain stuck in a version of game theory where nobody is incentivised
to be the first to scrap vessels.

Net deliveries of AHTS and PSVs (quarterly) Remarks

50 45 1. Net deliveries (i.e. additions
37
39 less removals) have
40 35
31
decreased in recent quarters
30
30 28 as owners continue to defer
25
23 23 23 delivery dates and scrap
20
20 17 18 17 18 some vessels
13 12
9 8
10 7 7 2. But given a fleet of 5000+
4 5
3 23
-2 AHTS and PSVs combined,
-4
0 the oversupply looks unlikely
-3 to be alleviated soon
-10

AHTS net delieveries/(demolitions) PSV net delieveries/(demolitions)

Source: Clarkson Research, DBS Bank

Delivery pipeline is not huge but new orders unlikely at this stage. The overall OSV order book-to-fleet ratio is less than
10%, with the AHTS order book at 5.5% of fleet and PSV order book at 7.3% as of end-October 2017. This is a long
way off from peak orderbook-to-fleet levels but the decline has been mainly due to the gradual delivery of vessels into
the working fleet over the last decade, which has pushed the OSV-to-rig ratios to all-time highs. With such high OSV-
to-rig ratios, we see limited scope for new orders over the next few years, except for certain niche requirements or

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some replacement demand. We believe this is bad news especially for OSV shipyards, as orders for new OSVs will be
few and far between.

OSV order book-to-fleet ratios Remarks

40.0%
1. AHTS order book-to-fleet
35.0%
ratio is at 5.5%
30.0%
25.0% 2. PSV order book-to-fleet
20.0% ratio is 7.3% currently
15.0%
3. Not worrying under
10.0%
ordinary circumstances, but
5.0% onerous for now
0.0%
Jan-97

Jan-99

Jan-01

Jan-03

Jan-05

Jan-07

Jan-09

Jan-11

Jan-13

Jan-15

Jan-17
AHTS PSV

Source: Clarkson Research, DBS Bank

Delivery schedule of AHTS vessels Remarks

300
1. 2016 deliveries have been
250 pushed back to 2017

200
No. of deliv eries

2. We will likely see the

majority of 2017/18
150
deliveries deferred further
100
3. Older vessels need to be
50 scrapped at a much faster
rate to absorb replacement
0 vessels
2017F

2018F
2006

2007

2008

2009

2015

2016
2010

2011

2012

2013

2014

4,000 - 7,999 BHP 8,000 - 12,000 BHP >12,000 BHP

Source: Clarkson Research, DBS Bank

Delivery schedule of PSVs Remarks

300 1. Similar situation to the

AHTS vessels with many
250
PSVs deferred
No. of deliv eries

200
2. Majority of the 2017/18
150 newbuilds expected to be
deferred further
100

50 3. Oversupply in bigger PSVs

more apparent
0
2007

2008

2009

2010

2013

2014

2015

2016
2006

2011

2012

2018F
2017F

<3.000 DWT 3,000 - 4,000 DWT > 4,000 DWT

Source: Clarkson Research, DBS Bank

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New orders for AHTS vessels Remarks

350
1. AHTS ordering has been
300
subdued since the large
No. of vessels ordered

250 boom in 2006 to 2007

200
2. Only four orders made in
150
2016, and none in 2017 so
100 far
50
3. Unlikely to see a pickup in
0 newbuild orders in the near
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
YTD
term
<8,000 bhp 8,000 - 12,000 bhp > 12,000 bhp
Source: Clarkson Research, DBS Bank

New orders for PSVs Remarks

250
1. Orders for PSVs had picked
200 up during 2010 to 2014 as
No. of v essels ordered

fields went further offshore

150
2. 2016 saw only one newbuild
100 order, and four in 2017 so
far
50
3. New orders for PSVs likely to
0 dry up significantly hereon
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
YTD
<3,000 dwt 3,000-4,000 dwt >4,000 dwt
Source: Clarkson Research, DBS Bank

Demand-side dynamics look more sanguine, with green shoots of a recovery starting to show. In contrast to the bleak
supply-side situation painted, we see the beginnings of an uptick in demand for OSVs, seen in oil majors’ capex (please
see the next section) and the offshore working rig count. After falling from a peak of 740 contracted offshore rigs in
April 2014 to 460 rigs in January 2017, we have observed what looks to be a bottoming of the contracted rig count,
with the YTD rig count having increased by a modest 2% since the lows in January. While 1H17 saw a brisker uptick in
activity level, the rig count has declined slightly from the recent high of 481 rigs in July to 470 rigs as of end-October. A
meaningful rebound in the working rig count would of course be predicated on oil majors increasing their capex
budgets, of which we are yet to see major signs.

Worldwide contracted rig count Remarks

Low seen in Jan '17. Current
(No. of rigs) contracted rig count is 2% higher 1. Working rig count bottomed
800 vs. trough level.
in January 2017, and is up a
700
modest 2% from the trough
600 level, as October saw a drop-
500 off in activity
400

300

200

100

Jackup Semisub Drillship

Source: IHS Petrodata, DBS Bank

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Key Industry Trends

Drop in industry capex have led to a long bottom for OSVs. Capex budgets have been cut substantially since the onset
of the oil-price collapse. Global oil & gas capex remained flat in 2017 after dropping around 20% in 2016, and
declining about 17% in 2015. Offshore capex was down in 2017, especially from IOCs but this was offset by 30%
growth in onshore capex from North American independent oil producers and slight growth from a few Asian national
oil companies (NOCs). As highlighted earlier, if we look at the estimated capex budgets for 2018 of the eight largest
IOCs, the trend is only for single-digit growth (6-7%), which is not significant to cause a sharp turnaround for the OSV
asset owners in 2018. However, we reckon if oil prices stay above the US$60/bbl level for a sustained period in 2018,
we should see capex budgets climbing towards 2H18, providing some succour to the OSV sector.

Capex increases by state-owned producers in China, India, Indonesia, and Thailand are the only silver lining for regional
offshore oil services companies in the near term. Capex growth from NOCs in the Middle East and Russia are expected
to remain subdued in 2018 as the production cut weighs. Over at Brazilian heavyweight Petrobras, high debt levels and
depressed oil prices mean upstream investment will be flat at best, though a reduction in lifting costs at presalt fields
(from nearly US$15/bbl in 2014 to an estimated US$8/bbl currently) should help boost its ultra-deepwater ambitions in
the medium to long term.

Supermajor capex trends Remarks

US$ bn
50.0 1. Eight supermajors account
45.0 -52% -35% -44% for roughly one-third of
40.0 global E&P capex
35.0 -46%
30.0 -30% 2. Capex estimate for 2018 is
-44%
25.0 -46% 43% lower than 2014’s
20.0 -52%
15.0
capex (before oil-price
10.0 collapse)
5.0
0.0 3. Capex estimate for 2018 is
Chevron

Exxon
BP

Statoil
Total
Shell (+BG)

Eni

slightly higher than 2017 for

ConocoPhillips

now

2014 2015 2016 2017 2018

Source: Clarkson Research, DBS Bank

Deepwater activity is especially vulnerable. In the past, with depleting oil fields and dwindling shallow-water reserves,
oil companies and E&P companies were under pressure to spend on undeveloped fields in deeper and more remote
waters that required the support of OSVs. But with the oil price drop and lower E&P expenditure, firms are cutting back
on deepwater activity. We believe deepwater activity will be slow as long as oil prices are below US$70/barrel. Industry
consultant Wood Mackenzie estimated in 2016 that capital spending worth US$380b, on 68 major projects, had been
deferred since oil prices started crashing in late-2014, and an additional US$170b is at risk during the five-year period
spanning 2016 to 2020, particularly in deepwater projects. This will affect OSV deployment trends in areas like the
North Sea, the Gulf of Mexico, and Brazil.

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Global OSV fleet utilisation trends Remarks

100%
1. West Africa has been the
90% bright spot but intense
80% competition there means
lower day rates
70%

60% 2. Utilisation looks to have

50%
bottomed in most regions

40%
Apr-14

Apr-15

Apr-16

Apr-17
Jul-13

Jul-14

Jul-15

Jul-16

Jul-17
Jan-15

Jan-16

Jan-17
Jan-14
Oct-13

Oct-14

Oct-15

Oct-16
West Africa Asia Pacific US GoM North Sea
Source: IHS Petrodata, DBS Bank

North Sea OSV fleet utilisation trends Remarks

100%
1. Utilisation has bottomed in
90%
early-2017
80%
70% 2. AHT/AHTS market remains
60% relatively weaker
50%
3. Significant idling of vessels in
40%
the North Sea still likely as
30% harsh environment/
Apr-14

Apr-15

Apr-16

Apr-17
Jul-14

Jul-15

Jul-16

Jul-17
Jul-13

Jan-15

Jan-16
Jan-14

Jan-17
Oct-14

Oct-15
Oct-13

Oct-16

deepwater activity suffers in

a low-oil-price environment
Total PSV Total AHT/AHTS Total

Source: IHS Petrodata, DBS Bank

North Sea PSV term day rates - average Remarks

30,000
1. Secular downward trend in
day rates since 2H14
25,000

20,000 2. North Sea PSVs have been

migrating into other areas
15,000 like West Africa

10,000

5,000
Apr-15

Apr-16
Apr-14

Apr-17
Jul-14

Jul-15

Jul-17
Jul-13

Jul-16
Jan-14

Jan-16

Jan-17
Jan-15
Oct-13

Oct-14

Oct-16
Oct-15

3,000-3,999 dwt 4,000+ dwt

Source: IHS Petrodata, DBS Bank

Utilisation rates seem be picking up slightly from 2017 bottom, as OSV owners are operating at near cash breakeven.
Utilisation rates have remained broadly stable so far in 2017, with some regions – Asia-Pacific and the North Sea – even
seeing a slight uptick in recent months. Asia-Pacific OSV utilisation remains just below 50%, US Gulf of Mexico at 42%,
North Sea at 57%, and West Africa - the relative bright spot - with utilisation at 66% (though we understand day rates
there are being competed down as vessels have been moved into the region to get work). In Southeast Asia, spot AHTS
day rates have declined to below US$1 per British horsepower per day (likely somewhere between US$0.60-0.80/bhp,
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based on our conversations with operators), from US$1.60-1.80 per British horsepower per day levels before the oil
price decline. Mid-sized PSV day rates are around US$8,000-11,000, down from US$23,000 per day levels pre-crisis.
Nonetheless, we expect that rates are now either at or near the bottom, as OSV players generally talk of operating near
cash-breakeven levels. The risk for OSV players would be a ‘lower for longer’ rates if a recovery in offshore spending
does not materialise.

Asia-Pacific OSV fleet utilisation trends Remarks

100% 1. Utilisation for both AHTS and
90% PSV has slipped to around
50% levels
80%

70% 2. Owners largely operating at

60% cash-breakeven levels

50%
40%
Apr-14

Apr-15

Apr-17
Apr-16
Jul-13

Jul-14

Jul-16

Jul-17
Jan-15

Jul-15

Jan-16

Jan-17
Jan-14
Oct-13

Oct-15

Oct-16
Oct-14

Total PSV Total AHTS Total

Source: IHS Petrodata, DBS Bank

Southeast Asia AHTS term day rates - average Remarks

35,000
1. Spot day rates AHTS in
30,000 Southeast Asia close to the
25,000 US$1/bhp mark based on
20,000 data
15,000
2. Anecdotally, rates below
10,000
US$1/bhp are now the
5,000 norm, though operators are
0 less forthcoming in
Apr-15

Apr-16

Apr-17
Apr-14
Jan-14

Jul-14

Jan-15

Jul-15

Jan-16

Jul-16

Jan-17
Jul-13

Jul-17
Oct-13

Oct-14

Oct-15

Oct-16

disclosing rates these days.

Data (average number)
could be skewed by some
3,000-5,999 bhp 6,000-9,999 bhp
legacy term contracts
10,000-14,999 bhp 15,000-17,999 bhp

Source: IHS Petrodata, DBS Bank

Southeast Asia PSV term day rates - average Remarks

35000
1. Day rates for workhorse
30000
medium-sized PSVs have slid
25000 toward US$10,000 per day
20000 from US$22,000 per day
15000
10000
5000
0
Apr-15

Apr-16

Apr-17
Apr-14
Jan-14

Jul-14

Jan-15

Jul-15

Jan-16

Jul-16

Jan-17
Jul-13

Jul-17
Oct-13

Oct-14

Oct-15

Oct-16

1,000-1,999 dwt 3,000-3,999 dwt 4,000+ dwt

Source: IHS Petrodata, DBS Bank

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Longer-term contracts, exposure to production phase critical. Spending on maintenance requirements of existing
offshore production platforms is expected to be less affected, as the efficiency of these structures needs to be
maintained. Since producing fields tend to last anywhere between five and 20 years, OSV contracts related to servicing
offshore production platforms and related structures, like pipelines, are relatively longer term in nature and companies
exposed to such contracts can ride out the crisis relatively better.

Exposure to NOCs could be a benefit in certain regions. Despite the oil price plunge, NOCs remain more resilient than
major IOCs and independents, and carry less risk of cancellations and deferments of payment, as these NOCs often
have other strategic motivations in keeping capex at certain levels than just profit alone. NOCs in India, the Middle East,
West Africa, and Mexico, among others, remain pockets of opportunities in the global E&P space. As mentioned earlier,
the Middle East is a relative hub of activity at the moment, though an influx of tonnage from other regions has
increased competition and pushed rates downward. OSV owners are vying for long-term contracts that can be found in
the Middle-East region at relatively attractive rates (versus other regions), although securing such contracts is often
reliant on relationships – hence the move by local players to partner Middle Eastern counterparts, e.g. Pacific
Radiance’s joint venture with Allianz Marine.

Middle East AHTS term day rates - average Remarks

14,000
1. Competition for work has
12,000 intensified as tonnage has
10,000 moved into the Middle East
8,000
6,000 2. Not easy to get contracts
4,000
from NOCs
2,000
0
Apr-14

Apr-15

Apr-17
Apr-16
Jan-14

Jan-15

Jan-16

Jan-17
Jul-13

Jul-14
Oct-14

Jul-15
Oct-15

Jul-16
Oct-16

Jul-17
Oct-13

3,000-5,999 bhp 6,000-9,999 bhp

Source: IHS Petrodata, DBS Bank

West Africa PSV term day rates - average Remarks

35000 1. Work in West Africa has
30000 been brisker on project
developments
25000
20000 2. However, an influx of PSVs
15000 from other regions has
depressed day rates
10000

5000
Apr-14

Apr-15

Apr-17
Apr-16
Jul-13

Jan-14

Jul-14

Jan-15

Jul-15

Jan-16

Jul-16

Jan-17

Jul-17
Oct-14

Oct-15

Oct-16
Oct-13

3,000-3,999 dwt 4,000+ dwt

Source: IHS Petrodata, DBS Bank

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West Africa AHTS term day rates - average Remarks

30,000
1. AHTS day rates have,
likewise, been depressed in
25,000 West Africa on an influx of
tonnage
20,000

15,000

10,000

Jul-13 Jul-14 Jul-15 Jul-16 Jul-17

Jan-14 Jan-15 Jan-16 Jan-17

Oct-13 Oct-14 Oct-15 Oct-16
Apr-14 Apr-15 Apr-16 Apr-17

6,000-9,999 bhp 10,000-14,999 bhp

Source: IHS Petrodata, DBS Bank

Risks and Regulations

Balance-sheet stress and cash-flow issues. Typically, OSV owner/operators and offshore contractors are highly geared
as it is an asset-intensive business. Gearing ratios in excess of 1x are the norm, and operating cash-flow is negative in
many cases. In this stressed environment, we have already seen several cases of OSV companies securing extension of
maturity, debt-to-equity swaps, outright haircuts on debt, and waivers of loan-related covenants from bondholders
and/or lending banks. With earnings declining and operating cash-flow negative in many cases, refinancing existing
borrowings will be expensive and in extreme cases, new credit facilities may not be available. In the absence of working
capital financing, trade claims could pile up quickly, leading to bankruptcy proceedings. Thus, we need to keep a close
eye on the liquidity and solvency situation of OSV players. Insolvencies, market exits, and consolidation are likely to
continue dominating the industry landscape in the near term.

Renegotiations of existing contracts a reality. Although day rates are at near-breakeven levels now, vessels on legacy
contracts at higher day rates are likely to face pressure from charterers to renegotiate those rates downward, if that
discussion has not already taken place.

Political and regulatory risks of emerging growth pockets. The OSV industry in Asia-Pacific has been increasingly
looking at newer growth markets to expand into. This includes geographies like Mexico, Latin America, West and East
Africa, and now, Iran, with the removal of US sanctions. These regions have their own share of political problems and
local content regulations, which make it necessary for foreign players to tread carefully and choose the right partners.
Failure to read these new markets carefully could lead to financial and reputational hazards.

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We Cover
Ezion Holdings
PACC Offshore Holdings
Vard Holdings
Mermaid Maritime
Pacific Radiance
Wintermar Offshore

Our In-House Experts

Suvro Sarkar Ho Pei Hwa

suvro@dbs.com peihwa@dbs.com
+65 6682 3720 +65 6682 3714

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or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct,
special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein
(including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other
person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell
any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their
directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also
perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not
intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or
regulation.

RESTRICTIONS ON DISTRIBUTION
General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or
located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be
contrary to law or regulation.

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Industry Outlook
Offshore Support Vessels

Australia This report is being distributed in Australia by DBS Bank Ltd. (“DBS”) or DBS Vickers Securities (Singapore) Pte Ltd
(“DBSVS”), both of which are exempted from the requirement to hold an Australian Financial Services Licence under the
Corporation Act 2001 (“CA”) in respect of financial services provided to the recipients. Both DBS and DBSVS are regulated
by the Monetary Authority of Singapore under the laws of Singapore, which differ from Australian laws. Distribution of this
report is intended only for “wholesale investors” within the meaning of the CA.

Hong Kong This report is being distributed in Hong Kong by DBS Vickers (Hong Kong) Limited which is licensed and regulated by the
Hong Kong Securities and Futures Commission and/or by DBS Bank (Hong Kong) Limited which is regulated by the Hong
Kong Monetary Authority and the Securities and Futures Commission. Where this publication relates to a research report,
unless otherwise stated in the research report(s), DBS Bank (Hong Kong) Limited is not the issuer of the research report(s).
This publication including any research report(s) is/are distributed on the express understanding that, whilst the information
contained within is believed to be reliable, the information has not been independently verified by DBS Bank (Hong Kong)
Limited. This report is intended for distribution in Hong Kong only to professional investors (as defined in the Securities and
Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and any rules promulgated thereunder.)

Indonesia This report is being distributed in Indonesia by PT DBS Vickers Securities Indonesia.

Malaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from
ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this
report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised
that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected
and associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any
of them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or
seek to perform broking, investment banking/corporate advisory and other services for the subject companies. They may
also have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory
and other services from the subject companies.

Wong Ming Tek, Executive Director, ADBSR

Singapore This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No.
198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the
Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign
entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial
Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert
Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons
only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising
from, or in connection with the report.

Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd. Research reports distributed are only
intended for institutional clients only and no other person may act upon it.

United Kingdom This report is being distributed in the UK by DBS Vickers Securities (UK) Ltd, who is an authorised person in the meaning of
the Financial Services and Markets Act and is regulated by The Financial Conduct Authority. Research distributed in the UK
is intended only for institutional clients.

Dubai This research report is being distributed in The Dubai International Financial Centre (“DIFC”) by DBS Bank Ltd., (DIFC
Branch) having its office at PO Box 506538, 3rd Floor, Building 3, East Wing, Gate Precinct, Dubai International Financial
Centre (DIFC), Dubai, United Arab Emirates. DBS Bank Ltd., (DIFC Branch) is regulated by The Dubai Financial Services
Authority. This research report is intended only for professional clients (as defined in the DFSA rulebook) and no other
person may act upon it.

United States This report was prepared by DBS Bank Ltd. DBSVUSA did not participate in its preparation. The research analyst(s) named
on this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The research
analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a subject
company, public appearances and trading securities held by a research analyst. This report is being distributed in the United
States by DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major U.S.
Institutional Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as
DBSVUSA may authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred
to herein should contact DBSVUSA directly and not its affiliate.

Other jurisdictions In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified,
professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.

DBS Bank Ltd

12 Marina Boulevard, Marina Bay Financial Centre Tower 3
Singapore 018982
Tel. 65-6878 8888
Company Regn. No. 196800306E

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