ADRIANECONOMAKIS@VESSELSVALUE.COM

OFFSHORE VESSEL VALUES: REALITY VERSUS FANTASY

Adrian Economakis · COO

1. An introduction to VesselsValue

2. OSV valuation methodology

3. Offshore vessel values: reality versus fantasy?

TOPICS

INTRODUCTION TO VESSELSVALUE

INTRODUCTION TO VESSELSVALUE

ESTABLISHED 2010 OFFICES London (HQ), Isle of Wight (Data), Stoke (Coders), Singapore (Rep) PEOPLE 80 (from 4 in 2010)

The Online Shipping & Offshore Market Intelligence and Valuation Service

INTRODUCTION TO VESSELSVALUE

CLIENTS 750 logins, 360 companies, 48 countries CLIENT TYPES Banks, Owners, Funds, Governments, Regulators, Lawyers

PRESS Quoted in c.20 articles per week, across more than 30 global and regional publications

OVERVIEW OF SERVICES

VV$ INSTANT VALUES • Daily updated values for Vessels,

Companies, Portfolios

• Tankers, Bulkers, Containers, LNG, LPG, PSV’s, AHTS’s

• Accuracy tested and reported

• Full supporting information (time series, transactions etc)

• Instant valuation certificates

OVERVIEW OF SERVICES

VV+ POWERFUL & INTERACTIVE DATABASE • Search and compare by any

combination of criteria

• Fleet search: vessels, companies, specifications, incidents, locations, laden/ballast

• Deals search: S&P, Newbuilds, Demolitions, Charters

OVERVIEW OF SERVICES

VV@ INTEGRATED AIS AND GIS • AIS Satellite and Terrestrial

mapping/tracking

• GIS Maritime energy infrastructure (oil fields, platforms, pipelines, SBM’s

• Automated alerts (i.e. sanction zones, OSV activity around rigs)

BOARD OF DIRECTORS

RICHARD RIVLIN CEO

40 years in the shipping market

Founder of VesselsValue

ADRIAN ECONOMAKIS COO

5 years in Energy consultancy, 6 years VV

Founding employee at VV

MSc Shipping, Trade & Finance

GEORGINA GAVIN CCO

10 years sales and management experience

Founding employee at VV

BEN DURBER CTO

1st class mathematics and computer programming degree

11 years experience in software development

Founding employee at VV

KEY STAFF

London Isle of Wight

Stoke

Singapore

Consultants

OSV VALUATION METHODOLOGY

OSV MARKET VALUE MODEL

1. Type

2. Size

3. Age

4. Features

5. Transactions

6. Market sentiment

Ship, Fleet and Portfolio

values

Historical Time Series

Fleet Statistics

Ownership/Relationships

DAILY UPDATES INSTANT ACCESS

DAILY RECALIBRATION

OSV FEATURES VS VALUE

• DWT (PSVs)

• Bollard pull / BHP (AHTSs)

• Fire-fighting (FiFi) capability

• Deck strength

• Deck area

• Total accommodation

• Supply capacity (methanol/glycol etc.)

• Dynamic positioning

• Chain capacity

• Chain lockers

• Oil recovery

• Survivor capacity/equipment

• Generators

• Number of winches/drums

• Helideck

• Gearing

• Design

MARKET SENTIMENT VS VALUE

Reported OSV charter rates are NOT a good proxy for market performance & sentiment

This is because they do NOT take into account utilisation of the vessels (i.e. no TCE)

Therefore, there is NO adequate reporting of OSV rates that can be used to correlate changes in vessel values.

OSV values correlate highly with the oil price (after signal processing utilising rolling averages and a lagging effect)

Therefore, the VV Oil Price Index (SOM) is used as the proxy for market sentiment and has effects on values in the absence of transactions

However…

MARKET SENTIMENT VS VALUE

0

10

20

30

40

50

60

70

80

90

100

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

1/4/2005 1/4/2006 1/4/2007 1/4/2008 1/4/2009 1/4/2010 1/4/2011 1/4/2012 1/4/2013 1/4/2014 1/4/2015 1/4/2016

Offshore SOM - Brent Crude Oil

Brent Crude Oil Spot($/barrel) Combined SOM PSV (Large)

EXAMPLE OF VV OFFSHORE VALUATION PAGE

EXAMPLE OF VV OFFSHORE VALUATION PAGE

ACCURACY

0%

1%

2%

3%

-50% -30% -10% 10% 30% 50%

% o

f val

uatio

ns

Valuation difference (%)

Accuracy Range

% of Values

+/- 1% 7% +/- 2% 12% +/- 3% 17% +/- 4% 22% +/- 5% 27%

+/- 10% 49% +/- 20% 79% +/- 30% 94% +/- 40% 99% +/- 50% 100%

Mean 5% Stdev 15%

Accuracy = transaction price vs VV value the day before

OFFSHORE CHARTER FREE VESSEL VALUES: REALITY VERSUS FANTASY

MARKET REACTION

SOME NEGATIVE

“VesselsValue does not know what they are doing and should concentrate on assessing the value of tankers and bulk carriers.”

Norweigan Shipowner Quoted in Dagens Naeringsliv

(a Norwegian daily newspaper)

May 2016

MARKET REACTION

SOME POSITIVE

“VesselsValue have come a long way in setting the standard for blue sea shipping in precise, prompt valuations in a relatively short period of time.

By applying similar metrics along with known differentiators in the offshore space they will achieve this too with their offshore product.”

Singaporean Offshore Broker

MARKET UNCERTAINTY

Notes to the accounts

“Valuation has been received from accredited brokers for all vessels. Due to a limited number of sale and purchase transactions in the current market, there is a large uncertainty related to the received broker estimates.”

FANTASY

Huge variation in values provided by brokers, for example:

c.200% spread, very limited supporting evidence = lack of confidence in values

Far East offshore broker

USD 30m

Same AHTS (blt 2016, 28k

bhp), same day, charter free

market value

Scandinavian offshore broker USD 90m

REALITY

REALITY

REALITY

% CHANGE IN VALUE OVER LAST 12 MONTHS

PSV VALUE (2007 BLT)

High of $48m May 2008 Low of $9.1m June 2016

AHTS VALUE (2007 BLT)

High of $57m August 2008 Low of $12.2m June 2016

VALUE CHANGE SUMMARY

• Values are down significantly

• PSV’s suffered first, with falls starting in 2014

• AHTS values followed a year later, with drops starting in 2015

• No recovery in sight, although moderately rising oil prices should be

good news

• We can tell you the value of any OSV back to 2007, and soon back to early 90’s (multiple cycles)

MORE THAN VALUES

AIS / GIS · OIL & GAS PIPELINES

AIS / GIS · PLATFORMS / RIGS

AIS / GIS · GAS & OIL FIELDS

AIS / GIS · OPEN AND OPERATED LICENCES

APPLICATIONS OF AIS / GIS

• Alerts when platforms have had no OSV activity = early warning on lack of the rigs activity/earnings

• Layup • Utilisation • Hot/cold markets

• Leading indicators on the Offshore and Oil/Gas markets • Much more

ADRIANECONOMAKIS@VESSELSVALUE.COM Adrian Economakis · COO