QUEST BRASIL DEEPWATER INSIGHT Vol

QUEST BRASIL DEEPWATER INSIGHT Vol. 9, Issue 3 December 2013

P-61 DEPARTS ANGRA DOS REIS FOR THE CAMPOS BASIN PAPA-TERRA FIELD

BrasFels completed the construction of platform P-61, which departed Angra dos Reis Bay on Dec. 31, 2013. The unit will make a technical stop for diesel and water near Ilha Grande and continue on until its final location, the Papa-Terra field in the Campos Basin. The journey will take about six days after leaving the shipyard.

This is the first TLWP platform (Tension Leg Wellhead Platform) to be built and operated in Brasil. The P-61 will operate together with the P-63 FPSO unit, which commenced oil production in Papa-Terra on November 11. Together, the units have the capacity to produce 140,000 BOPD via 18 wells.The TLWP has a lower range of motion compared to alternatives, allowing the use of dry trees, which are deployed on the deck of Source: Petrobras TLWP rather than on the seabed. Petrobras notes that this arrangement easier well intervention through the use of submerged centrifugal pumps.

All the P-61 production will be transferred to the P-63 to process, store and offload extracted oil to shuttle tankers. The P-63 can also compress 1 million cu. m/d of natural gas and the excess gas consumed on the platforms will be injected into the reservoir.

The P-61’s deck and four modules were built in Singapore, Asia.Two of the modules drive and control the submerged centrifugal pump (SCP) of the wells, while the two others distribute electricity and provide platform/accommodation control, respectively. They were brought to the BrasFels Shipyard, in Angra dos Reis (RJ) where BrasFels built the hull. BrasFels was responsible for topsides integration.

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BRASIL DEEPWATER INSIGHT

Corporate Headquarters: Paul H. Hillegeist David C. M. Thomas www.questoffshore.com President, COO Senior Editor 1600 Highway 6, Suite 300 John Chadderdon Nick Search Sugar Land, TX 77478, U.S.A. CEO Vice President Sales Voice: +1 (281) 491-5900 Subscriptions: Quest Offshore Resources, Inc. publishes Brasil Fax: +1 (281) 491-5902 Deepwater Insight in electronic format once per month. Subscrip- tions are available @ $950/yr for 12 issues. Multi-user licenses are Brasil Bureau: negotiable on an individual basis. Qbr Empreendimentos Romero Brito Address Change/Subscription Information: Please forward any written correspondence regarding address changes or subscription Rua João Pessoa, 338/505 information to : Quest Offshore Resources, Inc., 1600 Highway 6, 24.220-331 Niterói RJ, Brazil Suite 300, Sugar Land, TX 77478 or [email protected]. Tel. +55 21 3619-2344 Email:- [email protected] © 2013 Quest Offshore Resources, Inc. QBDI December 2013 2

P-61, which will be moored in 3,937 FSW (1,200 MSW), jobs and 7,350 indirect jobs. Local content of its services will be able to produce 100,000 BOPD. The platform reached 65%. can produce 6,000 kW of electrical power via three onboard generators, and receive up to 35 MW from the The Papa-Terra field, operated by Petrobras (62.5%) in P-63 for processing. The 23,000-ton platform has partnership with Chevron (37.5%), is located 110 km accommodations for 60 people. off the Brasilian coast, in depths of water between 1,312 FSW to 4.593 FSW (400 MSW and 1,400 MSW). At peak construction, the P-61 generated 2,450 direct

CONTRACTS, ACQUISITIONS & INVESTMENTS

PETROBRAS FINALIZES SALE OF BC-10 TO the Polvo oil field in Brasil. The definitive agreements SHELL & ONGC are still subject to a due diligence process to be conducted Petrobras finalized the sale of its 35% stake in the by BW Offshore, and remains subject to regulatory, Parque das Conchas (BC-10) offshore project for $1.636 governmental and board approvals. billion on Dec. 30, 2013.In August 2013, Petrobras Following the ongoing sale of BP’s stake in the Polvo signed an agreement to sell its 35% stake in the block, field to HRT Participações em Petróleo S.A. (HRT), BW subject to government approval and the preemptive Offshore has the intention to acquire half of HRT’s rights of its partners. Shell and ONGC Videsh decided stake. BW Offshore owns and operates the FPSO to buy out Petrobras, acquiring stakes of 23% (Shell) POLVO, operating under a firm contract until Q3 2014, and 12% (ONGC Videsh). with additional options until Q3 2022.

The Brasilian Petroleum Agency (ANP) granted The Polvo oil field is located in the Campos basin in approval on December 18. Brasil. The field was brought onstream in 2007, with a In 2013, the contribution of BC-10 to Petrobras average 2013 year-to-date production of approximately 12,000 oil production volume was 8,600 BOPD. BOPD. The field installations include the FPSO POLVO, the Polvo A wellhead platform with a drilling rig and an infield pipeline. BW OFFSHORE ACQUIRES 30% STAKE IN POLVO FIELD BW Offshore inked a Letter of Intent to acquire 30% of

MARKET HIGHLIGHTS

PETROBRAS DECLARES FRANCO, SUL DE 28-degree API). During the execution of the Franco TUPI COMMERCIAL Mandatory Exploratory Plan, Petrobras acquired 3D Petrobras submitted the declaration that the oil and seismic data for the entire area and drilled two gas accumulations of Franco and Sul de Tupi are mandatory and six additional wells, with the objective commercially viable to Brasil’s National Petroleum, of delimiting and characterizing the reservoirs. An Natural Gas and Biofuels Agency (ANP). In the proposal extended formation test was also performed. sent to the ANP, the names suggested for the new fields Búzios field is some 200 km off the coast of Rio de Janeiro were Búzios and Lula Sul for Franco and Sul de Tupi, state at a water depth ranging from 5,249 FSW to respectively. 6,890 FSW (1,600 MSW to 2,100 MSW). Petrobras The volume contracted through the Transfer of Rights expects to bring five production systems onstream for Agreement for Franco area, 3.058 Bboe, was confirmed this field progressively from Q3 2016 to Q4 2019. in the exploratory phase. The pre-salt reservoirs in this The volume contracted through the Transfer of Rights field contain good quality oil (between 26-degree and

TABLE OF CONTENTS

PETROBRAS FINALIZES SALE OF BC-10 TO SHELL & ONGC ...... 2 BW OFFSHORE ACQUIRES 30% STAKE IN POLVO FIELD ...... 2 PETROBRAS DECLARES FRANCO, SUL DE TUPI COMMERCIAL ...... 2 PETROBRAS CONFIRMS SUCCESSFUL MOITA BONITA EXTENSION WELL ...... 3 BP TO RELINQUISH BM-CAL-13 FOLLOWING DISAPPOINTING PITANGA WELL ...... 3 PETROBRAS STRIKES OIL PAY IN THE DEEPWATER POTIGUAR BASIN ...... 4 KEPPEL, NATIONAL UNIVERSITY OF SINGAPORE INVEST IN CORE LAB ...... 4 ANP GREENLIGHTS KAROON’S APPRAISAL WORK PROGRAM APPLICATION ...... 4 BARCLAYS FORECASTS 6.1% GROWTH IN INTERNATIONAL E&P SPENDING ...... 4 SIX HRT BOARD MEMBERS RESIGN ...... 5 PETROBRAS NOVEMBER 2013 PRODUCTION UP 1.2% OVER OCTOBER 2013 ...... 5 BRASILIAN PRESIDENT, PETROBRAS CEO MARK COMPLETION OF PLATFORM P-62 ...... 6 P-55 SEMI COMMENCES OPERATION ON RONCADOR FIELD ...... 6 BG GROUP CONFIRMS DOC FOR BM-S-9 CARIOCA AREA FIELD ...... 6 OGX COMMENCES PRODUCTION FROM TUBARAO MARTELO FIELD ...... 6 PETROBRAS TAPS NORSKAN FOR TWO AHTS VESSELS ...... 7 SIEM OFFSHORE SNARES CONTRACT FROM PETROBRAS FOR PSV SIEM ATLAS ...... 7 PROSAFE GRABS $179MM CONTRACT EXTENSION FROM PETROBRAS ...... 7 SPECTRUM, CGG LAUNCH 3D SURVEY OFFSHORE BRASIL ...... 7 DAMEN DELIVERES FIFTH PSV IN SERIES TO WORLD WIDE SUPPLY ...... 7

Agreement for the Sul de Tupi area, 128 MMboe, was 168), at a water depth of 9,186 FSW (2,800 MSW). The confirmed during the exploratory phase. The pre-salt Moita Bonita accumulation is part of the Sergipe- reservoirs in this field contain good quality oil (27º API). Alagoas Basin deepwater development program. Petrobras acquired 3D seismic data for the entire area and drilled a well, as stipulated in the Mandatory The consortium will proceed with the discovery Exploratory Plan. evaluation plan approved by the National Agency of Petroleum, Natural Gas and Biofuels (ANP), which Lula Sul field is around 300 km off the coast of Rio de covers concessions BM-SEAL-10 and BM-SEAL-4. Janeiro state at a water depth of approximately 7,218 FSW (2,200 MSW). Petrobras is the operator of both areas, holding 100% interest in BM-SEAL-10 and in partnership with ONGC Production in the Lula Sul field will be based on the (25%) in BM-SEAL-4. same production system planned for the Extremo Sul module of Lula field. Petrobras forecasts the first oil BP TO RELINQUISH BM-CAL-13 FOLLOWING from this system for Q1 2017. DISAPPOINTING PITANGA WELL BP advises that the Pitanga exploration wellon Block PETROBRAS CONFIRMS SUCCESSFUL MOITA BM-CAL-13, in the Camamu-Almada basin offshore BONITA EXTENSION WELL Brasil, encountered oil shows but no commercial Petrobras reveals that the first extension well 3-BRSA- quantities of oil or gas. This result will cause BP to 1194-SES (3-SES-178) drilled in the Moita Bonita area, relinquish the BM-CAL-13 block. on concession BM-SEAL-10, has confirmed the extension of the gas and light oil discovery. The well, The Pitanga well result will trigger a write-off of around known as Moita Bonita-1, is located in ultra-deep waters $230 million related to the costs of drilling the well, as of the Sergipe-Alagoas Basin. Fifty-meter thick well as a write-off of around $850 million associated reservoirs were discovered featuring good permeability with the value allocated to this block as part of the and porosity, confirming the project´s expectations. acquisition accounting related to the Devon deal, which BP expects to treat as a non-operating item. The well is 83 km off the Aracaju coast, 7 km from the discovery well Moita Bonita 1-BRSA-1088-SES (1-SES-

PETROBRAS STRIKES OIL PAY IN THE S-M-1102, S-M-1037, S-M-1165 and S-M-1166 has DEEPWATER POTIGUAR BASIN been approved. Petrobras hit oil pay on concession BM-POT-17, the first The PAD governs the next stage of the Concession in the deepwater of Potiguar Basin, in its portion located Agreement and outlines the forward appraisal work in the state of Rio Grande do Norte. The discovery was program commitments Karoon will undertake on the made while drilling well 1-BRSA-1205-RNS (1-RNS- Blocks. The work program comprises of anumber of firm 158), informally known as Pitu, at a water depth of commitments to be completed by Dec. 31, 2014 and 5,679 FSW (1,731 MSW) and 55 km off the coast of Rio contingent commitments,to be completed by Dec. 31, Grande do Norte state. 2016.Approval of the PAD was the final regulatory The oil column was confirmed through log data and hurdle to be cleared prior to contracting a rig fluid samples, which will be characterized through andcommitting to the Phase 2 exploration and appraisal laboratory analysis. The well is currently being drilled drilling campaign. at a depth of 4,197 meters and drilling will proceed until Karoon is required to complete the following by Dec. 5,028 meters. 31, 2014: drill Kangaroo-2 appraisal well; drill the Petrobras is the operator of the concession with 80% Kangaroo West-1 exploration well; conduct seismic stake and Petrogal Brasil S.A. holds the remaining 20%. reprocessing and quantitative inversion (QI) studies on Due to the farm-out agreement in progress, and after the Bilby discovery; conduct seismic reprocessing and obtaining the approval from the National Agency of QI studies on the Emu and Emu East prospects; and Petroleum, Natural Gas and Biofuels (ANP), BP Energy conduct basin modeling studies. do Brasil Ltda will join the consortium and interests of The company’s 2015/2016 Contingent Commitments the partners in the block will be: Petrobras - 40%, BP - may include: QI studies at Kangaroo and Kangaroo 40% and Petrogal - 20%. West following the 2 firm wells; drilling Kangaroo-3, The consortium will proceed with operations to complete Kangaroo West-2, updip Emu-2 and / or Emu East-1. the well drilling until the planned depth, verify the The PAD consolidates the Blocks into one work program extension of the new discovery and characterize the which, following the integration and analysis of results conditions of the reservoirs. from the firm commitment period, provides Karoon the maximum flexibility tofocus the contingent work KEPPEL, NATIONAL UNIVERSITY OF program on those projects that present the best potential SINGAPORE INVEST IN CORE LAB developmentopportunity. Singapore rig builder Keppel Corp established a Core Karoon has commenced preliminary engineering Lab with the National University of Singapore (NUS) studies to examine the technical challenges ofdrilling to carry out research & development for oil and gas these targets, and is also making preparations for a exploration in new frontiers including the ultra-deep targeted 3D seismic acquisition expectedto commence waters and the Arctic area. The company expects the mid-2014.Seismic processing and interpretation, as well S$75 million ($59.7 million) Keppel-NUS Core Lab to as the engineering studies are expected to be completed send researchers to study deepwater regions off Brasil by H1 2015. and the harsh environment of the Arctic. Keppel Corp chief executive Choo Chiau Beng said the BARCLAYS FORECASTS 6.1% GROWTH IN move is part of the shipyard and marine group’s INTERNATIONAL E&P SPENDING strategy to stay ahead of competition and provide Barclays Global E&P Spending Outlook, a survey of solutions to the global oil and gas industry as over 300 oil and gas companies, forecasts total 2014 hydrocarbon prospecting advances into more expenditures of $723,311 million, up 6.1% over 2013 challenging environments. expenditures of $681,690 million. The Spending Outlook notes that surveyed companies are basing their ANP GREENLIGHTS KAROON’S APPRAISAL spending plans on $98 Brent, $89 WTI and U.S. natural WORK PROGRAM APPLICATION gas prices of $3.66. Karoon Gas Australia received written notification from The Middle East and Latin America are forecast to lead the Agência Nacional do Petróleo (ANP) that the the spending increase with 14.4% and 12.8% increases Discovery Appraisal Plan (PAD) forblocks S-M-1101, in regional spending. Saudi Aramco and Kuwait Oil

Co. are expected to drive the increases in the Middle On Dec. 20, 2013, a majority of the Board had approved East, while PEMEX and PDVSA are expected to drive the following motion: “To acknowledge that the election Latin America. The Spending Outlook notes that of Messrs. Edmundo Falcão and Marcello Pacheco is Petrobras “remains in a relative holding pattern.” null and void, and that they should cease to be members of the Fiscal Council and be considered as such; Messrs. Other significant increases are forecast for Russia and François Moreau and Oscar Prieto should be suspended Europe with projected increases of 10.9% and 7.8%, until the next Shareholder´s Meeting and shall refrain respectively. Spending in India/Asia/Australia is from exercising the prerogatives they would be entitled forecast to increase by 1.2%, while spending in Africa to, if they had been properly elected; To instruct the is projected to increase by 0.4%. The Spending Outlook Company to seek the reimbursement of the reveals that increases from Petronas, Pertamina and compensation and costs, and all payments made to ONGC will be partially offset by declines from Inpex Messrs. Marcello Pacheco and Edmundo Falcão; To and Santos, and relatively flat plans from Chinese reschedule the Shareholder´s Meeting and adjust the National Oil Companies (NOC). agenda and to publish a Material Fact, given that it is The U.S. is expected to rise by 8.5%, while North in the best interest of the company and its shareholders American spending overall is expected to increase by to allow shareholders to vote all of the relevant matters 7.3%. The Spending Outlook highlights that the U.S. with a fully informed basis.” Gulf of Mexico remains a bright spot with 17 floaters scheduled to mobilize to the region through Q1 2015. PETROBRAS NOVEMBER 2013 PRODUCTION A total of 58 deepwater rigs are expected to be contracted UP 1.2% OVER OCTOBER 2013 over the next year and a half. Meanwhile, expenditures Petrobras’ November 2013 total oil and natural gas in Canada are expected to increase by 3% following output in Brasil was 2,342,000 BOEPD, up 1.2% from two years of declines. the 2,315,000 BOEPD extracted during the prior month. Surveyed companies eye improved economics, both Including the share operated by Petrobras for its internationally and domestically. A total of 63% of partners, the increase in production over October was surveyed companies responded that international 1.9%. Oil output exclusively from Petrobras’ fields in economics are “excellent” or “good,” while 65% of Brasil averaged 1,957,000 BOPD, relatively flat companies responded that U.S. economics are “excellent” compared to October’s output of 1,960,000 BOPD. or “good.” The new monthly and daily pre-salt output record of The Spending Outlook believes that actual 2014 339,100 BOPD and 362,300 BOPD, respectively, spending will be higher than estimates. The Survey contributed to the stable oil output in November, in notes that since 2000, spending fell short of estimates addition to the start-up of platform P-63 in the Campos during only two years – 2010 and 2012. The Survey Basin Papa-Terra field, which took place on advises, “The outcome for 2013 appears poised to resume November 11. the long-standing pattern where actual spending Petrobras also noted the start-up of new wells outpaces our forecast. Our original spending estimate interconnected to the platforms P-26, in Marlim, and for 2013, released last December, suggested year over P-53, in Marlim Leste, as part of the complementary year growth of 6.6% for global E&P spending with most development of these Campos Basin fields. During of the uptick driven by international markets while the November, the company also started the Extended Well U.S. and Canada remained flat. Our most recent Test (EWT) of Lula Extremo Sul in the Santos Basin discussions with the E&Ps indicate that global spending pre-salt area via the FPSO CIDADE DE increased 7.4% in 2013 from 2012 as spending gains in SAO VICENTE. the international and U.S. markets will likely exceed our original forecast from last year.” During November, Petrobras conducted scheduled maintenance shut-ins of Northeast Polo, FPSO SIX HRT BOARD MEMBERS RESIGN CIDADE DE ANCHIETA and P-53. HRT Participações em Petróleo S.A. advises that six of its independent members of its Board of Directors have resigned. The company received Letters of Resignation on Dec. 22, 2013, from Thomas W. Ebbern, Peter L. O‘Brien, Joseph P. Ash, François Moreau, Charles Laganá Putz and Oscar Prieto.

FIELD DEVELOPMENT

BRASILIAN PRESIDENT, PETROBRAS CEO The new unit will operate alongside platforms P-52 and MARK COMPLETION OF PLATFORM P-62 P-54, which are already installed on the Roncador field, The Brasilian President, Dilma Rousseff, and the and with platform P-62, that left the Atlântico Sul Petrobras CEO Maria das Graças Silva Foster, marked Shipyard, in Ipojuca (state of Pernambuco) on Dec. 30, the completion of the P-62 platform at the Atlântico Sul 2013, and is moving toward its location in Module IV of Shipyard (EAS) in Ipojuca (PE) on Tuesday, Dec. 17, the field. 2013. After unveiling the commemorative plaque for the completion of the P-62 work, the president pointed BG GROUP CONFIRMS DOC FOR BM-S-9 out that 7,000 people were employed in the shipbuilding CARIOCA AREA FIELD industry in 2003 and today there are 79,000 employees. BG Group confirms that its partner Petrobras, the “With oil being extracted from the pre-salt at an operator of block BM-S-9 in the pre-salt Santos Basin, increasing rate and scale, Brasil will become the largest has submitted a Declaration of Commerciality (DoC) to oil producer from platforms in the twenty first century,” the Brasilian National Agency of Petroleum, Natural she said. Six to seven drilling rigs and 19 oil tankers Gas and Biofuels (ANP), for the oil and gas will be built at the Atlântico Sul Shipyard over the next accumulations in the Carioca area, offshore Brasil. As few years, the President said. part of the DoC, the consortium has suggested that the The P-62 has a daily production capacity of 180,000 new field be named Lapa. barrels of oil and 6 MMcm of gas. The work has The Lapa field is located approximately 270 km off the generated about 5,000 direct and 15,000 indirect jobs coast of São Paulo state, in water depths of around and has achieved approximately 63% domestic content. 7,021 FSW (2,140 MSW). The DoC notification to the The unit is expected to come on stream during Q1 2014. ANP also includes the operator’s estimates of total recoverable volumes associated with the initial stage of P-55 SEMI COMMENCES OPERATION ON development. RONCADOR FIELD BG Group is working with the consortium partners to The Petrobras’ P-55 platform commenced operation on achieve further optimization of the development plan Dec. 31, 2013. inthe Campos Basin’s Roncador field.P- following encouraging results from the recent Carioca 55 is part of Roncador´s field Module 3 project and will SW appraisal well drilled in October 2013. The be connected to 17 wells, 11 of which are oil and gas Development Plan for the Lapa field will be submitted production and 6 water injection. Oil and natural gas for ANP approval within the next 180 days. will be transported from the platform via submarine pipelines connected to the unit till the oil and gas Petrobras (45%) operates the BM-S-9 concession. BG offloading system of the Campos Basin. Group (30%) and RepsolSinopec Brasil (25%) are partners in the license. P-55 is a semisubmersible unit installed at a water depth of 5,906 FSW (1,800 MSW), with daily processing capacity of 180,000 barrels of oil, compressing 6,000,000 OGX COMMENCES PRODUCTION FROM cu. m of natural gas and injecting 290,000 barrels TUBARAO MARTELO FIELD of water. OGX advises that production commenced from the Tubarão Martelo field, located in the Campos Basin Weighing 52,000 tons and with an area of 10,000 cu. blocks BM-C-39 and BM-C-40. The field is producing m, P-55 is the biggest semi platform ever built in Brasil through the horizontal well TBMT-8H. and one of the biggest of its kind worldwide. On Nov. 29, 2013 the company received the operating Construction work on P-55 is part of the Brasilian license from IBAMA (the Brasilian Institute for Federal Government’s Growth Acceleration Plan – PAC. Environment and Renewable Natural Resources), The construction and integration of platform modules authorizing the operation of FPSO OSX-3 and the were carried out entirely in Brasil, boosting the local respective subsea structures related to the oil production content rate to 79%. Construction work generated 5,000 development and outflow for the BM-C-39 and BM-C- direct and 15,000 indirect jobs. 40 blocks, located in the Campos Basin.

MARINE CONTRACTING

PETROBRAS TAPS NORSKAN FOR TWO AHTS demonstrates the continued long-term demand for VESSELS safety and maintenance support services within Brasil. DOF’s subsidiary Norskan seized two new four-year contracts from Petrobras for the AHTS vessels SKANDI SPECTRUM, CGG LAUNCH 3D SURVEY FLUMINENSE and SKANDI RIO. The contracts will OFFSHORE BRASIL start in direct continuation after finalization of the Spectrum and CGG are jointly launching a large, high- previous contracts with Petrobras, in Q1 2014 and in end BroadSeis3D multi-client survey program offshore H2 2014, respectively. DOF Subsea Brasil will operate Brasil that will focus on a large proportion of open the ROV’s on both vessels. Total contract value is acreage in the very promising Foz do Amazonas Basin. approximately NOK1.3 billion ($211.5 million). The two companies are working as equal partners on this project, which has received high prefunding from SIEM OFFSHORE SNARES CONTRACT FROM a number of major industry players. PETROBRAS FOR PSV SIEM ATLAS Covering 11,330 sq. km, the Foz do Amazonas survey Siem Offshore and Petrobras have entered into a will be acquired by the OCEANIC ENDEAVOUR charter agreement for the Platform Supply Vessel (PSV) deploying Sercel’s next-generation Sentinel RD solid SIEM ATLAS. The charter period has commenced and streamer and is expected to start in January 2014. The is for a firm period of two years. Petrobras has an option high-end BroadSeis data set will be processed in CGG’s to extend the charter for two additional years, upon Rio de Janeiro subsurface imaging center. terms to be mutually agreed.The gross contract value for the firm period is approximately $26 million. DAMEN DELIVERES FIFTH PSV IN SERIES TO WORLD WIDE SUPPLY PROSAFE GRABS $179MM CONTRACT Damen Shipyards Group delivered the WORLD OPAL, EXTENSION FROM PETROBRAS the fifth Platform Supply Vessel (PSV) in a series of Prosafe seized a $179 million contract extension by six, to World Wide Supply of Norway during early Petrobras Netherlands B.V. (Petrobras) for the provision December. WORLD OPAL is a Damen PSV 3300 CD. of the SAFE CONCORDIA semisubmersible vessel for The first ship, World Diamond, was delivered in July safety and maintenance support offshore Brasil. The and the last in the series, WORLD SAPPHIRE, is due firm period of the contract extension is three years and to be delivered mid-December. commences in June 2014, immediately following expiry of the existing contract firm period. Four of the six World Wide Supply PSV 3300s have secured long-term contracts supporting Petrobras, Prosafe states that the award of this contract extension offshore Brasil. The remaining two are expected to be offered to the North Sea spot charter market.

Offshore SouthMarine America Forecast FPS Spending by Year MillionConstruction of US Dollars by FPS Award Year (Mean Case)

Vessels South America continues to be the engine of the FPS market dominated by the utilization of $10,000,000 FPSO’s in the Brazilian Pre-Salt. Multiple FPSO orders for many $9,000,000 projects at the same time will cause this spending to be lumpy. $8,000,000 Recent decreases in Petrobras’ forecasts coupled with local $7,000,000 supply issues should hamper $6,000,000 growth.

$5,000,000

$4,000,000

$3,000,000

Thousands of of US DollarsThousands $2,000,000

$1,000,000

$0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Hull Award Year

FPSO FPS-Semi Spar TLP

South America FPS Awards 2004– 2017 (e) Mean Case By FPS Type

16 The pre-salt play will be the engine of South American FPS 14 demand, while traditional developments will continue to 12 provide opportunities for FPS contractors.

6 Number of FPSUnits 4

0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Hull Award Year FPSO FPS-Semi Spar TLP

South America Forecast Floating Activity by Startup Year 2004-2017 (e) Area Activity Share By Type (Mean Case)

6 Number of FPS Units 4

0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Startup Year FPSO FPS-Semi TLP

South America Forecast FPS Construction by Startup Year 2013-2017(e) Mean Case 30 Units, 25 Under Construction

10 Number of UnitsNumber of 5

0 2013 2014 2015 2016 2017 2008-2012 Total 13-17e Startup Year

Units Under Construction Forecast Demand FPS Units Flowing

South America Subsea Forecast Award Comparison

Trinidad & 2000-2017e Awards (1,904 Trees*) Tobago 1% Other 6%

900

800

700 Brazil 600 93% 500

400 # of Subsea Trees # of Subsea 300

200

100

Award Year

SAM Tree Orders (Awarded) SAM Tree Orders (Forecasted Mean) ROW Tree Orders (Mean) SAM Tree Orders (High) SAM Tree Orders (Base) •2013-2017 Awards = Mean Case ROW = Rest Of World. Pie Chart = 2013-2017e Mean Case Forecast ©2013 Quest Offshore Resources, Inc. Source: Quest_Subsea_Forecast_Awards Nov 2013.xls 5

South America Subsea Tree Startups by Water Depth 1996-2018e Startups – Normalized Case

200 180 160 140 120 100 80

# of Subsea Trees Subsea # of 60 40 20 0 1996 1997 1998 1999 2000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2001e 2013e 2014e 2015e 2016e 2017e 2018e Startup Year

0-1000fsw 1001-5000fsw 5001+fsw

South America Consolidated Market Share Q4 2011-Q3 2012 Vs. Q4 2012-Q3 2013

70%

60%

50%

40%

30%

% Market% Share 20%

10%

0% AS DQ FTI GE OneSubsea Q4 2011-Q3 2012 0% 0% 67% 8% 25% 120 Subsea Trees Q4 2012-Q3 2013 40% 0% 27% 0% 33% 199 Subsea Trees

Tree Mfg

South America Subsea Tree, Control & Manifold CAPEX 2000-2017e Mean Case Awards ($9.6bn Forecast)

$3,000 250

$2,500 200

$2,000 150

$1,500

Value ($MM) 100 $1,000

50 $500 # Subsea Tree & Control Systems (Mean Case) (Mean Systems Control & Tree Subsea #

$0 0

Award Year

SS Tree & Control System ($MM) Subsea Manifold ($MM) # SS Tree & Control Systems Includes hardware costs for subsea tree, subsea control system and manifold only – does not represent total contract value for system

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