Market Dynamics in the WROV Industry
September 2014
Infield Systems examines the supply & demand balance for the WROV markets
I. Introduction to Infield Systems
II. The Macroeconomic Environment
III. Leading indicators for the ROV Market
IV. WROV Demand
V. WROV Supply
VI. Supply vs Demand
VII. Major Takeaways
Table of Contents
2
Introduction to Infield Systems
SECTION I
Geographic Locations
A globally recognised consultancy with a dedicated team of cross-sector specialists
4
Key Global Personnel
c.30 energy professionals – global footprint
Office Locations
London
Aberdeen
Houston
Head Office
Regional Office
Paul Main (Research Manager) London
[email protected] +44 207 423 5022
James Hall (Director) London
[email protected] +44 207 423 5024
Steve Adams (International Sales Manager) Aberdeen
[email protected] +44 122 425 8150
Luke Davis (Senior Analyst) London
[email protected] +44 207 423 5023
Gregory Brown (Transaction Services Manager) London
[email protected] +44 207 423 5031
John Ferentinos (Senior Analyst) London
[email protected] +44 207 423 5036
Kieran O’Brien (Energy Researcher) London
[email protected] +44 122 425 8153
Energy Sector Exposure
Infield provides products and services across the full oilfield service supply chain
Sources: FMC, Infield Systems 5
Image courtesy of FMC Technologies Inc.
Products & Services
A leading offshore oil and gas and associated services consultancy
Source: Infield Systems Limited, company websites 6
Research, Reports & GIS Mapping Business Strategy and Analysis Transaction Services
• Offshore specific data covering production infrastructure, rigs, specialist vessels, construction yards, contracts and OFS providers
• Sector specific reports • GIS mapping services covering operational
and forecasted production infrastructure
• Market matching and market tracking – “Match & Track”
• Complete market intelligence outsourcing • Bespoke sector services • Market entry strategy • Procurement strategy advisory – “Project
Flow” • Ad-hoc sector analysis • NPV Economic Field Modelling
• Advisory • Market overview IPO • Debt financing analysis • Distressed asset purchase analysis • Buy/sell side market due diligence • Opportunity identification
Macroeconomic Environment
SECTION II
Long-term Oil Price Outlook
Sources: Infield Systems 8
0
30
60
90
120
150
180
210
$/b
bl
Brent
Unsustainable Short-Run Spikes
• Oil prices may fall below US$100/bbl in the second half of the decade
• Brent oil prices will likely fall to around US$93/bbl by the end of the decade
Long-term Brent Price Scenarios
Leading Indicators
SECTION III
Offshore Drilling
Source: InfieldRigs
Drilling number forecasts from Globalshift. Please see www.globalshift.co.uk for more information.
10
• Rig use is the major driver of ROV demand – 74% of total forecast demand
• Increased opportunities for ROVs as the average water depth of wells increases
• The recent increase in semi-submersibles and drillship assets is expected to continue over the forecast period
Offshore Drilling Rigs (Nos.) by Type Rig Employment 2014 by Activity Type
0
100
200
300
400
500
600
700
800
900
1,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Jackup Semisub Drillship
Exploration 28%
Other 15%
Development 57%
Offshore Capex by Infrastructure
11
• US$680 billion in Capex from 2014 to 2018 (10% CAGR)
• Pipelines: SURF for remote and/or deepwater fields, marginal fields, Capex intensive trunklines to shore
• US$33 billion for subsea: 33% growth over forecast
Capex (US$m) by Infrastructure Capex split by Infrastructure 2014-2018
Pipeline 43%
Platform 30%
Subsea Completion
21%
Control Line 4%
Single Point Mooring 2%
Source: Infield Systems
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Pipeline Platform Subsea Completion ControlLine Single Point Mooring
Forecast hidden for commercial purposes
WROV Demand
SECTION IV
Work Class ROV Demand
• Total demand forecast to reach 279,000 days by 2018
‐ 25% increase on 2013
• Drilling is the major demand driver but growth slows over forecast
• Increased demand from the installation support of Control Lines/Pipelines and Subsea Completions
WROV Demand by Object Type (days) Forecast (2014-18) ROV Demand Exc. Drilling
13
0
50,000
100,000
150,000
200,000
250,000
300,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Wells Platforms SubseaCompletions
Pipelines Control Lines SinglePointMoorings
WindFarms
Platforms 37%
Subsea Completions
32%
Pipelines 19%
Control Lines 10%
Single Point Moorings
2%
Wind Farms 0%
Source: Infield Systems.
Forecast hidden for commercial purposes
Latin America Work Class ROV Demand
• Latin America among largest regions for ROV Demand
‐ 5% CAGR Growth forecast between 2014-18
• Subsea demand is far higher in Latin America than global average
• Ultra-deep water activity is the main market growth driver
WROV Demand by Object Type (days) Forecast (2014-18) ROV Demand Exc. Drilling
14
Subsea Completions
37%
Pipelines 25%
Platforms 25%
Control Lines 11%
Single Point Moorings
2%
Source: Infield Systems
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Wells SubseaCompletions Platforms
Pipelines Control Lines SinglePointMoorings
Forecast hidden for commercial purposes
WROV Supply
SECTION V
WROV Supply
Source: InfieldROV
• Two very different business models across the top 5 companies in both operators and OEMs
• Oceaneering dominates in terms of unit quantum but offer tends to be lower-end
• Supply model uses a scoring system to rank ROVs according to their capabilities
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WROV Fleet by Top 9 OEMs & Others WROV Fleet by Top 9 Operators & Others
Oceaneering International
Inc 27%
Perry Slingsby Systems
17% SMD 11%
Schilling Robotics
11%
Fugro 11%
SAAB 5%
Saipem 4%
Subsea 7 (iTech)
2%
KystDesign 2%
Others 10%
Oceaneering International
Inc 26%
Fugro 13%
Subsea 7 (iTech)
12%
Saipem 4%
Helix Energy Solutions
3%
C-Innovation 3%
DOF Subsea 3%
Harkand 3%
Hallin Marine
2%
Others 31%
SUPPLY VS DEMAND
SECTION VI
WROV Supply vs. Demand
Sources: InfieldROV, Oceaneering Annual Report 2013
• WROV market currently appears balanced
• Retirements and expected demand increases lead to a tightening through the forecast
‐ Fleet should see 3-6% retirements annually1
• Fleet expected to grow 25% due to newbuild rigs, vessels and demand increases
Work-class ROVs Market Dynamics (days) Required Fleet Additions (Nos.)
-
50,000
100,000
150,000
200,000
250,000
300,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Work-class ROV Demand Supply in 2014
Supply in 2014
Current Oversupply = 8%
0
20
40
60
80
100
120
2014 2015 2016 2017 2018
New Unit Requirements Retirement Replacements
Forecast hidden for commercial purposes
Forecast hidden for commercial purposes
Key Takeaways
SECTION VII
Sources: Infield Systems 20
Key Takeaways
• Long-term floor price of $80/bbl in (2013 US$) for Brent through to 2020 • Gas price premiums likely to remain in Asia, fuelling the global LNG sector • The majority of developments are sanctionable at US$100/bbl, but large regional differences
Offshore Capex
Rig Demand
• Supply broadly balanced at present – retirements and tightening present opportunities • Heavy Work Class ROVs see largest demand increases • Strong trend towards higher-specification units
ROV Supply
• Slow but steady growth at 3.5% CAGR • Vessel based demand growth at 5% CAGR • Ultra-deepwater demand growth strongest at 14% CAGR
ROV Demand
• Strong SURF demand drivers: remote field locations and cluster field developments • Significant growth in some markets; platforms & SPM growth low • Control lines and Subsea Completions cause largest increases in demand globally
Vessel Demand
• Wells and rigged intervention the prime drivers of ROV demand • Low growth in market but number of floating rigs forecast to increase by 12% during forecast • Demand increases primarily from Development wells in Africa & Australasia
• Market broadly balanced though tightening towards middle of forecast • New units needed to meet increased demand and replace retired units • Demand for units will increase as rigs & vessels retire and newbuilds come to market
Supply vs. Demand
Key Takeaways
Total New System Requirements including Retirements
21
Disclaimer
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The information contained in this document is believed to be accurate, but no representation or warranty, express or implied, is made by Infield Systems Limited as to the completeness, accuracy or fairness of any information contained in it, and we do not accept any responsibility in relation to such information whether fact, opinion or conclusion that the reader may draw. The views expressed are those of the individual contributors and do not represent those of the publishers.
Some of the statements contained in this document are forward-looking statements. Forward looking statements include, but are not limited to, statements concerning estimates of recoverable hydrocarbons, expected hydrocarbon prices, expected costs, numbers of development units, statements relating to the continued advancement of the industry’s projects and other statements which are not historical facts. When used in this document, and in other published information of the Company, the words such as "could," "forecast”, “estimate," "expect," "intend," "may," "potential," "should," and similar expressions are forward-looking statements.
Although the Company believes that its expectations reflected in the forward-looking statements are reasonable, such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Various factors could cause actual results to differ from these forward-looking statements, including the potential for the industry’s projects to experience technical or mechanical problems or changes in financial decisions, geological conditions in the reservoir may not result in a commercial level of oil and gas production, changes in product prices and other risks not anticipated by the Company. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties.
© Infield Systems Limited 2014