Infield Systems/Maritime Strategies International Joint
Venture Introduction
April 2013
Table of Contents
I.
II.
III.
IV.
V.
VI.
2
Introductions
a)
Infield Systems
b)
Maritime Strategies International
Data Collection and Benchmark Coverage
a)
Data Processing
Newbuilding Prices
Secondhand Prices
Clients and Asset Types
Administration
SECTION I
Company Introductions
Infield Systems Productions & Services
A leading offshore O&G and associated services consultancy
Data, Reports & GIS Mapping
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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
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Business Strategy and Analysis
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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
Transaction Services
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Pre IPO due diligence
Market overview IPO
Debt financing analysis
Distressed asset purchases
Buy/sell side market due diligence
Opportunity identification
Products & Services – Market Reports
Infield publish a range of market reports covering various aspects of the O&G, renewables and
associated marine industries
Regional Reports
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Arctic
Asia
Australasia
Latin America
Middle East
North America
Global Perspectives
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Deepwater
Fixed Platforms
Floating Platforms
Pipe & Control Lines
FPSOs
Specialist markets
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Offshore Heavy Transport
Heavy Lift
LNG
Wind
ROVs
Construction Vessels
Subsea Well Intervention
The market update reports provide detailed information, analysis and insight into market trends over the next five years, which is presented in a
manageable, clear and concise manner. The integration of the Offshore Energy Database, the Specialist Vessels Database, the construction and
fabrication yards database, the drilling rigs database along with Infield's OFFPEX™ Market Modelling and Forecasting System means that each report
contains uniquely detailed and up to-date analysis. Within each market update a five year forward forecast is provided with a five year history
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Maritime Strategies International Introduction
Leading independent market forecasting, research and consultancy firm within the shipping industry
Data, Reports and Models
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Sector specific reports
Interactive forecasting models for all major
shipping sector
Supply and demand data by cargo by trade
route
Time series data for prices, rates and OPEX
Transaction data
Shipbuilding
6
Business Strategy and Analysis
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Restructuring benchmarking
Project evaluations and market entry strategy
Trade and market share projections
Financing and investment prospectuses
Expert testimony/litigation support
Vessel size and route evolution
Market risk and sensitivity analysis
Valuations
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Independent spot and forecast valuations
Charter attached valuations
Earnings and operating cost forecasts
Coverage includes all merchant ship types and
sizes as well as offshore vessels and units
Maritime Strategies International Introduction
MSI publish a range of proprietary forecasting models and market reports covering all aspects of
merchant shipping
Monthly/Quarterly Reports
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Tanker Shipping Planning Service Report
Bulker Shipping Planning Service Report
Container Shipping Planning Service Report
Shipbuilding Planning Service Report
Freight Forecaster – Tankers
Freight Forecaster – Dry Bulk
Marketing Strategy Intelligence Service
Quarterly Models
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Tanker Shipping Planning Service Model
Bulker Shipping Planning Service Model
Container Shipping Planning Service Model
Shipbuilding Planning Service Model
Chemical Tanker Market and Trade Model
LPG Carrier Market and Trade Model
Car Carrier Model
Reefer Model
Short Sea Shipping Model
Open Hatch Bulker Model
Shuttle Tanker Model
Specialist Areas
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Business Advisory
Investment Strategies
Strategic Consulting
Credit Risk Modelling
Financial Modelling
Stochastic Modelling
Project Financing
Cruise Industry Outlook
Ports and Infrastructure
MSI’s quarterly reports provides readers with a comprehensive, independent guide to medium-term market interrelationships, complementing
historical and forecast data from MSI's latest scenarios with in-depth text and charts highlighting and analysing market dynamics and forecast risks.
Each report covers five years of historical data and five years of forecast data. MSI's Shipping Planning Services models are fully interactive menu-driven
modelling system for each sector. They provide a platform to access easily and quickly historic and forecasted data (1980 to 2025) as well as a powerful
analysis and simulation tool that enables the use of alternative assumptions to test market sensitivities and primary risks by modifying a wide range of
macroeconomic, supply and demand inputs.
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Geographic Locations
A globally recognised group with a dedicated international team of cross-sector specialists
Office Locations
Key Global Personnel
Michael Payne (Managing Director - MSI)
London
michael.payne@msiltd.com +44 207 940 0079
James Hall (Director - Infield)
London
james.hall@infield.com +44 207 423 5024
Aberdeen
London
Gregory Brown (Consultant - Infield)
London
gregory.brown@infield.com +44 207 423 5032
Adam Kent (Director - MSI)
London
adam.kent@msiltd.com +44 207 940 0074
Houston
Singapore
Head Office
Regional Office
JV/Representative Office
48 Energy/Shipping Professionals covering all geographic regions
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Roger Bartlett (Managing Director - MSI Asia)
Singapore
roger.barlett@msiltd.com
SECTION II
Data Collection & Benchmarking
Data Sources/Methodology
Infield compiled and collates publically available data to provide an offshore activity forecast
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Infield Systems houses a number of databases developed over the
course of the last 25 years. Our data is compiled from publically
available sources:
‐ Trade journals
‐ Financial reports
‐ Operator statements
‐ Oilfield service contractors
‐ Legislative bodies
‐ Financial institutions
The sources are collated and timelines reviewed. Infield take operator
schedules and apply a supply chain analysis:
‐ We take into account:
‐ Fabrication yards
‐ Rig supply
‐ Construction vessel supply
‐ Engineering
‐ Competing projects
‐ Commodity price sensitivity
Our forecasts are then ‘peer reviewed’ by our clients – subsea OEMs,
OFS groups, Operators. Our forecasts are therefore defined as ‘viable’
and it is these which drive our dayrate and valuation methodology
‐ Dayrates are historically researched – investor reports, drilling unit
statement etc and then modelled for future earnings
‐ Model rates are driven by base factors multiplied by market factors –
supply/demand, complexity of work etc
‐ Complexity of work driven by Infield databases – wells, platforms etc
to highlight future demand
10
Data Processing
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Primary data supplied by Infield Systems
‐ Dayrates
‐ Utilisation
‐ Fleet size
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Primary data supplied with additional data from databases, publications,
broker data and desktop research
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Data verified, archive searches, outliers removed
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Adjustments made for size and age
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Generic benchmark data series updated on a quarterly basis
Offshore Price Series Maintained
Timeseries data maintained across support vessels, drilling units and production platforms
Newbuild contract price, 5, 10 and 15 year old price, scrap price, earnings and Opex updated quaterly
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• Anchor Handling Vessels
‐ 5/8k BHP
‐ 8/10k BHP
‐ 12/16k BHP
‐ 16/20 BHP
• Semi-sub Drilling Rig
‐ 3rd Generation
‐ 5/6th Generation
• Platform Supply Vessels
‐ 2/3k DWT
‐ 3/4k DWT
‐ 4/5k DWT
• Drillship
‐ 10k ft Water Depth
• Jack-up Drilling Rig
‐ 300ft
• FPSO
‐ 100k DWT
‐ 300k DWT
What Determines Secondhand Prices?
Current replacement cost, earnings and residual scrap values are taken into account
Current Replacement Cost
• Independent Variables
‐ Yard prices; unstable, major
market risk
• Researched figures from contracts
Used to define upper limit
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Earnings
• Independent Variables
‐ Dayrates
‐ Utilisation
‐ Expected vessel life
• Researched figures from contracts and
modelled for future earnings
Used to define the depreciation rate
Residual Scrap Value
• Independent Variables
‐ S/LDT; limited influence or Up/downside risk
• Researched figures from contracts
Used to define the price floor
SECTION III
Newbuilding Prices
Newbuilding Prices
Based on the data feeds MSI generate consistent newbuilding price data – asset types strongly
correlated
Semi-sub Timeseries vs. Actual Contracts ($m)
• Even if no units are contracted or units are of benchmark
size MSI publish prices based on historical relationships
between similar asset classes and size/spec adjustment
criteria
800
700
600
500
400
• Generate price for all contracts even if no published price
300
200
• Even though assets types are very heterogeneous in size,
design and price there is a very good correlation between
benchmark offshore newbuilding prices annually
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
MSI Benchmark Price
Average Reported Contract Price
Contract Prices Across Offshore Asset Types ($m)
Average cross correlation = 0.95
80
800
60
600
40
400
20
200
0
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
PSV 2/3k Dwt
AHTS 16/20k BHP
Semi Sub Rig 5th/6th Gen (RHA)
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AHTS 5/8k BHP
Drillship (RHA)
Jack Up Rig 300ft (RHA)
Newbuilding Prices
Offshore asset prices move together and are correlated to conventional shipping due to ubiquitous
drivers for the two
Contract Prices Across Offshore and Shipping ($m)
• The correlation extends beyond just intra-offshore units and
shows a strong alignment between offshore and merchant
shipping
• This is perhaps unsurprising as the are ubiquitous drivers
between the two i.e.
‐ Relationship between yard space and order book
‐ Costs (labour, steel, machinery etc.)
200
800
150
600
100
400
50
200
0
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
VLCC
6.6kTEU FCC
100kDwt FPSO (RHA)
Average cross correlation = 0.90
Cape
Semi Sub Rig 5th/6th Gen (RHA)
Newbuilding Prices Actual and Modelled ($m)
• MSI’s modelled newbuilding price is a very good indicator of
actual newbuilding prices historically
‐ Absolute % difference over the past 14 years in just 8%
(excluding 2004 and 2005 brings the difference down to
5%)
‐ MSI is able to generate indicative newbuilding prices
using the three inputs at any point in time
800
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
5th/6th Semi Sub (Historical)
5th/6th Semi Sub (Modelled)
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Model Generated Cross Check
A cross check is supplied to independently verify report prices which can be prepared even if no
contracts were placed
• An assessment of the current day newbuilding price can therefore be generated even if no assets of a similar size/type have
been contracted recently
• Even if there are no comparable contracts a model generated view offers an independent cross check to verify reported prices
• Newbuilding price can be modelled using three primary drivers:
Costs
Forward Cover
Oil Price
• Explicit assumptions on:
‐ Exchange rates, interest rates, wage inflation, equipment inflation, steel price, productivity
• Shipyard capacity demand balance (measured in years) which is based on:
‐ Capacity by major region, capacity elasticity, forecast contracting
• Oil price is a leading indicator dictating E&P spending and field procurement
‐ Oil price
• MSI collate and process data from a large range of sources and build up consistent timeseries based on actual observations for
a range of benchmark units/rigs
• If no contracts were placed or we are unable to obtain contract prices these are assessed based on movements in prices
exhibited by comparable sectors
• Newbuilding prices can be cross checked using three input drivers weighted based on historical relationships (cost, yard
availability and oil price). As MSI monitors these on a quarterly basis indicative newbuilding prices can be calculated at any
point in time
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SECTION IV
Secondhand Values
Replace Cost and Net Replacement Value
Replacement costs and net replacement values are key inputs in deciding secondhand values
• Given the variability in newbuilding prices the depreciation
of the asset has to assessed in isolation from both the
newbuilding and scrap price. This is called the Net
Replacement Value:
‐ The rate at which an asset depreciates is dictated to be
the earnings environment, when earnings are high the
depreciation approaches a straight line and when
earnings are poor the depreciation is concaved
‐ Using historical transaction data the dynamics of the
curve can be calculated based on known net earnings at
the time of sales
‐ With limited sales data comparable sectors can be
aggregated to give better coverage
2011 Drillship Price by Design
Average Price (Mn
US$)
Water Depth (ft)
DSME 1000
580
10k
Gusto MSC P10000
610
10-12k
Samsung 12000
Huisman GT-10000
600
570
10-12k
10k
Design
Net Replacement Value Over Time
120
100
80
NRV (%)
• The starting point of any valuation involves working out the
replacement cost at the time of valuation i.e. how much
would it cost to place a new order at a yard for a replica unit
‐ Starting off using MSI’s benchmark prices we are able to
tailor these price to match a specific unit given either the
specification and technical parameters or the design
based on historical evidence such as 2011 drillship prices
by design
60
40
20
0
0
5
10
15
High Earnings Environment
18
20
Age at Sale
25
30
35
Low Earnings Environment
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Net Replacement Value and Depreciation Relationship
Net replacement value is used alongside depreciation to accurately model market dynamics
Semi-sub 5 year old NRV vs. Net Earnings (USDm)
• NRV =
(2𝑛𝑑 ℎ𝑎𝑛𝑑 𝑝𝑟𝑖𝑐𝑒 − 𝑠𝑐𝑟𝑎𝑝 𝑝𝑟𝑖𝑐𝑒 𝑖𝑛 𝑦𝑒𝑎𝑟 𝑜𝑓 𝑠𝑎𝑙𝑒)
(𝑁𝑒𝑤𝑏𝑢𝑖𝑙𝑑𝑖𝑛𝑔 𝑝𝑟𝑖𝑐𝑒 𝑖𝑛 𝑦𝑒𝑎𝑟 𝑜𝑓 𝑠𝑎𝑙𝑒 − 𝑠𝑐𝑟𝑎𝑝 𝑝𝑟𝑖𝑐𝑒 𝑖𝑛 𝑦𝑒𝑎𝑟 𝑜𝑓 𝑠𝑎𝑙𝑒)
• Depreciation is not static and using SLD would have
underestimated modern rig values over the last 6 years and
overvalued at start of last decade
• Earnings environment meant owners would be prepared to
pay significant premium for modern tonnage with
immediate availability
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500
110%
450
105%
400
100%
350
95%
300
90%
250
85%
200
80%
150
75%
100
70%
50
65%
0
60%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
5 Yr Old NRV (RHA)
Net Earnings
Modelled Secondhand Prices and Considerations
The exact price of a secondhand asset is influenced by a range of market factors
• The secondhand value is based on a number of factors
including:
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Exact specification and age of asset
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Yard and location of build, including track record
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Replacement cost and time from ordering to delivery
(by sub component where necessary i.e. hull, topside,
engineering, supervision costs etc.
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Current and future earnings potential/utilisation rates
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Scrap price (both $LDT and cannibalisation potential)
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Life expectancy
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Maintenance schedule
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Recent transaction prices and any specifics relating to
those transactions
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These data are either contained in MSI or Infield Systems
databases and can be used to assess each unit on a caseby-case basis with premium and/or discounts applied
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MSI is then able to cross check the calculated valuation as
described above with a model generated valuation
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The model algorithms utilise the relationships between
net earnings, newbuilding prices and scrap prices
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Actual vs. Model Secondhand Prices (US$)
800
700
600
500
400
300
200
100
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
5 Yr Actual
5 Yr Calc
SECTION V
Data Users
Clients Using MSI Offshore Price Data and Certificates
Clients across private equity, investment and retail banks valuing assets including rigs, support vessels
and production platforms
Clients and Asset Types Values
Support Vessels
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Anchor Handlers
Platform Supply
Tug Workboat
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Construction Vessels
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Heavy Lift
Pipelay
Dive Support
Well Intervention
Multifunctional
Drilling Units
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Drillship
Semi-sub
Jack-up
Production Platforms
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FPSO
FSO
FSRU
FLNG
Export Vessels
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Shuttle Tanker
SECTION VI
Administration
Disclaimer
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 2013
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