Oceanteam Increases Activity Level in First Quarter

During the first quarter Oceanteam Shipping ASA increased its level of activity with start up of several new contracts for RentOcean, its marine asset services division.

Oceanteam Increases Activity Level in First Quarter

The Company increased its strategic ownership in the design engineering firm KCI to 100 % and commenced an investment programme named “The Next Step”. The most significant event during the quarter was the founding of a new joint venture named “DOT Shipping” together with Grupo Diavaz to prepare for the expected growth of the market in Mexico.

Grupo Diavaz provides a wide range of integrated services to the Mexican oil company PEMEX and was founded in 1973. This new joint venture company will focus on providing high-end vessel solutions and marine asset services in Mexico.

Highlights for the quarter:

* Revenue from operations USD 15.1 million for the quarter.
* EBITDA from operations is positive USD 6.7 million for the quarter.
* Operating profit of USD 4.2 million.
* Net finance negative USD 3.7 million.
* CSV Southern Ocean is 100 percent consolidated from the first quarter due to change in control effective from 2014. This is related to implementing of IFRS 10 Consolidated Financial Statements and IFRS 11 Joint Arrangements.
* Oceanteam takes 40 % stake in new offshore shipping company. DOT Shipping is a joint venture founded together with Grupo Diavaz focusing on the Mexican market.
* Oceanteam has acquired ownership of the remaining 30 % shares in KCI, design and engineering services.
* RentOcean delivered to CEONA a 2.000T modular carousel system in Brasil for 1 year plus options.
* RentOcean awarded a contract by LS Cable South Korea for a second 4.000T modular carousel system for 1 year plus options.
* Bergen District Court upheld Oceanteam’s appeal in the legal case against Sawicon and NSS.

Stable oil prices have strengthened Oceanteam’s markets and the Company expects, also as a result of its revised strategy and The Next Step programme, that this will increase the demand for the integrated services Oceanteam provides.
As a consequence of the divergence between oil and gas demand and production predicted for the future, oil and gas prices are forecasted to increase further.

Exploration and production activities are likely to increase, as will the demand for large construction support vessels. In certain regions, in particular Latin America, Australia and West Africa, exploration and production activities are growing strongly. Geopolitical tension will make certain regions develop faster or slower and therefore the Company has chosen to focus on stable regions or to team up with strong local partners.

In Western Europe many offshore wind parks have been delayed due to funding or supply chain problems and cost overruns. During 2014 and for the years to come, the Company expects demand to increase for renewable energy related services but exact start dates remain uncertain. Overall the market is expected to grow. This will lead to an increased demand for support vessels and associated services. The focus of the industry is on cutting installation and maintenance
costs and using flexible solutions, which Oceanteam believes it can provide.

Larger wind farms allow improved fixed cost allocation, but also increased project complexity and increased demand for engineering services.
The oil and gas price influences oil companies’ priorities and choices between new developments, upgrades to existing facilities and commitments to recovery from producing fields. Fluctuations in oil prices also affect the renewable  energy market and thereby affect activity in both of Oceanteam’s main markets.

Oceanteam Shipping is confident and has secured sufficient projects in both the oil and gas and the renewable energy markets to maintain a high level of utilization of its assets and engineers. In addition the Company allocated significant resources in 2013 to preparing the Company for growth. A significant step in 2014 has been the establishment of a joint venture with Grupo Diavaz in Mexico named DOT Shipping. The Company is to provide, in this captive market, vertical integration fleet engineering solutions for the Mexican market. Through this joint venture Oceanteam operations will grow throughout the coming years.

The shipping segment is based on long term contracts and the Company has a long track record of securing such contracts. The current back log on a 100 % basis is: USD 111 million, excluding options. KCI, design engineering services is built on a 26 year track record of multiple short term contracts of different sizes and durations.

RentOcean has started its first two major oil & gas contracts for supply to South Korea and Brazil in addition to the historically strong offshore renewables market for the business. The current back log of the marine assets is USD 36 million and major projects have been started up in Q1 2014. The Company’s strategy is to focus on the provision of “state of the art” construction support and flex lay vessels plus engineering and equipment services for the oil and gas and offshore renewable energy market.

This strategy will provide the Company with excellent opportunities in the near future. The Company is experiencing strong interests for its vessels, equipment and services from globally leading companies.

Press Release, May 22, 2014