Hornbeck Offshore Services

Transcription

1 H O S Investor Presentation November 2008 Todd M. Hornbeck Chairman, President and CEO James O. Harp, Jr. Executive VP and CFO

2 Forward-Looking Statements This presentation contains forward-looking statements, as contemplated by the Private Securities Litigation Reform Act of 1995, in which the Company discusses factors it believes may affect its performance in the future. Forward-looking statements are all statements other than historical facts, such as statements regarding assumptions, expectations, beliefs and projections about future events or conditions. You can generally identify forward-looking statements by the appearance in such a statement of words like anticipate, believe, continue, could, estimate, expect, intend, may, might, plan, potential, predict, forecast, project, should or will or other comparable words or the negative of such words. The accuracy of the Company s assumptions, expectations, beliefs and projections depend on events or conditions that change over time and are thus susceptible to change based on actual experience, new developments and known and unknown risks. The Company gives no assurance that the forward-looking statements will prove to be correct and does not undertake any duty to update them. The Company s actual future results might differ from the forward-looking statements made in this presentation for a variety of reasons, which include: the Company s inability to successfully or timely complete its various vessel construction and conversion programs, especially its MPSV program, which involves the construction and integration of highly complex vessels and systems; changes in the Company s vessel construction and conversion budgets, less than anticipated success in marketing and operating its MPSVs, which are a class of vessels that the Company has not previously owned or operated; the inability to re-charter the HOS Achiever (f/k/a the Superior Achiever) due to the bankruptcy proceedings involving Superior Offshore International, Inc.; further weakening of demand for TTB services; inability of the Company to offset the loss of TTB revenues with OSV revenue increases; inability to effectively curtail TTB operating expenses from stacked vessels; inability to successfully implement any actions resulting from the Company s strategic review of the TTB segment; unplanned customer suspensions, cancellations or non-renewals of vessel charters, or failure to finalize commitments to charter vessels; industry risks, changes in capital spending budgets by customers, fluctuations in oil and natural gas prices, variations in demand for vessel services, increases in operating costs, the inability to accurately predict vessel utilization levels and dayrates, less than anticipated subsea infrastructure demand activity in the GoM and other markets, the level of fleet additions by competitors that could result in over-capacity, economic and political risks, weather related risks, the inability to attract and retain qualified marine personnel, regulatory risks, the repeal or administrative weakening of the Jones Act, drydocking delays and cost overruns and related risks, vessel accidents or pollution incidents resulting in lost revenue or expenses that are unrecoverable from insurance policies or other third parties, unexpected litigation and insurance expenses, fluctuations in foreign currency valuations compared to the U.S. dollar and risks associated with expanded foreign operations. In addition, the Company s future results may be impacted by continued volatility or further deterioration in capital markets, inflation, deflation, or other adverse economic conditions that may negatively affect it or parties with whom it does business resulting in their non-payment or inability to perform obligations owed to the Company, such as the failure of shipyards and major suppliers to complete orders or the failure by banks to provide expected funding under the Company s credit agreement, or changes that may result from the pending shift in power between the national political parties in the United States government. Should one or more of the foregoing risks or uncertainties materialize, or should the Company s underlying assumptions prove incorrect, the Company s actual results may vary materially from those anticipated in its forward-looking statements, and the Company s business, financial condition and results of operations could be materially and adversely affected. Additional factors that you should consider are set forth in detail in the Risk Factors section of the Company's most recent Annual Report on Form 10-K as well as other filings the Company has made and will make with the Securities and Exchange Commission which, after their filings, can be found on the Company s website The Company cautions readers that the information contained in this presentation is only current as of November 6, 2008, and the Company undertakes no obligation to update or publicly release any revisions to the forwardlooking statements in this presentation hereafter to reflect the occurrence of any events or circumstances or any changes in its assumptions, expectations, beliefs and projections, except to the extent required by applicable law. 2

3 H O S Company Overview

4 Company Profile Relative Stock Price Performance (IPO to 6-Nov-2008) Year Founded Year of IPO Market Inception Market IPO Market 6-Nov-2008 Total Cash 1 Moody s Rating S&P Rating Mar 2004 $ 267m $ 21m Total Debt 1 $ 660m Total Enterprise 6-Nov-2008 $ 1,214m 1 As of 30-Sep-2008 Jun 1997 $ 1m $ 575m Ba3 BB- 400% 350% 300% 250% 200% 150% 100% 50% 0% -50% S&P Sm lcap 600 Apr-04 Jul-04 OSV Peers Russell 2000 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 OSV Peers include TDW, GLF, and CKH. Daily Trading Volume (000s) OSX 2 L3M average daily trading volume is ~915k shares S&P 500 HOS Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct ,000 5,000 4,000 3,000 2,000 1,000-4

5 Diversified Oilfield Marine Service Provider Offshore Supply Vessels Upstream Tugs and Tank Barges Downstream HOS Cornerstone approaching the drillship GSF CR Luigs Energy 13501, our first newbuild double-hulled tank barge, on her maiden voyage. 46 Vessels 61 Pro Forma Vessels 1 38 Vessels 2008E EBITDA = ~86% E EBITDA = ~14% 1 1 As of 6-Nov

6 Favorable Macro Trends Driving Each Segment Upstream (OSV) Deepwater GoM Production % of Total U.S. Offshore Production from Deepwater Downstream (TTB) OPA 90 Phase-Out of Single-Hulled Tank Barges Cumulative Barrels of Capacity Retired Oil Prod Gas Prod -5,000 Retiring Barrels (000's) Capacity (000's) -10,000-15, , Source: Minerals Management Service (MMS) Gulf of Mexico OCS Deepwater Production Summary by Year, dated Apr-2008 Source: Based on data contained in the United States Coast Guard Report to Congress on the Progress to Replace Single Hull Tank Vessels with Double Hull Tank Vessels, dated Sep

7 Competitor Profile by Segment 1 Upstream (OSV) GoM New Generation Market 2 Downstream (TTB) East Coast Short-Haul Market 3 Other Public 19% Chouest 35% Hornbeck Offshore 13% Penn 9% Seaboard 7% Vane Bros 9% Others 9% Hornbeck Offshore 19% Other Private 27% Est. Total Capacity (dwt) = 595,602 ~37% owned by public companies Reinauer 12% Bouchard 14% K-Sea 26% Est. Total Capacity (mbbls) = 12,806 ~29% owned by public companies 1 Source: Company estimates based on peer company websites and selected industry sources as of 6-Nov Represents vessels owned by HOS and OSV competitors currently operating in the U.S. Gulf of Mexico market, including 49 currently announced newbuilds with deliveries through Represents vessels owned by HOS and TTB competitors currently operating barges in the size range of 50k to 150k barrels in the East Coast bluewater, or coastwise, market. East Coast is defined as the entire Atlantic seaboard from the northeastern U.S. to Florida, the Gulf of Mexico region, Puerto Rico and the Great Lakes. 7

8 Market Diversification Strategy 1 By Geographic Area By Service-Offering Well Test GoM (Downstream) Mexico Northeast US Great Lakes Trinidad West Coast East Coast Qatar Brazil Petroleum Transportation Military Services Port Services Vessel Management Puerto Rico GoM (Upstream) Oilfield Supply Oilfield Specialty 11 geographic markets 7 service-lines 1 Based on current fleet complement and near-term outlook as of 6-Nov This slide is not intended to provide precise revenue estimates, but is only a representative graphical illustration of our market mix, as vessels often shift between geographic areas and/or service-offerings. 8

9 Currently Focused on U.S.-Flagged Markets 2 OSVs (Military) Gulf of Mexico 2 nd largest new generation OSV operator 30 OSVs 1 MPSV 8 Tugs 6 Barges (seasonal) Great Lakes 1 Tug 1 Barge Mexico New Orleans GoM 4 OSVs 1 AHTS (foreign-flagged) 2 OSVs (Military) East Coast Top 3 operator in short-haul market 1 6 Tugs 7 Barges Puerto Rico 1 Tug 1 Barge Trinidad 3 OSVs 1 AHTS (foreign-flagged) Represents active vessel counts as of 6-Nov-2008, excluding six stacked barges and one stacked tug. Also excludes all announced newbuilds currently under construction and two OSVs currently working in Qatar. 1 Based on barges in the size range of 50k to 150k barrels in the East Coast bluewater, or coastwise, market. East Coast is defined as the entire Atlantic seaboard from the northeastern U.S. to Florida, the Gulf of Mexico region, Puerto Rico and the Great Lakes. Non-Oilfield service Oilfield service 9

10 Diversified Service Mix Energy on deepwater well test at the semi-submersible Ocean Quest HOS Port in Port Fourchon, LA (recently expanded) HOS enlists 240 ED class OSVs in military service BJ Blue Ray, a 265 class well stimulation vessel performing a 360 turn HOS Resolution, a 250EDF class vessel in reel service An ROV being deployed from the 240E class DP2 HOS Innovator 10

11 Outstanding Safety Record Lost Time Incident Rate Recordable Incident Rate Shoreside Mariners Steadily improving safety record despite substantial increase in employee headcount 2007 set a new record for our lowest total recordable incident rate (TRIR = 0.15) Also achieved our best annual lost time incident rating (LTIR =.03) since

12 H O S OSV Market Overview

13 Gulf of Mexico A Bifurcated OSV Market Conventional Fleet ~46% owned by public companies New Generation Fleet ~37% owned by public companies yrs old Under 20 yrs old Over 10 yrs old Newbuilds Over 25 yrs old 5-10 yrs old Under 5 yrs old 107k DWT 115 Vessels* Servicing: Shallow shelf only * 95% are over 20 years old, with avg. age of 29 years 596k DWT Vessels* Servicing: All offshore areas Specialty services * 56% are newbuilds or under 5 years old, with avg. age of 7 years for existing vessels Source: Company estimates and selected industry sources as of 6-Nov-2008; Conventional Fleet does not include U.S.-flagged vessels that have recently been sold by HOS to a foreign buyer and/or written-off or cold-stacked by public competitors; New Generation Fleet includes 49 newbuilds currently announced for construction or conversion with projected deliveries through

14 HOS vs. Public Domestic OSV Peers HOS Effective Dayrate = 2.5x OSV Peer Group HOS Utilization 30% > than OSV Peer Group $24,000 $22,000 $20,000 Average Dayrate Effective Dayrate Dayrates 100% 90% Utilization Hornbeck 9-yr Average $18,000 80% $16,000 $14,000 $12,000 $10,000 $8,000 9-yr Effective Hornbeck 70% 60% 50% OSV Peer Group 9-yr Average $6,000 $4,000 $2,000 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 9-yr Effective Dayrate Hornbeck = $12,469 OSV Peer Group = $4,933 9-yr Effective OSV Peer Group 40% 30% 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 9-yr Average Utilization Hornbeck = 93% OSV Peer Group = 65% Effective Dayrate = Average Dayrate x Utilization Source: SEC filings from OSV public peers that operate vessels in the domestic GoM, including TDW, CKH, SBLK and TRMA, through 3Q2008. As of 6-Nov

15 Deepwater E&P Demand Drivers Deepwater and ultra-deepwater exploration and production infrastructure Courtesy of: Clarkson Research Services Limited UK ( 15

16 Growth in Deepwater Exploratory Rig Count Deepwater GoM exploratory rig fleet expected to increase 15% over current levels by 2012 Plus, GoM is expected to attract some of the 68 add l speculative world-wide deepwater rigs Deepwater development accelerating due to proven technologies and operational efficiencies Over 600 new blocks were bid during recent U.S. lease sale, with the majority in deepwater GoM Deepwater Exploratory Rig Fleet Deep Shelf Jackup Drillship Semisubmersible Plus Speculative Worldwide Deepwater Rig Deliveries E 2010E 2011E 2012E E 2009E 2010E 2011E 2012E Total Source: ODS-Petrodata Source: ODS-Petrodata As of 6-Nov

17 Growth in Deepwater Production Infrastructure Deepwater GoM production facilities are expected to grow 31% over current levels by 2009 GoM subsea tree installations are expected to grow 38% over current levels by 2011 An estimated 75% of the deepwater discoveries have yet to be developed and produced Increased infrastructure creates demand for subsea inspection, repair and maintenance (IRM) Historical and Projected GoM Deepwater Production Infrastructure Floating Platforms Producing Fields Subsea Trees Subsea Tieback Activity in the GoM (2008E-2011E) E 2008E 2009E 0 0 Current Construction Planned Under Study 2012E Source: Infield Systems Limited Source: ODS-Petrodata As of 6-Nov

18 Growth in Platform Decommissioning Activity Average decommissioning age of GoM shelf platforms is approximately 18 years Nearly 2,500 production platforms in the GoM are now over 15 years old Since 1990, an average of 122 platforms have been decommissioned per year 113 platforms destroyed during 2005 hurricanes, with 90 platforms still waiting to be removed Active Shelf Production Platforms in the GoM 200 Decommissioning of Shelf Production Platforms in the GoM Over 30 yrs old yrs old Under 5 yrs old 5-15 yrs old Source: MMS As of 6-Nov ~3,900 Platforms > 60% over 15 years old > 30% over 30 years old Source: MMS 18

19 Post Hurricane Repair Offshore Supply Vessels Multi-Purpose Support Vessels DP2 240E class OSV, HOS Innovator surveying damage at BP s Thunderhorse semi-submersible production platform after Hurricane Dennis in DP3 T-22 class MPSV, HOS Achiever, on her first shelf platfom remediation job in the GoM after Hurricanes Gustav and Ike in

20 Potential Shortage of U.S.-Flagged New Generation OSVs Visible Fleet Demand Through 2012 Visible Fleet Supply Through 2012 Semisubmersibles Drilling 32% SPARs 10% TLPs 9% Deep Shelf Jackups 10% Specialty Services 12% Drillships 13% Subsea Tiebacks 6% FPSOs 1% 270 Class 28% 240 Class 28% 200 Class 43% Semisubmersibles Production 7% HOS 370 Class 1% Total Visible Demand: > 208 OSVs Source: Company estimates based on publicly available information from ODS-Petrodata and other industry sources; assumes 100% rig utilization and new generation boat multipliers based on conservative correlations per demand driver. Total Visible Supply: 204 U.S.-Flagged OSVs (operating in GoM) Source: Company estimates and MarineLog; includes 49 newbuilds currently announced or under construction or conversion with deliveries through Excludes 51 U.S.-flagged new generation OSVs currently operating in foreign or non-oilfield markets. As of 6-Nov As of 6-Nov

21 H O S OSV Fleet Summary

22 Hornbeck OSV Fleet Profile 270 Class 24% HOS Fleet (Prior to Sea Mar acquisition) 200 Class 32% ~3x Growth Pro Forma HOS Fleet Class 41% 270 Class 12% 240 Class 44% MPSV Class 19% Conventional Class 4% 200 Class 24% Total Deadweight Tons = 59,042 New Gen US Flagged Market Share by DWT: 15% Total Deadweight Tons = 166,697 New Gen US Flagged Market Share by DWT: 19% 1 Pro Forma HOS Fleet includes two new DP-2 MPSVs being converted and two new DP-3 MPSVs being constructed under our MPSV Program, 15 new proprietary 240 class OSVs and one 290 class OSV being constructed under our OSV Newbuild Program #4 and the Sea Mar Fleet, acquired in August 2007, now comprised of 10 new generation OSVs and 6 conventional OSVs. 22

23 Proprietary OSV Newbuild Designs Six Discrete Classes Proprietary Design Features HOS 200 OSV HOS 240/240E/240ED OSV HOS 250EDF OSV HOS 265 OSV Since 1998, HOS has built a multi-class fleet of in-house designed new generation OSVs Each program improved upon prior designs to develop larger, more versatile deepwater vessels This fleet is able to service the widest array of our customers needs from cradle to grave 23

24 Diverse Fleet of New Generation OSVs 200 class HOS Crossfire, our first proprietary new generation OSV 220 class HOS Voyager, one of six OSVs acquired from Candy Fleet 240E class HOS Innovator surveying hurricane damage at BP s Thunderhorse 240ED class HOS Bluewater, our latest proprietary OSV design 265 class HOS Sandstorm, performing specialty services in the Mediterranean Sea 240 class HOS Navegante, one of two acquired foreign-flagged AHTS vessels 24

25 Recent Progress Photos of MPSVs Merwede T-22 class DP3 design HOS 370 class DP2 design HOS Achiever, our first of two foreign-built DP3 Merwede T-22 class MPSVs HOS Centerline, our first of two U.S.-flagged DP2 HOS 370 class MPSVs (Expected delivery in 4Q and 4Q2009) (Expected delivery in 1Q2009 and 4Q2009) 1 HOS Achiever was placed in service on 1-Oct-2008 As of 6-Nov

26 Number of OSVs Highlights of MPSV-DP2 Vessel Specs Vessel Equivalents to 10,000 DWT Equals one HOS 370 Vessel Specs Proprietary HOS 370 class DP2 design ~370-ft overall length ~10k deadweight tons (dwt) ~30k bbls of liquid mud capacity Moon pool / 250 ton HC crane (optional) 2.0 Notable Vessel Attributes 0.0 Conv ED 270 Number of OSVs needed to equal the deadweight tons of one HOS 370 class MPSV World s largest supply vessels (by dwt) U.S. Jones Act qualified MPSVs Unique U.S.C.G. Subchapter L-I-D notations Deepwater well tests require Subchapter D Liquid mud well-suited for ultra-deep spud loads As of 6-Nov

27 Highlights of MPSV-DP3 Vessel Specs Vessel Specs Proven Merwede T-22 class DP3 design ~430-ft overall length ~8k deadweight tons ~15,000 bhp propulsion Accommodations for 100 to 150 Moon pool / heli-deck (Super Puma class) HOS Achiever Delivered in 4Q2008 Notable Vessel Attributes Complementary to HOS DP2 MPSVs U.S.-flag DP3 HOS Iron Horse will be unique to GoM DP3 for live well intervention and sat-diving High capacity cranes ideal for decommissioning Ample accommodations for flotel services HOS Iron Horse Estimated delivery in 4Q2009 Note: The above illustrations may not represent final vessel configurations 27

28 H O S TTB Market Overview

29 Overview of U.S. Waterway Transportation U.S. East Coast waterway system y y U.S. waterborne transport volumes Lakewise 8% Coastwise Lakewise Inland waterways Inland waterways 46% Total: 600mm tons Coastwise 46% Blue Water comprised of larger coastwise ocean-going vessels Brown Water comprised of smaller vessels working on the navigable inland waterways Green Water comprised of smaller vessels navigating the lakes, bays and sounds 29

30 A Critical Link in the Petroleum Distribution Chain Types of cargo transported by tugs and tank barges Clean products Gasoline Distillates High octane Low octane Aviation Home heating oil Cars, light trucks and boats Light aircraft Furnaces Turbines Diesel fuel Trucks, cars, & off-road Upstream Downstream Black oil products Crude oil Kerosenes Residual fuel oil Asphalts Jet fuel Kerosene Jets Heaters Boilers Ships Furnaces Paving materials Tars Refineries 30

31 Most Efficient Mode of Bulk Transportation Equivalent capacity of 100k barrel barge 1 tank barge 162 rail tank cars 439 tractor trailer tank trucks = = More cost-effective and energy-efficient means of transporting bulk commodities Double-hulled barges have become the industry standard for petroleum transportation U.S. TTB industry transported 240mm barrels of crude oil and refined products in

32 U.S. Coastwise TTB Industry Fleet Profile Domestic Domestic tank tank barges barges (by (by geography) geography) West Coast 14% East Coast 86% East East Coast Coast tank tank barges barges (by (by size) size) <50k 15% >150k 21% 50k 150k 64% 23.5mmbbls of capacity 20.3mmbbls of capacity Vast majority of domestic blue-water tank barges operate in the East Coast market The East Coast market is primarily serviced by short-haul units in 50k-150k barrel range Hornbeck is a leading provider in this short-haul coastwise market niche Note: Based on Company estimates of domestic short-haul coastwise tank barges with 50k to 150k barrels of capacity in the East Coast market, the TTB Segment s primary region of operations. The East Coast market is defined as the entire Atlantic seaboard from the northeastern U.S. to Florida, the Gulf of Mexico region, Puerto Rico and the Great Lakes. Company estimates based on peer company websites and selected industry sources as of 7/22/08 32

33 Tank Barge Fleet A Bifurcated Market U.S. TTB industry fleet age profile (average age, in years) HOS Industry average Double-hulled barges Single-hulled barges Source: Company estimates based on peer company websites and selected industry sources as of 7/22/08 Remaining single-hulled barges are over 25 years older than their double-hulled replacements HOS has adopted a just-in-time newbuild strategy to address its OPA 90 retirements This approach has resulted in one of the youngest double-hulled fleets in the industry today 33

34 Recent TTB Dayrate Trends Utilization-adjusted, or effective, double-hulled dayrates have increased by 64% since 2004 Dayrate increases driven by single-hulled retirements and high double-hulled reinvestment costs HOS has recently stacked six barges due to soft market demand for single-hulled vessels Dayrates Utilization $34,000 Average Dayrate Effective Dayrate 100% Double-Hulled 5-yr Average $30,000 90% $26,000 $22,000 $18,000 Double-Hulled 5-yr Effective 80% 70% 5-yr Average Single-Hulled $14,000 60% $10,000 $6,000 $2,000 1Q04 1Q05 1Q06 1Q07 1Q08 5-yr Effective Dayrate Double-Hulled = $18,296 Single-Hulled = $9,926 5-yr Effective Single-Hulled 50% 40% Average Utilization Effective Utilization 30% 1Q04 1Q05 1Q06 1Q07 1Q08 5-yr Average Utilization Double-Hulled = 94% Single-Hulled = 81% As of 6-Nov Effective Dayrate = Average Dayrate x Average Utilization 34

35 Leverage to High Refining Sector Activity Demand for domestic tank barges is largely driven by demand for refined petroleum products Strong demand outlook due to continued growth in the industrial economy and population Planned refining capacity expansions should increase demand in core TTB operating markets Incremental demand for lightering services due to expected growth in imported crude volumes Mbpd U.S. Refinery Utilization and Excess Capacity U.S. excess capacity Capacity utilization 6,000 95% 5,000 90% 4,000 85% 80% 3,000 75% 2,000 70% 1,000 65% 0 60% Planned Expansion of U.S. Refining Capacity (Mbpd) Delaware City, DE (20) Garyville, LA (406) St. Charles, LA (105) Port Allen, LA (25) Detroit, MI (80) Pascagoula, MS (14) Bayway, NJ (6) Philadelphia, PA (45) Port Arthur, TX (186) Port Arthur, TX (370) Source: BP Statistical Review Source: Reuters 35

36 Projected Net Reduction in Fleet Capacity by 2014 Overall net barge capacity expected to decline in East Coast short-haul coastwise market OPA 90 requires all newbuild tank barges in petroleum transportation to be double-hulled Remaining single-hulled retirements are twice the current newbuild order book TTB industry barge capacity outlook (thousands of barrels) 1 Single-hulled Double-hulled 12,806 1,398 (3,189) 9,617 11,015 3, Double-hulled newbuilds Single-hulled retirements Pro forma 2015 Note: Based on Company estimates of domestic short-haul coastwise tank barges with 50k to 150k barrels of capacity in the East Coast market, the TTB Segment s primary region of operations 1 Based on existing capacity as of September 2001 U.S. Coast Guard report As of 22-Jul

37 H O S TTB Fleet Summary

38 Hornbeck OPA 90 Tank Barge Fleet Profile Pre-Newbuild HOS Fleet 1 Current HOS Fleet 2 Double-Hulled 9% % ~2x Growth Double-Hulled 51% % Total Capacity (Mbbls) = 878 Total Capacity (Mbbls) = 1, % % References to 2009 and 2014 represent the OPA 90 retirement dates for certain single-hulled equipment. 1 Pre-Newbuild HOS fleet reflects the fleet capacity in January 2005 for 13 barges, immediately after the December 2004 OPA 90 retirement of three 90k-barrel single-hulled barges. 2 Current HOS Fleet reflects current fleet capacity for 21 barges. 38

39 Proprietary TTB Newbuild Designs Three Discrete Sizes Proprietary Design Features HOS has completed two TTB newbuild programs in the last three years These programs added eight double-hulled barges and rebuilt eight recently acquired tugs The 60,000-bbl DH barges were specifically designed for the seasonal Great Lakes market 39

40 Tugs and Tank Barges Energy 13501, our first proprietary double-hulled tank barge newbuild HOS tugs docked at our Brooklyn shore-based facility Energy on its maiden voyage, powered by the 6,140 hp Liberty Service Two of our double-hulled newbuilds, the Energy and Energy Energy 6506, our first 60,000-bbl double-hulled tank barge newbuild The Gulf Service, one of our 3,900 hp ocean-going tugs, in New York Harbor 40

41 High Quality, Modern TTB Fleet TTB Segment tank barge fleet profile Hull type (by capacity in bbls) Average age (in years) Capacity (barges sorted by mbbls) Double- Hulled 51% Single- Hulled 49% Total fleet: 1.745mmbbls 0 Doublehulled Single-hulled TTB Segment tug fleet profile Rebuilt 47% Rebuilt status (by headcount) Total fleet: 17 tugs Not Rebuilt 53% Average age (in years) 2 Rebuilt 33 Not rebuilt Capacity (tugs sorted by BHP) k 3k-6k 6k+ 4 41

42 H O S Financial Highlights

43 Track Record of Financial Growth ($ in millions) $360 $300 $240 $180 $120 $60 $0 OSVs Tank Barges Revenue CAGR 44% ($ in millions) $200 $160 $120 $80 $40 $0 OSVs Tank Barges EBITDA 1 CAGR 62% EBITDA is a non-gaap financial measure; see Appendix for definition and Regulation G reconciliation to GAAP. 43 EBITDA for 2001, 2004 and 2005 has only been adjusted for loss on early extinguishment of debt of $3.0m, $22.4m and $1.7m, respectively.

44 80.0% 70.0% 60.0% Industry Leading OSV Margins Gross Margin Hornbeck OSVs 8-year Average HOS OSVs = 67% OSV Peers = 44% 50.0% 40.0% 30.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% -10.0% OSV Peers OSV Peers Operating Margin Sources: Company SEC filings Note: OSV Peers include TDW, CKH, GLF and TRMA. Gross margin defined as GAAP revenues minus GAAP operating expenses divided by GAAP revenues for each period. Operating margin defined as GAAP operating income minus Gains or Losses from Asset sales divided by GAAP revenues for each period. Negative results of competitors have been excluded from the peer averages YTD2008 Hornbeck OSVs YTD2008 YTD 2008 HOS OSVs = 65% OSV Peers = 44% 8-year Average HOS OSVs = 46% OSV Peers = 22% YTD 2008 HOS OSVs = 47% OSV Peers = 24% 44

45 Strong Track Record of Value Creation 18.0% EVA = ROIC 1 WACC % 14.0% 12.0% HOS 7-yr Average Cash Tax-Adjusted ROIC = 14% HOS 7-yr Average CWIP-Adjusted ROIC = 13% HOS 7-yr Average ROIC = 11% 2007 ROIC 13% 10.0% 8.0% EVA = 8% 6.0% 4.0% 2.0% Current Weighted Average Cost of Capital (WACC) = 5% 0.0% 2001A 2002A 2003A 2004A 2005A 2006A 2007A 2008E 1 Return on invested capital (ROIC) is defined as tax-affected GAAP operating income divided by average net book capital (BoY long-term debt less cash plus book equity + EoY long-term debt less cash plus book equity divided by 2). See Appendix for detailed calculation of HOS ROIC and HOS WACC. As of 6-Nov

46 HOS HOS leads Oilfield Industry Peers in 5-yr EVA 5-yr Average CROCI 1 HOS Current WACC Large-Cap Equip Small-Cap Equip All Diversified Equip Mid-Cap Equip All Drillers Offshore Drillers TDW Large-Cap Equip Small-Cap Equip All Diversified Equip Mid-Cap Equip All Drillers Offshore Drillers TDW -20% -15% -10% -5% 0% 5% 10% 15% 20% -20% -15% -10% -5% 0% 5% 10% 15% 20% HOS 5-yr Average EVA 1 (CROCI) Large-Cap Equip Small-Cap Equip All Diversified Equip Mid-Cap Equip All Drillers Offshore Drillers TDW -20% -15% -10% -5% 0% 5% 10% 15% 20% Source: Goldman Sachs Oil Service Weekly: Valuations and Fundamentals, dated 7-Nov The companies represented above reflect the entire Goldman Sachs (GS) oil service equity research coverage universe, which is comprised of BHI, HAL, SLB, BJS, CAM, DRC, FTI, NOV, SII, WFT, OIS, ATW, DO, ESV, NE, PDE, RDC, RIG, BAS, NBR, HERO, HP, PTEN, TS, HOS and TDW. 1 CROCI is Cash Tax-Affected Return on Capital Invested, as defined by Goldman Sachs. EVA equals CROCI minus WACC. 46 Note: GS calculation of WACC differs from HOS calculation of WACC, but is consistently applied to all peers. See Appendix for detailed calculation of HOS WACC.

47 HOS Fleet Growth (1998 to 2010E) 1 Offshore Supply Vessels (total deadweight tons) Tank Barges (total barrel capacity) 180, , ,000 90,000 60,000 30, ,000,000 51% 12-year CAGR 14% 12-year CAGR E 2009E 2010E Newbuilds Acquisitions Conversions 1,500,000 1,000, , E 2009E 2010E SH Acquisitions DH Acquisitions DH Newbuilds HOS has constructed 21 OSVs and 1 MPSV and has acquired 24 OSVs 2 HOS currently has 12 OSVs and 3 MPSVs under construction or conversion HOS has acquired 13 TBs and has constructed 8 TBs As of 6-Nov Excludes prior vessel divestures 2 Includes 16 OSVs from recently acquired Sea Mar Fleet 47

48 Growth Capex Outlook 1 Upstream (OSV) Before E 2 After 2008E Aggregate MPSV Program $ 146m $ 249m $ 55m $ 450m OSV Newbuild Program #4 $ 89m $ 176m $ 185m $ 450m Sea Mar Fleet $ 186m - - $ 186m Downstream (TTB) Before E 2 After 2008E Aggregate TTB Newbuild Program #2 $ 69m $ 9m - $ 78m Total $ 490m $ 434m $ 240m $ 1,164m 1 As of 6-Nov As of 30-Sep-2008, $368m of the total growth capex budget for 2008E has already been incurred and, therefore, only $306m remains to be incurred out of an estimated aggregate growth capex budget of $1,164m 48

49 Significant Operating Leverage with Stable Base ($ in millions) $450.0 $400.0 $350.0 $300.0 $250.0 $200.0 $150.0 $100.0 $50.0 $0.0 $153 $181 $97 $36 $59 $47 $ E Pro Forma 2 Run-Rate Oilfield OSV EBITDA Military OSV EBITDA 3 TTB EBITDA 1 EBITDA / Cash Interest Expense Cash Interest Expense $230 77% 9% 14% 2 $406 84% 8% 8% 20x 18x 16x 14x 12x 10x 8x 6x 4x 2x 0x EBITDA / Intereset Expense Note: EBITDA is a non-gaap financial measure; see Appendix for definition and Regulation G reconciliation to GAAP. 1 EBITDA for 2001, 2004 and 2005 has only been adjusted for loss on early extinguishment of debt of $3.0m, $22.4m and $1.7m, respectively. 2 Annual and Pro Forma Run-Rate EBITDA estimates and EBITDA percentage contributions by segment reflect the mid-point of the Company s latest 2008E guidance range reported in its 6-Nov-2008 press release. See Appendix for detailed footnotes regarding Pro Forma Run-Rate assumptions. 3 Military OSV EBITDA reflects estimated contribution from the Company s vessels currently working for the military under long-term contracts. 49

50 Modest Annual Fixed Charges EBITDA growth, coupled with relatively modest fixed charges, generates strong free cash flow Low-coupon, fixed-rate, long-term debt only requires $23m of annual post-newbuild debt service Recurring annual maintenance capex expected to be in $40m to $50m range for 2009 and 2010 $28 Cash Paid for Debt Service $28 Cash Paid for Taxes $24 $20 $24 $20 $16 $12 $8 $4 $0 $19 $20 $24 $18 $19 $23 $26 $16 $12 $8 $4 $0 $0 $0 $0 $0 $1 $5 $ E E $28 $24 $20 $16 $12 $8 $4 $0 $2 $6 Deferred Drydocking Charges $9 $7 $13 $20 $ E As of 6-Nov $28 $24 $20 $16 $12 $8 $4 $0 Other Vessel / Non-Vessel Capital Improvements $8 $6 $10 $7 $10 $9 $ E 50

51 Strong Balance Sheet and Liquidity ($ in millions) 31-Dec-2006 Actual 31-Dec-2007 Actual 30-Sep-2008 Actual Cash and Equivalents $474 $174 $21 Revolving Credit Facility due 2011 $0 $0 $ % Senior Notes due % Convertible Senior Notes due Total Debt Book Equity Total Capitalization $1,005 $1,112 $1,316 Net Debt / Net Capitalization 14% 40% 49% Net Debt / LTM Adjusted EBITDA 0.43x 1.82x 2.72x LTM Adjusted EBITDA / LTM Cash Interest 9.4x 9.1x 9.0x Total Available Liquidity $574 1 $274 2 $161 3 Revolver Coupon (as of period end) L+50 L+75 L+100 Moody s Rating Ba3 Ba3 Ba3 Standard & Poor s Rating BB- BB- BB- 1 Equals cash plus immediately available $100m borrowing base under $100m Revolving Credit Facility 2 Equals cash plus immediately available $100m borrowing base under $100m Revolving Credit Facility 3 Equals cash plus immediately available $140m borrowing base under $250m Revolving Credit Facility 51

52 6.00x H O S Leverage Ratio Improving Credit Statistics 14.00x Coverage Ratio Leverage Ratio 5.00x 4.00x 3.00x 2.00x 1.00x 0.00x Interest Coverage Ratio 12.00x 10.00x 8.00x 6.00x 4.00x 2.00x 2000A 2001A 2002A 2003A 2004A 2005A 2006A 2007A 2008E Pro Forma 0.00x 2000A 2001A 2002A 2003A 2004A 2005A 2006A 2007A 2008E Pro Forma Debt to Adjusted EBITDA Net Debt to EBITDA Capitalization Ratio Adjusted EBITDA to Int Expense 80.0% Capitalization Ratio 60.0% 40.0% 20.0% 0.0% 2000A 2001A 2002A 2003A 2004A 2005A 2006A 2007A 2008E Pro Forma Debt to Cap Net Debt to Net Cap Note: Pro Forma columns in each chart reflect the Company s latest Pro Forma Run-Rate EBITDA and Adjusted EBITDA guidance and projected post-construction capital structure. See Appendix for Pro Forma Run-Rate assumptions and definition and reconciliation of EBITDA and Adjusted EBITDA. As of 6-Nov

53 Investment Highlights Leading presence in strategic markets Premium fleet well positioned to capitalize on macro trends Industry leading growth, margins and returns Diversified operating leverage with stable cash flow foundation Proven track record of profitable growth through market cycles Balance sheet strength and liquidity to fund growth initiatives Effective use of capital markets to lower overall cost of capital Long-term earnings growth visibility Currently trading at attractive valuation multiples 53

54 H O S Investor Presentation November 2008 Todd M. Hornbeck Chairman, President and CEO James O. Harp, Jr. Executive VP and CFO

55 H O S Appendix

56 Regulation G EBITDA Reconciliation This presentation contains references to the non-gaap financial measures of earnings (net income) before interest, income taxes, depreciation and amortization, or EBITDA, and Adjusted EBITDA. The Company views EBITDA and Adjusted EBITDA primarily as liquidity measures and, therefore, believes that the GAAP financial measure most directly comparable to such measures is cash flows provided by operating activities. Reconciliations of EBITDA and Adjusted EBITDA to cash flows provided by operating activities are provided in the table below. Management's opinion regarding the usefulness of EBITDA and the components of Adjusted EBITDA to investors and a description of the ways in which management uses such measures can be found in the Company's most recent Annual Report on Form 10-K filed with the SEC. The following data is as of 6-Nov Reconciliation of EBITDA to Cash Flows Provided by Operating Activities ($m) Year Ended December 31, E 1 Run-Rate 2,3 Pro Forma Components of EBITDA: Net income (loss) $ (1.4) $ (1.8) $ (4.5) $ 7.0 $ 11.6 $ 11.2 $ (2.5) $ 37.4 $ 75.7 $ 94.8 $ $ Interest expense, net: Debt obligations Put warrants Interest income (0.1) (0.1) (0.3) (1.5) (0.7) (0.2) (0.4) (3.2) (16.1) (18.4) (1.5) (2.0) Total interest expense, net (2.7) Income tax expense (benefit) (0.2) (1.3) Depreciation Amortization EBITDA $ 2.3 $ 9.1 $ 17.5 $ 32.6 $ 46.5 $ 54.0 $ 36.6 $ 95.6 $ $ $ $ Loss on early extinguishment of debt Stock-based compensation expense Interest income Adjusted EBITDA $ 2.4 $ 9.2 $ 17.8 $ 37.1 $ 47.2 $ 54.2 $ 59.4 $ $ $ $ $ EBITDA Reconciliation to GAAP: EBITDA $ 2.3 $ 9.1 $ 17.5 $ 32.6 $ 46.5 $ 54.0 $ 36.6 $ 95.6 $ $ $ $ Cash paid for deferred drydocking charges (1.7) (2.4) (1.5) (1.7) (2.4) (6.1) (8.5) (6.8) (12.9) (19.8) (19.4) (29.7) Cash paid for interest (0.4) (4.5) (7.1) (5.6) (19.1) (19.7) (24.0) (17.9) (18.5) (22.6) (25.4) (22.6) Cash paid for taxes (1.4) (4.8) (5.9) (5.9) Changes in working capital (0.6) (2.9) 1.9 (0.5) (2.0) (5.0) (4.1) 15.3 (24.6) Stock-based compensation expense Loss on early extinguishment of debt Changes in other, net 5 (1.3) 0.3 (0.1) (0.7) (0.2) (1.9) (1.7) (1.7) (8.6) (8.6) Cash flows provided by operating activities $ 3.6 $ 1.9 $ 5.9 $ 30.3 $ 24.8 $ 25.5 $ 21.3 $ 75.8 $ $ $ $ Reflects mid-point of latest reported Company guidance and estimates for each income statement metric. Company guidance for 2008E reflects a partial-year contribution from one 60,000-barrel tank barge delivered during 2008 under the Company's TTB Newbuild Program #2. TTB segment EBITDA for 2008E is expected to be approximately 14% of the mid-point of the latest company-wide 2008E guidance range. 2 Pro Forma Run-Rate scenario illustrates the estimated incremental operating results from any recently acquired or constructed vessels that have been placed in service since December 31, 2007, as well as those vessels currently under construction or conversion under the Company s MPSV program and fourth OSV newbuild program, assuming all such vessels were placed in service as of January 1, 2008 and were working at their contracted dayrates or current market dayrates commensurate with their relative size and service capabilities. All other key assumptions related to the Company s current and projected operating fleet, including vessel dayrates, utilization, cash operating expenses, delivery dates, drydocking schedule, SG&A and income tax expense, are consistent with the Company s latest 2008 guidance. 3 Total interest expense, net, for the "Pro Forma Run-Rate" scenario assumes $24.4m of interest expense (without any capitalization of construction period interest) on a projected post-construction debt balanace of $550.0m, offset by $2.0m of interest income at an assumed rate of 2.0% on a projected post-construction cash balance of $100.0m. 4 Results for 2001 were impacted by a $2.0m after-tax ($0.19 per diluted share) charge on early extinguishment of debt relating to a July 2001 debt refinancing. Results for 2004 were impacted by a $14.7m after-tax ($0.75 per diluted share) charge on early extinguishment of debt relating to 91% of the November 2004 refinancing of our % Senior Notes due Results for 2005 were impacted by a $1.1m after-tax ($0.05 per diluted share) charge on early extinguishment of debt relating to the January 2005 redemption of the final 9% of our % Senior Notes due Projected cash flows provided by operating activities are based, in part, on estimated future changes in working capital and changes in other, net, that are susceptible to significant variances due to the timing at quarterend of cash inflows and outflows, most of which are beyond the Company s ability to control. However, any future variances in those two line items from the above forward-looking reconciliations should result in an equal and opposite adjustment to actual cash flows provided by operating activities. 56

57 Company Valuation and Credit Metrics 52-Week Range $ $ A 2008E Pro Forma Average Daily Trading Volume (L3M) 915k Results & Guidance Stock 6-Nov-2008 $21.22 Diluted Common Shares Outstanding m EBITDA Diluted EPS $ 181m $ 3.58 $ 230m $ 4.06 $ 406m $ 6.92 Market 6-Nov-2008 $ 575m Trading Multiples Total Cash 1 $ 21m TEV/EBITDA 6.7x 5.3x 3.0x Total Debt 1 $ 660m Total Enterprise 6-Nov-2008 $ 1,214m Price/Earnings EBITDA Mix 5.9x 5.2x 3.1x Moody s Rating Ba3 OSV 74% 86% 92% S&P Rating BB- TTB 26% 14% 8% Note: 2008E and Pro Forma EBITDA and Diluted EPS estimates, as well as EBITDA Mix percentage contributions by segment, reflect the mid-point of the Company s latest guidance ranges reported in its 6-Nov-2008 press release. See Slide 56 for detailed footnotes regarding Pro Forma Run-Rate assumptions 1 As of 30-Sep

58 Maintenance & Other Capex Outlook Recurring Maintenance Capex Deferred drydocking charges Other vessel capital improvements Other non-vessel capital expenditures 2008E $ 19m $ 4m $ 4m 2009E / 2010E $ 25m to $ 30m $ 8m to $ 10m $ 7m to $ 10m Other Capex 1 HOS Port shore-base Revenue-generating modular equipment 2008E $ 21m $ 18m 2009E / 2010E n/a n/a Total Recurring Maintenance Capex Other Capex E $ 27m $ 39m 2009E / 2010E $ 40m to $ 50m n/a 1 Other Capex is considered non-recurring items (such as ROVs, cranes, etc.), which are more analagous to growth capex than maintenance capex As of 6-Nov

59 Hornbeck Contract Coverage by Segment % OSV Fleet 100.0% Tug and Tank Barge Fleet 19.1% 80.0% 52.3% 80.0% 40.5% 60.0% 60.0% 89.6% 40.0% 80.9% 1.7% 40.0% 20.0% 46.1% 20.0% 59.5% 0.0% 4Q % 10.4% 4Q Contracted Expected Extensions Spot 2008E EBITDA = ~86% E EBITDA = ~14% 1 1 Estimates as of 6-Nov

60 Book Equity Plus Debt Less Cash Invested Capital Return on Invested Capital (ROIC 1 ) Construction WIP Invested Capital less CWIP Deferred Tax Liability Invested Capital plus DTL Fiscal 2007 Average Invested Capital EBITDA Depreciation/Amortization Effective Tax Rate Change in Deferred Income Taxes ROIC CWIP-Adjusted ROIC Cash Tax-Adjusted ROIC BoY $ 454.9m $ 549.5m $ 474.3m $ 530.1m $ 96.7m $ 433.4m $ 54.5m $ 584.6m ROIC (Fiscal 2007) EoY 2 $ 562.3m $ 549.5m $ 173.6m $ 938.2m $ 299.0m $ 639.2m $ 101.1m $ 1,039.3m Avg $ 508.6m $ 549.5m $ 324.0m $ 734.2m $ 197.9m $ 536.3m $ 77.8m $ 812.0m $ 181.1m $ 35.2m 36.2% $ 48.5m 12.7% 17.3% 17.4% 1 ROIC equals tax-affected EBIT divided by average net book capital; EBIT equals EBITDA minus Depreciation/Amortization 2 Reflects 2007 year-end capital structure 60

61 Weighted-Average Cost of Capital (Calculated as of 1-Feb-2008) 2007 Capital Structure 1 Book Equity $ 562m Debt $ 550m Total Capital $ 1,112m Cost of Equity = R f + β(r m -R f ) Risk-free Rate (R f ) 3.78% (vs. 4.59% in 2006) Industry Beta 2 (β) 0.68% (vs in 2006) Market Risk Premium 3 (R m R f ) 4.57% Cost of Equity 6.89% Cost of Debt = i x (1-t) Average Debt Interest Rate (i) 4.094% Marginal Tax Rate (t) 36.5% After-Tax Cost of Debt 2.60% 51% 49% Equity Debt WACC = (6.89% x 51%) + (2.60% x 49%) = 4.78% 1 Based on historical methodology, consistently applied, as of 31-Dec Levered 3-yr adjusted beta versus the S&P 500 Index as of 1-Feb Mid-point of Goldman Sachs estimates based on HOS 6.125% bond yields as of 1-Feb

62 Rationale for 2004 High Yield Bond Refinancing Record low coupon and Treasury spread in the history of oil service high yield deals Reduced cost of then-outstanding 10-year bonds by 44% from 11.0% yield to 6.125% yield Treasury spreads of HOS senior notes traded from >800 bps in 2001 to <200 bps in late Jan-01 Sep-01 Jun-02 Mar-03 Nov-03 Aug-04 May-05 Feb-06 M arket (BSIX) Oil Services HOS6.125 HOS As of 21-Nov

63 Optimal Market Timing for 2005 Follow-on Equity Offering I Survived Hurricane HOS...!!! September % 200% Sep 29 - OSX index reaches new high of Sep 29 - HOS prices upsized Follow-On at $35.35 Sep 30 - HOS reaches new high of $ % 100% 50% Mar 25 - HOS prices IPO at $ % Aug 29 - Hurricane Katrina strikes land Sep 24 - Hurricane Rita strikes land Sep 1 - HOS files Form S-3-50% Mar-04 May-04 Jul-04 Sep-04 Nov-04 Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 HOS OSX As of 6-Oct

64 Rationale for 2006 Convertible Notes Offering Illustration of Convertible Financing Versus Alternative Sources of Capital 20.0% 18.0% Reference: Common Stock 16.0% 7-yr Pre-Tax Cost of Capital 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% $62.59 Effective Conversion Price $96.01 Stock Buy-Back Breakeven $ HY Debt Breakeven Reference: HY Debt (7.25% Fixed) Reference: Revolver (5.85%; L+50) Hedged Convert Hedged Convert + Stock Buy-Back 0.0% $35.26 $43.26 $51.26 $59.26 $67.26 $75.26 $83.26 $91.26 $99.26 $ $ $ $ Stock Price at Year 7 Opportunistic financing allowed HOS to monetize its high stock volatility and strong credit profile Lowest-cost source of capital then-available to HOS at ~560 bps less than a fixed-rate HYD tack-on Lowered weighted-average fixed-rate cash coupon on company-wide debt from 6.125% to 4.1% Favorable interest rate arbitrage of ~350 bps versus money market rates then being earned on invested cash Immediately accretive to 2007E diluted EPS As of 13-Nov

65 HOS Common Stock Historical Trading Multiples 14.0x 12.0x 10.0x 8.0x IPO 9.1x 1 TEV / Forward EBITDA Multiples Follow-On 9.4x 2 Historic High 11.6x 3 Sector Avg 9.8x 3 HOS Avg 8.7x 6.0x 4.0x 2.0x Mar 2004 Jun 2004 Aug 2004 Nov 2004 Jan 2005 Apr 2005 Jun 2005 Aug 2005 Nov 2005 Buy-Back 5.8x Jan 2006 Mar 2006 Jun 2006 Aug 2006 Oct 2006 Jan 2007 Mar 2007 May 2007 Prior Low 4.8x TEV/EBITDA HOS Avg Sector Avg Aug 2007 Oct 2007 Dec 2007 Feb 2008 New Low 4.1x May 2008 Jul 2008 Sep 2008 In Oct-2006, severe multiple contraction created an opportunity to buy HOS stock back at then-attractive multiples HOS was trading below Oct-2005 follow-on pricing, despite a substantial increase in forward EPS guidance HOS is currently trading near its all-time low TEV/Forward EBITDA multiple, in-line with traditional private company levels 4 1 On 31-Mar-2004, HOS issued 6.1m shares of common stock in an IPO at $ On 6-Oct-2005, HOS issued 6.1m shares of common stock in a follow-on offering at $ Industry sector and HOS average multiples are per Goldman Sachs equity research report dated 7-Nov On 13-Nov-2006, HOS bought 1.8m shares of common stock at $35.26 As of 7-Nov

66 Rationale for MPSV Program Expansion Off-the-rack approach rather than developing proprietary designs from scratch Same basic concept as originally envisioned in OSV#4 Phase 1, only larger in scope Allows speed to market given current U.S. shipbuilding market conditions Existing DP3 design was adapted by HOS to meet our customers objectives in the GoM Signed contract with reputable European shipyard for world-class DP3 MPSV 4Q2009 delivery was earliest available slot for a DP3 vessel of this size and capability Other worldwide shipyard order books were full with earliest deliveries in Subsea DP3 vessel expertise currently resides in European shipyards Proven T-22 design with five recent sister newbuilds reportedly on multi-year charters Customer-driven need for additional high-end ultra-deepwater vessels Worldwide and GoM markets are expanding and require this type of specialized equipment More ultra-deepwater construction vessels are still needed for post-2009 market U.S.-flagged vessels with multi-purpose DP3 capabilities would be unique in the GoM market Complements HOS 370 MPSV-DP2 vessels and expands GoM service-offering Gives HOS a total of up to five high-end MPSVs with broadest array of service capabilities Along with HOS Port, represents latest element of our bundled service strategy Will be only MPSV-DP3 design to be owned by a U.S. operator in the GoM Subsea construction market is currently dominated by foreign vessels HOS plans to U.S.-flag the foreign-built Merwede T-22 for certain strategic benefits 4-year exclusive license agreement to build up to two Jones Act sister vessels in U.S. Jones Act qualified vessels would have precedence over foreign-flag MPSVs in GoM As of 3-May

67 Comparison of HOS Vessel Capabilities USCG Notation Typical Features and Services HOS 265 MPSV- DP2 MPSV-DP3 Platform Supply Subchapter L: ROV Support Saturation Dive Support Subsea Construction / IRM Decommissioning Subchapter I: Deep Well Intervention Flexible Umbilical Pipelay Power Cable / Fiber Optic Trenching Subchapter D: Petroleum Transportation Deepwater Well Test Yes, as designed Yes, with modifications Not as designed 67