2009 SUBSEA 7 ANNUAL REPORT. 1 Subsea 7 Annual Report

Transcription

1 SUBSEA 7 ANNUAL REPORT 1 Subsea 7 Annual Report

2 Who We Are Subsea 7 is one of the world s leading subsea engineering and construction companies servicing the oil and gas industry. Our skilled and experienced multinational workforce, in excess of 5,000 personnel, supports our onshore and offshore operations in Africa, Asia Pacific, Brazil, North America and the North Sea. Our Values Safe Clean Smart Fair Anywhere We Are Focused On: optimising the value from the investments we have made in new assets and equipment; driving efficiency and value creation throughout our operations via our business improvement initiatives; and being able to attract and retain the best people and provide them with the support they need to help us deliver excellence in our project execution. What We Delivered In These results would not have been achieved without... the early management action to align the scale of the organisation to the challenging market conditions that we were facing as we approched. As a result of this, we now have a leaner operation, a much more competitive cost base and a stronger balance sheet from which to address the challenging shortterm market in Equally, we are well placed to maximise the opportunities that the expected upturn will bring. Mel Fitzgerald, Chief Executive Officer 2 subsea partner of choice

3 Contents Who We Are What We Do Where We Operate How We Operate Chairman s Message Financial Results Business Review Highlights Of The Year Regional Reports Executive Management Team Vessel Fleet Operational Bases Financial Report Financial Highlights Revenue - $2.4bn EBITDA* - $527m 2, ,000 1,500 1,670 2,187 2,373 2, ,000 1, * EBITDA is calculated as net profit adjusted for taxation, net financial items, depreciation, amortisation, impairments and profits or losses on disposals of property, plant and equipment. Net Profit - $288m Shareholders Equity - $1.2bn at 31 December , ,000 1, Subsea 7 Annual Report

4 What We Do Subsea 7 has a strong focus on the growing high-tech and high-value deepwater subsea umbilical, riser and flowline markets in Africa, Asia Pacific, Brazil and the Gulf of Mexico, but also retains a leading role in the North Sea. We are respected globally for our strong project management capability and excellent project execution, while retaining a strong focus on safety. We offer the full spectrum of products and capabilities to deliver Subsea Field Developments and Life-of-Field (LoF) services to clients. These include project management, conceptual engineering, pipeline design, fabrication and installation through to inspection, repair and maintenance and asset integrity management. Projects are delivered by a large pool of experienced in-house project managers and engineers, who have an exceptional track record and technical knowledge base from which to deliver large-scale engineering, procurement, installation and commissioning contracts or projects executed on a longterm day-rate basis. Subsea 7 has a fleet of over 20 world-class pipelay, construction, remotely operated vehicle and diving support vessels. In recent years, the fleet has undergone a $1bn+ capital investment programme to upgrade and expand its capability and capacity, in particular to serve deepwater markets. In addition, our offshore operations are supported by a number of global pipeline fabrication and logistics bases, such as the recently opened pipeline fabrication spoolbase at Port Isabel in the Gulf of Mexico. We are respected globally for our strong project management capability and excellent project execution, while retaining a strong focus on safety. 4 subsea partner of choice

5 Subsea Field Development Subsea 7 has a presence in all the major oil and gas basins globally. We have a proven track record in all types of subsea field development activities including pipelines, risers, umbilicals and construction. RIGID PIPELINES A proven track record demonstrates our ability to design, build and install a range of high-quality, cost-effective rigid pipeline solutions. In addition, we are recognised as the market leader in the design, fabrication and installation of pipeline bundles*. An ongoing technical development programme, allied to investment in new vessels and equipment, helps to ensure our position as a leading provider of rigid pipelay services globally. FLEXIBLES AND UMBILICALS We have a track record built up over many years for successfully installing some of the deepest umbilicals in the world, including at Independence Hub in the Gulf of Mexico where we installed umbilicals down to almost 2,750m. We also played a key role in the development of Petrobras Roncador field in the Campos Basin, a field with over 40 flexible lines, totalling a length in excess of 400km. RISERS Subsea 7 has a long-established track record in the design, fabrication and installation of rigid risers, including most recently in Brazil where we installed the world s first lazy-wave steel catenary risers for Shell on the BC-10 project. In addition, Subsea 7 has a strong track record in deepwater flexible riser installation, using flexlay and triple-lay methods. CONSTRUCTION Subsea 7 can provide project management and engineering support to a wide range of subsea construction services including the lifting and installation of templates, spools, flying leads, manifolds and jumpers. These are in addition to pipeline installation support services such as tie-ins, trenching, survey, inspection, testing and commissioning. Life-of-Field Services Subsea 7 delivers a full suite of services across all categories of subsea LoF work. We can offer these from a flexible menu of traditional contracts and services (either segmented or integrated), new technologies and innovative contracting packages using either our own or client-supplied vessels. These services are enhanced by a strong collaborative approach to working with industry partners in developing and delivering cutting-edge products and technologies. INTEGRITY ASSURANCE Subsea 7 provides integrity assurance services to clients around the world in both deep and shallow water. We are well placed to deliver a comprehensive service through the depth of our engineering and management resources as well as the size of our pool of qualified offshore personnel. As a result of the large number of contracts undertaken, we have acquired an extensive working knowledge of integrity assurance systems. INTERVENTION Subsea 7 is a world leader in underwater remote intervention technology services and is one of the largest saturation diving companies in the world. Our fleet of over 120 remotely operated vehicles is supported by a team of in-house electrical, software, structural and mechanical engineers who are specialists in the design and operation of bespoke remote tooling for global deepwater markets. INCREMENTAL CAPEX Modifications to the infrastructure of subsea fields to extend life or expand capacity is becoming increasingly required on fields to maximise recovery from the field assets. Subsea 7 is able to deliver this capability as part of a LoF service by combining it with inspection, maintenance and other operations support activities. * A pipeline bundle integrates a combination of flowlines, water injection, gas lift, chemical injection and control systems necessary for any subsea development and assembles them within a steel carrier pipe. 5 Subsea 7 Annual Report

6 What We Do cont d ROV Services for Exploration and Production i-tech, a division of Subsea 7, is a premier provider of remotely operated vehicles (ROVs) and remote intervention technology services to the global exploration and production industry. i-tech s primary focus is the provision of intervention services onboard semisubmersibles, drill-ships, jack-ups, platforms and floating production units. More recently i-tech has focused on the expanding vessel market where it is currently providing ROV services onboard a number of anchor-handling tugs and field support vessels. Since it pioneered the use of the first ROV onboard a drill rig for BP Norway in 1980, i-tech has been at the forefront of remote intervention technology. It has a fleet of more than 70 advanced work class ROV systems and employs in excess of 650 highly skilled engineers, technicians, managers and business support personnel around the world. i-tech operates out of four regional centres: Asia Pacific, Brazil, Europe and Africa, and North and Central America, together with several country and project support facilities. i-tech is uniquely positioned to use the knowledge gained and lessons learned from working in these challenging areas to continue to develop fresh solutions to meet the technological demands of new environments. With its long and established history, i-tech can demonstrate a proven track record of providing marketleading ROV and remote intervention technology services throughout the world, including in the deepwater markets such as the Gulf of Mexico and the harsh environmental conditions encountered West of Shetland, North Atlantic. i-tech is uniquely positioned to use the knowledge gained and lessons learned from working in these challenging areas to continue to develop fresh solutions to meet the technological demands of new environments. 6 subsea partner of choice

7 Precise Positioning Services VERIPOS, a division of Subsea 7, has over 20 years of experience in the delivery of precise positioning services to the global marine market. VERIPOS mission is to be a market leader in the supply of precise navigation and positioning services and solutions, through the innovative application of technology, continuous product development and operational excellence, while creating maximum value for both our customers and our shareholders. Front-End Engineering Services Subsea Engineering Solutions Inc (SES) is a global engineering company providing subsea front-end engineering and design, integrity management and engineering consulting services to operators in the oil and gas industry. SES has offices in Houston, Texas and Shanghai, China. Subsea Engineering Solutions is a joint venture between Subsea 7 Inc. and Richtech International Holding Inc. VERIPOS core business is the provision of data broadcast services for the purposes of enhancing accuracy, reliability and integrity of precise navigation and positioning. It offers a range of such services to meet individual client requirements. VERIPOS recognises that market-leading product technology is not enough, in isolation, to ensure the best solution for clients. Other factors contribute to optimum operational and commercial effectiveness, from the provision of fit-for-purpose products maintained at a high level of operability to rapid, reliable delivery and a high standard of user support. VERIPOS aims to meet all of these requirements without compromise. At the centre of its business philosophy is a firm commitment to provide superior quality service and support while giving appropriate consideration to health, safety and the protection of the environment. From project planning to preventative maintenance, every aspect of VERIPOS service is designed towards delivering products and services to its clients in the most professional manner possible. 7 Subsea 7 Annual Report

8 Where We Operate Significant projects worked on or completed in include: Africa Addax - Okwori BP - Block 18 Life-of-Field, Block 18 Gas Export Line, Block 31 (PSVM). Chevron - Tombua Landana Mobil Equatorial Guinea - Serpentina Total - Block 17 Girassol Asia Pacific ConocoPhillips - Xijiang Murphy - Kikeh Santos - Henry Woodside - Frame Agreement, Enfield Houston, Texas NORTH AMERICA Port Isabel, Texas Brazil Petrobras - Flexible pipelay day rate, Hybrid steel rigid pipelay, Sul Capixaba Shell - BC-10 Statoil - Peregrino George Town (Cayman Islands) North America BP - Thunder Horse, Atlantis Marathon - Droshky Murphy - Thunder Hawk Petrobras - Cascade / Chinook North Sea BP - Valhall, Skarv, West of Shetland, IRM* Frame Agreement Centrica Energy - Grove Extension / Seven Seas ConocoPhillips - IRM Frame Agreement Ithaca - Jacky Shell - Pan-European USC Statoil - Vega, Visund, Snorre B, Troll 02, Troll B Total - IRM Frame Agreement Venture (Centrica Energy) - Chestnut P2, Channon / Barbarossa, F3-FA Ubu, Espirito Santo Rio das Ostras, Rio de Janeiro BRAZIL Paranaguá, Paraná (development site) * inspection, repair and maintenance Niteroi, Rio de Janeiro 8 subsea partner of choice

9 Wick, Scotland Kristiansund, Norway Grimstad, Norway Vigra, Norway Stavanger/Dusavik, Norway Aberdeen/Glasgow, Scotland NORTH SEA London, England Lagos, Nigeria Kuala Lumpur, Malaysia Singapore AFRICA ASIA PACIFIC Luanda, Angola Luanda, Angola Perth, Australia OFFICE SPOOLBASE BUNDLE FABRICATION YARD OTHER VESSELS - refer to pages Subsea 7 Annual Report

10 How We Operate Our Values The health and safety of our employees, clients, subcontractors and all those who work with Subsea 7 is one of our key priorities. Having a focus on improving the quality of services we provide to clients, being more efficient at how we do this and minimising the impact of our activity on the environment is critical for all our operations. The Subsea 7 Code of Business Conduct reflects the Company s values and commitment to our shareholders, customers and people. It also provides a framework for our people in applying legal and ethical practices to their everyday work. Our key values are: Safe We do not want to see anyone hurt or injured through their efforts for Subsea 7. It is avoidable, unnecessary and morally unacceptable. Clean We will minimise the impact of our activities on the environment with the aim of continually improving our environmental performance. Our People Subsea 7 is comprised of people from many different cultural and professional backgrounds. By working together, onshore and offshore, they have helped us build a reputation for excellence and continue to reinforce Subsea 7 s position as one of the world s leading subsea engineering and construction companies. We recognise that Subsea 7 s ability to deliver value for all our stakeholders depends upon the continued positive contribution from our people. We are committed to providing the training, development and support systems required to help them develop the skills and knowledge that enable them to do their jobs safely and effectively. In addition, we work closely with our supply-chain and local communities to ensure that they are provided with the necessary support to develop their own resources. Subsea 7 actively promotes a culture of openness. Through regular leadership visits, line management briefings and employee forums, everyone is encouraged to contribute their views and ideas on how to further develop the Company. Smart Success will come through applying our collective intellect which will entail the development of people through training, innovation in our thinking and the application of new technology. Fair To sustain our business, people need to want to work together. Treating customers, colleagues and subcontractors fairly will build trust, which will bring success. Anywhere The business is global; our growth will come from understanding the different markets and encouraging localisation. Collectively these values continue to play a major part in developing Subsea 7 s unique culture. TOTAL 5,320 2,658 Onshore 2,662 Offshore Ratio of permanent personnel to contractors 70 / personnel in the category of engineering and design 31 December, 10 subsea partner of choice

11 Our Communities Subsea 7 seeks to play an active part in building upon the level of skills, the opportunities for personal development and the provision of educational facilities in the communities in which we operate. It is our goal to build Subsea 7 globally to have a number of strong regional businesses, resourced locally, that can deliver high-quality services for our clients. The employment of local people and the provision of training and support to local suppliers have been critical to the growth of Subsea 7 to date. An example of this is in Brazil, where we have strong local management and engineering teams, and in Angola where we have recruited and trained a locally resourced welding team to work in our fabrication facility in Luanda. The work that we do with our communities is vital to the continued development of Subsea 7 globally. Corporate Governance Subsea 7 is committed to ensuring high standards of corporate governance. As we are listed on the Oslo Stock Exchange, we comply with relevant aspects of Norwegian securities law and the Norwegian Code of Practice for Corporate Governance. As a Cayman Islands incorporated company, we are also subject to Cayman Islands laws and regulations with respect to corporate governance. A full copy of the Group s Corporate Governance Report is available to read on pages 47 to 51. The Board of Subsea 7 is comprised of directors with varied backgrounds and the necessary expertise, diversity and capacity to enable it to function effectively. Regular board meetings are held at which the Executive Management Team attend to present on strategic, operational and financial matters. The Board recognises that it has responsibility for ensuring that there is a system of internal control in place and reviewing its effectiveness. This system is designed to manage rather than eliminate risk and can only provide reasonable but not absolute assurance against material misstatement or loss. Picture above right: As part of Subsea 7 s commitment to the development of local communities and resources, in early a group of four Angolan nationals were recruited to join a new Officer Cadet training programme in Cape Town, South Africa. The programme is the first of its kind in the region, with the graduates being selected after a period of rigorous assessment. The cadets are being trained so that they can work globally on the full range of vessels within the Subsea 7 fleet. Two of the four cadets are expected to graduate as Deck Officers in 2012, while the other two are expected to graduate as Engineering Officers in We expect to have three additional recruits join the programme in The key components of the Group s system of internal control are: clearly defined lines of responsibility and limits of delegated authority; regular meetings between the Executive Management Team and the Global Leadership Team; maintaining a comprehensive annual planning and management reporting process; regular reviews by the Board of projected and actual financial performance; and reports from the Audit Committee. 11 Subsea 7 Annual Report

12 Chairman s Message was another record year with good progress for Subsea 7. The performance of the Company was better than expected and is particularly pleasing when considered against the uncertain and challenging economic environment that prevailed during the year. The worldwide economic recession, which was triggered by the global financial crisis in, impacted our market significantly. The oil price had dropped from a high of $147 in July to $30 at the end of December. This had a dramatic impact on the subsea sector in. We had already started to see larger clients deferring projects as they reassessed their commercial viability and sought the opportunity to obtain cost reductions from the supply chain. For smaller clients, the lack of liquidity in the financial markets and the cost of available borrowing made it difficult for them to obtain funding for projects. This combination of factors resulted in a significant reduction in the number of projects being sanctioned around the globe. In light of these events we recognised the need to act quickly to align the size and cost base of our organisation to the anticipated market demand. It was also imperative that we remained disciplined to ensure we are competitive in the short-term, without compromising our ability to deliver strong returns when the market recovers. In light of these events we recognised the need to act quickly to align the size and cost base of our organisation to the anticipated market demand. 12 subsea partner of choice

13 We were also confident that the investments we had made in our business improvement initiatives over the previous three years would help us to deliver continued strong performance. The $1bn+ capital investment programme in new vessels, equipment and infrastructure has provided Subsea 7 with enhanced capability to help meet our clients needs and has provided them with the level of flexibility, efficiency and predictability they require. As a Board we are pleased with the record financial results which the Company delivered for shareholders in. In addition, we are pleased to report that our balance sheet has strengthened significantly over the year and our borrowings are offset by our cash and available-for-sale financial assets. Although we continue to be optimistic about the outlook for the Company, there is no doubt that 2010 will be a more challenging year. The reduced number of projects sanctioned during will impact on levels of activity and margins in The medium to long-term outlook, however, is positive. We have a strong management team that has delivered continuous improvement in operational and financial performance over recent years. This gives the Board great confidence in the ability of the Company to deliver sustainable value for shareholders. Let me close by acknowledging the contribution made by our clients, suppliers and people. We endeavour to foster strong relationships with our clients to minimise costs and we must continue to work together to maximise value for mutual benefit. We have worked closely with our supply chain with the joint aim of removing inefficiencies, reducing cost and improving quality. Finally, the strong performance in could not have been delivered without the efforts of our global workforce, both onshore and offshore. I thank them for their continued commitment to the values of Subsea 7 and support in providing excellent service for our clients. Kristian Siem Chairman 13 Subsea 7 Annual Report

14 Financial Summary Year ended 31 December (In $ millions, except per share data) Revenue 2,439 2,373 Operating expenses Net operating profit Net financial items Profit before tax Net profit attributable to equity shareholders (2,035) (1,948) 425 (43) Financial Results Earnings per share ($) - Basic Diluted As at 31 December Shareholders equity 1, Backlog 2,798 3,268 Capital expenditure ebitda $265m year on year $527m $521m $392m EBITDA is calculated as net profit adjusted for taxation, net financial items, depreciation, amortisation, impairments and profits or losses on disposals of property, plant and equipment $166m net Cash / (debt) ($360m) ($220m) ($157m) ($28m) year on year $62m Net cash / (debt) is calculated as cash and cash equivalents, together with available-for-sale financial assets, less both current and non-current borrowings as per the balance sheet. 14 subsea partner of choice

15 These results would not have been achieved without... the support and engagement we had from the people of Subsea 7 to the cost-efficiency challenges that we faced. Mel Fitzgerald, Chief Executive Officer Revenue by region* africa $245m north sea $1,079m brazil $848m north america $146m asia pacific $122m Profit before tax by region* africa $89m north sea $209m brazil $74m north america $47m asia pacific $15m Backlog at 31 December Backlog by year of execution * Excludes Global segment LUMP-SUM DAY-RATE $1,032m $770m $145m $59m $58m $1,766m $734m $529m $250m $253m TOTAL $2,798m $1,504m $674m $309m $311m 15 Subsea 7 Annual Report

16 Business Review Our Performance was another successful year for the Company, with revenue of $2.4bn and a net profit of $288m. We ended the year with a backlog of $2.8bn comprising of a good mix of day-rate and lump-sum work. This was a tremendous result during a year of changing market conditions brought about by the global economic crisis. These results would not have been achieved without three important factors: the early management action to align the scale of the organisation to the challenging market conditions that we were facing as we approached ; the support and engagement we had from the people of Subsea 7 to the cost-efficiency challenges that we faced; and the first-class execution of our projects driven by the key business improvement initiatives that we had in place. As a result of this, we now have a leaner operation, a much more competitive cost base and a stronger balance sheet from which to address the challenging short-term market in Equally, we are well placed to maximise the opportunities that the expected upturn will bring. These results would not have been achieved without... the first-class execution of our projects driven by the key business improvement initiatives that we had in place. 16 subsea partner of choice

17 Mel Fitzgerald Chief Executive Officer Our Vision In 2005 we carried out a review of how we operated our business. This led to a number of business improvement initiatives being implemented over subsequent years to help us achieve our vision of becoming the Subsea Partner of Choice in our niche market. We stated that we would build the Company around three particular areas: people and teamwork having the right people in place to win, engineer, manage and execute projects safely and efficiently; assets and infrastructure having the correct balance of capability and capacity to deliver the range and quality of services our clients require, in particular for deepwater markets; and excellence in project execution designing and implementing safe and efficient business processes that ensure repeatability and predictability in our operations. The strong operational performance in demonstrates that we have come a long way to reaching our vision. Our Strategy Being able to provide a range of services that supports both new subsea field development and life-of-field operations is a major part of Subsea 7 s business strategy. This was a critical factor in being able to deliver a strong financial performance in and will continue to be so throughout Equally important is that we continue to demonstrate that we can provide a reliable service for our clients. The successful delivery of large complex projects, such as BC-10 for Shell in Brazil, demonstrated once again that Subsea 7 is one of the few subsea engineering companies globally that has the technical capability and operational expertise required to execute such a major project. Our Investments In we started to see a return on the $1bn+ capital investment programme in new assets and equipment that we have been making since The Seven Oceans and Seven Seas showed that they can deliver high service levels for our customers and generate increased efficiencies as we become consistently better at optimising vessel capability and equipment performance. The latest new-build vessels to join the fleet are the Normand Subsea and the Seven Atlantic. Both vessels are already committed to work for Shell on a long-term contract. In we opened our new pipeline fabrication spoolbase at Port Isabel in the Gulf of Mexico. With its credentials proven on the Marathon Droshky pipelay project, this strategically-positioned base will allow Subsea 7 to offer clients an enhanced level of service, and make us more competitive in the deepwater markets in the Gulf of Mexico and offshore Mexico. The recent opening of the new Aberdeen Campus has been extremely beneficial in helping to drive high 17 Subsea 7 Annual Report

18 Business Review cont d performance levels and operational efficiencies in the UK region. We expect to be able to deliver similar benefits at the new Norwegian campus in Stavanger. In Brazil, we continued our investment in the region with the opening of a new logistics base in Rio das Ostras, and are progressing plans for our development site at Paranaguá in southern Brazil. This site is ideally placed to take advantage of the early activity related to the presalt region in the Santos Basin. Our strong financial performance, coupled with additional long-term funding, places us in a strong position to take advantage of any opportunities that may arise for further investment in new assets. Our Initiatives As we started, we knew that it was going to be a challenging year. As a response, we focused our attention more than ever on reducing our cost base. We questioned how we did things, and worked with our supply-chain to remove unnecessary costs and non-value creating activities. Crucially, the relationships that we have built up with key suppliers through our Critical Supply Network focus in recent years helped us to drive cost and efficiency improvements together. Through engineering efficiencies we standardised products which allowed us to shorten lead delivery times, and we reviewed the scope of framework agreements to ensure we cut out unnecessary costs. In some areas we actively sourced new suppliers who were prepared to work with us to reduce costs and drive efficiency. We explored and introduced new technologies that enabled us to be more efficient, and we are encouraged by the willingness of clients to be flexible in project planning and vessel scheduling. During the year we completed a full review of our global and regional processes and introduced an updated global Business Management System to ensure that we operate more efficiently globally. Combined with a focus on knowledge sharing and collaboration, additional investment in new information technologies is making us a more efficient organisation. Operationally, excellent project execution was a key feature of the year. We delivered very high utilisation of all our assets, made possible by the mobility of vessels and crews across the regions to meet varied and difficult challenges. We continue to bring new vessels, equipment and spoolbases into our operations with minimal disruption to safety, schedules and project delivery. These achievements have been made possible by the fact that, organisationally and culturally, we are more globally aligned today than we were a few years ago. The regional business units have worked together productively, with the valuable support of functions such as Global Operations, the Vessel and Equipment Management Group, the Vessel and Spoolbase Support Team and the new Pipeline Production Group. By working closely together, these groups are helping to ensure our bidding, engineering and offshore execution is more robust, efficient and effective. This places us in a very strong position going forward. The 17 Centres of Excellence that we created in are now well embedded into day-to-day operations, supporting the business globally and continuing to deliver essential value to bidding and operations. This year we benefited in particular from the work they did supporting the BC-10 project, which helped to make this challenging scope of work an outstanding success. Our Gateway bidding team, working with regional operations and the Technology and Assets group, ensures that there is a continued focus on arriving at robust technical solutions with proper risk-assessed cost and contingency for major projects. Their work gives us great confidence in being able to provide commercially sound, innovative technical solutions for our clients. Picture: The latest of Subsea 7 s new-build pipelay vessels, the Seven Pacific, was named and successfully launched at Krimpen aan den Ijssel, The Netherlands on 20 th March The vessel is due for delivery late subsea partner of choice

19 Our focus areas for 2010 In 2010, the focus of our business improvement activity will be on building a company that is lean and efficient by embedding: cost-reduction and efficiency generation across all our operations; continuous improvement of our processes to ensure functional, operational and global alignment; and a right first time quality ethos. The creation of the new global Business Improvement function will drive this focus in recognition of the ongoing value to be gained from an improvement in quality. In particular, this will be achieved through increased standardisation of processes and the removal of nonvalue generating activities. Outlook The market outlook remains challenging in the short-term. There are signs of a recovery starting to appear with a significant number of projects moving towards sanction. In addition, there is no doubt that a higher oil price and improved access to finance will see a greater level of confidence in the market starting to return. In conclusion, the market outlook for the medium to long-term is positive and we are well placed to take advantage of the expected upturn when it comes. Mel Fitzgerald Chief Executive Officer We will continue to build on the breadth of portfolio of services we offer to clients such as the mix of day-rate and long-term Life-of-Field contracts. This will protect us to an extent when the market is tight and the larger engineering, procurement, installation and commissioning contracts are being delayed. In light of the expected upturn, and the associated demand for skilled resources that this will bring, we are working hard to develop local talent in each of our regions. 19 Subsea 7 Annual Report

20 Highlights Of The Year: QUARTER 2 QUARTER 1 Tombua Landana project completed The Tombua Landana EPIC* project was successfully completed for Chevron in Angola. $200 million contract award in Brazil Award of $200m Tambua Urugua and P-56 rigid pipelay projects in Brazil by Petrobras. Brazil gets busy offshore Eight of the Company s vessels were operating in Brazil at the same time - Kommandor 3000, Lochnagar, Amazonia, Normand Seven, Seisranger, Seven Seas, Seven Oceans and Seven Navica. VERIPOS 20 th anniversary VERIPOS marked its 20 th anniversary it was founded in 1989 as a joint venture between Brown & Root Survey and Ormston Technology. New global BMS launched New global Business Management System launched. * engineering, procurement, installation and commissioning Frame agreement with Nexen Award of an exclusive three-year frame agreement contract with Nexen for subsea field development works on all its UK assets. Port Isabel spoolbase opens Completion of the Port Isabel pipeline fabrication spoolbase in the Gulf of Mexico and commencement of pipeline fabrication work for the Marathon Droshky project. Subsea 7 goes it alone again in Asia Pacific Subsea 7 became a stand-alone operation in Asia Pacific again with the announcement of the dissolution of the Technip Subsea 7 joint venture. SAFETY performance Lost-Time-Incident (LTI) Frequency (per 200,000 man hours) Total Recordable Case (TRC) Frequency (per 200,000 man hours) No of LTI incidents No of TRC cases subsea partner of choice

21 QUARTER 4 QUARTER 3 $150 million contract award in Africa Award of $150m pipelay project by BP for the Block 18 Gas Export Line, offshore Angola. Serpentina project delivered Serpentina fast-track project successfully completed for Mobil Equatorial Guinea. BC-10 project completed Following an eight-month offshore campaign, the BC- 10 project was successfully completed. Xijang IRM* completed Xijang IRM scope completed in the South China Sea for ConocoPhillips. Normand Seven $250 million contract award $250m four-year contract awarded by Petrobras for the Normand Seven to support its pipelay operations. $200 million contract award in Brazil Award of $200m pipelay project by Petrobras for the P-55 project in the Roncador field. Normand Subsea joins the fleet One of the most modern ROVSVs* in the world, the new-build Normand Subsea, commenced operations working for Shell on the long-term Pan-European underwater services contract. Henry pipelay scope completed The Seven Navica successfully completed her pipelay scope for Santos Henry project. This was Subsea 7 s first rigid pipelay job in the Asia Pacific region. Girassol project completed Successful completion of the deepwater Girassol pipeline repair project for Total in Angola. $275 million convertible notes issued Issued and received proceeds for the private placement of $275m convertible notes. * inspection, repair and maintenance * remotely operated vehicle supply vessel AWARDS AND safety ACHIEVEMENTS Subsea UK Company of the Year Awarded in recognition of excellence throughout the Company and its operations. February Scottish Offshore Achievement Safety Award Awarded in recognition of the Company s overall commitment to safety, including the processes in place for risk awareness and mitigation. March Honourable Distinction for Safety Performance from ExxonMobil - Saxi Batuque project Awarded in recognition of the Company s safety performance during the execution of the Saxi Batuque project. March Excellence in Safety Award - Chevron Tahiti project Awarded in recognition of achieving zero TRCs and zero LTIs throughout the project. May Chevron Safety Award - Tombua Landana Project Awarded in recognition of 500,000 LTI-free hours. May Kommandor Subsea - Eight years LTI-free. May Lochnagar - Five years LTI-free. October Offshore Energy Technology Pioneers Award In recognition of services to the ROV industry. October Subsea Viking - Nine years LTI-free. November 21 Subsea 7 Annual Report

22 Regional Report: Africa Total - Girassol This complex project demonstrated Subsea 7 s capabilities to provide design engineering services, efficiently manufacture and test specialist equipment, and provide safe and timely project management. The project provided further evidence of Subsea 7 s capability to engineer effective life-of-field solutions in deepwater environments. The concept behind the pipeline repair system (PRS) involved a mix of proven and new technologies with the majority of equipment designed in-house by Subsea 7. It comprised key equipment items such as handling frames, connector installation tool, intervention tools for pipeline cutting and end preparation and coating removal - all powered and controlled by remotely operated vehicles. The successful design required a team of in-house engineers with a diverse range of engineering skills including pipeline analysis, geotechnical, structural, mechanical, electrical, electronic and software design, combined with operational and installation experience, all integrated together to provide the completed system. The availability and continuity of this team of engineers and technicians to follow the project from design to the offshore phase was fundamental to its success. The innovative PRS design was completed in June. Full system integration trials were carried out in Nigg, Scotland, with further tests carried out in Angola before the system went offshore in late. The offshore phase presented a unique set of challenges for the project team who had responsibility for the subsea operations onboard a client-provided vessel. The project team was able to foster good integrated teamwork to get the job completed safely and successfully. Location Block 17, offshore Angola in water depths of up to 1,350m. Main scope of work The design, manufacture, assembly, testing and offshore operation of a diverless pipeline repair system. Total is the operator for the Block 17 consortium, as contractor of Sonangol concessionnaire. As well as setting the benchmark for future pipeline repair operations in Angola, the system has a modular design that can be adapted to suit a range of future repair scenarios and provide cost-effective solutions that meet the needs of the industry. This solution was awarded the 2010 Pipeline Industries Guild Award for Subsea Pipeline Technology in March Picture: System integration testing for the pipeline repair system being carried out in the UK. 22 subsea partner of choice

23 HIGHLIGHTS FOR THE YEAR Financial Performance Successful completion of the Tombua Landana project for Chevron. Completion of another successful campaign for Addax at the Okwori field in Nigeria. Engineering and project management continued for the offshore phase of the BP Block 31 (PSVM) and Block 18 Gas Export Line projects. The BP Block 18 life-of-field scope continued to progress well. Successful completion of the Serpentina project for Mobil Equatorial Guinea. Designed a pipeline repair system that was used in the deepwater Girassol field in Block 17, offshore Angola, to successfully complete a pipeline repair for Total. $m $245m $462m Africa $89m $115m REVENUE Profit Before Tax BP - Block 18 Life-of-Field The project was the first deepwater Life-of-Field contract to be awarded in the region and built on the experience and relationship Subsea 7 has developed with BP in the North Sea. In Angola, work scopes are planned and managed by a dedicated project management and engineering support team from Subsea 7 s Luanda office. A 45-strong offshore team delivers the project from a client-supplied vessel on which we installed twin remotely operated vehicles (ROVs) and rigid spool deployment systems. We also designed and installed an entire on-line and off-line survey and reporting suite onboard the vessel which includes a full network and server system, satellite communications, multi-beam, metrology and pipeline inspection systems. The project is further supported by Subsea 7 s wide range of in-house services such as remote technology engineering, design engineering and technical Centres of Excellence. To date the scope of work has included routine metrology and inspection, repair and maintenance activity. We also successfully deployed and connected 17 rigid production and water injection spools. In addition to planned activities, unplanned works are carried out to help maintain the long-term serviceability of the subsea infrastructure. Location Block 18, offshore Angola, in water depths of up to 1,500m. Main scope of work Long-term project management and life-offield services including inspection, repair and maintenance, light construction and intervention. Picture: Production jumper load-out during a port call at the Soya base. 23 Subsea 7 Annual Report

24 Regional Report: Asia Pacific Santos - Henry The fast-track Henry project (VIC/P44 Stage 2 Development) was awarded to Subsea 7 by Santos in August. The project was a subsea tie-back to the existing Casino field development. This was the first rigid pipelay job that Subsea 7 had carried out in the region, and the first project to be undertaken by Subsea 7 following the dissolution of the Technip Subsea 7 joint venture. It demonstrated that Subsea 7 has the ability to engineer, manage and execute a major offshore pipelay construction project in the region, safely and on time. Engineering and project management was carried out in Subsea 7 s Singapore office. A temporary spoolbase facility was set up at Crib Point in south-eastern Australia for the spooling of the client-supplied pipe on to the Seven Navica. The offshore execution phase commenced with the installation of the 12 pipe in December. The Seven Navica installed 22km of rigid pipe, complete with two in-line tee skids, over two trips in less than 18 days. The Rockwater 2 supported the Seven Navica on the project, installing the four sections of umbilical, three pipeline end manifolds, associated subsea infrastructure and 650 stabilisation mattresses to complete the tie-ins and freespan rectification. The umbilicals ranged from 3.3km to 6.5km in length and were installed utilising an in-line tensioner and reel drive system. The vessel also installed rigid spools and performed the associated metrology. After completing this scope, the Rockwater 2 remained in field to assist Santos with field commissioning and start-up activities. In total over the life of the project, the Rockwater 2 performed over 2,000 successful lifts with its 300t active heave compensated crane. Location Otway Basin, Victoria, Australia Main scope of work Installation of 22km of 12 rigid pipeline, installation of 22km of four sections of umbilical and 650 stabilisation mattresses. The excellent performance of the offshore crew on this fast-track project will help reinforce Subsea 7 s vision of becoming the Subsea Partner of Choice in Asia Pacific. Picture: Seven Navica deploys the 12 rigid pipeline in the field. 24 subsea partner of choice

25 HIGHLIGHTS FOR THE YEAR Financial Performance Successful completion of the rigid pipelay scope by the Seven Navica for Santos on the Henry project. First-ever rigid pipelay scope completed in the Asia Pacific region by Subsea 7. Rockwater 2 continued to perform well on the KGD6, Enfield and Henry projects. Re-established Subsea 7 as a stand-alone business in the region, although work will continue with Technip on existing joint venture projects. Opened a new office in Kuala Lumpur, Malaysia. $m Asia Pacific $122m $73m $15m $40m REVENUE Profit Before Tax Woodside - Enfield * The Enfield development has been operational since 2006 with the Nganhurra floating, production, storage and offloading facility producing via subsea wells and flowlines. To improve production output, Woodside modified the existing Enfield subsea architecture by adding a production well at a new well centre and an additional water injection well at the existing E-DC3 well centre. As the project was executed in water depths of up to 550m, all tie-ins were completed using remote intervention technology, specifically the ROVCON system. The design of the water injection spoolpiece added an additional complexity to the project; being an e-spool with two tree legs to one manifold hub, the spool was required to be deployed to the seabed in a cradle before being lifted and installed between the trees and manifold. The project was heavily dependent on the 300t lift capability of the Rockwater 2 s active heave compensated crane for installation of the spools, structures and foundations. Despite the project being carried out in an area which is remote and often exposed to adverse weather, the vessel was able to work productively throughout with less than four days of downtime. The ability of Subsea 7 to demonstrate flexibility and commitment was evident towards the end of the project when the client requested that the vessel return to the field to assist with the reconfiguration around the production manifold. This required detailed engineering preparation to be executed simultaneously while the Rockwater 2 was in transit from Singapore to Dampier to carry out the work. Location Exmouth, North West Shelf, Australia Main scope of work Installation of manifold, foundation, four 300m flexible flowline jumpers and umbilicals, fabrication and installation of production, water injection and gas lift spoolpieces. *This project was undertaken by the Technip Subsea 7 joint venture. Picture: A 130t foundation being mobilised to the Rockwater 2 for offshore installation. 25 Subsea 7 Annual Report

26 Regional Report: Brazil Petrobras - Sul Capixaba The Sul Capixaba gas export pipeline will eventually connect the floating, production, storage and offloading P-57 facility in the Jubarte field to the Petrobras onshore installation in Anchieta, Espirito Santo. The system will also receive the interconnection of a gas export pipeline from the BC-10 field - with installation also to be carried out by Subsea 7. All engineering and project management work for this project was conducted at Subsea 7 s offices in Niteroi, Rio de Janeiro. The fabrication of the 12 rigid pipeline was carried out at Subsea 7 s pipeline fabrication spoolbase in Ubu, 80km from the field location, confirming the strategic value of having an in-country pipeline fabrication facility. Welding procedures were developed by Subsea 7 s Pipeline Production Group and the pipeline was fabricated on schedule for the offshore installation campaign which took place during. The project scheduling benefited from having both of Subsea 7 s rigid pipelay vessels, the Seven Oceans and the Seven Navica, in the region to carry out the offshore phase. One of the main challenges on the project was to deliver the pipeline onshore via a shoreline approach using a horizontal directional drilled (HDD) tunnel. Such shore approaches have been attempted before but with limited success. The 1,200m HDD shore approach on the Sul Capixaba project was the longest ever built on the Brazilian coast, and proved particularly challenging to construct due to the environmentally sensitive beach location. Certain species of sea turtles lay their eggs between September and March every year on the beach; for this reason offshore construction schedules had to be carefully planned. Location Espirito Santo state coast, in water depths of up to 1,200m. Main scope of work EPIC* contract for a 78km 12 export pipeline and end termination assembly, including the execution of a horizontal directional drilled shore approach. * engineering, procurement, installation and commissioning The project field activities were all completed in December, almost six months ahead of schedule, and involved more than 700,000 man hours being worked with no losttime-incidents, onshore or offshore. Picture: Quality control check being carried out on the 12 rigid pipeline fabrication at Subsea 7 s Ubu base. 26 subsea partner of choice

27 HIGHLIGHTS FOR THE YEAR Financial Performance Seven Oceans and Seven Seas demonstrated their combined capabilities by successfully completing the BC-10 project for Shell. The world s first lazy-wave steel catenary riser was successfully installed on the BC-10 project. A horizontal directional drill shore approach was completed successfully on the Sul Capixaba project. The Normand Seven joined the Lochnagar and Kommandor 3000 to work on long-term pipelay contracts for Petrobras. Environmental plan for the Paranaguá development site was submitted. $m 900 Brazil $848m $621m $74m $28m REVENUE Profit Before Tax Shell - BC-10 The successful completion of BC-10 was a significant milestone for Subsea 7 for a number of reasons. Firstly the scope included the fabrication and installation of the world s first lazy-wave steel catenary risers (SCRs). It was the first project to utilise both of the Company s flagship pipelay vessels, the Seven Oceans and the Seven Seas. Together with the Seisranger, the vessels were utilised for 770 days on the project, while the Ubu pipeline fabrication spoolbase supported the project for 450 days. The positioning of Subsea 7 s Ubu base, the only base of its type operational in Brazil today, was a significant advantage to the project because of its close proximity to the BC-10 field. The project was technically very challenging, and was the largest reeled steel pipeline installation project ever performed in Brazil. Working to very strict welding criteria on elements like the lazy-wave SCRs and the Flex Joints, with enormous stress to be exerted on the risers, the project team had to ensure that the welding would meet the required quality to assure the 30-year field design life-cycle. The automatic Tungsten Inert Gas welding procedures used to meet these challenging specifications were developed in-house by Subsea 7 s Pipeline Production Group and Central Engineering department. BC-10 was also the first time all the jumpers required on any Brazilian project had been manufactured in the region. Each of the 25 jumpers were successfully installed by the Seven Seas due to very accurate metrology, control of the dimensions and connector angles during manufacture and excellent offshore execution. Location BC-10, Campos Basin, offshore Brazil, in water depths of up to 2,000m. Main scope of work EPIC* contract for 11 steel pipelines (130km), seven lazy-wave SCRs (21km) and 25 rigid jumpers and installation of five umbilicals (55km) and four manifolds. The successful completion of the BC-10 project could not have been achieved without the high level of engineering and project management that was undertaken at the Company s Brazilian offices. Picture: The automatic Tungsten Inert Gas welding process being used on the SCR fabrication. 27 Subsea 7 Annual Report

28 Regional Report: North America Marathon - Droshky In October, Subsea 7 was contracted by Marathon to support its Droshky development, the first offshore development by Marathon in the Gulf of Mexico in 14 years and its first-ever deepwater project in the region. For Subsea 7, the project was also a historic one; it was the first project to use Port Isabel, our new pipeline fabrication spoolbase. It was also the first time the Seven Oceans used a cross-haul technique for the transfer and installation of two 70t pipeline end termination manifolds (PLEMs). During the project a number of operational challenges were successfully overcome including: initiation of two flowlines within a drill rig anchor pattern from a single initiation point; the lifts of the initiation PLEMs from a supply boat and cross-hauling them into the Seven Oceans workstation offshore; initiation of two flowlines via platform j-tube pull-ins; and managing a tight schedule and simultaneous operations to minimise the impact on drill rig operations. The successful delivery of the Droshky project demonstrated the professional and safe nature of offshore execution that clients have come to expect from Subsea 7. It also confirmed the value which the Port Isabel spoolbase offers clients in the Gulf of Mexico region. Location Gulf of Mexico, Green Canyon Block 244 in water depths of up to 1,000m. Main scope of work The engineering, fabrication and installation of 58km of 8 production flowline, 1km of 8 riser pipe, and associated end terminations and jumpers. Picture: A pipeline lateral mitigation buoyancy module being fitted to the 8 pipeline being deployed from the Seven Oceans. 28 subsea partner of choice

29 HIGHLIGHTS FOR THE YEAR Financial Performance Opening of Subsea 7 s first pipeline fabrication spoolbase in the Gulf of Mexico at Port Isabel, Texas. First-ever pipeline end termination manifold cross-haul successfully carried out by the Seven Oceans on the Droshky project. Seven Seas arrived in the region for the first time and completed her deepest-ever (2,660m) large-diameter (166mm) umbilical installation on the Cascade / Chinook project for Petrobras. Continued good performance for BP on Thunder Horse / Atlantis, and Murphy on Thunder Hawk. $m 200 North America $146m $166m $47m $42m REVENUE Profit Before Tax Petrobras - Cascade / Chinook The ultra-deepwater Cascade and Chinook development is Petrobras first in the Gulf of Mexico, and involved the installation of the first-ever floating, production, storage and offloading vessel (FPSO) in the Gulf of Mexico, and the world s deepest FPSO to date. For Subsea 7, this was the first time the Seven Seas had worked in the Gulf of Mexico and during her stay she completed her deepest-ever (2,660m) large-diameter (166mm) umbilical installation to the submerged turret FPSO. Location Gulf of Mexico, Walker Ridge Block 425 in water depths of up to 2,800m. Main scope of work Engineering, fabrication and installation of steel jumpers and installation of dynamic control umbilicals, in-field power cable, jumpers and flying leads. Throughout the duration of the project, the project team and vessel crews demonstrated engineering expertise and technical capabilities by overcoming a number of challenges including: working in water depths of up to 2,800m; high umbilical installation loads; installation of umbilicals under the FPSO mooring wires; laying the umbilicals across subsea furrows 10m deep and up to 100m wide; pulling in the umbilicals into a submerged turret buoy 70m below the surface, prior to the arrival of the FPSO; and managing a tight schedule and simultaneous operations with drilling rigs and other installation vessels in the field. The team also had to contend with unavoidable environmental factors including Hurricane Ida which hit the Gulf of Mexico in November, requiring the temporary lay-down of the Chinook umbilical. The project team and vessel crew were commended by Petrobras for their successful management of this project, completing it safely and on schedule. Picture: One of the dynamic control umbilicals being installed through the vertical lay system on the Seven Seas. 29 Subsea 7 Annual Report

30 Regional Report: North Sea BP - Valhall Subsea 7 was awarded the Valhall Re-development (VRD) project in 2007, which comprised the engineering, procurement, fabrication and installation of a range of subsea components in order to re-route oil production to a new platform in the field. The offshore scope of the project will be performed between In we fabricated and installed a pipeline bundle, a 185m towed spool and 15 conventional spools, including associated protection structures and the preservation of the pipeline system. The fabrication of the 50 diameter bundle took place at our dedicated bundle fabrication facility at Wick, Scotland. Following some preparatory offshore work in 2010, the VRD scope will be completed in 2011 when we will deploy both a diving support vessel and construction vessel to disconnect and re-route the existing production lines by installing and re-connecting the final five tie-in spools. An extensive pre-commissioning scope will also be performed prior to production re-start from the new Valhall facility. Subsea 7 s contribution to the VRD project will play a major role in enabling the extension of the Valhall field life until Building on our well-established partnership with BP, we were awarded the Valhall Flanks Gas Lift and WP Riser (VFG) project in July. The scope of work on VFG will involve engineering, procurement, fabrication and installation of a 30 riser caisson, two 8 rigid pipelines (13km in total) and five tie-in spools. The 8 pipelines will be fabricated at our pipeline fabrication spoolbase at Vigra in Norway. Location South-west coast of Norway in a water depths of up to 80m. Main scope of work The Valhall scope of work is divided into two projects: Valhall Re-development and Valhall Flanks Gas Lift & WP Riser. As part of the VFG offshore scope during, some preparatory diving work was performed by the dive support vessel Seven Pelican. The success of this campaign, which was the first diving work commissioned by BP in Norway for many years, led to additional diving work being awarded by BP to us for Picture: Installation of a reinforcement clamp on the Valhall platform using a combination of climbers from the platform and divers. 30 subsea partner of choice

31 HIGHLIGHTS FOR THE YEAR Financial Performance Successful completion of Vega, Troll 02 and the fast-track Visund and Snorre projects for Statoil. Continued progress on the Valhall Re-development and Skarv projects for BP. Normand Subsea joined the fleet to work on the long-tem Shell contract. New Norwegian campus opened in Stavanger. Diving scope successfully completed at the Ekofisk field for ConocoPhillips. $m 1,200 North Sea $1,079m $1,051m $209m $235m REVENUE Profit Before Tax Statoil - Vega The Subsea 7 scope of work on the project comprised the engineering, fabrication and installation of one 14 and two 12 rigid flowlines, totalling 52km from Vega South to the Vega field and then to the Gjøa platform. The scope also covered the engineering, fabrication and installation of three umbilicals and three MEG* lines, totalling 52km each and the protection of all flowlines and umbilicals on the seabed. The rigid flowlines were fabricated at Subsea 7 s North Sea pipeline fabrication spoolbase at Vigra, one of the most modern and longest facilities of its type in the world. The offshore installation phase took place over 260 vessel days. A major success on the project was the coordination of six vessels in the field at the same time. Another notable achievement on the project was the installation by the Seven Navica of the largest-ever reeled diameter pipe (21 including coating) installed to date by Subsea 7. Subsea 7 s flexlay vessel, the Seven Seas, installed the umbilical and MEG lines. One major challenge on the project was the handling of the dynamic section of the 28km static umbilical linking the Vega field to the Gjøa platform. This section had a four tonne transition module that had to be lifted over the vertical lay system with the dynamic umbilical section attached to it. The scope was achieved safely because of excellent project engineering and offshore execution. *mono ethylene glycol Location The Vega field is located 80km west of Florø in Sogn og Fjordane, in water depths of up to 380m. Main scope of work Major pipelay contract for the Vega and Vega South fields in the Norwegian sector of the North Sea. Picture: 3 MEG line being installed from the Seven Seas using the vertical lay system. 31 Subsea 7 Annual Report

32 Regional Report: North Sea cont d Centrica Energy - Grove Extension and Seven Seas This major piplelay project, encompassing two southern North Sea shallow water field developments, was awarded to Subsea 7 in May by Centrica Energy, operator of the fields. Following the onshore design and installation engineering, along with procurement and fabrication, the project transitioned to a busy offshore installation campaign in March. Approximately 220 construction vessel days were utilised on the project. The Seven Sisters installed and piled four structures over four trips. A twin-reel drive system was installed on the Seven Sisters, and the steel tube umbilicals were deployed through the ship s moonpool, a first for the vessel. The Seven Navica and the Kommandor Subsea initiated the pipelines in close proximity to a fixed platform and drilling rig, while a third-party vessel was used to bury the pipelines and umbilicals. The Rockwater 1 tied-in the pipelines and umbilicals, installed concrete mattresses, and completed precommissioning of the Grove and Seven Seas pipeline systems and intelligent pigging of the Seven Seas pipeline. Around 50 coaster and supply vessel days and 360 guard vessel days were spent in support of the offshore installation campaign. Over 20 mobilisations and demobilisations were completed successfully. Offshore work on the Grove West pipeline system was completed in September, while work on the Seven Seas pipeline system was completed in October. Location Southern sector of the UK North Sea. Main scope of work Project management, design, procurement, fabrication, installation of 6 and 8 gas pipeline systems, including four piled structures and two control umbilicals. On successful delivery of the project, commendations were received from the client recognising the safe and professional manner in which the work was performed. Picture: Piling hammer deployment from the Seven Sisters ahead of piling of the Grove West manifold. 32 subsea partner of choice

33 HIGHLIGHTS FOR THE YEAR Awarded integrity management contract by Venture (now Centrica Energy) for its North Sea subsea assets. Awarded an exclusive three-year frame agreement by Nexen for subsea field development works on all of its UK assets. Successful completion of the Grove Extension and Seven Seas project for Centrica Energy. Shell - Pan-European underwater services contract In 2006, Subsea 7 was awarded two long-term contracts by Shell to provide all-year round diving and remote operated vehicle services across Europe using dedicated support vessels. These contracts, known collectively as the underwater services contract, are the continuation of an ongoing long-term relationship between Subsea 7 (and its predecessor companies) and Shell which goes back over 20 years. Recent work scopes include a project to disconnect, tow and reconnect the Curlew floating, production, storage and offloading vessel. This involved disconnecting the vessel from its moorings and risers, to enable it to be towed to dry dock to undergo inspection, repair and maintenance modifications. In addition, during the year, we continued to deploy Xmas trees from one of our construction vessels at the deepwater Ormen Lange field using the flexible Tree on Wire method of installation, saving a substantial amount of time over conventional delivery methods. In late, the Normand Subsea - the new-build remotely operated vehicle support vessel specifically designed for inspection, repair and maintenance work - joined the Subsea 7 fleet to service the contract. Its first mobilisation included template and pipeline inspections and shipwreck surveys at Shell s Ormen Lange field, in the Norwegian sector of the North Sea. Location UK, Dutch and Norwegian waters Main scope of work The main scope of work is centred on the ongoing inspection, repair and maintenance of Shell s North Sea assets, including well scale squeeze activities, assuring asset integrity and production continuity. Also joining the fleet in 2010 to service this contract is the new dive support vessel, the Seven Atlantic, one of the world s largest and most capable vessels of its type. Although specifically designed for saturation and air-diving support works, the vessel has the capability to deliver substantial added-value when used in construction mode. Picture: The new-build Seven Atlantic during her sea trials, prior to commencing operations for Shell in March Subsea 7 Annual Report

34 HIGHLIGHTS FOR THE YEAR Divisional Report: i-tech Opening of new facility at Rio das Ostras, near Macae, Brazil. Awarded five-year field support contract by Tullow for the Jubilee field offshore Ghana, onboard client provided vessel. First-ever 230hp Quantum ROV ordered following award of a five-year contract by IPC onboard new-build deepwater rig offshore Mexico. Five-year contract awarded on new-build deepwater drill ship which will operate globally. First field simulation completed for West Africa client including complex spool piece installation. Development of Class I-V torque tool to support internal tooling requirements. Woodside - Maersk Discoverer In late 2007, Woodside extended its major services contract with i-tech to include the provision of remotely operated vehicle (ROV) services onboard Maersk s newbuild semi-submersible Maersk Discoverer, an ultradeepwater (3,000m) development semi-submersible with a variable deck load of over 7,700t and a hull measuring 256m by 376m. The i-tech work scope included provision of a new-build Centurion QX ROV, deployed by means of a bespoke guide wire heavy weather launch system to equal the operating envelope of the rig. The Centurion QX ROV system QX310 is installed within an internal ROV hanger onboard the rig, and the ROV and Tether Management System deployed through a moonpool using a two-wire heavy weather launch system and cursor frame. The ROV system s controls are housed within a dedicated control room onboard the rig instead of the conventional zoned control container. The installation of the ROV system was completed in Singapore during the last quarter of prior to the rig departing the shipyard for transit to Western Australia s North West Shelf to conduct trials and testing. The project was delivered both on-budget and on-time and confirms the international capability of i-tech in working closely with our client, rig owner Maersk, yard owner Keppel FELS and a number of subcontractors. Location Australia, in water depths of up to 3,000m. Main scope of work The provision of remotely operated vehicle services onboard the new-build semi-submersible sixth generation drill rig, Maersk Discoverer. Picture: The Centurion QX ROV deployed using a guide wire heavy weather launch system. 34 subsea partner of choice

35 HIGHLIGHTS FOR THE YEAR Divisional Report: VERIPOS Successful entry and growth in the dynamic positioning vessel and drill rig markets. Several multi-year global fleet contracts extended by major clients in seismic, construction and survey sectors. A range of new hardware products and services developed. Marine and Drilling Dynamic Positioning market saw the continued growth of business in the marine dynamic positioning (DP) market sector in which VERIPOS has been successful in selling its proprietary reception hardware to major DP system manufacturers for integration into large packages for new-build vessels and conversions. Following these hardware sales, VERIPOS secured ongoing signal services contracts with vessel operators throughout the world. In the marine DP market the number of vessels operating using VERIPOS services has increased from approx 250 at the start of to an expected 500 by the end of Growth in this market sector has been particularly strong in the Middle East, South America and Europe. was also a breakthrough year for penetration of the DP drill rig market, where VERIPOS had no market share at the start of. Picture: The VERIPOS control and customer service centre oversees the Company s global service delivery. 35 Subsea 7 Annual Report

36 Executive Management Team Mel Fitzgerald Chief Executive Officer Born: 1950 Mel has been involved in the oil industry since he joined Brown & Root in 1974 and has worked in Malaysia, Indonesia, Singapore, Bahrain, Egypt and the UK. He joined European Marine Contractors (EMC) in 1988, holding a number of management positions before joining Halliburton Subsea as a Vice President in In 2001 he took up the role of UK Vice President for Halliburton s Energy Services Group. Mel joined Subsea 7 as Chief Executive Officer in July He has a Bachelor of Engineering degree from Galway University of Ireland and a Masters in Business Administration from the University of Kingston, UK. Barry Mahon Chief Financial Officer Born: 1962 Barry has over 25 years of experience in finance and general management. He started his career with KPMG in Dublin qualifying as a Chartered Accountant in 1987 before moving to Perth, Australia with KPMG where in 1992 he joined publicly-listed Orbital Engine Corporation Ltd as its Group Financial Controller, later becoming Company Secretary. In 1996 he joined Halliburton as its Shared Services Manager in Australia and New Zealand. In 2000 he joined Halliburton Subsea in Aberdeen as Shared Services Director. Barry joined Subsea 7 as Chief Financial Officer in July He has a Bachelor of Commerce degree from University College Dublin. John Evans Chief Operating Officer Born: 1963 John has over 20 years of experience in the engineering and contracting sector. During 18 years with Kellogg Brown & Root (KBR) and European Marine Contractors he built a successful record in general management, commercial and operational roles in the offshore oil and gas industry. Between 2002 and mid-2005 John was Chief Operating Officer for KBR Infrastructure business in Europe and Africa. John joined Subsea 7 as Chief Operating Officer in July He has a Bachelor of Engineering (Tech) degree in Mechanical Engineering from the University of Wales, Cardiff and is a Chartered Mechanical and Marine Engineer. David Cassie Executive Vice President - Commercial Born: 1956 David is a Chartered Quantity Surveyor with over 25 years of oil and gas experience. He began his career with Construction John Brown, Press & Worley Offshore and Britoil before moving into the subsea sector with Wharton Williams in After joining Stena Offshore in 1987 as Commercial Manager, David held a number of posts including Managing Director for the merged company Coflexip Stena Offshore, and latterly at Technip where he was Senior Executive Vice President, responsible for the North Sea, Canada and Caspian region. David joined Subsea 7 as Executive Vice President Commercial in October Jan Willem van der Graaf Vice President - Africa Region Born: 1956 Jan Willem is a Naval Architect with 25 years of experience in the oil and gas industry and shipbuilding. He started his offshore career with Smit International. In 1990 he joined Rockwater in Rotterdam and moved to Singapore where he became general manager for the Asia Pacific region. In 1997 he moved to van der Giessen de Noord shipyard in the Netherlands with responsibility for operations and production. In 2003 Jan Willem became Vice President for Subsea 7 s Africa region. He was appointed to the role of Executive Vice President Commercial (acting) in January. 36 subsea partner of choice

37 Regional Management Team Victor Bomfim Vice President Brazil Craig Broussard Vice President Asia Pacific Ian Cobban Vice President North America Steph McNeill Vice President UK Tor Espedal Vice President Norway Graham Sharland Vice President Africa (acting) Global Management Team Dave Adams Vice President Project Management & Engineering Stuart Cameron Commercial Director & Deputy Vice President North America Robin Davies Vice President Business Improvement Jackie Doyle Head of Communications Nina El-Imad Group Financial Controller Neill Kelly Director Strategy Development Dick Martin Vice President Life-of-Field Services Neil Milne Managing Director i-tech Graeme Murray General Counsel and Vice President Commercial & Procurement Martin Ridley Vice President Business Acquisition & Risk Dr. Stuart N Smith Vice President Technology & Asset Development Russell Stewart Vice President Human Resources Jonathan Tame Vice President Vessel and Equipment Management Group Judith Tocher Vice President Legal Steve Wisely Vice President Business Acquisition Asia Pacific Andy Woolgar Vice President Global Operations 37 Subsea 7 Annual Report

38 VESSEL FLEET WORLDWIDE The Seven Oceans is a purpose built deepwater rigid pipelay vessel fitted with an advanced reeled pipelay system, capable of operating in water depths up to 3,000m with a top tension capacity of 400/450t. The Seven Seas is a pipelay and construction vessel fitted with an advanced rigid and flexible pipelay system capable of operating in water depths of up to 3,000m with a top tension capacity of 400t (rigid J-lay mode) and 430t (flexlay mode). The Seven Pacific* is a pipelay and construction vessel for installing flexible flowlines and umbilicals, capable of operating in water depths of up to 3,000m. The vessel is equipped with a Vertical Lay System (260t top tension capacity), twin underdeck carousels, a 250t crane and twin 3,000m rated ROVs. The Kommandor 3000 is a pipelay vessel with an extensive and purpose built pipelay system to install flexible pipelines in up to 1,000m water depth with a top tension capacity of 200t. The Lochnagar is a pipelay vessel specifically equipped for the installation of flexible pipelines in up to 2,000m water depth with a top tension capacity of 255t. The Seven Navica is a pipelay vessel capable of both rigid and flexible pipelay in water depths of up to 2,000m with a top tension capacity of 205t. The Normand Seven is a pipelay vessel fitted with an advanced flexible pipelay system capable of operating in water depths of up to 2,000m with a top tension capacity of 300t. The Seven Sisters is a multi-purpose subsea construction vessel and is capable of working in water depths of up to 3,000m. The Skandi Neptune is a pipelay and construction vessel equipped with a Vertical Lay System (100t top tension capacity) and can support flexible pipelay and umbilical installation and deepwater construction. * The Seven Pacific is currently under construction and is due for delivery late The Skandi Seven is a pipelay and construction vessel fitted with a Vertical Lay System for deployment of a range of flexible products, capable of operating in water depths of up to 3,000m with a top-tension capacity of 110t. The Subsea Viking is a multi-purpose subsea support vessel with multi functional capabilities including flexible pipelay, construction, module handling, ROV support and well abandonment. 38 subsea partner of choice

39 The Rockwater 1 is a diving support vessel with multi-purpose capabilities. The vessel has an 18-man single-bell saturation dive system consisting of three chambers and a hyperbaric lifeboat. The Rockwater 2 is a diving support vessel with multi-purpose capabilities. The vessel has a 16-man single-bell saturation diving system rated to 300m, consisting of three living chambers and a self-propelled hyperbaric lifeboat. A single centreline moonpool is provided for diving operations. The Seven Atlantic is one of the largest and most capable diving support vessels in the world, featuring a 24-man saturation diving system. The system is rated to 350m and includes twin diving bells orientated port and starboard with two hyperbaric lifeboats. The Seven Pelican is a diving support vessel with multi-purpose capabilities. An 18-man twin-bell saturation diving system rated to 370m provides a flexible platform for subsea operations. The system consists of three chambers and two 16-man hyperbaric lifeboats. The Toisa Polaris is a diving support vessel with multi-purpose capabilities. The vessel has an 18-man twin-bell saturation diving system rated to 300m, consisting of three twin-lock and a single triple lock chamber with an 18-man self propelled hyperbaric lifeboat. Forward and aft moonpools are provided. The Seven Spray is a modern, highly manoeuvrable, safe and compact shallow diving support vessel. The relatively small footprint and its autonomous diving capability allows access to areas around jackets and alongside FPSOs. The Seven Spray can be deployed from any suitable (mother) vessel. Remotely Operated Vehicles (ROV) SUPPORT The Normand Subsea is a ROV support vessel equipped with a suite of ROVs capable of operating in water depths of up to 1,200m. The ROV suite includes two workclass and four eyeball ROV systems. A handling system is under cover and adjusts to suit a range of modules. The Seisranger is a multi-purpose offshore support vessel, with a primary ROV support function. The main workclass ROV has the capability to operate in deepwater locations up to 2,000m, deployed through the vessel s centreline moonpool. The Kommandor Subsea is an ROV support vessel with an extensive ROV spread onboard. Fitted as standard are a centreline moonpool launched workclass ROV and a port side door launched observation class ROV. 39 Subsea 7 Annual Report

40 OPERATIONAL BASES WORLDWIDE Luanda ANGOLA Opened in 2005, this pipeline fabrication spoolbase is located within the Sonils Oil Service Centre in the Port of Luanda, Angola. The base covers an area of 65,376m 2 and is 715m long including a 75m load-out jetty. The base had a major expansion and upgrade in. Ubu BRAZIL The Ubu pipeline fabrication spoolbase is located in Espirito Santo state, within the Samarco iron ore processing plant, one hour s flying time north of Rio de Janeiro, Brazil. The base runs 2,225m (including spooling line to vessel) and covers an area of 88,000m 2. Vigra NORWAY Opened in, the Vigra pipeline fabrication spoolbase is located beside Ålesund airport, Vigra, on the north west coast of Norway. The base runs 3.7km across the island and includes a purpose built deepwater quay, covering a total area of 284,505m². This makes it one of the longest spoolbase facilities of its type in the world. Wick UK Established in 1978, Subsea 7 s pipeline bundle fabrication yard is located 6 miles north of the town of Wick, Caithness, in the far North of Scotland. This unique site runs 7.8km inland, covers a total area in excess of 300,000m² and has a sheltered bay in which to launch the pipeline bundles. Port Isabel USA Opened in, this pipeline fabrication spoolbase is located in Cameron County on the US/Mexico border of Texas. The base covers a total area of 235,000m 2 and is 1,500m long (1,200m stalk rack and 300m fabrication building). It is one of the longest spoolbase facilities of its type in the world. 40 subsea partner of choice