Offshore Supply Weekly (week 51) Kjetil Haukås,

Transcription

1 Offshore Supply Weekly (week 51) Kjetil Haukås,

2 Newsflow Technip/Reach extends contract with Eidesvik s large subsea newbuild from 110 to 180 days in Positive for EIOF.» Thechnip/Reach has today exercised their first option to extend the contract from 110 to 180 days operations in 2015 for the vessel TBN Viking Neptun. Charterer has in addition several option that they can declare before the delivery of the vessel. Positive for EIOF as this will improve utilization on the largest vessel in their fleet.» As mentioned earlier, we believe dayrate for the first 110 days should be in the USD ,000 range ex. ROV services (i.e. EIOF s share of total dayrate), and below USD 90,000 for the option period.» With its 145 meters length, TBN Viking Neptun will become the largest vessel in Eidesvik s fleet after delivery in early The contract with Technip is a cooperation between Reach Subsea and Eidesvik Offshore in which the latter provides marine services, while Reach delivers ROV/subsea services. Farstad announces more details on their new a subsea/imr vessel» Farstad released more details this week on their new subsea vessel that will work on a frame work with Technip for up to 320 days a year. The vessel is a light subsea/imr vessel to be built at Vard Vung Tau in Vietnam. Total capex should be around NOK 520m, and the vessel is scheduled to be delivered in Q » Based on an EV/EBITDA of 11x we estimate an effective dayrate of around USD 37,000 assuming vessel is utilized 320 days each year. Rem Offshore and Vard agrees to postpone delivery of subsea vessel due to weakening market» Rem Offshore contracted in June 2014 an OCV vessel at Vard with scheduled delivery in Q Due to the weak OSV market, the two parties has agreed to postpone delivery of the vessel until Q According to REM, the remaining terms are unchanged.» Clearly negative read-across to Farstad Shipping, that still has not managed to secure any contracts for two speculative subsea vessels with scheduled delivery in April and July Postponing deliveries by one year would reduce Farstad s EBITDA by additional 3-4% in 2016 thereby lifting NIBD/EBITDA to around 6x on our estimates. As such, we find it hard to understand Farstad s decision last week to expand the fleet with a third subsea vessel scheduled for delivery in Q Two new Petrobras AHTS tenders out» Petrobras has issued a couple of new tenders for AHTS vessels. The first tender is for AHTS > 18,000 bhp. with ROV capabilities. Commencement is scheduled for April 2015 (or 90 days after contract award) with bids being submitted before January 29.» The second tender is divided into four sub categories. Main requirement for the first three categories is that the vessels should be less than 15 years old with commencement in April to September next year, while the latter is for AHTS with ROV capabilities commencing in March Petrobras expects to receive commercial bids for all four categories by 14 th of January.» As always, the total number of vessels required is not specified. There are few alternative regions for AHTS vessels to operate in except for the North Sea, Brazil, and to some extent Australia, as such, it will be very interesting to follow the new round of Petrobras tenders in January Oceanteam: McDermott exercises option to acquire CSV 102 as expected» OTS announces that it has completed the transfer of its 50% ownership stake in the to date jointly owned Pipelay Vessel "North Ocean 102" to J. Ray McDermott Norway (McDermott has exercised option to purchase OTS' 50% stake). The proceeds from the sale will go towards a USD 35m amortization on OTS' bond loan due in April 2015 and other general corporate purposes. According to the company, the transaction is part of its long term strategy to deleverage and to strengthen its balance sheet further. The sale and purchase conditions are to remain confidential under the signed agreement. The transaction has been fully executed on 18 December 2014.» Our analysis: McDermott's option on the vessel was deep in the money and it has therefore been widely expected to see OTS having to sell its stake in the vessel. The USD 35m bond amortization in April 2015 is linked to this sale. Net proceeds (after debt) from the sale of the 50% stake is expected to roughly match the bond amortization. 2 Source: Sparebank 1 Markets, Companies, Press,++

3 USD USD USD USD Weekly spot market development Spot market remains very weak. Weekly avg AHTS utilization at PSV seasonal spot rates AHTS seasonal spot rates Week number Week number PSV spot rates and utilization since jan 2013 AHTS spot rates and utilization since jan 2013 PSV rate PSV utl AHTS rate AHTS utl % % % % % % % % 60 % % % % % Week number, since % Week number 30 % 3 Source: SB1 Markets, IHS Petrodata, Hagland Offshore

4 Recent spot fixtures Vessel Name Vessel TyBHP DWT (tomanager Contract type Activity Country Client Fixture Date Start Date End Date w/o Rate USD Rate Ocean Pride PSV Atlantic OffshSpot Supply Norway Statoil NOK 110, UP Coral PSV Ultrapetrol Spot Supply United Kingdom Premier GBP 5, Bourbon Topaz PSV Bourbon OffshSpot Supply United Kingdom Maersk Oil GBP 5, Troms Castor PSV Troms Offsho Spot Cargo Run Norway BP NOK 60, Rem Stadt PSV Remoy ShippiSpot Supply Norway Statoil NOK 60, Maersk Lifter AHTS Maersk Suppl Spot Supply United Kingdom ConocoPhillips GBP 3, Rem Vision PSV Rem MaritimeSpot Supply Norway ConocoPhillips NOK 85, Blue Guardian PSV Remoy ShippiSpot Supply Norway Statoil NOK 60, Far Spica PSV Farstad Spot Cargo Run United Kingdom Apache Loke Viking AHTS Viking SupplySpot Supply United Kingdom Team GBP 5, Olympic Hera AHTS Olympic ShippSpot All Duties Norway Statoil NOK 60, Olympus PSV Global OffshoSpot Cargo Run United Kingdom Dana Petroleum GBP 4, Pacific Champion AHTS Swire Pacific Spot All Duties United Kingdom Shell GBP 5, UP Coral PSV Ultrapetrol Spot Cargo Run United Kingdom Premier GBP 4, KL Saltfjord AHTS K Line OffshorSpot All Duties Norway MLS NOK 260, KL Brofjord PSV K Line OffshorSpot Supply Norway MLS NOK 60, Olympic Orion PSV Olympic ShippSpot Supply United Kingdom BW Offshore GBP 12, Energy Insula PSV Golden Energ Spot Supply United Kingdom Shell GBP 6, Far Superior PSV Farstad Spot Cargo Run United Kingdom Maersk Oil GBP 4, Olympic Poseidon AHTS Olympic ShippSpot Supply United Kingdom Team GBP 6, Malaviya Seven PSV GOL Offshore Spot Cargo Run United Kingdom Wood Group GBP 4, Source: SB1 Markets, IHS Petrodata

5 OSV peer group Market cap. Px Share price performance EV/EBITDA consensus P/B Company Ticker [USDm] [Local] 3m 6m 12m 2014E 2015E 2016E 5Y avg. current Deep Sea Supply DESSC NO 205 5,8-33 % -39 % -47 % 5,4x 4,1x 4,5x 4,9x 0,4x Siem Offshore SIOFF NO 198 3,8-39 % -55 % -60 % 7,5x 6,6x 6,1x 6,2x 0,3x Farstad Shipping FAR NO ,4-51 % -62 % -67 % 6,6x 6,3x 6,2x 6,3x 0,2x DOF DOF NO ,9-34 % -48 % -47 % 7,5x 7,9x 7,9x 7,2x 0,4x Solstad Offshore SOFF NO ,3-24 % -34 % -38 % 7,6x 7,8x 7,4x 7,3x 0,5x Havila Shipping HAVI NO 77 18,8-37 % -46 % -38 % 7,0x 8,0x 7,9x 8,0x 0,3x Nordic American Offshore NAO US ,6-34 % -25 % #VALUE! 9,8x 7,2x 6,3x #N/A N/A #N/A N/A Eidesvik Offshore EIOF NO 94 23,0-22 % -28 % -32 % 6,9x 5,4x 6,1x 5,9x 0,3x Tidewater TDW US ,4-29 % -43 % -43 % 6,8x 6,3x 6,1x 6,9x 0,6x Gulfmark GLF US ,8-36 % -50 % -48 % 6,3x 6,3x 6,4x 6,6x 0,6x Average international -33 % -47 % -46 % 6,5x 6,3x 6,3x 6,8x 0,6x Source: Sparebank 1 Markets; Bloomberg *Change of analyst. Recommendation and target under review. 5 Source: Sparebank 1 Markets

6 Share price performance Norwegian OSVs Share price performance since jan Norwegian peers Share price performance since jan Norwegian peers OSEBX Index SOFF FAR DOF DESSC SIOFF HAVI EIOF OSEBX Index SOFF FAR DOF DESSC SIOFF HAVI EIOF 6 Source: SB1 Markets, Bloomberg

7 Oil service sector performance Oil Service Sector Performance since Jan Oil Service Sector Performance since Jan SUPPLY Index.USSUPPLY Index.SUBSEA Index.SEISMIC Index.DRILLING Index OSEBX Index.SUPPLY Index.USSUPPLY Index.SUBSEA Index.SEISMIC Index.DRILLING Index OSEBX Index 7 Source: SB1 Markets, Bloomberg

8 EBITDA EBITDA EBITDA EBITDA EBITDA EBITDA Consensus EBITDA estimates FAR 2 700, , , , , , , ,00 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct SOFF 2 100, , , , , , , ,00 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct DOF 4 100, , , , , , , , , ,00 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct SIOFF 350,00 330,00 310,00 290,00 270,00 250,00 230,00 210,00 190,00 170,00 150,00 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct DESSC 140,00 130,00 120,00 110,00 100,00 90,00 80,00 70,00 60,00 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct HAVI 950,00 900,00 850,00 800,00 750,00 700,00 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct Source: SB1 Markets, Bloomberg

9 Consensus EBITDA estimates OSV and drilling OSV consensus EBITDA revisions OSV and Drilling. 15E/16E OSV 2015 OSV 2016 Drilling 2016 Drilling Source: Sparebank 1 Markets; Bloomberg

10 Short interest OSV and drilling (US companies only) 400 Short positions (absolute) base year OSV and rig 16% Short positions % of free float. - OSV and rig % % % 200 8% 150 6% 100 4% 50 2% 0 des. 10 mar. 11 jun. 11 sep. 11 des. 11 mar. 12 jun. 12 sep. 12 des. 12 mar. 13 jun. 13 sep. 13 des. 13 mar. 14 jun. 14 sep. 14 0% des. 10 mar. 11 jun. 11 sep. 11 des. 11 mar. 12 jun. 12 sep. 12 des. 12 mar. 13 jun. 13 sep. 13 des. 13 mar. 14 jun. 14 sep. 14 Rig index Source: Bloomberg; Sparebank 1 Markets OSV index Rig Source: Bloomberg; Sparebank 1 Markets OSV 10 Source: Sparebank 1 Markets, Bloomberg

11 Historic pricing of Norwegian OSV peers 11,5x EV/EBITDA (12m forward) 2,0x Price Boook 10,5x 1,8x 9,5x 1,6x 1,4x 8,5x 1,2x 7,5x 1,0x 6,5x 0,8x 5,5x 0,6x 0,4x 4,5x 0,2x 3,5x DESSC SIOFF FAR DOF SOFF HAVI EIOF DESSC SIOFF FAR DOF SOFF HAVI EIOF Industry avg. EV/EBITDA (12m forward) Industry avg. Price Book 9,5x 9,0x 8,5x 8,0x 7,5x 7,0x 6,5x 6,0x 5,5x 5,0x 4,5x ,2x 1,1x 1,0x 0,9x 0,8x 0,7x 0,6x 0,5x 0,4x 0,3x Source: SB1 Markets, Bloomberg

12 Discount to NAV Discount to NAV Discount to NAV Discount to NAV Discounts to reported NAVs 100% 90% SOFF - Discount to last reported NAV 100% 90% HAVI - Discount to last reported NAV 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 100% 90% DOF - Discount to last reported NAV 100% 90% FAR - Discount to last reported NAV 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 12 Source: SB1 Markets, Company reports, Bloomberg

13 Bond Indications Supply & Subsea Services Issuer ISIN Ticker Size Crncy Priority Security Maturity TTM Coupon Bid Px Bid YTW Bid Z/DM Ask Px Ask YTW Ask Z/DM Mid Z/DM Atlantic Offshore AS NO ATOFF02 39 NOK Senior unsecured m N % % Atlantic Offshore AS NO ATOFF01 90 NOK Share pledge Vessel owning comp's m N % % Atlantic Offshore AS NO ATOFF NOK Senior unsecured m N % % Boa OCV AS NO NOK 1st lien 2x OCV m N % % Boa Offshore AS NO BOAO NOK Senior unsecured m N % % Boa Offshore AS NO BOAO NOK Senior unsecured m N % % Boa SBL AS NO BOAS NOK 1st lien 2x EM vessels m N % % DOF ASA NO DOF NOK Senior unsecured m N % % DOF ASA NO DOF NOK Senior unsecured m N % % DOF ASA NO DOF NOK Senior unsecured m N % % DOF ASA NO DOF NOK Senior unsecured m N % % DOF Subsea ASA NO DOFSUB NOK Senior unsecured m N % % DOF Subsea ASA NO DOFSUB NOK Senior unsecured m N % % DOF Subsea ASA NO DOFSUB NOK Senior unsecured m N % % E Forland AS NO EFOR NOK 1st lien 1x Subsea m N % % Eidesvik Offshore ASA NO EIOF NOK Senior unsecured m N % % Farstad Shipping AS NO FAR NOK Senior unsecured m N % % Farstad Shipping AS NO FAR NOK Senior unsecured m N % % Golden Energy Offshore Services AS NO NOK 1st lien 2x PSV m N % % Havila Holding AS NO NOK Share pledge Various shares % % Havila Shipping ASA NO HAVI NOK Senior unsecured m N % % Havila Shipping ASA NO HAVI NOK 1st lien PSV Clipper m N % % Havila Shipping ASA NO HAVI NOK 1st lien OCV Subsea % % % Havila Shipping ASA NO HAVI NOK 1st lien OCV Subsea m N % % Island Offshore Shipholding L.P. NO IOSH NOK Senior unsecured m N % % Oceanteam Shipping ASA NO OTS02 93 USD Senior unsecured m L % % Olympic Ship AS NO OLSH NOK Senior unsecured m N % % Olympic Ship AS NO OLSH NOK Senior unsecured m N % % Olympic Ship AS NO NOK Senior unsecured m N % % Rem Offshore ASA NO REM NOK Senior unsecured m N % % Rem Offshore ASA NO REM NOK Senior unsecured m N % % Rem Offshore ASA NO NOK Senior unsecured m N % % Sea Trucks Group Ltd NO USD 1st lien Various vessels % % % Siem Offshore Inc NO SIOFF NOK Senior unsecured m N % % Siem Offshore Inc NO SIOFF NOK Senior unsecured m N % % Solstad Offshore ASA NO SOFF NOK Senior unsecured m N % % Viking Supply Ships AS NO VSS NOK Senior unsecured m N % % Volstad Maritime AS NO VOSUB NOK 1st lien 1x DSV & 2x Seismic m N % % Volstad Shipping AS NO VOLS NOK 2nd lien 2x PSV & 1x Subsea m N % %

14 Spread (bps) Spread/Maturity Supply & Subsea Services Supply & Subsea Services Spread/Maturity Diagram 900 Oceanteam Boa Offshore Golden Energy +725 (2x PSV) Atlantic +750 Viking +825 VOLSHI +600 (2x PSV & 1x Subsea) Havila Holding +660 (various E Forland +675 (Fugro Saltire) shares) REM +575 DOF +700 REM VOLMAR +650 (1x DSV, 2x DOF +475 Boa SBL +550 (2x EM vessels) Boa OCV +475 (2x OCV) Seismic) DOF +725 SIOFF +475 Island Offshore +525 SIOFF +440 Olympic +500 Olympic +600 Havila +850 (2016) DOFSUB Havila 8.6% (OCV Subsea) Eidesvik +450 Havila +450 (OCV Subsea) Farstad +340 Atlantic (vessel owning Farstad comp's) SOFF +440 Havila +375 (PSV Clipper) DOFSUB DOF +610 DOFSUB Olympic REM +500 Atlantic +975 Boa Offshore Time to Maturity Unsecured 1 st lien 2 nd lien/share pledge Source: SpareBank 1 Markets Price Indications 14

15 Disclaimer IMPORTANT DISCLOSURES AND CERTIFICATIONS This document provides additional disclosures and disclaimers relevant to research reports and other investment recommendatio ns ( Recommendations ) issued by SpareBank 1 Markets AS ( SpareBank 1 Markets ), cf. the Norwegian Securities Trading Act section 3-10 with further regulations. Standards and supervisory authorities SpareBank 1 Markets complies with the standards for recommendations issued by the Norwegian Securities Dealers Association ( and the Norwegian Society of Financial Analysts. The lead analyst (see front page) is employed by SpareBank 1 Markets, which is legally responsible for this report and is under the supervision of The Financial Supervisory Authority o f Norway (Finanstilsynet). Previous Recommendations For an overview of SpareBank 1 Markets research reports and other investment recommendations regarding the financial instruments of the issuer the past 12 months, including data on changes in such research reports and other investment recommendations, please see SpareBank 1 Markets website, (log-in required) Planned updates Unless explicitly stated otherwise in this report, SpareBank 1 Markets expects, but not undertake, to issue updates to this report following the publication of new figures or forecasts b y the issuer covered, or upon the occurrence of other events which could potentially have a material effect on it. Information sources Important sources of information: the issuer, including its quarterly and annual reports, Oslo Stock Exchange, Statistics Nor way (Statistisk Sentralbyrå). Sources are cited when referred to in the Recommendation. We use only sources we find reliable and accurate, unless otherwise stated. The Recommendations has not been presented to the issuer/ the issuers of the financial instrument presented before dissemination. SpareBank 1 Markets interests and disclosure of assignments and mandates Financial instruments held by the analyst(s) and/or close associate in the issuer/ issuers herein: 0 Other material interest (if any): None SpareBank 1 Markets does not alone or together with related companies or persons, hold a portion of the shares exceeding 5 % of the total share capital in any companies where a recommendation has been produced or distributed by SpareBank 1 Markets, or holds other interest likely to affect the objectivity of a recommendation, except when disclosed, cf. below. SpareBank 1 Markets may hold financial instruments in companies where a recommendation has been produced or distributed by SpareBank 1 Markets in connection with rendering investment services, including market making. For important disclosures, such as an overview of all financial instruments in which SpareBank 1 Markets or related companies are market makers or liquidity providers, all financial instruments where SpareBank 1 Markets or related companies have been lead managers or co-lead managers over the previous 12 months, and all issuers of financial instruments to whom SpareBank 1 Markets or related companies have rendered investment banking services over the previous 12 months, please refer to SpareBank 1 Markets equity research website: (login required) Please note that agreements and services subject to confidentiality are excluded. 15

16 Disclaimer SpareBank 1 Markets Research Department Our recommendations are based on a six-month horizon, and on absolute performance. We apply a three-stage recommendation structure where Buy indicates an expected annualized return of greater than +15%; Neutral, from 0% to +10%; Sell, less than 0%. Current recommendations of the Research Department: (refers to Recommendations published prior to this report and required disclosed in accordance with the Securities Trading Regulations section 3-11 (4) Standard research disclaimer All employees of SpareBank 1 Markets are subject to duty of confidentiality towards clients and with respect to inside information. SpareBank 1 Markets operates a system of Chinese Walls and other organizational procedures in order to control the flow of information within the firm and minimize conflicts of interest within SpareBank1 Markets and between clients. The Research Department is part of this system. The Research Analysts of SpareBank 1 Markets receive salary and are members of the bonus pool. However no part of the analysts salaries or compensations relates to the performance of their recommendations, directly to investment banking services or other services provided by SpareBank 1 Markets or related companies to issuers. Analyst Certification The views expressed in this research accurately reflect(s) the personal views of the analyst(s) principally responsible for this report about the subject securities or issuers, and no part of the compensation of such analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. No part of the compensation of the research analyst(s) responsible for the preparation of this report was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the research analyst(s) in this report. Risks Generally, investments in financial instruments involve risks. For specific risks related to our various recommendations, please see the latest relevant reports. The target prices on companies in the SpareBank 1 Markets Research universe reflect the subjective view of the analyst about the absolute price that financial instruments should trade at, within our six-month recommendation horizon. The target price is based on an absolute valuation approach, which is detailed in our research reports. The target price can differ from the absolute valuation, in accordance with the analyst's subjective view on the trading or cyclical patterns for a particular financial instrument, or a possible discount/premium to reflect factors such as market capitalization, ownership structure and/or changes in the same, and company-specific issues. This report or summary has been prepared by SpareBank 1 Markets from information obtained from public sources not all of which are controlled by SpareBank 1 Markets. Such information is believed to be reliable and although it has not been independently verified, SpareBank 1 Markets has taken all reasonable care to ensure that the information is true and not misleading. Notwithstanding such reasonable efforts, SpareBank 1 Markets makes no guarantee, representation or warranty as to its accuracy or completeness. SpareBank 1 Markets assumes no obligation to update the information contained in this report or summary to the extent that it is subseq uently determined to be false or inaccurate. This document contains certain forward-looking statements relating to the business, financial performance and results of the issuer and/or the industry in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words believes, expects, predicts, intends, projects, plans, estimates, aims, foresees, anticipates, targets, and similar expressions. The forward-looking statements contained in this document, including assumptions, opinions and views of the issuer or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. 16

17 Disclaimer No Solicitation This report or summary is provided for informational purposes only and under no circumstances is it to be used or considered as an offer to sell, or a solicitation of any offer to buy any securities. This report or summary is prepared for general circulation and general information only. It does not have regard to the specific investment objectives, financial situation or the particular needs of any person who may receive this report or summary. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report or summary and should understand that statements regarding future prospects may not be realized. Performance in the past is not a guide to future performance. SpareBank 1 Markets accepts no liability whatsoever for any direct or consequential loss arising from the use of this publication or its contents. These materials may not be reproduced, distributed or published by any recipient for any purpose. Please cite source when quo ting. Notice to U.S. Investors If this report is being furnished directly to U.S. recipients by a non-u.s. SpareBank 1 Markets entity in reliance on section (a)(2) of Rule 15a-6 under the U.S. Securities Exchange Act of 1934, as amended (each a direct U.S. recipient ), each such direct U.S. recipient of this report represents and agrees, by virtue of its acceptance thereof, that it is major U.S. institutional investor (as such term is defined in section (b)(4) of Rule 15a-6) and that it understands the risks involved in executing transactions in such securities. Any direct U.S. recipient of this report that wishes to discuss or receive additional information regarding any security or issuer mentioned herein, or engage in any transaction to purchase or sell or solicit or offer the purchase or sale of such securities, should contact a registered representative of SpareBank 1 Capital Markets Inc. ( SpareBank 1 Capital Markets ), a registered U.S. broker-dealer and member of FINRA and SIPC. In certain cases, unless prohibited by the provisions of Regulation S under the U.S. Securities Act of 1933, as amended, this report may be provided by SpareBank 1 Capital Markets to a U.S. recipient (a SpareBank 1 Capital Markets U.S. recipient ), in which case each such SpareBank 1 Capital Markets U.S. recipient of this report represents and agrees, by virtue of its acceptance thereof, that it is major U.S. institutional investor (as such term is defined in section (b)(4) of Rule 15a-6), or that it is a U.S. institutional investor (as such term is defined in section (b)(7) of Rule 15a-6), and that it understands the risks involved in executing transactions in such securities. In such cases, SpareBank 1 Capital Markets accepts responsibility for the content of this report; however, although it has accepted responsibility for the content of this report in such cases, SpareBank 1 Capital Markets did not contribute to the preparation of this report, and the specific authors of the report are not employed by, and are not associated persons of, SpareBank 1 Capital Markets. The SpareBank 1 Markets entity that prepared the report, and the authors of this report, may not be subject to all of the registration, qualification, disclosure, independence and other U.S. regulatory requirements that apply to SpareBank 1 Capital Markets and its employees and associated persons. Any SpareBank 1 Capital Markets U.S. recipient of this report that wishes to discuss or receive additional information regarding any security or issuer mentioned herein, or to engage in any transaction to purchase or sell or solicit or offer the purchase or sale of such securities, should contact a registered representative of SpareBank 1 Capital Markets. 17

18 Disclaimer Any transaction in the securities discussed in this report by U.S. persons (other than a registered U.S. broker-dealer or bank acting in a broker-dealer capacity) must be effected with or through SpareBank 1 Capital Markets. The securities referred to in this report may not be registered under the U.S. Securities Act of 1933, as amended, and the issuer of such securities may not be subject to U.S. reporting and/or other requirements. Available information regarding the issuers of such securities may be limited, and such issuers may not be subject to the same auditing and reporting standards as U.S. issuers. Such information is provided for informational purposes only and does not constitute a solicitation to buy or an offer to sell any securities under the Securities Act of 1933, as amended, or under any other U.S. federal or state securities laws, rules or regulations. The investment opportunities discussed in this report may be unsuitable for certain investors depending on their specific investment objectives, risk tolerance and financial position. In jurisdictions where SpareBank 1 Capital Markets is not registered or licensed to trade in securities, commodities or other financial products, transactions may be executed only in accordance with applicable law and legislation, which may vary from jurisdiction to jurisdiction and which may require that a transaction be made in accordance with applicable exemptions from registration or licensing requirements. The information in this publication is based on carefully selected sources believed to be reliable, but SpareBank 1 Capital Markets does not make any representation with respect to its completeness or accuracy. All opinions expressed herein reflect the author s judgment at the original time of publication, without regard to the date on wh ich you may receive such information, and are subject to change without notice. The information contained herein may include forward-looking statements as described above within the meaning of U.S. federal securities laws that are subject to risks and uncertainties. Factors that could cause a company s actual results and financial condition to differ from expectations include, without limitation: political uncertain ty, changes in general economic conditions that adversely affect the level of demand for the company s products or services, changes in foreign exchange markets, changes in international and domestic financial markets and in the competitive environment, and other factors relating to the foregoing. All forward-looking statements contained in this report are qualified in their entirety by this cautionary statement. 18