"Despite Imminent Project Delays, 2015-2019 Deepwater Spend to Total $210 Billion" Deepwater expenditure is expected to increase by 69%, compared to the preceding five-year period, totalling $210 billion (bn) from 2015 to 2019. This is the headline finding from Douglas-Westwood’s (DW) World Deepwater Market Forecast 2015-2019. Report author, Mark Adeosun, commented, “As production from mature basins onshore and in shallow water declines, development of deepwater reserves has become increasingly vital, particularly to the world’s oil majors. However, the recent oil price decline has intensified pressure on operator budgets. Consequently, numerous operators have deferred sanctioning of capital intensive developments. “DW has identified a trough in global expenditure in 2015 and 2016 primarily driven by delays to delivery of FPS units in Latin America. We expect deepwater Capex to rise post-2016, driven by the continued development of deepwater fields off Latin America and West Africa, as well as new developments off East Africa. However, in the short-term, delays as a result of the oil price are causing significantly slower growth than was expected a year ago.”

1. World Deepwater
Market Forecast 2015-2019energy business insight
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• Prospects
• Technologies
• Markets
Despite imminent project delays,
2015-2019 deepwater spend to total
$210 billion
Deepwater expenditure is expected to increase
by 69%, compared to the preceding five-year
period, totalling $210 billion (bn) from 2015
to 2019. As production from mature basins
onshore and in shallow water declines, devel-
opment of deepwater reserves has become
increasingly vital, particularly to the world’s oil
majors. However, the recent oil price decline
has intensified pressure on operators' budgets.
Consequently, numerous operators have de-
ferred sanctioning of capital intensive develop-
ments.
Africa, Latin America and North America will
continue to dominate deepwater Capex, with
$173bn set to be spent over the next five years
with Africa forecast to experience the greatest
growth. The development of East African natu-
ral gas basins has not been aided by the plunge
in Asian gas prices; however, the development
of these gas basins is inevitable. The expected
recovery of oil prices will spark a revival in
LNG-related activities in the region towards the
end of the forecast period. Latin America will,
however, remain the largest market and North
America is expected to experience the least
growth.
In addition to the low oil price environment,
building oversupply and the lack of rig demand
will impact Capex growth over the forecast
period. In recent years, record deepwater rig
demand has resulted in unprecedented levels
of rig orders.
Douglas-Westwood (DW) has identified a
trough in global expenditure in 2015 and 2016
primarily driven by delays to delivery of FPS
units in Latin America.
DW’s 13th edition of the World Deepwater
Market Forecast covers all key commercial
themes relevant to players across the value
chain in the deepwater sector:
• Supply chain – detailing the financing of
deepwater developments, contractors,
equipment and installations. Includes analysis
of contracting strategies (e.g. frame agree-
ments), dayrates, key players and capabilities
of each sector within the deepwater market
(drilling, FPS and subsea hardware).
• Key drivers – discussion of factors encour-
aging deepwater activity – including robust
oil & gas prices, deepwater production to
offset declining production from onshore
and shallow water basins, E&P spend of
international operators and Petrobras’ activ-
ity in Brazil.
• Regional forecasts – forecast Capex within
each region, including examples of notable
projects and operators within the region
and countries with most activity.
• Component forecasts – drilling and comple-
tion (subsea and surface completed wells), sub-
sea production hardware, SURF and trunklines.

2. World Deepwater
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• Focus areas – examination of deepwater
provinces, including recent discoveries in
East Africa.
• Procurement – factors affecting the deci-
sions facing FPS operators, whether to lease
or own vessels and details of major leasing
contractors.
• List of deepwater prospects – includes in-
formation on all identified prospects coming
onstream from 2015 to 2019 by operator,
location, water depth, number of trees and
status category.
Why purchase the Deepwater Market
Forecast?
DW’s market forecasting is trusted by sector
players worldwide, with clients including the
world’s top-10 oil & gas companies, top-10
oilfield services companies and top-10 private
equity firms.
The report is essential for financial institutions,
equipment manufacturers, offshore construc-
tion companies, drilling operators, oilfield
service companies, shipbuilders and oil & gas
companies wanting to better understand where
and when to make investment decisions.
Our proven approach includes:
• Unique and proprietary data – updated
year-round from published sources and
insight gained from industry consultation.
• Detailed methodology – the report uses
research from DW’s ‘Deepwater Database’,
an in-house information system exclusive
to DW. Our global analyst team is involved
in the gathering and analysis of deepwater
market data through primary research and
professional networks. A project-by-project
review of development prospects drives a
data-rich market model and forecast.
• Comprehensive analysis – comprehensive
examination, analysis and 10-year coverage
of deepwater expenditure.
• Concise report layout – consistent with
DW’s commitment to delivering value for
our clients, all our market forecasts have a
concise layout consisting of industry back-
ground and supporting materials condensed
to enable quick review with ‘speed-read’
summaries of key points throughout.
ISBN 978-1-910045-13-8
"The statistics are key to our
annual business plan"
- Energy services provider
"An excellent report"
- Services company

3. 2015 World Deepwater Market Forecast
Prospects, Technologies, World Markets
2015-2019

4. © 2015 Douglas-Westwood 2World Deepwater Market Forecast 2015-2019
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Contents
Table of Contents
1 Summary and Conclusions......................................7
Summary......................................................................................................................................... 8
Conclusions.................................................................................................................................... 9
2 Drivers and Indicators........................................... 10
E&P Trends – Spending Activity ...............................................................................................11
Viability of Oil & Gas Developments......................................................................................12
Continued Development of Offshore Reserves...................................................................13
Oil Prices......................................................................................................................................14
Gas Prices.....................................................................................................................................15
Importance of Brazil...................................................................................................................16
Current Influences in the Deepwater Market.......................................................................17
Deepwater Focus Areas............................................................................................................18
3 Field Development................................................. 19
Field Lifecycle...............................................................................................................................20
Drilling and Completion............................................................................................................21
Field Development Concept Selection...................................................................................22
Subsea Production Hardware...................................................................................................23
SURF and Trunklines...................................................................................................................24
Floating Production Systems (FPS) ..........................................................................................25
Vessels...........................................................................................................................................26
4 The Supply Chain.................................................... 27
Financing .......................................................................................................................................28
Deepwater Supply Chain – Drilling and FPS..........................................................................29
Deepwater Supply Chain – Subsea Hardware .....................................................................30
Deepwater Drilling Fleet...........................................................................................................31
Rig Dayrate Analysis...................................................................................................................32
Subsea Tree Market Trends.......................................................................................................33
FPS Leasing...................................................................................................................................34
Supply Issues – Local Content and Personnel.......................................................................35
5 The Deepwater Market Forecast....................... 36
Introduction.................................................................................................................................37
Forecasting and Potential Upside.............................................................................................38
Assumptions.................................................................................................................................39
Methodology................................................................................................................................40
The World Deepwater Market – By Region .........................................................................41
The World Deepwater Market – By Component................................................................42
Africa.............................................................................................................................................43
Asia ................................................................................................................................................44
Australasia ....................................................................................................................................45
Eastern Europe & FSU................................................................................................................46
Latin America...............................................................................................................................47
Middle East...................................................................................................................................48
North America............................................................................................................................49
Western Europe..........................................................................................................................50
Drilling and Completion: Subsea Completed Wells.............................................................51
Drilling and Completion: Surface Completed Wells............................................................52
Subsea Production Hardware...................................................................................................53
SURF..............................................................................................................................................54
Trunklines .....................................................................................................................................55
Floating Production Systems by Region..................................................................................56
Floating Production Systems by Type......................................................................................57
6 Appendix .................................................................. 58
Deepwater Prospects ................................................................................................................59
Data and Text Conventions......................................................................................................65

5. © 2015 Douglas-Westwood 3World Deepwater Market Forecast 2015-2019
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Contents
Figures
Figure 1: Global Deepwater Capex by Region 2010-2019 ......................................................................8
Figure 2: Global Deepwater Rig Demand & Utilisation (2000-2015).................................................9
Figure 3: Viability of Oil and Gas Development ($/bbl)..........................................................................12
Figure 4: Oil & Gas Production vs E&P Spend .............................................................................................12
Figure 5: Global Oil Supply mix Shallow/Deep Split 2000-2020 .......................................................13
Figure 6: Oil Price & Demand...............................................................................................................................14
Figure 7: Natural Gas Price.....................................................................................................................................15
Figure 8: Brazillian Offshore Basins.....................................................................................................................16
Figure 9: Forecast Deepwater Capex 2014 & 2015 Edition.................................................................17
Figure 10: Deepwater Focus Areas....................................................................................................................18
Figure 11: Completion Strategy and Deepwater Field Development Concept Selection.....22
Figure 12: Typical Lending Cycles in the Offshore Sector ......................................................................28
Figure 13: Drilling and FPS Supply Chain.........................................................................................................29
Figure 14: Subsea Hardware Supply Chain.....................................................................................................30
Figure 15: Rig Managers of Existing Deepwater Rigs ................................................................................31
Figure 16: Rig Managers of Deepwater Rigs Under Construction.....................................................31
Figure 17: Deepwater Rigs Currently On Order by Shipyard..............................................................31
Figure 18: Dayrates of Semi-submersibles, Drillship and Jackup Drilling Rigs...............................32
Figure 19: Average Dayrates of Deepwater Drilling Rigs ......................................................................32
Figure 20: Visible Subsea Production Hardware Orders.........................................................................33
Figure 21: Market Share of Subsea Production Hardware Suppliers................................................33
Figure 22: Leasing Contractors of Existing and Under Construction Deepwater Vessels.....34
Figure 23: Trees Installed by Category..............................................................................................................38
Figure 24: Global – Deepwater Capex by Region .....................................................................................41
Figure 25: Global – Deepwater Capex by Component..........................................................................42
Figure 26: Africa – Deepwater Capex by Component............................................................................43
Figure 27: Asia – Deepwater Capex by Component...............................................................................44
Figure 28: Australasia – Deepwater Capex by Component.................................................................45
Figure 29: Eastern Europe & FSU – Deepwater Capex by Component........................................46
Figure 30: Latin America – Deepwater Capex by Component ..........................................................47
Figure 31: Middle East – Deepwater Capex by Component ...............................................................48
Figure 32: North America – Deepwater Capex by Component .......................................................49
Figure 33: Western Europe – Deepwater Capex by Component ....................................................50
Figure 34: Drilling and Completion: Subsea Wells – Deepwater Capex by Region.................51
Figure 35: Subsea Drilling – Historic vs. Forecast Capex........................................................................51
Figure 36: Drilling and Completion: Surface Wells – Deepwater Capex by Region ................52
Figure 37: Surface Drilling – Historic vs. Forecast Capex .......................................................................52
Figure 38: Subsea Production Hardware – Deepwater Capex by Region ....................................53
Figure 39: Subsea Production Hardware – Historic vs. Forecast Capex.........................................53
Figure 40: SURF – Deepwater Capex by Region........................................................................................54
Figure 41: SURF – Historic vs. Forecast Capex............................................................................................54
Figure 42: Trunklines – Deepwater Capex by Region ..............................................................................55
Figure 43: Trunklines – Historic vs. Forecast Capex ..................................................................................55
Figure 44: Floating Production Systems – Deepwater Capex by Region.......................................56
Figure 45: Floating Production Systems – Historic vs. Forecast Capex...........................................56
Figure 46: Floating Production Systems – Deepwater Capex by Type............................................57
Figure 47: Floating Production Systems – Historic vs. Forecast Capex...........................................57

6. © 2015 Douglas-Westwood 4World Deepwater Market Forecast 2015-2019
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Contents
Tables
Table 1: International E&P Expenditure ($million)......................................................................................11
Table 2: E&P Expenditure (Consolidated) ($ millions).............................................................................11
Table 3: Selected Majors’ Oil Production 2002-2013...............................................................................13
Table 4: Global – Deepwater Capex by Region..........................................................................................41
Table 5: Global – Deepwater Capex by Component...............................................................................42
Table 6: Africa – Deepwater Capex by Component................................................................................43
Table 7: Asia – Deepwater Capex by Component....................................................................................44
Table 8: Australasia – Deepwater Capex by Component......................................................................45
Table 9: Eastern Europe & FSU – Deepwater Capex by Component.............................................46
Table 10: Latin America – Deepwater Capex by Component............................................................47
Table 11: Middle East – Deepwater Capex by Component.................................................................48
Table 12: North America – Deepwater Capex by Component.........................................................49
Table 13: Western Europe – Deepwater Capex by Component ......................................................50
Table 14: Drilling and Completion: Subsea Wells – Deepwater Capex by Region...................51
Table 15: Drilling and Completion: Subsea Wells – Units by Component Type.........................51
Table 16: Drilling and Completion: Surface Wells – Deepwater Capex by Region..................52
Table 17: Drilling and Completion: Surface Wells – Units by Component Type........................52
Table 18: Subsea Production Hardware – Deepwater Capex by Region......................................53
Table 19: Subsea Production Hardware – Units by Component Type............................................53
Table 20: SURF – Deepwater Capex by Region..........................................................................................54
Table 21: SURF – km by Component Type....................................................................................................54
Table 22: Trunklines – Deepwater Capex by Region................................................................................55
Table 23: Trunklines – km by Region..................................................................................................................55
Table 24: Floating Production Systems – Deepwater Capex by Region.........................................56
Table 25: Floating Production Systems – Units by Region......................................................................56
Table 26: Floating Production Systems – Deepwater Capex by Type..............................................57
Table 27: Floating Production Systems – Units by Type ..........................................................................57

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DW report number 559-15
ISBN 978-1-910045-13-8
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Katherine Dunn
kd@douglaswestwood.com

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