A Chinese Financial Leasing Company View of the … sea in China Alternative energy recourses New technology Content • Market situation • Oil price is still unstable • Oil industry

A Chinese F inancia l Leasing Company View of the Of fshore Market Today M i n s h e n g F i n a n c i a l L e a s i n g C o . , L t d

March, 2017

Index

Chinese Leasing Companies

General view of offshore market

Opportunities and threats

Where is the future

2

Chinese Leasing Companies in sh ipping

In 2016, total investment around11.5 billion USD

Leading by ICBC Leasing, Minsheng Financial Leasing, Bank of

Communications Leasing etc.

Transactions with top names in shipping industry

Financial lease & Operating lease

Resource: Financial Times 2017/03/13

3

4

General v iew of o f fshore market

Exploration and Development investment

0

200

400

600

800

2009 2010 2011 2012 2013 2014 2015 2016

E&D Investment (B. USD)

5

General v iew of o f fshore market

Crude Oil Price

Resource: Clarksons

6

General v iew of o f fshore market Drilling Sector

45 34 30

80

163

223

11 11 4 20

40 43

0

50

100

150

200

250

2011 2012 2013 2014 2015 2016

StackingScarp

7

General v iew of o f fshore market PSV & AHTS Sector

231 293 358 441

1443

1798

19 32 30 34 28 37 0

200400600800

100012001400160018002000

2011 2012 2013 2014 2015 2016

StackingScarp

8

Opportuni t ies and threats

Offshore companies are struggling…

Hercules Offshore

Havila Shipping

Seadrill

Viking Supply Ships

Otto Marine

Ezra Holding Company

9

Opportuni t ies and threats

Who can enter into offshore market now?

Assets player

Private Equity

Hedge Funds

Why?

Capital-intensive

Low asset price in this stage

Cycling

10

Opportuni t ies and threats

Other Factors

Shale oil production

OPEC agreement

Trump’s new policy

Deep sea in China

Alternative energy recourses

New technology

Content • Market situation

• Oil price is still unstable • Oil industry is heavily hurt and yet to recover • Oil service industry is heavily hurt • Offshore industry is restructuring • Exploration and drilling sectors are still bad • Production sector begin to see new activity • The whole value chain is restructuring • Debt holders lose money due to the default • New equity is required • Assets is under valued under replaced cost measure, while everything is over priced under cash flow discounted model • The way to measure the industry does not work, ie, pe, pb, ebitea multiple • 10% 90% NB model will never be there anymore • The crisis stop the technical development of the industry, eg, canstallation, seatao, d90, • While, those assets will be valuable again if we believe the market will come back • Look at the production area, work with major under new mooring place • Risk is less than before if we can have an agreement on the repayment • • Eg: seadrill, Ezra,

12

Where is the fu ture?

13

Thank You!

Minsheng Financial Leasing., Ltd

Shipping, Offshore & Logistics

March, 2017