© Subsea 7 - 2020 1 Subsea 7 Renewables Renewables Investor Event 29 September 2020
© Subsea 7 - 20201 Subsea 7 Renewables
Renewables Investor Event
29 September 2020
© Subsea 7 - 20202 Subsea 7 Renewables
Forward looking statements
This announcement may contain ‘forward-looking statements’ (within the meaning of the safe harbour provisions of the U.S. PrivateSecurities Litigation Reform Act of 1995). These statements relate to our current expectations, beliefs, intentions, assumptions orstrategies regarding the future and are subject to known and unknown risks that could cause actual results, performance or events todiffer materially from those expressed or implied in these statements. Forward-looking statements may be identified by the use of wordssuch as ‘anticipate’, ‘believe’, ‘estimate’, ‘expect’, ‘future’, ‘goal’, ‘intend’, ‘likely’ ‘may’, ‘plan’, ‘project’, ‘seek’, ‘should’, ‘strategy’ ‘will’,and similar expressions. The principal risks which could affect future operations of the Group are described in the ‘Risk Management’section of the Group’s Annual Report and Consolidated Financial Statements for the year ended 31 December 2019. Factors that maycause actual and future results and trends to differ materially from our forward-looking statements include (but are not limited to): (i) ourability to deliver fixed price projects in accordance with client expectations and within the parameters of our bids, and to avoid costoverruns; (ii) our ability to collect receivables, negotiate variation orders and collect the related revenue; (iii) our ability to recover costson significant projects; (iv) capital expenditure by oil and gas companies, which is affected by fluctuations in the price of, and demand for,crude oil and natural gas; (v) unanticipated delays or cancellation of projects included in our backlog; (vi) competition and pricefluctuations in the markets and businesses in which we operate; (vii) the loss of, or deterioration in our relationship with, any significantclients; (viii) the outcome of legal proceedings or governmental inquiries; (ix) uncertainties inherent in operating internationally, includingeconomic, political and social instability, boycotts or embargoes, labour unrest, changes in foreign governmental regulations, corruptionand currency fluctuations; (x) the effects of a pandemic or epidemic or a natural disaster; (xi) liability to third parties for the failure of ourjoint venture partners to fulfil their obligations; (xii) changes in, or our failure to comply with, applicable laws and regulations (includingregulatory measures addressing climate change); (xiii) operating hazards, including spills, environmental damage, personal or propertydamage and business interruptions caused by adverse weather; (xiv) equipment or mechanical failures, which could increase costs, impairrevenue and result in penalties for failure to meet project completion requirements; (xv) the timely delivery of vessels on order and thetimely completion of ship conversion programmes; (xvi) our ability to keep pace with technological changes and the impact of potentialinformation technology, cyber security or data security breaches; and (xvii) the effectiveness of our disclosure controls and proceduresand internal control over financial reporting;. Many of these factors are beyond our ability to control or predict. Given these uncertainties,you should not place undue reliance on the forward-looking statements. Each forward-looking statement speaks only as of the date of thisannouncement. We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of newinformation, future events or otherwise.
© Subsea 7 - 20203 Subsea 7 Renewables
Agenda
1. Introduction
2. Offshore wind industry
3. Seaway 7
4. Case studies
5. Q&A
6. Floating wind
7. Financials
8. Closing
9. Q&A
© Subsea 7 - 20204 Subsea 7 Renewables
John EvansCEO, Subsea 7
© Subsea 7 - 20205 Subsea 7 Renewables
Subsea 7 – our values
In an evolving energy sector, we create sustainable value by being the industry’s partner and employer of choice in delivering the efficient offshore solutions the world needs.
We seek to create sustainable value for our clients, our people, our shareholders and society in everything we do.
To lead the way in the delivery of offshore projects and services for the energy industry.
Our Vision
Our Strategy
Our Stakeholders
Values
Our ValuesWhat makes us who we are
Safety
Integrity
Sustainability
Performance
Collaboration
Innovation
© Subsea 7 - 20206 Subsea 7 Renewables
Subsea 7 – our sustainability focus
© Subsea 7 - 20207 Subsea 7 Renewables
Subsea 7 – our business units
Group backlog Q2 2020: $7.0bn
© Subsea 7 - 20208 Subsea 7 Renewables
Strategic focus areas
• Early engagement and partnerships
• Systems innovation and enabling Products
• Integrated SPS and SURF
• Digital delivery of projects andservices
Strategic focus areas
Energy Transition:
Proactive Participation
• Oil and gas – lower carbon developments
• Operations – sustainable and efficient
• Emerging energy – new markets and opportunities
• Renewables – offshore wind
Subsea Field of the Future:
Systems and Delivery
© Subsea 7 - 20209 Subsea 7 Renewables
Energy transition: oil and gas – lower carbon developments
• Leveraging early engagement and engineering capabilities
• Digital solutions across the asset lifecycle
– efficiency and lower carbon at every stage
• Deploying Carbon Estimator across early engagement and tender activities
• Subsea technologies to support Oil & Gas developments lower carbon intensity
• Building our capabilities and track record for offshore electrification
© Subsea 7 - 202010 Subsea 7 Renewables
Energy transition: operations – sustainable and efficient
• Strengthen our focus on clean operations
• Improving energy efficiency and carbon footprint of our solutions and delivery
• Leveraging digital capabilities towards more efficient vessel activities
• Developing our long term strategy towards a sustainable fleet
© Subsea 7 - 202011 Subsea 7 Renewables
Energy transition: emerging energy – new markets and opportunities
• Participating in early stage projects through Xodus
• Understanding and seizing opportunities in carbon capture and hydrogen
• Evaluating emerging markets and partnership opportunities
Source: Equinor
© Subsea 7 - 202012 Subsea 7 Renewables
Energy transition: renewables – offshore wind
• Top tier service provider in fixed offshore
wind
• Top tier service provider in floating
offshore wind by 2030
• Supporting the growth of our specialist
capabilities in Xodus and 4Subsea
• Building our investment in renewables
technology
© Subsea 7 - 202013 Subsea 7 Renewables
Agenda
1. Introduction
2. Offshore wind industry
3. Seaway 7
4. Case studies
5. Q&A
6. Floating wind
7. Financials
8. Closing
9. Q&A
© Subsea 7 - 202014 Subsea 7 Renewables
Steph McNeillCEO Seaway 7
© Subsea 7 - 202015 Subsea 7 Renewables
2020
2030
1
2
3
4
5
6
7TW
Renewable Sources
41%
2
4
6
8
10
12
2020
2030
TW
All Energy Sources
Offshore fixed wind fast growing new energy source
2020
2030
0
50
100
150
200
GW
Offshore Renewables
Source: BNEF 1H 2020
40%
5%
55% 40%
4%
56%
45% 26%
27%
22%
3%
1%
27%
96%
99%Fossil Fuels
Hydro
0%
3%
Wave & Tidal 1%
5%3%
© Subsea 7 - 202016 Subsea 7 Renewables
4
1
5 4
8
4
9 9
7
10
1718 19 19
25
26
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
America
China
Asia (excluding China)
Europe
Annual installation OWFs (Giga Watts)
Global expansion forecast for offshore wind energy (GW)
CAGR 20%
Source: BNEF 1H 2020
© Subsea 7 - 202017 Subsea 7 Renewables
Offshore wind – cost is continuing to reduce
0
50
100
150
200
250
300
2005 2010 2015 2020 2025 2030
Levelis
ed
cost of ele
ctr
icity $
/MW
h
Commercial operation date
China
Taiwan
Japan
Vietnam
U.K.
Germany
Netherlands
France
Denmark
Belgium
Finland
Italy
U.S.
Source: BNEF 1H 2020 for Development LCOEsMarket, Fixed and Floating indicative trend lines: Seaway 7
Subsidy free
Subsidised
© Subsea 7 - 202018 Subsea 7 Renewables
13
3
13 12
21
11
22 22
17
25
42 44 44 44
56 59
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Investment in offshore wind forecast to increase significantly ($bn)
CAPEX/MW
2015: 3.0m USD/MW 2030: 2.3m USD/MW
CAPEX China
CAPEX Rest of the world
Annual CAPEX for offshore wind farms ($ billion)
Average Annual Investment482012
Source: BNEF 1H 2020, Seaway 7
CAGR 18%
© Subsea 7 - 202019 Subsea 7 Renewables
Offshore wind – typical timeline for a development
Years
0 1 2 3 4 5 6 7 8 9
Securing SiteProject Define
Grid Connection & Consent Application
Surveys
Bid for Subsidy
FID Process
Supply Chain Engagement
10
Project Construction
FEED & Detailed Design
Develop Legislation & Site Leasing Process
-4
National Plan
-5
Develop Subsidy Process
11+
IRM & Warranty
© Subsea 7 - 202020 Subsea 7 Renewables
Major components of an offshore fixed windfarm
Export Cable Substation
Topsides
SubstationFoundations
ArrayCables
Wind Turbine Generators
WTGFoundations
FoundationPiles
TransitionPieces
© Subsea 7 - 202021 Subsea 7 Renewables
Contractor perspective – turbines, foundations and array cables
• Wind turbine generators
– Standardised products, common designs
– Mostly sub contractor to WTG manufacturer
– Lower engineering, supply chain and project management content
– Lower project complexity
• Foundations and array cables
– High level of customisation
– Main contractor
– Typically lump sum contracts
– Unique design, fabrication, logistics and installation for each location
– Highly bespoke engineering, supply chain and project management content
– Higher project complexityJacketMonopile
Wind Turbine
Generators
TransitionPieces
WTGFoundations
FoundationPiles
© Subsea 7 - 202022 Subsea 7 Renewables
Typical developer contract models
WTGEPCI
Design
Procure
Long Haul Transport
Storage
In Field Transport
Install
Trench
Commission
Offshore TransmissionEPCI
Design
SubstationTopsides Fabrication
SubstationFoundation Fabrication
SubstationTopsidesT&I
SubstationFoundation T&I
WTG Supply
Long Haul Transport
Marshalling
In Field T&I
Commission
Export Cable Supply
Export Cable T&I
Grid Connection
Array Cables EPIC
Balance of Plant (BOP)EPCI
Segmented Contracts
EPIC/EPCI Contracts
Key:
Offshore Transmission Foundations Wind Turbine Generator
(WTG)
Array Cables
BOP EPCIContractIn
tegra
ted
Pro
ject Integrated
Project
Fabrication
Design
Long Haul Transport
Marshalling
In Field Transport
Install
Scour
Foundations EPCI
© Subsea 7 - 202023 Subsea 7 Renewables
Fixed offshore wind farm – typical capex split
1%
11%
34%
45%
3%
6%
Design
Cables Supply and Install
Foundation Fabrication,
Transport & Install
WTG Supply
Installation of WTG
Substation Fabrication
© Subsea 7 - 202024 Subsea 7 Renewables
8.27
2.19
4.05
8.74
9.06
11.11
10.45
16.51
0 2 4 6 8 10 12 14 16 18 20GW
Fully Commissionned
Under Construction
FID
Potential Planned Developments
The largest European based offshore wind developers
Source: 4COffshore 17th September 20
Installed and planned capacity (GW)
© Subsea 7 - 202025 Subsea 7 Renewables
Agenda
1. Introduction
2. Offshore wind industry
3. Seaway 7
4. Case studies
5. Q&A
6. Floating wind
7. Financials
8. Closing
9. Q&A
© Subsea 7 - 202026 Subsea 7 Renewables
Harke Jan MeekCCO Seaway 7
© Subsea 7 - 202027 Subsea 7 Renewables
Long track record in renewables
2009 First WTG foundation installed
2016 Award
$1bn+ Beatrice EPCI project
2019 First monopile
installation on DP
2020 Award$1bn+ Seagreen
EPCI project
2013 First inner array cable
installed
2017 First
floating wind cables installed
2019 First
project executed in Taiwan
2020 First project executed
in the US
2020 Awardfirst integrated T&I projects
2009 First substation installed
Over 10 years experience in offshore wind
© Subsea 7 - 202028 Subsea 7 Renewables
Global reach for a globalising market
Offices
• Zoetermeer, Netherlands
• Paris, France
• Aberdeen, Scotland
• Leer, Germany
• Taipei, Taiwan
• Providence, US
Fleet
• HLV Seaway Strashnov
• HLV Seaway Yudin
• CLV Seaway Aimery
• ISV Seaway Moxie
Support Bases
• Rotterdam, Netherlands
• Eemshaven, Netherlands
Personnel• ~500 onshore, ~550 offshore
© Subsea 7 - 202029 Subsea 7 Renewables© Subsea 7 - 202029 Subsea 7 Renewables
© Subsea 7 - 202030 Subsea 7 Renewables
Organisation structure
Renewables SURF and Conventional Life of Field
Integrated SolutionsHeavy Lifting Offshore Cables
Integrated ProjectsSubmarine Cable Systems Foundations and Substations
EPCI
EPCI Projects
An experienced partner for the delivery of fixed and floating offshore wind farm projects through various contracting models
© Subsea 7 - 202031 Subsea 7 Renewables
Capability aligned with market needs
BOP EPCI
Integrated T&I
Jackets Monopiles
Project Management
& EngineeringSeaway 7 Seaway 7 Seaway 7 Seaway 7
Procurement Seaway 7 Seaway 7 Seaway 7 Seaway 7
Construction /
ManufacturingSeaway 7 Seaway 7
Transport /
Installation Seaway 7 Seaway 7 Seaway 7 Seaway 7 Seaway 7
Commissioning Seaway 7 Seaway 7 Seaway 7 Seaway 7
WTGExport
Cables
Offshore
Substation
Inner
Array
Cables
WTG
Foundations
WTG
Foundations
© Subsea 7 - 202032 Subsea 7 Renewables
Wide breadth of capability and experience
Project and Risk Management and Engineering Capabilities
– Foundation design and fabrication
– Cable design and supply
– Transportation, marshalling and logistics
– Interface management
– Scour protection and trenching
– Access to wider Subsea 7 asset and skill pool
• Global footprint
• Established systems and processes
• Large pool of specialised resources
• Asset pool
Transportation and Installation Expertise
Specialist heavy lifting and submarine cable installation expertise
Full Range of Commercial Services
– Studies
– Transport and Installation (T&I)
– Integrated Foundation and Cables T&I
– EPCI Foundations
– EPIC Cables
– BOP EPCI
– Project management services
Specialist Front-End Services
– Feasibility and concept studies, environmental consulting, digital solutions, project architecture
© Subsea 7 - 202033 Subsea 7 Renewables
Competitive environment
Specialist installation services for foundations
and/or cables
Providers of complete balance of plant (BOP)
scope
Foundation services
(T&I or EPCI)
• Many active companies
• Established players and new entrants
• Companies with different experience and backgrounds
– Dredging
– Marine contracting
• Companies are offering different scope services and contracting models
– Foundation-only, cables-only, combination
– T&I, EPCI
© Subsea 7 - 202034 Subsea 7 RenewablesMarket maturity
Australia
India Vietnam
JapanSouthKorea
Taiwan
Poland Netherlands
Ireland
Well positioned and track record in key markets
France
Market size
Source : BNEF H2 2020
US
20-35 GW
Americas
10 – 20 GW
1-2 GW
Europe
Asia Pacific
> 35 GW
UK
Germany
© Subsea 7 - 202035 Subsea 7 Renewables
USA• EPIC - Cables:
Coastal Virginia
EUROPE
• T&I - Foundations: Greater Gabbard, Sheringham Shoal, Riffgat, Gwynt y Mor, Baltic 2, Dudgeon, Triton Knoll
• T&I Cables:Baltic 2, Humber Gateway, Amrumbank West, Nordsee One, Veja Mate, Hornsea One
• BOP EPCI: Beatrice, Trianel Windpark Borkum II
TAIWAN• T&I - Foundations:
Formosa 1
Track record since first offshore wind project executed in 2009
© Subsea 7 - 202036 Subsea 7 Renewables
Projects in execution
EUROPE
• T&I - Cables
Hornsea Two
• Integrated - Foundations & Cables
Hollandse Kust Zuid
Kaskasi
• BOP EPCI Seagreen
• FloatingHywind Tampen
TAIWAN
• T&I - Foundations
Formosa 2
• T&I - CablesChangfang Xidao, unnamed project
• EPIC - CablesYunlin
© Subsea 7 - 202037 Subsea 7 Renewables
Prospect pipeline
USA• CIP Vineyard• Ørsted US Projects• Shell and EDF-RE Atlantic Shores• Shell and EDPR Mayflower• Equinor Empire
Europe• RWE Sofia• Iberdrola East Anglia Hub• Red Rock Inch Cape• EDPR Moray West• UK Extension projects
Taiwan• WPD Guanyin• Ørsted Greater Changhua 2• RWE Chu Feng
• High levels of tendering in the three main regions
• Continued high competition for foundation installation projects
• Prospects emerging in floating wind
© Subsea 7 - 202038 Subsea 7 Renewables
Agenda
1. Introduction
2. Offshore wind industry
3. Seaway 7
4. Case studies
5. Q&A
6. Floating wind
7. Financials
8. Closing
9. Q&A
© Subsea 7 - 202039 Subsea 7 Renewables
Lloyd DuthieSeaway 7 EPCIs
Beatrice
© Subsea 7 - 202040 Subsea 7 Renewables
Beatrice Offshore Wind Farm – balance of plant EPCI
• Project
– 588MW development, located 13km off the NE coast of Scotland in 40 to 60 metres of water
– FID: May 2016
– Completed: August 2018
• Scope
– EPCI for balance of plant
– 84 turbines of 7MW each for a total of 588MW
• 120,000+ tonnes of steel
– 91 inner array cables
• 165km
• Contract value: $1.3 billionBeatrice Offshore Windfarm Ltd: A joint venture partnership,
SSE 40%, CIP 35%, Red Rock Power Ltd 15%
© Subsea 7 - 202041 Subsea 7 Renewables
Beatrice Offshore Wind Farm
• Engineering
– Complex geology
– Variable water depth
– Multiple foundation designs
– Integrated inner array cable system
– Schedule
Marshalling Beatrice foundations
© Subsea 7 - 202042 Subsea 7 Renewables
Beatrice Offshore Wind Farm
• Procurement
– Complex supply chain
– 11 countries
– Over 50 suppliers
– Focus on quality
– Risk management
Beatrice supply chain
© Subsea 7 - 202043 Subsea 7 Renewables
Beatrice Offshore Wind Farm
• Installation
– Safety performance
– Reliability
– Marine logistics
• Over 20 vessels
– Integrated schedule for foundations and inner array cables installation
• First power generation achieved ahead of schedule
Beatrice foundation installation by Seaway Strashnov
© Subsea 7 - 202044 Subsea 7 Renewables
Beatrice Offshore Wind Farm
$1.3 billion
contract value
Complex supply chain
Within budget
Piling started
within 12 months
Complex Soils
Compressed design
schedule
Completed ahead of schedule
Seaway Aimery at the Beatrice Offshore Wind Farm
© Subsea 7 - 202045 Subsea 7 Renewables
Lloyd DuthieSeaway 7 EPCIs
Seagreen Project
© Subsea 7 - 202046 Subsea 7 Renewables
Seagreen Offshore Wind Farm – balance of plant EPCI
• Project
– 1,075 MW development, located 27km off the east coast of Scotland in 40 to 60m of water
– FID: June 2020
– Offshore installation: 2021-22
• Scope
– EPCI for balance of plant
– ~114 turbines of 10MW each for a total of 1.1GW
• 240,000+ tonnes of steel
– 116 inner array cables
• 330km
• Contract value: ~$1.4 billion
Seagreen Wind Energy Ltd: A joint venture partnership, SSE 49%, Total 51%
© Subsea 7 - 202047 Subsea 7 Renewables
Seagreen Offshore Wind Farm
• Engineering
– Large, complex wind farm
– Competitive UK subsidy auction
– Suction caisson foundation
– Global logistics
Seagreen foundations will be transported to the marshalling site
© Subsea 7 - 202048 Subsea 7 Renewables
Philippe GleizeSeaway 7 Integrated Projects
Hollandse Kust 1 & 2
Hollandse Kust 3 & 4
© Subsea 7 - 202049 Subsea 7 Renewables
Hollandse Kust Zuid – innovative integrated solution
• First integrated foundation and cable installation project
– Confirming the value and strength of Seaway 7’s offering
• Scope
– Combined HKZ 1&2 and 3&4 projects, 1,540MW development, 20km off the Dutch coast
– The first subsidy free offshore wind farm developed in the Netherlands
– 140 TP-less monopile foundations (T&I)
– 325km inner array cables
Installation of foundations and cables
© Subsea 7 - 202050 Subsea 7 Renewables
Hollandse Kust Zuid – collaboration leading to success
• Collaboration with Vattenfall led to first integrated foundation and inner array cable contract
• Two years of partnership achieved an optimised execution plan
• Lower cost solution was devised for a subsidy-free development
• Established relationship with Vattenfall on HKZ 1&2 led to award of HKZ 3&4
Collaboration
“Working collaboratively with our partners in the supply chain has enabled us to hand in a state-of-the-art proposal for this project. We can bundle now the projects Hollandse Kust Zuid 1&2 and 3&4 which is a great advantage leading to further optimisation and synergies.”
Gunnar Groebler SVP Business Area Wind, Vattenfall
© Subsea 7 - 202051 Subsea 7 Renewables
Hollandse Kust Zuid – innovative operations reducing cost
• Strong focus on technology and innovation
– Floating monopiles towed to site
– Monopile installation while vessel in dynamic positioning mode
Innovation
Floating monopiles towed to site
© Subsea 7 - 202052 Subsea 7 Renewables
Integrated projects – conclusion
• Following on Hollandse Kust Zuid 1-2 and 3-4 projects, Seaway7 secured, on a similar approach, our 3rd integrated project :
• Kaskasi for RWE in Germany
– Use of industry’s largest vibratory hammer to minimize noise levels during installation of the monopiles
– Monopile installation using Dynamic Positioning (DP)
– Integrated T&I contract model
Success
Innovation
© Subsea 7 - 202053 Subsea 7 Renewables
Lars MuckSeaway 7 Offshore Cables
Hornsea One
Hornsea Two
© Subsea 7 - 202054 Subsea 7 Renewables
Hornsea Offshore Wind Farm – large, cable lay project
• Project
– 6GW development in four phases, located off the coast of England in 40 to 60 metres of water
• Hornsea One
– Seaway 7 awarded half of the cables for the first phase, Hornsea One
– Scope 89 inner array grid cables (T&I)
• 170km
– FID: 2016
– Completed: 2020
• Contract value: >$50 millionHornsea One, Two and Three
© Subsea 7 - 202055 Subsea 7 Renewables
Hornsea One
• Seaway 7 scope
– Pre-lay inspection surveys
– Pre-lay grapnel runs
– Messenger wire installation
– Cable pull-ins
– Post-lay trenching
– Boulder relocation and/or clearance
– Remedial rock placement
• Completed successfully inclusive of additional work programmes
Offshore activities on Hornsea One
© Subsea 7 - 202056 Subsea 7 Renewables
Hornsea Two
• Project
– Seaway 7 awarded the installation of the entire inner array grid cable system of the second phase
– Hornsea Two FID: 2019
– Scheduled: 2021-22
• Scope
– 165 inner array grid cables (T&I)
• 422 km
• Contract value: ~$100 million
Seven Falcon (Hornsea Two) and Seaway Moxie (Hornsea One)
© Subsea 7 - 202057 Subsea 7 Renewables
Coastal Virginia Offshore Wind – US cable lay
• Demonstrator Project
– Supply and installation of export and inner array cable for 2x demonstrator wind turbine generators off the coast of Virginia, USA.
– First Seaway 7 Renewables project in USA
– Scheduled completion: 2020
• Scope
– One inner array grid cables and one export cable of 43 km (EPIC)
• Contract value: ~$25 millionSeaway Aimery offshore Virginia Beach
© Subsea 7 - 202058 Subsea 7 Renewables
Steph McNeillCEO Seaway 7
© Subsea 7 - 202059 Subsea 7 Renewables
Case studies – key takeaways
• Established in all the current offshore renewables market regions
• Early engagement supporting developers to reduce costs and win subsidies
• Delivering projects for the major renewables developers and winning repeat business
• Differentiating through EPCI and integrated offerings
– Large, complex project management
– Experienced interface and risk management
– Extensive supply chain management
• Executed from our global network of local offices
• Supporting developers as projects become larger and more global
• Reliable, on time, delivery
© Subsea 7 - 202060 Subsea 7 Renewables
Q&A
© Subsea 7 - 202061 Subsea 7 Renewables
Renewables Investor Event
----SHORT BREAK----
© Subsea 7 - 202062 Subsea 7 Renewables
© Subsea 7 - 202063 Subsea 7 Renewables
Agenda
1. Introduction
2. Offshore wind industry
3. Seaway 7
4. Case studies
5. Q&A
6. Floating wind
7. Financials
8. Closing
9. Q&A
© Subsea 7 - 202064 Subsea 7 Renewables
Philippe GleizeSeaway 7 Floating Wind
© Subsea 7 - 202065 Subsea 7 Renewables
Floating wind
• Promising market
• Start of commercial phase in 2025-30
• Variety of floating solutions
• Full scale tested solutions
• Subsidy regimes
IDEOL floating wind turbine
© Subsea 7 - 202066 Subsea 7 Renewables
Two types of developments: “off-grid” and “on-grid” solutions
• Off-grid solutions
– Floating wind turbines to power oil and gas platforms
– Small scale development, limited number of units
– Typical client: upstream operator
– Currently under development
• On-grid solutions
– Floating wind turbine farms connected to the onshore electricity network
– Large scale, large number of units
– Expected development from 2025 onwards
OffshoreOffshore Onshore
© Subsea 7 - 202067 Subsea 7 Renewables
Forecast growth in emerging offshore floating wind market
"Pilot" scaleAverage project size ~ 70 MW
"Commercial" scaleAverage project size > 500 MW"Pre-commercial" scale
Average project size 100-200 MW
Floating wind cumulative installed capacity(by year of commissioning)
4 GW
12 GW
Sources: BNEF June 2020, 4Coffshore, internal analysis
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
© Subsea 7 - 202068 Subsea 7 Renewables
Active participation and growing track record
• Equinor Hywind, Scotland
– Demonstrator project completed in 2017 with five floating wind turbines on steel spar structures
• Equinor Hywind Tampen, Norway
– Ongoing development designed to provide off-grid power to a number of offshore facilities.
– 11 floating wind 8MW turbines on concrete spar structures
• Minor equity stake in Ideol
– Insight into development of floating concepts and technology Hywind dynamic cables
© Subsea 7 - 202069 Subsea 7 Renewables
Typical scope of work in floating turbine projects
• Design and engineering
• Fabrication of floating structure
• Procurement of mooring lines and cables
• Installation of the turbine on the floating structure
• Towing to site
• Installation of mooring lines and connection to floating structure
• Installation of dynamic cables
Floating turbine designs
© Subsea 7 - 202070 Subsea 7 Renewables
Established capabilities to be a key player in an emerging market
• Highly transferable expertise in delivering large complex offshore projects involving floating structures, mooring systems and dynamic cables
• Combined with existing track record in delivering offshore fixed wind
Tow of Aasta Hansteen SPAR
25+ years’ experience in
engineering and fabrication of
complex moored floating systems
Long history of towing
large floating facilities to deep water locations
worldwide
Execution of more than 60 moored
installation projects
worldwide
Extensive track record
of the supply and installation of
dynamic cables
© Subsea 7 - 202071 Subsea 7 Renewables
Agenda
1. Introduction
2. Offshore wind industry
3. Seaway 7
4. Case studies
5. Q&A
6. Floating wind
7. Financials
8. Closing
9. Q&A
© Subsea 7 - 202072 Subsea 7 Renewables
Ricardo RosaCFO
© Subsea 7 - 202073 Subsea 7 Renewables
Contracts and accounting treatment
• Most contracts are lump sum
– Treated as a single performance obligation
– Revenue recognised over time on a percentage
completion (POC) basis
– Margin recognition from 5% POC onwards
– Constant project margin recognised throughout
• T&I contracts
– Contract values range from $50-150 million for up
to 2 years’ work
– Revenue mainly recognised in the offshore phase
• EPCI contracts
– Contract values can range from $150 million to over
$1 billion for up to 3 years’ work
– Procurement can range from 60-80% of total costs
Timeline for a typical BOP EPCI contract
Procurement costs can vary by +/- 10% of total costdepending on foundation type, cable size, water depth,distance from shore
© Subsea 7 - 202074 Subsea 7 Renewables
959
663
217127
134
591
(13)
90
4 (56) (38)
13.9%
8.9%
0.5%
-10.0%-15%
-10%
-5%
0%
5%
10%
15%
20%
-200
0
200
400
600
800
1000
1200
2017 2018 2019 1H 2020
Revenue EBITDA NOI EBITDA Margin
Historical performance of Renewables and Heavy Lifting
• Performance in recent past was adversely impacted by:
– Significant decline in heavy lifting activity in oil and gas
– Limited number of Renewables EPCI projects
– Rapid increase in competition in renewables
– Globalisation of the business into Asia and North America
$m
© Subsea 7 - 202075 Subsea 7 Renewables
Streamlining Renewables
• Organisational changes:
– Creation of dedicated EPCI team
– New team dedicated to floating wind
• Targeting specific clients and projects aligned to our capabilities
– Pursuit of differentiated, integrated offering with offshore cables business
• Greater leverage of Subsea 7’s resources and expertise to improve operational performance
• Organisational streamlining completed in 2019:
– Annual cost savings of ~$20 million
• Significant increase in backlog in 2020
Renewables backlogQ2 2020: $2.2bn
Seagreen
HKZ
Formosa 2
Changfang & Xidao
Hornsea Two
KaskasiOthers
© Subsea 7 - 202076 Subsea 7 Renewables
275
199
17 177 7
0
50
100
150
200
250
300
2017 2018 2019 1H 2020
M&A Capex
SOCSHL
Significant investment in renewables since 2017
• Since 2017, Subsea 7 has invested ~$0.5bn to strengthen presence in renewables, acquiring:
– Remaining 50% of Seaway Heavy Lifting
– 100% of Seaway Offshore Cables
• Current objective is to achieve sustainable returns from the existing resource base
• Open to opportunities for growth through acquisition in a disciplined manner
$m
© Subsea 7 - 202077 Subsea 7 Renewables
Future Capital Expenditures
• Lower capital intensity anticipated going forward:
– High level of investment by traditional shipowners reducing capacity constraints
– General acceptance of subcontractor model by developers
– Lower differentiation between renewables vessels than those utilised in oil and gas
– Some scope to utilise spare capacity in SURF fleet through "double-hatting" or conversion
• Disciplined investment in new vessels will be driven by market growth and size of structures
• Sustaining capex approximately $10 million per year excluding upgrades
Seven Borealis installing transition pieces on Borkum
© Subsea 7 - 202078 Subsea 7 Renewables
Seven Phoenix conversion to renewables cable lay
• Approximately $25 million to convert Seven Phoenix to cable lay:
– Hull suited to cable lay
– Fitting a new cable lay system
– Modernising remaining equipment
– Relatively low cost and fast conversion
– 15-year design life
• Due to join the active fleet in Q2 2021
• Fully booked in H2 2021 and 2022
• Matching the capability of cable lay vessel Seaway Aimery
• Supported by a strong pipeline of cable lay projects
Seven Phoenix conversion planning
© Subsea 7 - 202079 Subsea 7 Renewables
Financial framework for the near to medium term
• More frequent EPCI and integrated awards as the market matures
• Early engagement and innovation
• Continued presence in T&I and cable lay
• Growth in emerging renewables markets
• Growth in floating wind
• Expansion of service offering
>10% EBITDALong term,
sustainable margin
9-14% ROAIC(1)
Expected return
• Improving EBITDA margins targeting a sustainable 10% level
• Collaborative relationships with emerging developers
• Higher proportion of value-added services
• Continued operational innovation
• Greater use of technology
• Capital discipline in reinvesting in the fleet
• Use of subcontractors to reduce capital intensity
• Tight working capital management, targeting neutral or negative positions
• Consistent free cash flow
(1) Return on average invested capital
~$1 billionAverage revenues per year
© Subsea 7 - 202080 Subsea 7 Renewables
Agenda
1. Introduction
2. Offshore wind industry
3. Seaway 7
4. Case studies
5. Q&A
6. Floating wind
7. Financials
8. Closing
9. Q&A
© Subsea 7 - 202081 Subsea 7 Renewables
Proactive participation in Energy Transition
• Delivering successful renewables projects since 2009
• Capturing opportunities in the high growth offshore fixed and floating wind markets
• Differentiating through a reliable EPCI offering
• Leveraging our global reach and risk management to execute complex projects
• Generating free cash flow to underpin returns to Subsea 7 shareholders
• Creating sustainable value for all our stakeholders
© Subsea 7 - 202082 subsea7.com
Q&A
© Subsea 7 - 202083 Subsea 7 Renewables