Pareto World Wide Offshore AS - Pareto Project Finance

Pareto World Wide
Offshore AS
2nd quarter report 2013
Link: www.paretoprojectfinance.no/avdelinger/forvaltning/offshorefond

Executive Summary
NAV NOK 117/share
(as of 30.06.2013)
The offshore oil services markets have continued to strengthen this year, with some of the lagging
segments really coming to life. On the other hand, rising costs and increased undertainty about the
global economic outlook are putting a damper on the oil industry’s investment appetite. The portfolio is
performing well due to a high contract coverage and ways to realise underlying assets are constantly
being monitored.
Market Development
Offshore oil service activity levels have continued to
rise this year, with the most notable feature being
some of the lagging segments of 2012 finally
catching up. Particularly for offshore support
vessels, the year to date performance has been
particularly strong.
The outlook continues to be promising, with rising
order back-logs among industry players adding
valuable visibility. On the other hand, the oil
industry appears to be reacting to rising
exploration- and production-costs, as well as
heightened uncertainty about economic growth in
emerging markets.
So far, we have seen a few projects being put on
hold, and consensus for global growth in exploration
and production spending has come down. It
appears that we should expect this to be in the
5%-10% range in the near term, rather than double
digit.
During the summer, BassDrill Alpha has completed a
USD 90m bond issue, to refinance existing bank
debt. This exercise will free up significant capital to
be paid out to the shareholders in the company. As
a result, PWWO is in a position to make a large,
extraordinary payment to its shareholders in
September 2013. It is proposed that NOK 16 per
share which will be proposed as a repayment of paid
in capital to an extraordinary general assembly 28 th
of August 2013 and paid out during the following
days.
The way forward
The term of PWWO was extended to July 2015 at
the Annual General Meeting in June 2013. The
Manager and the Board are working to provide
shareholders with stable realisation proceeds in the
coming years, but shareholders should expect the
term of PWWO to be extended further to enable a
realisation of the portfolio at maximum value.
Newbuild activity is also more subdued than what
was the case last year. On the one hand, the
swelling orderbooks for new rigs and modern subsea
vessels will pose a challenge when it comes to
absorbing the new capacity. Secondly, financing
conditions are still difficult, which reduces the
appetite for speculative newbuildings. In turn, this is
positive for the longer term market balance.
Portfolio
PWWO retains a high contract coverage, currently at
91% with an average contract length of 3.9 years.
The bulk of the backlog is against solid and
profitable counterparts.
The portfolio is focused on modern assets and is
well spread across several market segments and
geographic regions. The high contract coverage is
expected to result in an increase in incoming cash
flow, which in turn will take down asset exposure
and pave the way for increasing pay-outs to
shareholders.

Net Asset Value Development (PWWO)
NAV in PWWO was up 11% during H1’13, due to a strengthened USD and an overall increase in value
of the portfolio. Overall, PWWO is likely to continue to benefit from underlying cash flows, while
improving market conditions in oil services indicate an upside in asset values in the coming years.
NAV development
An increase in the value of the portfolio contributed
to a 4% increase in NAV during H1’13, with the
remaining being down to a strengthening of the
USD. As a result, NAV ended up at NOK 117 per
share at the end of Q2’13, adjusted for a NOK 10
per share dividend that was approved in June and
paid in July 2013.
PWWO makes semi-annual NAV calculations.
Accordingly, the next NAV will be published as of
31.12.2013 and will be reported to investors in the
report for the fourth quarter 2013.
NAV is down 26% since inception in 2007. This poor
return reflects the cyclical timing of PWWO’s
inception, which started investing at the peak of the
previous cycle, just as we headed straight into the
2008 financial crisis. This is reflected in the fact that
oil service stocks on the Oslo Stock Exchange are
down 11% in the same period. That being said, the
performance since the bottom has been reasonably
good with NAV rising 56% since the end of 2009.
This reflects the intense work to turn around
troublesome projects with exit and contract
opportunities having improved along with better
markets.
As seen in the graph below, the estimated values of
the charters, charter free values, cash and debt in
the projects constitute NOK 109 per share in PWWO.
Cash, tax positions and cost provisions at the
holding company net a positive NOK 22 per share.
Direct yield
PWWO strives to make cash distributions to
shareholders as we move towards the end of the
company’s life cycle in 2015. As a result, NOK 10
per share was paid out in July 2013. An
extraordinary distribution of NOK 16 is expected in
September 2013 following the refinancing of
BassDrill Alpha. All distributions have been
repayments of paid in capital.
Last 6 mths Last 12 mths Last 24 mths Since inception
PWWO 11,4% 7,6% 21,1% -25,5 %
Oslo Stock Exchange 5,6% 15,2% 11,3% -8,2%
Offshore Index * -2,7% 7,5% 5,0% -11,7%
* Based on OSE101010 Energy Equipment & Service
260
240
220
PWWO - NAV development
NAV per share
NAV per share (dividend adjusted)
200
PWWO - NAV Composition per share (NOK)
Value of
charters
Cash in
SPVs
12
Debt in
SPVs
200
180
160
140
120
150
100
Charter
free
values
70
86
Sellers'
credit
3
Cash in
PWWO
12
Tax
14
Other
costs
4
NAV
PWWO
100
80
60
Sep-07 Apr-08 Nov-08 Jun-09 Jan-10 Aug-10 Mar-11 Oct-11 May-12 Dec-12
50
116 117
0

Net Asset Value Development (POK)
NAV in the feeder company Pareto Offshorekapital ASA («POK») increased by 11,5% during H1’13 and
is up 7,4% in the past 12 months. POK currently has more than 1,600 shareholders and the company
acts as the main marketplace for second hand transactions for small, non-institutional investors.
NAV development
NAV as of 30.06.2013 was NOK 53, up 11,5% on the
previous NAV as of 31.12.2012 and up 7,4% for the
past year, both adjusted for the repayments of capital
made to shareholders (NOK 5 per share in Q2’13).
Direct yield
PWWO strives to make cash distributions to
shareholders as we move towards the end of the
company’s life cycle in 2015. As a result, NOK 5 per
share was approved in June and paid in July 2013. An
extraordinary distribution of NOK 6 per share is
expected in September 2013 following the refinancing
of BassDrill Alpha. All distributions have been
repayments of paid in capital.
Last 6 mths Last 12 mths Last 24 mths Since inception
POK 11,5% 7,4% 17,6% -27,1 %
Oslo Stock Exchange 5,6% 15,2% 11,3% -8,2%
Offshore Index * -2,7% 7,5% 5,0% -11,7%
* Based on OSE101010 Energy Equipment & Service
140
POK - NAV development
NAV per share
NAV per share (dividend adjusted)
120
100
80
60
40
20
Sep-07 Apr-08 Nov-08 Jun-09 Jan-10 Aug-10 Mar-11 Oct-11 May-12 Dec-12

Portfolio News
PWWO is invested in a broad range of offshore projects, which implies a significant diversification
across different asset types and market segments. This section provides an update on the quarter’s
most important news flow related to the underlying investments.
BassDrill Alpha Ltd
The rig continues on a contract which will extend until
well into 2015. The company has recently completed a
USD 90m bond issue to refinance its currently
outstanding USD 46m of bank debt. As a result of the
increased leverage, the shareholders received a
repayment of invested capital of USD 33m. This
enables a significant capital distribution to PWWO’s
shareholders in Sept’13. The bond loan has a 5-year
term and carries interest of 7.5% p.a.
Neptune Subsea IS
Both vessels are employed on shorter term contracts in
West Africa and Italy. The charterer appears to be
struggling with its profitability, but has the backing of
two very strong shareholders and are exposed to a very
promising segment.
Neptune Offshore AS
The company has been demerged so that PWWO is
taken out of its position in the organisation and the
underlying seismic project, while increasing its share in
Neptune Subsea from 9,4% to 23,8%. This has been a
significant part of PWWO’s exit-strategy and take down
the operational and commercial risk of the portfolio.
made available for new contracts and the response
from the market so far has been good. We are
therefore optimistic in seeing the vessel on a new
charter in the near term. The project has a low level of
debt and is financially sound.
3B Offshore IS
PWWO has already received NOK 300,000 in dividends
from this project, which was acquired in Q4’12.
New investments
PWWO does not plan to make new investments, but
may consider value adding follow up investments
should they arise. The focus now is on realising the
portfolio.
Project sales
There have been no straight project sales during H1’13.
Payments from projects
During H1’13, PWWO received dividend payments of
NOK 1.5m from underlying projects. The funds from
BassDrill Alpha have been received in Q3’13.
Master & Commander IS
The Phoenix continues on bareboat charter to CGG until
2019. The Commander’s charter to Reflect Geophysical
was cancelled in the spring as Reflect went into
liquidation. The vessel is now in Singapore and ready
for new contracts or alternatively a sale. The charter
hire from CGG is more than sufficient to cover the debt
obligation.
Asian Offshore III IS
The pool of 15 AHTS continues to operate to
satisfaction. The first quarter of 2013 was very strong
and the outlook for the rest of the year is good, after a
temporary lull in Q2. The pool participants are close to
finalising a working capital bank facility, which will
significantly ease the burden of a significant amount of
receivables outstanding.
Vestland Seismic IS
The end charterer of the vessel in this project, RXT
Geophysical, has gone into liquidation and the charter
has therefore been terminated. The vessel is now being

Portfolio
The portfolio is highly robust, with most assets on long term contracts. There is only one newbuilding
project. Assets on long term contracts make up 91% of the total exposure and are well distributed
across the different offshore oil services segments.
Investments and capital
PWWO’s portfolio consists of 12 projects which owns
stakes in 26 units. The average contract length is 3.9
years and the contract coverage is 91%.
The gross nominal value of the contract backlog is
roughly NOK 610m and sufficient to cover all debt
service costs and projected operating costs. Total debt
in the projects amounts to around NOK 397m. The
backlog is primarily made up by solid counterparts.
PWWO had a cash holding of NOK 53m as of 30.06.13.
There are only minor capital requirements in the
underlying projects. However, the company has made
an allocation for a dispute with Larsen Oil & Gas in
connection with the Songa Eclipse. Overall, there is
adequate capital available to make cash distributions
to shareholders and to consider value adding follow up
investments, should they arise.
Charterparty Distribution based on NAV+commited
Timecharter
39 %
Bareboat
47 %
Spot/Asset Play
14 %
Segment Distribution based on NAV+commited
The life cycle of PWWO expires 1 July 2015, after the
term was extended by one year at the general meeting
in June 2013. The underlying projects are expected to
yield good cash flow until then. Asset and/or portfolio
sales will be considered at the opportune time to
provide shareholders with the best possible exit
values. Current market conditions indicate that exits
should be made as late as possible to maximize
values.
The contracted cash flow is evenly spread across five
main segments; rigs, supply, accommodation, seismic
and subsea.
Seismic
9%
Subsea
28%
Tender Rig
39%
PSV/AHTS (Asia)
9%
Accommodation PSV/AHTS
12% (Europe)
3%
Asset sales from the underlying investments are
planned upon the exit of existing contracts, which will
primarily take place from 2015 and onwards.
Therefore, PWWO does not need to expose itself to the
current market conditions, where asset values are yet
to reach their full potential.
Charter hire backlog by counterpart
Reef Subsea
16%
Swiber
14%
African Offshore
Services
23%
CGG
4% Bourbon
2%
Total / CNR
42%

Portfolio (continued)
Project / company Contract Charterparty Charterer
Proportion
of NAV
Bassdrill Alpha Ltd Dec-15 Timecharter Total / CNR 39,8 %
Neptune Subsea IS Feb-17 Bareboat Reef Subsea 25,9 %
ParBarge IS Jul-23 Bareboat African Offshore Services 8,7 %
Vestland Seismic IS Sep-18 Spot/Asset play Albatross Shipping Ltd. 6,4 %
Bukhit Timah Offshore DIS Jul-20 Bareboat Swiber Offshore Marine Pte 4,5 %
Asian Offshore III IS Spot/Asset play 5,1 %
Offshore Accommodation IS Dec-21 Bareboat African Offshore Services 3,1 %
Master and Commander IS Mar-19 Bareboat CGG 2,5 %
Iceman IS Spot/Asset play 1,4 %
3B Offshore IS Nov-17 Bareboat Bourbon 1,2 %
Carlisle Subsea IS Oct-15 Bareboat Hallin Marine Subsea International Ltd 1,4 %
1000
800
600
PWWO - Cash flow composition vs debt service, NOKm
Capex (-) / Sale of assets (+)
Spot EBITDA
Contracted EBITDA
Debt service
PWWO - EBITDA composition
Rigs
16 %
400
200
0
Oil Service
57 %
Supply
27 %
-200
2013 2014 2015 2016 - 2029
500
PWWO - Debt in projects, NOKm
PWWO - Duration of contract backlog
450
400
350
300
13
13
13
Sellers credit
Bank debt
13
1-2 years
11 %
250
200
150
378
460
397
325
Later
43 %
3-4 years
46 %
100
50
0
2013 2014 2015 2016 - 2029

Price per share
Volume (Thousand NOK)
Second Hand Market and Share Liquidity
As of 30.06.2013 PWWO had 4.37m shares outstanding. Pareto Project Finance AS (”PPF”) strives to
facilitate an active second hand market for shares. 80% of the shares in PWWO is owned by Pareto
Offshorekapital (POK), where the last trading price was NOK 33 per share (after the repayment of NOK
5 per share). Investors who wish to buy or sell shares should contact their advisors.
POK
As of 30.06.2013 POK had 5.46m shares
outstanding. The last trading price in POK was NOK
33 per share and the previous five trades are
displayed in the table below.
From what brokers and investors tell us, this steep
decline seems primarily driven by investors’
preference for liquidity rather than future upside.
The investment manager and the board will take
this into consideration when working on the exit
strategy.
Date Share price No. of shares Volume (NOK)
13.08.13 33 980 32 340
09.08.13 33 6 861 226 413
11.07.13 33 30 000 990 000
05.07.13 33 980 32 340
03.07.13 33 9 095 300 135
Number of trades since startup: 472
Volume traded since startup (NOK): 79 844 918
200
175
150
125
Pareto Offshorekapital ASA - Second Hand Trades
Volume traded
Nav per share
NAV per share (dividend adjusted)
Second hand price per share
10 000
9 000
8 000
7 000
6 000
100
5 000
75
50
25
4 000
3 000
2 000
1 000
0
Jun-07 Jan-08 Aug-08 Mar-09 Oct-09 May-10 Dec-10 Jul-11 Feb-12 Sep-12 Apr-13
Date
0

The offshore oil services market
The activity growth continues unabated, despite oil price volatility and uncertain financial markets. The oil industry
is planning for the long term, driven by reserve replacement needs and production growth ambitions. In fact, the
most negative factor this year has been project delays on political hurdles or late delivery of equipment, but this
only adds to pent up demand going forward. Overall, there is reason to remain positive on this market in the future.
The oil and gas markets
The oil price has been range bound between USD 100-
120/b in the past two years. This year, it has been in
the low end of this range, primarily owing to
uncertainty about economic growth, particularly in
China.
Source: EIA
Overall, global upstream investments were up by 13%
in 2012 and initial budgets call for a 10% increase in
2013. This year’s plans were based on an average
planning price of USD 98/b (Brent), which is USD 2/b
higher than for 2012 and below the current oil price.
However, rising costs for the oil companies may curtail
the investment plans in the near term, so we have
seen consensus forecasts for 2013 E&P spending
growth drift downwards to 5%, more in line with the
oil industry’s revised budgets for the year.
Source: Pareto Securities
Favourable supply / demand outlook
The average growth in global E&P spending has been
12% during the past twelve years. The activity growth
in offshore oil services has averaged 14% in the same
period, so it seems we can continue to expect robust
market growth, based on the oil industry’s investment
budgets.
Source: Pareto Research
Demand and capacity growth in oil services
Capacity Grow th
Avg demand
grow th 2000-12 2013e 2014e
PSV > 3,000 dw t 16% 26% 13%
AHTS > 15,000 BHP 13% 13% 6%
UDW rigs 17% 12% 19%
Subsea, vsls > 90m LOA 13% 11% 8%
High end seismic vsls 9% 4% 7%
Average 14% 13% 11%
Source: Pareto Research
Since our previous report, the drilling markets have
been stable at a very strong levels. There has been a
solid improvement in the seismic markets, with the
players filling up the capacity for this year early and at
good prices. In the subsea market, the order intake
remains strong, which should mean that the vessel
markets are set for an uptick in activity from 2014 and
onwards.
The AHTS and PSV markets have fared much better
than feared this year. A lot of the spot market PSVs in
the North Sea was taken on term contracts by the oil
companies early and at reasonably good rates. As a
result, the remaining vessels in the spot market have
seen a recovery in rates. AHTS rates were lacklustre at
the start of the year, but have now jumped to high
levels. The order book for new AHTS is low, while it is
still significant for PSVs and continue to represent a
potential drag on rates.
Overall, the difficult financing conditions should reduce
the appetite for speculative newbuildings.

The offshore oil services market
Seismic market outlook
The seismic market has been brisk this year with high
day rates and utilization. The tendering activity
remains at a high level, although day rate expectations
for the upcoming winter season has been trimmed
somewhat, following an active fixture period in the
spring. Overall, the outlook remains positive, although
maybe not as bullish as some may have expected. On
a positive note, though, the supply growth in the
industry is relatively limited, so the market balance
should remain tight.
Subsea outlook
Source: PGS, Pareto Research
The strong book-to-bill ratio of 1.3x during 2012 for
the large subsea contractors indicate substantial
growth in this market in the coming years. The order
intake has continued in recent months, with Subsea7
racing in more than USD 1bn of orders in the past
month alone. There was a substantial speculative
newbuild ordering activity last year, primarily from
Norwegian owners, but it is still expected that there
will be some capacity shortage in the coming years.
Supply vessel outlook
Source: ODS Petrodata, Pareto Research
The AHTS market has surged in Q2’13, apparently
catching up on work that was delayed from 2012. The
number of vessels active in the North Sea spot market
is unchanged from a year ago, and so the rate
increases come from an increase in demand, primarily
related to more rig moves. It is expected that the
market will remain tight going forward and in the long
term, the outlook is positive as there is limited new
capacity coming in.
The PSV market has been held as a weak spot, but has
surprised positively this year. A significant chunk of
the available spot fleet was fixed early this year as the
oil companies took the opportunity to lock in
significant capacity for their programs. Statoil alone
took 15 vessels on term contracts, with other players
following suit, It is expected that the market will
remain tight towards the end of the year. So far, there
has been limited ordering of new capacity this year, at
least for North Sea spec vessels.
Source: ODS Petrodata, Pareto Research

Fund Management Team
Johan Anker-Rasch
Richard Jansen
Head of Fund Management
Head of Fund Management
Real Estate
Shipping/Offshore
Phone: + 47 22 01 58 73 Phone: + 47 22 01 58 96
E-mail: jar@pareto.no
E-email: richard.jansen@pareto.no
Jonathan Andreas Barfod
Patrick Kartevoll
Fund Manager
Fund Manager
Real Estate
Shipping/Offshore
Phone: + 47 22 01 58 46 Phone: + 47 22 01 58 79
E-mail: jab@pareto.no
E-mail: patrick@pareto.no
Dronning Mauds Gate 3, P.O. Box 1396 Vika, NO-0114 Oslo, Norway, Tlf: 22 87 87 00, www.pareto.no

Disclaimer
This Quarterly Report has been prepared in order to
provide information about Pareto World Wide Offshore
AS (“PWWO” or the “Company”) and must not be
considered an offer to trade in the shares of the
Company.
actual events to differ materially from any anticipated
development. All investors must verify these
assumptions themselves. The company cannot give any
assurance as to the correctness of such information and
statements.
Information contained in this Quarterly Report is
obtained by Pareto Project Finance AS (“Pareto Project
Finance”, “Pareto”, or “PPF”). Information is presented
to the best of our efforts and knowledge, but Pareto
Project Finance AS cannot guarantee that the
information is correct or all inclusive. Pareto Project
Finance AS takes no responsibility for any loss caused
by information given being misleading, wrongful or
incomplete nor for any other loss suffered as a
consequence of investments made in the Company.
Historic returns and return forecasts do not constitute
any guarantee for future returns. Returns may vary as
a consequence of fluctuations in currency exchange
rates. Investors should be aware that there is
significant uncertainty related to valuations in the
current volatile market. The valuation process is
described in PPF’s market report as per February 2013.
Risks and costs are further described in the prospectus
(information memorandum) produced in relation to
share issues in the Company.
This Quarterly Report includes and is based on, among
other things, forward-looking information and
statements. Such forward-looking information and
statements are based on the current expectations,
estimates and projection of the company or
assumptions based on information available to the
company and Pareto Project Finance AS. Such forwardlooking
information and statements reflect current
views with respect to future events and are subject to
risks, uncertainties and assumptions that may cause
The contents of this presentation are not to be
construed as legal, business, investment or tax advice.
Each recipient should consult with its legal-, business-,
investment-, and tax advisors as to legal, business,
investment and tax advice. Specifically, Pareto Project
Finance AS has been engaged as the company’s
financial advisor and does not render – and shall not be
deemed to render – any advice or recommendations as
to a transaction.