SeaMetric's 2 Heavy Transport Vessels Under Construction in China

SeaMetric is currently constructing two heavy transport vessels in parallel at the China Petroleum Liaohe Equipment Company (CPLEC) Offshore Engineering Company shipyard in Panjin, China. The shipyard is owned by PetroChina, a subsidiary of the state owned China National Petroleum Company (CNPC), one of the world's leading energy corporations with businesses covering oil and gas with both upstream and downstream operations.

The shipyard itself has also been under construction, but is now close to being completed. However, delays in the yard development schedule have resulted in a delay also in the construction schedule for SeaMetric's TML vessels. SeaMetric views a delay of three to six months in the delivery of the vessels as likely, as compared to the original contract delivery date in August 2009.

The CPLEC shipyard has recently strengthened its organization by recruiting a number of experienced inspectors and managers. At present, there are approximately 1,000 workers at the yard. The cutting of steel, the welding of panels and the fabrication of blocks are all ongoing processes.

During high level meetings in China in early November 2008, SeaMetric received confirmation from both the shipyard's top management and the President of PetroChina Liaohe Oilfield Company -- the owners of the yard -- that construction of the TML vessels is a high priority project. A promise was given to deliver the vessels according to a newly developed recovery plan. SeaMetric fully supports the yard in its efforts to recover the lost progress.

Investors in SeaMetric's bond issue visited the shipyard also in early November 2008. These investors will be able to confirm the status of the shipyard, the construction process and the commitments given by the yard and the yard's owners.

Block Building for SeaMetric's TML Vessels at the Shipyard

The shipyard has also confirmed that the vessels will be delivered without any cost increases for the vessel construction. In addition, SeaMetric has not identified any cost overruns for deliveries of the various types of equipment to the vessels. However, some increases in management and financing costs could be expected as a direct consequence of a delayed delivery.

SeaMetric's TML System consists of the two TML vessels in addition to a number of lifting arms which are placed across the vessels. With eight lifting arms in place, four on each vessel, the TML System will be able to install and remove platform topsides and jackets weighing up to 20,000 tonnes. Such marine heavy lifting capacity is not currently available in the world markets.

SeaMetric has received bids from a number of contractors for the construction of the TML lifting arm systems. The construction of the lifting arm systems will not start until the necessary financing is in place.

SeaMetric has secured production slots for engines, generators and thrusters for four additional vessels – two further 140 meter long heavy transport vessels for a second TML System as well as two larger (length 180 meter) transport vessels. The potential orders for these further vessels would have to be executed through separate contracts.