Siem Offshore Inc.

Rights Offering of 100,000,000 New Shares

Subscription Price: NOK 1.90 per New Share
Subscription Period:
From 30 May 2017 to 16:30 hours (CET) on 12 June 2017
Trading in Subscription Rights:
From 30 May 2017 until the end of trading on the Oslo Stock Exchange on 8 June 2017
________________________
Siem Offshore Inc. (the "Company", and, together with its consolidated subsidiaries, "Siem Offshore" or the "Group") is
offering 100,000,000 new shares in the Company (the "New Shares") with a nominal value of USD 0.01 each, at a
subscription price of NOK 1.90 per New Share (the "Subscription Price"). Holders of the Company’s shares registered in
the Norwegian Central Securities Depository (the "VPS") as of 23 May 2017 (the "Existing Shareholders") are being
granted transferable subscription rights (the "Subscription Rights") that, subject to applicable law, provide preferential
rights to subscribe for and be allocated New Shares at the Subscription Price (such offering of New Shares upon the exercise
of Subscription Rights, the "Rights Offering").

Each Existing Shareholder will be granted 0.1187 Subscription Rights for each share registered as held by such Existing
Shareholder as of 23 May 2017 (the "Record Date"). Each Subscription Right will give the right to subscribe for and be
allocated one New Share. The subscription period commences on 30 May 2017 and expires at 16:30 hours, Central European
Time ("CET"), on 12 June 2017 (the "Subscription Period"). The Subscription Rights will be listed and tradable on the Oslo
Børs (the "Oslo Stock Exchange") under the ticker code SIOFF T from 30 May 2017 until the end of trading on the Oslo
Stock Exchange on 8 June 2017.

Subscription Rights that are not used to subscribe for New Shares before the expiry of the Subscription Period,
or that are not sold before the end of trading on the Oslo Stock Exchange on 8 June 2017 will have no value and
will lapse without compensation to the holder.

After the expiry of the Subscription Period, any New Shares that have not been subscribed for and allocated in the Rights
Offering will be subscribed and paid for at the Subscription Price by Siem Europe S.a r.l (the "Underwriter"), subject to the
terms and conditions of the Underwriting Agreement between the Company and the Underwriter dated 15 May 2017 (the
"Underwriting Agreement").

The Company is not taking any action to permit a public offering of the Subscription Rights or the New Shares in any
jurisdiction outside of Norway. The New Shares are being offered only in those jurisdictions in which, and only to those
persons to whom, offers and sales of the New Shares (pursuant to the exercise of the Subscription Rights or otherwise) may
lawfully be made. The Subscription Rights and the New Shares have not been, and will not be, registered under the United
States Securities Act of 1933, as amended (the "US Securities Act"), or under the securities laws of any state of the United
States and may not be offered or sold (i) within the United States, except in transactions exempt from registration under
the US Securities Act, or (ii) outside the United States, except in offshore transactions in reliance on Regulation S. The Rights
Offering will not be made to persons who are residents of Australia, Canada, Hong Kong or Japan or in any jurisdiction in
which such offering would be unlawful. For more information regarding restrictions in relation to the Rights Offering pursuant
to this Prospectus, please see Section 14, "Selling and transfer restrictions" .

Investing in the Company’s shares (the "Shares"), including the New Shares, and trading in the Subscription
Rights involves certain risks. See Section 2, "Risk Factors" beginning on page 14.

The Company’s existing shares (the "Existing Shares") are listed on the Oslo Stock Exchange under the ticker code "SIOFF".

Manager
Swedbank

The date of this Prospectus is 26 May 2017

 IMPORTANT INFORMATION

This Prospectus has been prepared solely for use in connection with the Rights Offering and the Listing. Please see Section
16, "Definitions and glossary" for definitions of terms used throughout this Prospectus.

The Prospectus has been prepared to comply with the Norwegian Securities Trading Act of 29 June 2007 No. 75 (the
"Norwegian Securities Trading Act") and related secondary legislation, including the Commission Regulation (EC) No.
809/2004 implementing Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 regarding
information contained in prospectuses, as amended, and as implemented in Norway (the "Prospectus Directive"). This
Prospectus has been prepared solely in the English language and in accordance with the minimum disclosure requirements
for rights issues, issued by the Financial Supervisory Authority of Norway (the "Norwegian FSA"). The Norwegian FSA has
reviewed and approved this Prospectus in accordance with sections 7-7 and 7-8 of the Norwegian Securities Trading Act on
date 26 May 2017. The Norwegian FSA has not controlled or approved the accuracy or completeness of the information
given in this Prospectus. The approval given by the Norwegian FSA only relates to the information included in accordance
with pre-defined disclosure requirements. The Norwegian FSA has not made any form of control or approval relating to
corporate matters described or referred to in this Prospectus.

The Company has engaged Swedbank as Manager in the Rights Offering. Swedbank is acting for the Company and no one
else in relation to the Rights Offering or the Listing. Swedbank will not be responsible to anyone other than the Company
for providing the protections afforded to their clients or for providing advice in relation to the listing.

No person is authorised to give information or to make any representation concerning the Group or in connection with the
Rights Offering other than as contained in this Prospectus. If any such information is given or made, it must not be relied
upon as having been authorised by the Company or the Manager or by any of the affiliates, advisors or selling agents of any
of the foregoing.

The distribution of this Prospectus and the offer and sale of the New Shares may be restricted by law in certain jurisdictions.
This Prospectus does not constitute an offer of, or an invitation to purchase, any of the New Shares in any jurisdiction in
which such offer or sale would be unlawful. No one has taken any action that would permit a public offering of the Shares
to occur outside of Norway. Accordingly neither this Prospectus nor any advertisement or any other offering material may
be distributed or published in any jurisdiction except under circumstances that will result in compliance with applicable laws
and regulations. Persons in possession of this Prospectus are required to inform themselves about, and to observe, any such
restrictions. In addition, the Shares are subject to restrictions on transferability and resale in certain jurisdictions and may
not be transferred or resold except as permitted under applicable securities laws and regulations. Investors should be aware
that they may be required to bear the financial risks of this investment for an indefinite period of time. Any failure to comply
with these restrictions may constitute a violation of applicable securities laws. For further information on the sale and transfer
restrictions of the Shares, see Section 14, "Selling and transfer restrictions".

The information contained herein is current as at the date hereof and subject to change, completion and amendment without
notice. In accordance with section 7-15 of the Norwegian Securities Trading Act, significant new factors, material mistakes
or inaccuracies relating to the information included in this Prospectus, which are capable of affecting the assessment of the
Shares between the time of approval of this Prospectus by the Norwegian FSA and the Listing of the Shares on the Oslo
Stock Exchange, will be included in a supplement to this Prospectus. The publication of this Prospectus shall not under any
circumstances create any implication that there has been no change in the Group's affairs or that the information herein is
correct as of any date subsequent to the date of this Prospectus.

Neither the Company nor the Manager, or any of their respective affiliates, representatives, advisers or selling agents, are
making any representation to any subscriber or purchaser of New Shares regarding the legality or suitability of an investment
in the New Shares. Each investor should consult with his or her own advisors as to the legal, tax, business, financial and
related aspects of a subscription or purchase of the New Shares.

In the ordinary course of their businesses, the Manager and certain of their respective affiliates have engaged, and may
continue to engage, in investment and commercial banking transactions with the Company and its subsidiaries.

This Prospectus and the terms and conditions of the Rights Offering as set out herein shall be governed by and construed in
accordance with Norwegian law. The courts of Norway, with Oslo as legal venue, shall have exclusive jurisdiction to settle
any dispute which may arise out of or in connection with the Rights Offering or this Prospectus.
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER
CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT
A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES
A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE,
COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS
AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON
THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR
TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR
CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
NOTICE TO INVESTORS IN THE UNITED STATES
Because of the following restrictions, prospective investors are advised to consult legal counsel prior to making any offer,
resale, pledge or other transfer of the Shares. The New Shares have not been and will not be registered under the U.S.
Securities Act or with any securities regulatory authority of any state or other jurisdiction in the United States and may not
be offered, sold, pledged or otherwise transferred within the United States except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the U.S. Securities Act and in compliance with any applicable
2
state securities laws. Accordingly, the New Shares will not be offered or sold within the United States, except in reliance on
the exemption from the registration requirements of the U.S. Securities Act under Rule 144A. The New Shares will be offered
outside the United States in compliance with Regulation S. Prospective purchasers are hereby notified that sellers of New
Shares may be relying on the exemption from the provisions of Section 5 of the U.S. Securities Act provided by Rule 144A
under the U.S. Securities Act. See Section 14.2.1 "Selling and transfer restrictions — Selling restrictions — United States".
Any Shares offered or sold in the United States will be subject to certain transfer restrictions as set forth under Section
14.3.1 "Selling and transfer restrictions—Transfer restrictions—United States".
The securities offered hereby have not been recommended by any United States federal or state securities commission or
regulatory authority. Further, the foregoing authorities have not passed upon the merits of the Rights Offering or confirmed
the accuracy or determined the adequacy of this Prospectus. Any representation to the contrary is a criminal offense under
the laws of the United States.
In the United States, this Prospectus is being furnished on a confidential basis solely for the purposes of enabling a
prospective investor to consider purchasing the particular securities described herein. The information contained in this
Prospectus has been provided by the Company and other sources identified herein. Distribution of this Prospectus to any
person other than the offeree specified by the Manager or its representatives, and those persons, if any, retained to advise
such offeree with respect thereto, is unauthorised and any disclosure of its contents, without prior written consent of the
Company, is prohibited. This Prospectus is personal to each offeree and does not constitute an offer to any other person or
to the public generally to purchase New Shares or subscribe for or otherwise acquire any Shares.
NOTICE TO UNITED KINGDOM INVESTORS
This Prospectus is only being distributed to and is only directed at (i) persons who are outside the United Kingdom (the
"UK") or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005 (the "Order") or (iii) high net worth companies, and other persons to whom it may lawfully be
communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "Relevant
Persons"). The New Shares are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise
acquire such Shares will be engaged in only with, Relevant Persons. Any person who is not a Relevant Person should not act
or rely on this Prospectus or any of its contents.
NOTICE TO INVESTORS IN THE EEA
In any member state of the European Economic Area (the "EEA") that has implemented the Prospectus Directive, other than
Norway (each, a "Relevant Member State"), this communication is only addressed to and is only directed at qualified
investors in that Member State within the meaning of the Prospectus Directive. The Prospectus has been prepared on the
basis that all offers of New Shares outside Norway will be made pursuant to an exemption under the Prospectus Directive
from the requirement to produce a prospectus for offer of shares. Accordingly, any person making or intending to make any
offer within the EEA of New Shares which is the subject of the Rights Offering contemplated in this Prospectus within any
EEA member state (other than Norway) should only do so in circumstances in which no obligation arises for the Company
or the Manager to publish a prospectus or a supplement to a prospectus under the Prospectus Directive for such offer.
Neither the Company nor the Manager have authorised, nor do they authorise, the making of any offer of Shares through
any financial intermediary, other than offers made by the Manager which constitute the final placement of New Shares
contemplated in this Prospectus.
Each person in a Relevant Member State other than, in the case of paragraph (a), persons receiving offers contemplated in
this Prospectus in Norway, who receives any communication in respect of, or who acquires any New Shares under, the offers
contemplated in this Prospectus will be deemed to have represented, warranted and agreed to and with the Manager and
the Company that:
a) it is a qualified investor as defined in the Prospectus Directive, and
b) in the case of any New Shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the
Prospectus Directive, (i) such New Shares acquired by it in the Rights Offering have not been acquired on behalf
of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other
than qualified investors, as that term is defined in the Prospectus Directive, or in circumstances in which the prior
consent of the Manager has been given to the offer or resale; or (ii) where such New Shares have been acquired
by it on behalf of persons in any Relevant Member State other than qualified investors, the offer of those New
Shares to it is not treated under the Prospectus Directive as having been made to such persons.
For the purposes of this provision, the expression an "offer to the public" in relation to any of the New Shares in any Relevant
Member State means the communication in any form and by any means of sufficient information on the terms of the offer
and any Shares to be offered so as to enable an investor to decide to purchase any of the New Shares, as the same may be
varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State,
and the expression " Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including the 2010 PD
Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing
measure in each Relevant Member State and the expression "2010 PD Amending Directive" means Directive 2010/73/EU.
See Section 14, "Selling and Transfer Restrictions" for certain other notices to investors.
ENFORCEMENT OF CIVIL LIABILITIES
The Company is a company limited by shares incorporated under the laws of the Cayman Islands. As a result, the rights of
holders of the Company’s Shares will be governed by the laws of the Cayman Islands and the Company’s articles of
association (the "Articles of Association"). The rights of shareholders under the laws of the Cayman Islands may differ
from the rights of shareholders of companies incorporated in other jurisdictions. The majority of the members of the
Company’s board of directors (the "Board Members" and the "Board of Directors", respectively) and the members of the
senior management of the Group (the "Management") are not residents of the United States, and all of the Company’s
assets are located outside the United States. As a result, it may be difficult for investors in the United States to effect service
of process on the Company or its Board Members and members of Management in the United States or to enforce in the
United States judgments obtained in U.S. courts against the Company or those persons, including judgments based on the
3
civil liability provisions of the securities laws of the United States or any State or territory within the United States.
Uncertainty exists as to whether courts in Norway will enforce judgments obtained in other jurisdictions, including the United
States, against the Company or its Board Members or members of Management under the securities laws of those
jurisdictions or entertain actions in the Cayman Islands against the Company or its Board Members or members of
Management under the securities laws of other jurisdictions. In addition, awards of punitive damages in actions brought in
the United States or elsewhere may not be enforceable in the Cayman Islands. The United States and the Cayman Islands
do not currently have a treaty providing for reciprocal recognition and enforcement of judgements (other than arbitral
awards) in civil and commercial matters.
AVAILABLE INFORMATION
The Company has agreed that, for so long as any of the New Shares are "restricted securities" within the meaning of Rule
144(a)(3) under the U.S. Securities Act, it will during any period in which it is neither subject to Sections 13 or 15(d) of the
U.S. Securities Exchange Act of 1934, as amended (the "U.S. Exchange Act"), nor exempt from reporting pursuant to Rule
12g3-2(b) under the U.S. Exchange Act, provide to any holder or beneficial owners of Shares, or to any prospective purchaser
designated by any such registered holder, upon the request of such holder, beneficial owner or prospective owner, the
information required to be delivered pursuant to Rule 144A(d)(4) of the U.S. Securities Act.

4
TABLE OF CONTENTS

1. EXECUTIVE SUMMARY ........................................................................................................................... 1

2. RISK FACTORS ....................................................................................................................................... 14
3. RESPONSIBILITY FOR THE PROSPECTUS .................................................................................... 19
4. GENERAL INFORMATION .................................................................................................................... 20
5. PRESENTATION OF SIEM OFFSHORE INC. .................................................................................. 22
6. INDUSTRY OVERVIEW ......................................................................................................................... 38
7. CAPITALISATION AND INDEBTEDNESS ........................................................................................ 47
8. SELECTED FINANCIAL INFORMATION ........................................................................................... 50
9. BOARD OF DIRECTORS, MANAGEMENT, EMPLOYEES AND CORPORATE GOVERNANCE
58
10. CORPORATE INFORMATION .............................................................................................................. 69
11. SECURITIES TRADING IN NORWAY ............................................................................................... 79
12. TAXATION ................................................................................................................................................. 83
13. THE RIGHTS OFFERING ...................................................................................................................... 87
14. SELLING AND TRANSFER RESTRICTIONS ................................................................................... 99
15. ADDITIONAL INFORMATION ........................................................................................................... 104
16. DEFINITIONS AND GLOSSARY ....................................................................................................... 105

Appendix A: Memorandum and Articles of Association

Appendix B: Annual financial statements 2016
Appendix C: Subscription Form

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1. EXECUTIVE SUMMARY

Summaries are made up of disclosure requirements known as "Elements". These elements

are numbered in Sections A – E (A.1 – E.7). This summary contains all the Elements
required to be included in a summary for this type of securities and issuer. Because some
Elements are not required to be addressed, there may be gaps in the numbering sequence
of the Elements. Even though an Element may be required to be inserted in the summary
because of the type of securities and issuer, it is possible that no relevant information can
be given regarding the Element. In this case a short description of the Element is included
in the summary with the mention of "not applicable".

Section A – Introduction and warnings

A.1 Warning This summary should be read as an introduction to the

Prospectus.
Any decision to invest in the New Shares should be based on
consideration of the Prospectus as a whole by the investor.
Where a claim relating to the information contained in the
Prospectus is brought before a court, the plaintiff investor might,
under the national legislation in its Member States, have to bear
the costs of translating the Prospectus before the legal
proceedings are initiated.
Civil liability attaches only to those persons who have tabled the
summary including any translation thereof, but only if the
summary is misleading, inaccurate or inconsistent when read
together with the other parts of the prospectus or it does not
provide, when read together with the other parts of the
Prospectus, key information in order to aid investors when
considering whether to invest in such securities.
A.2 Resale or final Not applicable. Financial intermediaries are not entitled to use
placement of this Prospectus for subsequent resale or final placement of
securities by securities.
financial
intermediaries

Section B – Issuer

B.1 Legal and Siem Offshore Inc.

commercial
name

B.2 Domicile and Siem Offshore Inc. is an exempted company limited by shares
legal form, incorporated under the laws of the Cayman Islands with corporate
legislation registration no. 140468.
and country
of
incorporation

B.3 Current Siem Offshore’s primary activity is to own and operate offshore
operations, support vessels for the offshore energy service industry. The
principal Group's fleet comprises of platform supply vessels, anchor-
activities and handling, tug, supply vessels, offshore subsea construction
markets vessels, well-intervention vessels and a variety of other support
vessels.

The Company’s fleet comprises of 45 offshore support vessels.

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 In addition to its primary activity, the Company has also
established a business division for industrial investments. The
Group's industrial investment division includes the Group's services
as a contractor within the European offshore wind farm and
offshore cable lay market, the development of applications for
managed pressure drilling, a scientific core drilling vessel,
specialized engineering to develop and implement combat
management systems for navy vessels and certain other
investments.

B.4 Significant The North Sea PSV and AHTS vessel market continued to be
a recent trends depressed during the fourth quarter 2016 and the first quarter
affecting the 2017 with a number of vessels in lay-up. Low activity within the
Company and oil-service industry has led to reductions in chartering rates and
the industries increased idle periods.
in which it
operates Oversupply of vessels and reduced rig activity has put pressure on
vessel utilization and fixture rates.

The market for OSVs in Brazil has significantly softened following

lower demand activity from Petroleo Brasileiro SA (“Petrobras”).
When disclosing its five-year business plan in 2015, Petrobras
announced reduced capital expenditures and highlighted cost
cutting measures with the intension to reduce leverage going
forward. In order for Petrobras to reduce its cost base, Petrobras
has initiated renegotiation of existing contracts with several
suppliers, including vessel owners. It is the opinion of the Company
that an increased risk of such contract renegotiations or even
contract cancellations for certain vessels of the Company exists.

The outlook for the OSV market is expected to remain soft for
several years due to reduced investments in the offshore oil and
gas industry following lower current and future commodity prices
for oil and gas, which again reduces the demand for vessels and
puts pressure on utilisation and fixture rates, coupled with excess
vessel capacity. Such imbalance between supply and demand will
continue to make the market difficult and might force owners to
put more vessels into lay-up. The obtainable charter rates and
margins are below what is sustainable for the industry in the long-
run.

In response to the soft OSV market, the Company has placed two
vessels out of operations and into lay-up.

There has been no significant change in the financial or trading

position of the Group since the end of the last financial period for
which interim financial information has been published. The Group
has in connection with preparing the reporting of its fourth quarter
2016 results considered impairment for its vessels. Based on the
impairment assessment as December 31, 2016, some vessels were
impaired based on the difference between carrying amount and
recoverable amount (higher of fair value or value in use
calculation).

There has been no material adverse change in the prospects of the

issuer since the date of its last published audited financial
statements.

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B.5 Description of Siem Offshore Inc. is a holding company with no employees and is
the Group therefore dependent on service from its subsidiaries. These
services consist of administrative, operational and corporate
services provided by Siem Offshore Management AS and Siem
Offshore AS.

The Group's vessels are owned by several companies within the

Group. Siem Offshore Rederi AS currently owns all Norwegian,
Polish and German built vessels, except the OSCV “Siem Spearfish”
which is owned by Siem Offshore Construction Vessels AS. Further,
Siem Offshore Rederi AS owns 51% of Siem Offshore Ghana
International AS, which owns the PSV “Siem Sasha”, and 51% of
Siem Meling Offshore DA which owns two PSVs.

Siem Offshore Do Brazil S.A. owns the locally built Brazilian fleet.
Siem Offshore Canada Inc. owns Secunda Canada LP ("Secunda"),
which owns 5 Canadian flagged vessels. Siem Offshore Contractors
GmbH, which has the cable lay vessel (“CLV”) “Siem Aimery” and
the installation support vessel (“ISV”) “Siem Moxie” on a bareboat
charter, is owned 100% by Siem Offshore Invest AS. Siem AHTS
Pool AS is owned 78.16% by Siem Offshore Inc. and owns a fleet
of 10 high-end AHTS sister vessels.

The Group's industrial investments business division consists of the

subsidiaries Siem Offshore Contractors GmbH and Siem WIS AS,
Overseas Drilling Limited which owns the scientific core drilling
vessel “JOIDES Resolution” and certain other investments, which
are owned 100% by Siem Offshore Invest AS. In addition the
combat management business in Siem Offshore do Brazil SA is
included in this business division.

B.6 Interests in Shareholders owning 5% or more of the Shares have an interest

the Company in the Company's share capital which is notifiable pursuant to the
and voting Norwegian Securities Trading Act.
rights
As of the date of this Prospectus, Siem Europe S.a r.l. owns
699,110,008 shares in the Company, equal to 83.03% of the
issued Shares. Siem Europe S.a r.l. is the main shareholder of Siem
Offshore Inc. and is controlled by a trust whose potential
beneficiaries include members of Kristian Siem’s immediate family.
Kristian Siem is a Board Member of the Company.

Siem Europe S.a r.l. has underwritten the Rights Offering.

The Company is not aware of any agreements that at a later stage

may lead to change of control of the Company.

B.7 Selected The table below sets out selected data from the Group’s
historical key consolidated income statement for the year ended 31 December
financial 2016 and for the three months period ended 31 March 2017.
information
2017 2016 2016
(Amounts in USD 1 000) 1Q 1Q Jan-Dec
Unaudited Unaudited Audited
Operating revenue 107 405 70 756 469 123
Operating expenses -68 312 -40 474 -307 769
Administration expenses -7 250 -6 378 -33 059

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Operating margin 31 842 23 905 128 295
Depreciation and
amortization -33 035 -25 526 -111 771

Impairment of vessels - - -60 180

Impairment of
intangibles - - -1 015
Impairment related to
long term receivables - - -13 979
Impairment related to
long term receivables - - -1 400
Gain/(loss) on sales of
fixed assets -45 355 -423
Gain on bargain
purchase - - 18 312
Gain on sale of interest
rate derivatives (CIRR) 92 92 368
Gain/(loss) on currency
derivative contracts -260 10 135 -7 762
Operating
profit/(loss) -1 406 8 960 -49 555
Financial revenues 1 212 2 523 12 471
Financial expenses -14 874 -13 037 -55 312
Net currency gain/(loss)
on revaluation -320 -10 415 -64 154
Net financial items -13 981 -20 929 -106 994
Result from associated
companies 77 462 19
Profit/(loss) before
taxes -15 311 -11 506 -156 531
Tax benefit / (expense) -2 034 1 936 626
Net profit/(loss) -17 344 -9 570 -155 905
Attributable to non-
controlling interest -4 019 -579 -13 469
Attributable to
shareholders -13 326 -8 992 -142 436

Weighted average
number of outstanding
shares('000) 842 021 842 021 842 021
Earnings(loss) per share
(basic and diluted) -0,02 -0,01 -0,17

Comprehensive
Income Statement 2017 2016 2016
(Amounts in USD 1
000) 1Q 1Q Jan-Dec
Unaudited Unaudited Audited
Net profit/(loss) -17 344 -9 570 -155 905

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Other
comprehensive
income
Items that will not
be reclassified to
profit or loss:
Pension
remeasurement
gain/(loss) - - 230
Items that may be
subsequently
reclassified to profit
or loss:

Cash flow hedges - 34 038 60 319

Currency translation
differences 11 -26 642 -23
Total comprehensive
income for the
period -17 333 -2 174 -95 379
Attributable to non-
controlling interest -4 015 -592 -9 729
Attributable to
shareholders of the
Company -13 319 -1 583 -85 650

The table below sets out selected data from the Group’s
consolidated statement of financial position as of 31 December
2016 and 31 March 2017.

(Amounts in USD 1 000) 31.03.2017 31.12.2016

Unaudited Audited
Non-current assets
Vessels and equipment 1 957 968 1 980 228
Vessels under construction - 8 258
Capitalized project cost 5 386 5 623
Investment in associates and
other long-term receivables 24 004 33 884
CIRR loan deposit 1) 72 750 76 215
Deferred tax asset 11 496 11 467
Intangible assets 32 684 16 977
Total non-current assets 2 104 288 2 132 652
Debtors, prepayments and
other current assets 123 192 178 316
Assets held-for-sale - 1 099
Cash and cash equivalents 81 004 101 323
Total current assets 204 196 280 738
Total assets 2 308 483 2 413 390

Equity
Paid-in capital 625 219 625 219
Other reserves -47 110 -47 276

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Retained earnings -42 162 -28 836
Shareholders´ equity 535 947 549 107
Non-controlling interest 94 864 98 878
Total equity 630 811 647 985
Liabilities
Borrowings 1 286 304 1 293 059
CIRR loan 1) 72 750 76 215
Other non-current liabilities 53 812 51 421
Total non-current
liabilities 1 412 866 1 420 695
Borrowings 118 726 177 834
Accounts payable and other
current liabilities 146 080 166 875
Total current liabilities 264 806 344 709
Total liabilities 1 677 672 1 765 404
Total equity and liabilities 2 308 483 2 413 390

1) Commercial Interest Reference Rate

The table below sets out selected data from the Group’s
consolidated statements of cash flows for the year ended 31
December 2016 and for the three months period ended 31 March
2017.

2017 2016 2016

(Amounts in USD 1 000) 1Q 1Q Jan-Dec
Unaudited Unaudited Audited
Cash flow from
operations
Net profit/(loss) -17 344 -9 570 -155 905
Interest expense 13 381 10 104 50 115
Interest paid -11 544 -12 159 -52 338
Interest income -1 188 -1 201 -8 487
Interest received 1 188 1 184 8 501
Cash flow hedge - - 60 319
Tax expense 2 034 -1 936 -626
Taxes paid -103 - -603
Results from associated
companies -77 -462 -19
Loss/(gain) on sale of
assets 45 -355 423
Gain from bargain
purchase - - -18 312
Employee share scheeme
expenses 61 131 516
Impairment of vessels,
projects, intangibles, long-
term contracts - - 76 574
Depreciation and
amortization 33 035 25 526 111 771

6
Effect of unreal. currency
exchange forward
contracts 61 -9 237 -871
Changes in short-term
receivables and payables 13 652 -1 999 -20 938
CIRR gain -92 -92 -368
Other changes 1 567 3 022 23 590
Net cash flow from
operations 34 675 2 955 73 343

Cash flow from

investing activities
Investments in fixed
assets -6 948 -18 663 -414 802
Proceeds from sale of
fixed assets 8 270 355 9 751
Cash acquired in Business
Combination - - 3 314
Investment in subsidiaries - - -201
Dividend from associated
companies - -290 -
Cash flow from
investing activities 1 322 -18 598 -401 938

Cash flow from

financing activities
Contribution from non-
controlling interests of
consolidated subsidiaries - - 885
Proceeds from new long-
term borrowing - 623 455 706
Repayment of long-term
borrowing -67 864 -55 011 -188 360
Cash flow from
financing activities -67 864 -54 388 268 232

Net change in cash -31 868 -70 032 -60 363

Cash at bank start of 148

period 101 323 753 148 753
Effect of exchange rate
differences 11 547 18 720 12 934
Cash at bank at end of
period 81 004 97 441 101 323

The table below sets out selected data from the Group’s
consolidated statement of changes in equity for the year ended 31
December 2016 and for the three months period ended 31 March
2017.

7
 Share Non-
(Amounts in USD 1 Total no. of Share premium Other Retained Shareholders' Controlling
000) shares capital reserves reserves earnings equity interest Total equity
Equity on 1 January
2017 842 021 380 8 420 616 799 -47 276 -28 837 549 106 98 879 647 985
Net profit to
shareholders -13 326 -13 326 -4 019 -17 344
Employee share scheme -Value of
employee services 61 61 61
Currency translation
differences 105 106 4 110
Total
comprehensive
income/(expense) - - 167 -13 326 -13 159 -4 015 -17 174
Share issue in partially
owned subsidiary - - - - - - -
Equity on 31 March
2017 842 021 380 8 420 616 799 -47 110 -42 162 535 947 94 864 630 811

Share Non-
(Amounts in USD 1 Total no. of Share premium Other Retained Shareholders' Controlling
000) shares capital reserves reserves earnings equity interest Total equity
Equity on 1 January
2016 842 021 380 8 420 616 799 -108 151 115 147 632 215 33 293 665 508
Change previous
periods - -1 682 -1 682 -100 -1 782
Net profit to
shareholders -142 436 -142 436 -13 469 -155 905
Employee share scheme -Value of
employee services 516 516 516
Pension
remeasurement 230 230 230
Currency translation
differences -23 - -23 -23
Reclassification to
profit or loss 60 319 60 319 60 319
Other 63 -96 -33 1 201 1 168
Total
comprehensive
income/(expense) - - 60 875 -143 984 -83 109 -12 368 -95 477
Share issue in partially
owned subsidiary - - - - - 77 953 77 953
Equity on 31
December 2016 842 021 380 8 420 616 799 -47 276 -28 837 549 106 98 879 647 985

(Amount in USD 1
000)
Equity on1 January
2015 387 591 380 3 876 522 361 -45 491 304 237 784 983 38 666 823 649
Change previous
periods -869 -869 -869
Net profit to
shareholders -186 687 -186 687 -9 729 -196 416
Value of employee
services -1 728 -1 728 -1 728
Pension
remeasurement 1 178 1 178 1 178
Currency revaluation -9 687 -2 710 -12 398 209 -12 189
Cash flow hedge -65 866 -65 866 -65 866
Reclassification to
profit or loss 14 621 14 621 14 621
Total
comprehensive
income / (expense) - - -62 660 -189 088 -251 749 -9 520 -261 270

8
Share issues in
partially owned
subsidiaries - 6 276 6 276
Capital reduction in partially owned
subsidiaries - -4 811 -4 811
Impairment of excess value partially
owned subsidiaries - 2 682 2 682
Shares issues in Siem
Offshore Inc 454 430 000 4 544 94 438 98 983 - 98 983
Equity on31
December 2015 842 021 380 8 420 616 799 -108 151 115 147 632 215 33 293 665 508

B.8 Selected key Not applicable. There is no pro forma financial information.
pro forma
financial
information

B.9 Profit forecast Not applicable. No profit forecasts or estimates are made.
or estimate

B.1 Audit report Not applicable. There are no qualifications in the audit reports.
0 qualifications

B.1 Working The Company is of the opinion that the working capital available to
1 capital the Group is sufficient for the Company's present requirements, for
the period covering at least 12 months from the date of this
Prospectus.

Section C – Securities

C.1 Type and Listing of New Shares to be issued in the Rights Offering. The
class of Company has one class of Shares and all Shares are equal in all
securities respects.
admitted to
trading and The New Shares will have the same VPS registrar and the same
identification International Securities Identification Number (“ISIN”) as the
numbers Company’s other shares (ISIN KYG813131011). The Company's
Shares are listed on the Oslo Stock Exchange and are traded
under the ticker symbol "SIOFF".

The Subscription Rights will be fully tradable and listed on the

Oslo Stock Exchange with ticker code "SIOFF T" and with ISIN
KYG812291170 from 30 May 2017 until the end of trading on the
Oslo Stock Exchange on 8 June 2017.
C.2 Currency The Shares are issued in USD, but trading activity is denominated
in NOK.
C.3 Number of The issued share capital of the Company as of the date of this
shares and Prospectus is USD 8,420,213.80 divided into 842,021,380 Shares
par value each with a nominal value of USD 0.01. All the Shares are validly
issued and fully paid. Following the Rights Offering, the issued
share capital will be USD 9,420,213.80 divided into 942,021,380
Shares.
C.4 Right The Company has one class of Shares, and each Share carries
attached to one vote and has equal rights to dividend. All the Shares are
the securities validly issued and fully paid. All of the Company’s shareholders
have equal voting rights.

9
C.5 Restrictions Not applicable. The Shares are freely transferable according to
on Cayman Islands law and the Company’s Articles of Association.
transferability
C.6 Admission to The Shares are listed on the Oslo Stock Exchange, under Oslo
trading Børs ticker symbol “SIOFF”. The listing on the Oslo Stock
Exchange of the New Shares is subject to the approval of the
Prospectus by the Norwegian Financial Supervisory Authority
(Norwegian: Finanstilsynet) under the rules of the Norwegian
Securities Trading Act. Such approval was granted on 26 May
2017. The first day of trading of the New Shares on the Oslo Stock
Exchange, will be on or about 23 June 2017.
C.7 Dividend The priorities for the use of Company funds are determined by
policy the Board of Directors and recommendations of Management
influenced by existing conditions. At present, priorities for use of
funds in order of importance are repayment of debt, investment
opportunities in the business, and the return of capital to the
shareholders in form of share buy-back or dividends.

Section D – Risks

D.1 Key risks Prospective investors should consider, among other factors, the
specific to the following financial risks relating to the Group:
Group or its
industry • The Group is financed by debt and equity. If the Group
requires additional equity financing, it may be unable to
raise new equity, or arrange new borrowing facilities, on
favorable terms and in amounts necessary to conduct its
ongoing and future operations.

• The Group is exposed to currency risk as part of the revenue

and costs are denominated in other currencies than USD

• The Group is exposed to changes in interest rates as a

portion of the long-term interest-bearing debt is subject to
floating interest rates with the remaining amount subject to
fixed interest rates.

• The Group's vessels operate in several jurisdictions and the

Group may not be able to minimize withholding taxes when
operating vessels abroad, avoiding double taxation, and
minimizing corporate tax.

Prospective investors should consider, among other factors, the

following risks relating to the Group and its business:

• Demand for the Group’s services and products is sensitive

to oil and gas price fluctuations, low production levels and
disappointing exploration results and possible political
incidents.

• The Group's business is subject to possible liabilities caused

by technical, operational and commercial actions, harsh
weather, capsizing, groundings, collisions, engine problems,
technical problems, navigation errors and other conditions
beyond the Company’s control.

• Claims brought against the Group could result in a court

judgment or settlement or a nature or in an amount that is

10
 not covered, in whole or in part, by the Group’s insurance
or that it is in excess of the limits of the Company’s
insurance coverage.

• The Group is subject to the risk of not receiving the vessels

under construction on time, at budget and with agreed
specifications.

• There is a risk that the process of integrating the new

vessels into the Group will provoke unforeseen challenges
which may not be effectively manageable by the
organization.

• The Group's vessels' service life may be shorter than

expected.

• The market balance for offshore support vessels has

recently been negatively influenced by excessive newbuild
activity, which has led to a stronger growth in supply of
vessels than in the demand for vessels.

• The Group's operations involve the use and handling of

materials that can be environmentally hazardous.

If any of the abovementioned risks were to continue or materialise,

individually or together with other circumstances, they could have
a material and adverse effect on the Group and/or its business,
financial condition, results of operations, cash flows and/or
prospects, which could cause a decline in the value and trading
price of the New Shares, resulting in the loss of all or part of an
investment in the New Shares.
D.3 Key risks Prospective investors should consider, among other factors, the
specific to the following risks relating to the securities described herein:
securities
• To the extent that an existing shareholder does not exercise
its Subscription Rights prior to the expiry of the Subscription
Period, such shareholder will have their holdings and voting
interests diluted.

• An active trading market in the Subscription Rights may not

develop on the Oslo Stock Exchange.

• Certain existing shareholders may be unable to take up and

exercise their Subscription Rights as a matter of applicable
law.

• The Company's shares are subject to price volatility for a

number of reasons, including the Company's financial
results and general market conditions outside the
Company's control.

• If the Company raises additional funds by issuing additional

equity securities, the holdings and voting interests of
existing shareholders could be diluted.

If any of the abovementioned risks were to materialise, individually

or together with other circumstances, they could have a material
and adverse effect on the Group and/or its business, financial

11
 condition, results of operations, cash flows and/or prospects, which
could cause a decline in the value and trading price of the New
Shares, resulting in the loss of all or part of an investment in the
New Shares.

Section E – Offer

E.1 Net proceeds Subject to the completion of the Rights Offering, the Company will
and estimated raise gross proceeds of approximately NOK 190 million through
expenses issuance of the New Shares. The Rights Offering is fully
underwritten by Siem Europe S.a r.l.

The total expenses which will be covered by the Company in

connection with the Rights Offering is expected to amount to
approximately NOK 2.7 million.
E.2a Reasons for The Company intends to use the net proceeds for working capital
the Offering purposes and some minor capital investments and to serve interest
and use of and instalments on its debt in accordance with its repayment
proceeds schedules and thereby continue to reduce the Company's debt
leverage.
E.3 Terms and The Subscription Price in the Rights Offering is NOK 1.90 per New
conditions of Share. The Subscription Price represents a discount of
the Offering approximately 7.3% to the closing price of NOK 2.05 per Share as
quoted on 16 May 2017.

The Subscription Period will commence on 30 May 2017 and end on

12 June 2017 at 16:30 hours (CET). The Subscription Period may
not be extended.

Shareholders who are registered in the Company’s shareholder

register in the VPS as of 23 May 2017 (the Record Date) will receive
Subscription Rights.

Provided that the delivery of traded Shares is made with ordinary

T+2 settlement in the VPS, Shares that are acquired until and
including 19 May 2017 will give the right to receive Subscription
Rights, whereas Shares that are acquired from and including 22
May 2017 will not give the right to receive Subscription Rights.

Existing Shareholders will be granted Subscription Rights giving a

preferential right to subscribe for and be allocated New Shares in
the Rights Offering. Each Existing Shareholder will be granted
0.1187 Subscription Rights for each Existing Shares registered as
held by such Existing Shareholder on the Record Date. The number
of Subscription Rights granted to each Existing Shareholder will be
rounded down to the nearest whole Subscription Right. Each
Subscription Right will, subject to applicable securities laws, give
the right to subscribe for and be allocated one New Share in the
Rights Offering.

The Subscription Rights will be credited to and registered on each

Existing Shareholder’s VPS account on or about 23 May 2017 under
the International Securities Identification Number (ISIN)
KYG812291170. The Subscription Rights will be distributed free of
charge to Existing Shareholders.

The Subscription Rights may be used to subscribe for New Shares

in the Rights Offering before the expiry of the Subscription Period

12
 on 12 June 2017 at 16:30 hours (CET) or be sold before the end of
trading on the Oslo Stock Exchange on 8 June 2017. Acquired
Subscription Rights will give the same right to subscribe for and be
allocated New Shares as Subscription Rights held by Existing
Shareholders on the basis of their shareholdings on the Record
Date.

The Subscription Rights, including acquired Subscription Rights,

must be used to subscribe for New Shares before the end of the
Subscription Period (i.e., 12 June 2017 at 16:30 hours (CET)) or be
sold before the end of trading on the Oslo Stock Exchange on 8
June 2017. Subscription Rights which are not sold before the end
of trading on the Oslo Stock Exchange on 8 June 2017 or exercised
before 12 June 2017 at 16:30 hours (CET) will have no value and
will lapse without compensation to the holder. Holders of
Subscription Rights (whether granted or acquired) should note that
subscriptions for New Shares must be made in accordance with the
procedures set out in this Prospectus.

The Subscription Rights will be fully tradable and listed on the Oslo
Stock Exchange with ticker code "SIOFF T" from 30 May 2017 until
the end of trading on the Oslo Stock Exchange on 8 June 2017.

The Rights Offering will be completed. If the Rights Offering is not

fully subscribed, the Underwriting Agreement will remain in full
force and effect and secure a fully subscribed Rights Offering.
E.4 Material and The Manager or its affiliates have provided from time to time, and
conflicting may provide in the future, investment and commercial banking
interests services to the Company and its affiliates in the ordinary course of
business, for which they may have received and may continue to
receive customary fees and commissions. The Manager, its
employees and any affiliate may currently own Existing Shares in
the Company. Further, in connection with the Rights Offering, the
Manager, its employees and any affiliate acting as an investor for
its own account may receive Subscription Rights (if they are
Existing Shareholders) and may exercise its right to take up such
Subscription Rights and acquire New Shares, and, in that capacity,
may retain, purchase or sell Subscription Rights or New Shares and
any other securities of the Company or other investments for its
own account and may offer or sell such securities (or other
investments) otherwise than in connection with the Rights Offering.
The Manager does not intend to disclose the extent of any such
investments or transactions otherwise than in accordance with any
legal or regulatory obligation to do so.

E.5 Selling Not applicable.

Shareholders
and lock-up
E.6 Dilution The dilutive effect following the Rights Offering represents an
resulting from immediate dilution of approximately 10.62% for Existing
the Offering Shareholders who do not participate in the Rights Offering.
E.7 Estimated Not applicable. The Company will not charge any costs, expenses
expenses or taxes directly to any shareholder or to any investor in connection
charged to with the Rights Offering.
investor

13
2. RISK FACTORS

An investment in the Company and the New Shares involves inherent risks. Before making
an investment decision with respect to the New Shares, investors should carefully consider
the risk factors set forth below and all information contained in this Prospectus, including
the Financial Statements and related notes. The risks and uncertainties described in this
Section 2 are the principal known risks and uncertainties faced by the Group as of the date
hereof that the Company believes are relevant to an investment in the New Shares.

An investment in the New Shares is suitable only for investors who understand the risks
associated with this type of investment and who can afford to lose all or part of their
investment. The absence of negative past experience associated with a given risk factor
does not mean that the risks and uncertainties described in that risk factor are not a
genuine potential threat to an investment in the New Shares. If any of the following risks
were to materialise, individually or together with other circumstances, they could have a
material and adverse effect on the Group and/or its business, financial condition, results
of operations, cash flows and/or prospects, which could cause a decline in the value and
trading price of the New Shares, resulting in the loss of all or part of an investment in the
New Shares.

The order in which the risks are presented does not reflect the likelihood of their occurrence
or the magnitude of their potential impact on the Group’s business, financial condition,
results of operations, cash flows and/or prospects. The risks mentioned herein could
materialise individually or cumulatively. The information in this Section 2 is as of the date
of this Prospectus. Furthermore, risks that the Company currently feels are not material
could in the future prove to become significant to the Group.

2.1 Financial risks

2.1.1 Financial leverage

The companies in the Group are financed by debt and equity. If the Group fails to repay
or refinance its loan facilities, additional equity financing may be required. There can be
no assurance that the Group will be able to repay its debts or extend their re-payment
schedule through re-financing of the loan agreements or not experience net cash flow
shortfalls exceeding the Group’s available funding sources or to comply with a minimum
cash requirements, nor can there be any assurance that the Group will be able to raise
new equity, or arrange new borrowing facilities, on favorable terms and in amounts
necessary to conduct its ongoing and future operations, should this be required.

In the event of insolvency, liquidation or similar event relating to a subsidiary of the

Company, all creditors of such subsidiary would be entitled to payment in full out of the
assets of such subsidiary before the Company, as a shareholder, would be entitled to any
payments. Defaults by, or the insolvency of, a subsidiary of the Company could result in
the obligation of the Company to make payments under parent company guarantees
issued in favour of such subsidiary.

2.1.2 Interest rates and currency fluctuations

For the Company, USD is the functional and reporting currency. The Group is exposed to
currency risk as part of the revenue and costs are denominated in other currencies than
USD. The Group is also exposed to currency risk due to long-term debt in various
currencies other than USD. The Company is exposed to foreign exchange risk of its
subsidiaries, including the development of the Brazilian real. The Shares listed on the Oslo
Stock Exchange are quoted in NOK. There is a foreign exchange risk associated with
conversion from the reporting currency to NOK.

The Group is exposed to changes in interest rates as a portion of the long-term interest-
bearing debt is subject to floating interest rates with the remaining amount subject to

14
fixed interest rates. This may affect the Company’s financial results significantly.

2.1.3 Risks related to loan agreements, restrictions on dividends and distribution

The Group’s current and future loan agreements may include terms, conditions and
covenants which impose restrictions on the operations of the Group. These restrictions
may negatively affect the Group’s operations, hereunder, but not limited to, the Group’s
ability to meet the fierce competition in the market in which it operates.

2.1.4 Additional capital requirements

The Company may require additional capital in the future due to unforeseen liabilities or
in order for it to take advantage of business opportunities. There can be no assurance that
the Company will be able to obtain necessary financing in a timely manner on acceptable
terms. Future share issues may result in the existing shareholders of the Company
sustaining dilution to their relative proportion of the equity in the Company.

2.1.5 Risks related to possible tax liabilities

The Group will seek to optimize its tax structure to minimize withholding taxes when
operating vessels abroad, avoiding double taxation, and minimizing corporate tax paid by
optimally making use of the shipping taxation rules that applies. It is, however, a
challenging task to optimize taxation, and there is always a risk that the Group may end
up paying more taxes than the theoretical minimum, which may in turn affect the financial
results negatively.

2.2 Commercial risks

2.2.1 Market risks

Demand for offshore support vessel services in connection with exploration, development
and production in the offshore oil and gas industry is particularly sensitive to oil and gas
price fluctuations, low production levels and disappointing exploration results as well as
possible political incidents. Demand for the Group’s services and products may also be
negatively impacted by increased supply of similar or other complementary vessels into
the markets where the Group operates.

2.2.2 Possible liabilities

Offshore support operations are associated with considerable risks and responsibilities,
including technical, operational, environmental, commercial and political risks. In addition,
offshore operations may be affected by harsh weather, capsizing, groundings, collisions,
engine problems, technical problems, navigation errors and other conditions beyond the
Group’s control.

2.2.3 Inadequate insurance

Although the Group maintains liability insurance coverage it believes to be in line with
industry practice, any claim that may be brought against the Group could result in a court
judgment or settlement or a nature or in an amount that is not covered, in whole or in
part, by the Group’s insurance or that it is in excess of the limits of the Company’s
insurance coverage. The Group’s insurance policies also have various exclusions, including
for certain geographic regions, gross negligence caused by the Company or its employees
or vessel personnel and for certain pollution or environmental damage. The Group will
have to pay any amounts awarded by a court or negotiated in a settlement that exceed
the Company’s coverage limitations or that are not covered by the Group’s insurance, and
the Group may not have, or be able to obtain, sufficient capital to pay such amounts. This
may have a material adverse effect on the Group’s business, revenue, profit and financial
condition.

2.2.4 Dependence on key employees

15
The development of the Company is dependent on the ability of the senior management
to manage the current project portfolio and obtain new and profitable contracts. Although
no single person is solely instrumental in fulfilling either of these business objectives, there
is no guarantee that they will be achieved to the degree expected.

The Group’s business and prospects depend to a significant extent on the continued
services of its key personnel. Financial difficulties and other factors could negatively impact
the Group’s ability to retain key employees. The loss of any of the members of its senior
management or other key personnel or the inability to attract a sufficient number of
qualified employees could adversely affect its business and results of operations.

2.2.5 Service life and technical and operational risks

The service life of modern offshore support vessels is generally considered to exceed thirty
years, but may ultimately depend on its efficiency and demand for such equipment. There
can be no guarantees that the Group’s current and future fleet will have a long service life.
The vessels may have particular unforeseen technical problems or deficiencies, new
environmental requirements may be enforced, or new technical solutions or vessels may
be introduced that are more in demand than the Group’s vessels, causing less demand
and use of these vessels.

2.2.6 New capacity entering the market

It typically takes approximately 12-18 months from the time an offshore support vessel is
ordered until it is delivered, depending on its complexity and the order backlog at the ship
yards. The market balance for offshore support vessels has recently been negatively
influenced by excessive newbuild activity, which has led to a stronger growth in supply of
vessels than in the demand for vessels. This may consequently negatively affect the results
and asset values of the Group.

2.2.7 The risk of new technological developments

The market for oil and gas technologies has developed towards a single competitive market
for concepts and technological solutions. Companies with the best solutions will therefore
achieve a strong competitive position in both markets. In the long run, a competitive
advantage in products and services for offshore services will be achieved through
continuous development and commercialization of new technical solutions. There can be
no assurance that the Group will be able to maintain its current competitive position in
this respect.

The Group’s ability to secure its intangible rights legally is important since the development
of the Group will to some extent depend on its technological advances. Third parties might
act in violation of these rights and it is not possible to achieve protection of intangible
rights in certain countries. There can be no assurance that the Group will be able to
sufficiently secure its intellectual property and other intangible rights. This is in particular
relevant for the PCD technology developed by Siem WIS AS.

2.3 Other risks

2.3.1 Political risks

The Group has among others operations and investments in countries that are regarded
as unsafe and politically unstable. Activities in these countries will often involve greater
risk, including unfavorable changes in tax laws and other laws, partial or full expropriation,
currency volatility and restrictions on currency transfer, disruption of operations because
of labor disputes or political riots or wars, and some individual countries’ requirements for
some local ownership interests.

The Group’s operations are moreover subject to laws, regulations and supervisory rules in
the country where the activity is performed. The operations of the Group may be

16
negatively affected by changes in environmental laws and other regulations that can result
in large expenses in, for example, modification of vessels and changes in the operation of
vessels.

2.3.2 Environmental risks

The Group’s operations involve the use and handling of materials that can be
environmentally hazardous. Environmental legislation has in general become stricter in
the countries in which the Group operates. These laws and regulations might expose the
Group to liability due to events caused by others or by it, even though the actions were
consistent with existing laws at the time. In the event of liability arising due to the action
of a customer, the Group would expect to get some contractual compensation from that
customer through contractual regulations for events such as pollution and other
environmental damage. However, there can be no assurance that the compensation
granted in such events, if at all granted, will cover the losses suffered.

2.4 Risks related to the Shares and the Rights Offering

2.4.1 Dilution as a result of non-participation in Rights Offering.

Subscription Rights that are not exercised by the end of the Subscription Period will
automatically expire without compensation to the holder. To the extent that an existing
shareholder does not exercise its Subscription Rights prior to the expiry of the Subscription
Period, whether by choice or due to a failure to comply with procedures set forth in Section
13, "The Rights Offering", or to the extent that an existing shareholder is not permitted to
subscribe for New Shares, such existing shareholders’ proportionate ownership and voting
interests in the Company after the completion of the Rights Offering will be diluted. Even
if an existing shareholder elects to sell its unexercised Subscription Rights, or such
Subscription Rights are sold on its behalf, the consideration it receives on the trading
market for the Subscription Rights may not reflect the immediate dilution in its
shareholding as a result of the completion of the Rights Offering.

2.4.2 Absence of active trading market in Subscription Rights.

An active trading market in the Subscription Rights may not develop on the Oslo Stock
Exchange. In addition, because the trading price of the Subscription Rights depends on
the trading price of the Shares, the price of the Subscription Rights may be volatile and
subject to the same risks as described for the Shares in the below risk factors. The existing
volatility of the Shares may also have an effect on the volatility of the Subscription Rights.

2.4.3 Sales of Subscription Rights.

Certain existing shareholders may be unable to take up and exercise their Subscription
Rights as a matter of applicable law. The Subscription Rights of such existing shareholders,
with the exception of Subscription Rights held through financial intermediaries, will, to the
extent possible, be sold on their behalf in the market by the Manager pursuant to
instructions from the Company, but no assurance can be given as to whether such sales
may actually take place or as to the price that may be achieved. Other existing
shareholders may also choose not to exercise their Subscription Rights and therefore sell
them in the market. The sale of Subscription Rights by or on behalf of existing shareholders
could cause significant downward pressure on, and may result in a substantial reduction
in, the price of the Subscription Rights and the Shares.

2.4.4 Volatility of the share price

The trading price of the Shares could fluctuate significantly in response to quarterly
variations in operating results, adverse business developments, interest rate, changes in
financial estimates by securities analysts, matters announced in respect of major
customers or competitors, or changes to the regulatory environment in which the
Company operates.

17
The market price of the Shares could decline due to sales of large numbers of Shares in
the market or the perception that such sales could occur. Such sales could also make it
more difficult for the Company to offer equity securities in the future at a time and at a
price that are deemed appropriate.

In recent years, the securities markets in Norway and elsewhere in Europe, have
experienced a high level of price and volume volatility, and the market price of securities
of many companies have experienced wide fluctuations in price which have not necessarily
been related to the operating performance, underlying asset values or prospects of such
companies. There can be no assurance that continual fluctuations in price will not occur.
It is likely that the quoted market price for the Shares will be subject to market trends
generally, notwithstanding the financial and operational performance of the Company.

2.4.5 Difficulties for foreign investors to enforce civil liabilities in Cayman Islands
The Company is organized under the laws of Cayman Islands. The rights of holders of
Shares are governed by Cayman Islands law and by the Articles of Association. These
rights may differ from the rights of shareholders in other jurisdictions, including Norway.
As a result, it may, inter alia, be difficult for a shareholder to take legal action against the
Company and/or its directors in the investor’s own jurisdiction, or to enforce against them
judgments obtained in non-Cayman Islands courts.

2.4.6 Restrictions on ability to transfer or resell the Shares without registration under
applicable securities laws
The Shares are being offered and sold pursuant to an exemption from registration under
the U.S. and applicable state securities laws. Therefore, the Shares may only be
transferred or resold in the U.S. in a transaction registered under or exempt from the
registration requirements of the applicable securities laws, and U.S. Shareholders may be
required to bear the risk of their investment for an indefinite period of time. The Company
does not currently anticipate registering any resale transaction under applicable securities
laws.

2.4.7 Dilution as a result of future share issue

The Company may in the future decide to offer additional Shares or other securities in
order to finance new capital-intensive projects, in connection with unanticipated liabilities
or expenses or for any other purposes. There is no assurance the Company will not decide
to conduct further offerings of securities in the future. Depending on the structure of any
future offering, certain existing shareholders may not have the ability to purchase
additional equity securities. If the Company raises additional funds by issuing additional
equity securities, the holdings and voting interests of existing shareholders could be
diluted.

18
3. RESPONSIBILITY FOR THE PROSPECTUS

This Prospectus has been prepared in connection with the Rights Offering described herein.

The Board of Directors of Siem Offshore Inc. accepts responsibility for the information
contained in this Prospectus. The members of the Board of Directors confirm that, after
having taken all reasonable care to ensure that such is the case, the information contained
in this Prospectus is, to the best of their knowledge, in accordance with the facts and
contains no omissions likely to affect its import.

26 May 2017

Eystein Eriksrud Kristian Siem

Board member and Chairman Board member

Michael Delouche Alexander Monnas John C. Wallace

Board member Board member Board member

19
4. GENERAL INFORMATION

4.1 Presentation of financial and other information

4.1.1 Financial information
See section 8.2, "Selected financial information–Summary of accounting policies and
principles" for further details regarding the basis for the Group's financial information.

4.1.2 Industry and market data

This Prospectus contains statistics, data, statements and other information relating to
markets, market sizes, market shares, market positions and other industry data pertaining
to the Group's business and the industries and markets in which it operates. Unless
otherwise indicated, such information reflects the Group's estimates based on analysis of
multiple sources, including data compiled by professional organisations, consultants and
analysts and information otherwise obtained from other third party sources, such as
annual and interim financial statements and other presentations published by listed
companies operating within the same industry as the Group, as well as the Group's internal
data and its own experience, or on a combination of the foregoing. Unless otherwise
indicated in the Prospectus, the basis for any statements regarding the Group's
competitive position is based on the Company's own assessment and knowledge of the
market in which it operates.

The Company confirms that where information has been sourced from a third party, such
information has been accurately reproduced and that as far as the Company is aware and
is able to ascertain from information published by that third party, no facts have been
omitted that would render the reproduced information inaccurate or misleading. Where
information sourced from third parties has been presented, the source of such information
has been identified. The Company does not intend, and does not assume any obligations
to, update industry or market data set forth in this Prospectus.

Industry publications or reports generally state that the information they contain has been
obtained from sources believed to be reliable, but the accuracy and completeness of such
information is not guaranteed. The Company has not independently verified and cannot
give any assurances as to the accuracy of market data contained in this Prospectus that
was extracted from these industry publications or reports and reproduced herein. Market
data and statistics are inherently predictive and subject to uncertainty and not necessarily
reflective of actual market conditions. Such statistics are based on market research, which
itself is based on sampling and subjective judgments by both the researchers and the
respondents, including judgments about what types of products and transactions should
be included in the relevant market.

As a result, prospective investors should be aware that statistics, data, statements and
other information relating to markets, market sizes, market shares, market positions and
other industry data in this Prospectus and projections, assumptions and estimates based
on such information may not be reliable indicators of the Company's future performance
and the future performance of the industry in which it operates. Such indicators are
necessarily subject to a high degree of uncertainty and risk due to the limitations described
above and to a variety of other factors, including those described in Section 2, "Risk
factors" and elsewhere in this Prospectus.

4.1.3 Rounding
Certain figures included in this Prospectus have been subject to rounding adjustments (by
rounding to the nearest whole number or decimal or fraction, as the case may be).
Accordingly, figures shown for the same category presented in different tables may vary
slightly. As a result of rounding adjustments, the figures presented may not add up to the
total amount presented.

20
4.2 Forward-Looking Statements
This Prospectus includes forward-looking statements, including, without limitation,
projections and expectations regarding the Group's future financial position, business
strategy, plans and objectives. All forward-looking statements included in the Prospectus
are based on information available to the Company, and views and assessments of the
Company, as at the date of this Prospectus. Except as required by the applicable stock
exchange rules or applicable law, the Company does not intend, and expressly disclaims
any obligation or undertaking, to publicly update, correct or revise any of the information
included in this Prospectus, including forward-looking information and statements,
whether to reflect changes in the Company's expectations with regard thereto or as a
result of new information, future events, changes in conditions or circumstances or
otherwise on which any statement in this Prospectus is based.

When used in this document, the words "anticipate", "assume", "believe", "can", "could",
"estimate", "expect", "intend", "may", "might", "plan", "should", "will", "would" or, in each
case, their negative, and similar expressions, as they relate to the Company, its
subsidiaries or its management, are intended to identify forward-looking statements. The
Company can give no assurance as to the correctness of such forward-looking statements
and investors are cautioned that any forward-looking statements are not guarantees of
future performance. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the actual results, performance or
achievements of the Company and its subsidiaries, or, as the case may be, the industry,
to materially differ from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such forward-looking statements are based
on numerous assumptions regarding the Group's present and future business strategies
and the environment in which the Company and its subsidiaries operate.

Factors that could cause the Company's actual results, performance or achievements to
materially differ from those in the forward-looking statements include but are not limited
to, the competitive nature of the markets, in which the Company operates, technological
developments, government regulations, changes in economic conditions or political
events. These forward-looking statements reflect only the Company's views and
assessment as at the date of this Prospectus. Factors that could cause the Company's
actual results, performance or achievements to materially differ from those in the forward-
looking statements include, but are not limited to, those described in Section 2, "Risk
factors" and elsewhere in the Prospectus.

Given the aforementioned uncertainties, prospective investors are cautioned not to place
undue reliance on any of these forward-looking statements.

Forward looking statements are found in sections 2, "Risk Factors", 4, "General

information, 5, "Presentation of Siem Offshore Inc.", 6, "Industry Overview", 7
"Capitalisation and indebtedness", 8, "Selected financial information, 9, "Board of
directors, management , employees and corporate governance", 10, "Corporate
information", 11 "Securities trading in Norway", 12, "Taxation", 13, "The Rights Offering",
14, "Selling and transfer restrictions and 15, "Additional information".

21
5. PRESENTATION OF SIEM OFFSHORE INC.

5.1 Overview
The Group’s primary business activity is to own and operate offshore support vessels
("OSVs") for the offshore energy service industry. The OSV fleet comprises of platform
supply vessels ("PSVs"), anchor-handling, tug, supply vessels ("AHTS vessels"), offshore
subsea construction vessels ("OSCVs"), Well-intervention vessels ("WIVs") and a variety
of other support vessels.

The Company’s fleet comprises of 45 offshore support vessels, including partly-owned

vessels.

In addition to its primary activity, the Company has also established a business division
for industrial investments. The Group's industrial investment division includes the Group's
services as a contractor within the European offshore wind farm and offshore cable lay
market, the development of applications for managed pressure drilling, a scientific core
drilling vessel, specialized engineering to develop and implement combat management
systems for navy vessels in Brazil and certain other investments.

The Company’s headquarter and corporate management team is located in Kristiansand,

Norway and additional subsidiary offices are located in Brazil, Germany, the Netherlands,
Ghana, the United States, Australia, Canada and the Cayman Islands. The Company is tax
resident in Norway.

5.2 Group structure

The chart below shows a simplified structure of the Group:

22
Siem Offshore Inc. is a holding company with no employees and is therefore dependent
on service from its subsidiaries. These services consist of administrative, operational and
corporate services provided by Siem Offshore Management AS and Siem Offshore AS.

The Group's vessels are owned by several companies within the Group. Siem Offshore
Rederi AS currently owns all Norwegian, Polish and German built vessels, except the OSCV
“Siem Spearfish” which is owned by Siem Offshore Construction Vessels AS. Further, Siem
Offshore Rederi AS owns 51% of Siem Offshore Ghana International AS, which owns the
PSV “Siem Sasha”, and 51% of Siem Meling Offshore DA which owns two PSVs.

Siem Offshore Do Brazil S.A. owns the locally built Brazilian fleet. Siem Offshore Canada
Inc. owns Secunda Canada LP ("Secunda"), which owns 5 Canadian flagged vessels. Siem
Offshore Contractors GmbH, which has the cable lay vessel (“CLV”) “Siem Aimery” and
the installation support vessel (“ISV”) “Siem Moxie” on a bareboat charter, is owned 100%
by Siem Offshore Invest AS. Siem AHTS Pool AS is owned 78.16% by Siem Offshore Inc.
and owns a fleet of 10 AHTS sister vessels.

The Group's industrial investments business division consists of the subsidiaries Siem
Offshore Contractors GmbH and Siem WIS AS, Overseas Drilling Limited which owns the
scientific core drilling vessel “JOIDES Resolution” and certain other investments, which are
owned 100% by Siem Offshore Invest AS. In addition the combat management business
in Siem Offshore do Brazil SA is included in this business division.

Below is a list of directly owned subsidiaries of the Company:

Ownership and
Company Registered office voting share

Siem Offshore AS Kristiansand, Norway 100 %

Siem Offshore Invest AS Kristiansand, Norway 100 %
Siem Offshore Rederi AS Kristiansand, Norway 100 %
Siem Offshore Construction Vessels AS Kristiansand, Norway 100 %
Siem Offshore do Brasil SA Rio de Janeiro, Brazil 100 %
Siem Offshore US Inc. Delaware, USA 100 %
Siem AHTS Pool AS Kristiansand, Norway 78 %
DSND Subsea Ltd London, UK 100 %
Siem Offshore Services AS Kristiansand, Norway 100 %
Siem Offshore Management AS Kristiansand, Norway 100 %
Siem Offshore Management (US) Inc. Texas, USA 100 %
Siem Offshore US Holding AS Kristiansand, Norway 100 %
Siem Offshore Crewing (CI) Inc. Cayman Islands 100 %

In addition, the subsidiaries own the following companies;

Share and voting

Company Registered office rights
Consub Delaware LLC Delaware, USA 100 %
Aracaju Serviços Auxiliares Ltda Rio de Janeiro, Brazil 100 %
Siem Offshore Crewing AS Kristiansand, Norway 100 %
Siem Meling Offshore DA Stavanger, Norway 51 %
Siem WIS AS Bergen, Norway 60 %
Siem Offshore Maritime Personnel AS Kristiansand, Norway 100 %
Siem Offshore Contractors GmbH Leer, Germany 100 %

23
 SOC Equipment and Personnel Services Groningen, The
BV Netherlands 100 %
Groningen, The
Overseas Drilling Ltd Netherlands 100 %
Siem Offshore Canada Inc. Halifax, Canada 100 %
Siem Offshore Poland Sp.z.O.O Gdynia, Poland 100 %
Siem Offshore Australia Pty Ltd Perth, Australia 100 %
Siem Offshore Real Estate GmbH Leer, Germany 100 %
Siem Offshore Contractors UK Ltd London, UK 100 %
Siem Offshore Ghana International AS Kristiansand, Norway 51%
Siem Offshore LLC Delaware, USA 100%
Consub Defesa e Tecnologia SA Rio de Janeiro, Brazil 100%
Secunda Holdings SLH Halifax, Canada 100%

The Company also holds ownership interests in certain non-material subsidiaries and joint
ventures.

5.3 History
The Company traces its roots back to Det Søndenfjeldske-Norske Dampskipselskap AS
("DSND"), which was established in 1854. The main activity in DSND until 1964 was
shipping operations, with a focus on passenger transportation. In 1964, DSND’s passenger
lines service between Hamburg and Oslo was closed down, and DSND’s activity level was
then limited until 1985.

DSND operated as an investment company between 1985 and 1995, with investments
mostly in offshore related activities. By early 1990, DSND had taken ownership of several
dynamically positioned ("DP") offshore vessels. As a consequence, the board wanted to
cultivate DSND’s investment profile and strategy, and other non-offshore related
investments were gradually sold or spun-off from the company.

By 1995, the DSND owned six special offshore vessels, of which two were used for offshore
construction, two for well maintenance and two for geo-technical drilling. The company
planned for further expansion into these three business areas through the addition of
technology and human capital. DSND conducted eight acquisitions of assets or businesses
between 1995 and 2002, which gave the company a significant position within the area of
offshore maintenance and construction, both in terms of geography and resources. The
acquisition provided DSND the skills and equipment to complete total construction
contracts for deep water subsea installations, as well as the install of pipelines, floating
production, units and riser systems, and link-up and completion of subsea production
installations.

On 18 October 2001, DSND announced that they were in discussions with Halliburton on
combining their respective activities within subsea construction and related services. On
23 May 2002, the two companies announced that they had completed a final agreement
for the creation of the 50/50 joint venture company Subsea 7 Holding Inc. (formerly
named Subsea 7 Inc.), registered in the Cayman Islands. The agreement involved all
substantial subsea-related assets, personnel and existing contracts from both companies
to be included in the joint venture.

After the merger in May 2002, both Halliburton and DSND actively contributed to the
further industrial development of the Subsea 7 Holding Inc. business. During this period
Subsea 7 also consolidated its non-subsea activities through the divestment of loss-making
activities and by a more concentrated focus. The holding company was further relocated
from Norway to the Cayman Islands in the fourth quarter of 2002 through a share swap.

In 2002, DSND was renamed Siem Offshore Inc. which again subsequently changed its

24
name to Subsea 7 Inc. in 2005.

In 2002, DSND was renamed Siem Offshore Inc. which again subsequently changed its
name to Subsea 7 Inc. in 2005.

In 2004, the Company was incorporated under the name of Siem Supply Inc. as a
subsidiary of the company then named Siem Offshore Inc. (now Subsea 7 Inc.).

In July 2005, Subsea 7 decided that it would be beneficial for the further development of
both its subsea business and its non-subsea business, as well as enhance shareholder
value, to separate the subsea and the non-subsea business and give them the opportunity
to develop in distinct companies and under separate management. As a consequence, the
Company acquired the non-subsea assets of Subsea 7 not already held by the Company
and the Company was spun-off from Subsea 7.

The Company listed the Shares on the Oslo Stock Exchange in August 2005.

Early in 2006, the Company completed a merger with Rovde Shipping AS which owned or
operated six vessels, whereof three standby vessels which have subsequently been sold.
Also, during 2006, the Company acquired a majority shareholding in Siem WIS AS.
Further, the Company acquired the newbuilding contract for the vessel Siem Mariner from
OH Meling & Co AS, and entered into the joint venture Siem Meling Offshore DA which
controlled an additional two vessels. The Company also contracted four MRSVs from
Kleven Verft AS.

In 2010, Petrobras chartered four AHTS vessels from the Company for a firm period of
four years. The contract value for the firm period was approximately USD 285 million (NOK
1.9 billion), net of local taxes. The contracts for the four AHTS vessels were added to the
Brazilian activities of ten vessels in operation and eight vessels under construction at that
time. The contracts marked growth of operations in Brazil and an important step in
becoming a first class operator in Brazil.

In 2011, the company acquired the remaining 50% ownership interest in the shares of
ODL from a subsidiary of Transocean Ltd.

In the same year, the Company announced the entry into the business for submarine cable
installation, repair and maintenance projects. The Company and the shareholders of Five
Oceans Services ("FOS"), later to be renamed Siem Offshore Contractors GmbH, reached
an agreement whereby the Company acquired all shares in FOS. The transaction combined
the marine operating capacities of the Company with the engineering capabilities and
project execution expertise of FOS and formed a strong entity to meet the forecasted
market growth and customer requirements.

In 2012, Siem Offshore Contractors, the wholly owned subsidiary of the Company,
announced that it had been awarded the first contract for the renewable energy market
for the installation of the inner array grid cables as well as associated services for the
Amrumbank West offshore wind farm ("OWF") project. The contract award marked the
entry into the Offshore Renewable Energy Market for the Group. Subsequently, Siem
Offshore Contractors has been successful in winning additional contracts for OWF projects.

In 2013, the Company acquired 50% of Secunda. Secunda had more than two decades of
offshore experience in serving the oil and gas industry and at the time of the acquisition
Secunda owned and operated a fleet of six offshore support vessels on Canada’s east
coast. The ownership in Secunda provided the Company with a strategic position in
Canada’s east coast offshore sector with the aim to grow the business of Secunda and also
to develop the Company’s current business through the position represented by Secunda.

In 2014, the Company entered into agreements with a client to provide two well-

25
intervention vessels ("WIVs" or "Well-Intervention Vessels"). The vessels were
delivered in 2016 from a German yard and have an overall length of 158 meters, a beam
of 31 meters, and built in compliance with the MODU-class (Marine Offshore Drilling Units).
The agreements represented a targeted entry for the Company as vessel provider into the
segment for Well-Intervention Vessels.

In 2015, the Company decided to streamline its business by forming one dedicated
organisation for its core offshore vessel business named "Siem Offshore OSV". The
remaining business consisting of Siem Offshore Contractors, “JOIDES Resolution”, Siem
WIS, the combat management business in Brazil and certain other investments will be
organisationally separated and operated under the name of "Siem Offshore Industrial
Investments".

In 2016, the Company successfully took delivery of 6 vessels under construction,

consisting of one Oil spill recovery vessel, one AHTS vessel, one Cable Lay vessel, one
Dual Fuel PSV and two Well-intervention vessels. In 2016, the Company also acquired the
remaining 50% ownership of Secunda.

In the period 2006 to 2017, the fleet of vessels in operation has grown from 21 to 45
vessels. The fleet growth has mainly been achieved through the construction of vessels.
The Company has currently no vessels under construction.

5.4 Business objectives and strategy

The objective of the Company is to maintain and develop the Offshore Support Vessel
(OSV) activities, continue to strengthen the Contracting Business providing services for
the Offshore Windfarm Renewable Industry and other cable laying activities, and to find
strategic solutions for its other investments.

The Company intends to pursue a strategy of continued consolidation and growth, with
the aim of becoming one of the leading owners and operators of high specification OSV’s
on a global basis, and the leading contractor for the Offshore Windfarm Renewable
Industry.

5.4.1 Advanced fleet

The fleet consists of 45 advanced high-end offshore support vessel. The fleet includes large
Anchor Handling Tug Supply vessels, Platform Supply Vessels, Multipurpose field & ROV
Support Vessel, Offshore Subsea Construction Vessels and Well-Intervention Vessels
designed to meet the most challenging environments.

The Company aims at meeting the market’s demand for modern and advanced support
vessels for the global offshore oil and gas industry. This is supported by the newbuilding
activity undertaken by the Group over the last several years, which has strengthen the
Group’s offshore fleet with additional modern and, environmentally friendly and technically
advanced offshore support vessels.

5.4.2 Industrial Investments

The primary activities for Siem Offshore Contractors GmbH ("SOC") include the
installation, post-lay trenching, termination and testing of submarine composite cables
forming the inner array grid of an OWF. SOC has been technically successful in executing
its planned work scope by utilising its chartered fleet of large and high quality DP-2
installation vessels, in combination with its experienced offshore and onshore organisation.
SOC will also focus on other cable laying opportunities.

Siem WIS AS has designed and developed a pressure control device ("PCD") which can
improve managed pressure drilling ("MPD") operations. These services are increasing due
to global challenges with depleted reservoirs, drilling of additional and infield wells, and
the demand to achieve a more constant well pressure during drilling and tripping

26
operations. Global energy demand growth, combined with an increasing number of deep
sea and high pressure high temperature ("HPHT") reservoirs, and increasing emphasis on
safety management will lead to increased demand for MPD services.

The “JOIDES Resolution” is a scientific core sampling research vessel. Its mission is to
explore the Earth below the oceans of the world in order to investigate the origin and the
evolution of the Earth. The ship is a dynamically positioned non-riser drilling/coring vessel
capable of operating in water depths of 7,000 meters, and with holes cored to depths of
2,000 meters below the seafloor.

5.4.3 Professional and cost effective operations

The Group will maintain a strong focus on operating its fleet professionally and cost-
effectively and in accordance with relevant laws and regulations.

The Company has, and will continue to have, a small team of dedicated staff focusing on
core activities such as marketing, chartering, technical supervision, finance, business
development and investor relations, and may outsource services within the areas of
technical management, construction supervision and certain administrative functions to
well-qualified suppliers of such services.

5.5 Business activities

5.5.1 Introduction
The Company's business is split into two divisions:

• Siem Offshore OSV, which comprises the Group's core offshore vessel business

• Siem Offshore Industrial Investments, which comprises the Group's other

businesses

5.5.2 Siem Offshore OSV

Siem Offshore OSV’s primary activity is to own and operate OSVs for the offshore energy
service industry. The OSV fleet comprises PSVs, AHTS vessels, OSCVs, WIVs and a variety
of other support vessels including but not limited to an ISV and CLV, Brazilian built vessels
including oil spill recovery vessels ("OSRVs"), fast supply vessels ("FSVs") and fast crew
vessels ("FCVs").

Fleet

The Group’s fleet comprises 45 vessels in operation.

The average age of main vessel types in operation are seven years for AHTS vessels, five
years for OSCVs, six years for PSVs and half a year for WIVs.

The below table summarizes the main characteristics of the Group’s current fleet:

27
28
29
30
Contract coverage and operations of current fleet

The Group’s vessels are currently operating in the North Sea, of the Brazilian coast, of
east coast of Canada, of the coast of Argentina, of the coast of West Africa, of the coast
of Australia and in the Gulf of Mexico/the US Golf.

Below is an overview of the firm contracts and options for the Group’s fleet of PSVs, OSCVs,
AHTSs, ISV, CLV and WIVs in operation as of end first quarter 2017:

Contract Contract option Spot work Contract with subsidiary

1) “Siem Pearl” and “Siem Diamond” are currently in lay-up

2) The ISV “Siem Moxie” and CLV “Siem Aimery” shall primarily be utilized by the subsidiary Siem Offshore
Contractors for cable installation projects within the offshore wind-farm segment.

Secunda Canada LP

The wholly-owned company, Secunda, has ownership in a fleet of five offshore support
vessels which operate offshore Canada. Secunda is engaged in support services for
platform supply, anchor handling, rescue standby and towage in its primary area of
operation outside the coast of Eastern Canada.

Big Orange XVIII

The Company has a 41%-ownership in the "Big Orange XVIII", which is a DP-2 well
stimulation vessel.

Siem Offshore Do Brazil S.A. (trademark: Siem Consub SA)

31
The Company’s subsidiary Siem Consub SA in Brazil is an owner and operator of offshore
support vessels and crew boats in the Brazilian market. Siem Consub’s head office is
located in Rio de Janeiro in addition to bases located along the Brazilian coast. With more
than 27 years of experience in Brazil, Siem Consub is focused on offshore support
operations, submarine cable maintenance and installation, engineering and systems
integration for the defence market. Siem Consub further undertakes projects that
comprise underwater and naval technology, high quality resources and qualified
professionals. Unique solutions have been implemented but each new project brings new
challenges to overcome.

View the company web at www.consub.com.br

Below is an overview of the firm contracts and options for Big Orange XVIII, five Canadian
flagged vessels currently in operation and the smaller Brazilian flagged vessels as of end
first quarter 2017:

5.5.3 Siem Offshore Industrial Investments

Siem Offshore Industrial Investments consists of Siem Offshore Contractors, “JOIDES
Resolution”, Siem WIS, the combat management business in Brazil and certain other
investments.

Siem Offshore Contractors (SOC)

SOC is an experienced submarine cable and umbilical installation, repair and maintenance
contractor serving the worldwide offshore oil and gas as well as renewable energy
industries. SOC, a German company with its head office situated in the City of Leer, was
formed in 2003. SOC has gained experience in providing its service to the demanding
worldwide offshore oil and gas industry, meeting industry standards for quality, health,
safety and environmental protection. This has been of value when winning contracts in the
renewable energy sector. Based on its in-house resources as well as experience, SOC can
install, maintain and repair submarine cables as well as subsea umbilical, in many water
depths and geographical areas.

View the company web at www.siemoffshorecontractors.com

Below is an overview of the main projects of SOC as if end first quarter 2017:

32
 1) The project reached financial close in April 2015.

Overseas Drilling Ltd. (“JOIDES Resolution”)

The vessel “JOIDES Resolution” is owned 100% by Overseas Drilling Limited, of which the
Company owns 100%. The vessel is a highly specialized research drill ship, whose primary

33
mission is to recover core samples for scientific purposes. The vessel is currently on
contract with Texas A&M Research Foundation ("TAMRF") for the use as a scientific core
drilling vessel for the International Ocean Discovery Program. The operational firm phase
of the contract ended in fourth quarter 2013, and TAMRF has since then exercised three
of the initial 10 yearly options. In May 2016, TAMRF declared their options for the fourth
time, for a period of three times one year for the vessel, and the current option period
under the existing contract will expire at the end of September 2019. A series of four 1-
year option periods is still to be exercised by the TAMRF.

Below is an overview of the firm contracts and options for “JOIDES Resolution” as of end
first quarter 2017:

2017 2018 2019

Vessel Type Ownership 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Joides Resolution SPV 100 %
Total order backlog in % and USD mill. 100% 19 100% 26 100% 19

Contract Contract option Spot work Contract with subsidiary

Siem WIS AS

Siem WIS AS is 60% owned by Siem Offshore, and is a Norwegian Oil Service Company
which has developed and commercialized new unique drilling technology for
Underbalanced Operations ("UBO") and MPD. Subject to a successful development, the
products will enable safer and more efficient drilling and well maintenance services,
including riser-less subsea intervention services from vessels.

With the technology, challenging reservoirs such as HPHT (High Pressure High
Temperature) and ERD (Extended Reach Drilling) wells, will be drilled with better control
of your first barrier. These companies services are increasing due to global challenges with
depleted reservoirs, drilling of additional and infield wells, and the demand to achieve a
more constant well pressure during drilling and tripping operations.

View the company web at www.siemwis.com

Total Contract Backlog for the Company

The total contract backlog for the Company at 31 March 2017 was USD 1.14 billion and is
allocated as follows:
2019
(Amounts in USD millions) 2017 2018 onwards
OSVs 153 162 576
Siem Offshore Contractors 74 87 28
Other 20 26 19
Total Backlog 247 275 623

The backlog of Siem Offshore Contractors is normally based on lump sum contracts, while
the backlog of “JOIDES Resolution” included under Other is based on a firm contract period
with an agreed charter rate per day.

5.6 Material agreements

The Company believes that all of its contracts, including its financing arrangements, are
material for its business. However, the Company does not consider itself dependent upon

34
any contract in particular. The contract with Helix for the two well-intervention vessels
operating in Brazil is however of material important.

5.7 Recent trends developments

The North Sea PSV and AHTS vessel market continued to be depressed during the fourth
quarter 2016 and the first quarter 2017 with a number of vessels in lay-up. Low activity
within the oil-service industry has led to reductions in chartering rates and increased idle
periods.

Oversupply of vessels and reduced rig activity has put pressure on vessel utilization and
fixture rates.

The market for OSVs in Brazil has significantly softened following lower demand activity
from Petroleo Brasileiro SA (“Petrobras”). When disclosing its five-year business plan in
2015, Petrobras announced reduced capital expenditures and highlighted cost cutting
measures with the intension to reduce leverage going forward. In order for Petrobras to
reduce its cost base, Petrobras has initiated renegotiation of existing contracts with several
suppliers, including vessel owners. It is in the opinion of the Company that an increased
risk of such contract renegotiations or even contract cancellations for certain vessels of
the Company exists.

Going forward, the Company believes that the excess vessel capacity will last for several
years and continue to make the market difficult and might force owners to put more
vessels into lay-up. The charter rates and margins are below what is sustainable for the
industry in the long-run.

The outlook for the OSV market is expected to remain soft for several years due to reduced
investments in the offshore oil and gas industry following lower current and future
commodity prices for oil and gas, which again reduces the demand for vessels and puts
pressure on utilisation and fixture rates, coupled with excess vessel capacity. Such
imbalance between supply and demand will continue to make the market difficult and
might force owners to put more vessels into lay-up. The obtainable charter rates and
margins are below what is sustainable for the industry in the long-run.

In response to the soft OSV market, the Company has placed two AHTS vessels, “Siem
Pearl” and “Siem Diamond”, out of operations and into lay-up.

Siem Offshore Contractors continues to experience a high level of tendering activity for
EPIC-based contracts for both medium- and high-voltage submarine power cables in the
offshore windfarm market with scheduled marine installation activities to commence in
2019, 2020 and 2021 using the cable-lay vessel “Siem Aimery” and the installation support
vessel “Siem Moxie”, now referred to as the “Siem Duo” vessels by the industry.

There has been no significant change in the financial or trading position of the Group since
the end of the last financial period for which interim financial information has been
published. The Group has in connection with preparing the reporting of its fourth quarter
2016 results considered the fair value of its assets versus the respective book values. Such
considerations resulted in impairments on vessel values, intangibles and long term
receivables in the fourth quarter 2016 results.

In connection with release of the results for the fiscal 2016, the Group recorded a loss of
approximately USD 60.3 million in relation to prior years’ currency losses in a cash flow
hedge that had accumulated in other comprehensive income in the financial statements of
its wholly-owned Brazilian subsidiary, Siem Offshore Do Brazil.

After considering the ability of Siem Offshore Do Brazil to reverse the balance of
accumulated translation differences in other comprehensive income, it was concluded that
the recent termination of vessel contracts and loss of highly-probable USD cash flows and

35
the continued devaluation of the Brazilian real made it unlikely that the accumulated
balance would naturally reverse during operations. Therefore, USD 60.3 million related to
the accumulated translation differences in other comprehensive income was recognized
through profit or loss. Consequently, other comprehensive income was increased by the
removal of the USD 60.3 million and retained earnings was decreased by the same amount
of USD 60.3 million that was recorded in profit and loss; therefore, shareholders' equity
remains unchanged and there is no cash effect.

There has been no significant change in the financial or trading position of the Group since
the end of the last financial period for which interim financial information has been
published. The Group has in connection with preparing the reporting of its fourth quarter
2016 results considered impairment for its vessels. Based on the impairment assessment
as December 31, 2016, some vessels were impaired based on the difference between
carrying amount and recoverable amount (higher of fair value or value in use calculation).

5.8 Investments
At the end of 2015 the Company had approximately USD 396 million in unpaid instalments
on 8 vessels under construction. During 2016 the Company took delivery of one oil-spill
recovery vessel, one AHTS vessel, one Cable Lay vessel, one PSV and two well-intervention
vessels.

The shipbuilding contracts for 2 PSVs were cancelled in fourth quarter 2016 and first
quarter 2017 respectively. The Company has been repaid all pre-delivery instalments
made under these contracts, including interest.

As of the date of this prospectus, the Company has no vessels under construction, and is
only exposed to regular maintenance capex in its ordinary course of business.

5.9 Principal markets

The principal markets for the Company is currently the North Sea, Brazil, the Gulf of
Mexico, east coast of Canada, Australia and West Africa.

The following is the management’s assessment of the Company’s position in different

areas:

5.9.1 The North Sea

Siem Offshore holds a strong position and market share in this region, with focus on supply
services by AHTS, PSV and OSCV. Furthermore, Siem Offshore has during the last two
years delivered their first two dual fuelled PSV, for the use of either LNG or Marine Diesel
Oil, to Total E&P Norge AS and a "sister vessel" to A/S Norske Shell in third quarter of
2015. Both vessels have the most modern solutions for fire-fighting and emergency
preparedness and are chartered out on multiple year contracts.

5.9.2 Brazil

General

36
The Brazilian market is highly regulated and only locally established companies are allowed
to operate there. Currently there are approximately 387 vessels in Brazilian Waters, of
which approximately 79% is Brazilian flagged, while the foreign vessels are all under
temporary import conditions.

There are offshore drilling and production activities all along the thousands of miles of the
Brazilian coast, but the main oil provinces are Campos Basin, offshore Macaé (by far the
largest), Sergipe Basin offshore Aracaju and Rio Grande do Norte, offshore Guamaré. Siem
Offshore do Brazil has onshore facilities in Macaé and Aracaju. Promising new areas are
Santos Basin and Vitória Basin.

The main client is Petrobras, the state-controlled oil company, but there are other oil
companies expanding its offshore activities in Brazil, among them Shell, TOTAL, CHEVRON,
STATOIL, Queiroz Galvão, etc. Most of the contracts are long term, being up to eight years
term for new building vessels to two/four years for foreign vessels. However, due to the
current market scenario, and the availability of Brazilian tonnage, it is expected the next
bids considering 1-2 years contract period and focused on Brazilian flagged vessels or
foreign vessels under REB regime. The spot market is very limited. There are currently
140 Offshore Support Shipping companies duly authorized by ANTAQ governmental
agency, however, the main players are in the number of 50 companies and several are
subsidiary of major international players.

The Company has during 2016 scaled down its operations in Brazil following one AHTS,
four PSV vessels ending firm contracts with Petrobras without further extension.
Currently, Siem Offshore fleet in Brazil is composed of eight vessels.

Engineering Services
Siem Offshore Do Brazil is also a main provider of specialized engineering services to the
Brazilian Navy acting in this sector with its subsidiary Consub Defesa e Tecnologia. Among
its successfully contracts are: the Combat Management Systems supply for six frigates of
Niteroi class, the Combat Management Systems supply for the Barroso corvette, the
Combat Management Systems supply for the aircraft carrier São Paulo, and several other
jobs related to system integration, simulators and navy specialized training. Besides, there
are actions on course to apply these engineering capabilities on the oil and gas market,
seeking future opportunities.

5.9.3 The Gulf of Mexico, east coast of Canada, Australia and West Africa
The Company has successfully entered into the market in east coast of Canada, West
Africa and Australia, which is expected to grow over the coming years, with demand for
different types of vessels for general support, maintenance and special services.

The Company has successfully operated in the market in the Gulf of Mexico for about four
years. It is expected that this market will grow over the coming years, with demand for
different types of vessels for general support, maintenance and special services.

37
6. INDUSTRY OVERVIEW
This section discusses the industry in which the Group operates, which is the offshore
support vessel industry. Certain parts of the information in this Section relating to market
environment, market developments, growth rates, market trends, industry trends,
competition and similar information are estimates based on data compiled by professional
organizations, consultants and analysts; in addition to market data from other external
and publicly available sources, and the Company's knowledge of the markets, see Section
4.1.2 "General information—Industry and market data". The following discussion contains
Forward-looking Statements, see Section 4.3 "General information—Forward-looking
statements". Any forecast information and other Forward-looking Statements in this
Section are not guarantees of future outcomes and these future outcomes could differ
materially from current expectations. Numerous factors could cause or contribute to such
differences, see Section 2 "Risk factors" for further details.

6.1 Introduction
Offshore support vessels perform a wide range of services related to construction and
decommissioning work, pipe laying, support of drilling rigs and floating and fixed
installations. Offshore service vessels can be divided into three main segments; AHTS
vessels, PSVs, and various types of subsea vessels (OSCVs), which are further described
in Section 6.3—"The Offshore Support Vessel Market". The Company owns vessels in all
of the above-mentioned segments. In addition, there are various niche segments being
more specialized, such as oil spill response vessels, OSRVs and other types of vessels.

Demand for PSVs are mainly related to support of offshore platforms, rigs and floating
production units, with respect to transporting cargo between such installations/units and
supply bases onshore. PSVs have liquid tanks, dry bulk tanks and deck area for
transportation of various cargoes such as mud, brine, cement, water, oil, diesel, pipes
food, and other supplies related to production/operation of the offshore rigs/platforms.

AHTS vessels can perform the same duties, but are equipped with winches and towing
capacity, enabling them to lift and position anchors, tow rigs and floating production units
that either cannot propel themselves, or where towing is more economical due to fuel
costs. Towing of new fixed platforms or cargo barges are also relatively frequent tasks for
these vessels. A large portion of AHTS vessels' duties is related to anchoring up offshore
rigs and floating production units. Even though many new rigs have dynamic positioning
("DP") systems that enable them to hold their position using navigation systems and own
thrusters, and thus do not necessarily require the use of anchors, such DP systems require
the constant use of the rig's engines it is often more economical to be anchored up,
especially if the rig is expected to be in the same position for several weeks.

CSVs comprise of pipelay vessels, dive support vessels, heavylift / derrick barges, offshore
construction vessels, subsea vessels, seismic support vessels, well intervention vessels
and survey vessels. These types of vessels are normally utilized in the installation, light
construction, inspection, maintenance and decommissioning of subsea equipment related
to the development of oil and gas offshore. The vessels may also be utilized within certain
non-oil and gas related segments, e.g. the offshore wind industry.

6.2 Demand and key drivers

The key demand driver for offshore support vessels is the level of activity and investments
in the oil and gas sector. The oil companies' exploration and production activities, normally
referred to as "E&P spending", are based on the world's demand for oil and gas.
Furthermore, demolition of old platforms and installations and remedial work (e.g. in the
US Gulf after hurricane damages) are new important areas of work for offshore supply
vessels. Together with a growing maintenance requirement on existing drilling units,
installations and pipelines worldwide due to ageing and corrosion and need for repair and
upgrading, this also has great influence on the demand for offshore support vessels.

38
The below chart shows the Brent oil price development since 2010 as well as the forward
curve.

Brent oil price (USD/bbl)

Source: Macrobond (series: Crude Oil, Brent, Spot, FOB North Sea, ICE, Close, USD), Bloomberg (series: Brent oil forward curve,
consensus estimates) (Both series from April 2017. The data is not freely available to the public, and require a valid account at
Macrobond and Bloomberg respectively). Note: Dotted lines show average actual Brent price for the year.

In the years 2011 to 2013, oil prices (Brent) traded in the USD 90/bbl to USD 120/bbl
range, with yearly averages being stable around USD 110/bbl. This was a supportive level
for an increasing spending environment. In mid 2014 the oil price peaked at around USD
115/bbl and from there the oil price saw a dramatic fall amid an oversupplied global oil
market due to, among other thing, a rapid growth in US shale oil production. The Brent oil
price have recovered from the trough in January 2016 of about USD 27/bbl and is trading
around 55/bbl in early April 2017. The forward curve indicates a flat development for oil
prices over the next years, with an average price Brent price of USD 53.7, 53.4 and
53.6/bbl for 2018, 2019 and 2020 respectively. Consensus estimates are slightly more
positive with an estimated Brent price of USD 61/bbl and 62/bbl for 2018 and 2019,
respectively.

The level of E&P spending is a function of the prevailing oil prices. Naturally, the dramatic
fall in the oil price forced oil companies to reduce their investments and overall offshore
activity. With years of stable oil prices above USD 100/bbl, the oil companies budgeting
prices increased and hence, when the oil price dropped many projects that previously were
profitable came under review and were postponed. The low oil price environment during
2015 and 2016 has increased focus on cost efficiency among oil companies and suppliers,
leading to reduced break-even prices on many projects. Combined with increasing oil
prices, this should provide support for increased investment activity.

The graph below shows the historic global E&P spending growth:

Global E&P spending growth

39
 30%
25%
21%
18% 18% 18% 18% 19% 19%
20%
15% 15%
12%
12%
12%
9% 9% 9%10% 8%
10%
10% 6%
3% 3%2% 3%
1% 0%
0%
1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017e
-3%
-6% -5%
-10% -8%
-12%
-20%
-21%
-23%
-25%
-30%

-33%
-40%

Source: Manager's research, based on Schlumberger, Citigroup, companies, and WoodMac (March 2017). Please note that the
above chart has been compiled for illustrative purposes only, and may not perfectly depict the actual development in global E&P
spending. The Manager’s research analysts have used a number of sources, including annual and quarterly reports from
Schlumberger (the world's largest oilfield services company) which are freely available at the company's investor website:
http://investorcenter.slb.com/phoenix.zhtml?c=97513&p=irol-reportsannual. Additionally, part of the data has been based on
industry research published by Citigroup analysts. Some data has also been gathered from the Wood Mackenzie database, which
is not freely available, and can only be accessed through a valid account.

As seen in the above chart one saw strong growth in E&P spending in the years prior to
the financial crisis with annual growth rates of 15-21% in the period 2005-2008. Following
the financial crisis E&P spending saw a 12% decline in 2009 before bouncing back to double
digit growth in the period between 2010 and 2012. In 2014 E&P spending growth was flat,
before 2015 and 2016 showed decline of approximately 23% and 25%, respectively. 2017
is expected to show a decline of approximately 5%.

Going forward, E&P spending growth is naturally dependent on the development in oil
prices. The recent sharp oil price drop combined with the market’s expectations of a more
modest recovery supports an increasing focus on preserving cash flow for oil companies,
and heightened cost focus on new projects. The sharp capex cut in 2015 and 2016 is
therefore likely to be followed by a single digit reduction of E&P spending also in 2017.
This view is underpinned by already announced capex guidance from approximately 40 oil
companies, both majors, onshore, IOCs and NOCs.

Another key driver for the offshore support vessel market is the offshore drilling activity.
The demand for drilling rigs witnessed a sharp increase in the years leading up to the peak
in 2014, but has declined substantially since the sudden oil price drop. The decline
accelerated during 2015 and into 2016, and has continued over the last months, although
at a slightly slower pace. The prolonged weakness in demand for drilling rigs provides a
challenging market backdrop for offshore support vessels.

40
6.3 The Offshore Support Vessel market

6.3.1 General introduction

The offshore support vessel (OSV) market can be divided into several categories and
segments. The main categories are platform supply vessel (PSV), anchor-handling tugs
supply (AHTS) and offshore subsea construction vessels (OSCV). In addition, there are
various niche segments being more specialized. The Company owns and operates vessels
within all these categories. The market for offshore support vessels is fragmented across
segments and regions, with many owners owning/controlling fleets that can be
characterized small to medium in terms of both size and global reach.

6.3.2 Regional overview

The North Sea area consists mainly of the continental shelves of Norway, the United
Kingdom, Denmark and Netherlands. Due to the large number of oil companies and limited
distances in the region (Barents Sea being an exception), the market has seen a large spot
market both within the PSV and AHTS segment develop since the 80s. In addition, the
market provides opportunities for various term contract lengths varying from months to
several years. While Statoil has a large share of the market in Norway, the market is well
diversified in terms of oil- and service-companies. With the well-functioning spot market,
the region is often referred to as a reasonable proxy on the overall global supply/demand
balance since idle vessels in other regions (mainly Med', West-Africa and Brazil) tend to
migrate into the region.

Brazil is one of the key markets for offshore support vessels. The market is characterized
by the national oil company Petrobras being the dominant player and historically offering
long-term contract opportunities in various segments, attracting operators on a global
basis. The region has a limited spot market and term contracts have been in the range of
1-8 years. The country offers preference towards locally built tonnage both on contract
duration and by differentiating tender processes. Brazil is also highly regulated in terms of
local content requirements. Brazilian flagged vessels are also in a position to block foreign
flagged vessels when these are up for their annual “Certification of Charter Authorization”
renewal. Given the declining activity in the region and an increasing number of Brazilian
flagged vessels becoming available, a number of foreign flagged vessels have seen their
contracts cancelled over the last year. Siem Offshore is no exception, and the company
has experienced vessels being blocked by local tonnage and consequently lost contracts.
Currently, the Brazilian fleet consists of 8 vessels in operation.

The US Gulf of Mexico is characterized by the Jones Act regulation for the PSV and AHTS
segment, since operators need to comply with this act to be able to qualify for operations
in this region. According to the Jones Act, goods and passengers can only be transported
between U.S. ports by water in U.S. made ships that are owned by U.S. citizens and crewed
by U.S. citizens. Consequently, the region is only served by US operators. With the Jones
Act follows also a large domestic shipbuilding industry. The region holds a large spot market
as well as a term market with various contract durations.

West Africa holds various regional markets related to each country in the region, the largest
markets being Angola and Nigeria. Each market is unique in terms of local content
requirements. The region offers smaller spot markets, but by nature is characterized as
various terms markets. The region may offer certain challenges related to logistics,
including dry-docking and maintenance of vessels/equipment.

Asia is similar to West Africa in terms of various local/regional markets. While the port of
Singapore provides a regional hub for vessels standing idle or in-between contracts, there
is no single spot market in the region and also term markets are characterized by the

41
country of operation. The market is also characterized by being the largest new build
market in the offshore support vessel industry with the key build country being China.

6.3.3 Platform Supply Vessels

The supply vessel market is usually divided into two main areas, namely vessels for towing
and anchor handling, and for general supply to offshore units (rigs, barges, fixed
installations or shore bases), in the industry called general supply duties. Such tasks can
be carried out by both AHTS vessels and PSVs. However, the operations of a PSV are a
main rule limited to carry out storage duties and supply duties. Both categories of vessels
can be divided further into sub segments according to their capabilities, as a number of
such vessels do have cross-over capacities into other categories and related segments. Oil
Recovery, Fire Fighting, ROV Surveys and Standby ERRV services are some examples of
such capacities.

The market for offshore vessels was very strong in most of 2005-2008, reaching record
levels in the North Sea. The market has been more volatile since 2009 with generally lower
and more fluctuating fleet utilization, and as a result, also fluctuating day rates for the
vessels.

PSVs are specifically designed for transport of all required supplies, either as deck cargo
or under deck in dedicated tank systems to and from offshore installations. On deck the
vessels may carry containers, drill pipes and other equipment. Under deck the vessels may
carry a variety of different fluids in separate tanks, like mud & brine, cement or other dry
bulk, fresh water, fuel and/or special products like methanol and drill cuttings for the
drilling program.

PSVs are mainly classified according to the following capacities:

− Size of free deck area

− Total carrying capacity in dead weight tons (dwt)

− Type and capacity of special tanks carrying mud & brine, fuel, dry bulk, methanol
etc.

Historically, a PSV with dwt above 2,000 has been considered large. However, as the trend
continues towards larger and larger vessels, PSVs with dwt between 3,000 and 4,000 are
now considered medium-sized and vessels with a carrying capacity above 4,000 dwt are
considered large. Classified by deck area, this corresponds to approximately 500-800 m2
for medium-sized vessels, and above 800 m2 for large vessels.

Siem Offshore currently has 9 fully owned PSVs as well as 3 that are partially owned. Of
the fully owned vessels, 7 have carrying capacity above 4,000 dwt and 5 have capacity
between 3,000 and 4,000 dwt. Siem currently has no PSVs under construction.

The PSV segment has seen substantial contracting of new builds in the years leading up to
the oil price collapse in 2014, and there are quite a large number of vessels scheduled for
delivery in 2017. However, the low delivery rates in 2015/2016 emphasize the fact that
the order book remains overstated and it is also worth mentioning that a substantial part
of the order book consists of smaller and less advanced vessels mainly under construction
in the Far East. A significant part of these vessels may be subject to significant delays as
well as potential cancellations. Potentially mitigating the order book is the relatively
significant number of vessels built in the 1980s still in service. We have already seen an
increasing number of older vessels being phased out and given the current challenging
market, this trend is likely to continue. It should also be taken into consideration the
uncertainty related to vessels currently cold-stacked. Depending on the length of the

42
downturn and the maintenance on the vessels, this may be a source to both supply side
reduction (vessels not able to return to active service) or extended oversupply (vessels
able to return to the market through re-activation and investments). As to YTD deliveries
in the PSV segment, we have seen a similar trend as in 2016 with actual deliveries running
significantly behind the planned deliveries.

6.3.4 Anchor Handling Tug-Supply vessels

AHTS vessels are specifically designed for towing and anchor handling operations of rigs
and other offshore units. Furthermore, the vessels are often prepared for fire fighting (FiFi),
rescue operations (standby) and oil recovery (ORO) capabilities, as well as additional
opportunities like crane for ROV operations, A-frame, large AHC crane for construction and
deepwater work. The AHTS is, like a PSV, also used for general supply service between
shore bases and platforms, transporting different types and grades of cargo both on deck,
as well as under deck in tank systems. In the case where the oil activity is in deeper waters,
the anchor handling operations become heavier and focus is put on the power of the AHTS
vessels, station keeping and winch capabilities, in addition to the vessels' stability,
capacities and functionality in general. A general trend for the segment has been to provide
for safer and more efficient operations in more challenging conditions, as well as various
HSE issues for safer operations for the vessels crew.

As oil activity has moved into deeper waters, the main focus has been on the vessels' winch
and engine capacities, in order to offer the oil companies a safe and efficient operation in
the challenging conditions of the deepwater area. AHTS vessels are classified mainly
according to their towing capacity, but other parameters are also considered:

− Bollard pull (tons)

− Engine (brake horse power)

− Winch capacities (tons)

− Cargo carrying capacity (tanks and deck space)

− Dynamic positioning systems, Rescue characteristics and Fire-fighting and oil

recovery capabilities

Brake horse power (BHP) is the most common parameter for categorizing AHTS vessels.
The AHTS fleet is normally divided into vessels with less than 12,000 BHP (small sized),
between 12,000 and 16,000 BHP (medium size), between 16,000 and 20,000 BHP (large)
and above 20,000 BHP (very large). Owners have traditionally focused on vessels with
between 12,000 and 18,000 BHP, but with a push in recent years for the larger high-end
vessels above 20,000 BHP due to the fact that the offshore industry has increased its
presence in deeper water and outer areas where more and special capacity are required.
Siem Offshore has decided to focus on the high-end of the AHTS market, i.e. vessels above
20,000 BHP.

In 2011 Siem Offshore completed a new build program of ten AHTS vessels in the category
"very large", of which eight vessels are owned by Siem Offshore. The AHTS newbuilds are
of VS 491 design, which meets the current and future requirements of the industry serving
the next generation of drilling rigs and floaters for global offshore and deep water work.
The AHTS vessels are of designs promoting favourable fuel consumption and consequently
low emissions as a result of their optimal hull lines, Selective Catalysts Reduction (SCR)
and hybrid propulsion, high speed and large all round capacities. The AHTS newbuilds have
bollard pull of 275 tons, prepared for ROV operations, 60 men accommodation and have a
lot of optionality such as A-frame (300t), large AHC crane (300t) etc. Today, the company
owns these ten high-end AHTS vessels in addition to four other Canadian flagged AHTS
vessels that are 100% owned.

43
Similar to the PSV market, there are also quite a number of AHTS vessels under
construction. However, a large number of the AHTS vessels are smaller and less
sophisticated vessels being built in the Far East where one should expect delays and
potential cancellations. There are also a large number of AHTS vessels that are built from
mid 1970s to mid 1980s, which are obvious phase out candidates under the current market
environment. The normal lifetime of an AHTS vessel is generally considered to be around
30 years. As for deliveries YTD in the AHTS segment, the manger has have seen a similar
trend as in 2016 with actual deliveries running significantly behind the planned deliveries.

6.3.5 Offshore Subsea Construction Vessels

OSCV, often quoted as subsea vessels, are utilized in the installation, light construction,
inspection and maintenance of subsea equipment related to the extraction of oil and gas
offshore. The vessels may also be utilized within certain non-oil and gas related segment,
e.g. the offshore wind industry. The OCSVs can further be divided into various
subcategories:

- Pipelay Vessels
- Dive Support Vessels
- Heavylift/Derrick Barges
- Offshore Construction Vessels
- Seismic Support Vessels
- Well-Intervention Vessels
- Survey Vessels

Siem Offshore currently has a wide range of vessels in the OSCV category, including a
series of five vessels operating in the subsea support/IMR role along with two MRSV
(Multipurpose field & ROV support vessels). The company also has certain vessels in
operation targeting the offshore wind market and the well intervention market. Siem
Offshore’s current OSCV fleet includes Siem Marlin, Siem Helix 1, Siem Helix 2, Siem
Stingray, Siem N-Sea, Siem Spearfish and Siem Baracuda (previously Siem Daya 2).

The OSCV segment in today’s form is a relatively new segment as the majority of vessels
have been ordered since the mid 2000s following the oil companies’ focus on subsea
solutions. There are however quite a few older vessels, but these are generally less
sophisticated and not comparable to standards seen on modern vessels. Prior to the
financial crisis there was large ordering activity with vessels being delivered in 2008 and
2010.

Over the last years there has been a lot of subsea activity. The below chart shows the total
subsea order intake for the three major subsea contractors from 2003 to 2017, and this
gives a good indication of the demand for subsea vessels. As seen from the chart, their
order intake was relatively stable at around USD 15 billion per year in the period between
2006 and 2010 while increasing to around USD 26 billion in 2014. Following the collapse
in oil prices lately, 2015 showed a significant decline of 58% year-on-year. For 2016, order
intake was up 9% to approximately USD 12bn.

Subsea order intake (USDbn):

44
Source: Manager’s research (April 2017)

6.3.6 Specialized vessels and others

Siem Offshore also operates several specialized vessels. Some of these vessels are listed
and described below:

− Cable Lay Vessel Siem Aimery: the vessel was purpose built to work for the wholly
owned subsidiary Siem Offshore Contractors (SOC) and performs project work
within the offshore renewable wind industry with specialized capabilities towards
cable laying.

− Installation Support Vessel Siem Moxie: the vessel was built to work for the wholly
owned subsidiary SOC and performs project work within the offshore renewable
wind industry with specialized capabilities within cable pull-in, termination and
testing activities, including motion-compensated gangway.

− Well stimulation vessel Big Orange XVIII: DP2 well stimulation vessel with capability
to increase production from oil and gas wells.

− Well Intervention Vessels, Siem Helix 1 and Siem Helix 2: the vessels are in
compliant with the mobile offshore drilling unit (MODU) and well intervention unit
2 class notations. The Siem Helix vessels are equipped with a dynamic positioning
system (Dynpos Autro) and a subsea crane with a capacity of 250 tonnes at a depth
of 3000m. Accommodation is provided for 150 people. The vessels will perform well
intervention services.

− JOIDES Resolution: core sampling research vessel capable of operating in water

depths of 7,000 meters, and with holes cored to depths of 2,000 meters below the
seafloor.

− Small vessels in Brazil: the Company operates a fleet of smaller, Brazilian built
vessels with the majority of vessels operating under long-term contracts with
Petrobras.

45
6.4 Rate development and utilisation
The offshore support vessel market is cyclical, and spot market rates in the North Sea
region are characterized by significant volatility. This relates mostly to the underlying
cyclicality of the business, but also to variations between summer and winter season and
to changes within shorter time periods. In particular, the summer season is generally
characterized by high activity levels. To a large extent, this can be attributed to the weather
conditions in the North Sea Region. The current spot rates for PSVs in the North Sea are
very low and insufficient to cover costs. The weak market has triggered several operators
to lay up vessels in order to cut losses. Rates for longer contracts generally fluctuate less,
but are highly correlated with the spot market. As mentioned above, the regions outside
the North Sea do not have as visible and efficient spot market. The development and status
in the North Sea region gives a good indication of the conditions of charters elsewhere in
the world. Other regions are characterized more by medium to long term charters, but
facing the same negative trends on both rates and utilization as seen in the North Sea
area.

While the industry trend has been operators having preference for newer and more efficient
vessels (both fuel and operational) and consequently improving utilization vs. older
tonnage, the weak market trends are seen across vessel segments (size and age). The PSV
spot market has been weak since late 2014 and North Sea PSV rates have bottomed out
at a level barely covering operating expenses. With softer activity levels, market
participants cut costs by stacking vessels there is no employment for / cover its own costs.

The challenging market conditions are also weighing on the market for long term contracts.
In general, PSV contracts that extend throughout 2016 and 2017 have a very low EBITDA-
margin. This is similar for the AHTS segment, although some good contracts have been
entered into in specific markets (for example Brazilian flagged vessels, which, as a general
rule, have priority over foreign vessels in Brazilian jurisdictional waters under the Brazilian
Shipping Act (Brazilian Law 9.432/97). However, this should be viewed as a special case
since the law of supply and demand does not necessarily work in such situations). The
overall picture is that utilization and rates are down across the board, regardless of the
segment and region. Day rates for subsea/construction tonnage have generally held up
well for the vessels that have been able to find work due to the more specialized / fit for
purpose nature of the business and generally healthier supply/demand balance than the
commoditized AHTS/PSV segments.

Offshore installation campaigns for projects in tender stage are now mainly for 2018 start-
up. Subsea tie-back and maintenance activity is expected to pick up during 2017, coming
from an absolute minimum activity level. This is especially visible for the North Sea, where
aging infrastructure means that new developments in many cases will require modification
and maintenance activity. In Norway, two thirds of the new development projects the
manager has identified are tie-backs or upgrades of existing fields, which is expected to
drive maintenance activity for years after original life-of-field estimates. While smaller tie-
back projects could drive an uptick in activity level already in 2017, larger standalone
projects that are being sanctioned in 2017 will typically have most of their offshore work
in 2018-2020. The Manager expects spending levels in 2017 to be below 2016, but
improved economics could mean the activity level could be flat or increase. The early
recovery is likely to be slow, and a meaningful uptick in activity is not expected until 2018.

46
7. CAPITALISATION AND INDEBTEDNESS

The information presented below should be read in conjunction with the other parts of
this Prospectus, in particular Section 8 "Selected financial and other information", and
the Group's financial statements and the notes related thereto, included in Appendix B of
this Prospectus.

Other than as set forth as above, there has been no material change to the Group’s
unaudited consolidated capitalisation and net financial indebtedness since 31 March
2017.
7.1 Capitalisation

The following table sets forth information about the Group’s consolidated capitalisation as
at 31 March 2017.

As of
31 March
2017
In USD 1000 (unaudited)
Indebtedness
Total current debt: 264 806
Guaranteed and secured ………………………………………………………….. 118 726
Guaranteed but unsecured ……………………………………………………….
Secured but unguaranteed ……………………………………………………….
Unguaranteed and unsecured ………………………………………………….. 146 080

Total non-current debt: 1 412 866

Guaranteed and secured …………………………………………………………… 1 197 460
Guaranteed but unsecured ……………………………………………………….. 151 591
Secured but unguaranteed ……………………………………………………….. 10 003
Unguaranteed and unsecured ………………………………………………….. 53 812
Total indebtedness …………………………………………………. 1 677 672

Shareholders’ equity
Paid in capital ……………………………………………………………………….... 625 219
Other reserves ………………………………………………………………………… -47 110
Retained earnings ………………………………………………………………….. -42 162
Non-controlling interests ……………………………………………………….. 94 864
Total shareholders’ equity ……………………………………... 630 811
Total capitalisation ……………………………………………….. 2 308 483

47
7.2 Net financial indebtedness

The following table sets forth information about the Group’s net financial indebtedness as
at 31 March 2017.

31 March
Net financial indebtedness 2017 31 Dec 2016

(A) Cash 81 004 101 323

(B) Cash equivalent (detail) 0 0

(C) Trading securities 0 0

(D) Liquidity (A)+ (B)+(C) 81 004 101 323

(E) Current Financial Receivable 88 216 170 306

(F ) Current bank debt 118 726 177 834

(G) Current portion of non-current debt 0 0

(H) Other current financial debt 138442 166 876

(I) Current Financial Debt (F)+(G)+(H) 257 168 344 710

Net Current Financial Indebtedness (I)-
(J) (E)-(D) 87 948 73 081

(K) Non current bank loans 1 207 463 1 218 462

(L) Bonds issue 151 591 150 812

(M) Other non-current loans 53 812 51 421

Non-current Financial Indebtedness
(N) (K)+(L)+(M) 1 412 866 1 420 695

(O) Net Financial Indebtedness (J)+(N) 1 568 692 1 493 776

The loan facilities established to finance the construction and acquisitions of the Company's
vessels are secured by, a first priority mortgage on the applicable vessels, and in most
cases also security in earnings, charter contracts, insurance and hedging arrangements.
As of end first quarter 2017, the Company had approximately USD 160 million in
outstanding unsecured bond debt with maturity in January 2018 and March 2019.

(E) Current Financial Receivables include trade receivables (USD 34 757) and other
receivables (USD 88 435) less prepaid expenses (USD 27 708) and inventories (USD
7 268).
(M) Other Current Financial Debt include trade payables (USD 22 350) and other current
liabilities (USD 116 092) less prepaid revenues (USD 7 638).

7.3 Working Capital Statement

The Company is of the opinion that the working capital available to the Group is sufficient
for the Company's present requirements, for the period covering at least 12 months from
the date of this Prospectus.

7.4 Debt instalments falling due over the next 5 years, as of April 2017.

48
PARENT COMPANY CONSOLIDATED
Instalments falling due Mortgage Other interest
(Amounts in USD 1,000) over the next 5 years debt bearing debt Total

2017 106 719 106 719

2018 100 031 100 031
2019 157 393 157 393
69 601 2020 489 185 69 601 558 786
141 206 2021 220 453 81 206 301 659
Thereafter 255 842 255 842
210 807 Total 1 329 623 150 807 1 480 430

The book value of mortgaged assets consisted of non-current tangible assets and portion
of the accounts receivables and amounted to USD 1,395 million at year end 2016.

Current cost of debt is approximately 3.9% p.a., including the effect of interest rate
derivatives.

7.5 Contingent and Indirect Indebtedness

As at 31 December 2016 the Group had the following contingent or indirect indebtedness
in the form of guarantees.

PARENT COMPANY CONSOLIDATED

12/31/2016 12/31/2015 (Amounts in USD 1,000) 12/31/2016 12/31/2015

- - Contractual guarantees to Brazilia n Navy 1) 3 912 1 681

- - Guarantees related to tax-disputes, Brazil 2) 2 889 2 748
52 494 305 658 Contractual guarantees Power cable segment 3) 54 518 305 658
52 494 305 658 Total guarantees 61 318 310 087

1) Contractual guarantees to the Brazilian Navy are issued by Siem Offshore do Brasil SA.
2) Guarantees related to disputes and ongoing tax-cases have been raised per request from Brazilian tax-
authorities.
3) Contractual guarantees provided by Parent are security to clients of Siem Offshore Contractors GmbH.

49
8. SELECTED FINANCIAL INFORMATION

8.1 Introduction and Basis for Preparation

The following selected financial information have been extracted from the Group's audited
consolidated financial statements for the year ended 31 December 2016 and for the three
months periods ended 31 March 2017. These financial statements are prepared under the
International Financing Reporting Standards ("IFRS") as approved by the European Union.
The interim financial statements for the three months periods ended 31 March 2017 are
unaudited.

8.2 Summary of Accounting Policies and Principles

For information regarding the Group’s accounting policies under IFRS and the use of
estimates and judgements, please refer to the notes of the Group's consolidated financial
statements prepared under IFRS for the year ended 31 December 2016, included in this
Prospectus as Appendix B.

50
8.3 Consolidated Income Statements
The table below sets out selected data from the Group’s consolidated income statements
for the year ended 31 December 2016 and for the three months period ended 31 March
2017.

2017 2016 2016

(Amounts in USD 1 000) 1Q 1Q Jan-Dec
Unaudited Unaudited Audited
Operating revenue 107 405 70 756 469 123
-307
Operating expenses -68 312 -40 474 769
Administration expenses -7 250 -6 378 -33 059
Operating margin 31 842 23 905 128 295
-111
Depreciation and amortization -33 035 -25 526 771
Impairment of vessels - - -60 180
Impairment of intangibles - - -1 015
Impairment related to long term receivables - - -13 979
Impairment related to long term receivables - - -1 400
Gain/(loss) on sales of fixed assets -45 355 -423
18
Gain on bargain purchase - - 312
Gain on sale of interest rate derivatives (CIRR) 92 92 368
Gain/(loss) on currency derivative contracts -260 10 135 -7 762
Operating profit/(loss) -1 406 8 960 -49 555
12
Financial revenues 1 212 2 523 471
Financial expenses -14 874 -13 037 -55 312
Net currency gain/(loss) on revaluation -320 -10 415 -64 154
-106
Net financial items -13 981 -20 929 994
Result from associated companies 77 462 19
Profit/(loss) before taxes -15 311 -11 506 -156 531
Tax benefit / (expense) -2 034 1 936 626
-155
Net profit/(loss) -17 344 -9 570 905
Attributable to non-controlling interest -4 019 -579 -13 469
-142
Attributable to shareholders -13 326 -8 992 436

Weighted average number of outstanding shares('000) 842 021 842 021 842 021
Earnings(loss) per share (basic and diluted) -0,02 -0,01 -0,17

51
Comprehensive Income Statement 2017 2016 2016
(Amounts in USD 1 000) 1Q 1Q Jan-Dec
Unaudited Unaudited Audited
Net profit/(loss) -17 344 -9 570 -155 905
Other comprehensive income
Items that will not be reclassified to profit or loss:
Pension remeasurement gain/(loss) - - 230
Items that may be subsequently reclassified to profit or
loss:
Cash flow hedges - 34 038 60 319
Currency translation differences 11 -26 642 -23
Total comprehensive income for the period -17 333 -2 174 -95 379
Attributable to non-controlling interest -4 015 -592 -9 729
Attributable to shareholders of the Company -13 319 -1 583 -85 650

8.4 Selected Statements of Financial Position

The table below sets out selected data from the Group’s consolidated statements of
financial position as of 31 December 2016 and 31 March 2017.

(Amounts in USD 1 000) 31.03.2017 31.12.2016

Unaudited Audited
Non-current assets
Vessels and equipment 1 957 968 1 980 228
Vessels under construction - 8 258
Capitalized project cost 5 386 5 623
Investment in associates and other long-term receivables 24 004 33 884
CIRR loan deposit 1) 72 750 76 215
Deferred tax asset 11 496 11 467
Intangible assets 32 684 16 977
Total non-current assets 2 104 288 2 132 652
Debtors, prepayments and other current assets 123 192 178 316
Assets held-for-sale - 1 099
Cash and cash equivalents 81 004 101 323
Total current assets 204 196 280 738
Total assets 2 308 483 2 413 390

Equity
Paid-in capital 625 219 625 219
Other reserves -47 110 -47 276
Retained earnings -42 162 -28 836
Shareholders´ equity 535 947 549 107
Non-controlling interest 94 864 98 878
Total equity 630 811 647 985
Liabilities
Borrowings 1 286 304 1 293 059
CIRR loan 1) 72 750 76 215
Other non-current liabilities 53 812 51 421

52
Total non-current liabilities 1 412 866 1 420 695
Borrowings 118 726 177 834
Accounts payable and other current liabilities 146 080 166 875
Total current liabilities 264 806 344 709
Total liabilities 1 677 672 1 765 404
Total equity and liabilities 2 308 483 2 413 390
1) Commercial Interest Reference Rate

8.5 Selected Statements of Cash Flows

The table below sets out selected data from the Group’s consolidated statements of cash
flows for the year ended 31 December 2016 and for the three months period ended 31
March 2017.

2017 2016 2016

(Amounts in USD 1 000) 1Q 1Q Jan-Dec
Unaudited Unaudited Audited
Cash flow from operations
Net profit/(loss) -17 344 -9 570 -155 905
Interest expense 13 381 10 104 50 115
Interest paid -11 544 -12 159 -52 338
Interest income -1 188 -1 201 -8 487
Interest received 1 188 1 184 8 501
Cash flow hedge - - 60 319
Tax expense 2 034 -1 936 -626
Taxes paid -103 - -603
Results from associated companies -77 -462 -19
Loss/(gain) on sale of assets 45 -355 423
Gain from bargain purchase - - -18 312
Employee share scheeme expenses 61 131 516
Impairment of vessels, projects, intangibles, long-term contracts - - 76 574
111
Depreciation and amortization 33 035 25 526 771
Effect of unreal. currency exchange forward contracts 61 -9 237 -871
Changes in short-term receivables and payables 13 652 -1 999 -20 938
CIRR gain -92 -92 -368
Other changes 1 567 3 022 23 590
Net cash flow from operations 34 675 2 955 73 343

Cash flow from investing activities

Investments in fixed assets -6 948 -18 663 -414 802
Proceeds from sale of fixed assets 8 270 355 9 751
Cash acquired in Business Combination - - 3 314
Investment in subsidiaries - - -201
Dividend from associated companies - -290 -
Cash flow from investing activities 1 322 -18 598 -401 938

53
 Cash flow from financing activities
Contribution from non-controlling interests of consolidated
subsidiaries - - 885
Proceeds from new long-term borrowing - 623 455 706
Repayment of long-term borrowing -67 864 -55 011 -188 360
Cash flow from financing activities -67 864 -54 388 268 232

Net change in cash -31 868 -70 032 -60 363

Cash at bank start of period 101 323 148 753 148 753
Effect of exchange rate differences 11 547 18 720 12 934
Cash at bank at end of period 81 004 97 441 101 323

8.6 Selected Statement of Changes in Equity

The table below sets out selected data from the Group’s consolidated statement of changes
in equity for the year ended 31 December 2016 and for the three months period ended 31
March 2017.

Share Non-
(Amounts in USD 1 Total no. of Share premium Other Retained Shareholders' Controlling
000) shares capital reserves reserves earnings equity interest Total equity
Equity on 1 January
2017 842 021 380 8 420 616 799 -47 276 -28 837 549 106 98 879 647 985
Net profit to
shareholders -13 326 -13 326 -4 019 -17 344
Employee share scheme -Value of
employee services 61 61 61
Currency translation
differences 105 106 4 110
Total
comprehensive
income/(expense) - - 167 -13 326 -13 159 -4 015 -17 174
Share issue in partially
owned subsidiary - - - - - - -
Equity on 31 March
2017 842 021 380 8 420 616 799 -47 110 -42 162 535 947 94 864 630 811

Share Non-
(Amounts in USD 1 Total no. of Share premium Other Retained Shareholders' Controlling
000) shares capital reserves reserves earnings equity interest Total equity
Equity on 1 January
2016 842 021 380 8 420 616 799 -108 151 115 147 632 215 33 293 665 508
Change previous
periods - -1 682 -1 682 -100 -1 782
Net profit to
shareholders -142 436 -142 436 -13 469 -155 905
Employee share scheme -Value of
employee services 516 516 516
Pension
remeasurement 230 230 230
Currency translation
differences -23 - -23 -23
Reclassification to
profit or loss 60 319 60 319 60 319
Other 63 -96 -33 1 201 1 168

54
Total
comprehensive
income/(expense) - - 60 875 -143 984 -83 109 -12 368 -95 477
Share issue in partially
owned subsidiary - - - - - 77 953 77 953
Equity on 31
December 2016 842 021 380 8 420 616 799 -47 276 -28 837 549 106 98 879 647 985

(Amount in USD 1
000)
Equity on1 January
2015 387 591 380 3 876 522 361 -45 491 304 237 784 983 38 666 823 649
Change previous
periods -869 -869 -869
Net profit to
shareholders -186 687 -186 687 -9 729 -196 416
Value of employee
services -1 728 -1 728 -1 728
Pension
remeasurement 1 178 1 178 1 178
Currency revaluation -9 687 -2 710 -12 398 209 -12 189
Cash flow hedge -65 866 -65 866 -65 866
Reclassification to
profit or loss 14 621 14 621 14 621
Total
comprehensive
income / (expense) - - -62 660 -189 088 -251 749 -9 520 -261 270
Share issues in
partially owned
subsidiaries - 6 276 6 276
Capital reduction in partially owned
subsidiaries - -4 811 -4 811
Impairment of excess value partially
owned subsidiaries - 2 682 2 682
Shares issues in Siem
Offshore Inc 454 430 000 4 544 94 438 98 983 - 98 983
Equity on31
December 2015 842 021 380 8 420 616 799 -108 151 115 147 632 215 33 293 665 508

8.7 Segment Information

The Company identifies its reportable segments and discloses segment information under
IFRS 8 Operating Segments which requires Siem Offshore Inc. to identify its segments
according to the organization and reporting structure used by management. Operating
segments are components of a business that are evaluated regularly by the chief operating
decision maker for the purpose of assessing performance and allocating resources. The
Company’s chief operating decision maker is the management board, comprised of the
CEO of Siem Offshore Inc., CFO, CCO and CHRO. Generally, financial information is
required to be disclosed on the same basis that is used by the chief operating decision
maker. The Company’s operating segments represent separately managed business areas
with unique products serving different markets. The reportable segments are Siem
Offshore OSV and Siem Offshore Industrial Investments, with the seven sub segment
business areas PSV, OSCV, AHTS Vessels, Other Vessels in Brazil, Submarine Power Cable
Installation, Combat Management Systems, Scientific Core-Drilling and Siem WIS.

Under Siem Offshore OSV, the PSV segment includes twelve Platform Supply Vessels. The
OSCV and WIV segment includes three Offshore Subsea Construction Vessels, two
Multipurpose field and ROV Support Vessels and two Well-Intervention vessels. The AHTS
segment includes ten Anchor Handling Tug Supply Vessels. The Segment of Other Vessels
in Brazil consists of two Oil Spill Recovery Vessel and four smaller Platform Supply Vessels.

55
Under Siem Offshore Industrial Investments, the Submarine Power Cable Installation
comprises the activities of installation and maintenance of subsea power cables for offshore
windfarms. Combat Management Systems is the activity of supplying software for a
management system to the Brazilian Navy. Scientific Core-Drilling is comprised of the
activity of the scientific drillship, “JOIDES Resolution” which performs core drilling. Siem
WIS develops applications for MPD, and certain other investments.

The Company uses two measures of segment results, operating revenue and operating
profit. Intersegment sales and transfers reflect arm’s length prices as if sold or transferred
to third parties at the time of inception of the internal contract, which may cover several
years. Transfers of businesses or fixed assets within or between the segments are reported
without recognizing gains or losses. Results of activities not considered part of the
Company’s main operations as well as unallocated revenues, expenses, liabilities and
assets are reported together with Other under the caption Other and intercompany
eliminations.

The following tables include information about the Company’s operating segments.

2017 2016 2016

(Amounts in USD 1 000) 1Q 1Q Jan-Dec
Unaudited Unaudited Audited
Operating revenue by business area
Platform Supply Vessels (1) 16 497 17 607 62 058
Offshore Subsea Construction Vessels
and Well Intervention Vessels (1) 28 761 19 158 97 232
Anchor Handling Tug Supply Vessels (1) 6 993 13 297 48 326
Other vessels in Brazil 6 350 3 718 20 143
Canadian fleet 6 474 - 24 474
Other/Intercompany eliminations -2 683 382 -9 256
242
Operating revenue, OSV segment 62 392 54 162 976
Combat Management Systems 271 1 405 2 410
193
Submarine Power Cable activities 37 905 7 626 774
Scientific Core-Drilling 6 621 6 533 26 376
Siem WIS 215 1 030 3 587
Operating revenue, Industrial
Segment 45 013 16 595 226 147
Total operating revenue 107 405 70 756 469 123

2017 2016 2016

(Amounts in USD 1 000) 1Q 1Q Jan-Dec
Unaudited Unaudited Audited
Operating profit by business area
Platform Supply Vessels 1) 1 888 4 135 -43 081
Offshore Subsea Construction Vessels
and Well Intervention Vessels (1) 6 887 2 429 7 406
Anchor Handling Tug Supply Vessels 1) -12 719 -5 108 -29 496
Other vessels in Brazil 2 169 110 3 184
Canadian fleet 600 - 5 739

56
Other/Intercompany eliminations -594 -231 -11 996
Operating profit, OSV segment -1 769 1 334 -68 244

Combat Management Systems -474 14 31

Submarine Power Cable activities 5 246 212 30 540
Scientific Core-Drilling 3 020 2 913 11 391
Siem WIS 34 282 -710
Operating profit, Industrial segment 7 826 3 422 41 253

Administration expenses -7 250 -6 378 -33 059

Gain (loss) from sale of fixed assets -45 - -423
Gain from bargain purchase - - 18 312
Gain sale of interest rate derivatives 92 92 368
Currency gain/(loss) -260 10 490 -7 762
Total operating profit -1 406 8 960 -49 555

(1) Platform Supply Vessel category and Anchor Handling Tug Supply Vessel category
include Intercompany revenue from contracting work for the 100% owned subsidiary
"Siem Offshore Contractors GmbH" which is included in the Intercompany eliminations
in the table above.

8.8 Auditor
The Company’s auditor is PriceWaterhouseCoopers AS, with registration number 987 009
713 and business address at Dronning Eufemias gate 8, 0191 Oslo, Norway.
PriceWaterhouseCoopers AS is a member of Den Norske Revisorforeningen (The Norwegian
Institute of Public Accountants). PriceWaterhouseCoopers AS has been the Group’s auditor
throughout the period covered by financial information included in the Prospectus.

PriceWaterhouseCoopers AS' audit reports on the annual financial statements for the
Company for 2016 are included in Appendix B. PriceWaterhouseCoopers AS has not
audited, reviewed or produced any report on any other information provided in this
Prospectus.

57
9. BOARD OF DIRECTORS, MANAGEMENT, EMPLOYEES AND CORPORATE
GOVERNANCE

9.1 Board of Directors

9.1.1 Overview
The Articles of Association provide that the Board of Directors shall consist of a minimum
of three and a maximum of seven members.

As at the date of this Prospectus, the Company's Board of Directors consists of the
following:

Name of director Director since Current term expires

Eystein Eriksrud (Chairman) 2010 2018
Kristian Siem 2005 2019
Michael Delouche 2005 2019
Alexander Monnas 2016 2018
John C. Wallace 2012 2018

The Board of Directors is in compliance with the independence requirements of the

Norwegian Code of Practice for Corporate Governance dated 30 October 2014 (the
"Corporate Governance Code"), meaning that (i) the majority of the shareholder-elected
members of the Board of Directors is independent of the Company’s executive
management and material business contacts, (ii) at least two of the shareholder-elected
members of the Board of Directors are independent of the Company’s main shareholders,
and (iii) no members of the Company’s executive management are on the Board of
Directors.

Eystein Eriksrud, Kristian Siem and Michael Delouche represent the Company's main
shareholders, Siem Europe S.a r.l., and are not considered as independent. Alexander
Monnas and John C. Wallace are both considered as independent Board Members.

The following serves as the business address for the members of the Board of Directors in
relation to their directorships in the Company:

Siem Offshore Management AS

Nodeviga 14
4610 Kristiansand
Norway

9.1.2 Brief biographies of the members of the Board Directors

Eystein Eriksrud (born 1970), Chairman
Mr. Eriksrud is the Deputy CEO of Siem Industries Inc., the Company’s main shareholder.
He is further the chairman of Electromagnetic Geoservices ASA, Flensburger
Schiffbaugesellschaft mbH & Co KG, Venn Partners LLP and a director of Subsea 7 S.A.
Prior to joining Siem Industries in October 2011, he was partner of the Norwegian law
firm Wiersholm Mellbye & Bech since 2005 working as a business lawyer with an
internationally oriented practice in mergers and acquisitions, company law and securities
law, particularly in the shipping, offshore and oil service sectors. He was Group Company
Secretary of the Kvaerner Group from 2000-2002 and served as Group General Counsel
of the Siem Industries Group from 2002-2005. He has served on the boards of Veripos
Inc., Privatbanken ASA and Tinfos AS as well as a number of other boards. Eriksrud is a
Norwegian citizen.

Kristian Siem (born 1949), Board member

58
Mr. Siem is chairman of Siem Industries Inc., Subsea 7 S.A., and Siem Shipping Inc. and
a director of Flensburger Schiffbau-Gesellschaft mbH & Co. KG, North Atlantic Smaller
Companies Investment Trust plc. and Frupor S.A. Mr. Siem is a Norwegian citizen.
Michael Delouche (born 1957), Board member
Mr. Delouche is the president and the secretary of Siem Industries Inc. and is in charge
of the Company's operations at the registered office in George Town, Cayman Islands.
He is a director of Siem Shipping Inc. and a former director of Subsea 7 Inc. Mr. Delouche
received degrees in civil engineering (structural) and business and was previously an
audit manager with KPMG Peat Marwick LLP. Mr. Delouche is a US citizen.
Alexander Monnas (born 1951), Board member
Mr. Monnas is a non-executive advisor to Daiwa Capital Markets Europe Ltd., and is a
member of the Board risk Committee and the Audit Committee. He is also an advisor on
investment and financial matters in Geneva, and on the board of a private trust company.
He has spent 40 years in the commercial and investment banking industries, starting his
career in 1974 with the UK merchant bank Hill Samuel & Co. Limited and later specialising
in financial markets. He was CEO of Daiwa Securities' European operations from 1994 to
2001, and was a board member of Veripos Inc. from 2012 to 2014. He has a degree in
Chemistry. Mr. Monnas is a British citizen.
John C. Wallace (born 1938), Board member
John C. Wallace is a Chartered Accountant having qualified with PricewaterhouseCoopers
in Canada in 1963, after which he joined Baring Brothers & Co., Limited in London,
England. Prior to his retirement in 2010, he served for over twenty-five years as Chairman
of Fred. Olsen Ltd., a London-based corporation that he joined in 1968 and which
specializes in the business of shipping, renewable energy and property development. He
received his B. Comm degree majoring in Accounting and Economics from McGill
University in 1959. In November 2004, he successfully completed the International
Uniform Certified Public Accountant Qualification Examination and has received a CPA
Certificate from the State of Illinois. Mr. Wallace also retired from the board of directors
of Bonheur ASA, Oslo, a publicly traded shipping company with interests in offshore
energy services and renewable energy. He is a Director of Callon Petroleum Co, USA
where he is Chairman of the Audit Committee. He was inducted as a 2011 Industry
Pioneer by the Offshore Energy Centre in Houston. Mr. Wallace is a Canadian citizen.
9.1.3 Remuneration
The remuneration paid to the members of the Board of Directors (acting in capacity as
board members) in 2016 was USD 407,000.
9.1.4 Shares and options held by members of the Board of Directors
As at the date of this Prospectus, the Chairman Eystein Eriksrud holds 145,000 Shares in
the Company through his wholly owned company Laburnum AS. None of the other
members of the Board of Directors holds any Shares or options for Shares in the
Company.
The main shareholder of the Company, Siem Europe S.a r.l. is controlled by a trust where
certain members of Kristian Siem’s family are potential beneficiaries.
9.2 Management
9.2.1 Overview
The senior management of the Company consists of four individuals. The names of the
members of the Management as at the date of this Prospectus, and their respective
positions, are presented in the table below:

59
 Name Position Served since
Bernt Omdal Chief Executive Officer May 2017
Dagfinn B. Lie Chief Financial Officer May 2010
Tore Lillestø Chief Operating Officer May 2017
Tore B. Johannessen CHRO/ Senior Vice President HR& May 2012
Organization

The following serves as the business address for the members of Management in relation
to their positions in the Company:

Siem Offshore Management AS

Nodeviga 14
4610 Kristiansand
Norway

9.2.2 Brief biographies of the members of the Management

Set out below are brief biographies of the members of the Management, including their
relevant management expertise and experience, an indication of any significant principal
activities performed by them outside the Company and names of companies and
partnerships of which a member of the Management is or has been a member of the
administrative, management or supervisory bodies or partner the previous five years (not
including directorships and management positions in subsidiaries of the Company).

Bernt Omdal (born 1966) – Chief Executive Officer

Bernt Omdal was appointed as Chief Executive Officer for Siem Offshore in May 2017. Prior
to this, he held the position as Head of Chartering since 1 July 2011. Bernt Omdal has been
the Chartering Director of the company since November 2008 and has more than 25 years
of experience within the maritime industry, including chartering, operations and
shipbroking. He is also a Board Member of the following companies; Siem Offshore Ghana
International AS, Siem Meling Offshore DA and Chr Th Boe & Søn AS. Bernt Omdal is a
Norwegian citizen and resident in Kristiansand, Norway.

Dagfinn B. Lie (born 1972) – Chief Financial Officer

Mr. Dagfinn B. Lie joined Siem Offshore in October 2007 as Controller and was appointed
CFO in May 2010. Dagfinn B. Lie has a Master in Finance & Accounting and an MBA from
the Norwegian School of Economics and Business Administration. Prior to his current
employment in Siem Offshore he has gained experience from, among others, the
companies Wallenius Wilhelmsen Logistics and ABB Offshore. Dagfinn B. Lie is a Norwegian
citizen and resident in Vennesla, Norway.

Tore Lillestø (born 1974) – COO/ Chief Operating Officer

Mr. Tore Lillestø was appointed Chief Operation Officer with effect of 15 May 2017. He has
long experience from the shipping industry. Tore Lillestø came from the position as General
Manager – Region Norway in Siem Offshore. He has also previous experience from position
as HR Manager in Siem Offshore and before that HR Director in Teekay Marine Services.
Tore Lillestø is a Norwegian citizen and resident in Arendal, Norway.

Tore B. Johannessen (born 1955) – CHRO/ Senior Vice President HR&

Organization
Mr. Tore B. Johannessen was appointed Global HR Director for Siem Offshore with effect
of 15 May 2012. He has a long and diverse experience from the oil and gas industry. He
came from the position as Senior Vice President HR & Organization in TTS Energy AS. He
has also previous experience from position as Regional General Manager in DNB, Norway
and Vice President HR & Organization in Hydralift AS. Tore B. Johannessen is a Norwegian
citizen and resident in Kristiansand, Norway.

60
9.2.3 Remuneration and benefits
The remuneration paid to the members of the Management in 2016 was TUSD 1,558 The
table below sets out salaries and other benefits to the members of the Management in
2016 (all in USD 1,000).

Name Salary paid Pension Other Share

premium benefits options
Idar Hillersøy* 511.5 28.4 5.5 -
Dagfinn B. Lie 253.1 21.6 9.2 2,400,000
Bernt Omdal 327.5 26.5 4.4 2,400,000
Tore B. Johannessen 331.5 31.1 8.1 2,400,000
*Idar Hillershøy resigned as Chief Executive Officer 15 May 2017. Bernt Omdal was appointed as Chief Executive
Officer.

9.2.4 Long-term incentive program

The Company has entered into two Share based option programs, the first in 2013 and the
second in 2014.

On the 13 January 2013, the Company entered into Share option agreement with selected
employees. The Board of Directors awarded 14,000,000 share options to eight key
employees of the Company. The exercise price is NOK 8.45 per share. The exercise price
of the granted options is equal to the market price of the shares on the date of the grant.

On the 2 April 2014, the Company entered into Share option agreement with selected
employees. The Board of Directors awarded 3,000,000 share options to ten key employees
of the Company. The exercise price is NOK 9.07 per share. The exercise price of the granted
options is equal to the market price of the shares on the date of the grant.

As of the date of this Prospectus, a total of 9,800,000 share options are outstanding in the
Company.

9.2.5 Shares held by members of the Management

As of the date of this Prospectus, the members of the Management own Shares in the
Company in total of 1,538,161 (2015: 1,538,161).

Name Shares owned

Dagfinn B. Lie 1,538,161
Bernt Omdal 0
Tore B. Johannessen 0
Tore Lillestø 0

9.3 Directorships and management positions held by the Board Members and
the senior management
The following table sets forth all companies and partnerships in which the members of the
Board of Directors and senior management have been members of the administrative,
management and supervisory bodies in the previous five years (not including subsidiaries
within the Group).
Overview Board Members

61
Name of Positions Company or partnership
officer
Kristian Siem Current:
Director Siem Offshore Inc.
Chairman Siem Industries Inc.
Director Frupor S.A
Chairman Siem Shipping Inc.
Chairman Subsea 7 S.A
Director North Atlantic Smaller Companies Investment
Trust plc
Director
Flensburger Schiffbau-Gesellschaft mbH & Co. KG

62
Eystein Eriksrud Current:
Chairman Siem Offshore Inc.
Director Subsea 7 S.A
Chairman Electromagnetic Geoservices ASA
Chairman Siem Kapital AS
Chairman Flensburger Schiffbau-Gesellschaft mbH & Co. KG
Director VSK Finance Ltd.
Director VSK Holdings Ltd
Director Ember VRM S.a r.l.
Director Siem Car Carriers AS
Chairman Laburnum AS
Director Siem Europe S.a r.l.
Director Siem Capital UK Ltd.
Director Epistates Ltd.
Director SCC Shipowning II DA
Chairman SCC Shipowning I AS
Director Star Reefers AS
Chairman Venn Partners LLP
Director Siem Oil Service Invest Holding Limited
Director Siem Oil Service Invest Limited
Chairman Seven Yield AS
Chairman Seven Yield 7500 PCTC 1 AS
Chairman Seven Yield 7500 PCTC 2 AS
Chairman Siem Oil Service Invest Norway
Deputy Chief Siem Industries Inc.
Executive Officer
Terminated:
Veripos Inc.
Chairman
Siem WIS AS
Director

63
John Wallace Current:
Director Siem Offshore Inc.
Director Callon Petroleum Co.
Director LNG Direct Rail Ltd.

Terminated:
Director Secunda Holdings GP Inc.
Director Secunda Operations GP Inc.
Director Bonheur ASA
Director Fred. Olsen Ltd.
Alexander Current:
Monnas
Director Siem Offshore Inc.

Terminated:
Director Veripos Inc.

Michael Current:
Delouche
Director Siem Offshore Inc.
Director Siem Shipping Inc.
President Siem Industries Inc.
Manager A Siem Europe S.a r.l.
Director Deep Seas Insurance Ltd.
Director VSK Holdings Inc.
Director VSK Finance Inc.
Director Various Cayman Islands subsidiaries of Subsea 7
S.A.

64
Overview Senior Management

Name of officer Positions Company or partnership

Bernt Omdal Current:
CEO Siem Offshore Inc.
Director Chr.Th.Boe & Søn AS

Dagfinn B. Lie Current:

CFO Siem Offshore Inc.
Chairman DG – Invest AS

Tore Lillestø Current:

COO Siem Offshore Inc.
Tore B. Current:
Johannessen
CHRO/ Senior Siem Offshore Inc.
Vice President
HR&
Organization
Director Sørlandet Shipping Association
Director Sørlandsreklame AS

Terminated:
Senior Vice
President HR &
TTS Energy, division of TTS Group ASA
Organization

Kristiansand Chamber of Commerce

Director

9.4 Benefits upon termination

There are no specific benefits upon termination of engagement for board members or
senior management.
9.5 Pension and retirement benefits
The Company has a defined benefit plan for its employees in Norway and its senior
management. The pension scheme is financed through contributions to insurance
companies or pension funds. A defined benefit plan defines the amount of pension benefit
that an employee will receive on retirement, usually dependent on one or more factors
such as age, years of service and compensation.

9.6 Loans and guarantees

Loans on December 31, 2016 Amount Interest Comment

Loans to senior management 727 11 Share loan
Total 727 11

65
The loans are repayable by the employee when the employee's shares in the Company are
realized or if the employee leaves the Company.
9.7 Audit committee
The following Directors are currently members of the Company’s audit committee:

• John C. Wallace

• Michael Delouche

The agenda for each audit committee meeting is pre-planned to ensure that each aspect
of the committee’s responsibilities is discharged as part of an annual cycle.

The main responsibilities of the audit committee are to:

• monitor the integrity and clarity of the financial information and of the major financial
statements of the Company, and to review any significant financial reporting issues
and judgments those statements contain;

• approve the annual external audit plan and to review with the external auditors the
nature, scope and results of their audit, and any control issues raised by them;

• make recommendations as to the appointment, terms of engagement and

remuneration of the external auditors and review any question of their resignation or
removal, and to review the effectiveness of the external auditors and their
independence;

• review the consistency of and any changes to accounting policies, the application of
appropriate accounting standards, and the methods used to account for significant
or unusual transactions;

• review the Company’s internal controls and systems and practices for the
identification and management of risk; and

• monitor compliance with the Company’s policies to prevent illegal and questionable
corporate conduct and to review arrangements for ‘whistle-blowing’.

The external auditors attend meetings of the committee, other than when their
appointment or performance is being reviewed, and the chief financial officer and members
of the finance function attend as appropriate. It is the intention of the committee to meet
with the auditors in the absence of management at least twice a year.

The external auditors are appointed annually at the annual general meeting. The Board
audit committee considers the reappointment of the auditors and reports its findings to the
Board. The Board audit committee periodically considers the performance, cost and
independence of the external auditors, including a comparison of audit fees with similar
trading companies and reviews the level of service provided by the audit team throughout
the Group.
9.8 Compensation Committee
The Compensation Committee consists of two Directors, Kristian Siem and Eystein
Eriksrud. The mandate of the committee is to review and approve the compensation of the
CEO and any bonuses to all executive personnel.
9.9 Conflicts of interests
The main shareholder of the Company, Siem Europe S.a r.l. is controlled by a trust where
certain members of Kristian Siem’s family are potential beneficiaries. Kristian Siem, who is
a member of the Board of the Company, is also inter alia the chairman of the board of

66
directors of Siem Industries Inc. and of Subsea 7 S.A., the charterer of the OSCV "Siem
Stingray". The contract between the Company and Subsea 7 S.A. is made on arm's length
terms.

At the end of 2014 a short term loan of USD 60 million was drawn by the Company under
a credit facility provided by Siem Industries Inc. The short term loan is on market terms.

Except from the above, there are no potential conflicts of interest between the Directors
and members of managements’ duties to the Company and their private interests and
other duties.
9.10 Convictions for fraudulent offences, bankruptcy etc.
None of the members of the Board of Directors or the Management have during the last
five years preceding the date of this Prospectus:

• any convictions in relation to indictable offences or convictions in relation to

fraudulent offences;

• received any official public incrimination and/or sanctions by any statutory or

regulatory authorities (including designated professional bodies) or been
disqualified by a court from acting as a member of the administrative, management
or supervisory bodies of a company or from acting in the management or conduct
of the affairs of any company; or

• been declared bankrupt or been associated with any bankruptcy, receivership or

liquidation in his/her capacity as a founder, director or senior manager of a company
or partner of a limited partnership.

9.11 Employees
9.11.1 Overview
As at the date of this Prospectus, the Group had a total of 1058 employees.

The following table illustrates the number of employees as per the end of each calendar
year for 2016, 2015, 2014 and 2013 and 2012 split by the geographical areas.

Geographical
2016 2015 2014 2013 2012
area
Norway 397 388 333 468 451
Germany 87 76 82 66 21
Holland 57 56 58 54 70
Brazil 201 316 552 514 525
Poland 265 169 9 4 0
Australia 49 2 1 1 0
Ghana 0 2 N/A N/A 5
USA 2 3 3 3 4
India 0 0 0 0 2
Total 1,058 1,012 1,038 1,110 1,078

Siem Offshore Inc. is a holding company with no employees.

9.12 Corporate governance

The Company complies with the Corporate Governance Code. As a company incorporated
in the Cayman Islands, Siem Offshore Inc. is an exempted company duly incorporated
under the laws of the Cayman Islands and subject to Cayman Islands laws and regulations

67
with respect to corporate governance. Cayman Islands corporate law is to a great extent
based on English Law. In addition, due to the Company’s listing on the Oslo Stock
Exchange, certain aspects of Norwegian Securities law apply to the Company and there is
a requirement to adhere to the Corporate Governance Code. Due to new provisions
implemented in the Norwegian Accounting Act, compliance with the regulations for
corporate governance reporting is now a legal requirement provided that it does not conflict
with the Cayman Islands laws and regulations. The Company endeavours to maintain high
standards of corporate governance and is committed to ensuring that all shareholders of
the Company are treated equally and the same information is communicated to all
shareholders at the same time. Corporate governance is subject to annual assessment and
review by the Board of Directors.

Code of Conduct

It is the policy of the Company to conduct its business in accordance with all applicable
laws and regulations and in an ethically responsible manner.

The Company’s code of conduct guidelines applies to all directors, officers, hired staff,
temporary employees and employees of the Company.

It enables the Company to continue to operate ethically, honestly and to comply with law.

The Company’s code of conduct guidelines sets out minimum required standards and it is
a line management responsibility to communicate and implement the Company’s code of
conduct guidelines and associated Siem Offshore policies.

The Company has a policy of zero tolerance for corruption and other illegal business means,
and will not accept that our people use improper influence on any individual or entity. Due
to the international nature of our business, we are subject to several anti-corruption laws.
Corruption is a threat to fair business, it undermines legitimate business activities, and any
violation within our organisation will be a threat to our reputation and credibility in the
market.

68
10. CORPORATE INFORMATION

10.1 Incorporation and address

Siem Offshore Inc. is an exempted company limited by shares incorporated under the laws
of Cayman Islands with corporate registration no. 140468. The Company was incorporated
on 12 October 2004 under the name Siem Supply Inc. The legal name of the Company is
Siem Offshore Inc. and the commercial name is Siem Offshore.

The Company and its activities are primarily governed by the Cayman Islands Companies
Law (2016 Revision) and the Company’s Memorandum and Articles of Association. The
Company’s Shares have been created pursuant to the terms of the Company’s
Memorandum and Articles of Association and subject to the Cayman Islands Companies
Law (2016 Revision) pursuant to section 8 and 13. Certain elements of Norwegian
securities law regulations will apply in addition, since the Company’s shares are listed on
the Oslo Stock Exchange.

The registered address of Siem Offshore Inc. is as follows:

Siem Offshore Inc.

PO Box 309
Ugland House
South Church Street
George Town
Grand Cayman KY1-1104
Cayman Islands

The Company maintains executive offices in the Cayman Islands at the following address:

Siem Offshore Inc.

PO Box 10718
George Town
Grand Cayman KY1-1006
Cayman Islands

Telephone: + 1 345 949 1030

Telefax: + 1 345 946 3342

The Company’s headquarter and corporate management team is located at the following
address:

Siem Offshore Management AS

Nodeviga 14
4610 Kristiansand
Norway

10.2 Listing and registration

The Company's Shares are listed on the Oslo Stock Exchange and are trade under the
ticker symbol "SIOFF".

The Shares are registered in the Norwegian Central Securities Depository (VPS). The
Company's registrar is Nordea Bank Norge ASA, Oslo, Norway, Middelthunsgate 17, 0368
Oslo, Norway. The Shares carry the ISIN number KYG813131011.
10.3 Share capital and Share capital history
The authorized share capital of the Company is USD 12,500,000 divided into
1,250,000,000 common shares of a nominal value of USD 0.01 each.

69
The issued share capital of the Company as of the date of this Prospectus is USD
8,420,213.80 divided into 842,021,380 Shares each with a nominal value of USD 0.01. All
the Shares are validly issued and fully paid.

On 5 May 2017 the Company's annual general meeting resolved to increase the Company's
authorised share capital from USD 10,000,000 divided into 1,000,000,000 Shares with a
nominal value of USD 0.01 each to USD 12,500,000 by the creation of an additional
250,000,000 Shares with a nominal value of USD 0.01 each.

On 12 May 2017 the Company’s board of directors resolved to issue 100,000,000 New
Shares in the Company with a nominal value of USD 0.01 each at a subscription price of
NOK 1.90 per New Shares in connection with the Rights Offering.

Following the Rights Offering, the issued share capital will be USD 9,420,213.80 divided
into 942,021,380 Shares.

There has not been any development in the Company's issued share capital for the periods
covered by the historical financial information included in the Prospectus as Appendix B.

10.4 Own shares

As of the date of this Prospectus, the Company does not own any Shares.

10.5 Shareholder agreements

The Company is not aware of any shareholders' agreements in relation to the Shares.

10.6 Outstanding authorizations

The Board of Siem Offshore currently holds authorization to issue 157,978,620 new Shares
in the Company.
10.7 Convertible instruments, warrants and share options
On the 13 January 2013, the Company entered into a Share option agreement with selected
employees.

The Board of Directors of Siem Offshore Inc. has authorized the award of 14,000,000 share
options to eight key employees of the Company. The exercise price is NOK 8.45 per share.

The exercise price of the granted options is equal to the market price of the shares on the
date of the grant.

The Options can be exercised as follows:

2014: 20% of the total number beginning on January 18th 2014.

2015: 40% of the total number beginning on January 18th 2015, less any options previously
issued.

2016: 60% of the total number beginning on January 18th 2016, less any options previously
issued.

2017: 80% of the total number beginning on January 18th 2017, less any options previously
issued.

2018: 100% of the total number beginning on June 18th 2018, less any options previously
issued.

70
The exercise period shall in no event be later than the date falling 10 years after the award
date.

The group has no legal or constructive obligation to repurchase or settle the options in
cash.

No options were exercised during 2013 or 2014.

On 2 April 2014, the Company entered into a second Share option agreement with selected
employees. The Board of Directors has authorized the award of 3,000,000 share options
to ten key employees of the Company. The exercise price is NOK 9.07 per share. The
exercise price of the granted options is equal to the market price of the shares on the date
of the grant.

The Options can be exercised as follows:

2017: 60% of the total number beginning on 2 April 2017, less any options previously
issued.

2018: 80% of the total number beginning on 2 April 2018, less any options previously
issued.

2019: 100% of the total number beginning on 2 April 2019, less any options previously
issued.

The exercise period shall in no event be later than the date falling 10 years after the award
date.

As stated above in Section 9.2.4 “Long-term incentive program”, a total of 9,800,000 share
options are outstanding in the Company as of the date of this Prospectus.

Except as set out above, neither the Company nor any of its subsidiaries has issued any
options, warrants, convertible loans or other instruments that would entitle a holder of any
such instrument to subscribe for any shares in the Company or its subsidiaries. Further,
neither the Company nor any of its subsidiaries has issued subordinated debt or
transferable securities other than the Shares and the shares in its subsidiaries which will
be held, directly or indirectly, by the Company.
10.8 Dividend policy
The priorities for the use of Company funds are determined by the Board of Directors and
recommendations of Management influenced by existing conditions. At present, priorities
for use of funds in order of importance are repayment of debt, investment opportunities in
the business, and the return of capital to the shareholders in form of share buy-back or
dividends.

The Company paid out NOK 0.10 per Share (approximately NOK 38.8 million in total) in
respect of 2013.
10.9 Shareholders
The table below sets out the top 20 shareholders registered in the VPS as of 22 May 2017:

71
Number of shares Share % Name of Shareholder Account Nationality

699 110 008 83.03 SIEM EUROPE S.A R.L LUX

79 907 775 9.49 Ace Crown Internatio C/O SINGA STAR PTE L VGB
13 500 000 1.60 WATERMAN HOLDING LTD GBR
6 000 000 0.71 EGD CAPITAL AS NOR
4 404 442 0.52 SØRENSEN TERJE NOR
3 727 644 0.44 Merrill Lynch, Pierc S/A MLPF & S HOLD NOM USA
2 550 000 0.30 ROVDEFRAKT AS NOR
1 538 161 0.18 DG-INVEST AS NOR
1 500 000 0.18 TONGA INVEST AS NOR
1 350 000 0.16 MYKLAND SVEIN ERIK NOR
953 976 0.11 FORSVARETS PERSONELL Tom Ole Gundersen NOR
952 000 0.11 CORTEX AS NOR
863 687 0.10 OPSAHL STIAN NOR
850 000 0.10 OSLOKANALEN AS NOR
699 656 0.08 BRUUN LARS DNK
646 268 0.08 TIMUCUAN FUND LTD. USA
515 697 0.06 BARRUS CAPITAL AS NOR
500 000 0.06 KEBI AS Knut Erland Grubben NOR
500 000 0.06 LEROLI AS NOR
473 500 0.06 MACAMA AS NOR

The Company has one class of Shares, and each Share carries one vote and has equal
rights to dividend. All the Shares are validly issued and fully paid. All of the Company’s
shareholders have equal voting rights.

Siem Europe S.a r.l. currently owns 699,110,008 shares in the Company, equal to 83.03%
of the issued Shares. Siem Europe S.a r.l. is the main shareholder of Siem Offshore Inc.
and is controlled by a trust whose potential beneficiaries include members of Kristian
Siem’s immediate family. Kristian Siem is a Board Member of the Company.

Siem Europe S.a r.l. has underwritten the Rights Offering as further described in Section
13.20, "The Rights Offering—The Underwriting".

The Company is not aware of any agreements that at a later stage may lead to change of
control of the Company.

Shareholders with ownership exceeding 5% must comply with disclosure obligations

according to the Norwegian Securities Trading Act section 4-3. For more detailed
description please see section 11.6 "Securities trading in Norway—Disclosure obligations".

10.10 The Articles of Association and certain aspects of Cayman Islands law
The Company is an exempted company incorporated with limited liability in the Cayman
Islands. This means that the Company may not trade in the Cayman Islands with any
person, firm or corporation, except in furtherance of the business of the Company carried
on outside of the Cayman Islands.

The Company and its activities are primarily governed by the Companies Law (2016
Revision), the Company's memorandum of association and the Articles of Association. As
the Company is listed on the Oslo Stock Exchange, certain aspects of its activities are
governed by Norwegian law.

The constitutional documents of the Company consist of the Company's memorandum of

association and the Articles of Association. The Articles of Association are significantly more

72
extensive than the articles of association of a Norwegian company. The Articles of
Association deal primarily with the Company's administration, internal regulation and the
distribution of rights and authorities between the shareholders and the directors.

Company objective

Pursuant to section 3 of the Company's memorandum of association, the objective of the

Company is unrestricted and the Company shall have full power to carry out any objective
not prohibited by law.

General Meeting

Under Cayman Islands law, there is no requirement to hold an annual general meeting.
However, pursuant to the Articles of Association, the Company shall hold annual General
Meetings each year. Any annual General Meeting shall be held at the time and place as
decided by the board of directors.

All General Meetings other than annual General Meetings shall be called extraordinary
General Meetings.

The Annual General Meeting shall be called by the board of directors. Additionally, the
Board of Directors shall, on the requisition of a shareholder or shareholders’ holding in
aggregate no less than 10% of the issued Shares which as at that date carry the right to
vote at the General Meeting, forthwith proceed to convene an extraordinary General
Meeting.

A General Meeting shall be called by not less than 14 clear days notice in writing, except
when consent to a shorter period is given in accordance with the provisions set out in the
Articles of Association. The notice shall specify the time, place, and agenda of the meeting,
particulars of the resolutions to be considered at the meeting and the general nature of
that business to be conducted at the General Meeting. The notice convening a General
Meeting to pass a special resolution shall specify the intention to propose the resolution as
a special resolution.

For all purposes a quorum for a General Meeting is constituted by one or more members
present in person holding not less than one third of the issued shares of the Company.

A resolution of a General Meeting is adopted by ordinary resolution unless the Companies

Law (2016 Revision) or the Articles of Association specify otherwise.

"Ordinary resolution" means a resolution passed by a simple majority of the shareholders

as, being entitled to do so, vote in person or by proxy, at a General Meeting, and includes
a unanimous written resolution. In computing the majority when a poll is demanded regard
shall be had to the number of votes to which each member is entitled by the Articles of
Association.

"Special Resolution" means a resolution passed by a majority of at least two thirds of the
shareholders as, being entitled to do so, vote in person or by proxy, at a General Meeting.

Each of the Shares represents one vote on a poll in a General Meeting. Shareholders may
be represented in person or by proxy.

In the case of an equality of votes the chairman of the meeting shall be entitled to a second
or casting vote.

Amendments of the Articles of Association

73
Subject to the provisions of the Companies Law (2016 Revision) and the provisions of the
Articles of Association as regards the matters to be dealt with by ordinary resolution, the
Articles of Association may be amended by the passing of a special resolution.

Equity and share capital increases

The Companies Law, the Company's memorandum of association and the Articles of
Association draws a distinction between authorised and issued share capital.

The Company’ authorised share capital dictates the maximum number of shares which the
Company is authorised to issue and such information is set out in the Articles of
Association. The authorised share capital of the Company may be increased by the passing
of an ordinary resolution at the General Meeting. The Board of Directors may allot, issue,
grant options over or otherwise dispose of shares to such persons, at such times and on
such other terms as they think proper (subject to the Companies Law (2016 Revision) and
the Articles of Association) without any further consent or approval by the shareholders.

Shareholders in the Company do not have pre-emptive rights in later capital increases.

Capital reductions

A reduction of the share capital is subject to the passing of a special resolution at the
General Meeting. The same majority is required for a reduction of the Company’s capital
redemption reserve fund.

Classes of shares

The Shares are currently not divided into different classes. However, the Articles of
Association establish a right to divide the share capital into different classes of shares with
varied rights attaching to the shares of such different classes. According to the Articles of
Association, modifications in the rights attached to the Shares, such as dividing the shares
into different classes of shares with different rights attached, require the written consent
of at least 2/3 of the holders of the issued shares of that class or the passing of a resolution
passed by a majority of not less than two thirds of the votes cast at a separate meeting of
the holders of the shares of the applicable class.

Purchase of shares

Subject to the Companies Law (2016 Revision), to relevant regulations of any securities
exchange or other system on which the shares of the Company may be listed or otherwise
authorised for trading (an, "Exchange"), and to any rights conferred on the holders of any
class of shares, the Company has the power:

(i) to purchase or otherwise acquire any of its own shares, provided either:

(a) the manner of purchase has first been authorised by the Company
in general meeting;

(b) such purchases are made in open market transactions on an

Exchange;

(c) such purchases may be effected from time to time, as authorised by

the Company in general meeting, at a price per share no higher than
the average of the closing prices of said shares on an Exchange, for
the five days on which said shares are traded immediately preceding
any such purchase (the “Average Market Price”);

74
 (d) such purchases may be effected from time to time, as authorised by
the Company in general meeting at a price per share in excess of
the Average Market Price, provided that: the shares to be purchased
shall be in blocks consisting of a number equal to or greater than
five per cent. of the number of shares then outstanding and the price
to be paid therefore shall have been found to be fair in a written
opinion of independent investment bankers who have been selected
for the purpose by a disinterested committee of Directors; or

(e) an offer is made to all shareholders of the Company to purchase a

specified number of shares at a specified price, all tenders of shares
made in response to such offer to be accepted pro rata in the event
that more shares are to be tendered than the Company has offered
to purchase, except that all tenders of 99 shares or less may be
accepted in full at the discretion of the Directors,

provided that, the Company shall not, in any 12-month period, purchase in
aggregate more than such number of shares as shall be equal to 10 per
cent of the lowest number of shares in issue during such period except to
the extent authorised by special resolution;

(ii) to purchase or otherwise acquire warrants for the subscription or purchase

of its own shares; and

(iii) to give, directly or indirectly, by means of a loan, a guarantee, a gift, an

indemnity, the provision of security or otherwise howsoever, financial
assistance for the purpose of or in connection with a purchase or other
acquisition made or to be made by any person of any shares or warrants in
the Company. The Company may pay for such shares or warrants in any
manner authorised or not prohibited by law, including out of capital. Should
the Company purchase or otherwise acquire its own shares or warrants,
neither the Company nor the Board shall be required to select the shares or
warrants to be purchased or otherwise acquired rateably or in any other
manner as between the holders of shares or warrants of the same class or
as between them and the holders of shares or warrants of any other class or
in accordance with the rights as to dividends or capital conferred by any class
of shares.

Transfer of shares

The Shares are generally freely transferable and there are no restrictions on trading in the
Shares. The Shares are registered in the VPS, and are tradable in the same manner as
other VPS registered shares.

The Board of Directors may, however, in its absolute discretion, refuse to register a transfer
of any shares which are not fully paid up or on which the Company has a lien. In accordance
with the Articles of Association, the board of directors shall decline to register the transfer
of any share to a person where the board of directors is of the opinion that such transfer
might breach any law or requirement of any authority or any approved stock exchange
until it has received such evidence as it may require satisfying itself that no such breach
would occur.

Dividends

Subject to the Companies Law (2016 Revision) and the Articles of Association, the Board
of Directors may declare dividends and distributions on the Company’s issued Shares and
authorise payment of the same out of the funds which are lawfully available. Dividends or

75
distributions are payable only out of the profits, realised or unrealised, or out of the share
premium account or as otherwise permitted by law. Each of the Shares carries equal rights
to dividend and equal rights to any surplus in the event of liquidation. The Shares will be
eligible for any dividends being declared and paid immediately upon the share issue. A
Share will be deemed to be issued at the time that the Company's register of shareholders
is updated to reflect such issue and the details of the applicable shareholder.

The Articles of Association provide that the Company may deduct from any dividend or
distribution payable to any shareholder all sums of money (if any) presently payable by
him to the Company on account of calls or otherwise.

The Companies Law (2016 Revision) and the Articles of Association do not provide for any
time limit after which entitlement to dividends lapses. Subject to various exceptions,
Cayman Islands law provides a limitation period of three years from the date on which an
obligation is due.

Any future payments of dividends on the Shares will be denominated in NOK, and will be
paid to the shareholders through the VPS.

Board of directors

According to the Articles of Association, the Board of Directors shall consist of not less than
three or more than seven persons (exclusive of alternate directors). The Company may,
by ordinary resolution, increase or reduce the limits in the number of directors and may
appoint and remove any director from the Board of Directors.

A resolution in writing (in one or more counterparts) signed by each and every one of the
Directors or all the members of a committee of the Directors shall be as valid and effectual
as if it had been passed at a meeting of the Directors, or committee of Directors as the
case may be, duly convened and held.

The powers of the Board of Directors

Subject to limitations in the Companies Law (2016 Revision), the Articles of Association
and any direction given by special resolution by the General Meeting, the business of the
Company shall be managed by the board of directors who may exercise all the powers of
the Company.

A duly convened meeting of the Board of Directors at which a quorum is presented may
exercise all powers exercisable by the Board of Directors. The Board of Directors has full
power to charge any of the Company’ assets and to borrow money without any sanction
by the members at a General Meeting.

The Board of Directors may, by power of attorney or otherwise, appoint a company, firm,
person or body of persons to be the attorney or authorised signatory of the Company for
such purposes and with such powers, authorities and discretions as the Board of Directors
thinks fit, provided however that this does not exceed the powers vested in the Board of
Directors by the Articles of Association. The Board of Directors may also authorise any
attorney or authorised signatory to sub-delegate any or all powers, authorities and
discretions vested in him.

Furthermore, the Board of Directors may delegate any of its powers, authorities and
discretions, including the power to sub-delegate, to any committees consisting of one or
more directors. Every committee so formed shall conform to any regulations that may from
time to time be imposed upon it by the Board of Directors.

Directors’ interests

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A Director may be engaged by the Company for the purpose of performing services which
go beyond his ordinary duties as a director, but he may not be the auditor of the Company.
The director performing such services for the Company is entitled to such extra
remuneration as the board of directors may decide.

A Director or a company owned by him may also enter into commercial agreements with
the Company provided that the relevant Director declares his interest in such contract at
the board meeting where the contract is first considered. Subject to the provisions of the
Articles of Association, a Director (or his alternate director in his absence) shall be at liberty
to vote in respect of any contract or transaction in which he is interested provided that the
nature of the interest of any director or alternate director in any such contract or
transaction shall be disclosed by him at or prior to its consideration and any vote thereon.

Members of the administrative, management and supervisory bodies

The management of the business of the Company is vested in the Board of Directors, whom
may establish any committees or any person to be manager or agent for the Company’
affairs. Furthermore, the Board of Directors may appoint a secretary for such term, at such
remuneration and upon such conditions as it may think fit, and any secretary so appointed
may be removed by the Board of Directors.

Annual accounts

According to the Articles of Association, the financial year shall end on 31 December and
begin on 1 January in each year, unless otherwise prescribed by the Board of Directors.
The auditor shall audit the profit and loss account and the balance sheet of the Company
and shall prepare a report which shall be laid before the shareholders at the annual General
Meeting each year. The auditor’s report shall be open for inspection by any shareholder.

Winding up

According to the Articles of Association, in case of a liquidation of the Company the

following shall apply; (i) if the assets available for distribution amongst the members shall
be insufficient to repay whole of the Company’ issued share capital, such assets shall be
distributed so that, as nearly as may be, the losses shall be borne by the members in
proportion to the par value of the shares held by them, and (ii) if the assets available for
distribution amongst the members shall be more than sufficient to repay the whole of the
Company’ issued share capital at the commencement of the liquidation, the surplus shall
be distributed amongst the members in portion to the par value of the shares held by them
subject to a deduction from those shares in respect of which there are monies due, of all
monies payable to the Company for unpaid calls or otherwise.
10.11 Compulsory acquisition
Schemes of Arrangement

The Companies Law (2016 Revision) of the Cayman Islands allow for schemes of
arrangement. A scheme of arrangement is a flexible form of corporate restructuring and
involves a range of transactions aimed to reorganise Cayman Islands companies. The
schemes may be effected by a court-supervised scheme if an amalgamation or
reconstruction is required or schemes of arrangement can be put in place either between a
company and its shareholders in various forms, including takeovers, spin-offs,
amalgamations, mergers, de-mergers, re-domicilings, restating net asset values, de-
mutualisations, and/or between a company and its creditors, also in various forms such as
debt-for-debt, debt-for-equity and debt-for-assets swaps, and the re-organisations of
options and warrants.

77
A scheme is a collective procedure. It operates both as a contract and a court order and
has statutory effect. Provided the necessary majorities are obtained, the terms of a scheme
become binding on all members of shareholders/creditors of the company, whether or not
they (i) received notice of the scheme; (ii) voted at the meeting; (iii) voted for or against
the scheme; and (iv) changed their minds afterwards. The range of possible objections
that can be raised is very narrow. Dissenting shareholders have no statutory rights in any
scheme, however, if such rights are thought desirable then the terms of the scheme itself
may make such provision. The required majority is a super-majority of each class of
members voting at the meeting (present in person or by proxy) being: 50% + one in
number (i.e. a headcount vote); and 75% in value (i.e. the number of shares voted).

Power to acquire shares

In accordance with the Companies Law (2016 Revision), where a scheme or contract
involving the transfer of shares or any class of shares in a company (in this section referred
to as "the transferor company") to another company, whether a company within the
meaning of the Companies Law (2016 Revision) or not (in this section referred to as "the
transferee company") has, within four months after the making of the offer in that behalf
by the transferee company, been approved by the holders of not less than 90% in value
of the shares affected, the transferee company may, at any time within two months after
the expiration of the said four months, give notice in the prescribed manner to any
dissenting shareholder that it desires to acquire his shares, and where such notice is given
the transferee company shall, unless on an application made by the dissenting shareholder
within one month from the date on which the notice was given, the court thinks fit to order
otherwise, be entitled and bound to acquire those shares on the terms on which under the
scheme or contract the shares of the approving shareholders are to be transferred to the
transferee company.

Where a notice has been given by the transferee company and the Grand Court of the
Cayman Islands has not, on an application made by the dissenting shareholder, ordered to
the contrary, the transferee company shall, on the expiration of one month from the date
on which the notice has been given or, if an application to the Grand Court of the Cayman
Islands by the dissenting shareholder is then pending, after that application has been
disposed of, transmit a copy of the notice to the transferor company and pay or transfer
to the transferor company the amount or other consideration representing the price
payable by the transferee company for the shares which that company is entitled to
acquire, and the transferor company shall thereupon register the transferee company as
the holder of those shares.

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11. SECURITIES TRADING IN NORWAY

This Section 11 includes certain aspects of rules pertaining to securities trading in Norway
in a Norwegian incorporated company pursuant to Norwegian legislation, but is however
not a full or complete description of the matters described herein. The following summary
does not purport to be a comprehensive description of all the legal considerations that may
be relevant to a decision to purchase, own or dispose of Shares. Investors are advised to
consult their own legal advisors concerning the overall legal consequences of their
ownership of Shares.
11.1 Introduction
Oslo Børs was established in 1819 and is the principal market in which shares, bonds and
other financial instruments are traded in Norway. Oslo Børs is operated by Oslo Børs ASA,
which also operates the regulated marketplace Oslo Axess.

Oslo Børs has entered into a strategic cooperation with the London Stock Exchange group
with regards to, inter alia, trading systems for equities, fixed income and derivatives.
11.2 Trading and settlement
Trading of equities on Oslo Børs is carried out in the electronic trading system Millenium
Exchange. This trading system was developed by the London Stock Exchange and is in use
by all markets operated by the London Stock Exchange as well as by the Borsa Italiana
and the Johannesburg Stock Exchange.

Official trading on Oslo Børs takes place between 09:00 hours (CET) and 16:20 hours (CET)
each trading day, with pre-trade period between 08:15 hours (CET) and 09:00 hours (CET),
closing auction from 16:20 hours (CET) to 16:25 hours (CET) and a post-trade period from
16:25 hours (CET) to 17:30 hours (CET). Reporting of after exchange trades can be done
until 17:30 hours (CET).

The settlement period for trading on Oslo Børs is two trading days (T+2). This means that
securities will be settled on the investor’s account in the VPS two days after the transaction,
and that the seller will receive payment after two days.

Oslo Clearing ASA, a wholly-owned subsidiary SIX x-clear Ltd, a company in the Six Group,
has a license from the Norwegian FSA to act as a central clearing service, and has since
18 June 2010 offered clearing and counterparty services for equity trading on Oslo Børs.

Investment services in Norway may only be provided by Norwegian investment firms

holding a license under the Norwegian Securities Trading Act, branches of investment firms
from an EEA member state or investment firms from outside the EEA that have been
licensed to operate in Norway. Investment firms in an EEA member state may also provide
cross-border investment services into Norway.

It is possible for investment firms to undertake market-making activities in shares listed

in Norway if they have a license to this effect under the Norwegian Securities Trading Act,
or in the case of investment firms in an EEA member state, a license to carry out market-
making activities in their home jurisdiction. Such market-making activities will be governed
by the regulations of the Norwegian Securities Trading Act relating to brokers' trading for
their own account. However, market-making activities do not as such require notification
to the Norwegian FSA or Oslo Børs except for the general obligation of investment firms
being members of Oslo Børs to report all trades in stock exchange listed securities.

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11.3 Information, control and surveillance
Under Norwegian law, Oslo Børs is required to perform a number of surveillance and control
functions. The Surveillance and Corporate Control unit of Oslo Børs monitors market
activity on a continuous basis. Market surveillance systems are largely automated,
promptly warning department personnel of abnormal market developments.

The Norwegian FSA controls the issuance of securities in both the equity and bond markets
in Norway and evaluates whether the issuance documentation contains the required
information and whether it would otherwise be unlawful to carry out the issuance. Under
Norwegian law, a company that is listed on a Norwegian regulated market, or has applied
for listing on such market, must promptly release any inside information directly
concerning the company (i.e. precise information about financial instruments, the issuer
thereof or other matters which are likely to have a significant effect on the price of the
relevant financial instruments or related financial instruments, and which are not publicly
available or commonly known in the market). A company may, however, delay the release
of such information in order not to prejudice its legitimate interests, provided that it is able
to ensure the confidentiality of the information and that the delayed release would not be
likely to mislead the public. Oslo Børs may levy fines on companies violating these
requirements.
11.4 The VPS and transfer of Shares
The Company's shareholder register is operated through the VPS. The VPS is the Norwegian
paperless centralised securities register. It is a computerised bookkeeping system in which
the ownership of, and all transactions relating to, Norwegian listed shares must be
recorded. All transactions relating to securities registered with the VPS are made through
computerised book entries. No physical share certificates are, or may be, issued. The VPS
confirms each entry by sending a transcript to the registered shareholder irrespective of
any beneficial ownership. To give effect to such entries, the individual shareholder must
establish a share account with a Norwegian account agent. Norwegian banks, authorised
securities brokers in Norway and Norwegian branches of credit institutions established
within the EEA are allowed to act as account agents.

The entry of a transaction in the VPS is generally prima facie evidence in determining the
legal rights of parties as against the issuing company or any third party claiming an interest
in the given security.

The VPS is liable for any loss suffered as a result of faulty registration or an amendment
to, or deletion of, rights in respect of registered securities unless the error is caused by
matters outside the VPS’ control which the VPS could not reasonably be expected to avoid
or overcome the consequences of. Damages payable by the VPS may, however, be reduced
in the event of contributory negligence by the aggrieved party.

The VPS must provide information to the Norwegian FSA on an on-going basis, as well as
any information that the Norwegian FSA requests. Further, Norwegian tax authorities may
require certain information from the VPS regarding any individual’s holdings of securities,
including information about dividends and interest payments.
11.5 Foreign investment in shares listed in Norway
Foreign investors may trade shares listed on Oslo Børs through any broker that is a member
of Oslo Børs, whether Norwegian or foreign.
11.6 Disclosure obligations
If a person's, entity's or consolidated group's proportion of the total issued shares and/or
rights to shares in an issuer with its shares listed on a regulated market in Norway (with
Norway as its home state, which will be the case for the Company) reaches, exceeds or
falls below the respective thresholds of 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 or 90%
of the share capital or the voting rights of that issuer, the person, entity or group in

80
question has an obligation under the Norwegian Securities Trading Act to notify Oslo Børs
and the issuer immediately. The same applies if the disclosure thresholds are passed due
to other circumstances, such as a change in the Company's share capital.
11.7 Insider trading
According to Norwegian law, subscription for, purchase, sale or exchange of financial
instruments that are listed, or subject to the application for listing, on a Norwegian
regulated market, or incitement to such dispositions, must not be undertaken by anyone
who has inside information, as defined in section 3-2 of the Norwegian Securities Trading
Act. The same applies to the entry into, purchase, sale or exchange of options or
futures/forward contracts or equivalent rights whose value is connected to such financial
instruments or incitement to such dispositions.
11.8 Mandatory offer requirement
The Norwegian Securities Trading Act requires any person, entity or consolidated group
that becomes the owner of shares representing more than one-third of the voting rights of
a Norwegian issuer with its shares listed on a Norwegian regulated market to, within four
weeks, make an unconditional general offer for the purchase of the remaining shares in
that issuer. A mandatory offer obligation may also be triggered where a party acquires the
right to become the owner of shares that, together with the party's own shareholding,
represent more than one-third of the voting rights in the issuer and Oslo Børs decides that
this is regarded as an effective acquisition of the shares in question.

The mandatory offer obligation ceases to apply if the person, entity or consolidated group
sells the portion of the shares that exceeds the relevant threshold within four weeks of the
date on which the mandatory offer obligation was triggered.

When a mandatory offer obligation is triggered, the person subject to the obligation is
required to immediately notify Oslo Børs and the issuer in question accordingly. The
notification is required to state whether an offer will be made to acquire the remaining
shares in the issuer or whether a sale will take place. As a rule, a notification to the effect
that an offer will be made cannot be retracted. The offer is subject to approval by Oslo
Børs before the offer is submitted to the shareholders or made public.

The offer price per share must be at least as high as the highest price paid or agreed to be
paid by the offeror for the shares in the six-month period prior to the date the threshold
was exceeded. If the acquirer acquires or agrees to acquire additional shares at a higher
price prior to the expiration of the mandatory offer period, the acquirer is required to
restate its offer at such higher price. A mandatory offer must be in cash or contain a cash
alternative at least equivalent to any other consideration offered.

In case of failure to make a mandatory offer or to sell the portion of the shares that exceeds
the relevant mandatory offer threshold within four weeks, Oslo Børs may force the acquirer
to sell the shares exceeding the threshold by public auction. Moreover, a shareholder who
fails to make an offer may not, as long as the mandatory offer obligation remains in
unfulfilled, exercise rights in the issuer, such as voting on shares at general meetings of
the issuer's shareholders, without the consent of a majority of the remaining shareholders.
The shareholder may, however, exercise its rights to dividends and pre-emption rights in
the event of a share capital increase. If the shareholder neglects his duty to make a
mandatory offer, Oslo Børs may impose a cumulative daily fine that accrues until the
circumstance has been rectified.

Any person, entity or consolidated group that owns shares representing more than one-
third of the votes in a Norwegian issuer with its shares listed on a Norwegian regulated
market is required to make an offer to purchase the remaining shares of the issuer
(repeated offer obligation) if the person, entity or consolidated group through acquisition
becomes the owner of shares representing 40% or more of the votes in the issuer. The

81
same applies correspondingly if the person, entity or consolidated group through
acquisition becomes the owner of shares representing 50% or more of the votes in the
issuer. The mandatory offer obligation ceases to apply if the person, entity or consolidated
group sells the portion of the shares which exceeds the relevant threshold within four
weeks of the date on which the mandatory offer obligation was triggered.

Any person, entity or consolidated group that has passed any of the above mentioned
thresholds in such a way as not to trigger the mandatory bid obligation, and has therefore
not previously made an offer for the remaining shares in the company in accordance with
the mandatory offer rules is, as a main rule, required to make a mandatory offer in the
event of a subsequent acquisition of shares in the company.
11.9 Foreign exchange controls
There are currently no foreign exchange control restrictions in Norway that would
potentially restrict the payment of dividends to a shareholder outside Norway, and there
are currently no restrictions that would affect the right of shareholders of a Norwegian
issuer who are not residents in Norway to dispose of their shares and receive the proceeds
from a disposal outside Norway. There is no maximum transferable amount either to or
from Norway, although transferring banks are required to submit reports on foreign
currency exchange transactions into and out of Norway into a central data register
maintained by the Norwegian customs and excise authorities. The Norwegian police, tax
authorities, customs and excise authorities, the National Insurance Administration and the
Norwegian FSA have electronic access to the data in this register.

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12. TAXATION

The following is a summary of certain Norwegian tax considerations relevant to the

acquisition, ownership and disposition of shares by holders that are residents of Norway
for purposes of Norwegian taxation ("Norwegian Shareholders") and holders that are
not residents of Norway for such purposes ("Non-Norwegian Shareholders").

The summary is based on applicable Norwegian laws, rules and regulations as they exist
in force as of the date of this Prospectus. Such laws, rules and regulations may be subject
to changes after this date, possibly on a retroactive basis for the same tax year. The
summary is of a general nature and does not purport to be a comprehensive description of
all the tax considerations that may be relevant to the Shareholders and does not address
foreign tax laws.

As will be evident from the description, the taxation will differ depending on whether the
investor is a limited liability company or a natural person

Please note that special rules apply for shareholders that cease to be tax resident in Norway
or that for some reason are no longer considered taxable to Norway in relation to their
shareholding.

Each Shareholder should consult with and rely upon their own tax advisor to determine the
particular tax consequences for him or her and the applicability and effect of any Norwegian
or foreign tax laws and possible changes in such laws.

For the purpose of the summary below, a reference to a Norwegian or foreign shareholder
or company refers to tax residency rather than nationality.

12.1 Taxation of dividends

12.1.1 Norwegian Shareholders who are corporations
Norwegian Shareholders who are corporations (i.e. limited liability companies, mutual
funds, savings banks, mutual insurance companies or similar entities resident in Norway
for tax purposes) are generally exempt from tax on dividends received on shares in
Norwegian limited liability companies, pursuant to the participation exemption (Norwegian:
Fritaksmetoden). However, 3% of dividend income is generally deemed taxable as general
income at a flat rate of 24%, implying that dividends distributed from the Company to
Norwegian Shareholders who are corporations are effectively taxed at a rate of 0.72%.

However, Norwegian Shareholders who are corporations that fall within the scope of the
exemption method and have an ownership stake in excess of 90% of the limited liability
company, is not taxed upon the receipt of dividends from this company.

The repayment of paid-up share capital and paid-up share premium of each share is not
regarded as dividend for tax purposes and thus not subject to tax.

12.1.2 Norwegian Shareholders who are natural persons

Norwegian Shareholders who are natural persons are in general tax liable to Norway for
their worldwide income. Dividends distributed to Norwegian Shareholders who are natural
persons are taxed at a rate of 24%, but the tax base is adjusted upwards by a factor of
1.24, thus implying an effective tax rate of 29.76% (2017).

However, only dividends exceeding a statutory tax-free allowance (Norwegian:

skjermingsfradrag) are taxable. The allowance is calculated on a share-by-share basis, and
the allowance for each share is equal to the cost price of the share multiplied by a
determined risk-free interest rate based on the effective rate after tax of interest on

83
treasury bills (Norwegian: "statskasseveksler") with three months maturity. The
Directorate of Taxes announces the risk free-interest rate in January the year after the
income year. The risk-free interest rate for 2016, was 0.4%. The risk free interest rate for
2017 will be published mid January 2018.

The allowance is allocated to the Norwegian Shareholder owning the share on 31 December
in the relevant income year. Norwegian Shareholders who are natural persons and who
transfer shares during an income year will thus not be entitled to deduct any calculated
allowance related to the year of transfer. Any part of the calculated allowance one year
exceeding dividend distributed on the same share ("excess allowance") can be carried
forward and set off against future dividends received on, or capital gains upon realization
of the same share. Furthermore, excess allowance can be added to the cost price of the
share and included in basis for calculating the allowance on the same share the following
year.

The repayment of paid-up share capital and paid-up share premium of each share is not
regarded as dividend for tax purposes and thus not subject to tax. Such repayment will
lead to a reduction of the tax input value of the shares corresponding to the repayment.

12.1.3 Non-Norwegian Shareholders who are natural persons

Dividends distributed to Non-Norwegian Shareholders who are natural persons are in
general subject to withholding tax at a rate of 25%, unless otherwise provided for in an
applicable tax treaty or the recipient is covered by the specific regulations for corporate
shareholders tax-resident within the EEA (ref. the section below for more information on
the EEA exemption). The company distributing the dividend is responsible for the
withholding. Norway has entered into tax treaties with more than 80 countries. In most
tax treaties the withholding tax rate is reduced to 15%.

In accordance with the present administrative system in Norway, the Norwegian

distributing company will normally withhold tax at the regular rate or reduced rate
according to an applicable tax treaty, based on the information registered with the VPS
with regard to the tax residence of the Non-Norwegian Shareholder. Dividends paid to Non-
Norwegian Shareholders in respect of nominee- registered shares will be subject to
withholding tax at the general rate of 25% unless the nominee, by agreeing to provide
certain information regarding beneficial owners, has obtained approval for a reduced or
zero rate from the Central Office for Foreign Tax Affairs ("COFTA") (Norwegian:
Sentralskattekontoret for utenlandssaker).

Non-Norwegian Shareholders who are exempt from withholding tax and Shareholders who
have been subject to a higher withholding tax than applicable in the relevant tax treaty,
may apply to the Norwegian tax authorities for a refund of the excess withholding tax. The
application is to be filed with COFTA.

If a Non-Norwegian Shareholder is engaged in business activities in Norway, and the shares

are effectively connected with such business activities, dividends distributed to such
shareholder will generally be subject to the same taxation as that of a Norwegian
Shareholders, cf. the description of tax issues related to Norwegian Shareholders above.

Non-Norwegian Shareholders should consult their own advisers regarding the availability
of treaty benefits in respect of dividend payments, including the ability to effectively claim
refunds of withholding tax.

12.1.4 Non-Norwegian Shareholders tax-resident within the EEA

Non-Norwegian Shareholders who are natural persons tax-resident within the EEA are
upon request entitled to the statutory tax-free allowance mentioned above under the
section for taxation of Norwegian Shareholders being natural persons. The shareholder

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shall pay the lesser amount of (i) withholding tax according to the rate in an applicable tax
treaty or (ii) withholding tax at 25% of taxable dividends after deduction for the tax free
allowance. Non-Norwegian Shareholders being natural persons resident within the EEA
may carry forward any unused allowance, if the allowance exceeds the dividends.

Non-Norwegian Shareholders that are corporations tax-resident within the EEA for tax
purposes are exempt from Norwegian tax on dividends distributed from Norwegian limited
liability companies, provided that the Non-Norwegian Shareholder in fact is genuinely
established within the EEA and performs real economic activity there.
12.2 Taxation upon realization of shares
12.2.1 Norwegian Shareholders being corporations
Norwegian Shareholders being corporations are generally exempt from tax on capital gains
upon the realization of shares in Norwegian limited liability companies in accordance with
the Norwegian exemption method. Losses upon the realization and costs incurred in
connection with the purchase and realization of such shares are not deductible for tax
purposes.

12.2.2 Norwegian Shareholders who are natural persons

Sale, redemption or other disposal of shares is considered realization for Norwegian tax
purposes. Norwegian Shareholders who are natural persons are taxable in Norway for
capital gains upon the realization of shares, and have a corresponding right to deduct
losses that arise upon such realization. The tax liability applies irrespective of time of
ownership and the number of shares realised. Gains are taxable as general income in the
year of realization, and losses can be deducted from general income in the year of
realization. The tax rate for general income is currently 24%. The tax base is adjusted
upwards by a factor of 1.24, thus implying an effective tax rate of 29.76% (2017).

The taxable gain or loss is calculated per share as the difference between the consideration
received and the cost price of the share, including any costs incurred in relation to the
acquisition or realization of the share. Any unused allowance on a share (ref. above) may
be set off against capital gains related to the realization of the same share, but may not
lead to or increase a deductible loss i.e. any unused allowance exceeding the capital gain
upon the realization of the share will be lost. Furthermore, unused allowance may not be
set of against gains from realization of other shares.

If a Shareholder disposes of shares acquired at different times, the shares that were first
acquired will be deemed as first sold (the FIFO-principle) when calculating a taxable gain
or loss.

12.2.3 Non-Norwegian Shareholders

As a general rule, capital gains generated by Non-Norwegian Shareholders are not taxable
in Norway unless

(i) the shares are effectively connected with business activities carried out in or
managed from Norway (in which case capital gains will generally be subject to the
same taxation as that of Norwegian Shareholders, cf. the description of tax issues
related to Norwegian Shareholders above), or

(ii) the shares are held by a natural person who has been a resident of Norway for tax
purposes with unsettled/postponed exit tax calculated on the shares at the time of
cessation as Norwegian tax resident.
12.3 Net wealth tax
Norwegian Shareholders being limited liability companies and certain similar entities are
exempt from Norwegian net wealth tax.

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For other Norwegian Shareholders (i.e. Shareholders who are natural persons), the shares
will form part of the basis for the calculation of net wealth tax. The current marginal net
wealth tax rate is 0.85% of taxable values (subject to a basic allowance).

Listed shares are valued at 100% of their quoted value on 1 January in the assessment
year (the year following the relevant income year).
12.4 Inheritance tax
Norway does not impose inheritance tax on assignment of shares by way of inheritance or
gift. If any shares of the Company are assigned by way of inheritance or gift, the tax input
value of such shares on the part of the originator of such inheritance or gift will be
attributed to the recipient of said inheritance or gift (based on continuity). Thus, the heir
will, upon realization of the shares, be taxable for any increase in value in the donor's
ownership. However, the principles of continuity only apply if the donor was taxable into
Norway. In the case of gifts distributed to other persons than heirs according to law or
testament, the recipient will be able to revalue the received shares to market value. The
same apply if the recipient receives shares from a foreign donor and the assets are included
in the Norwegian tax jurisdiction.
12.5 Stamp duty
There is currently no Norwegian stamp duty or transfer tax on the transfer or issuance of
shares.

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13. THE RIGHTS OFFERING

13.1 Overview
The Rights Offering consists of an offer by the Company to issue 100,000,000 New Shares
at a Subscription Price of NOK 1.90 per New Share, thereby raising gross proceeds of
approximately NOK 190 million.

The Company intends to use the net proceeds for working capital purposes and some minor
capital investments and to serve interest and instalments on its debt in accordance with
its repayment schedules and thereby continue to reduce the Company's debt leverage.

Existing Shareholders will be granted tradable Subscription Rights providing a preferential

right to subscribe for and be allocated New Shares in the Rights Offering. Oversubscription
and subscription without Subscription Rights will be permitted; however, there can be no
assurance that New Shares will be allocated for such subscriptions.

The largest shareholder of the Company, Siem Europe S.a r.l., has entered into an
underwriting agreement with the Company, whereby it will subscribe for any New Shares
not otherwise subscribed for in the Rights Offering. See Section 13.20, "The Underwriting"
for more details.

No action will be taken to permit a public offering of the New Shares in any jurisdiction
outside of Norway.

13.2 Resolution to Issue the New Shares

On 12 May 2017, the Board of Directors passed the following resolution to issue New Shares
in connection with the Rights Offering:

Pursuant to the Rights Issue, the Company will offer 100,000,000 new Common
Shares in the Company (the "New Shares") with a nominal value of USD 0.01
each, at a subscription price of NOK 1.90 per New Share (the "Subscription
Price"). It was also noted that holders of the Company’s shares registered in the
Norwegian Central Securities Depository as of 22 May 2017 (the "Existing
Shareholders") are being granted transferable subscription rights (the
"Subscription Rights") that, subject to applicable law, provide preferential rights
to subscribe for and be allocated New Shares at the Subscription Price.

The Rights Issue will be fully underwritten by Siem Europe S.a r.l. (the
“Underwriter”) pursuant to a separate underwriting agreement to be entered into
between the Company and the Underwriter (the “Underwriting Agreement”). The
draft of the Underwriting Agreement has been separately considered and approved
by John Wallace and Alexander Monnas acting in their respective capacities as
Independent Directors and, further, the Independent Directors recommended that
the full Board of Directors accept their approval and grant authorization for the
execution of the Underwriting Agreement.

Each Existing Shareholder will be granted 0.1187 Subscription Rights for each
Common Share registered as held by such Existing Shareholder in the capital of the
Company as of 22 May 2017 (the "Record Date"). Further, each Subscription Right
will give the right to subscribe for and be allocated one New Share.

The Company has proposed that the subscription period in respect of the Rights
Issue shall commence on 29 May 2017 and expire at 16:30 hours, Central European
Time ("CET"), on 9 June 2017 (the "Subscription Period"). If the Prospectus is

87
 approved in time for the Subscription Period to commence on 29 May 2017, the
Subscription Period shall commence on the second trading day following approval
of the Prospectus and end at 16:30 CET on the 14th day thereafter. Any New Shares
which shall be subscribed for by the Underwriter shall be subscribed for within two
trading days after expiry of the Subscription Period.

The Subscription Rights will be listed and tradable on the Oslo Børs (the "Oslo
Stock Exchange") under the ticker symbol SIOFF T from 29 May 2017 until the
end of trading on the Oslo Stock Exchange on 7 June 2017, subject to postponement
if the Subscription Period is postponed as noted above.

The Prospectus is required to be approved by the Norwegian Financial Supervisory

Authority in connection with the Rights Issue. Unless the Directors decide otherwise,
the Prospectus shall not be registered with or approved by any foreign authorities.
The New Shares cannot be subscribed for by investors in jurisdictions in which it is
not permitted to offer New Shares to the investors in question without the
registration or approval of a Prospectus, unless such registration or approval has
taken place pursuant to a resolution by the Directors. With respect to Subscription
Rights issued to any shareholder that in the Company’s view is not entitled to
subscribe for New Shares due to limitations imposed by laws or regulations of the
jurisdiction where such shareholder is a resident or citizen, the Company (or
someone appointed or instructed by it) may sell such shareholder's Subscription
Rights against transfer of the net proceeds from such sale to the shareholder.

The allocation of New Shares shall be made by the Directors and that the following
allocation criteria shall apply:

(i) the allocation will be made to subscribers on the basis of granted and acquired
Subscription Rights which have been validly exercised during the Subscription
Period. Each Subscription Right will give the right to subscribe for and be
allocated 1 New Share;

(ii) if not all Subscription Rights are validly exercised in the Subscription Period,
subscribers having exercised their Subscription Rights and who have over-
subscribed will have the right to be allocated the remaining New Shares pro rata
based on the number of Subscription Rights exercised by the subscriber. In the
event that pro rata allocation is not possible, the Company will determine the
allocation by lot drawing;

(iii) any remaining New Shares not allocated pursuant to the criteria in items (i)
and (ii) above, will be allocated to subscribers not holding Subscription Rights.
Allocation will be made pro rata based on the respective subscription amounts,
provided, however, that such allocation may be rounded down; and

(iv) if the subscription amount of approximately NOK 190 million has not been
subscribed and allocated pursuant to the criteria in items (i), (ii) and (iii) above,
the outstanding amount will be subscribed by and allocated to the Underwriter.
The Underwriter will receive a guarantee commission of 1% on the guaranteed
amount.

The due date for payment of the New Shares is 16 June 2017 or the third trading
day on Oslo Børs after expiry of the Subscription Period if the Subscription Period is
postponed as noted above.

13.3 Conditions for Completion of the Rights Offering

The completion of the Rights Offering is subject to the condition that, unless the Rights

88
Offering is fully subscribed, the Underwriting Agreement remaining in full force and effect.

Please refer to Section 13.20 "—The Underwriting" below for a description of the
underwriting and the Underwriting Agreement and the Shareholder Commitments,
including the conditions and termination rights to which the underwriting is subject.

If it becomes clear that the above conditions will not be fulfilled, the Rights Offering will be
withdrawn. If the Rights Offering is withdrawn, all Subscription Rights will lapse without
value, any subscriptions for, and allocations of, New Shares that have been made will be
disregarded and any payments for New Shares made will be returned to the subscribers
without interest or any other compensation. The lapsing of Subscription Rights shall be
without prejudice to the validity of any trades in Subscription Rights, and investors will not
receive any refund or compensation in respect of Subscription Rights purchased in the
market.
13.4 Timetable
The timetable set out below provides certain indicative key dates for the Rights Offering:

Last day of trading in the Shares including 19 May 2017

Subscription Rights
First day of trading in the Shares excluding 22 May 2017
Subscription Rights
Record Date 23 May 2017
Subscription Period commences 30 May 2017
Trading in Subscription Rights commences on the
Oslo Stock Exchange 30 May 2017
Trading in Subscription Rights ends End of trading on the Oslo Stock
Exchange on 8 June 2017
Subscription Period ends 12 June 2017 at 16:30 hours (CET)
Allocation of the New Shares Expected on or about 14 June 2017
Distribution of allocation letters Expected on or about 15 June 2017
Payment Date 19 June 2017
Delivery of the New Shares Expected on or about 23 June 2017
Listing and commencement of trading in the New
Shares on the Oslo Stock Exchange Expected on or about 23 June 2017

13.5 Subscription Price

The Subscription Price in the Rights Offering is NOK 1.90 per New Share. The Subscription
Price represents a discount of approximately 7.3% to the closing price of NOK 2.05 per
Share as quoted on 16 May 2017.

13.6 Subscription Period

The Subscription Period will commence on 30 May 2017 and end on 12 June 2017 at 16:30
hours (CET). The Subscription Period may not be extended or shortened.

13.7 Record Date

Shareholders who are registered in the Company’s shareholder register in the VPS as of
23 May 2017 (the Record Date) will receive Subscription Rights.

89
Provided that the delivery of traded Shares is made with ordinary T+2 settlement in the
VPS, Shares that are acquired until and including 19 May 2017 will give the right to receive
Subscription Rights, whereas Shares that are acquired from and including 22 May 2017
will not give the right to receive Subscription Rights.

13.8 Subscription Rights

Existing Shareholders will be granted Subscription Rights giving a preferential right to
subscribe for and be allocated New Shares in the Rights Offering. Each Existing Shareholder
will be granted 0.1187 tradable Subscription Rights for each Existing Shares registered as
held by such Existing Shareholder on the Record Date. The number of Subscription Rights
granted to each Existing Shareholder will be rounded down to the nearest whole
Subscription Right. Each Subscription Right will, subject to applicable securities laws, give
the right to subscribe for and be allocated one New Share in the Rights Offering.

The Subscription Rights will be credited to and registered on each Existing Shareholder’s
VPS account on or about 23 May 2017 under the International Securities Identification
Number (ISIN) KYG812291170. The Subscription Rights will be distributed free of charge
to Existing Shareholders.

The Subscription Rights may be used to subscribe for New Shares in the Rights Offering
before the expiry of the Subscription Period on 12 June 2017 at 16:30 hours (CET) or be
sold before the end of trading on the Oslo Stock Exchange on 8 June 2017. Acquired
Subscription Rights will give the same right to subscribe for and be allocated New Shares
as Subscription Rights held by Existing Shareholders on the basis of their shareholdings on
the Record Date.

The Subscription Rights, including acquired Subscription Rights, must be used to subscribe
for New Shares before the end of the Subscription Period (i.e., 12 June 2017 at 16:30
hours (CET)) or be sold before the end of trading on the Oslo Stock Exchange on 8 June
2017. Subscription Rights which are not sold before the end of trading on the Oslo Stock
Exchange on 8 June 2017 or exercised before 12 June 2017 at 16:30 hours (CET) will have
no value and will lapse without compensation to the holder. Holders of Subscription Rights
(whether granted or acquired) should note that subscriptions for New Shares must be made
in accordance with the procedures set out in this Prospectus.

Subscription Rights of Existing Shareholders resident in jurisdictions where the Prospectus

may not be distributed and/or with legislation that, according to the Company’s
assessment, prohibits or otherwise restricts subscription for New Shares (the "Ineligible
Shareholders") will initially be credited to such Ineligible Shareholders’ VPS accounts.
Such credit specifically does not constitute an offer to Ineligible Shareholders. Please refer
to Section 13.12, "Financial Intermediaries" below for a description of the procedures
applicable to Subscription Rights held by Ineligible Shareholders through financial
intermediaries.

The Company will instruct the Manager to, as far as possible, withdraw the Subscription
Rights from such Ineligible Shareholders’ VPS accounts, and, as far as commercially
reasonable, sell them from and including 30 May 2017 until the end of trading on the Oslo
Stock Exchange on 8 June 2017 for the account and risk of such Ineligible Shareholders,
unless the relevant Subscription Rights are held through a financial intermediary.

The Manager will use commercially reasonable efforts to procure that the Subscription
Rights withdrawn from the VPS accounts of Ineligible Shareholders (and that are not held
through financial intermediaries) are sold on behalf of, and for the benefit of, such Ineligible
Shareholders during said period, provided that (i) the Manager is able to sell the
Subscription Rights at a price at least equal to the anticipated costs (including costs relating

90
to "know your customer checks" under applicable legislation) related to the sale of such
Subscription Rights, (ii) the relevant Ineligible Shareholder has not by 16:30 hours (CET)
on 7 June 2017 documented to the Company through the Manager a right to receive the
Subscription Rights withdrawn from its VPS account, in which case the Manager shall re-
credit the withdrawn Subscription Rights to the VPS account of the relevant Ineligible
Shareholder, and (iii) that the net proceeds (after taking into account of costs as referred
to in (i) above) from the sale are likely to exceed NOK 500.

The proceeds from the sale of the Subscription Rights (if any), after deduction of customary
sales expenses, will be credited to the Ineligible Shareholder’s bank account registered in
the VPS for payment of dividends, provided that the net proceeds attributable to such
Ineligible Shareholder amount to or exceed NOK 500. If an Ineligible Shareholder does not
have a bank account registered in the VPS, the Ineligible Shareholder must contact the
Manager to claim the proceeds. If the net proceeds attributable to an Ineligible Shareholder
are less than NOK 500, such amount will be retained for the benefit of the Company. There
can be no assurance that the Manager will be able to withdraw and/or sell the Subscription
Rights at a profit or at all. Other than as explicitly stated above, neither the Company nor
the Manager will conduct any sale of Subscription Rights not utilised before the end of the
Subscription Period.

13.9 Trading in Subscription Rights

The Subscription Rights will be fully tradable and listed on the Oslo Stock Exchange with
ticker code "SIOFF T" and with ISIN KYG812291170 from 30 May 2017 until the end of
trading on the Oslo Stock Exchange on 8 June 2017. Subscription Rights acquired during
the aforementioned trading period carry the same rights to subscribe for New Shares
during the Subscription Period, as Subscription Rights received and held by Eligible
Shareholders.

The Subscription Rights will hence only be tradable during part of the
Subscription Period.

Persons intending to trade in Subscription Rights should be aware that the exercise of
Subscription Rights by holders who are located in jurisdictions outside Norway may be
restricted or prohibited by applicable securities laws. Please refer to Section 14, "Selling
and transfer restrictions" for a description of such restrictions and prohibitions.

13.10 Subscription Procedures

Subscriptions for New Shares must be made by submitting a correctly completed
Subscription Form to the Manager during the Subscription Period or, for Norwegian citizens,
made online as further described below.

Existing Shareholders will receive Subscription Forms that include information about the
number of Subscription Rights allocated to the Existing Shareholder and certain other
matters relating to the shareholding.

Subscriptions for New Shares by subscribers who are not Existing Shareholders must be
made on a Subscription Form in the form included in Annex 2 "Form of Subscription Form".
Existing Shareholders may also choose to use such a Subscription Form.

Correctly completed Subscription Forms must be received by the Manager no later than
16:30 hours (CET) 12 June 2017 at the following addresses or fax numbers:

Swedbank Norway
Filipstad Brygge 1
P.O. Box 1441 Vika

91
 N-0115 Oslo
Norway
Tel.: +47 23 23 80 00
Fax: +47 23 23 80 11
www.swedbank.no
emisjon@swedbank.no

Subscribers who are residents of Norway with a Norwegian personal identification number
(Nw. personnummer) are encouraged to subscribe for New Shares through the VPS online
subscription system (or by following the links on www.swedbank.no which will redirect the
subscriber to the VPS online subscription system).

Neither the Company nor the Manager may be held responsible for postal delays,
unavailable fax lines, internet lines or servers or other logistical or technical problems that
may result in subscriptions not being received in time or at all by the Manager. Subscription
Forms received after the end of the Subscription Period and/or incomplete or incorrect
Subscription Forms and any subscription that may be unlawful may be disregarded at the
sole discretion of the Company and/or the Manager without notice to the subscriber.

Subscriptions are binding and irrevocable, and cannot be withdrawn, cancelled or modified
by the subscriber after having been received by the Manager. The subscriber is responsible
for the correctness of the information filled into the Subscription Form. By signing and
submitting a Subscription Form, the subscribers confirm and warrant that they have read
this Prospectus and are eligible to subscribe for New Shares under the terms set forth
herein.

There is no minimum subscription amount for which subscriptions in the Rights Offering
must be made. Oversubscription (i.e., subscription for more New Shares than the number
of Subscription Rights held by the subscriber entitles the subscriber to be allocated) and
subscription without Subscription Rights will be permitted. However, in each case there
can be no assurance that New Shares will be allocated for such subscriptions.

Multiple subscriptions (i.e., subscriptions on more than one Subscription Form) are allowed.
Please note, however, that two separate Subscription Forms submitted by the same
subscriber with the same number of New Shares subscribed for on both Subscription Forms
will only be counted once unless otherwise explicitly stated in one of the Subscription
Forms. In the case of multiple subscriptions through the VPS online subscription system or
subscriptions made both on a Subscription Form and through the VPS online subscription
system, all subscriptions will be counted.
13.11 Mandatory Anti-Money Laundering Procedures
The Rights Offering is subject to the Norwegian Money Laundering Act No. 11 of 6 March
2009 and the Norwegian Money Laundering Regulations No. 302 of 13 March 2009
(collectively the "Anti-Money Laundering Legislation").

Subscribers who are not registered as existing customers of the Manager must verify their
identity to the Manager in accordance with requirements of the Anti-Money Laundering
Legislation, unless an exemption is available. Subscribers who have designated an existing
Norwegian bank account and an existing VPS account on the Subscription Form are
exempted, unless verification of identity is requested by the Manager. Subscribers who
have not completed the required verification of identity prior to the expiry of the
Subscription Period will not be allocated New Shares.

Furthermore, participation in the Rights Offering is conditional upon the subscriber holding
a VPS account. The VPS account number must be stated in the Subscription Form. VPS
accounts can be established with authorised VPS registrars, who can be Norwegian banks,
authorised securities brokers in Norway and Norwegian branches of credit institutions

92
established within the EEA. However, non-Norwegian investors may use nominee VPS
accounts registered in the name of a nominee. The nominee must be authorised by the
NFSA. Establishment of a VPS account requires verification of identification to the VPS
registrar in accordance with the Anti-Money Laundering Legislation.
13.12 Financial Intermediaries
All persons or entities holding Shares or Subscription Rights through financial
intermediaries (i.e., brokers, custodians and nominees) should read this Section 13.12. All
questions concerning the timeliness, validity and form of instructions to a financial
intermediary in relation to the exercise, sale or purchase of Subscription Rights should be
determined by the financial intermediary in accordance with its usual customer relations
procedure or as it otherwise notifies each beneficial shareholder.

The Company is not liable for any action or failure to act by a financial intermediary through
which Shares are held.

13.12.1 Subscription Rights

If an Existing Shareholder holds Shares registered through a financial intermediary on the
Record Date, the financial intermediary will customarily give the Existing Shareholder
details of the aggregate number of Subscription Rights to which it will be entitled. The
relevant financial intermediary will customarily supply each Existing Shareholder with this
information in accordance with its usual customer relations procedures. Existing
Shareholders holding Shares through a financial intermediary should contact the financial
intermediary if they have received no information with respect to the Rights Offering.

Subject to applicable law, Existing Shareholders holding Shares through a financial

intermediary may instruct the financial intermediary to sell some or all of their Subscription
Rights, or to purchase additional Subscription Rights on their behalf. Please refer to Section
14, "Selling and transfer restrictions" for a description of certain restrictions and
prohibitions applicable to the sale and purchase of Subscription Rights in certain
jurisdictions outside Norway.

Existing Shareholders who hold their Shares through a financial intermediary and who are
Ineligible Shareholders will not be entitled to exercise their Subscription Rights but may,
subject to applicable law, instruct their financial intermediaries to sell their Subscription
Rights transferred to the financial intermediary. As described in Section 13.8, "—
Subscription Rights", neither the Company nor the Manager will sell any Subscription Rights
transferred to financial intermediaries.

13.12.2 Subscription Period and period for trading in Subscription Rights

The time by which notification of exercise instructions for subscription of New Shares must
validly be given to a financial intermediary may be earlier than the expiry of the
Subscription Period. The same applies for instructions pertaining to trading in Subscription
Rights and the last day of trading in such rights (which accordingly will be a deadline earlier
than the end of trading on the Oslo Stock Exchange on 8 June 2017). Such deadlines will
depend on the financial intermediary. Existing Shareholders who hold their Shares through
a financial intermediary should contact their financial intermediary if they are in any doubt
with respect to deadlines.

13.12.3 Subscription
Any Existing Shareholder who is not an Ineligible Shareholder and who holds its
Subscription Rights through a financial intermediary and wishes to exercise its Subscription
Rights, should instruct its financial intermediary in accordance with the instructions
received from such financial intermediary. The financial intermediary will be responsible
for collecting exercise instructions from the Existing Shareholders and for informing the
Manager of their exercise instructions.

93
A person or entity who has acquired Subscription Rights that are held through a financial
intermediary should contact the relevant financial intermediary for instructions on how to
exercise the Subscription Rights.

Please refer to Section 14, "Selling and transfer restrictions" for a description of certain
restrictions and prohibitions applicable to the exercise of Subscription Rights in certain
jurisdictions outside Norway.

13.12.4 Method of payment

Any Existing Shareholder who holds its Subscription Rights through a financial intermediary
should pay the Subscription Price for the New Shares that are allocated to it in accordance
with the instructions received from the financial intermediary. The financial intermediary
must pay the Subscription Price in accordance with the instructions in the Prospectus.
Payment by the financial intermediary for the New Shares must be made to the Manager
no later than the Payment Date. Accordingly, financial intermediaries may require payment
to be provided to them prior to the Payment Date.

13.13 Allocation of New Shares

Allocation of the New Shares will take place on or about 14 June 2017 in accordance with
the following criteria:

i. Allocation will be made to subscribers on the basis of granted and acquired

Subscription Rights, which have been validly exercised during the Subscription
Period. Each Subscription Right will give the right to subscribe for and be allocated
one New Share in the Rights Offering.

ii. If not all Subscription Rights are exercised, subscribers having exercised their
Subscription Rights and who have oversubscribed will be allocated additional New
Shares on a pro rata basis based on the number of Subscription Rights exercised
by each such subscriber. To the extent that pro rata allocation is not possible, the
Company will determine the allocation by the drawing of lots.

iii. New Shares not allocated pursuant to (i) and (ii) above will be allocated to
subscribers not holding Subscription Rights. Allocation will be sought made on a pro
rata basis based on the relevant subscription amounts.

iv. New Shares not allocated pursuant to (i), (ii) and (iii) above will be subscribed by,
and allocated to, the Underwriter.

No fractional New Shares will be allocated. The Company reserves the right to round off,
reject or reduce any subscription for New Shares not covered by Subscription Rights.

Allocation of fewer New Shares than subscribed for by a subscriber will not impact on the
subscriber’s obligation to pay for the number of New Shares allocated.

The result of the Rights Offering is expected to be published on or about 13 June 2017 in
the form of a stock exchange notification from the Company through the Oslo Stock
Exchange information system and at the Company’s website
(http://www.siemoffshore.com/). Notifications of allocated New Shares and the
corresponding subscription amount to be paid by each subscriber are expected to be
distributed in a letter on or about 15 June 2017. Subscribers having access to investor
services through their VPS account manager will be able to check the number of New
Shares allocated to them from 12:00 hours (CET) on 14 June 2017. Subscribers who do
not have access to investor services through their VPS account manager may contact the
Manager from 14:00 hours (CET) on 14 June 2017 to get information about the number of
New Shares allocated to them.

94
13.14 Payment for the New Shares
The payment for New Shares allocated to a subscriber falls due on the Payment Date (19
June 2017). Payment must be made in accordance with the requirements set out in
Sections 13.14.1 "—Subscribers who have a Norwegian bank account" or 13.14.2 "—
Subscribers who do not have a Norwegian bank account" below.

13.14.1 Subscribers who have a Norwegian bank account

Subscribers who have a Norwegian bank account must, and will by signing the Subscription
Form, provide the Manager with a one-time irrevocable authorisation to debit a specified
bank account with a Norwegian bank for the amount payable for the New Shares which are
allocated to the subscriber.

The specified bank account is expected to be debited on or after the Payment Date. The
Manager is only authorised to debit such account once, but reserves the right to make up
to three debit attempts, and the authorisation will be valid for up to seven working days
after the Payment Date.

The subscriber furthermore authorises the Manager to obtain confirmation from the
subscriber’s bank that the subscriber has the right to dispose over the specified account
and that there are sufficient funds in the account to cover the payment.

If there are insufficient funds in a subscriber’s bank account or if it for other reasons is
impossible to debit such bank account when a debit attempt is made pursuant to the
authorisation from the subscriber, the subscriber’s obligation to pay for the New Shares
will be deemed overdue.

Payment by direct debiting is a service that banks in Norway provide in cooperation. In the
relationship between the subscriber and the subscriber’s bank, the standard terms and
conditions for "Payment by Direct Debiting – Securities Trading", which are set out on page
2 of the Subscription Form, will apply, provided, however, that subscribers who subscribe
for an amount exceeding NOK 5 million by signing the Subscription Form provide the
Manager with a one-time irrevocable authorisation to directly debit the specified bank
account for the entire subscription amount.

13.14.2 Subscribers who do not have a Norwegian bank account

Subscribers who do not have a Norwegian bank account must ensure that payment with
cleared funds for the New Shares allocated to them is made on or before the Payment
Date.

Prior to any such payment being made, the subscriber must contact the Manager for further
details and instructions.

13.14.3 Overdue payments

Overdue payments will be charged with interest at the applicable rate from time to time
under the Norwegian Act on Interest on Overdue Payment of 17 December 1976 No. 100,
currently 8.50% per annum. If a subscriber fails to comply with the terms of payment, the
New Shares will not be delivered to the subscriber.
13.15 Delivery of the New Shares
The Company expects that the New Shares will be issued on or about 23 June 2017 and
that the New Shares will be delivered to the VPS accounts of the subscribers to whom they
are allocated on or about the same day.
13.16 Listing of the New Shares
The Shares are listed on the Oslo Stock Exchange under ticker code "SIOFF". The New

95
Shares will be listed on the Oslo Stock Exchange as soon as the New Shares have been
issued and registered in the VPS. This is expected to take place on or about 23 June 2017.
The listing of the New Shares on the Oslo Stock Exchange is expected to take place on the
same day.

The New Shares may not be transferred or traded before they are fully paid and said
registration the VPS has taken place.
13.17 The rights conferred by the New Shares
The New Shares issued in the Rights Offering will be ordinary shares in the Company having
a nominal value of USD 0.01 each and will be issued electronically in registered form.

The New Shares will rank pari passu in all respects with the Existing Shares and will carry
full shareholder rights in the Company from the time of issue. The New Shares will be
eligible for any dividends which the Company may declare after said registration. Please
refer to Section 10, "Corporate information", for a more detailed description of the Shares.

For information on taxes on the income from the securities, please refer to Section 12.1
and 12.2 above. The Company assumes responsibility for the withholding of taxes at the
source according to Norwegian Law.
13.18 VPS registration
The Subscription Rights will be registered with the VPS under the International Securities
Identification Number (ISIN) KYG812291170. The New Shares will be registered in the VPS
with the same International Securities Identification Number as the Existing Shares, being
ISIN KYG813131011.

The Company’s registrar in the VPS is Nordea Bank Norge ASA, Postboks 1166 Sentrum,
0107 Oslo, Norway.
13.19 Dilution
The Rights Offering will result in an immediate dilution of approximately 10.62% for
Existing Shareholders who do not participate in the Rights Offering. The dilution of
approximately 10.62% is calculated on the basis of the closing price of NOK 2.05 per Share
as quoted on 16 May 2017.
13.20 The Underwriting
The largest shareholder of the Company, Siem Europe S.a r.l., having its registered address
on 11-13, Boulevard de la Foire, L-1528 Luxembourg, Grand Duchy of Luxembourg, has
on 15 May 2017 entered into the Underwriting Agreement with the Company whereby they
undertake to guarantee for the subscription of all New Shares not subscribed for by other
subscribers. Siem Europe S.a r.l. will receive an underwriting commission of 1.00% of the
underwriting obligation.

The underwriting obligation of Siem Europe S.a r.l. is conditional upon no change, event,
effect, or condition (which shall result not only from events occurring after the signing of
the Underwriting Agreement, but also as a result of, separately or in combination with, any
previously undisclosed circumstances) occurring prior to such time as payment for the
Offer Shares is due, that has or would be expected to have, in the opinion of Siem Europe
S.a r.l., acting in good faith, individually or in the aggregate, a material adverse effect on
the conditions, assets, operations, results or prospectus of the Company and its
subsidiaries taken as a whole.
13.21 Net proceeds and expenses relating to the Rights Offering
The Company will bear the fees and expenses related to the Rights Offering, which are
estimated to amount to approximately NOK 2.7 million, consisting of fees to the Manager
and other fees and expenses related to the Rights Issue, and the underwriters' commission

96
of 1% of the underwriting obligation as described in Section 13.20, "—The Underwriting"
above. No expenses or taxes will be charged by the Company or the Manager to the
subscribers in the Rights Offering.

Total net proceeds from the Rights Offering are estimated to amount to approximately
USD 187 million.
13.22 Interests of natural and legal persons involved in the Rights Offering
The Manager or its affiliates, have provided from time to time, and may provide in the
future, investment and commercial banking services to the Company and its affiliates in
the ordinary course of business, for which they may have received and may continue to
receive customary fees and commissions. The Manager, its employees and any affiliate
may currently own Existing Shares in the Company. Further, in connection with the Rights
Offering, the Manager, its employees and any affiliate acting as an investor for its own
account may receive Subscription Rights (if they are Existing Shareholders) and may
exercise its right to take up such Subscription Rights and acquire New Shares, and, in that
capacity, may retain, purchase or sell Subscription Rights or New Shares and any other
securities of the Company or other investments for its own account and may offer or sell
such securities (or other investments) otherwise than in connection with the Rights
Offering. The Manager does not intend to disclose the extent of any such investments or
transactions otherwise than in accordance with any legal or regulatory obligation to do so.

The Manager will receive a management fee in connection with the Offering and, as such,
have an interest in the Offering. The management fee is a fixed amount.

Siem Europe S.a r.l. has underwritten the Rights Offering as further described in Section
13.20, "The Rights Offering—The Underwriting".

13.23 Participation of Major Existing Shareholders and Members of the

Company’s Management, Supervisory and Administrative Bodies in the
Rights Offering
The Company's largest shareholders, Siem Europe S.a r.l, has underwritten the Rights
Offering. Please see Section 13.20, "—The Underwriting".

The Chairman Eystein Eriksrud holds 145,000 shares in the Company through his wholly
owned company Laburnum AS. The Company Laburnum AS intends to oversubscribe
allocated New Shares.
13.24 Publication of information relating to the Rights Offering
In addition to press releases which will be posted on the Company’s website, the Company
will use the Oslo Stock Exchange information system to publish information relating to the
Rights Offering.
13.25 Governing law and jurisdiction
This Prospectus, the Subscription Forms and the terms and conditions of the Rights Offering
shall be governed by and construed in accordance with Norwegian law. Any dispute arising
out of, or in connection with, this Prospectus or the Rights Offering shall be subject to the
exclusive jurisdiction of the courts of Norway, with Oslo as legal venue.
13.26 Manager and advisors
The Rights Issue is managed by Swedbank Norway, Filipstad Brygge 1, P.O Box 1441 Vika,
N-0115 Oslo, Norway.

Advokatfirmaet Wiersholm AS has acted as the Company's legal adviser in connection with
the Rights Issue.
13.27 How to proceed

97
The below instructions apply to subscriptions for New Shares on the basis of Subscription
Rights. Please see above for further details of the Rights Offering, including details on
oversubscription and subscription without Subscription Rights.

Terms and conditions For each Existing Shares you own, you will
receive 0.1187 Subscription Rights. Each
Subscription Right gives an entitlement to
subscribe for and to be allocated one New
Share.
Subscription Price NOK 1.90 per New Share.
Record Date for determining the right to 23 May 2017 (i.e. shareholders who are
receive Subscription Rights registered in the Company’s shareholder
register in the VPS as of 23 May 2017 will
receive Subscription Rights).
Trading in Subscription Rights 30 May 2017 to the end of trading on the
Oslo Stock Exchange on 8 June 2017.
Subscription Period 30 May 2017 to 12 June 2017 at 16:30
hours (CET).

98
14. SELLING AND TRANSFER RESTRICTIONS

14.1 General
As a consequence of the following restrictions, prospective investors are advised to consult
legal counsel prior to making any offer, resale, pledge or other transfer of the Shares
offered hereby.
Other than in Norway, the Company is not taking any action to permit a public offering of
the Shares in any jurisdiction. Receipt of this Prospectus will not constitute an offer in those
jurisdictions in which it would be illegal to make an offer and, in those circumstances, this
Prospectus is for information only and should not be copied or redistributed. Except as
otherwise disclosed in this Prospectus, if an investor receives a copy of this Prospectus in
any jurisdiction other than Norway, the investor may not treat this Prospectus as
constituting an invitation or offer to it, nor should the investor in any event deal in the
Shares, unless, in the relevant jurisdiction, such an invitation or offer could lawfully be
made to that investor, or the Shares could lawfully be dealt in without contravention of
any unfulfilled registration or other legal requirements. Accordingly, if an investor receives
a copy of this Prospectus, the investor should not distribute or send the same, or transfer
Shares, to any person or in or into any jurisdiction where to do so would or might
contravene local securities laws or regulations.
14.2 Selling restrictions

14.2.1 United States

The New Shares have not been and will not be registered under the U.S. Securities Act,
and may not be offered or sold except: (i) within the United States to QIBs in reliance on
Rule 144A; or (ii) to certain persons in offshore transactions in compliance with Regulation
S under the U.S. Securities Act, and in accordance with any applicable securities laws of
any state or territory of the United States or any other jurisdiction. Accordingly, each
Manager has represented and agreed that it has not offered or sold, and will not offer or
sell, any of the New Shares as part of its allocation at any time other than to QIBs in the
United States in accordance with Rule 144A or outside of the United States in compliance
with Rule 903 of Regulation S. Transfer of the New Shares will be restricted and each
purchaser of the New Shares in the United States will be required to make certain
acknowledgements, representations and agreements, as described under Section 18.3.1
"—Transfer restrictions—United States".
Any offer or sale in the United States will be made by affiliates of the Manager who are
broker-dealers registered under the U.S. Exchange Act. In addition, until 40 days after the
commencement of the Rights Offering, an offer or sale of New Shares within the United
States by a dealer, whether or not participating in the Rights Offering, may violate the
registration requirements of the U.S. Securities Act if such offer or sale is made otherwise
than in accordance with Rule 144A of the U.S. Securities Act and in connection with any
applicable state securities laws.

14.2.2 United Kingdom

This Prospectus and any other material in relation to the Rights Offering described herein
is only being distributed to, and is only directed at persons in the United Kingdom who are
qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive
(“qualified investors”) that are also (i) investment professionals falling within Article 19(5)
of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the
“Order”); (ii) high net worth entities or other persons falling within Article 49(2)(a) to (d)
of the Order; or (iii) persons to whom distributions may otherwise lawfully be made (all
such persons together being referred to as “Relevant Persons”). The Offer Shares are only
available to, and any investment or investment activity to which this Prospectus relates is
available only to, and will be engaged in only with, Relevant Persons). This Prospectus and
its contents are confidential and should not be distributed, published or reproduced (in

99
whole or in part) or disclosed by recipients to any other person in the United Kingdom.
Persons who are not Relevant Persons should not take any action on the basis of this
Prospectus and should not rely on it.

14.2.3 European Economic Area

In relation to each Relevant Member State, with effect from and including the date on
which the Prospectus Directive is implemented in that Relevant Member State (the
"Relevant Implementation Date"), an offer to the public of any New Shares which are
the subject of the offering contemplated by this Prospectus may not be made in that
Relevant Member State, other than the offering in Norway as described in this Prospectus,
once the Prospectus has been approved by the competent authority in Norway and
published in accordance with the Prospectus Directive (as implemented in Norway), except
that an offer to the public in that Relevant Member State of any New Shares may be made
at any time with effect from and including the Relevant Implementation Date under the
following exemptions under the Prospectus Directive, if they have been implemented in
that Relevant Member State:
a) to legal entities which are qualified investors as defined in the Prospectus Directive;
b) to fewer than 100, or, if the Relevant Member State has implemented the relevant
provisions of the 2010 PD Amending Directive, 150, natural or legal persons (other
than qualified investors as defined in the Prospectus Directive), as permitted under
the Prospectus Directive, subject to obtaining the prior consent of the Manager for
any such offer, or in any other circumstances falling within Article 3(2) of the
Prospectus Directive; provided that no such offer of New Shares shall require the
Company or any Manager to publish a prospectus pursuant to Article 3 of the
Prospectus Directive or supplement a prospectus pursuant to Article 16 of the
Prospectus Directive.
For the purposes of this provision, the expression an "offer to the public" in relation to any
New Shares in any Relevant Member State means the communication in any form and by
any means of sufficient information on the terms of the offer and any Securities to be
offered so as to enable an investor to decide to purchase any New Shares, as the same
may be varied in that Member State by any measure implementing the Prospectus Directive
in that Member State the expression " Prospectus Directive" means Directive 2003/71/EC
(and amendments thereto, including the 2010 PD Amending Directive, to the extent
implemented in the Relevant Member State), and includes any relevant implementing
measure in each Relevant Member State and the expression "2010 PD Amending Directive"
means Directive 2010/73/EU.
This EEA selling restriction is in addition to any other selling restrictions set out in this
Prospectus.

14.2.4 Additional jurisdictions

Canada
This Prospectus is not, and under no circumstance is to be construed as, a prospectus, an
advertisement or a public offering of the New Shares in Canada or any province or territory
thereof. Any offer or sale of the New Shares in Canada will be made only pursuant to an
exemption from the requirements to file a prospectus with the relevant Canadian securities
regulators and only by a dealer properly registered under applicable provincial securities
laws or, alternatively, pursuant to an exemption from the dealer registration requirement
in the relevant province or territory of Canada in which such offer or sale is made.
Hong Kong
The New Shares may not be offered or sold in Hong Kong by means of any document other
than (i) in circumstances which do not constitute an offer to the public within the meaning
of the Companies Ordinance (Cap. 32) of Hong Kong, or (ii) to "professional investors"
within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong and
any rules made thereunder, or (iii) in other circumstances which do not result in the

100
document being a "prospectus" within the meaning of the Companies Ordinance (Cap. 32)
of Hong Kong, and no advertisement, invitation or document relating to the New Shares
may be issued or may be in the possession of any person for the purposes of issue (in each
case whether in Hong Kong or elsewhere), which is directed at, or the contents of which
are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so
under the securities laws of Hong Kong) other than with respect to New Shares which are
or are intended to be disposed of only to persons outside Hong Kong or only to "professional
investors" within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong
Kong and any rules made thereunder.
Singapore
This Prospectus has not been registered as a prospectus with the Monetary Authority of
Singapore. Accordingly, this Prospectus and any other document or material in connection
with the offer or sale, or invitation for subscription or purchase, of the New Shares may
not be circulated or distributed, nor may they be offered or sold, or be made the subject
of an invitation for subscription or purchase, whether directly or indirectly, to persons in
Singapore other than (i) to an institutional investor under Section 274 of the Securities
and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person, or any
person pursuant to Section 275(1A), and in accordance with the conditions, specified in
Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions
of, any other applicable provision of the SFA.

14.2.5 Other jurisdictions

The New Shares may not be offered, sold, resold, transferred or delivered, directly or
indirectly, in or into, Japan, Australia or any other jurisdiction in which it would not be
permissible to offer the New Shares.
In jurisdictions outside the United States and the EEA where the Rights Offering would be
permissible, the New Shares will only be offered pursuant to applicable exceptions from
prospectus requirements in such jurisdictions.
14.3 Transfer restrictions

14.3.1 United States

The New Shares have not been and will not be registered under the U.S. Securities Act and
may not be offered or sold within the United States except pursuant to an exemption from,
or in a transaction not subject to, the registration requirements of the U.S. Securities Act
and applicable state securities laws. Terms defined in Rule 144A or Regulation S shall have
the same meaning when used in this Section.
Each purchaser of the New Shares outside the United States pursuant to Regulation S will
be deemed to have acknowledged, represented and agreed that it has received a copy of
this Prospectus and such other information as it deems necessary to make an informed
decision and that:
• The purchaser is authorised to consummate the purchase of the New Shares in
compliance with all applicable laws and regulations.
• The purchaser acknowledges that the New Shares have not been and will not be
registered under the U.S. Securities Act, or with any securities regulatory authority
or any state of the United States, and are subject to significant restrictions on
transfer.
• The purchaser is, and the person, if any, for whose account or benefit the purchaser
is acquiring the New Shares was located outside the United States at the time the
buy order for the New Shares was originated and continues to be located outside
the United States and has not purchased the New Shares for the benefit of any
person in the United States or entered into any arrangement for the transfer of the
New Shares to any person in the United States.

101
 • The purchaser is not an affiliate of the Company or a person acting on behalf of
such affiliate, and is not in the business of buying and selling securities or, if it is in
such business, it did not acquire the New Shares from the Company or an affiliate
thereof in the initial distribution of such Shares.
• The purchaser is aware of the restrictions on the offer and sale of the New Shares
pursuant to Regulation S described in this Prospectus.
• The New Shares have not been offered to it by means of any "directed selling
efforts" as defined in Regulation S.
• The Company shall not recognise any offer, sale, pledge or other transfer of the
New Shares made other than in compliance with the above restrictions.
• The purchaser acknowledges that the Company, the Manager and their respective
advisers will rely upon the truth and accuracy of the foregoing acknowledgements,
representations and agreements.
Each purchaser of the New Shares within the United States pursuant to Rule 144A will be
deemed to have acknowledged, represented and agreed that it has received a copy of this
Prospectus and such other information as it deems necessary to make an informed
investment decision and that:
• The purchaser is authorised to consummate the purchase of the New Shares in
compliance with all applicable laws and regulations.
• The purchaser acknowledges that the New Shares have not been and will not be
registered under the U.S. Securities Act or with any securities regulatory authority
of any state of the United States and are subject to significant restrictions to
transfer.
• The purchaser (i) is a QIB (as defined in Rule 144A), (ii) is aware that the sale to it
is being made in reliance on Rule 144A and (iii) is acquiring such New Shares for its
own account or for the account of a QIB, in each case for investment and not with
a view to any resale or distribution to the New Shares.
• The purchaser is aware that the New Shares are being offered in the United States
in a transaction not involving any public offering in the United States within the
meaning of the U.S. Securities Act.
• If, in the future, the purchaser decides to offer, resell, pledge or otherwise transfer
such New Shares, as the case may be, such Shares may be offered, sold, pledged
or otherwise transferred only (i) to a person whom the beneficial owner and/or any
person acting on its behalf reasonably believes is a QIB in a transaction meeting
the requirements of Rule 144A, (ii) in accordance with Regulation S, (iii) in
accordance with Rule 144 (if available), (iv) pursuant to any other exemption from
the registration requirements of the U.S. Securities Act, subject to the receipt by
the Company of an opinion of counsel or such other evidence that the Company
may reasonably require that such sale or transfer is in compliance with the U.S.
Securities Act or (v) pursuant to an effective registration statement under the U.S.
Securities Act, in each case in accordance with any applicable securities laws of any
state or territory of the United States or any other jurisdiction.
• The purchaser is not an affiliate of the Company or a person acting on behalf of
such affiliate, and is not in the business of buying and selling securities or, if it is in
such business, it did not acquire the New Shares from the Company or an affiliate
thereof in the initial distribution of such Shares.
• The New Shares are "restricted securities" within the meaning of Rule 144(a) (3)
and no representation is made as to the availability of the exemption provided by
Rule 144 for resales of any New Shares, as the case may be.
• The Company shall not recognise any offer, sale pledge or other transfer of the New
Shares made other than in compliance with the above-stated restrictions.

102
 • The purchaser acknowledges that the Company, the Manager and their respective
advisers will rely upon the truth and accuracy of the foregoing acknowledgements,
representations and agreements.

14.3.2 European Economic Area

• Each person in a Relevant Member State (other than, in the case of paragraph (a),
persons receiving offers contemplated in this Prospectus in Norway) who receives
any communication in respect of, or who acquires any New Shares under, the offers
contemplated in this Prospectus will be deemed to have represented, warranted and
agreed to and with each Manager and the Company that:
• it is a qualified investor as defined in the Prospectus Directive; and
• in the case of any New Shares acquired by it as a financial intermediary, as that
term is used in Article 3(2) of the Prospectus Directive, (i) the New Shares acquired
by it in the offer have not been acquired on behalf of, nor have they been acquired
with a view to their offer or resale to, persons in any Relevant Member State other
than qualified investors, as that term is defined in the Prospectus Directive, or in
circumstances in which the prior consent of the Manager has been given to the offer
or resale; or (ii) where New Shares have been acquired by it on behalf of persons
in any Relevant Member State other than qualified investors, the offer of those
Shares to it is not treated under the Prospectus Directive as having been made to
such persons.
• For the purposes of this representation, the expression an "offer" in relation to any
New Shares in any Relevant Member State means the communication in any form
and by any means of sufficient information on the terms of the offer and any New
Shares to be offered so as to enable an investor to decide to purchase or subscribe
for the New Shares, as the same may be varied in that Relevant Member State by
any measure implementing the Prospectus Directive in that Relevant Member State
and the expression " Prospectus Directive" means Directive 2003/71/EC (and
amendments thereto, including the 2010 PD Amending Directive, to the extent
implemented in the Relevant Member State), and includes any relevant
implementing measure in each Relevant Member State and the expression "2010
PD Amending Directive" means Directive 2010/73/EU.

103
15. ADDITIONAL INFORMATION

15.1 Legal Proceedings

There are no governmental, legal or arbitration proceedings, including any such
proceedings which are pending or threatened, during a period covering at least the
previous 12 months which may have, or have had in the recent past significant effects on
the Group’s financial position or profitability.
15.2 Material Contracts
Neither the Group nor any member of the Group has entered into any material contracts
outside the ordinary course of business for the two years prior to the date of this
Prospectus. Further, the Group has not entered into any other contract outside the ordinary
course of business which contains any provision under which any member of the Group
has any obligation or entitlement.
15.3 Related Party Transactions
Siem Industries Inc. is the parent company of Siem Europe S.a r.l. the Company’s largest
shareholder with a holding of 83.03%, and is defined as a related party. The Company is
obligated to Siem Industries Inc., for a fee of USD 250K (2015: USD 300K). This fee is the
remuneration for the services of two of the Board Members. This fee also covers office in
the Cayman Islands and administrative services.

The main shareholder of the Company, Siem Europe S.a r.l. is controlled by a trust where
certain members of Kristian Siem’s family are potential beneficiaries. Kristian Siem, who is
a member of the Board of the Company, is also inter alia the chairman of the board of
directors of Siem Industries Inc. and of Subsea 7 S.A., the charterer of the OSCV "Siem
Stingray". The contract between the Company and Subsea 7 S.A is made on arm's length
terms.

At the end of 2014 a short term loan of USD 60 million was drawn by the Company under
a credit facility provided by Siem Industries Inc. The short term loan is on market terms.
15.4 Documents on display
Copies of the following documents will be available for inspection at the Company's offices
and at the offices of Siem Offshore Management AS at Nodeviga 14, 4610 Kristiansand,
during normal business hours from Monday to Friday each week (except public holidays)
for a period of twelve months from the date of this Prospectus.

• The Company's Articles of Association and Certificate of Incorporation.

• The Group's audited consolidated annual financial statement for the year ended 31
December 2016 and the Group’s interim financial statements for the three months
periods ended 31 March 2017.

• This Prospectus.
15.5 Statement regarding sources
The Company confirms that when information in this Prospectus has been sourced from a
third party it has been accurately reproduced and as far as the Company is aware and is
able to ascertain from the information published by that third party, no facts have been
omitted which would render the reproduced information inaccurate or misleading.

104
16. DEFINITIONS AND GLOSSARY

The following definitions and glossary apply in this Prospectus unless otherwise dictated by
the context, including the foregoing pages of this Prospectus.

AHTS Anchor-handling, tug, supply vessel.

the Norwegian Money Laundering Act No. 11 of 6 March

Anti-Money Laundering
2009 and the Norwegian Money Laundering Regulations
Legislation
No. 302 of 13 March 2009.
The memorandum and articles of association of the
Articles of Association
Company.

Board Members The members of the Board of Directors.

Board of Directors or Board The board of directors of the Company.

CET Central European Time.

CLV Cable-lay vessel.

Central Office for Foreign Tax Affairs (Norwegian:

COFTA
Sentralskattekontoret for utenlandssaker).

Company Siem Offshore Inc.

Corporate Governance The Norwegian Code of Practice for Corporate Governance

Code dated 30 October 2014.

CSV Construction vessel.

DLB Heavylift / Derrick lay barge.

DP Dynamically positioned.

DSND Det Søndenfjeldske-Norske Dampskipselskap AS.

DSV Diving Support vessel.

EEA The European Economic Area.

ERD Extended Reach Drilling.

Existing Shares The issued Shares as of the date of this Prospectus.

Holders of the Company’s shares as registered in the VPS

Existing Shareholders
as of 23 May 2017.

EU The European Union.

Directive 2003/71/EC (and amendments thereto,

including the 2010 PD Amending Directive, to the extent
EU Prospectus Directive implemented in the Relevant Member State) and includes
any relevant implementing measure in each Relevant
Member State.

105
FCV Fast crew vessel.

Foreign EEA Corporate Foreign Shareholders that are corporations tax-resident

Shareholders within the EEA for tax purposes.
Foreign EEA Personal Non-resident Shareholders who are individuals tax-
Shareholders resident within the EEA.
Forward-looking Statements made that are not historic and thereby
statements predictive as defined in Section 4.3.

FOS Five Oceans Services.

FSV Fast supply vessel.

General Meeting The Company’s general meeting of shareholders.

Group The Company and its subsidiaries.

HPHT High pressure high temperature.

International Financial Reporting Standards as adopted by

IFRS
the EU.
Existing Shareholders resident in jurisdictions where the
Prospectus may not be distributed and/or with legislation
Ineligible Shareholders
that, according to the Company’s assessment, prohibits or
otherwise restricts subscription for New Shares.
Securities number in the Norwegian Central Securities
ISIN
Depository (VPS).

ISV Installation support vessel.

LAYSL Lay vessel.

LCV Light construction vessel.

Listing The listing of the New Shares on Oslo Børs.

Management The Group’s senior management team.

Manager Swedbank.

MPD Managed pressure drilling.

MPSV Multipurpose platform supply vessel.

MSV Multipurpose supply vessel.

The 100,000,000 new Shares issued in connection with

New Shares
the Rights Offering.

NOK Norwegian Kroner, the lawful currency of Norway.

Shareholders who are not resident in Norway for tax

Non-resident Shareholders
purposes.

106
 The Financial Supervisory Authority of Norway (Nw.:
Norwegian FSA
Finanstilsynet).
Shareholders who are limited liability companies and
Norwegian corporate
certain similar corporate entities resident in Norway for
shareholders
tax purposes.
Norwegian personal Personal shareholders resident in Norway for tax
shareholders purposes.
Norwegian Securities The Norwegian Securities Trading Act of 29 June 2007 no.
Trading Act 75 (Nw.: verdipapirhandelloven).

OCI Other comprehensive income.

ODL Overseas Drilling Limited.

The Financial Services and Markets Act 2000 (Financial

Order
Promotion) Order 2005 as amended.

OSCV Offshore subsea construction vessel.

Oslo Børs ASA or, as the context may require, Oslo Børs,
Oslo Stock Exchange a Norwegian regulated stock exchange operated by Oslo
Børs ASA.

OSRV Oil spill recovery vessels.

OSV Offshore support vessel.

OWF Offshore Wind Farm.

Prospectus This Prospectus.

Commission Regulation (EC) No. 809/2004 implementing

Directive 2003/71/EC of the European Parliament and of
Prospectus Directive the Council of 4 November 2003 regarding information
contained in prospectuses, as amended, and as
implemented in Norway.

PCD Pressure control device.

PSV Platform supply vessel.

Qualified institutional buyers, as defined in Rule 144A

QIBs
under the U.S. Securities Act.

Record date 23 May 2017.

Each Member State of the EEA which has implemented the

Relevant Member State
EU Prospectus Directive.

Rights Offering The offering of New Shares described in this Prospectus.

Shareholders that are residents of Norway for purposes of

Resident Shareholders
Norwegian taxation.

107
 Persons in the UK that are (i) investment professionals
falling within Article 19(5) of the Order or (ii) high net
Relevant Persons worth entities, and other persons to whom the Prospectus
may lawfully be communicated, falling within Article
49(2)(a) to (d) of the Order.
Unique sealing technology for the existing PCD products
RPCD and other arising applications, for example a seal to be
used from floating drilling units.

Secunda Secunda Holdings Limited.

SFA The Securities and Futures Act of Singapore.

Common shares in the share capital of the Company or

Share(s)
any one of them.

Siem Offshore The Company and its subsidiaries.

SOC Siem Offshore Contractors GmbH.

Subscription Period From 30 May 2017 to 16:30 hours (CET) on 12 June 2017.

The subscription price for New Shares in the Rights

Subscription Price
Offering, being NOK 1.90 per New Share.
The transferable subscription rights being issued to
Subscription Rights holders of Existing Shares in connection with the Rights
Offering.

TAMRF Texas A&M Research Foundation.

UBO Underbalanced Operations.

UK United Kingdom.

Underwriter Siem Europe S.a r.l.

The Underwriting Agreement dated 15 May 2017 between

Underwriting Agreement
the Company and the Underwriter.
United States Dollar, the lawful currency of the United
USD
States of America.
The United States Securities Exchange Act of 1934, as
U.S. Exchange Act
amended.

U.S. Securities Act The United States Securities Act of 1933, as amended.

The Norwegian Central Securities Depository (Nw.:

VPS
Verdipapirsentralen).
WIV or Well-Intervention
Well-intervention vessel.
Vessel

108
Appendix A: Memorandum and Articles of Association

109
Appendix B: Annual financial statements 2016

110
ANNUAL
REPORT 2016
Highlights 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Key Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
New Vessels Delivered in 2016 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Vessels in the Fleet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Local presence in key markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

This is Siem Offshore Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Board of Director’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Corporate Governance .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Income Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Statements of Financial Position – Assets .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Statements of Financial Position – Equity and Liabilities .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Statements of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Notes to the Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Corporate Social Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Responsibility Statement .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106

Board of Directors .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

Financial Calendar .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
HIGHLIGHTS 2016
REVENUE USD 1,000
469 123
OPERATING MARGIN USD 1,000
128 295
EMPLOYEES
1 058
VESSELS IN OPERATION
46
Highlights for the First Quarter
• The Oil spill recovery vessel (“OSRV”) “Siem Marataizes” was
delivered from a yard in Brazil and commenced an 8-year firm
contract with options for Petrobras.
• Agreed a 18-month contract with options for the AHTS vessel
“Siem Topaz” for operations in Australia.
• Siem Offshore Contractors was awarded a contract for the provi-
sion of a walk-to-work service operations vessel for the windfarm
sector of the North Sea. The firm charter period is 700 days with
options to extend the charter period by up to three additional years.
Highlights tor the Second Quarter
• Agreed a 5-year term contract with 2 x 1-year options for one
dual-fuelled PSV for operation in Australia.
• Extension of charter for the scientific research vessel “Joides Reso-
lution” until 30 September 2019. The charterer has further options
to extend charter until 30 September 2023 on an annual basis.
• Agreed a 6-month extension of the contract for the PSV “Siem Pilot”.
• SOC was awarded a turnkey supply and installation of the inner
array grid cable system for the Beatrice Offshore Wind Farm
project. The Company acquired 50% of Secunda Canada LP (“Se-
cunda”) as part of the recapitalization of Secunda and increased
its ownership to 100%.
• Secunda took delivery of the AHTS “Avalon Sea” from a yard in
Poland in May and commenced a 6-year contract with an inter-
national oil company.
• Terminated charter party for the OSCV “Siem Spearfish” due to
default by the charterer.
• Took delivery of the cable-lay vessel (“CLV”) “Siem Aimery” from
a yard in Poland in April and commenced employment with Siem
Offshore Contractors for project work within the submarine power
cable installation, repair and maintenance segment.
• Took delivery of the first of two Well-Intervention Vessels (“WIV”)
from a yard in Germany and commenced a 7-year contract.
Highlights for the Third Quarter
• Received approval from all of its financing banks for a financial
platform to position the Company for the challenging market
expected in the coming years.
• Established a stand-alone AHTS vessel company, Siem AHTS
Pool AS (“SAP”), holding ownership in 10 AHTS vessels and in
which Siem Offshore holds a 78.16% interest.
• Secunda was awarded 3-year term contracts plus options for two
of its PSVs, the “Venture Sea” and the “Siem Hanne”.
• Sold and delivered the PSV “Siem Carrier”.
• Extended the bareboat contract for MV “Hugin Explorer” by 15
months to 1 July 2019 and agreed a purchase obligation by the
charterer at the end of the period.
Highlights for the Fourth Quarter
• Siem Offshore Contractors (“SOC”) was awarded a contract for the
transportation and installation of a portion of the inner array grid
cable system of the Hornsea Offshore Wind Farm, Project One in
UK waters. SOC was awarded a turnkey contract for the supply
and installation of the inner array grid cable system contract for
the Trianel Windpark Borkum II.
• Cancelled a shipbuilding contract with Remontowa S.A. in Poland
for the 3rd dual fuel PSV in a series of four vessels due to delay
in delivery.
• Took delivery of the second of two well-intervention vessels (“WIV”)
built at a German shipyard and commenced a 7-year contract.
• Took delivery of the dual fuel PSV “Siem Thiima” from a Polish
shipyard and the vessel commenced a 5-year contract with an
international oil company for operation in Australian waters.
• Conducted a periodic review of vessel values, receivables and
investments in subsidiaries and recorded aggregate impairments
of USD 74.0 million.
SIEM OFFSHORE INC. ANNUAL REPORT 2016 1
 KEY FIGURES

(Amounts in USD 1,000) Consolidated

INCOME STATEMENTS Ref 2016 2015
Operating revenue 469,123 422,449
Operating expenses -340,829 -303,901
Operating margin (1) 128,295 118,548
Operating margin, % 27% 28%
Depreciation and amortization -111,771 -107,025
Impairment of vessels -60,180 -159,465
Impairment of intangibles -1,015 -6,705
Impairment of long-term receivables and subsidiaries -15,379 -
Gain/(loss) on sale of assets -423 16,317
Net gain on bargain purchase 18,312 -
Gain on sale of interest rate derivatives (CIRR) 368 368
Gain/(loss) on currency derivative contracts -7,762 -30,775
Operating profit (2) -49,555 -168,735
Operating profit margin, % -11% -40%
Net financial items -106,994 -21,384
Result from associated companies 19 -1,560
Profit /(loss) before taxes -156,531 -191,679
Profit margin before taxes -33% -45%
Tax benefit/(expense) 626 -4,737
Net profit /(loss) -155,905 -196,416
Non-controlling interest -13,469 -9,729
Net profit/(loss) attributable to shareholders -142,436 -186,687
Net profit margin, % -30% -44%

STATEMENTS OF FINANCIAL POSITION 12/31/2016 12/31/2015

Non-current assets 2,132,652 1,766,916
Current assets 279,639 264,747
Working capital (3) -65,071 34,299
Total assets 2,413,390 2,035,122
Shareholders' equity 549,107 632,215
Non-current liabilities 1,420,695 1,139,165
Current liabilities 344,710 230,448
Total equity and liabilities 2,413,390 2,035,121

Definitions
(1) Earnings before interests, tax, depreciation and amortization (EBITDA)
(2) Earnings before interests and taxes (EBIT)
(3) Total current assets less total current liabilities
(4) See Statements of Cash Flows for details
(5) Net cash flow from operation divided on weighted average number of shares outstanding
(6) Stock Exchange price on December 31 divided on earnings per share
(7) Stock Exchange price on December 31 divided on cash flow per share
(8) Shareholders’ equity divided on number of outstanding shares
(9) Operating margin divided on weighted average number of outstanding shares
(10) Book equity divided on total assets
(11) Current assets divided on current liabilities

2 SIEM OFFSHORE INC. ANNUAL REPORT 2016

STATEMENTS OF CASH FLOWS 2016 2015
Net cash flow from operations (4) 64,841 42,462
Net change in cash (4) -60,364 43,623

KEY FIGURES 2016 2015

Weighted average no. of outstanding shares (1,000) 842,021 518,318
Weighted average no. of diluted outstanding shares (1,000) 842,021 757,123
Earnings per share (USD) -0.17 -0.36
Diluted earnings per share (USD -0.17 -0.36
Cash flow per share in USD (5) 0.08 0.08
Share price per year end (USD) 0.21 0.16
Share price per year end (NOK) 1.85 1.40
Price/earnings per share (P/E) (6) -1.27 -0.44
Price/cash flow per share (P/CF) (7) 2.79 2.00
Book shareholders' equity per share (USD) (8) 0.65 0.75
Operating margin share (9) 0.15 0.23
Book equity ratio (10) 0.27 0.33
Liquidity ratio (11) 0.81 1.15

VESSELS 31/12/2016
31/12/2015
46 TOTAL
51 TOTAL
Newbuildings
Vessels in operation 31/12/2014 55 TOTAL
31/12/2013 55 TOTAL
31/12/2012 47 TOTAL
31/12/2011 45 TOTAL
31/12/2010 42 TOTAL
31/12/2009 44 TOTAL
31/12/2008 40 TOTAL
31/12/2007 32 TOTAL
31/12/2006 34 TOTAL
31/12/2005 27 TOTAL

OWNERSHIP 31/12/2016
31/12/2015
46 TOTAL
51 TOTAL
0-79%
100% 31/12/2014 55 TOTAL
31/12/2013 55 TOTAL
31/12/2012 47 TOTAL
31/12/2011 45 TOTAL
31/12/2010 42 TOTAL
31/12/2009 44 TOTAL
31/12/2008 40 TOTAL
31/12/2007 32 TOTAL
31/12/2006 34 TOTAL
31/12/2005 27 TOTAL

SIEM OFFSHORE INC. ANNUAL REPORT 2016 3

 NEW VESSELS DELIVERED IN 2016

Siem Helix 1
Delivered June 2016
Siem Helix 2
Delivered December 2016

4 SIEM OFFSHORE INC. ANNUAL REPORT 2016

 Siem Thiima
Delivered November 2016

Siem Marataizes
Delivered February 2016

Siem Aimery
Delivered April 2016

Avalon Sea
Delivered May 2016

SIEM OFFSHORE INC. ANNUAL REPORT 2016 5

 VESSELS IN THE FLEET

Platform Supply Vessels (PSV)

Siem Pride Siem Symphony Siem Atlas Siem Giant Siem Hanne Siem Louisa
Built 2015 2014 2013 2014 2007 2006
Design VS 4411 DF VS 4411 DF STX PSV 4700 STX PSV 4700 VS 470 MK II VS 470 MK II
Dp Class 2 2 2 2 2 2
LOA 89.20 m 89.20 m 87.90 m 87.90 m 73.40 m 73.40 m
Breadth 19.00 m 19.00 m 19.00 m 19.00 m 16.60 m 16.60 m
Draught 7.40 m 7.40 m 6.60m 6.60 m 6.42 m 6.42 m
Dwt 5,500 t 5,500 t 4700 T 4,700 T 3570 T 3570 T
Accommodation 28 25 34 34 34 34
Cargo Deck Area 980 m2 980 m2 1000 m2 usable 1000 m2 usable 680 m2 usable 680 m2 usable
Ownership 100% 100% 100% 100% 100% 100%

Anchor Handling Tug Supply Vessels (AHTS)

Siem Amethyst Siem Opal Siem Garnet Siem Sapphire Siem Aquamarine Siem Topaz
Built 2011 2011 2010 2010 2010 2010
Design VS 491 CD VS 491 CD VS 491 CD VS 491 CD VS 491 CD VS 491 CD
Dp Class 2 2 2 2 2 2
LOA 91.00 m 91.00 m 91.00 m 91.00 m 91.00 m 91.00 m
Breadth 22.00 m 22.00 m 22.00 m 22.00 m 22.00 m 22.00 m
Draught 7.95 m 7.95 m 7.95 m 7.95 m 7.95 m 7.95 m
Dwt 3800 T 3800 T 3800 T 3800 T 3800 T 3800 T
Accommodation 60 60 60 60 60 60
Cargo Deck Area 800 m2 800 m2 800 m2 800 m2 800 m2 800 m2
BHP 28000 28000 28000 28000 28000 28000

Bollard Pull 297 Te 297 Te 282 Te 301 Te 284 Te 306 Te

Ownership 78,16% 78,16% 78,16% 78,16% 78,16% 78,16%

Offshore Subsea Construction Vessel (OSCV) & Multipurpose field & ROV Support Vessel (MRSV)

Siem Marlin Siem N-Sea Siem Barracuda Siem Spearfish Siem Stingray
Built 2009 2009 2013 2014 2014
Design MT 6017 MK II MT 6017 MK II STX OSCV 11L STX OSCV 03 STX OSCV 03
Dp Class 2 2 2 2 2
LOA 93.60 m 93.60 m 120.80 m 120.80 m 120.80 m
Breadth 19.70 m 19.70 m 22.00 m 23.00 m 23.00 m
Draught 6.30 m 6.30 m 6.60 m 6.60 m 6.60 m
Dwt 4.500 t 4.500 t 5.000 t 5.000 t 5.000 t
Accommodation 68 68 110 110 110
Cargo Deck Area 1046 m2 1046 m2 1300 m2 1,300 m2 1,300 m2
Crane 100 t Offshore/Subsea crane 100 t Offshore/Subsea 250 t Offshore/Subsea 1 X 250 t AHC, 3,000 m 1 X 250 t AHC, 3,000 m
ROV Moonpool - - 7.2 X 7.2 7.2 X 7.2 m 7.2 X 7.2 m
Ownership 100% 100% 100% 100% 100%

6 SIEM OFFSHORE INC. ANNUAL REPORT 2016

 Large-size PSVs

Sophie Siem Siem Sasha Siddis Mariner Siem Pilot Hugin Explorer Siem Supplier Siem Thiima
2006 2005 2011 2010 2006 1999 2016
VS 470 MK II VS 470 MK II VS 485 VS 485 MT 6000 MK II MT 6000 VS 4411 DF
2 1 2 2 2 2 2
73.40 m 73.40 m 88.3 m 88.3 m 86.20 m 83.70 m 89.2 m
16.60 m 16.60 m 20 m 20 m 19.70 m 17.70 m 19.00 m
6.42 m 6.42 m approx 7.0 m approx 7.0 m 6.18 m 6.10 m 7.40 m
3570 T 3570 T 4500 T 4500 T 3236 T 4250 T 5500 T
34 34 64 64 56 20 25
680 m2 usable 680 m2 usable 970 m2 970 m2 935 m2 912 m2 980 m2
100% 51% 51% 51% 100% 100% 100%

Well Intervention Vessels (WIV)

Siem Ruby Siem Diamond Siem Pearl Siem Emerald Siem Helix 1 Siem Helix 2
2010 2010 2009 2009 Built 2016 2016
VS 490 CD VS 491 CD VS 491 CD VS 491 CD Design Salt 307 WIV Salt 307 WIV
2 2 2 2 Dp Class 3 3
91.00 m 91.00 m 91.00 m 91.00 m LOA 158.65 m 157.60 m
22.00 m 22.00 m 22.00 m 22.00 m Breadth 31.00 m 31.00 m
7.95 m 7.95 m 7.95 m 7.95 m Draught 8.50 m 8.50 m
3800 T 3800 T 3800 T 3800 T Dwt 12500 t 12500 t
60 60 60 60 Accommodation 150 150
800 m2 800 m2 800 m2 800 m2 BHP 36000 35000
28000 28000 28000 28000 Ownership 100% 100%
310 Te 284 Te 285 Te 281 Te

78,16% 78,16% 78,16% 78,16%

Installation Support Cablelay Vessel

Vessel (ISV) (CLV) Other

Siem Moxie Siem Aimery Brazil – Fleet of 6 Canada – Fleet of 5

Carajas
Built 2014 Built 2016 vessels vessels

Design SX 163 X-Bow Design Vard CLV01 Fast supply vessel AHTS/PSV/Field
Type OSRV/FCS/FSV
Dp Class 2 Dp Class 2 (FSV) support

LOA 74.00 m LOA 95.3 m Ownership 100% owned 100% owned 100% owned
Breadth 17.00 m Breadth 21.5 m
Draught 6.40 m Draught 7.1 m
Dwt 2.835 t Dwt 5,417 t
Accommodation 60 Accommodation 60
Cargo Deck Area 200 m2 usable Cargo Deck Area 350 m2
Joides Resolution Big Orange XVIII
Ownership 100% Ownership 100%
Scientific Core Drilling Well Stimulation Vessel
Type
Vessel (SCDV) (WSV)
Ownership 100% owned 41.3% owned

SIEM OFFSHORE INC. ANNUAL REPORT 2016 7

 LOCAL PRESENCE IN KEY MARKETS

Geographical
footprint
Kristiansand (HQ)

Leer

Groningen
Gdynia
Halifax

St. John´s
Houston

Accra
Siem Offshore offices
• Kristiansand (Norway)
• Rio de Janeiro, Macaé, Aracaju (Brazil)
• Leer (Germany) Macaé
Aracaju
• Groningen (The Netherlands)
• Houston (USA) Rio de Janeiro
• Accra (Ghana)
• Perth (Australia)
• Gdynia (Poland)
• St. John´s, Halifax (Canada)

8 SIEM OFFSHORE INC. ANNUAL REPORT 2016

 TOTAL EMPLOYEES

1058
TOTAL NUMBER OF VESSELS

46
VESSELS IN OPERATION

46
PSVs: 13
WIVs: 2
AHTs: 10
OSCVs: 5
CANADIAN FLEET: 5
OTHER: 11

Perth

SIEM OFFSHORE INC. ANNUAL REPORT 2016 9

 This is
Siem
Offshore
Inc.
Siem Offshore Contractors

Siem Offshore owns and operates one of the world’s most modern
fleet of offshore support vessels, equipped to meet the increased
requirements from clients and demands from operation in the
harshest environments. The Company has a strong involvement
in the renewable energy market as a contractor for installation of
submarine power cables for offshore wind farms.

S
iem Offshore had 46 vessels in operation and had one
vessel under construction by year-end 2016.
By end March 2017, the total fleet comprised of 45
vessels, including, among others the following owned ves-
sels, thirteen Platform Supply Vessels (PSVs), five Offshore Subsea
Construction Vessels (OSCVs), ten Anchor Handling, Tug and Supply
vessels (AHTS), two Well-Intervention Vessels (WIVs), one Installa-
tion Support Vessel (ISV), one Cable Lay Vessel (CLV), six Brazilian
flagged vessels and five Canadian flagged vessels comprising of
both AHTS vessels and PSVs. The fleet provides a broad spectrum
of services offered by a highly experienced and competent crew
with a strong focus on Health, Safety, Environment and Quality.
The Company’s vision is to become the leading provider and the
most attractive employer offering marine services to the offshore
energy service industry. The Company shall deliver quality and
reliable contracted services in a timely manner by executing cost-
efficient solutions developed in active collaboration and cooperation
with our customers.
Siem Offshore commenced operations with effect from 1 July
2005. The Company is registered in the Cayman Islands and is listed
on the Oslo Stock Exchange (OSE Symbol: SIOFF). The Company’s
headquarters is located in Kristiansand, Norway and additional
subsidiary offices are located in Brazil, Germany, the Netherlands,
Ghana, USA, Poland, Canada and Australia. The Company is tax
resident in Norway.

10 SIEM OFFSHORE INC. ANNUAL REPORT 2016

Our REVENUE Amounts in USD 1,000

Values
2016 469 123
2015 422 449
2014 491 312
2013 363 955
We continuously work to 2012 368 213
make the values part of the 2011 340 628
2010 228 302
daily life of the Company,
2009 183 558
in particular in training of 2008 192 773
leaders throughout the 2007 159 342
2006 73 554
organization. The values
are established to support
OPERATING MARGIN Amounts in USD 1,000
our present and future
2016 128 295
business. 2015 118 548
2014 194 125
2013 122 663
2012 110 348
CARING 2011 122 952
We encourage team spirit and knowl-
2010 74 641
edge sharing. We strive to perform our
daily work correctly, safely and without 2009 57 934
causing damage to people, environment 2008 87 738
and equipment.
2007 79 799
2006 20 480
COMPETITIVE
We behave in a pro-active manner and we
are innovative in our way of thinking. Con-
EMPLOYEES
tinuous improvement is our key to success.
2016 1058
2015 949
COMMITTED 2014 1 073
We are driven by integrity. We step up and
2013 1 110
take charge to fulfil given promises.
2012 1 078
2011 1 073
2010 828
2009 762
2008 642
2007 600
2006 527

SIEM OFFSHORE INC., ANNUAL REPORT 2016 11

 THE BOARD OF DIRECTORS’ REPORT
The Board of Directors of Siem Offshore Inc. (the “Board”) presents
its report for the fiscal year ended 31 December 2016 together with the
audited consolidated financial statements and the audited financial
statements for the parent company. The financial statements and
related notes were authorised for issue by the Board on 19 April
2017 and will be presented to the shareholders for approval at the
Annual General Meeting to be held 5 May 2017.
The Company
All references to “Siem Offshore” and the “Company” shall mean
Siem Offshore Inc. and its subsidiaries and associates unless the
context indicates otherwise. All references to “Parent” shall mean
Siem Offshore Inc. as the Parent Company only.
Siem Offshore is registered in the Cayman Islands and is listed
on the Oslo Stock Exchange (OSE Symbol: SIOFF). The Company’s
headquarters are located in Kristiansand, Norway and additional
subsidiary offices are located in Brazil, Germany, the Netherlands,
Poland, Ghana, United States, Canada, Cayman Islands and Australia.
The Company is tax domiciled in Norway.
The Company’s primary activity is the ownership and operation
of offshore support vessels (“OSVs”) for the offshore energy service
industry. Other significant activities include the installation, trench-
ing, termination and testing of inner-array cables for the offshore
renewable energy industry.
The Company operated a fleet of 46 vessels at year-end, includ-
ing partly-owned vessels and ten vessels in lay-up. During 2016,
the total fleet of OSVs conducted operations in the North Sea, West
Africa, Argentina, Australia, the U.S. Gulf, Canada and Brazil.
Secunda Holding Limited (“Secunda”) is now a wholly-owned
subsidiary following the Company’s acquisition of the remaining 50%
ownership during the year. Secunda owns and operates a harsh-
weather fleet of five offshore support vessels and is a leader in sup-
port services for platform supply, anchor-handling, rescue standby
and towage in its primary area of operation offshore Eastern Canada
12 SIEM OFFSHORE INC. ANNUAL REPORT 2016
Siem WIS AS, a 60%-owned subsidiary of the Company, devel-
ops applications for managed-pressure drilling (“MPD”) based on
a patented seal technology.
Overseas Drilling Limited (“ODL”) is a wholly-owned subsidiary
and the owner of the drillship, the “JOIDES Resolution”. The “JOIDES
Resolution” is used in scientific research to drill core samples in the
ocean floor during expeditions for an international research program.
Siem Offshore do Brasil S.A. is the Company’s wholly-owned
Brazilian subsidiary which owns and operates a fleet of eight OSVs
in Brazil and provides specialized engineering applications to de-
velop and implement combat management systems for vessels in
the Brazilian navy.
Financial Results, Position And Risks
IFRS
The financial statements for the Company and the Parent are pre-
pared in accordance with the International Financial Reporting
Standards (“IFRS”) as adopted by the European Union.
Going-Concern
The financial statements have been prepared under the assumption
that the Company and the Parent are going-concerns. This assump-
tion is based on the Company’s level of cash and cash equivalents
at year-end, forecasted cash-flows, available credit facilities, agree-
ments with finance creditors and bondholders and the market value
of its assets.
 The Company began to implement comprehensive cost reduc-
tion measures at the end of 2014 with the onset of a slowdown in
the industry to reduce the Company’s cost base and to preserve
liquidity for ongoing operations.
The current market situation creates uncertainty related to the
expected level of future revenues and places pressure on the Com-
pany’s cash position used in operations and the servicing of debt.
Following months of negotiations, the Company announced last
summer that its proposed Finance Plan had received approval from
all of its bank lenders; however, subject to the Company’s reaching
agreement with the holders of its two public bonds to extend the
maturity dates of the bonds on terms that are acceptable to the
banks. The Finance Plan gives support to the Company’s contention
that it is a viable, going-concern and provides a solid financial plat-
form to meet the challenges presented by the oil and gas services
market during the next several years. The bank lenders agreed to up
to three-year extension of the final bullet payments of all mortgage
debt due before 31 December 2019, deferral of instalments for the
fleet of AHTS vessels for 2.5 years with a cash sweep mechanism,
and the easing of certain debt covenant requirements from the
Company’s banks for the next three years. An agreement with the
bondholders was passed by the bondholders´ meeting in the Parent´s
two public bonds in April 2017 and the Finance Plan is therefore
firm. The bondholders´ meetings approved certain amendments to
the terms of the bond issues including the extension of maturity
by 2.75 years from original maturity date, easing of financial cov-
enants, lower interest coupon and option to payment-in-kind at a
higher interest rate. The Company has been granted a call option
at par and has agreed to certain restrictions on new debt and new
encumbrances outside the ordinary course of business, as well as
a restriction on dividend payments. In connection with and subject
to certain conditions in relation to the proposed amendments, the
Company intends to carry-out a rights issue to generate gross
proceeds of NOK190 million for working capital purposes. The
Company’s largest shareholder, Siem Europe S.a r.l., has indicated
its willingness to fully underwrite the share issue.
The Agreement reached with the bondholders and the raising of
new equity through the rights issue will provide the Company with
a stronger financial platform during the current downturn and will
position the Company to comply with its debt covenants over the
next couple of years.
Income Statement
The Company had 46 offshore vessels in operation at year-end.
The Company finished its comprehensive newbuilding program
with the last six vessels delivered in 2016. All vessels commenced
long-term charters after delivery.
In 2016, the Company recorded operating revenue of USD469.1
million and a net loss attributable to shareholders of USD(142.4)
million, or USD(0.17) per share, compared to operating revenue of
USD422.4 million and a net loss attributable to shareholders of
USD(186.7) million, or USD(0.36) per share, in 2015.
The Company’s operating margin for 2016 was USD128.3 mil-
lion compared to USD118.5 million in 2015. Net operating margin
as a percentage of operating revenue was 27% in 2016 compared
to 28% in 2015.
The Company’s operating profit for 2016 was USD(49.6) million
compared to USD(168.7) million in 2015 and includes deprecia-
tion and amortisation of USD111.8 million (2015: USD107 million).
During 2016, the Company conducted periodic reviews of vessel
valuations and recorded impairments of USD76.6 million on cer-
tain vessels, receivables and intangibles compared to impairment
charges of USD166.2 million in 2015. Net currency exchange (losses)
of USD(7.8) million (2015: USD(30.8) million) was recorded on
forward contracts, of which USD0.9 million (2015: USD2.1 million)
was unrealised. The net gain/(loss) on sale of assets was USD(0.4)
million (2015: USD16.3 million).
The Company’s net financial items included net expenses of
USD(107.0) million (2015: USD(21.4) million) and a revaluation
gain of non-USD currency items of USD(3.8) million (2015: USD22.1
million) due to stronger USD during the period. Non-USD currency
items are held to match short- and long-term liabilities, includ-
ing off-balance sheet liabilities, in similar currency. Net currency
gain/(loss) of USD(64.2)million includes a loss of approximately
USD(60.3) million in relation to prior years’ currency losses in a
cash flow hedge that had accumulated in other comprehensive
income in the financial statements of its wholly-owned Brazilian
subsidiary, Siem Offshore do Brazil SA.
The Parent company is primarily a holding company owning
shares in operating subsidiaries.
The Board proposes that the Parent’s net loss of USD(14.8) mil-
lion for 2016 be allocated to retained earnings and that no dividend
be paid for 2016.
Financial Position and Cash-Flows
Total equity for the Company was USD648 million at year-end 2016
(2015: USD666 million), and the book equity ratio was 27% (2015:
33%). Shareholders’ equity was USD549 million (2015: USD632
million), equivalent to USD0.65 per share (2015: USD0.75 per share).
The cash position at year-end was USD101 million (2015: USD149
million).
The Company recorded USD415 million as gross capital expen-
ditures in fixed assets during 2016, of which USD334 million related
to new vessels delivered from yards or vessels under construction,
and USD81 million related to project-specific investments in vessels
and capitalised dry-dockings.
The net interest-bearing debt at year-end were equivalent to
USD1.4 billion (USD1.0 billion in 2015). The Company made total
drawings equivalent to USD456 million under credit facilities during
the year. The weighted average cost of debt for the Company was
approximately 3.9% p.a. at year-end (2015: 4.3% p.a.).The Company
paid debt instalments of the equivalent of USD188 million during
the year.
The Company’s cash-flows are primarily denominated in USD,
SIEM OFFSHORE INC. ANNUAL REPORT 2016 13
 BOARD OF DIRECTORS’ REPORT
NOK, EUR and BRL. During 2016, the USD weakened by 2.15% to
the NOK, 16.54% to the BRL and strengthened by 3.59% to EUR.
The average recorded exchange rates were NOK/USD 0.1186, EUR/
USD 1.1022 and BRL/USD 0.287 (2015: NOK/USD 0.1236, EUR/
USD 1.1134 and BRL/USD 0.3002).
Financial Risks
— — INTEREST RISK
The Company is exposed to changes in interest rates as approxi-
mately 69% of the interest-bearing debt is based on floating interest
rates and primarily denominated in USD and NOK. The average
3-month USD LIBOR was 0.7444% p.a. during 2016 (0.31583% p.a.
in 2015) and the average 3-month NIBOR was 1.0674% p.a. during
2016 (1.29% p.a. in 2015). The Company held USD70 million in
interest rate swap agreements at year-end.
— — CURRENCY RISK
The Company is exposed to currency risk as revenue and costs
are denominated in various currencies. The Company is also ex-
posed to currency risk due to future yard instalments in relation
to shipbuilding contracts and long-term debt in various currencies.
Forward exchange contracts are entered into in order to reduce
the currency risk related to future cash flows.
— — LIQUIDITY RISK
The Company is financed by a combination of debt and equity. If the
Company fails to repay or refinance its credit facilities, additional
equity financing may be required. There can be no assurance that
the Company will be able to repay its debts or extend the debt
repayment schedule through re-financing of credit facilities. There
is no assurance that the Company will not experience cash flow
shortfalls exceeding the Company’s available funding sources
or to remain in compliance with minimum cash requirements or
other covenants. Further, there is no assurance that the Company
will be able to raise new equity or arrange new credit facilities on
favourable terms and in amounts necessary to conduct its ongoing
and future operations should this be required.
Operations
Fleet, Performance and Employment
The fleet in operation at end of year 2016 totalled 46 vessels (2015:
45 vessels), including partly owned vessels and vessels in lay-up.
The Company had 13 PSVs in operation at end of the year. The
PSV fleet earned operating revenues of USD62.1 million and had
77% utilisation (2015: USD76.5 million and 75%). The operating
margin before administrative expenses was USD28.1 million (2015:
USD38.7 million) and the operating margin as a percentage of rev-
enue was 45% (2015: 51%). The contract backlog at 31 December
2016 is 51% for 2017, 36% for 2018 and 23% for 2019 (2015: 60%
for 2016, 31% for 2017 and 24% for 2018).
The Company had five OSCVs in operation at end of the year
14 SIEM OFFSHORE INC. ANNUAL REPORT 2016
and two WIVs in operation at end of the year (2015: five).The OSCV
and WIV fleet earned operating revenues of USD97.2 million and
had 92% utilisation (2015: USD111.3 million and 94%). The operat-
ing margin before administrative expenses was USD44.5 million
(2015: USD69.6 million) and the operating margin as a percentage
of revenue was 46% (2015: 63%). The contract backlog was 55%
for 2017, 43% for 2018 and 29% for 2019 (2015: 88% for 2016, 83%
for 2017 and 77% for 2018).
The Company had ten AHTS vessels in operation at end of the
year (2015: ten). The AHTS fleet earned operating revenues of
USD48.3 million and had 39% utilisation (2015: USD54.7 million
and 55% utilization). The operating margin before administrative
expenses was USD10.8 million (2015: USD(1.4) million) and the
operating margin as a percentage of revenue was 22% (2015: (3)%).
The contract backlog is 8% for 2017, and 0% for 2018 (2015: 11%
for 2016, 0% for 2017 and 0% for 2018).
The Company had a fleet of five Canadian-flagged offshore
support vessels at the end of the year. The Canadian fleet earned
operating revenue of USD24.5 million and had 73% utilization. The
operating margin before administrative expenses was USD12.5
million and the operating margin as a percentage of revenue was
51%. The results for Secunda were recorded in accordance with
the equity method for the first five months and were fully consoli-
dated commencing with effect from 1 June 2016, post-acquisition
of 100% ownership in Secunda. The contract backlog was 48% for
2017, 45% for 2018 and 26% for 2019.
The Company had a fleet of six smaller Brazilian-flagged vessels
at end of the year (2015: seven).This fleet earned operating revenue
of USD20.1 million and had 73% utilisation (2015: USD21.3 million
and 86%). The operating margin before administrative expenses
was USD8.6 million (2015: USD7.1 million) and the operating margin
as a percentage of revenue was 43% (2015: 33%). The contract
backlog was 69% for 2017, 41% for 2018 and 33% for 2019 (2015:
57% for 2016, 57% for 2017 and 49% for 2018).
The research vessel “Joides Resolution” recorded operating
revenues of USD26.4 million (2015: USD26.2 million) with an op-
erating margin before administrative expenses of USD15.1 million
(2015: USD14.5 million) and the operating margin as a percentage
of revenue was 57% (2015: 55%). The contract backlog was 100%
for 2017, 100% for 2018 and 75% for 2019. (2015: 73 % for 2016,
0% for 2017 and 0% for 2018).
Siem Offshore Contractors (SOC) recorded operating revenues
of USD193.8 million (2015: USD132.3 million). The projects within
SOC are accounted for using the percentage-of-completion method
and profit margins are not recorded until the respective project’s
offshore operation has reached a minimum of 25% technical com-
pletion. This has an impact on the overall percentage of operating
margin for Siem Offshore on a consolidated basis. Total project
margin before administrative expense of USD30.0 million (2015:
USD17.5million) was recognized on projects.
The total firm contract backlog for all OSV vessels at 31 Decem-
ber 2016 was USD0.9 billion (2015: USD1.2 billion), including the
41%-ownership in the “Big Orange XVIII”. The total vessel contract
backlog is allocated with USD194 million in 2017, USD164 million
in 2018 and USD565 million in 2019 and thereafter.
The total firm contract backlog for SOC and the firm contract
for the “JOIDES Resolution” at 31 December 2016 was USD293
million (2015: USD198 million). The contract backlog is allocated
with USD137 million in 2017, USD113 million in 2018 and USD43
million in 2017 and thereafter.
HSEQ
The Company’s target includes zero personal injuries, no harm to the
environment and no damage to or loss of equipment and property.
The HSEQ performance improved during 2016 with no Lost
Time Injuries throughout the fleet. Considerable efforts are made
on various levels to ensure this positive trend continues in 2017.
The number of safety reports is steady, and it is believed that
the ongoing training in Root Cause Analysis will ensure improved
understanding of incidents in the fleet, which in turn will prevent
future incidents. On board and ashore, we believe that the trans-
fer of experience is an important factor to create and maintain a
professional HSEQ culture and continuously improve our HSEQ
performance.
By nature, anchor-handling is one of the most demanding op-
erations in the OSV sector. Siem Offshore puts great emphasis on
a safe work environment and appropriate time for preparations of
every job operation.
Siem Offshore Contractors
General
SOC is a well-established prime contractor for the installation,
post-lay trenching, termination and testing of submarine composite
cables for the inner array grid of offshore wind farms (“OWF”) and
for export to shore. SOC has been successful in executing the work
offshore by utilising primarily the Company’s specialized new-built
vessels, Siem Aimery (Cable Layer) and Siem Moxie (Installation
Support), both supported by our experienced offshore and onshore
organisation.
Safety & Environment
High safety and environmental standards have been a first priority
within SOC. Risk and opportunity management processes and per-
sonnel training ensures that internal personnel and subcontractors
have a common safety first mentality, which has delivered zero
loss time injuries for another year. Environmental impact is a key
area of importance in a market focused on renewable energy. SOC
has developed standards to minimize impact of cable installa-
tion activities on the environment. SOC has established itself as a
leading contractor for quality and safety demonstrated by recent
contract execution.
Projects
The Baltic 2 OWF project for EnBW Baltic 2 GmbH involved the
installation, post-lay trenching, termination and testing of 86 inner
array grid submarine composite cables within the German sector
of the Baltic Sea. A positive margin was recorded on the project.
The Nordsee One OWF project for Nordsee One GmbH is an
EPIC-contract for the supply, installation, post-lay trenching, and
testing of 59 submarine composite cables forming the inner array
grid and located in the German sector of the North Sea. The project
was completed offshore in the fourth quarter 2016.The project
recorded a positive margin.
The Nordsee One OWF export cable project for TenneT Offshore
GmbH is a contract for the supply, installation, post-lay trenching,
and testing of two export cables in the German sector of the North
Sea in partnership with J-Power Systems. The cables installation
work was completed offshore in the fourth quarter 2016 and final
testing is expected in the second quarter 2017. The project recorded
a positive margin.
The Veja Mate OWF project for Veja Mate Offshore Project GmbH
is an EPIC-contract for the supply, installation, post-lay trenching
and testing of 73 submarine composite cables forming the inner
array grid, in the German sector of the North Sea. The offshore in-
stallation commenced in the fourth quarter 2016 and is progressing
ahead of plan. The project recorded a positive margin in 2016 and
is planned to complete with a positive margin in 2017.
The Beatrice Offshore OWF was awarded by SHL Offshore Con-
tractors BV in June 2016 and is an EPIC-contract for the supply,
installation, post-lay trenching and testing of 91 submarine com-
posite cables forming the inner array grid located off the northeast
coast of Scotland. The project started engineering and preparation
for the cables fabrication.
The Trianel Windpark Borkum II OWF project was awarded in
November 2016 and is an EPIC-contract for the supply, installation,
post-lay trenching and testing of 32 submarine composite cables
forming the inner array grid within the German sector of the North
Sea. The project started the engineering and preparation for the
cables fabrication.
The Hornsea OWF One project was awarded in November 2016
and is a contract for the installation and post-lay trenching of 81
submarine composite cables forming the inner array grid in the UK
sector of the North Sea. The project started the engineering work.
The Ocean Breeze Energy walk-to-work charter for the Bard
Offshore 1 wind farm in the German sector of the North Sea was
awarded in March 2016.
Market Outlook
The tendering activity has been high throughout the year and con-
tinues into 2017. SOC has established itself as a reliable turnkey
contractor within the offshore renewable energy industry and is
well positioned in its segment for the future. Overall, the financial
year 2016 was a successful year for SOC and this trend is expected
to continue in 2017 and beyond.
SIEM OFFSHORE INC. ANNUAL REPORT 2016 15
 BOARD OF DIRECTORS’ REPORT
Siem WIS
Siem WIS has designed and developed a pressure control device
(“PCD”) which can improve managed-pressure drilling (“MPD”)
operations. MPD has the capability to mitigate drilling hazards by
improving drilling performance and increasing the performance
rate. In offshore application, they solve various complex challenges
such as reducing lost circulation, extensive mud cost, stuck pipe
and well pressure surges. The global managed pressure drilling
(MPD) market was valued at USD3.7 billion in 2015 and is expected
to reach USD5 billion by 2024.
Siem WIS delivered five successful PCD operations in 2016. Four
operations were for Statoil on the Gullfaks field and one operation
on the ultra-high pressure/high temperature (“HP/HT”) well “Sola-
ris” was for Total. The operations have been delivered without any
non-productive time.
In December 2016, Siem WIS entered into a frame agreement
with Statoil. Two contracts have been received to date for comple-
tion in 2017.
Shareholders And Corporate Governance
Shareholder Information
The Company’s authorised share capital is USD10,000,000- divided into
1,000,000,000 ordinary shares of a nominal value of USD0.01 each.
The issued share capital at 19 April 2017, based on the 842,021,380
Company shares issued and outstanding, is USD8,420,213.80 The
Company’s shares are listed on the Oslo Stock Exchange with the
ticker symbol SIOFF. The Company’s largest shareholder is Siem
Europe S.a r.l., a wholly-owned subsidiary of Siem Industries Inc.,
with an 83% interest at 19 April 2017. During 2016, the closing share
price reached a high of NOK 2.60, a low of NOK 1.35, and closed at
NOK 1.85 at year-end.
Corporate Governance
The Company has implemented guidelines for corporate governance
based on the recommendations and guidelines given by the Oslo
Stock Exchange. The purpose of these guidelines is to clarify the
division of roles between shareholders, the General Meeting, Board
19 April 2017 Eystein Eriksrud
Chairman
(Sign.)
John C. Wallace
Director
(Sign.)
Idar Hillersøy
Chief Executive Officer
(Sign.)
16 SIEM OFFSHORE INC. ANNUAL REPORT 2016
of Directors and day-to-day Management beyond what follows from
the legislation. A detailed summary of our corporate governance
principles may be found in a separate section of the annual report.
The Working Environment And The Employees
The Company provides a workplace with equal opportunities. We
treat current and prospective employees fairly with respect to sala-
ries, promotions and recruitment. The Company offers its employees
a sound working environment. We also give possibilities for profes-
sional development where men and women are treated equally and
where there is no discrimination.
The sick leave for the onshore and offshore employees was 1.9
and 3.46% respectively.
The development of the onshore and offshore organizations
continues in order to prepare for increased future activities. The
knowledge of the crew is vital for a safe and secure operation of any
vessel. Such knowledge includes good seamanship and understand-
ing of the demanding assignments to be executed.
Outlook
The low activity within the oil-service industry has led to reduced
charter rates and an increased number of vessels in lay-up. A re-
covery of the worldwide oil and gas drilling activities will absorb
some, but not all, of the current excess capacity. The build-up of
the existing fleets by owners and speculative newbuildings based
on overly optimistic projections of future requirements is expected
to take years to absorb. Fleet owners and their stakeholders must
be willing to make the difficult decisions to minimise the current
excess capacity by the scrapping of older, less efficient vessels
in favour of modern tonnage that has been built to meet today’s
increasingly demanding specifications. Such actions are necessary
to provide long-term financial stability for the industry.
The financial pressure on the industry has led to consolida-
tions among owners, which is positive for an industry that is very
fragmented.
Kristian Siem Michael Delouche
Director Director
(Sign.) (Sign.)
Alexander Monnas
Director
(Sign.)
 CORPORATE GOVERNANCE
Statement of Policy on Corporate Governance
The principles for corporate governance adopted by the Company
are based on the “Norwegian Recommendation for Corporate
Governance” issued on the 30th October 2014.
As a company incorporated in the Cayman Islands, Siem Offshore
Inc. is an exempted company duly incorporated under the laws
of the Cayman Islands and subject to Cayman Islands laws and
regulations with respect to corporate governance. Cayman Islands
corporate law is to a great extent based on English Law. In addition,
due to the Company’s listing on the Oslo Stock Exchange, certain
aspects of Norwegian Securities law apply to the Company and
there is a requirement to adhere to the Norwegian Code of Practice
for the Corporate Governance. The Norwegian Code of Practice
for Corporate Governance is publicly available at www.nues.no
in both Norwegian and English languages. Due to new provisions
implemented in the Norwegian Accounting Act, compliance with
the regulations for Corporate Governance reporting is now a legal
requirement provided that it does not conflict with the Cayman
Islands laws and regulations. The Company endeavours to main-
tain high standards of corporate governance and is committed to
ensuring that all shareholders of the Company are treated equally
and the same information is communicated to all shareholders at
the same time.
Corporate Governance is subject to annual assessment and
review by the Board of Directors.
The Board of Directors has reviewed this statement. It is the
opinion of the Board of Directors that the Company complies with
the Norwegian Code of Practice for Corporate Governance.
This statement is structured in accordance with The Norwegian
Code of Practice for Corporate Governance.
Business
Cayman Islands laws and regulation do not require the objects
clause of the Companies Memorandum and Articles of Association
to be clearly defined. The Company has however adopted clear
objectives and strategies for its business.
Siem Offshore aims to grow the company within offshore support
vessels, both organically and through combination with other opera-
tors, in order to achieve economies of scale and stronger presence
in the market.
Siem Offshore aims to become a preferred supplier of marine
services to the energy industry based on quality and reliability and
18 SIEM OFFSHORE INC. ANNUAL REPORT 2016
to provide cost-efficient solutions to its customers by understanding
their operation and applying technology and experience.
The Company builds its business around a motivated workforce
with the appropriate technical solutions. This creates sustainable
value for all shareholders.
Reference is made to the Board of Directors’ report for detailed
information.
Equity and Dividends
The priorities for the use of Company funds are determined by the
Board of Directors and recommendations of Management influenced
by existing conditions. At present, priorities for use of funds in order
of importance are investment opportunities in the business, repay-
ment of debt and the return of capital to the shareholders in form
of share buy-back or dividends.
The Board’s mandate to increase the Company’s share capital
is limited only to the extent of the authorized share capital of the
Company with certain pre-emption rights for shareholders and in
accordance with the Company’s Memorandum and Articles of As-
sociation which comply with Cayman Islands law.
Under the Articles of Association, the Board can issue new shares,
convertible bonds or warrants at any time within the limits of the
authorized capital without the consent of the general meeting but
with pre-emption rights for shareholders. A General Meeting has
further authorized the Board to issue new shares without pre-emption
rights to all shareholders up to a limit of 50% of Siem Offshore’
shares at the time the authorization was given. The authority gives
the Board flexibility to finance investments, acquisitions and other
business combinations on short notice through the issue of shares
or certain other equity instruments in the Company. Furthermore,
the Board considers the granting of a new standing authority at the
time of holding an Annual General Meeting rather than convening
an Extraordinary General Meeting at some future time to be in the
best interests of the Company, as this will result in cost savings and
more effective time management for both the Company’s senior
management and its Shareholders.
An extraordinary general meeting was held on 14th of Au-
gust 2015 resolving as a Special Resolution that the Company
should increase the authorized share capital of the Company from
USD5,500,000 divided into 550,000,000 Common Shares of par
value USD 0.01 each to USD10,000,000 divided into 1,000,000,000
Common Shares of par value USD0.01 each, by the creation of an
additional 450,000,000 Common Shares of par value USD0.01
each which shall rank pari passu in all respects with the existing
Common Shares.
The Board of Directors of the Company resolved to issue
454,430,000 common shares at a share price of NOK 1.80 in a
Rights Issue. The Board holds authorization to issue 157,978,620
common shares.
Equal Treatment of Shareholders, Freely Tradable
Shares and Transactions with Related Parties
The Company is committed to ensuring that all shareholders of
the Company are treated equally and all the issued shares in Siem
Offshore, at nominal value US$ 0.01 each, are freely tradable and
carry equal rights with no restrictions on voting.
Siem Industries Inc, which owns 83% of the Company, is repre-
sented by its Chairman, Kristian Siem, Deputy CEO, Eystein Eriksrud
and President, Michael Delouche, on the Board of Directors. The
Company pays an annual fee to Siem Industries as compensation
for directorships, provision of an office and presence in the Cay-
man Islands, and other services. The fee is adopted by the annual
general meeting based on a recommendation from the independent
Board Members. Related party transactions are disclosed in the
notes to the accounts.
Freely Negotiable Shares
All of the shares in the Company carry equal rights and are freely
negotiable. The shares are traded according to normal market
practice and no special limitations on transactions have been laid
down in the Articles of Association.
General Meetings
The Annual General Meeting of the Company will be held at the
registered office of the Company on the Cayman Islands, 5 May
2017, at 9:30am Cayman Islands local time and Shareholders can
be represented by proxy. Notices of general meetings and related
documents are made available to shareholders at the latest 17 days
prior to meeting date. Notice of attendance by proxy is to be provided
to either (1) the offices of Siem Offshore AS at Nodeviga 14, P.O. Box
425, Kristiansand 4664, Norway, telefax no. +47.37.40.62.86 or (2)
the Company’s office at P.O. Box 10597, George Town, Grand Cay-
man KY1-1005, CAYMAN ISLANDS, telefax no. +1.345.946.3342,
not less than 24 hours prior to the stated time of the annual general
meeting. Shareholders are given the opportunity to vote on the
election of board members.
Nomination Committee
The appointment of a nomination committee is not a requirement
under Cayman Islands Law.
Corporate Assembly and Board of Directors;
Composition and Independence
In the nominations to the Board of Directors, the Board consults with
the Company’s major shareholders and ensures that the Board is
constituted by Directors with the necessary expertise and capac-
ity. There is no requirement under Cayman Islands Law for the
Company to establish a corporate assembly.
Each Board member is elected for a term of 2 years or such
shorter term as shall be specified in the ordinary resolution pur-
suant to which the Director shall be appointed. Representatives
of the Executive Management are not presently members of the
Company’s Board of Directors.
The Board of Directors as a group has extensive experience in
areas which are important to Siem Offshore, including offshore
services, international shipping, ship broking, finance and corporate
governance and restructuring.
Work of the Board of Directors
The Board monitors the performance of management through
regular meetings and reporting. The Company has a Compensation
Committee and an Audit Committee.
The Compensation Committee consists of two Directors. The
mandate of the committee is to review and approve the compensa-
tion of the CEO and any bonuses to all executive personnel. Refer-
ence is also made to section 12, Remuneration of the Executive
Management.
The Audit Committee consists of two Directors. The composition
of the committee meets the requirements of the Norwegian Code of
Practice for Corporate Governance as regards independence. The
committee’s mandate can be summarized as follows:
• Ascertain that the internal and external accounting reporting
process are organized appropriately and carried out efficiently,
and are of high professional quality.
• Monitor and assess the quality of the statutory audit of the Com-
pany’s financial statements.
• Ensure the independence of the external auditor, including any
additional services provided by the external auditor.
Risk Management and Internal Control
Internal control
A prerequisite for the Company’s system of decentralized respon-
sibility is that the activities in every part of the Company meet
general financial and non-financial requirements, and are carried
out in accordance with the Company’s common norms and values.
SIEM OFFSHORE INC. ANNUAL REPORT 2016 19
 CORPORATE GOVERNANCE
The executive management of each subsidiary is responsible for risk
management and internal control in the subsidiary with a view to
ensuring 1) optimizing of business opportunities, 2) targeted, safe,
high-quality and cost-effective operations, 3) reliable financial report-
ing, 4) compliance with current legislation and regulations and 5)
operations in accordance with the Company’s governing documents,
including ethical and social responsibility standards. The Company’s
risk management system is fundamental to the achievement of
these goals.
Financial reporting process
Financial information from subsidiaries is received each month in
a reporting package in standard format accommodated necessary
information for preparing the consolidated financial statement for
the Company. The reporting from the subsidiaries is extended in the
year-end reporting process to meet various requirements for sup-
plementary information. There are established routines to check the
financial data in the received reporting packages to ensure the best
quality for the consolidated figures for the Company.
Training and further development of accounting experience within
the Company is provided locally by participating on various external
courses on a regular basis.
Remuneration of the Board of Directors
The remuneration of the Board members reflect their experience
and responsibilities, and is adopted by the annual general meeting
based on the recommendation from the Board. The Board members
do not have share options or profit-based remuneration.
The responsibility statement of the Board of Directors in this report
and the notes to the accounts include information about the remu-
neration of the Board of Directors.
Remuneration of the Executive Management
The Company has a Compensation Committee which reviews and
approves the compensation of the CEO and the bonuses to all execu-
tive personnel. The Articles of Association of the Company permit
the Board to approve the granting of share options to employees.
A long-term Employee share scheme for 8 key employees of the
company was introduced in Q1 2013. A second Employee share
scheme was implemented in Q2 2014 for 10 key employees of the
company. The remuneration of the CEO and the share option scheme
are disclosed in the notes to the accounts. Three key employees
have left the Company since the implementation of the Employee
share schemes.
The Board of Director’s statement on the remuneration of execu-
tive personnel is presented as a separate appendix to the agenda
for the general meeting. The remuneration statement clearly states
which aspects of the guidelines are advisory and which, if any, are
binding. The general meeting will vote separately on each of these
aspects of the guidelines.
20 SIEM OFFSHORE INC. ANNUAL REPORT 2016
Information and Communications
The Company has a policy of treating all its shareholders and other
market participants equally, and communicates relevant and objective
information on significant developments which impact the Company
in a timely manner.
The Company also seeks to ensure that its accounting and fi-
nancial reporting are to the standards of our investors, and the
Company presents its financial statements in accordance with the
International Financial Reporting Standards (IFRS). The Audit Com-
mittee of the Board of Directors monitors the company’s reporting
on behalf of the Board.
Notices to the Oslo Stock Exchange and placements of notices
and other information, including quarterly and annual reports, may
be found on the Company’s website (www.siemoffshore.com).
Take-overs
The shares in the Company are freely tradable and the Articles of
Association of the Company does not hold specific defence mecha-
nisms against take-over situations. In a take-over situation, the Board
of Directors will comply with relevant legislation.
Auditor
The Auditor of the Company is elected at the Annual General Meet-
ing which also approves its remuneration. Details of the Company’s
remuneration of the external auditor are given in the notes to the
accounts.
The auditor reports to the Audit Committee twice a year at a
minimum, but more often if necessary. During the latter half of
the year, the external auditor presents to the Audit Committee his
assessment of risks, internal controls, risk areas and improvement
potential in control systems and his audit plan for the following
year. The second report to the Audit Committee is the presentation
of Year-End Audit. The external auditor presents a summary of
the audit process, including comments on audited internal control
procedures and key issues in the financial reporting.
The Audit Committee also receives an annual independence report
from the external auditor, confirming the external auditor’s independ-
ence with respect to the Company, within the meaning of the Nor-
wegian Act on Auditing and Auditors. The confirmation also includes
services delivered to the Company other than mandatory audit.
INCOME STATEMENTS

PARENT COMPANY CONSOLIDATED

2016 2015 (Amounts in USD 1,000 except for earnings per share amounts) Note 2016 2015
865 145 Operating revenue 4,23 469,123 422,449
-13,187 -9,240 Operating expenses 8,18,19,20,23 -340,829 -303,901
-12,321 -9,095 Operating margin 128,295 118,548
- - Depreciation and amortization 4,5 -111,771 -107,025
- - Impairment of vessels 4.5 -60,180 -159,465
- - Impairment of intangible assets 4.5 -1,015 -6,705
- - Impairment on long-term receivables 9 -13,979 -
- - Impairment of projects 4,5,6 -1,400 -
- - Gain/(loss) on sales of assets 25 -423 16,317
- - Gain on bargain purchase 32 18,312 -
368 368 Gain on CIRR-deposit at off-market rate 12 368 368
- - Loss on currency derivative contracts 21.28 -7,762 -30,775
-11,953 -8,727 Operating loss 4 -49,555 -168,735
7,207 3,491 Financial income 3.21 12,471 11,184
-12,825 -12,225 Financial expenses 3.21 -55,312 -54,677
64 1,265 Net currency gain/(loss) 21 -64,154 22,110
-5,554 -7,469 Net financial items -106,994 -21,384
- - Result from associated companies 7 19 -1,560
-17,508 -16,196 Profit /(loss) before taxes -156,531 -191,679
2,742 - Tax benefit/(expense) 11 626 -4,737

-14,765 -16,196 Net profil/(loss) -155,905 -196,416

- - Attributable to non-controlling interest -13,469 -9,729
-14,765 -16,196 Attributable to shareholders of the Company -142,436 -186,687
- - Weighted average number of outstanding shares (1,000) 842,021 518,318
- - Earnings per share: Basic and Diluted 22 -0.17 -0.36

Comprehensive Income Statements

2016 2015 (Amounts in USD 1,000) Note 2016 2015
-14,765 -16,196 Net profit/(loss) -155,905 -196,416
Other comprehensive income
Items that will not be reclassified to profit or loss
- - Pension remeasurement gain (loss) 230 -1,178
Items that may be subsequently reclassified to profit or loss
- - Cash flow hedges 60,319 -51,245
- - Currency translation differences -23 -9,687

-14,765 -16,196 Total comprehensive loss for the year -95,379 -258,526
- - Attributable to non-controlling interest -9,729 -9,520

-14,765 -16,196 Attributable to shareholders of the Company -85,650 -249,006

SIEM OFFSHORE INC. ANNUAL REPORT 2016 21

 STATEMENTS OF FINANCIAL POSITION
—ASSETS

PARENT COMPANY CONSOLIDATED

12/31/2016 12/31/2015 (Amounts in USD 1,000) Note 12/31/2016 12/31/2015

NON-CURRENT INTANGIBLE ASSETS

- - Deferred tax asset 11 11,467 11,668
- - Intangible assets 5 16,977 16,849
- - Total non-current intangible assets 28,444 28,517

NON-CURRENT TANGIBLE ASSETS

- - Vessels under construction 5,17 8,258 185,064
- - Vessels and equipment 5 1,980,228 1,391,695
- - Capitalized project costs 5 5,623 5,381
- - Total non-current tangible assets 1,994,108 1,582,140

NON-CURRENT FINANCIAL ASSETS

801,099 768,127 Investment in subsidiaries 6
- - Investment in associated companies 7 2,717 16,660
14,300 19,208 CIRR Loan deposit 12 76,215 88,002
59,868 25,867 Long-term receivables 9,14,29 31,168 51,598
875,267 813,202 Total non-current financial assets 110,100 156,260
875,267 813,202 Total non-current assets 2,132,652 1,766,916

CURRENT ASSETS
- - Accounts receivable 2,29 48,230 46,147
5,697 4,169 Other current receivables 9,14,23,29 120,977 60,657
- - Inventories 30 9,109 7,739
- - Derivative financial instruments 15,28,29 - 1,451
195,433 269,293 Cash 2,10,29 101,323 148,753
201,130 273,463 Total current assets 279,639 264,747
- - Asset held for sale 24,25,29 1,099 3,459
1,076,397 1,086,664 Total assets 2,413,390 2,035,122

22 SIEM OFFSHORE INC. ANNUAL REPORT 2016

STATEMENTS OF FINANCIAL POSITION
—EQUITY AND LIABILITIES

PARENT COMPANY CONSOLIDATED

12/31/2016 12/31/2015 (Amounts in USD 1,000) Note 12/31/2016 12/31/2015

EQUITY
625,219 625,219 Paid-in capital 625,219 625,219
-22,302 -22,303 Other reserves -107,490 -108,151
240,158 249,671 Retained earnings 31,378 115,147
843,075 852,587 Shareholders' equity 26 549,107 632,215
- - Non-controlling interest 98,878 33,293
843,075 852,587 Total equity 647,985 665,508

LIABILITIES
NON-CURRENT LIABILITIES
210,807 207,852 Borrowings 2,12,14 1,293,059 1,007,925
14,300 19,208 CIRR Loan 12.29 76,215 88,002
- 4,258 Tax liabilities 11 1,298 5,483
1,050 1,418 Deferred CIRR gain 12 1,050 1,418
- - Pension liabilities 8 1,692 2,195
- - Other non-current liabilities 47,382 34,142
226,157 232,736 Total non-current liabilities 1,420,695 1,139,165

CURRENT LIABILITIES
56 144 Accounts payable 2.29 20,783 8,395
- - Borrowings 2,12,14,29 177,834 114,660
- - Derivative financial instruments 15,28,29 8,358 12,896
-292 -150 Taxes payable 11 2,868 3,496
7,401 1,347 Other current liabilities 13,14,23 134,868 91,001
7,165 1,341 Total current liabilities 344,710 230,448
233,323 234,077 Total liabilities 14 1,765,405 1,369,614

1,076,397 1,086,664 Total equity and liabilities 2,413,390 2,035,122

- - Secured debt 12 1,329,618 992,134

52,494 305,658 Guarantees 16 61,318 310,087

SIEM OFFSHORE INC. ANNUAL REPORT 2016 23

 STATEMENTS OF CHANGES IN EQUITY

CONSOLIDATED
Total no. Share Share premium
(Amounts in USD 1,000) of shares capital reserves

Equity as of December 31, 2014 387,591,380 3,876 522,361

Change previous periods - -

Net loss to shareholders - -
Employee share schemes – value of employee services - -
Currency translation differences - -
Pension remeasurement - -
Share issues in partially owned subsidiaries - -
Cash flow hedge - -
Reclassification to profit or loss - -
Capital reduction in partially owned subsidiaries - -
Impairment of excess value partially owned - -
Share issue in Siem Offshore Inc. 454,430,000 4,544 94,438
Equity as of December 31, 2015 842,021,380 8,420 616,799

Change previous periods - -

Net loss to shareholders - -
Employee share scheme – Value of employee services - -
Other - -
Currency translation differences - -
Pension remeasurement - -
Share issues in partially owned subsidiaries - -
Reclassification to profit or loss - -

Equity as of December 31, 2016 842,021,380 8,420 616,799

Share issues in partially owned subsidiaries

Minority share of new equity Siem WIS AS
Minority share of new equity Siem AHTS Pool AS
Total

24 SIEM OFFSHORE INC. ANNUAL REPORT 2016

Exchange rate Other Retained Shareholders’ Non-controlling Total
differences reserves earnings equity interest equity

-2,095 -43,396 304,237 784,982 38,666 823,649

- - -869 -869 - -869

- - -186,687 -186,687 -9,729 -196,416
- -1,728 - -1,728 - -1,728
-9,687 - -2,711 -12,398 209 -12,189
- - 1,178 1,178 - 1,178
- - - - 6,276 6,276
- -65,866 - -65,866 - -65,866
- 14,621 - 14,621 - 14,621
- - - - -4,811 -4,811
- - - - 2,682 2,682
- - - 98,983 - 98,983
-11,782 -96,369 115,147 632,215 33,293 665,508

- - -1 682 -1 682 -100 -1 782

- - -142 436 -142 436 -13 469 -155 905
- 516 - 516 - 516
- 63 -96 -33                 1 201                   1 168
-23 - - -23 - -23
- - 230 230 - 230
- - - - 77 953 77 953
- 60 319 - 60 319 - 60 319

-11 805 -35 471 -28 836 549 106 98 878 647 985

2016 2015
885 1,336
77,068 -
77,953 1,336

SIEM OFFSHORE INC. ANNUAL REPORT 2016 25

 STATEMENTS OF CHANGES IN EQUITY

PARENT COMPANY
Share Exchange
Share premium rate Other Retained Shareholders’
(Amounts in USD 1,000) Total no. of shares capital reserves differences reserves earnings equity

Equity as of December 31, 2014 387,591,380 3,876 522,360 -100 -22,203 258,675 762,609

Change previous periods - - - - 8,410 8,410

Net loss - - - - -16,196 -16,196
Employee share schemes – value of
- - - - -1,218 -1,218
employee services
Share issue 454,430,000 4,544 94,438 - - - 98,983
Equity as of December 31, 2015 842,021,380 8,420 616,799 -100 -22,203 249,671 852,588

Change previous periods - - - - 4,725 4,725

Other items, CIRR - - - - 368 368
Net loss - - - - -15,134 -15,134
Share option program - - - - 527 527

Equity as of December 31, 2016 842,021,380 8,420 616,799 -100 -22,203 240,158 843,075

26 SIEM OFFSHORE INC. ANNUAL REPORT 2016

STATEMENTS OF CASH FLOWS

PARENT COMPANY CONSOLIDATED

2016 2015 (Amounts in USD 1,000) Note 2016 2015
Cash flow from operations
-14,765 -16,196 Net profit/(loss) -155,905 -196,416
12,327 12,210 Interest expense 50,115 51,796
- - Cash flow hedge 60,319 -
-1,265 -568 Intercompany interest - -
-2,809 -2,923 Interest income -8,487 -4,223
2,742 - Tax expense -626 4,737
-12,811 -12,129 Interest paid -52,338 -50,649
-1,384 - Taxes paid -603 -2,272
- - Result from associated companies 7 -19 1,560
- - Gain/(loss) on sale of assets 25 423 -16,317
- - Gain from bargain purchase -18,312 -
- - Depreciation and amortization 5 111,771 107,025
- - Impairment of vessels 5 60,180 159,465
- - Impairment of intangible assets 5 1,015 6,705
- - Impairment related to long term receivables/projects 15,379 -
-527 -1,728 Employee share scheme expenses 31 516 -1,728
- - Effect of unreal. gain on currency exchange forward contracts 28 -871 -2,074
4,155 11,255 Changes in short-term receivables and payables -20,938 -25,149
-368 -368 CIRR gain -368 -368
331 - Other changes 23,590 10,373
-14,374 -10,447 Net cash flow from operations 64,841 42,462

Cash flow from investment activities

3,897 3,491 Interest received 8,501 4,233
- - Investment in fixed assets 4.5 -414,802 -149,631
- Proceeds from sale of fixed assets 25 9,751 122,193
- - Proceeds from sale of shares - 2,620
380 Cash acquired in business combination 3,314 -
6,179 13,319 Received from long term loan - -
-32,972 -22,071 Investments in subsidiaries -201 -2,510
- - Dividend from associated companies 7 - 1,355
-35,298 - Investments in associated companies 7 - -3,576
-57,814 -5,261 Net cash flow from investment activities -393,437 -25,315

Cash flow from financing activities

- 98,983 Proceeds from issue of new equity - 98,983
- - Contribution from non-controlling interest. 885 4,744
- - Proceeds from bank overdraft - -4,014
Proceeds from new long-term borrowing 12 455,706 109,583
-1,671 -36,560 Repayment of long-term borrowing 12 -188,360 -182,820
-1,671 62,422 Net cash flow from financing activities 268,232 26,476
-73,860 46,714 Net change in cash -60,364 43,623
269,293 222,579 Cash at bank as of 1 January 148,753 117,623
- - Effect of exchange rate differences 12,935 -12,494
195,433 269,293 Cash at bank as of 31 December 101,323 148,753

SIEM OFFSHORE INC. ANNUAL REPORT 2016 27

 NOTES TO THE ACCOUNTS

Note 1 - Accounting Principles

Siem Offshore owns and

operates a fleet of offshore
support vessels, including
Platform Supply Vessels,
Offshore Subsea Construction
Vessels, Anchor Handling,
Tug, Supply Vessels and
Well-Intervention Vessels.

1.1 General
Siem Offshore owns and operates a fleet of offshore support vessels,
including Platform Supply Vessels, Offshore Subsea Construction
Vessels, Anchor Handling Tug Supply Vessels and Well-Intervention
Vessels. Siem Offshore Inc. commenced operations 1 July 2005, and
is an exempted company under the laws of the Cayman Islands and
listed on the Oslo Stock Exchange. The Company’s headquarters is
located in Kristiansand, Norway and the Company is tax domiciled in
Norway. All references to “Siem Offshore Inc.”, “Consolidated” and
“Company” shall mean Siem Offshore Inc. and its subsidiaries and
associates unless the context indicates otherwise. All references
to “Parent” or “Parent Company” shall mean Siem Offshore Inc. as
a parent company only.

28 SIEM OFFSHORE INC. ANNUAL REPORT 2016

 The principal accounting policies applied in preparation of these
consolidated and parent financial statements are set out below. These
policies have been consistently applied to all the years presented,
unless otherwise stated.
1.2 Basis of preparation
The consolidated and parent company financial statements are pre-
pared in accordance with International Financial Reporting Standards
(IFRS) as endorsed by the European Union.
The financial statements also include any additional applicable
disclosures as required by Norwegian law and Oslo Stock Exchange
regulations. The financial statements have been prepared under the
historical cost convention, as modified by specific financial assets
and financial liabilities, namely derivative instruments, at fair value
through profit or loss and derivative instruments designated as
hedges, which are initially at fair value through other comprehensive
income (OCI). The financial statements have been prepared under
the assumption of going-concern.
All figures are in USD thousands, unless otherwise stated.
Management is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities. In addition, the
preparation of financial statements in conformity with IFRS requires
the use of certain critical accounting estimates. It also requires
management to exercise its judgment in the process of applying
the Company’s accounting policies. The areas involving a higher
degree of judgment or complexity or areas where assumptions and
estimates are significant to the consolidated financial statements
are disclosed in note 3 Critical accounting estimates and judgments.
1.3 Changes in accounting policy and disclosures
The following new or amendments to standards and interpreta-
tions have been issued and become effective during the current
period. These include:
• Amendments to IAS 16 and IAS 38 – Clarification of acceptable
methods of depreciation and amortisation, for periods beginning
on or after January 1, 2016
• Amendments to IAS 1 – Presentation of financial statements
for the disclosure initiative, for periods beginning on or after
January 1, 2016
• Amendments to IFRS 10 and IAS 28 – to clarify consolidation
exceptions for investment companies, for periods beginning on
or after January 1, 2016
• IFRS 14 – Regulatory deferral accounts, for periods beginning
on or after January 1, 2016
• IFRS 11 – Joint Arrangements, for periods beginning on or after
January 1, 2016
The above pronouncements are not all relevant for the Group
and there have been no material impact on the financial statements
of the Group, beyond disclosures.
The following new or amendments to standards and interpre-
tations have been issued and become effective in years beginning
on or after January 1, 2017. The Group is evaluating the impact of
these changes on its financial statements:
• Amendments to IAS 12 – Recognition of deferred tax assets for
periods beginning on or after January 1, 2017
• Amendments to IAS 7 – Disclosures initiative for periods begin-
ning on or after January 1, 2017
• IFRS 15 – Revenue from contracts with customers, for periods
beginning on or after January 1, 2018. Management is still as-
sessing the impact of the new standard. The impact of the new
standard will depend on assessments and conclusions made on
the industry level in the coming year.​
• IFRS 9 – Financial instruments, for periods beginning on or after
January 1, 2018. Management is still assessing the impact of
the new standard.
• IFRS 16 – Leases, for periods beginning on or after January
1, 2019. Management is still assessing the impact of the new
standard.
• Amendments to IFRS 2 – Share based payments for periods
beginning on or after January 1, 2018
1.4 Consolidation
(a) Subsidiaries
Subsidiaries are entities over which the Parent has control. The
Parent controls an entity when the Parent is exposed to, or has
rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the
entity. Subsidiaries are fully consolidated from the date on which
control is transferred to the Company. They are deconsolidated
from the date that control ceases.
Intercompany transactions, balances, and unrealized gains on
transactions between companies are eliminated. Unrealized losses
are also eliminated. When necessary, amounts reported by subsidi-
aries have been adjusted to ensure consistency with the policies
adopted by the Company.
(b) Business combinations
The Company applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of a
subsidiary is the fair values of the assets transferred and the liabilities
assumed to the former owners of the acquirer and the equity interests
issued by the Company. The consideration transferred includes the
fair value of any asset or liability resulting from a contingent con-
sideration arrangement. Identifiable assets acquired and liabilities
and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. The
Company recognizes any non-controlling interest in the acquiree
on an acquisition-by-acquisition basis, either at fair value or at the
non-controlling interest’s proportionate share of the recognized
amounts of acquiree’s identifiable net assets. Acquisition-related
costs are expensed as incurred.
SIEM OFFSHORE INC. ANNUAL REPORT 2016 29
 NOTES TO THE ACCOUNTS
If the business combination is achieved in stages, fair value of
the acquirer’s previously held equity interest in the acquiree is re-
measured to fair value at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the Company is
recognized at fair value at the acquisition date. Subsequent changes
to the fair value of the contingent consideration of an asset or li-
ability are recognized in profit or loss. Contingent consideration
that is classified as equity is not remeasured and its subsequent
settlement is accounted for within equity.
(c) Associated companies
Associates are entities over which the Company has significant
influence but not control, generally accompanying a shareholding
of between 20% and 50% of the voting rights. Investments in as-
sociates are accounted for using the equity method of accounting
and are initially recognized at cost. The Company’s investment in
associates includes goodwill identified on acquisition. The share
of profit or loss recorded in the consolidated financial statements
is based on the after-tax earnings of the associate.
The Company’s share of post-acquisition profit or loss is rec-
ognized in the income statement, and its share of post-acquisition
movements in other comprehensive income is recognized in other
comprehensive income with a corresponding adjustment to the
carrying amount of the investment. When the Company’s share of
losses in an associate equals or exceeds its interest in the associate,
including any other unsecured receivables, the Company does not
recognize further losses unless it has incurred legal or constructive
obligations or made payments on behalf of the associate.
Unrealized gains on transactions between the Company and
its associates are eliminated to the extent of the Company’s in-
terest in the associates. Unrealized losses are eliminated unless
the transaction provides evidence of an impairment of the asset
transferred. Accounting policies of associates have been changed
where necessary to ensure consistency with the policies adopted
by the Company.
1.5 Classification of items in the financial statements
Assets designated for long-term ownership or use and receivables
due later than one year after drawdown are classified as non-current
assets. Other assets are classified as current assets. Liabilities due
later than one year after the end of the reporting period are clas-
sified as non-current liabilities. Other liabilities are classified as
current liabilities. All derivative financial instruments are classified
as current assets or current liabilities.
1.6 Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for allocating
resources and assessing performance of the operating segments,
30 SIEM OFFSHORE INC. ANNUAL REPORT 2016
has been identified as the executive management team consisting
of the CEO, CFO, CCO and CHRO.
The Company is organized into nine different segments, plat-
form supply vessels (“PSVs”), offshore subsea construction vessels
(“OSCVs”), anchor-handling tug supply vessels (“AHTS Vessels”),
Other Vessels in Brazil (consisting of fast crew vessels (“FCVs”),
fast supply vessels (“FSVs”) and oil spill recovery vessels (“OSRVs”),
Combat Management Systems (“CMS”), Submarine Power Cable
Installation, Scientific Core-Drilling and Other.
1.7 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Company’s
entities are measured using the currency of the primary economic
environment in which the entity operates (the “functional currency”).
The consolidated financial statements are presented in USD, which
is the Company’s presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year-
end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognized in the income statement line
item Net currency gain/loss.
(c) Group companies
The results and financial position of all the Group companies (none
of which have the currency of a hyperinflationary economy) that have
a functional currency different from the presentation currency are
translated into the presentation currency as follows:
(i) assets and liabilities for each statement of financial position
presented are translated at the closing rate at the date of that
statement of financial position;
(ii) income and expenses for each income statement are translated
at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated
at the dates of the transactions); and
(iii) all resulting exchange differences are recognized in other com-
prehensive income.
As part of the consolidation process, exchange differences arising
from the translation of the net investment in foreign operations is
recognized directly in Other Comprehensive Income (OCI). When a
foreign operation is sold, exchange differences previously recognized
in OCI are reclassified to profit or loss and included in the gain or
loss on sale.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the foreign
entity and translated at the closing rate. Exchange differences aris-
ing are recognized in OCI.
1.8 Non-current tangible assets and
maintenance costs
Land and Buildings and Vessels are stated at their historical cost
less accumulated depreciation and net of any impairment losses.
All non-current tangible assets (excluding Land and Vessels un-
der construction) are depreciated on a straight-line basis over the
estimated remaining useful economic life of the asset. The vessel
residual value is the estimated future sales price for steel less the
estimated costs associated with scrapping a vessel. The residual
value and expected useful life for all non-current tangible assets is
reviewed annually and, where they differ significantly from previous
estimates, the rate of depreciation charges is changed accordingly.
The vessels presently owned by the Company have an estimated
economic life of 30 years. Some components of the vessels have a
shorter economic life than 30 years. Such components are depreci-
ated over their individual useful life. Each part of a vessel that is
significant to the total cost of the vessel is separately identified and
depreciated over that component’s useful lifetime. Components with
similar useful lives are included in one component. The Company
has identified nine significant components relating to its different
types of vessels. See note 5 for additional information. Dry-docking
- In accordance with IAS 16 and the cost model, dry-docking costs
are a separate component of the ship’s cost at purchase with a
different pattern of benefits and are therefore initially recognized
as a separate depreciable asset. Subsequently, the cost of major
renovations and periodic maintenance costs are capitalized as a
dry-docking asset and depreciated over the useful life of the parts
replaced. The useful life of the dry-docking costs will be the period
until the next docking, normally between two to three years. Day-
to-day maintenance costs are immediately expensed during the
reporting period in which they are incurred.
Capitalized project cost - Certain vessel contracts require an
The relevant exchange rates vs. USD are:
Average 2016
NOK (Norwegian kroner) 0.1186
EUR (Euros) 1.1022
GBP (Pound Sterling) 1.3559
REAS (Brazilian Reals) 0.2869
investment prior to commencing the contract to fulfil requirements
set by the charterer. These investments are capitalized and amortized
over the term of the specific charter contract.
Gains and losses on the sale of assets and disposals are determined
by comparing the sales or disposal proceeds with the net carrying
amount and are included in operating profit.
1.9 Newbuild contracts and borrowing costs
Instalments on newbuild contracts are classified as non-current
tangible assets. Direct costs related to the on-site supervision and
other pre-delivery construction costs are capitalized per vessel.
General and specific borrowing costs directly related to the
acquisition, construction or production of qualifying vessels are
added to the cost of those vessels, until such time as the vessels
are substantially ready for their intended use or sale. All other
borrowing costs are recognized in the profit or loss in the period in
which they are incurred.
Interest expense eligible for capitalization is only adjusted for
the effect of interest rate or cross-currency interest rate swaps that
are designated and qualify as an accounting hedge under IAS 39.
Currently the Company does not have any interest rate or cross-
currency swap contracts designated as hedges.
1.10 Impairment of non-financial assets
Intangible assets that have an indefinite useful life or intangible
assets not ready to use are not subject to amortization and are
tested annually for impairment.
Assets that are subject to amortization are reviewed for impair-
ment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment loss
is recognized for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset’s fair value less costs of disposal and value in
use. The recoverable amount is established individually for all as-
sets. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time and the risk
specific to the asset that is considered impaired.
31.12.2016 Average 2015 31.12.2015
0.1160 0.1236 0.1135
1.0541 1.1134 1.0920
1.2312 1.5279 1.4839
0.3068 0.3002 0.2561
SIEM OFFSHORE INC. ANNUAL REPORT 2016 31
 NOTES TO THE ACCOUNTS
Prior impairments of non-financial assets (other than goodwill)
are reviewed for possible reversal at each reporting date. A previously
recognized impairment loss is reversed if there has been a change in
the estimates used to determine the recoverable amount. Reversal
of a previously recognized impairment is limited to an amount that
would make the carrying value of the asset equal to what it would
have been had the initial impairment charge not occurred.
1.11 Intangible assets
Intangible assets that are acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired in a busi-
ness combination is recognized at fair value at the date of acquisition.
Following initial recognition, intangible assets are carried at cost less
any accumulated amortization and any accumulated impairment
losses. Internally-generated intangible assets, excluding capitalized
development costs, are not capitalized and expenditure is charged
against profits in the year in which the expenditure is incurred. The
useful lives of intangible assets are assessed to be either finite or
indefinite. Intangible assets with finite lives are amortized over
the useful economic life and assessed for impairment whenever
there is an indication that the intangible asset may be impaired.
The amortization period and the amortization method are reviewed
annually. Changes in the expected useful life or the expected pattern
of consumption of future economic benefits embodied in the asset
is accounted for by changing the amortization period or method, as
appropriate, and treated as a change in accounting estimate. The
amortization expense on intangible assets with finite lives is recog-
nized in the income statement in the expense category consistent
with the function of the intangible asset.
Intangible assets with indefinite useful lives are tested for impair-
ment annually either individually or at the cash-generating unit level.
Such intangibles are not amortized. The useful life of an intangible
asset with an indefinite life is reviewed annually to determine whether
the indefinite life assessment continues to be supportable. If not,
the change in the useful life assessment from indefinite to finite is
made on a prospective basis.
Goodwill - Goodwill arises on the acquisition of subsidiaries and
represents the excess of the consideration transferred, the amount
of any non-controlling interest in the acquiree and the acquisition-
date fair value of any previous equity interest in the acquiree over
the fair value of the identifiable net assets acquired. If the total of
consideration transferred, non-controlling interest recognized and
previously held interest measured at fair value is less than the
fair value of the net assets of the subsidiary acquired, in the case
of a bargain purchase, the difference is recognized directly in the
income statement.
For the purpose of impairment testing, goodwill acquired in a
business combination is allocated to each of the CGUs, or groups of
CGUs, that is expected to benefit from the synergies of the combina-
tion. Each unit or group of units to which the goodwill is allocated
represents the lowest level within the entity at which the goodwill is
32 SIEM OFFSHORE INC. ANNUAL REPORT 2016
monitored for internal management purposes. Goodwill is monitored
at the operating segment level.
Goodwill impairment reviews are undertaken annually or more
frequently if events or changes in circumstances indicate a poten-
tial impairment. The carrying value of goodwill is compared to the
recoverable amount, which is the higher of value in use and the fair
value less costs to sell. Any impairment is recognized immediately
as an expense and is not subsequently reversed.Trademarks and
licenses - Separately acquired trademarks and licenses are shown
at historical cost. Trademarks and licenses acquired in a business
combination are recognized at fair value at the acquisition date.
Trademarks and licenses have a finite useful life and are measured
at cost less accumulated amortization. Amortization is calculated
using the straight-line method to allocate the cost of trademarks and
licenses over their estimated useful lives of three to seven years.
Research and development - Research and Development (R&D)
relates to the development of a production method for drilling pro-
cess; this R&D is part of the Other Segment.
1.12 Financial assets
1.12.1 Classification
The Company classifies its financial assets in the following two
categories: Financial assets at fair value through profit or loss and
Loans and receivables. The classification depends on the purpose for
which the financial assets were acquired. Management determines
the classification of its financial assets at initial recognition and
re-evaluates this designation at every reporting date.
(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial
assets held for trading. The only financial assets in this category
are derivative contracts, which are categorized as held for trading
unless designated as hedges. Derivatives in this category are clas-
sified as current assets.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed
or determinable payments that are not quoted in an active market.
They are included in current assets, except for assets with maturities
greater than 12 months after the reporting date. These are classified
as non-current financial assets. The Company’s loans and receivables
include accounts receivable, cash, short and long-term financial
receivables and the CIRR loan deposit.
1.12.2 Recognition and measurement
Regular purchases and sales of financial assets are recognized
on the trade-date – the date on which the Company commits to
purchase or sell the asset. Investments are initially recognized at
fair value plus transaction costs for all financial assets not carried
at fair value through profit or loss. Financial assets carried at fair
value through profit or loss are initially recognized at fair value, and
transaction costs are expensed in the income statement. Financial
assets are derecognized when the rights to receive cash flows
from the investments have expired or have been transferred and
the Company has transferred substantially all risks and rewards
of ownership. Loans and receivables are subsequently carried at
amortized cost using the effective interest method.
Gains or losses arising from changes in the fair value of the
‘financial assets at fair value through profit or loss’ category are
presented in the income statement within Operating profit as Gain/
(Loss) on currency derivative contracts and within net financial items
for the interest rate and cross currency swap derivative contracts.
See for note 21 for additional information.
1.13 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported
in the balance sheet when there is a legally enforceable right to offset
the recognized amounts and there is an intention to settle on a net basis
or realize the asset and settle the liability simultaneously. The legally
enforceable right must not be contingent on future events and must
be enforceable in the normal course of business and in the event of
default, insolvency or bankruptcy of the company or the counterparty.
The Company has evaluated all of their derivative contract positions
and does not currently have the right to offset the contracts, and
therefore reports all derivative positions at gross amounts.
1.14 Inventories
Lubricating oil and bunkers inventories are valued at the lower of
cost and net realizable value. Cost is determined using the weighted
average cost method. Bunkers and lubricating oil inventories are an
integral part of the vessel, and not sold separately. Net realizable
value is estimated based on commodity market prices.
1.15 Cash and cash equivalents
In the statement of cash flows, cash and cash equivalents includes
cash in hand and other short-term highly-liquid investments with
original maturities of three months or less.
Cash and cash equivalents in the Statement of cash flows includes
restricted cash balances.
1.16 Accounts receivable
Accounts receivable are recognized initially at fair value and sub-
sequently measured at amortized cost, less provision for impair-
ment. The interest factor for accounts receivable is considered to
be insignificant and therefore not included in the measurement of
amortized cost. In the case of an objective evidence of a fall in value,
e difference between reported value and the present value of the
expected net future cash flows is reported as a loss.
Provisions for losses are recognized when there are objective indica-
tors that the Company will not receive settlement in accordance
with the original contract terms. Significant financial problems fac-
ing the customer, probability that the customer will go bankrupt or
undergo financial restructuring, postponements and non-payment
are regarded as indicators that the customer receivable is impaired.
1.17 Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity
as a deduction, net of tax, from the proceeds. When any Company
entity purchases its own shares, the consideration paid, including
any directly attributable incremental costs (net of income taxes),
is deducted as appropriate from share capital and share premium
reserve and the shares are cancelled.
1.18 Borrowings
Borrowings are recognized initially at fair value, net of transaction
costs incurred and are subsequently stated at amortized cost. Any
difference between the proceeds (net of transaction costs) and the
redemption value is recognized in the income statement over the
period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Com-
pany has an unconditional right to defer settlement of the liability
for at least 12 months after the reporting date.
1.19 Commercial Interest Reference Rate (CIRR) loan
The Company has applied for three Commercial Interest Reference
Rate (CIRR) loans from the Norwegian Export Credit Agency. The
duration of the loans is 12 years and the cash proceeds from the
loans have been deposited in a fixed deposit account with a Norwegian
bank at the same interest rate as the loans. The agreed periods of
the deposits are identical with the periods of the loans. The cash
gain due to the interest rate differential between the current market
interest rate and the rate agreed for the deposit is deferred over the
duration of the loans.
1.20 Taxation
The tax expense for the period comprises current and deferred tax.
Tax is recognized in the income statement, except to the extent
that it relates to items recognized in other comprehensive income
or directly in equity. In this case, the tax is also recognized in other
comprehensive income or directly in equity, respectively.
Tax expense/benefit includes current taxes and the change in
deferred taxes. Deferred income tax is provided for all temporary
differences between the book value and the tax basis of assets and
liabilities and for tax losses carried forward. Deferred tax assets
made probable through prospective earnings that can be utilized
SIEM OFFSHORE INC. ANNUAL REPORT 2016 33
 NOTES TO THE ACCOUNTS
against the tax reducing temporary differences are recognized as
intangible assets. Deferred tax assets and deferred tax liabilities
are recognized independently of when the differences will be re-
versed and, as a rule, at nominal value. Deferred tax assets and tax
liabilities are measured on the basis of estimated future tax rate.
Part of the Company’s activities under the Norwegian subsidi-
aries are structured to be in compliance with the regulations for
the Norwegian Tonnage Tax Regime. The Company has estimated
a tax rate of 0% for the companies subject to Norwegian Tonnage
Tax Regime. Financial income within the regime is taxable at a rate
of 25%. For companies not included in the tonnage tax regime, the
Company applies a tax rate of 2%. The tax expense consists of taxes
payable and changes in deferred tax assets/liabilities.
Deferred income tax is recognized on temporary differences
arising between the tax bases of assets and liabilities and their car-
rying amounts in the consolidated financial statements. Deferred
income tax is determined using tax rates (and laws) that have been
enacted or substantively enacted by the balance sheet date and are
expected to apply when the related deferred income tax asset is
realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized only to the extent
that it is probable that future taxable profit will be available against
which the temporary differences can be utilized.
Deferred income tax liabilities are provided on taxable temporary
differences arising from investments in subsidiaries and associates,
except for deferred income tax liability where the timing of the
reversal of the temporary difference is controlled by the Company
and it is probable that the temporary difference will not reverse in
the foreseeable future. Generally the Company is unable to control
the reversal of the temporary difference for associates.
Deferred income tax assets are recognized on deductible
temporary differences arising from investments in subsidiaries
and associates only to the extent that it is probable the temporary
difference will reverse in the future and there is sufficient taxable
profit available against which the temporary difference can be utilized.
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income taxes assets and
liabilities relate to income taxes levied by the same taxation authority
on either the same taxable entity or different taxable entities where
there is an intention to settle the balances on a net basis.
1.21 Pension costs and obligations
The Company has a defined benefit plan for its employees in
Norway. The pension scheme is financed through contributions
to insurance companies or pension funds. A defined benefit plan
defines the amount of pension benefit that an employee will receive
on retirement, usually dependent on one or more factors such as
age, years of service and compensation.
The liability recognized in the statement of financial position
relating to defined benefit plans is the present value of the defined
34 SIEM OFFSHORE INC. ANNUAL REPORT 2016
benefit obligation at the end of the reporting period less the fair
value of the pension fund assets. The defined benefit obligation is
calculated annually by an independent actuary on the basis of a
linear model. The present value of the defined benefit obligation
is determined by discounting the estimated future cash outflows
based on the interest rate for covered bond rate. Since Norwegian
government bonds are not issued for terms exceeding 10 years, a
supplement to this bond rate is calculated by means of estimation
techniques to establish a discount rate that is approximately the
same as the term of the pension obligation.
Past service costs are recognized immediately in income.
Actuarial gains and losses arising from experience adjustments
and changes in actuarial assumptions are charged or credited to eq-
uity in other comprehensive income in the period in which they arise.
1.22 Derivative financial instruments and hedging
activities
The Company enters into derivative instruments, primarily foreign
currency contracts and interest rate swaps, to hedge foreign currency
exposures, for example related to operating expenses and vessel
purchase commitments, and interest rate exposures primarily related
to long-term borrowings.
Derivatives are initially recognized at fair value on the date a
derivative contract is entered into and are subsequently re-measured
at their fair value. The method of recognizing the resulting gain or
loss depends on whether the derivative is designated as a hedging
instrument, and if so, the nature of the item being hedged.
Management designates loans in foreign currencies as hedges
of a particular risk associated with a highly probable forecast trans-
action (cash flow hedge), specifically the contractual future sales
related to vessels chartered by the Brazilian subsidiary. As of 1 Janu-
ary 2016 the functional currency of the Brazilian entity was changed
from BRL to USD, and as a consequence the hedge accounting was
discontinued. Further, some contracts in USD that was previously
designated as hedge objects were terminated. This resulted in the
reclassification of USD60.3m of hedge loss. See note 21.
The fair values of the foreign currency derivative instruments
used for hedging purposes are disclosed in note 15. The full fair
value of a hedging derivative is classified as a non-current asset or
liability when the remaining hedged item is more than 12 months,
and as a current asset or liability when the remaining maturity of
the hedged item is less than 12 months.
The effective portion of changes in the fair value of derivatives that
are designated and qualify as cash flow hedges is recognized in other
compre hensive income. The gain or loss relating to the ineffective
portion is recognized immediately in the income statement.
Amounts accumulated in equity are reclassified to profit or loss in
the periods when the forecast sale that is hedged takes place. When
a hedging instrument expires or is sold, or when a hedge no longer
meets the criteria for hedge accounting, any cumulative gain or loss
existing in equity at that time remains in equity and is recognized
when the forecast transaction is ultimately recognized in the profit
or loss. When a forecast transaction is no longer expected to occur,
the cumulative gain or loss that was reported in equity is immedi-
ately transferred to the income statement within Operating Margin.
1.23 Revenue recognition
The Company’s activity is to employ different types of offshore sup-
port vessels, including PSVs, OSCVs, AHTS vessels, WIVs, OSRVs,
standby vessels and crew-boats and one scientific core-drilling
vessel. In addition, the Company holds interest in one limited liability
partnership with ownership in one well-stimulation vessel. In one
of the subsidiaries of the Company, revenues are partly generated
from income from construction contracts. Revenue comprises the
fair value of the consideration received or receivable for the sale
of goods and services in the ordinary course of the Company’s ac-
tivities. Revenue is shown net of value-added tax, withholding tax,
returns, rebates and discounts and after elimination of sales within
the Company. Revenue is recognized as follows:
Charter rate contracts
Charter contracts are classified as operating leases under IAS 17.
Revenue derived from charter contracts is recognized in the period
over the lease term on a straight-line basis. Related services are rec-
ognized as revenue in accordance with the services being rendered.
Certain contracts include mobilization fees payable at the start
of the contract. In cases where the fee covers specific upgrades
or equipment specific to the contract, the mobilization fees are
recognized as revenue over the estimated contract period. The related
investment is depreciated over the estimated contract period. In cases
where the fee covers specific operating expenses at the start of the
contract, the fees are recognized in the same period as the expenses.
Vessels without signed contracts in place at discharge have no
revenue until the signing of a new contract. Charter-related expenses
for vessels during idle time are expensed as incurred.
Construction contracts
The Company accounts for long-term construction, engineering and
project management contracts on the percentage-of-completion
basis as costs are incurred. Under this method, when the outcome
of a construction contract can be estimated reliably and it is probably
that the contract will be profitable, contract revenue is recognized
over the period of the contract by reference to the stage of completion.
In the beginning phase of a project, the profit on a contract is not
able to be estimated reliably until progress has reached at least
25% completion. Therefore, until an estimate of 25% complete
is possible, only contract expenses are recognized, but no profit
margin. Contract costs are recognized as expenses by reference
to the stage of completion of the contract activity at the end of the
reporting period.
When it is probable that a project will generate a loss (total
contract costs are expected to exceed total contract revenue), the
total estimated loss is recognized as an expense immediately.
Interest income
Interest income is recognized using the effective interest method.
When a receivable is impaired, the Company reduces the carry-
ing amount to its recoverable amount, which is determined as the
estimated future cash flow discounted at original effective interest
rate of the instrument and continues unwinding the discount as
interest income. Interest income on impaired loans and receivables
is recognized using the original effective interest rate.
Dividend income
Dividend income is recognized when the right to receive payment
is established.
Rendering of services
Service revenue is generally recognized when a signed contract or
other persuasive evidence of an arrangement exists, the service
has been provided, the fee is fixed or determinable and collection
of resulting receivables is reasonably assured. Other services are
recognized on a percentage-of-completion basis.
1.24 Accounts payable
Accounts payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from suppli-
ers. Accounts payable are classified as current liabilities if payment
is due within one year or less (or in the normal operating cycle of the
business if longer). If not, they are presented as non-current liabilities.
Accounts payable are recognized initially at fair value and subsequently
measured at amortized cost using the effective interest method.
1.25 Earnings per share
Earnings per share are calculated by dividing the net profit/loss for
shareholders of the Company by the weighted average number of
outstanding shares over the reporting period. Diluted earnings per
share include the effect of the assumed conversion of potentially
dilutive instruments such as employee stock options. The impact
of share equivalents is computed using the treasury stock method
for stock options.
1.26 Statement of Cash Flows
The Statements of cash flows are prepared in accordance with the
indirect method.
1.27 Related party transactions
All transactions, agreements and business activities with related
parties are determined on an arm’s length basis in a manner similar
to transactions with third parties.
SIEM OFFSHORE INC. ANNUAL REPORT 2016 35
 NOTES TO THE ACCOUNTS
1.28 Government grants
Grants related to net wages arrangement in Norway are recognized
as a reduction of wage cost.
1.29 Operating leases
Leases in which a significant portion of the risks and rewards of
ownership still remains with the lessor are classified as operat-
ing leases. Payments made under operating lease agreements
are classified in the income statement as operating expenses and
recognized straight-line over the period of the lease.
1.30 Share-based payments
The Company operates an executive management equity-settled,
share-based compensation plan, under which the entity receives
services from ten top management employees as consideration
for equity instruments (share-options) of the Company. The fair
value of the employee services received in exchange for the grant
of the options is recognized as an Operating Expense. For additional
information see note 31 Share-based payments.
The total amount to be expensed is determined by reference to the
fair value of the options granted at grant date, as determined using
a Black-Scholes model. Exercise price is the stock price at date of
the exercise. The total expense is recognized over the vesting period,
which is the period over which all of the specified vesting conditions
are to be satisfied. The only condition for vesting is employment with
36 SIEM OFFSHORE INC. ANNUAL REPORT 2016
the Company; options vest over a five-year period after grant date.
At the end of each reporting period, the Company revises its
estimates of the number of options that are expected to vest based
on the non-market vesting conditions. It recognizes the impact of
the revision to original estimates, if any, in the income statement,
with a corresponding adjustment to equity. Each option gives the
holder the right, but not the obligation, to acquire one share at the
exercise price on the terms and subject to the conditions set out
in the Stock Option Plan.
When the options are exercised, the Parent issues new shares
or re-issues treasury shares. The proceeds received net of any
directly attributable transaction costs are credited to share capital
(nominal value) and share premium.
The grant by the Company of options over its equity instruments
to the employees of subsidiary undertakings in the Company is
treated as a capital contribution. The fair value of employee ser-
vices received, measured by reference to the grant date fair value,
is recognized over the vesting period as an increase to investment
in subsidiary undertakings, with a corresponding credit to equity
in the parent entity accounts.
The social security contributions payable in connection with the
grant of the share options is considered an integral part of the grant
itself, and the charge will be treated as a cash-settled transaction.
Note 2 – Financial Risk Management
2.1 Financial risk factors
The Company is exposed to a variety of financial risks through its
ordinary operations and debt financing. Such risks include foreign
exchange risk, interest rate risk, credit risk and liquidity risk. To
manage these risks, management reviews and assesses its primary
financial and market risks. Once risks are identified, appropriate action
is taken to mitigate the identified risk. The Company’s risk manage-
ment is exercised in line with guidelines approved by the Board.
2.2 Foreign exchange risks
USD is the reporting currency for the Company. Functional cur-
rency for the parent company is USD, and for the vessel-operating
subsidiaries USD, NOK, AUD and CAD are the functional currency.
Remaining subsidiaries use NOK and EUR as functional currency.
The Company operates internationally and is exposed to foreign
exchange risks arising from various currency exposures primary
with respect to NOK, GBP, EUR, CAD and AUD. Foreign exchange
risks can be divided into transaction risk from paying and receiving
foreign currency and translation risk due to recognizing assets and
liabilities in USD. The Company had in 2016 mainly USD, NOK,
EUR, GBP, BRL, CAD and AUD revenue and expenses, compared
to mainly USD, NOK, EUR, GBP and BRL for 2015.
At year-end, the Company had a shipbuilding contract with
Polish yard for the construction of one PSV. The contract with the
Polish yard is in EUR. After year-end the contract was cancelled
due to delayed delivery from yard. The Company has been repaid
all pre-delivery instalments related to the cancelled contract.
Further information regarding the contract is set out in Note 2.5
and Note 17.
The Company is exposed to foreign exchange risk of its subsidi-
aries, in particular the development of the Brazilian Real.
The following sensitivity table demonstrates the impact on the
Company’s profit and equity before tax from potential changes to
the exchange rates, all other variables held constant.
SIEM OFFSHORE INC. ANNUAL REPORT 2016 37
 NOTES TO THE ACCOUNTS

CONSOLIDATED Foreign exchange risk rate 10%

(Amounts in USD 1,000) +10% movements -10% movements
December 31, 2016 Carrying amount Profit/(loss) Equity Profit/(loss) Equity

Financial assets
Cash and cash equivalent 101,323 6,798 6,798 -6,798 -6,798
Derivaties - - - - -
Accounts receivable 48,230 3,519 3,519 -3,519 -3,519
Impact on financial assets before tax 149,553 10,317 10,317 -10,317 -10,317

Financial liabilities
Accounts payable 20,783 -1,646 -1,646 1,646 1,646
Derivatives 8,358 -1,040 -1,040 1,040 1,040
Borrowings 1,470,893 -51,111 -51,111 51,111 51,111
Impact on financial liabilities before tax 1,500,033 -53,797 -53,797 53,797 53,797

Income statement
Operating revenue 469,123 33,889 33,889 -33,889 -33,889
Operating expenses 340,829 -25,938 -25,938 25,938 25,938
Impact on operating result before tax 128,295 7,951 7,951 -7,951 -7,951
Total increase/decrease before tax -35,528 -35,528 35,528 35,528

Allocation per currency

NOK -37,620 -37,620 37,620 37,620
EUR 8,974 8,974 -8,974 -8,974
GBP 4,378 4,378 -4,378 -4,378
BRL -13,663 -13,663 13,663 13,663
CAD 1,979 1,979 -1,979 -1,979
AUD 423 423 -423 -423
Total increase/decrease before tax -35,528 -35,528 35,528 35,528

Financial assets in 2016 and 2015 include derivatives related to hedging of foreign exchange risks. The derivatives in the sensitivity table
include path-dependent options in which the value of the derivatives is influenced when the underlying reaches or fluctuates within, below
or above specific barrier levels. The change in value of these derivatives will impact the profit of the Company.
Financial liabilities in 2016 and 2015 consist of interest rate derivatives and are not influenced by movements in foreign exchange rates.

38 SIEM OFFSHORE INC. ANNUAL REPORT 2016

CONSOLIDATED Foreign exchange risk rate 10%
(Amounts in USD 1,000) +10% movements -10% movements
December 31, 2015 Carrying amount Profit/(loss) Equity Profit/(loss) Equity

Financial assets
Cash and cash equivalent 148,753 7,839 7,839 -7,839 -7,839
Derivaties 1,451 - - - -
Accounts receivable 46,147 2,162 2,162 -2,162 -2,162
Impact on financial assets before tax 196,351 10,000 10,000 -10,000 -10,000

Financial liabilities
Accounts payable 8,395 -823 -823 823 823
Derivatives 12,896 14,093 14,093 -14,093 -14,093
Borrowings 1,122,585 -51,906 -51,906 51,906 51,906
Impact on financial liabilities before tax 1,143,877 -38,635 -38,635 38,635 38,635

Income statement
Operating revenue 422,449 23,242 23,242 -23,242 -23,242
Operating expenses 303,901 -24,224 -24,224 24,224 24,224
Impact on operating result before tax 118,548 -982 -982 982 982
Total increase/decrease before tax -29,617 -29,617 29,617 29,617

Allocation per currency

NOK -33,637 -33,637 33,637 33,637
EUR 17,459 17,459 -17,459 -17,459
GBP 1,496 1,496 -1,496 -1,496
BRL -14,935 -14,935 14,935 14,935
Total increase/ decrease before tax -29,617 -29,617 29,617 29,617

SIEM OFFSHORE INC. ANNUAL REPORT 2016 39

 NOTES TO THE ACCOUNTS

PARENT COMPANY Foreign exchange risk rate 10%

(Amounts in USD 1,000) +10% movements -10% movements
December 31, 2016 Carrying amount Profit/(loss) Equity Profit/(loss) Equity

Financial assets
Cash and cash equivalent 195,433 9,006 9,006 -9,006 -9,006
Accounts receivable - - - - -
Impact on financial assets before tax 195,433 9,006 9,006 -9,006 -9,006

Financial liabilities
Accounts payable 56 -4 -4 4 4
Derivatives - - - - -
Borrowings 210,807 -16,553 -16,553 16,553 16,553
Impact on financial liabilities before tax 210,863 -16,558 -16,558 16,558 16,558

Income statement
Operating revenue 865 22 22 -22 -22
Operating expenses 13,187 -1,298 -1,298 1,298 1,298
Impact on operating result before tax -12,321 -1,275 -1,275 1,275 1,275
Total increase/decrease before tax -8,827 -8,827 8,827 8,827

Allocation per currency

NOK -12,105 -12,105 12,105 12,105
GBP 2,611 2,611 -2,611 -2,611
BRL 667 667 -667 -667
Total increase/ decrease before tax -8,827 -8,827 8,827 8,827

40 SIEM OFFSHORE INC. ANNUAL REPORT 2016

PARENT COMPANY Foreign exchange risk rate 10%
(Amounts in USD 1,000) +10% movements -10% movements
December 31, 2015 Carrying amount Profit/(loss) Equity Profit/(loss) Equity

Financial assets
Cash and cash equivalent 269,293 15,060 15,060 -15,060 -15,060
Accounts receivable - - - - -
Impact on financial assets before tax 269,293 15,060 15,060 -15,060 -15,060

Financial liabilities
Accounts payable 144 -14 -14 14 14
Derivatives - - - - -
Borrowings 207,582 -16,678 -16,678 16,678 16,678
Impact on financial liabilities before tax 207,996 -16,693 -16,693 16,693 16,693

Income statement
Operating revenue 145 15 15 -15 -15
Operating expenses 9,240 -885 -885 885 885
Impact on operating result before tax -9,095 -871 -871 871 871
Total increase/decrease before tax -2,503 -2,503 2,503 2,503

Allocation per currency

NOK -6,181 -6,181 6,181 6,181
GBP 3,719 3,719 -3,719 -3,719
BRL -42 -42 42 42
Total increase/ decrease before tax -2,503 -2,503 2,503 2,503

SIEM OFFSHORE INC. ANNUAL REPORT 2016 41

 NOTES TO THE ACCOUNTS

2.3 Credit risks, Concentration risks
The Company’s credit risk is primarily attributable to its trade and
other short-term receivables and asset derivative positions. The
derivative counterparties are large established financial institu-
tions, and the counterparty risk for the asset derivative positions
are regarded as limited.
The exposure to credit risk for trade and other short-term re-
ceivables is measured on an ongoing basis and credit evaluations
are performed for customers identified to be risky. The Company’s
debtors are mainly major oil companies and offshore service com-
panies, which are considered to be creditworthy third parties. His-
torically, the loss percentage has been low but due to the market
development caused by the low oil price, the counterparty risk
has increased significantly during the year. Ongoing provisions are
made and, on December 31, 2016, the provision for certain accounts
receivables which may not be paid in full was USD 23.9 million for
the Company (2015: USD 13.4 million) and USD 0 for the Parent
(2015: USD 261K).

The table below presents the concentration risks for 2016 and 2015.

PARENT COMPANY CONSOLIDATED

(Amounts in USD 1,000) USD % of total USD % of total
Receivables on December 31, 2016
1 to 5 largest - 0.0 % 38,008 78.8 %
6 to 10 largest - 0.0 % 16,692 34.6 %
Others - 0.0 % 17,403 36.1 %
Provision for bad debt - -23,872
Total accounts receivable - 0% 48,230 100%

(Amounts in USD 1,000) % of total USD % of total

Receivables on December 31, 2015
1 to 5 largest 261 100.0 % 38,217 82.8 %
6 to 10 largest - 0.0 % 10,869 23.6 %
Others - 0.0 % 10,433 -6.4 %
Provision for bad debt -261 -13,372
Total accounts receivables - 100% 46,147 100%

42 SIEM OFFSHORE INC. ANNUAL REPORT 2016

Trade and receivables
The table below presents an aging analysis of the outstanding receivables at year end 2016 and 2015. Overdue receivables are followed
up continually by Management. The Management considers the outstanding amounts to be recoverable.

PARENT COMPANY CONSOLIDATED

(Amounts in USD 1,000) % of total % of total
Aging on December 31, 2016
Not due - 0.0 % 26,744 55,5 %
Due up to 1 month - 0.0 % 13,815 28,6 %
Due 1-4 months - 0.0 % 4,207 8,7 %
Due more than 4 months - 0.0 % 3,464 7,2 %
Total accounts receivable - 0% 48 230 100%

(Amounts in USD 1,000) % of total % of total

Aging on December 31, 2015
Not due - 0.0 % 31,007 67.2 %
Due up to 1 month - 0.0 % 3,947 8.6 %
Due 1-4 months - 0.0 % 5,450 11.8 %
Due more than 4 months - 0.0 % 5,742 12.4 %
Total accounts receivable - 0% 46,147 100%

The carrying amounts of the Company’s and Parent’s accounts receivables are denominated in the following currencies:

PARENT COMPANY CONSOLIDATED

(Amounts in USD 1,000) 2016 2015 2016 2015
Currency
USD - - 13,041 24,529
NOK - - 3,579 2,351
EUR - - 20,216 14,233
GBP - - 2,339 3,252
CAD - - 2,534 -
AUD - - 3,801 -
BRL - - 2,721 1,783
Total accounts receivable - - 48,230 46,147

The maximum exposure to credit risk at the reporting date is the carrying value of each class of accounts receivables mentioned above.

SIEM OFFSHORE INC. ANNUAL REPORT 2016 43

 NOTES TO THE ACCOUNTS

2.4 Cash flow, interest risk and fair value
The Company is financed by debt and equity. The Company is
moreover exposed to changes in interest rates, which may affect
the Company’s financial results.
These risks are mainly related to the Company’s long term bor-
rowings with floating interest rates.
Further details of the Company’s borrowings are set out in Note 12.
The Company has no significant interest-bearing assets other
than cash and cash equivalents and therefore the Company’s income
and operating cash flows are substantially independent of changes
in market interest rates. Cash and cash equivalents are invested for
short maturity periods, generally from 1 day to 3 months, which
mitigates some of the potential interest rate risk.
The following sensitivity tables demonstrate the impact on the
Company’s profit before tax and equity from a potential shift in
interest rates, all other variables held constant.Borrowings in the
tables above (both for 2016 and 2015) include only borrowings with
floating interest.
Above movements also include the effect of interest rate swaps
entered into in order to hedge the floating interest risk. Market-to-
market effects in relation to the interest rate swaps impacts the
profit and loss following a change of +/- 1% in the interest rate.
For more details, see Note 12.
Above movements also include the effect of interest rate swaps
entered into in order to hedge the floating interest risk. Market-to-
market effects in relation to the interest rate swaps impacts the
profit and loss following a change of +/- 1% in the interest rate.
For more details, see Note 12.

CONSOLIDATED Interest rate risk (IR)

(Amounts in USD 1,000) -1% movements +1% movements

December 31, 2016 Carrying amount Profit/(loss) Equity Profit/(loss) Equity

Financial assets
Cash and cash equivalent 101,323 -1,013 -1,013 1,013 1,013
Impact on financial assets before tax 101,323 -1,013 -1,013 1,013 1,013

Financial liabilities
Borrowings 1,023,997 12,687 12,687 -19,507 -19,507
Impact on financial liabilities before tax 1,023,997 12,687 12,687 -19,507 -19,507
Total increase/decrease before tax 11,674 11,674 -18,494 -18,494

CONSOLIDATED Interest rate risk (IR)

(Amounts in USD 1,000) -1% movements +1% movements

December 31, 2015 Carrying amount Profit/(loss) Equity Profit/(loss) Equity

Financial assets
Cash and cash equivalent 148,753 -1,488 -1,488 1,488 1,488
Impact on financial assets before tax 148,753 -1,488 -1,488 1,488 1,488

Financial liabilities
Borrowings 657,317 5,782 5,782 -5,770 -5,770
Impact on financial liabilities before tax 657,317 5,782 5,782 -5,770 -5,770
Total increase/decrease before tax 4,294 4,294 -4,282 -4,282

44 SIEM OFFSHORE INC. ANNUAL REPORT 2016

PARENT COMPANY Interest rate risk (IR)
(Amounts in USD 1,000) -1% movements +1% movements

December 31, 2016 Carrying amount Profit/(loss) Equity Profit/(loss) Equity

Financial assets
Cash and cash equivalent 195,433 -1,954 -1,954 1,954 1,954
Impact on financial assets before tax 195,433 -1,954 -1,954 1,954 1,954

Financial liabilities
Borrowings 210,807 2,108 2,108 -2,108 -2,108
Impact on financial liabilities before tax 210,807 2,108 2,108 -2,108 -2,108
Total increase/decrease before tax 154 154 -154 -154

PARENT COMPANY Interest rate risk (IR)

(Amounts in USD 1,000) -1% movements +1% movements

December 31, 2015 Carrying amount Profit/(loss) Equity Profit/(loss) Equity

Financial assets
Cash and cash equivalent 269,293 -2,693 -2,693 2,693 2,693
Impact on financial assets before tax 269,293 -2,693 -2,693 2,693 2,693

Financial liabilities
Borrowings 207,852 2,079 2,079 -2,079 -2,079
Impact on financial liabilities before tax 207,852 2,079 2,079 -2,079 -2,079
Total increase/decrease before tax -614 -614 614 614

SIEM OFFSHORE INC. ANNUAL REPORT 2016 45

 NOTES TO THE ACCOUNTS

The Company’s financial assets are classified into the categories:
assets at fair value through the profit and loss, loans and receivables,
and available for sale. Financial liabilities are classified as liabilities
at fair value through the profit and loss, and other financial liabilities.
For further information about comparison by category, see Note 29.
The value of forward exchange contracts is set by comparing
forward exchange rate and the rate on the reporting date. The
Company’s following financial instruments are not evaluated at
fair value: accounts receivable, cash and cash equivalents, other
short-term receivables, accounts payable and long-term liabilities
with floating interest.
Because of the short term to maturity, the value of cash and
cash equivalents entered into the Statements of Financial Position
is almost the same as the fair value of these. Accordingly, the values
of accounts receivable and accounts payable are almost the same
as their fair values since they are entered on “normal” conditions.
The fair value of the Company’s non-current liabilities subjected
to fixed interest rates is calculated by comparing the Company’s
terms and market terms for liabilities with the same terms to ma-
turity and credit risk.
The following tables display the booked value and the fair value
of financial assets and obligations.

CONSOLIDATED
(Amounts in USD 1,000) 12/31/2016 12/31/2015

Financial assets Book value Fair value Book value Fair value
CIRR loan deposit 76,215 79,511 88,002 92,159
Long-term receivables 31,168 31,168 51,598 51,598
Accounts receivables 48,230 48,230 46,147 46,147
Other short-term receivables 120,977 120,977 60,657 60,657
Financial assets held for sale 1,099 1,099 3,459 3,459
Derivative financial instruments - - 1,451 1,451
Cash and cash equivalents 101,323 101,323 148,753 148,753
Total 379,012 382,307 400,066 404,224

Financial liabilities
Borrowings 1,470,893 1,483,834 1,122,585 1,162,291
CIRR loan 76,215 92,580 88,002 92,159
Other non-current liabilities 47,382 47,382 34,142 34,142
Accounts payable 20,783 20,783 8,395 8,395
Derivative financial instruments 8,358 8,358 12,896 12,896
Other current liabilities 134,868 134,868 91,001 91,001
Total 1,758,498 1,774,734 1,357,022 1,400,884

46 SIEM OFFSHORE INC. ANNUAL REPORT 2016

 PARENT COMPANY
(Amounts in USD 1,000) 12/31/2016 12/31/2015

Financial assets Book value Fair value Book value Fair value
CIRR loan deposit 14,300 15,343 19,208 20,215
Long-term loan 59,868 59,868 25,867 25,867
Accounts receivable - - - -
Other short-term receivables 6,298 6,298 4,169 4,169
Cash and cash equivalents 195,433 195,433 269,293 269,293
Total 275,900 276,943 318,538 319,544

Financial liabilities
CIRR loan 14,300 20,636 19,208 20,215
Accounts payable 56 56 144 144
Other current liabilities 7,401 7,401 1,347 1,347
Total 21,757 22,800 20,698 21,706

2.5 Liquidity risk
The Company monitors its cash flow from operations closely and
optimizes the working capital level of the individual companies and
the Company as a whole. The Company funds are used for investment
opportunities in the business, yard instalments, scheduled repayments
and repayments of debt and to general working capital purposes.
The Company seeks to fix the majority of its fleet on long-term
contracts. Vessels not fixed on long-term contracts are typically
exposed to the volatility in the in the short to medium term market.
The Company will from time to time require additional capital
to take advantage of business opportunities.
The tables below summarize the maturity profile of the Company’s
financial liabilities including interest, and future commitments to
the newbuilding program. Further, there can be no assurance that
the Company will be able to raise new equity, or arrange new bor-
rowing facilities, on favourable terms and in amounts necessary to
conduct its ongoing and future operations, should this be required.
If the Company fails to repay or refinance its loan facilities, additional
equity financing may be required. There can be no assurance that
the Company will be able to repay its debts or extend re-payment
schedules through re-financing of its loan agreements or avoid net
cash flow shortfalls exceeding the Company’s available funding
sources or comply with minimum cash requirements. In the event
of insolvency, liquidation or similar event relating to a subsidiary
of the Company, all creditors of such subsidiary would be entitled
to payment in full out of the assets of such subsidiary before the
Company, as a shareholder, would be entitled to any payments.
Defaults by, or the insolvency of, a subsidiary of the Company could
result in the obligation of the Company to make payments under
parent company guarantees issued in favour of such subsidiary.

SIEM OFFSHORE INC. ANNUAL REPORT 2016 47

 NOTES TO THE ACCOUNTS

CONSOLIDATED
Less than 3 3 to 12 1 to 2 2 to 5
(Amounts in USD 1,000) months months years years Thereafter Total

December 31, 2016

Interest-bearing loans and borrowings 26,649 232,026 234,836 873,923 463,874 1,831,308
Trade and other payables 20,783 - - - - 20,783
Total 47,432 232,026 234,836 873,923 463,874 1,852,091

December 31, 2015

Interest-bearing loans and borrowings 32,670 187,734 256,406 722,220 209,856 1,408,886
Trade and other payables 8,395 - - - - 8,395
Total 41,065 187,734 256,406 722,220 209,856 1,417,281

CONSOLIDATED
Less than 3 3 to 12 1 to 2 2 to 5
(Amounts in USD 1,000) months months years years Thereafter Total

December 31, 2016

Yard instalments falling due - - - - - -

December 31, 2015

Yard instalments falling due 3,650 392,250 - - - 395,900

PARENT COMAPNY
Less than 3 3 to 12 1 to 2 2 to 5
(Amounts in USD 1,000) months months years years Thereafter Total

December 31, 2016

Interest-bearing loans and borrowings 62,724 11,402 161,134 5,441 - 240,701
Trade and other payables 56 - - - - 56
Total 62,780 11,402 161,134 5,441 - 240,757

December 31, 2015

Interest-bearing loans and borrowings 2,776 12,956 141,472 95,182 - 252,386
Trade and other payables 144 - - - - 144
Total 2,920 12,956 141,472 95,182 - 252,530

No yard instalments falling due for the parent company as there were no vessels under construction year-end 2016 and 2015.

48 SIEM OFFSHORE INC. ANNUAL REPORT 2016

2.6 Capital risk management
The Company seeks to obtain long-term financing supported by
long-term contracts, in order to reduce the frequency and risk as-
sociated with the refinancing of loans. Long-term charter parties
at acceptable charter rates will also enable a higher degree of
debt-financing.
The wholly-owned Norwegian company, Siem Offshore Rederi AS,
had 1 PSV under construction in Poland at year end. The construc-
tion contract was cancelled after year-end due to delayed delivery
from the yard. The pre-delivery instalments paid to the yard have
been repaid to the Company.
The Company cancelled one PSV prior to year-end due to delayed
delivery from the yard, and took delivery of 6 vessels during the year.
All vessels have commenced on long term contracts.
The low oil price and the excess capacity of offshore service
vessels have increased the competition amongst owners which
further put pressure on fixture rates. As a consequence owners
have placed more vessels into lay-up. End of year the Company
had 10 vessels in lay-up.
2.7 Risks related to loan agreements, restrictions
on dividends and distribution
The Company’s loan agreements include terms, conditions and cov-
enants which impose restrictions on the operations of the Company.
These restrictions may negatively affect the Company’s operations
including, but not limited to, the Company’s ability to meet the fierce
competition in the market in which it operates.
2.8 Risks related to possible tax liabilities
The Company seeks to optimize its tax structure to minimize with-
holding taxes when operating vessels abroad, avoiding double taxa-
tion, and minimizing corporate tax paid by making optimal use of the
shipping taxation rules that apply. It is, however, a challenging task
to optimize taxation, and there is always a risk that the Company
may end up paying more taxes than the theoretical minimum, which
may in turn affect the financial results negatively.

CONSOLIDATED Interest rate risk (IR)

(Amounts in USD 1,000) -1% movements +1% movements

Estimated total
December 31, 2016 revenue Profit/(loss) Equity Profit/(loss) Equity
Total value of contracts 512,811
Progress reporting, effect from movement 5,128 5,128 -5,128 -5,128
Margin estimate, effect from movement - 5,128 5,128 -5,128 -5,128

CONSOLIDATED Interest rate risk (IR)

(Amounts in USD 1,000) -1% movements +1% movements

Estimated total
December 31, 2015 revenue Profit/(loss) Equity Profit/(loss) Equity
Total value of contracts 334,093
Progress reporting, effect from movement 3,341 3,341 -3,341 -3,341
Margin estimate, effect from movement - 3,341 3,341 -3,341 -3,341

SIEM OFFSHORE INC. ANNUAL REPORT 2016 49

 NOTES TO THE ACCOUNTS
Note 3 – Critical Accounting Estimates and Judgements
IFRS requires management to make estimates and judgments that
affect the reported amounts of assets and liabilities, as well as in-
come and expenses in the financial statements. The final reported
outcomes may deviate from the original estimates.
Certain amounts included in, or that have an effect on, the ac-
counts and the associated notes require estimation, which in turn
entails that the Company must make assessments related to values
and circumstances that are not known at the point in time when
the accounts are prepared.
A significant accounting estimate is an estimate that is important
to provide a complete picture of the Company’s financial position,
which at the same time is the result of difficult, subjective and com-
plex assessments performed by the management. Such estimates
are often uncertain by nature.
Management evaluates such estimates continuously based on
historical data and experience, consultation with experts, trend
analysis and other factors that are relevant for the individual esti-
mate, including expectations of future events that are believed to
be reasonable under the circumstances.
Estimates and assumptions that have a significant risk of caus-
ing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, as well as judgments made
by management, in the process of applying the Company’s account-
ing policies, that have the most significant effect on the amounts
recognized in the financial statements, are discussed below.
Revenue recognition – percentage-of-completion for
off-shore cable contracts
The Company uses the percentage-of-completion method in ac-
counting for its fixed price construction contracts related to the
segment Submarine Power Cable Installation.
One significant estimate is an estimate of the percent complete.
Management estimates completion based on an assessment of
certain technical criteria in the project execution plan that have to be
met in order to achieve a certain level of percentage of completion,
as opposed to using costs incurred as a measure of completion.
The primary risk in the execution of projects relates to the off-
shore installation phase. Hence, profit margin is not recorded until
the progress of the project has reached a stage of minimum 25
percent technical completion and that the offshore installation
phase has commenced.
The project shall need to progress into the cable-laying phase
before the minimum 25 percent age of technical completion is
reached. Prior to reaching a progress of minimum 25 percent techni-
cal completion, and subject to a foreseen positive project margin,
project revenue is accrued to match the actual costs incurred at
50 SIEM OFFSHORE INC. ANNUAL REPORT 2016
the estimated stage.
Periodic project margin is only recorded when the overall project
margin is forecasted to be positive, and when the execution of the
project has reached such level of technical completion beyond 25
percent that the management is comfortable to assess the financial
outcome of the project.
The sensitivity of the recorded revenue on long-term construc-
tion contracts would be +/- USD 8.9 million in 2016 (2015: USD 8.9
million) if management had estimated a 10% better/worse progress
on the contracts ongoing at year-end 2016.
Vessels
Impairment of vessels
On the reporting date, the Company has assessed whether there
are any indications that it may be necessary to write down a vessel.
Indicators include external broker estimates, significant changes
in charter hire contracts, day rates, operating costs or adverse
market conditions.
When such indications exist, an impairment test is performed in
accordance with Company policy.The recoverable value of the vessel
is estimated, and if the recoverable amount is less than the current
carrying value, an impairment loss is recognized in the amount of
the difference between carrying value and net realizable value.
The recoverable amount for vessels is estimated by means of
broker estimates and value in use calculations based on projected
discounted cash flows for the remaining charter hire period or over
the next four years if no charter contract exists, together with an
assumption of a terminal value of the vessel.
The market for offshore service vessels is expected to remain
weak for several years. For vessels fixed on firm contracts during
the period from 2017 until 2019, the assumption is that the contract
remains unchanged during the remaining contract period, and that
the rate level are reduced thereafter until the end of 2019. Options
included in charter hire agreements are not considered in the value
in use calculations.
The key assumptions used to determine the recoverable amount
for the different CGUs, including a sensitivity analysis, are disclosed
and further explained in Note 5.
Impairment of goodwill
The Company tests whether goodwill and intangible assets have
suffered any impairment in accordance with the accounting policy
stated in note 1.11. The recoverable amounts of cash-generating
unit have been determined based on value-in-use calculation. This
calculation requires the use of estimates (Note 5).
Business combinations and bargain gain

In May 2016 the Company acquired the remaining 50% shares in

Secunda Holding and made estimates on fair value of the vessel
values and contract values. Following such valuations the Company
identified a net bargain gain. See note 32.

Hedge accounting

The Company uses hedge accounting for the Brazilian subsidiary,

which has a functional currency of BRL. The designated cash-flow
hedge is a foreign currency exposure of future USD charter hire
revenue as the hedged item and USD long-term debt the designated
hedging instrument.
Designation of the hedged item requires significant judgment
in defining the future charter contract revenue as highly probable.
Highly probable future charter revenue has been determined
by management to include the renewal option period, based on
the frequency of similar past transactions and for the contracts to
be included in the designated hedge from the date of signing, even
though the vessels are under construction.
Siem Offshore has defined an effective hedge to be when the
cash flows of the highly probable future transactions are higher
than the cash flows of the hedging instrument for the same period.
Effectiveness testing is performed using the Dollar Offset Method.

SIEM OFFSHORE INC. ANNUAL REPORT 2016 51

 NOTES TO THE ACCOUNTS

Note 4 – Segment Reporting

The Company identifies its reportable segments and disclose segment
information under IFRS 8 Operating Segments which requires Siem
Offshore Inc. to identify its segments according to the organization
and reporting structure used by management. Operating Segments
are components of a business that are evaluated regularly by the chief
operating decision maker for the purpose of assessing performance
and allocating resources.
The Company’s chief operating decision maker is the management
board, comprised of the CEO, CFO, CCO and CHRO. Generally, finan-
cial information is required to be disclosed on the same basis that is
used by the chief operating decision maker. The Company’s operating
segments represent separately managed business areas with unique
products serving different markets. The reportable business areas are
OSV with the segments PSV, OSCV and WIV, AHTS Vessels, Canadian
fleet and Other Vessels in Brazil, and Industrial with the segments
Combat Management Systems, Submarine Power Cable Activities,
Scientific Core-Drilling and Siem WIS.
The PSV segment includes 13 Platform Supply Vessels. The
OSCV and WIV segment includes five Offshore Subsea Construc-
tion Vessels and two Well Intervention Vessels. The AHTS segment
includes ten Anchor Handling and Tug Supply Vessels. The Canadian
fleet Segment consist of five offshore support vessels operating
offshore Canada. The Segment of Other Vessels in Brazil consists
of two Oilspill Recovery Vessels and four smaller fast supply ves-
sels and crew vessels.
Combat Management Systems is the activity of supplying soft-
ware for a management system to the Brazilian Navy. Submarine
Power Cable Installation comprises the activities of installation and
maintenance of subsea power cables for offshore windfarms. Scien-
tific Core-Drilling is comprised of the activity of a scientific drillship
which performs core-drilling. The segment Siem WIS is comprised of
the ownership of Siem WIS that develops applications for managed
pressure drilling (“MPD”), and certain other activities. Siem Offshore
Inc. uses three measures of segment results, Operating Revenue,
Operating Margin and Net Profit.
Intersegment sales and transfers reflect arm’s length prices
as if sold or transferred to third parties at the time of inception of
the internal contract, which may cover several years. Transfers of
business or fixed assets within or between the segments are re-
ported without recognizing gains or losses. Results of activities not
considered part of Siem Offshore Inc.’s main operations as well as
unallocated revenues, expenses, liabilities and assets are reported
together with Other under the Caption Other and eliminations. The
following tables include information about the Company’s operat-
ing segments.

CONSOLIDATED
(Amounts in USD 1,000) 2016 2015

Operating revenue by business area

PSV 62,058 76,455
OSCV and WIV 97,232 111,315
AHTS Vessels 48,326 54,692
Other Vessels in Brazil 20,143 21,326
Canadian fleet 24,474 -
Other/Intercompany elimination -9,256 -9,323
Operating revenue OSV segment 242,976 254,465

Combat Management Systems 2,410 4,741

Submarine Power Cable Installation 193,774 132,307
Scientific Core-Drilling 26,376 26,164
Siem WIS 3,587 4,773
Other/Intercompany elimination -
Operating revenue Industrial segment 226,147 167,984

Total 469,123 422,449

52 SIEM OFFSHORE INC. ANNUAL REPORT 2016

 CONSOLIDATED
(Amounts in USD 1,000) 2016 2015
Depreciation and amortization by business area
PSV 23,134 28,169
OSCV and WIV 25,435 24,744
AHTS Vessels 40,292 40,534
Other Vessels in Brazil 4,710 3,579
Canadian fleet 4,845 -
Other/Intercompany elimination 6,554 3,199
Depreciation and amortisation OSV segment 104,970 100,225
Combat Management Systems - -
Submarine Power Cable Installation 1,663 1,601
Scientific Core-Drilling 3,676 3,538
Siem WIS 1,201 1,660
Other/Intercompany elimination 261 -
Depreciation and amortisation Industrial segment 6,801 6,800
Total 111,771 107,025

Impairment by business area 2016 2015

PSV 47,605 39,507
OSCV and WIV 10,750 24,849
AHTS Vessels - 95,109
Other Vessels in Brazil - -
Canadian fleet 1,824 -
Impairment OSV Segment 60,180 159,465
Siem WIS 1,015 6,705
Impairment Industrial Segment 1,015 6,705
Total 61,195 166,170

SIEM OFFSHORE INC. ANNUAL REPORT 2016 53

 NOTES TO THE ACCOUNTS

CONSOLIDATED
(Amounts in USD 1,000) 2016 2015
Operating profit/(loss) by business area
PSV -43,081 -28,980
OSCV and WIV 7,406 19,998
AHTS Vessels -29,496 -134,230
Other Vessels in Brazil 3,184 3,478
Canadian fleet 5,739 -
Other/Intercompany elimination -11,996 -3,413
Operating profit OSV segment -68,244 -143,147
Combat Management Systems 31 -208
Submarine Power Cable Installation 30,540 15,856
Scientific Core-Drilling 11,391 10,709
Siem WIS -710 720
Other/Intercompany elimination - -
Operating profit Industrial segment 41,253 27,076

Administration expenses -33,059 -38,575

Gain (loss) from sale of fixed assets -423 16,317
Gain from bargain purchase 18,312 -
Gain sale of interest rate derivatives 368 368
Currency gain/ (loss) -7,762 -30,775
Total -49,555 -168,735

Other operating profit/(loss) includes, among others, gain of sale of interest rate derivatives (CIRR), gain/(loss) on currency exchange
forward contracts and general and administration expenses.

Capital expenditures by business area 2016 2015

PSV (1) 33,391 60,872
OSCV and WIV 238,533 58,684
AHTS Vessels 130,426 18,079
Other Vessels in Brazil 6,000 11,257
Canadian fleet -2,124 -
Other/Intercompany elimination 70,061 1,407
OSV Segment 476,287 150,299
Combat Management Systems - -
Submarine Power Cable Installation 14,637 168
Scientific Core-Drilling 714 306
Siem WIS 194 142
Other/Intercompany elimination - -
Industrial Segment 15,545 616
Total 491,832 150,915

(1) Includes newbuilding program, in total 333,544 122,614

54 SIEM OFFSHORE INC. ANNUAL REPORT 2016

 CONSOLIDATED
Capital expenditures by business area 2016 2015
PSV 346,342 405,391
OSCV and WIV 671,694 473,306
AHTS Vessels 655,744 557,679
Other Vessels in Brazil 63,852 41,274
Canadian fleet 94,159 -
Other/Intercompany elimination 126,045 81,838
OSV Segment 1,957,836 1,559,488
Combat Management Systems - -
Submarine Power Cable Installation 12,954 3,483
Scientific Core-Drilling 20,594 14,761
Siem WIS 2,724 4,408
Other/Intercompany elimination - -
Industrial Segment 36,272 22,652
Total 1,994,108 1,582,140

SIEM OFFSHORE INC. ANNUAL REPORT 2016 55

 NOTES TO THE ACCOUNTS

Note 5 – Vessels, Equipment, Project Cost and Intangible Assets

CONSOLIDATED
Land and Vessels under Vessels and Capitalised
(Amounts in USD 1,000) buildings construction equipment Drydocking project cost
Purchase cost on January 1, 2015 4,128 145,015 2,084,094 54,855 17,597
Correction opening balance January 1, 2015 3,656 2,669 1,821
Capital expenditure 63 122,614 8,282 19,495 461
Movements between groups 1,024 -1,024
Vessels delivered in 2015 - -62,970 62,970 - -
The year's disposal at cost -3,805 - -151,452 -4,032 -6,179
Effect of exchange rate differences -75 -12,095 -78,085 -1,001 -
Purchase cost on December 31, 2015 310 192,563 1,930,488 71,986 12,676
Accumulated depreciation on January 1, 2015 -433 - -351,882 -32,569 -6,632
Accumulated impairment on January 1, 2015 -14,500 -14,500
Correction opening balance January 1, 2015 -1,501 -687
The year's depreciation -2 - -84,954 -16,318 -4,813
Impairment - -159,465
Movements between groups, impairment 7,000 -7,000 - -
The year's disposal of accumulated depreciation 410 - 43,186 3,722 4,836
Effect of exchange rate differences 5 - 9,611 603 -
Accumulated depreciation on December 31, 2015 -20 -7,500 -566,506 -44,563 -7,296

Net book value on December 31, 2015 291 185,063 1,363,982 27,423 5,380
Purchase cost on January 1, 2016 310 192,563 1,930,488 71,986 12,676
Capital expenditure 3 333,544 69,690 9,444 2,083
Business combinations - - 183,631 - -
Vessels delivered in 2016 - -505,685 505,018 666 -
The year's disposal at cost - -10,424 -47,073 -11,683 -27
Effect of exchange rate differences -11 25 -2,675 -84 -
Purchase cost on December 31, 2016 302 10,024 2,639,079 70,328 14,732
Accumulated depreciation on January 1, 2016 -20 - -392,540 -44,563 -7,296
Accumulated impairment on January 1, 2016 - -7,500 -173,965 - -
Movements between groups - 7,500 -7,500 - -
The year's depreciation -13 - -96,747 -12,645 -1,873
Impairment of vessels - -1,766 -58,414 - -
The year's disposal of accumulated depreciation - - 21,435 11,005 59
The year's disposal of accumulated impairment - - 24,433 - -
Effect of exchange rate differences 1 - 71 -12 -
Accumulated depreciation on December 31, 2016 -32 -1,766 -683,233 -46,216 -9,111

Net book value on December 31, 2016 270 8,258 1,955,845 24,112 5,623

The balance of capitalized project costs relate to specific contracts. The costs are amortized over the term of the specific charter
contracts.

56 SIEM OFFSHORE INC. ANNUAL REPORT 2016

The vessels are divided into the following components and economical life-times:

Component Percentage of total Economic life-time

Hull 27.00% 30 years
Cargo equipment 17.00% 30 years
Marine equipment 10.00% 15 years
Crew equipment 9.00% 15 years
Engine 18.00% 30 years
Engine system 6.00% 30 years
Combined sewerage system 13.00% 30 years
Docking 2.5 years
Equipment 3 years

INTANGIBLE ASSETS

Research and Trademarks

(Amounts in USD 1,000) Goodwill development and licences Total
Balance on January 1, 2015 17,318 2,704 9,684 29,705
Moved from Vessel and equipment - 9,240 -9,240 -
Investments - 561 7 568
Effect of exchange rate differences -1,763 -480 -69 -2,312
Purchase cost on December 31, 2015 15,555 12,025 380 27,961

Accumulated depreciation on January 1, 2015 - -2,588 -1,180 -3,768

Moved from Vessel and equipment - -777 841 64
The year's ordinary depreciation - -932 -9 -941
Impairment on intangibles - -6,704 - -6,704
Effect of exchange rate differences - 238 - 238
Accumulated depreciation on December 31, 2015 - -10,764 -347 -11,112

Net book value on December 31, 2015 15,555 1,261 33 16,849

SIEM OFFSHORE INC. ANNUAL REPORT 2016 57

 NOTES TO THE ACCOUNTS

INTANGIBLE ASSETS
Research and Trademarks
(Amounts in USD 1,000) Goodwill development and licences Total
Balance on January 1, 2016 15,555 12,025 381 27,961
Business combinations 1,123 - - 1,123
Investments - 38 - 38
Effect of exchange rate differences -581 61 7 -513
Purchase cost on December 31, 2016 16,097 12,125 387 28,608

Accumulated depreciation on January 1, 2016 - -10,764 -347 -11,111

The year's ordinary depreciation - -493 - -493
Effect of exchange rate differences - -21 -7 -28
Accumulated depreciation on December 31, 2016 - -11,277 -354 -11,632

Net book value on December 31, 2016 16,097 847 33 16,977

Trademarks and licences refer to Siem WIS AS patented technology for the drilling industry. The figures include assets under development
and developed assets, and the depreciation refers to developed assets that are not yet commercialized.

58 SIEM OFFSHORE INC. ANNUAL REPORT 2016

Impairment vessels
Tangible and intangible assets with finite lives are tested for im-
pairment if indicators are identified that would suggest that the
carrying amount of the assets exceed the recoverable amount.
The Group performs an assessment to determine any indicators
of impairment. An impairment loss is recognized if the carrying
amount exceeds recoverable amount. The recoverable amount is
the higher of an asset’s fair value less cost of disposal (FVLCOD)
and value in use (VIU) and each vessel is considered a separate
cash generating unit (CGU).
As of December 31, 2016, impairment indicators were identified
for all OSV vessels, mainly due to lower freight rates, and impair-
ment testing has been performed.
Value in use (VIU)
VIU is based on the present value of discounted cash flows for
each separate CGU for its remaining life based on market views
for future periods.
Discount rate
The discount rate used in the value-in-use calculation is a real aver-
age cost of capital after tax ranging from 7.59%–9.62%.
Operating expenses
Operational expenses that are directly attributable to the CGU are
based on budget with an annual escalation as applicable. Dry-docking
costs are included as scheduled.
Fair value less cost of disposal
FVLCOD (level 3) is determined as the amount that would be obtained
from sale of the asset in a regular market, less cost of sales, based
on an average of third party valuation reports from two independ-
ent ship brokers. The company understand that shipbrokers apply
newbuilding price parity as basis for their appraisals. Newbuilding
prices are adjusted for building supervision costs and other additional
costs, which results in an estimated delivered cost of a newbuilding
with prompt delivery adjusted for age of each vessel.
Impairment testing
Based on the assessment an impairment charge of USD 60.2 million
has been recognized which represents a write down of OSV vessels
to their recoverable amount. The recoverable amount was based
on the higher of FVLCOD and VIU calculation with each vessel as
a separate cash generating unit. Impairment of USD 60.2 million is
related to 13 vessels in the Group’s fleet.

(Amounts in USD 1,000) 2016 12/31/2016

Vessel Valuation Method Impairment recognized Recoverable amount
PSV 1 VIU 1,209 1,300
PSV 2 VIU 4,071 27,848
PSV 3 VIU 4,036 29,672
PSV 4 VIU 8,974 28,930
PSV 5 VIU 2,130 28,930
PSV 6 VIU 8,977 21,646
PSV 7 VIU 16,442 1,099
PSV 8 VIU 1,825 75
PSV 9 VIU 1,766 8,258
OSCV 1 VIU 2,668 34,319
OSCV 2 VIU 3,543 37,315
OSCV 3 VIU 2,188 82,621
OSCV 4 VIU 2,351 82,621
Total 60,180 384,634

Sensitivities
Impairment of USD 60.2 million was recognized as of December 31,
2016. The VIU calculation is mainly affected by changes in WACC
and freight rate assumptions.
A reduction of freight rate assumption of USD 1,000 per day
for remaining life for each vessel would increase the total impair-
ment by approximately USD 21.6 million. An increase in freight rate
assumption of USD 1,000 per day would imply an impairment of
approximately USD 39.6 million, relevant for only 10 of the vessels.
With an increase in freight rate assumptions of USD 1,000 day, VIU
would become higher than FVLCOD for certain vessels.
An increase in WACC of 0.5% would increase the total impairment
by approximately USD 12.6 million. A decrease in WACC of 0.5%
would imply an impairment of approximately USD 48.3 related to
only 11 of the vessels. With a decrease in WACC of 0.5%, VIU would
become higher than FVLCOD for certain vessels.

SIEM OFFSHORE INC. ANNUAL REPORT 2016 59

 NOTES TO THE ACCOUNTS

Note 6 – Investment in Subsidiaries

COMPANY (Amounts in USD 1,000) Registered office Ownership and voting share

Siem Offshore AS Kristiansand, Norway 100%

Siem Offshore Invest AS Kristiansand, Norway 100%
Siem Offshore Rederi AS Kristiansand, Norway 100%
Siem Offshore Construction Vessels AS Kristiansand, Norway 100%
Siem Offshore do Brasil SA Rio de Janeiro, Brazil 100%
Siem Offshore US Inc. Delaware, USA 100%
Siem AHTS Pool AS Kristiansand, Norway 78%
DSND Subsea Ltd London, England 100%
Siem Offshore Services AS Kristiansand, Norway 100%
Siem Offshore Management AS Kristiansand, Norway 100%
Siem Offshore Management (US) Inc Texas, USA 100%
Siem Offshore US Holding AS Kristiansand, Norway 100%
Siem Offshore Crewing (CI) Inc Cayman Islands 100%
Total value recorded in the statements of financial position of the Parent

The book value in Siem Offshore do Brasil SA was increased with USD 12.2 million, Siem Offshore Rederi AS reduced by USD 272.9 million,
Siem Offshore Construction Vessels increased by USD 11.4 million, Siem Offshore Management AS increased by USD 1.6 million, Siem
AHTS Pool AS increased by USD 275.8 million and Siem Offshore Invest AS increased by USD 0.1 in 2016.

The above companies are owned by the Parent. In addition, the subsidiaries own the following companies:

COMPANY Registered office Share and voting rights

Consub Delaware LLC Delaware, USA 100%
Aracaju Serviços Auxiliares Ltda Rio de Janeiro, Brazil 100%
Siem Offshore Crewing AS Kristiansand, Norway 100%
Siem Meling Offshore DA Stavanger, Norway 51%
Siem WIS AS Bergen, Norway 60%
Siem Offshore Maritime Personnel AS Kristiansand, Norway 100%
Siem Offshore Contractors GmbH Leer, Germany 100%
Siem Offshore Contractors EPS BV Glimmen, The Netherlands 100%
Overseas Drilling Ltd Groningen, The Netherlands 100%
Siem Offshore Canada Inc Halifax, Canada 100%
Siem Offshore Poland Sp.z.O.O Gdynia, Poland 100%
Siem Offshore Australia Pty Ltd Perth, Australia 100%
Siem Real Estate GmbH Leer, Germany 100%
Siem Offshore Contractors UK Ltd Aberdeen, UK 100%
Siem Offshore Ghana International AS Kristiansand, Norway 51%
Siem Offshore LLC Delaware, USA 100%
Consub Defesa e Tecnologia SA Rio de Janeiro, Brazil 100%
Secunda Holdings SLH Halifax, Canada 100%

60 SIEM OFFSHORE INC. ANNUAL REPORT 2016

 Revenue Net profit Share capital Book equity Cost price Book value

6,547 1,465 24 8,972 7,597 8,943

19,141 1,374 629 66,168 97,206 77,365
109,305 -59,072 6,175 272,997 310,500 310,500
9,852 -6,224 4 -4,895 11,356 11,356
27,649 -6,619 155,429 -43,130 132,253 105,156
- -6 - 5,295 - -
33,424 -28,213 139 329,703 275,825 275,825
- -4 - -187 18,352 -
12,359 -1,416 18 -704 292 3,908
9,150 348 12 2,353 5,566 7,033
232 -7 1 246 1 1
- -142 5 90 5 961
313 263 50 1,566 50 50
638,475 859,003 801,099
PHOTOGRAPHER: JAN PETER LEHNE

SIEM OFFSHORE INC. ANNUAL REPORT 2016 61

 NOTES TO THE ACCOUNTS

Note 7 – Investment in Associated Companies

Figures for associated companies included in the consolidated accounts based on the equity accounting.

December 31, 2016

Siem
COMPANY NAME PR Tracer KS Big Rovde Sentosa Secunda Offshore
(Amounts in USD 1,000) Offshore ANS Orange XVIII Ind.park AS Offshore DIS Holdings LP Ghana Ltd Total

Profit and loss account

Operating revenues 5,651 436 242 - - 6,328
Operating expenses -4,770 -21 -79 - - -4,870
EBITDA 881 415 163 - - 1,458
Depreciation and Amortisation -486 - -87 - - -573
Operating profit (EBIT) 394 415 76 - -360 885
Net financial items 9 7 -22 - - -6
Taxes - - - - - -
The year’s net profit after tax 403 422 54 - -360 - 879

Siem Offshore’s share of net 167 174 27 - -180 188

profit
Adjustments consolidated accounts - - -8 -160 -168
This year’s share of net profit
after tax 167 174 19 -160 -180 - 19

Statement of financial position

Non-current assets 0 - 1,296 - 1,296
Current assets 513 -17 6 - - 502
Cash 2,642 1,125 48 - - 3,815
Total assets 3,154 1,109 1,350 - - 5,613

Equity 3,601 1,108 616 - - - 5,324

Non-current liabilities 0 0 642 - - 642
Current liabilities -446 1 93 - - -353
Total liabilities -446 1 734 - - - 289
Total equity and liabilities 3,154 1,109 1,350 - - - 5,613

62 SIEM OFFSHORE INC. ANNUAL REPORT 2016

 Siem
PR Tracer KS Big Rovde Sentosa Secunda Offshore
COMPANY NAME Offshore ANS Orange XVIII Ind.park AS Offshore DIS Holdings LP Ghana Ltd Total
Siem Offshore's share of booked 1,488 458 308 - - 2,254
equity
Added/reduced in the period
Change of ownership% or sale
Adjustments IFRS and fair value in
excess of book value
for vessel and goodwill as of De-
15 324 124 - - 463
cember 31
Net book value in Siem Offshore
as of December 31 1,503 782 432 - - 2,717
Ownership interest 41.3% 41.3% 50.0% 0.0% 100.0% 49%

Specification of changes net book value in Siem Offshore's accounts

Net book value as of January 1 1,295 596 513 153 14,103 16,660
Investment in associated
- - - - -
companies
This year's share of net profit 167 174 27 - -180 - 188
Adjustments consolidated accounts 26 4 -107 -161 - - -238
Capital increase, correction
- -
previous year
Change of ownership% or sale - - - - -13,923 -13,923
Dividends - - - - - -
Effect of exchange rate differences 15 6 1 8 - 30
Net book value as of
December 31 1,503 780 434 - - - 2,717

Of which:
Adjustments IFRS and fair value in
excess of book value for vessel and 0 314 123 120 2,874 0 3,431
goodwill as of January 1
Capital increase, correction previ-
- - - - - -
ous year
Adjustment for depreciation IFRS - 4 - - - - 4
Amortisation of fair value in excess
of book value for vessels and - - - -120 -2,834 - -2,954
goodwill
Effect of exchange rate differences 15 6 1 - -40 -18
Fair value in excess of book value
for vessels and goodwill as of
December 31 15 324 124 0 0 0 463

SIEM OFFSHORE INC. ANNUAL REPORT 2016 63

 NOTES TO THE ACCOUNTS

Paid in Issued, not

COMPANY name Registered office CONSOLIDATED as Owner interest Voting rights capital paid in capital
PR Tracer Offshore ANS Lysaker, Norway Equity accounting 41.33% 41.33% 1,633 -
KS Big Orange XVIII Lysaker, Norway Equity accounting 41.33% 41.33% 8 5
Rovde Industripark AS Vanylven, Norway Equity accounting 50.00% 50.00% 222 -
Sentosa Offshore DIS (1) Oslo, Norway Equity accounting 0.00% 0.00% - -
Secunda Holdings LP (2) Halifax, Canada Equity accounting 100.00% 100.00% 15,519 -
Total 17,381 5

(1) Sentosa filed for bankrupcy in 2016.

(2) The Group aquired 100% of Secunda Holdings LP with effect from 1 June 2016. The Accounts of Secunda have since then fully con-
solidated into the Group accounts.

December 31, 2015

Siem
COMPANY name PR Tracer KS Big Rovde Sentosa Secunda Offshore
(Amounts in USD 1,000) Offshore ANS Orange XVIII Ind.park AS Offshore DIS Holdings LP Ghana Ltd Total

Profit and loss account

Operating revenues 6,533 452 263 4,494 33,067 44,810
Operating expenses -4,820 -21 -39 -186 -23,920 -28,985
EBITDA 1,713 431 225 4,309 9,148 15,825
Depreciation and Amortisation -862 - -105 -1,200 -6,171 -8,338
Gain on sale - - - - - -
Impairment - - - - - -
Operating profit (EBIT) 851 431 120 3,109 2,976 7,486
Net financial items 113 18 -27 -2,928 -3,500 -6,324
Taxes - - - - -455 -455
The year's net profit after tax 964 449 92 180 -978 707

Siem Offshore’s share of net 398 186 46 9 -489 150

profit
Share of net result not included - -
Adjustments consolidated accounts - - -9 - -1,701 -1,710
This year’s share of net profit
after tax 398 186 37 9 -2,190 -1,560

Statement of financial position

Non-current assets 466 - 1,563 12,244 48,852 63,125
Current assets 568 -17 71 30 4,214 4,867
Cash 2,213 698 10 1,054 4,406 8,381
Total assets 3,248 682 1,643 13,328 57,472 76,373

64 SIEM OFFSHORE INC. ANNUAL REPORT 2016

 Siem
COMPANY name PR Tracer KS Big Rovde Sentosa Secunda Offshore
(Amounts in USD 1,000) Offshore ANS Orange XVIII Ind.park AS Offshore DIS Holdings LP Ghana Ltd Total

Equity 3,132 682 781 662 22,459 27,715

Non-current liabilities - - 736 7,556 31,580 39,872
Current liabilities 116 - 126 5,110 3,433 8,786
Total liabilities 116 - 862 12,667 35,013 48,658
Total equity and liabilities 3,248 682 1,643 13,328 57,472 76,373

Siem Offshore's share of booked 1,294 282 390 33 11,229 13,229

equity
Added/reduced in the period
Change of ownership% or sale
Adjustments IFRS and fair value in
excess of book value
for vessel and goodwill as of De-
- 314 123 120 2,874 3,431
cember 31
Net book value in Siem Offshore
as of December 31 1,294 596 513 153 14,103 16,660
Ownership interest 41.3 % 41.3 % 50.0 % 5.0 % 50.0 %

Specification of changes net book value in Siem Offshore’s accounts

Net book value as of January 1 1,651 1,339 550 257 16,426 20,222
Investment in associated compa-
- - - - -
nies
This year's share of net profit 398 186 46 9 -489 150
Adjustments consolidated accounts - - -9 - -1,701 -1,710
Capital increase, correction previ-
2,427 2,427
ous year
Change of ownership% or sale - - - - - -
Dividends -513 -797 - -77 - -1,387
Effect of exchange rate differences -241 -131 -74 -35 -2,560 -3,041
Net book value as of December 31 1,295 596 513 153 14,103 16,660

Of which:
Adjustments IFRS and fair value in
excess of book value for vessel and - 373 157 144 482 1,156
goodwill as of January 1
Capital increase, correction previ-
- - - - 2,427 2,427
ous year
Adjustment for depreciation IFRS - - -9 - -274 -283
Amortisation of fair value in excess
of book value for vessels and - - - - -1,443 -1,443
goodwill
Effect of exchange rate differences - -59 -25 -24 1,682 1,574
Fair value in excess of book value
for vessels and goodwill as of
December 31 - 314 123 120 2,874 - 3,431

SIEM OFFSHORE INC. ANNUAL REPORT 2016 65

 NOTES TO THE ACCOUNTS

Voting Issued, not

COMPANY name Registered office CONSOLIDATED as Owner interest rights Paid in capital paid in capital
PR Tracer Offshore ANS Lysaker, Norway Equity accounting 41.33% 41.33% 1,633 -
KS Big Orange XVIII Lysaker, Norway Equity accounting 41.33% 41.33% 8 5
Rovde Industripark AS Vanylven, Norway Equity accounting 50.00% 50.00% 222 -
Sentosa Offshore DIS Oslo, Norway Equity accounting 5.00% 5.00% 7,514 -
Secunda Holdings LP Halifax, Canada Equity accounting 50.00% 50.00% 15,519 -
Total 24,895 5

Caption goes here PHOTOGRAPHER: XXX

66 SIEM OFFSHORE INC. ANNUAL REPORT 2016

Note 8 – Pension Costs and Obligations

CONSOLIDATED
(Amounts in USD 1,000) 2016 2015

The amount recognized in the income statement is as follows:

Service cost 1,690 2,491
Interest expense 275 285
Expected return on plan assests -221 -196
Administration cost 25 21
Social contribution 187 269
Impact of curtailment/settlement -445 -693
Net periodic pension cost (see Note 19) 1,511 2,177

The development in the defined benefit obligation is as follows:

Beginning of year 10,817 12,546
Current service cost 1,690 2,491
Interest expense 275 285
Aquisition (disposal) -505 -
Benefits paid -302 -319
Remeasurements loss/(gain) -718 -1,889
Exchange differences 241 -2,002
End of year 11,498 11,113

The development in the fair value of plan assets is as follows:

Beginning of year 8,622 8,735
Expected return on plan assets 221 196
Acquisition (disposal) -240 -
Employer's contribution 1,986 2,393
Benefits paid -301 -317
Remeasurements loss/(gain) -493 -493
Exchange differences 209 -1,596
End of year 10,005 8,918

SIEM OFFSHORE INC. ANNUAL REPORT 2016 67

 NOTES TO THE ACCOUNTS

CONSOLIDATED
(Amounts in USD 1,000) 2016 2015

Present value of funded obligations 11,498 11,113

Fair value of plan assets -10,005 -8,918
Social contribution - -
Present value of funded obligations 1,493 2,195
Present value of overfunded asset 199 -
Liability in the statement of financial position 1,692 2,195

Financial assumptions:
Discount rate 2.60% 2.70%
Expected return on funds 2.60% 2.70%
Expected wage adjustment 2.50% 2.50%
Adjustm. of the basic National Insur. amount 2.25% 2.25%
Expected pension increase 0.00% 0.00%
Number of employees in defined benefit scheme 326 334

68 SIEM OFFSHORE INC. ANNUAL REPORT 2016

Note 9 – Receivables

PARENT COMPANY CONSOLIDATED

12/31/2016 12/31/2015 (Amounts in USD 1,000) 12/31/2016 12/31/2015

Long-term receivables
4,136 3,997 Employee loans, see Note 19 4,136 3,997
55,732 21,870 Intercompany receivables - -
- - Loan to Group of Parent Company - 17,069
- - Other long term receivables 12,924 1,462
- - Convertible loan to Customer (1) 14,107 29,070
59,868 25,867 Total long-term receivables 31,168 51,598

12/31/2016 12/31/2015 Other short-term receivables 12/31/2016 12/31/2015

278 4 Prepaid expenses 51,060 18,387
- - Unbilled revenue 55,439 11,549
- - Outstanding insurance claims (2) 3,489 7,438
- - Prepaid income taxes and other taxes 2,397 2,571
- - VAT 91 565
-50 -1,620 Intercompany receivables - -
6,348 5,786 Other short-term receivables 8,500 20,148
6,298 4,169 Total other short-term receivables 120,977 60,657

(1) The sale of “Siem Daya 1” was partly financed by a Seller’s credit from Siem Offshore Inc. in the form of a Convertible Bond with four
years duration. Following an impairment test of the Convertible Bond, an impairment at USD 14.0 million was recorded.
(2) Outstanding insurance claims refer to breakdown expenses qualifying for insurance cover. The amount is less own deduction.

Note 10 – Restricted Cash

USD 5.8 million of the Company’s cash balance at year end was restricted funds of which USD 1.2 million was for tax withholdings and
USD 4.6 million represented security for bank guarantees and loans.

SIEM OFFSHORE INC. ANNUAL REPORT 2016 69

 NOTES TO THE ACCOUNTS

Note 11 – Taxes

CONSOLIDATED
(Amounts in USD 1,000) 2016 2015

Temporary differences
Deferred tax
Participation in limited liability companies -2,701 -2,701
Operating assets -30,927 -34,497
Pension funds/obligations -1,493 -2,601
Other long-term differences 6,517 4,605
Net temporary differences as of December 31 -28,604 -35,194

Tax loss carried forward -31,091 -31,091

Basis for deferred tax (tax asset) -59,695 -66,286

Deferred tax (tax asset) Norway -1,169 -8,137

Deferred tax (tax asset) Holland -3,075 -3,415
Deferred tax (tax asset) Germany -7,223 -115
Deferred tax (tax asset) -11,467 -11,668
Deferred tax asset recognized in statement of financial position as of December 31 -11,467 -11,668

There are no tax assets in the parent company.

Deferred tax assets are recognized as intangible assets as it is probable through prospective earnings that it can be utilized.
The Company is subject to taxes in several jurisdictions, where significant judgment is required in calculating the tax provision for the
Company. There are several transactions for which the ultimate tax cost is uncertain and for which the Company makes provisions based
on an assessment of internal estimates, tax treaties and tax regulations in countries of operation, and appropriate external advice. Where
the final tax outcome of these matters is different from the amounts that were initially recorded, such difference will impact the tax charge
in the period in which the outcome is determined.
The Company decided to exit the Norwegian Tonnage Tax regime effective 1 January 2015. Formally the decision was made as part
of filing of the 2015 corporate tax return. The decision was made to ensure that the Company is fully capable of complying with current
legislation. Additionally, exiting the Norwegian Tonnage Tax regime will provide more flexibility to the Company. The Norwegian Tonnage
tax Regime is a ring-fence regime which is not flexible with regards to which assets and activities that can be operated under the regime.

Tonnage tax in subsidiaries, as of December 31
(Amounts in USD 1,000) 2016 2015
Tonnage tax regime in subsidiaries, as of January 1 5 22
Tax charge -4
Paid -16
Effect of exchange rate differences 4
Total tonnage tax in subsidiaries, as of December 31 5 5

70 SIEM OFFSHORE INC. ANNUAL REPORT 2016

12/31/2016
Total tax liabilities CONSOLIDATED
(Amounts in USD 1,000) Tonnage tax regime Other tax regime Total tax liabilities
Long term tax liabilities falling due after 1 year - 1,297 1,297
Payable taxes falling due within 1 year 5 2,863 2,868
Tax liabilities 5 4,160 4,165

Tax expense 2016

(Amounts in USD 1,000) Tonnage tax regime Other tax regime Total tax expense
Taxes payable -4 842 838
Change in deferred tax/deferred tax asset - -212 -212
Total -4 629 626

12/21/2015
Total tax liabilities CONSOLIDATED
(Amounts in USD 1,000) Tonnage tax regime Other tax regime Total tax expense
Long term tax liabilities falling due after 1 year - 5,483 5,483
Payable taxes falling due within 1 year 5 3,491 3,496
Tax liabilities 5 8,974 8,979

Tax expense
(Amounts in USD 1,000) Tonnage tax regime Other tax regime Total tax expense
Taxes payable -4 -4,506 -4,510
Change in deferred tax/deferred tax asset - -227 -227
Total -4 -4,734 -4,737

Total tax liabilities PARENT COMPANY

(Amounts in USD 1,000) 12/31/2016 12/31/2015
Long term tax liabilities falling due after 1 year - 4,258
Payable taxes falling due within 1 year -292 -150
Tax liabilities -292 4,108

Total tax liabilities PARENT COMPANY

Tax expense 2016 2015
Taxes payable - -
Total - -

SIEM OFFSHORE INC. ANNUAL REPORT 2016 71

 NOTES TO THE ACCOUNTS

Note 12 – Borrowings

CONSOLIDATED Drawn amount

(Amounts in USD 1,000) 2016 2015

Secured Current Non-current Total Current Non-current Total

Bank Loans 177,834 1,091,784 1,269,618 114,660 817,474 932,134
Loans from related parties - 60,000 60,000 - 60,000 60,000
Total secured borrowings 177,834 1,151,784 1,329,618 114,660 877,474 992,134

Unsecured Current Non-current Total Current Non-current Total

Floating rate notes / Bonds - 150,812 150,812 - 147,576 147,576
Total unsecured borrowings - 150,812 150,812 - 147,576 147,576
Total borrowings 177,834 1,302,596 1,480,430 114,660 1,025,050 1,139,710
Fees and expenses - -9,537 -9,537 - -17,125 -17,125
Total borrowings incl. fees 177,834 1,293,059 1,470,893 114,660 1,007,925 1,122,585

CONSOLIDATED Fair value

(Amounts in USD 1,000) 2016 2015

Secured Current Non-current Total Current Non-current Total

Bank Loans 177,834 1,108,433 1,286,267 114,660 838,442 953,102
Loans from related parties - 60,000 60,000 - 60,000 60,000
Total secured borrowings 177,834 1,168,433 1,346,267 114,660 898,442 1,013,102

Unsecured Current Non-current Total Current Non-current Total

Floating rate notes / Bonds - 150,812 150,812 - 147,576 147,576
Total unsecured borrowings - 150,812 150,812 - 147,576 147,576
Total borrowings 177,834 1,319,245 1,497,079 114,660 1,046,018 1,160,678
Fees and expenses - -9,537 -9,537 - -17,125 -17,125
Total 177,834 1,309,708 1,487,542 114,660 1,028,893 1,143,553

72 SIEM OFFSHORE INC. ANNUAL REPORT 2016

PARENT COMPANY Drawn amount
(Amounts in USD 1,000) 2016 2015

Secured Current Non-current Total Current Non-current Total

Loans from related parties - 60,000 60,000 - 60,000 60,000

Total secured borrowings - 60,000 60,000 - 60,000 60,000

Unsecured Current Non-current Total Current Non-current Total

Floating rate notes / Bonds - 150 807 150 807 - 147,576 147,576
Total unsecured borrowings - 150,812 150,812 - 147,576 147,576
Total borrowings - 210,807 210,807 - 207,576 207,576
Fees and expenses - - - - 420 420
Total borrowings incl. fees - 210,807 210,807 - 207,996 207,996

PARENT COMPANY Fair value

(Amounts in USD 1,000) 2016 2015

Secured Current Non-current Total Current Non-current Total

Loans from related parties - 60,000 60,000 - 60,000 60,000

Total secured borrowings - 60,000 60,000 - 60,000 60,000

Unsecured Current Non-current Total Current Non-current Total

Floating rate notes / Bonds - 150,812 150,812 - 147,576 147,576
Total unsecured borrowings - 150,812 150,812 - 147,576 147,576
Total borrowings - 210,812 210,812 - 207,576 207,576
Fees and expenses - - - - 420 420
Total - 210,812 210,812 - 207,996 207,996

The Company has a portfolio of bank loans secured with mortgage in vessels. The creditor and guarantors are in general first class com-
mercial banks and state owned financial institutions with ratings on or above BBB- and AAA.
As of year-end, the Company had issued two high yield unsecured bonds of NOK 600 million and NOK 700 million respectively. It is
agreed with the bondholders that its two high yield bonds shall be extended with additional 2.75 years from original maturity date The
high yield unsecured bonds are listed on Oslo Stock Exchange, have no amortization and matures in 2020 and 2021.

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 NOTES TO THE ACCOUNTS

PARENT COMPANY CONSOLIDATED

Instalments per December 31, 2016
(USD 1,000) falling due over the next 5 years Mortgage debt Other interest bearing debt Total

2017 96,719 - 96,719

2018 100,031 - 100,031
2019 157,393 - 157,393
 69,601 2020 489,185 69,601 558,786
141,206 2021 230,453 81,206 311,659
- Thereafter 255,842 - 255,842
210,807 Total 1,329,623 150,807 1,480,430

The book value of mortgaged assets consist of non-current tangible assets and portion of the accounts receivables and amounts to USD
1,395 million at year end.
There are various financial covenants related to the Company’s debt agreements. The main prevailing covenants are:
• Value Adjusted Equity Ratio
• A ratio of Financial Indebtedness to EBITDA
• Free cash covenant
• The Company and Parent are in compliance with the financial covenants as per 31 December 2016.

CIRR loan (Both CONSOLIDATED and PARENT COMPANY) 2016 2015

Total CIRR loan commitment 76,215 88,002
CIRR loan drawn on 31.12 -76,215 -88,002
Commitment as of December 31 - -

Prior to ordering vessels from Norwegian yards, the Company applied for fixed 12-year interest rate options related to the long-term
financing of such vessels. The Company was granted such options for each of the relevant vessel by the Norwegian Export Credit Agency.
The Company made certain sale of the right to exercise such options to a first class international bank (the “Bank”). Long-term loans
drawn from the Norwegian Export Credit Agency are placed as corresponding deposits in the Bank as financial security for the loans
drawn. Recognition of the gain, related to each option, is recorded over the term of any drawn loans. In relation to sale of a vessel in 2015
which had a fixed 12-year USD interest rate associated with its mortgage debt financing, the proceeds from the sale equivalent to the
respective remaining amount of the outstanding long-term loan from the Norwegian Export Credit Agency were placed on deposit in the
Bank as financial security for the drawn loan at the date when the sale was concluded.

Unearned CIRR 2016 2015

Beginning of the year 1,418 1,786
Recognized in the profit and loss account -368 -368
Paid-back CIRR - -
Commitment as of December 31 1,050 1,418

74 SIEM OFFSHORE INC. ANNUAL REPORT 2016

Note 13 - Other Current Liabilities

PARENT COMPANY CONSOLIDATED

12/31/2016 12/31/2015 (Amounts in USD 1,000) 12/31/2016 12/31/2015
- - Social security tax, etc. 3,042 3,552
- - Unearned income 24,188 35,793
1,065 723 Accrued interest expenses 12,793 15,016
80 80 Other accrued cost, mainly regarding operating expenses vessels 9,387 3,655
- - Accrued expenses on long-term contracts 51,577 -
6,257 544 Other current liabilities 33,881 32,984
7,401 1,347 Total other current liabilities 134,868 91,001

Note 14 – Related Party Transactions

The Company’s largest shareholder, Siem Europe S.a r.l, with a holding of 83 %, and its parent company, Siem Industries Inc., are defined
as related parties. The Company has an obligation to Siem Industries Inc., for a fee of USD 250K for 2016 (2015: USD 300K). This fee is the
remuneration for the services of the two of the Board members. This fee also covers office in the Cayman Islands and administrative costs.
Details related to transactions, loans and remuneration to the Executive Management and the Board of Directors are set out in Note 19.
For the Parent, all subsidiaries listed in Note 6 are also defined as related parties.
For other related parties, the following transactions were carried out:

Sales of services CONSOLIDATED

(Amounts in USD 1,000) 2016 2015
Service to entity where director has ownership 26,150 21,493
Total 26,150 21,493

Above service is provided to companies in which a Board member has an interest. Kristian Siem is the Chairman of Siem Industries Inc.,
which is controlled by a trust whose potential beneficiaries include members of Kristian Siem’s immediate family. Siem Industries holds
an interest in Subsea 7. Siem Offshore LLC, 100% owned by the Company and Siem AHTS Pool AS, 78% owned by the Company, have
charted vessels to Subsea 7 during 2016. The amount for 2016 also include management services delivered to Siem Industries and to
subsidiaries of Siem Europe S.A R.L.

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 NOTES TO THE ACCOUNTS

Purchase of service CONSOLIDATED

(Amounts in USD 1,000) 2016 2015
Service from related parties 4,425 5,925
Service from entity where director has ownership 234,709 60,559
Total 239,134 66,484

Service delivered from related parties is mainly cost for technical management, corporate management and delivered crew. The service
is supported to Siem Meling Offshore DA, 51% owned by the Company, and is delivered by its partner in Siem Offshore DA.
Service from entity where director has ownership consist of instalment according to shipbuilding contracts with Flensburger Schiffbau-
Gesellschaft and management fee from Siem Capital UK Ltd, both owned 100% by Siem Europe; S.a.r.l.

Balance items following purchase and sale of service CONSOLIDATED

(Amounts in USD 1,000) 2016 2015
Accounts receivables 3,642 2,081
Accounts payable 222 250

Loans to related parties CONSOLIDATED

(Amounts in USD 1,000) 2016 2015
Loan to associates
At January 1 17,069 233
Drawings - 18,278
Instalments -18,600 -51
Interest charged 498 511
Interest received -1,047 -4
Exchange rate variations 2,233 -1,897
At December 31 153 17,069

The Company holds a long-term loan to Rovde Industripark AS and a long-term loan to Siem Industries Inc.The loan to Siem Industries
Inc was repaid end of 2016. Siem Offshore Invest AS owns 50% of Rovde Industripark AS.

Loans to related parties CONSOLIDATED

(Amounts in USD 1,000) 2016 2015
Short-term loan to related parties
At January 1 5,786 -
Drawings - 5,684
Instalments - -
Interest expenses 284 102
At December 31 6,070 5,786

In 2015 the Company provided a short-term loan to Research Developement & Financial Consultant Ltd. The borrower is the 49% owner
of Siem Offshore Ghana International AS. The loan is on markets term of interest.

76 SIEM OFFSHORE INC. ANNUAL REPORT 2016

Liability to related parties CONSOLIDATED
(Amounts in USD 1,000) 2016 2015
Loan to associates
At January 1 60,830 -
Reclassification - 60,158
Drawings 30,566 590
Instalments -30,000 -
Interest expenses 2,330 2,086
Interest paid -2,583 -1,956
Exchange rate variations -1 -49
At December 31 61,142 60,830

Liability to related parties CONSOLIDATED

(Amounts in USD 1,000) 2016 2015
Short-term loan to related parties
At January 1 - 60,158
Reclassification - -60,158
At December 31 - -

Long-term liability
The long-term liability consist of two fasilities. The Company has a long-term credit facility provided by Siem Industries Inc. and Siem
Meling Offshore DA has drawn a long-term liability from its partner in Siem Meling Offshore DA.

Short-term liability
End of 2014, a short-term liability of USD 60 million was drawn by Siem Offshore Inc. under a credit facility provided by Siem Industries
Inc. In 2015, the parties have agreed to change the terms of the liability from a short-term liability to a long-term liability. This is reflected
in the tables above as reclassification.
The liability is on market term of interest.

Following transactions with related parties were carried out for the parent company

Sales of service CONSOLIDATED

(Amounts in USD 1,000) 2016 2015
Service to subsidiaries 601 -
Service to associates 264 145
Total 865 7,415

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 NOTES TO THE ACCOUNTS

Purchase of service CONSOLIDATED

(Amounts in USD 1,000) 2016 2015
Service to subsidiaries 6,754 7,415
Service to associates - -
Total 6,754 7,415

Sales to subsidiaries and associates consists of guarantee provisions to Siem Offshore Rederi AS, Siem Offshore Contractors GmbH and
Secunda Canada LP.
Service from subsidiaries consists of administrative and corporate services provided by Siem Offshore Management AS. All terms used
for above transactions are at arms’ length.

Year-end balances arising from sales and purchases PARENT COMPANY

(Amounts in USD 1,000) 2016 2015
Receivables from related parties
Subsidiaries 1,027 1,129
Associates 327 522
Total 1,354 1,651
Payables from related parties
Subsidiaries 3,353 4,576
Associates - -
Total 3,353 4,576

Loans to related parties PARENT COMPANY

(Amounts in USD 1,000) 2016 2015
Loan to associates
At January 1 21,870 21,748
Reclassification 34,723 -
Drawings - -
Instalments -1,950 -
Interest expenses 1,045 502
Interest paid - -
Exchange rate variations 44 -380
At December 31 55,732 21,870

Loans to related parties

At January 1 - 4,498
Reclassification - 143
Drawings - -
Instalments - -4,761
Interest expenses - 61
Interest paid - -61
Exchange rate variations - 121
At December 31 - -

78 SIEM OFFSHORE INC. ANNUAL REPORT 2016

Total long-term loans to related parties 2016 2015
At January 1 21,870 26,246
Reclassification 34,723 143
Instalments -1,950 -4,761
Interest expenses 1,045 563
Interest paid - -61
Exchange rate variations 44 -259
At December 31 55,732 21,870

The long-term loan to subsidiaries on 31 December 2016, is held against Siem Offshore do Brasil SA and Siem AHTS Pool AS.
Loan provided to associates, Siem Offshore Contractors GmbH, a company owned 100% by the subsidiary Siem Offshore Invest AS, was
repaid during 2015.
All loans are on market terms of interest.

Short-term loan to related parties PARENT COMPANY

(Amounts in USD 1,000) 2016 2015
Short-term loan to related parties
At January 1 7,090 6,984
Reclassification - -
Drawings - -
Instalments - -
Interest expenses 327 106
Interest paid - -
Exchange rate variations - -
At December 31 7,417 7,090

The short-term loan to related parties on 31 December 2016, is held against Siem Offshore do Brasil SA and Research Developement &
Financial Consultant Ltd. The borrower is 49% owner of Siem Offshore Ghana International AS.
All loans are on market terms of interest.

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 NOTES TO THE ACCOUNTS

Note 15 – Derivative Financial Instruments – Assets (Liabilities)

PARENT COMPANY CONSOLIDATED

12/31/2016 12/31/2015 (Amounts in USD 1,000) 12/31/2016 12/31/2015
Assets Liabilities Assets Liabilities
- - Forward currency contracts - cash flow hedges - 326 1,286 4,170
- - Interest rate swaps - 214 106 2,021
- - Cross currency swaps - 7,817 59 6,705
- - Total derivative financial instruments - 8,358 1,451 12,896

Forward currency contracts

The nominal principal amount of the outstanding forward currency contracts on 31 December 2016 were USD 10.4 million (2015: 162.9
million) of which USD 8.6 million refers to USD/NOK contracts, USD 1.0 million refers to EUR/NOK contracts and USD 0.7 million refers
to GBP/NOK contracts. The forward currency contracts have been entered into in order to hedge primarily operating expenses in foreign
currencies.
For further information regarding profit and loss effect on forward currency contracts and currency options, please see Note 28.

Interest rate swaps

The nominal amounts of the outstanding interest rate swaps contracts on 31 December 2016 were USD 70.0 million (2015: USD 270.0
million ).
At 31 December 2016, the fixed rates vary from 1.13% to 2.10%. The floating rate leg of the interest rate swaps are LIBOR. Gains and
losses are recognised in the profit and loss under financial expenses.

Cross currency swaps

Cross currency swaps have been entered into in order to hedge both interest and principal payments on long term debt financings de-
nominated in other currencies than USD.

Caption goes here PHOTOGRAPHER: XXX

80 SIEM OFFSHORE INC. ANNUAL REPORT 2016

SIEM OFFSHORE INC. ANNUAL REPORT 2016 81
 NOTES TO THE ACCOUNTS

Note 16 – Guarantees

PARENT COMPANY CONSOLIDATED

12/31/2016 12/31/2015 (Amounts in USD 1,000) 12/31/2016 12/31/2015
- - Contractual guarantees to Brazilian Navy 3,912 1,681
- - Guarantees related to tax-disputes, Brazil 2,889 2,748
52,494 305,658 Contractual guarantees Power cable segment 54,518 305,658
52,494 305,658 Total guarantees 61,318 310,087

Contractual guarantees to Brazilian Navy are issued by Siem Offshore do Brasil SA. Guarantees related to disputes and ongoing tax-cases
have been raised per request from Brazilian tax authorities. Contractual guarantees provided by Parent are security for clients of Siem
Offshore Contractors GmbH.

Note 17 – Commitments

Capital expenditures contracted for at the reporting date but not yet paid are as follows:

PARENT COMPANY CONSOLIDATED

12/31/2016 12/31/2015 (Amounts in USD 1,000) 12/31/2016 12/31/2015
- - Shipbuilding contracts with variation orders - 596,594
- - Instalments paid - 200,694
- - Unpaid instalments - 395,900

PARENT COMPANY Instalments falling due over the next 2 years CONSOLIDATED
12/31/2016 12/31/2015 (Amounts in USD 1,000) 12/31/2016 12/31/2015
- - 2016 - 395,900
- - 2017 - -
- - Total - 395,900

(1) As at 31 December 2016, the Company had one vessel under construction at a Polish yard. After year-end, the contract was cancelled
due to delayed delivery. All prepayments have been refunded from refund guarantees.

82 SIEM OFFSHORE INC. ANNUAL REPORT 2016

Note 18 – Operating Expenses

PARENT COMPANY CONSOLIDATED

2016 2015 (Amounts in USD 1,000) 2016 2015
- -267 Vessel crew expenses 103,466 105,457
- -10 Other vessel operating expenses 65,192 63,678
- - Power Cable project expenses 139,111 96,191
13,187 9,516 General and administration 33,059 38,575
13,187 9,240 Total operating expenses 340,829 303,901

Note 19 – Salaries and Wages, Number of Employees

Personnel expenses (1) CONSOLIDATED

(Amounts in USD 1,000) 2016 2015
Salaries and wages 73,381 69,982
Government grants - net wages arrangement in Norway -3,852 -4,801
Payroll tax 9,416 9,740
Pension costs, see Note 8 1,511 2,177
Other benefits 8,491 5,178
Total personnel expenses 88,947 82,276

(1) Personnel expenses includes vessel crew expenses and part of general and administrative expenses, see Note 18.

Government grants are a special Norwegian seaman payroll and tax refund given to Norwegian shipping companies.
The average number of employees in the Company was 1,058 for 2016 (2015: 949), including onshore and offshore employees. There
are no employees in the Parent Company.

Payroll registered to the executive management:

(Amounts in USD 1,000) 2016 2015
Salary and other short term compensation 1,558 1,860
Total 1,558 1,860

Employees included in the above payroll in 2016 were 4 (2015: 6).

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 NOTES TO THE ACCOUNTS

Corporate management salaries and other benefits are presented in the table below:

Name Salary paid Pension premium Other benefits Share options held

2016 (Amounts in USD 1,000)

CEO Idar Hillersøy 511.5 28.4 5.5 -
CFO Dagfinn B. Lie 253.1 21.6 9.2 2,400,000
CCO Bernt Omdal 327.5 26.5 4.4 2,400,000
CHRO Tore B. Johannessen 331.5 31.1 8.1 2,400,000

Shares in the Company held by members of corporate management in 2016 were 1,538,161 (2015: 1,538,161).

2015 (Amounts in USD 1,000)

CEO Idar Hillersøy 1) 237.2 28.0 1.9 -
CEO Terje Sørensen 1) 379.6 33.1 39.7 -
CFO Dagfinn B. Lie 211.2 21.3 10.2 2,400,000
COO Svein Erik Mykland 2) 263.7 35.6 6.9 -
CCO Bernt Omdal 260.2 26.1 2.5 2,400,000
CHRO Tore B. Johannessen 268.0 31.4 3.0 2,400,000

1) Idar Hillersøy replaced Terje Sørensen as CEO with the effect from July 2015.
2) COO Svein Erik Mykland left the Company with the effect from December 2015.

The Board of Directors of Siem Offshore Inc. has authorized the award of two programs of Stock Options to seven employees of the Com-
pany. See Note 31 for more information.

Loan to executive management

(Amounts in USD 1,000) 2016 2015
Balance January 1 716 3,331
Changes in executive management - -2,760
New loan raised - 227
Instalments - -
Effect of currency differences 12 -83
Balance December 31 727 716

Loan on December 31, 2016 (Amounts in USD 1,000) Amount Interest Terms
Loan to executive management 727 11 Share loan (1)
Total 727 11

Loan on December 31, 2015 (Amounts in USD 1,000) Amount Interest Terms
Loan to executive management 716 9 Share loan (1)
Total 716 9

84 SIEM OFFSHORE INC. ANNUAL REPORT 2016

(1) Share loan: The loans are repayable by the employee when the employee’s shares in the Company are realized or if the employee
leaves the Company. Loans equivalent to USD 4 million are secured by pledges in relevant shares.

The Remuneration paid to the Board of Directors in 2016 was USD 407K (2015: USD 430K).

Auditor’s remuneration
PARENT COMPANY CONSOLIDATED
2016 2015 (Amounts in USD 1,000) 2016 2015
87 96 Audit Fee 452 484
15 101 Audit Fee Other 212 226
10 11 Tax/Legal Assistance 10 41
13 6 Other consultants, Fees 41 259
126 214 Total auditor’s remuneration 715 1,010

Note 20 – Operating Leases as Lessee

The Company has entered into different operating leases for office premises, office machines and communication satellite equipment for
the vessels. The lease period for the lease agreements varies and most of the leases contain an option for extention.
The lease costs were as follows:

PARENT COMPANY CONSOLIDATED

2016 2015 (Amounts in USD 1,000) 2016 2015
- - Annual lease payment on operational leases 3,042 2,985

As of 31 December 2016, the Company had some commitments relating to lease agreements which fall due as follows:

PARENT COMPANY Fall due CONSOLIDATED

- 2017 1,937
- 2018 1,072
- 2019 1,182
- Total 4,191

Net present value of future commitments relating to lease agreements are calculated to be USD 3,838 thousand for the Company. There
are no lease agreements for the Parent. The interest rate in the calculation of net present value is 5%.

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 NOTES TO THE ACCOUNTS

Note 21 – Financial Items

PARENT COMPANY CONSOLIDATED

2016 2015 (Amounts in USD 1,000) 2016 2015

Financial income
4,499 3,491 Interest income 8,487 4,223
3,308 - Other financial income 3,984 6,961
7,807 3,491 Total financial income 12,471 11,184

Financial expenses
-12,752 -12,210 Interest expenses -50,146 -51,149
-73 -16 Other financial expenses -5,166 -3,529
-12,825 -12,225 Total financial expenses -55,312 -54,677

Other financial items

64 1,265 Net currency gain/(loss) -64,154 22,110
64 1,265 Total currency gain/(loss) -64,154 22,110

Net currency gain/(loss) includes an unrealized loss of USD 3.8 million related to intercompany transactions and USD 60.3 million related
to a terminated hedge accounting program for the Brazilian subsidiary..
The net currency gain/(loss) for the Parent of USD 64 thousand includes an intercompany gain of USD 563 thousand.
The weighted average cost of debt for the Company was approximately 3.9% p.a. at 31 December 2016, including the effect of fixed
interest rate swap agreements.

Note 22 – Earnings per Share

2016 2015
Weighted average number of shares outstanding (1,000) 842,021 518,318
Weighted average number of shares diluted (1,000) 842,021 757,123
Result attributable to shareholders (USD 1,000) -142,436 -186,687
Loss per share attributable to equity shareholders -0.17 -0.36
Loss per share diluted attributable to equity shareholders -0.17 -0.36

Option program to executive management, see Notes 19 and 31.

86 SIEM OFFSHORE INC. ANNUAL REPORT 2016

Note 23 – Contracts in Progress

CONSOLIDATED
Recognized Accumulated per
(Amounts in USD 1,000) 2016 December 31 2016
Revenue 177 572 241 696
Cost 129 439 145 064
Total 48 133 96 632

Assets/liabilities
December 31 2016
Prepaid project cost Unearned revenue Accrued project cost Unbilled revenue
Revenue 19 296 - 47 192
Cost 16 624 51 577 -
Total 16 624 19 296 51 577 47 192

Recognized Accumulated per

(Amounts in USD 1,000) 2015 December 31 2015
Revenue 120 890 233 680
Cost 93 670 173 461
Total 27 220 60 219

Assets / liabilities
December 31 2015
Prepaid project cost Unearned revenue Accrued project cost Unbilled revenue
Revenue - 28 378 - 3 510
Cost 14 918 - 9 867 -
Total 14 918 28 378 9 867 3 510

Contracts in progress refer to activity within the Power Cable Installation Segment and Combat Management Systems (CMS), see Note 4.
The activity within Power Cable Installation segment included six projects in progress at year-end 2016. These projects are in an various
phases, and margin for 2016 is recognized only on projects with progress exceeding 25 %.
At year-end 2016, the activity within CMS had two projects in progress. The degree of completion varies from 29% to 94%. Margin for
2016 is recognized only on projects with progress exceeding 25%.
All projects in progress at year-end 2016 are estimated to generate a positive contribution over the total project period.
There are no contracts in progress in the Parent Company.
See note 2.9 for analysis of sensitivity.

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 NOTES TO THE ACCOUNTS

Note 24 – Asset Held for Sale

CONSOLIDATED
(Amounts in USD 1,000) 2016 2015
Purchase cost per January 1 3,459 -
Moved from Fixed asset 1,099 3,459
The year’s disposal at cost -3,459 -
Purchase cost on December 31 1,099 3,459

Booked value for the vessel “Siem Supplier” was transferred from fixed assets to asset held for sale in December 2016.
Booked value for the vessel “Siem Carrier” was transferred from fixed assets to asset held for sale in December 2015.

Note 25 – Other Gain/(Loss) on Sale of Assets

PARENT COMPANY CONSOLIDATED

2016 2015 (Amounts in USD 1,000) 2016 2015
- - Gain/(loss) on sale of assets, net -423 16,317
- - Total -423 16,317

2016
The net loss for the Company on sale of assets of USD 0.4 million consists of loss from the sale of the “Panuke” and other equipment.

2015
The net gain for the Company on sale of asses of USD 16.3 million consist of gain from the sale of the OSCV “Siem Daya 1” by USD 16.6
million, and a loss on sale of other equipment of USD 0.3 million.

88 SIEM OFFSHORE INC. ANNUAL REPORT 2016

Note 26 – Listing of the 20 Largest Shareholders as of 31 December 2016

SHAREHOLDER NUMBER OF SHARES OWNER INTEREST

SIEM EUROPE S.A R.L 699,110,008 83.03%
ACE CROWN INTERNATIONAL LIMITED 79,201,509 9.41%
WATERMAN HOLDING LTD 13,500,000 1.60%
EGD CAPITAL AS 6,000,000 0.71%
SØRENSEN, TERJE 4,404,442 0.52%
MERRILL LYNCH, PIERCE, FENNER & SM 3,727,644 0.44%
ROVDEFRAKT AS 2,550,000 0.30%
DG-INVEST AS 1,538,161 0.18%
TONGA INVEST AS 1,500,000 0.18%
MYKLAND, SVEIN ERIK 1,350,000 0.16%
OPSAHL, STIAN 963,687 0.11%
FORSVARETS PERSONELLSERVICE 953,976 0.11%
CORTEX AS 952,000 0.11%
OSLOKANALEN AS 850,000 0.10%
BRUUN, LARS 699,656 0.08%
TIMUCUAN FUND LTD. 646,268 0.08%
BARRUS CAPITAL AS 515,697 0.06%
LEROLI AS 500,000 0.06%
KEBI AS 500,000 0.06%
MACAMA AS 473,500 0.06%
Total 20 largest shareholders 819,936,548 97.38%
Other shareholders 22,084,832 2.62%
Total number of outstanding shares 842,021,380 100.00%

Siem Europe S.a r.l. is the main shareholder of Siem Offshore Inc. and is controlled by a trust whose potential beneficiaries include mem-
bers of Kristian Siem’s immediate family. Kristian Siem, who is Director of the Company, is also the Chairman of Siem Industries Inc., who
is the parent company of Siem Europe S.a r.l.

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 NOTES TO THE ACCOUNTS

Note 27 – Subsequent Events

• Concluded the sale of the 1999-built PSV “Siem Supplier”.

• Cancelled a shipbuilding contract for the 4th dual fuel PSV due to excessive delay in delivery. The Company has been repaid all pre-
delivery installments made under the contract covered by refund guarantees.
• Received approval from the bondholders of its two bond issues, the Senior Unsecured Bond Issue 2013/2018 and the Senior Unsecured
Bond Issue 2014/2019, for the extension of the original maturity dates by 2.75 years and for certain amendments to terms, conditions
and financial covenants. A condition to the bondholders’ approval is that the the Company must undertake a rights issue of NOK 190
million. The Company’s largest shareholder, Siem Europe S.a r.l., has agreed to underwrite the entire issue.
• Secunda Canada LP, a wholly-owned subsidiary of Siem Offshore Inc., has received a 4-year firm contract plus 5 yearly options from
a major Canadian customer. The Company will mobilize one of its vessels from the North Sea region for the contract. After necessary
upgrades, the vessel will operate offshore Newfoundland and be engaged in supply, standby-and-rescue and ice management operations.

Note 28 – Gain/(Loss) on Currency Derivative Contracts

PARENT COMPANY CONSOLIDATED

2016 2015 (Amounts in USD 1,000) 2016 2015
- - Unrealized gain/(loss) 871 2,074
- - Realized gain/(loss) -8,634 -32,849
- - Total -7,762 -30,775

Further details related to the currency derivative contracts are set out in Note 15.

90 SIEM OFFSHORE INC. ANNUAL REPORT 2016

Note 29 – Financial Instruments by Category

Below is a comparison by category for carrying amounts and fair values of all of the Company’s financial instruments.
CONSOLIDATED
(Amounts in USD 1,000) Loans and Assets at fair value through Available for
December 31, 2016 receivables the profit or loss sale Total
Assets as per statement of financial position
Derivative financial instruments 48,230 - - 48,230
Other short term receivables (1) 69,917 - - 69,917
CIRR Loan deposit 76,215 - - 76,215
Long term receivables 31,168 - - 31,168
Cash and cash equivalents 101,323 - - 101,323
Total 326,853 - - 326,853

(1) Prepayments do not qualify as a financial instrument and are not included in above amount. Excluded prepayments amount to USD
51,060, see Note 9.

CONSOLIDATED
(Amounts in USD 1,000) Liabilities at fair value through Other financial
December 31, 2016 the profit or loss liabilities Total

Liabilities as per statement of financial position

Accounts payable - 20,783 20,783
Borrowings - 1,470,893 1,470,893
CIRR Loans - 76,215 76,215
Other non-current liabilities - 47,382 47,382
Other current liabilities - 134,868 134,868
Adjustments for liabilities that do not qualify as a financial
- -31,790 -31,790
instrument (1)
Derivative financial instruments 8,358 - 8,358
Total 8,358 1,718,351 1,726,708

(1) Non-financial liabilities do not qualify as a financial instrument and are not included in above amount. Excluded liabilities amount to
USD 31,790 consisting of USD 2,868 in Taxes Payable, USD 1,692 in Pension Liability, USD 3,042 in Social Security Payable and USD
24,188 in Unearned Income. See Note 13 for information about Social Security Payable and Unearned Income.

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 NOTES TO THE ACCOUNTS

CONSOLIDATED
(Amounts in USD 1,000) Loans and Assets at fair value through Available for
December 31, 2015 receivables the profit or loss sale Total

Assets as per statement of financial position

Derivative financial instruments - 1,451 - 1,451
Accounts receivable (1) 46,147 - - 46,147
CIRR Loan deposits 88,002 - - 88,002
Long term receivables 51,598 - - 51,598
Cash and cash equivalents 148,753 - - 148,753
Total 334,500 1,451 - 335,951

(1) Prepayments do not qualify as a financial instrument and are not included in above amount. Excluded prepayments amount to USD
18,387, see Note 9.
CONSOLIDATED
(Amounts in USD 1,000) Liabilities at fair value through Other financial
December 31, 2015 the profit or loss liabilities Total

Liabilities as per statement of financial position

Accounts payable 8,395 8,395
Borrowings 1,122,585 1,122,585
CIRR Loans 88,002 88,002
Other non-current liabilities 34,142 34,142
Other current liabilities 91,001 91,001
Adjustments for liabilities that do not qualify as a financial instrument (1) - -41,604 -41,604
Derivative financial instruments 12,896 - 12,896
Total 12,896 1,302,521 1,315,417

(1) Non-financial liabilities do not qualify as a financial instrument and are not included in above amount. Excluded liabilities amount to
USD 12,802 consisting of USD 3,496 in Taxes Payable, USD 2,258 in Pension Liability, USD 3,552 in Social Security Payable and USD
3,496 in Unearned Income. See Note 13 for information about Social Security Payable and Unearned Income.

PARENT COMPANY
(Amounts in USD 1,000) Loans and Assets at fair value through Available for
December 31, 2016 receivables the profit and loss sale Total

Assets as per statement of financial position

Trade and other instruments (1) 86,113 - - 86,113
Cash and cash equivalents 195,433 - - 195,433
Total 281,546 - - 281,546

(1) Prepayments do not qualify as a financial instrument and are not included in above amount. Excluded prepayments amount to USD
278. See Note 9.

92 SIEM OFFSHORE INC. ANNUAL REPORT 2016

 PARENT COMPANY
(Amounts in USD 1,000) Liabilities at fair value through the Other financial
December 31, 2016 profit and loss liabilities Total

Liabilities as per statement of financial position

Borrowings falling due after 1 year - 210,807 210,807
Accounts payable - 56 56
CIRR Loan - 14,300 14,300
Total - 225,163 225,163

PARENT COMPANY
(Amounts in USD 1,000) Loans and Assets at fair value through Available for
December 31, 2015 receivables the profit and loss sale Total

Assets as per statement of financial position

Trade and other instruments (1) 55,766 - - 55,766
Cash and cash equivalents 269,293 - - 269,293
Total 325,059 - - 325,059

(1) Prepayments do not qualify as a financial instrument and are not included in above amount. Excluded prepayments amount to USD
4, see Note 9.
PARENT COMPANY
Liabilities at fair value through Other financial
(Amounts in USD 1,000) the profit and loss liabilities Total

Liabilities as per statement of financial position

Borrowings falling due after 1 year 207,852 207,852
Accounts payable - 144 144
CIRR Loan - 19,208 19,208
Total - 227,203 227,203

Note 30 – Inventories

PARENT COMPANY CONSOLIDATED

2016 2015 (Amounts in USD 1,000) 2016 2015
- - Fuel 1,819 2,514
- - Spareparts 7,290 5,225
- - Total inventories 9,109 7,739

SIEM OFFSHORE INC. ANNUAL REPORT 2016 93

 NOTES TO THE ACCOUNTS
Note 31 – Share-based Payments
The Company has entered into two Employee share schemes with
selected employees.
On the 13 January 2013, the Company entered into a Share option
agreement as follows: The Board of Directors of Siem Offshore
Inc. has authorized the award of 14,000,000 share options to eight
key employees of the Company. The exercise price is NOK 8.45
per share. The exercise price of the granted options is equal to the
market price of the shares on the date of the grant.
The Options can be exercised as follows:
2014
20% of the total number beginning on January 18th 2014.
2015
40% of the total number beginning on January 18th 2015, less any
options previously issued.
2016
60% of the total number beginning on January 18th 2016, less any
options previously issued.
2017
80% of the total number beginning on January 18th 2017, less any
options previously issued.
2018
100% of the total number beginning on June 18th 2018, less any
options previously issued.
The exercise period shall in no event be later than the date falling
10 years after the award date.The group has no legal or constructive
obligation to repurchase or settle the options in cash. No options
were exercised during 2015 or 2016.
The weighted average fair value of options granted during the
period determined using the Black-Scholes valuation model was
NOK 3.72 per option.
The significant inputs into the model were weighted average
share price of NOK 8.45 at the grant date, exercise price of NOK
8.45, volatility of 23%, dividend yield of 0%, an expected option life
of 10 years and an annual risk-free interest rate of 2.32% (4.13%).
The volatility measured at the standard deviation of continuously
compounded share returns is based on statistical analysis of daily
share prices over the last three years.
See Note 19 for the total expense recognised in the income
statement for share options granted to certain employees.
94 SIEM OFFSHORE INC. ANNUAL REPORT 2016
Value of employee services as per December 31, 2016 are recognized
under Retained earnings at USD 3,125.
On the 2 April 2014, the Company entered into a Share option agree-
ment with selected employees. The Board of Directors of Siem Off-
shore Inc. has authorized the award of 3,000,000 share options to
ten key employees of the Company. The exercise price is NOK 9.07
per share.The exercise price of the granted options is equal to the
market price of the shares on the date of the grant.
The Options can be exercised as follows:
2017
60% of the total number beginning on April 2nd 2017, less any op-
tions previously issued.
2018
80% of the total number beginning on April 2nd 2018, less any op-
tions previously issued.
2019
100% of the total number beginning on April 2nd 2019, less any
options previously issued.
The exercise period shall in no event be later than the date falling 10
years after the award date. The group has no legal or constructive
obligation to repurchase or settle the options in cash. The weighted
average fair value of options granted during the period determined
using the Black-Scholes valuation model was NOK 3.65 per option.
The significant inputs into the model were weighted average
share price of NOK 9.07 at the grant date, exercise price of NOK 9.07,
volatility of 25.92%, dividend yield of 0%, an expected option life of
10 years and an annual risk-free interest rate of 2.90%. The volatility
measured at the standard deviation of continuously compounded
share returns is based on statistical analysis of daily share prices
over the last five years.
During 2015 three members of the option program left the
Company. They have been taken out of the progam and previously
expensesd option costs are reversed. See Note 19 for the total ex-
pense recognised in the income statement for share options granted
to certain employees.Value of employee services as per December
31, 2016 are recognized under Retained earnings at USD 0.391.
 Excercise price per share option, NOK (*weighted average) Options outstanding

At 1 January 2014 8,45* 14,000,000

Granted 9.07 3,000,000
Forfeited -
Excersised -
Expired -
At 31 December 2014 8,56* 17,000,000

At 1 January 2015 8,56* 17,000,000

Granted -
Forfeited -7,200,000
Excersised -
Expired -
At 31 December 2015 8,56* 9,800,000

At 1 January 2016 8,56* 9,800,000

Granted -
Forfeited -
Excersised -
Expired -
At 31 December 2016 8,56* 9,800,000

SIEM OFFSHORE INC. ANNUAL REPORT 2016 95

 NOTES TO THE ACCOUNTS

Note 32 – Business Combinations

At the end of May 2016, Siem Offshore Inc. acquired the remaining From the date of acquisition, revenues of USD 27,5 million and a
50% of the shares in Secunda. Following this transaction, Siem loss of USD -1,2 million is included in these consolidated financial
Offshore Inc. owned and controlled 100% of the shares in Secunda. statements related to the acquisition of Secunda.
Details of the purchase consideration, the net assets acquired and Under the assumption that the acquisition had taken place on
bargain gain recognized are as follows: January 1, 2016, revenue and loss of the combined group would
have been USD 480,1 million and USD -155,9 million respectively
Purchase consideration for the remaining 50% shares was USD 1. (unaudited amounts).
A bargain purchase gain was recorded at USD 18.3 million fol-
The assets and liabilities recognized as a result of the acquisition lowing the acquisition of the remaining 50% shares in Secunda.
are as follows; The Bargain Gain has been tested against fair market value for
the previous held 50% shares in Secunda, the fair market value of
(Amounts in USD 1,000) the individual vessels and the fair market value of the contracts.
Based on such analysis management has concluded to recognize
Cash 4,599
a bargain gain of USD 18.3 million in the income statement.
Accounts receivable 4,750
The acquisition of the remaining 50% shares was a consequence
Other current receivables 977 of the previous owner’s decision not to contribute to further funding
Vessels and equipment including favorable of Secunda following certain circumstances when Secunda took
110,849
time charter contracts delivery a new PSV in May 2016.
Other non-current assets 1,194 Secunda had a contract with a Polish yard for the delivery of a
Accounts payable -1,649 highly specialized newbuilt PSV that was to commence operations
Other current liabilities -3,122 for a major oil-company offshore Canada.
Borrowings -84,480
As the vessel was delayed from the yard in Poland, the client noti-
Other non-current liabilities -51
fied Secunda that it intented to cancel the charter party due to
Net identifiable assets acquired 33,067
the delayed delivery. Following this information, the financing bank
Gross bargain gain recognized 33,067 informed Secunda that the financing commitment for the vessel
was terminated with immediate effect.
Business combination was achieved in stages and the following Siem, as the most active owner of Secunda, managed to get
information explains the loss recognized on equity interest held im- a tender for a alternative financing package in place, however at
mediately before the acquisition and the net bargain gainrecognized: less favorable terms than the original financing. Further, the import
duty that would be payable to Canandian customs was no longer
Loss on equity interest held immediately considered as being a part of the vessel purchase price, and had to
-14,755 be financed by funds provided by the owners of Secunda.
before the acquisition
Gross bargain gain recognized 33,067 At this stage, the previous owner declared that he did not accept
the increased risk following the delayed delivery of the vessel and
Net bargain gain recognized 18,312
that he would not contribute with shareholder’s funding that was
a term under the debt agreement.
Further, the previous owner declared that his investment in Se-
cunda was not regarded as part of his core business.

96 SIEM OFFSHORE INC. ANNUAL REPORT 2016

CORPORATE SOCIAL RESPONSIBILITY

As a company incorporated in the Cayman Islands, Siem Offshore

Inc. (“The Company”) is an exempted company duly incorporated
under the laws of the Cayman Islands and subject to Cayman Island
laws and regulations with respect to corporate governance.

C
ayman Islands corporate law
is to a great extent based
on English Law. In addition,
due to the Company being a
Norwegian Tax Resident, the Norwegian
Accounting law applies to the Company.
According to the Norwegian Accounting
Act $3-3c the Company should provide
a statement on social responsibility. The
statement should include which actions
are taken by The Company to integrate
human rights, employee’s rights and so-
cial conditions, external environment and
the fight against corruption in its business
strategies, daily operations and in relation
to its interested parties.
The Board of Directors has reviewed
this statement. It is the opinion of the
Board of Directors that the Company
complies with regulations in the Nor-
wegian Accounting law with respect to
Social Responsibility reporting.

Code of Business Conduct

The Company has established a Code of PHOTOGRAPHER: JAN PETER LEHNE
Business Conduct policy expressing its
non-tolerance on corruption as well as
dealing with ethical principles of the Company. The Company is fully to ensure that only proper transactions are entered into by the Com-
committed to perform its business with integrity and transparency pany, that such transactions have proper management approval,
throughout its global operations. As stated in the Code of Business that such transactions are properly accounted for in the books and
Conduct policy, it is the policy of the Company to conduct its busi- records of the Company, and the reports and financial statements
ness in accordance with all applicable laws and regulations and in of the Company are prepared in a timely manner, understandable
an ethically responsible manner. and fully, fairly and accurately reflect such transactions.
Protection of health, safety and the prevention of pollution to the The Company observes fair employment practices in every as-
environment are primary goals of the Company. All of our employees pect of its business.
and representatives must conduct their duties and responsibilities in The Company conducts its business with honesty and integ-
compliance with the Company’s policy on Health, Safety and Environ- rity and competes fairly and ethically within the framework of the
ment, applicable law and industry standards relating to health and law. The Company has entered into agreements with well-known
safety in the workplace and prevention of pollution to the environment. subcontractors for the delivery of technical management and
The Company has implemented policies and control procedures crew management services to some of the Company’s vessels.

SIEM OFFSHORE INC. ANNUAL REPORT 2016 97

 CORPORATE SOCIAL RESPONSIBILITY
The Company has also entered into shipbuilding contracts with
high standard shipbuilding yards in Norway, Poland and Germany.
These subcontractors are subject to review on an ongoing basis.
The Company expects that all of its business partners have the
same approach to business dealing.
Improper payments
The Code of Business Conduct does also include policies on improper
payments. The Company does not tolerate any actions / payments
which could be viewed as improper payments.
No gift, hospitality or travel benefit may be offered to or requested
or accepted from any third party if that benefit could be seen to be
disproportionately generous or otherwise be seen as something
which may induce or make the recipient feel obliged to reciprocate
by way of improperly performing his or her function.
The Company and its directors, officers and employees will
not accept any gift, hospitality or travel benefit either directly or
indirectly from business partners, against making commitment,
recommending or promoting a certain conduct or position by the
Company or otherwise seek to gain personal benefit in relation to
twhe Company’s business dealings.
Likewise, the Company does not itself offer inducements to
anyone associated with business partners to promote a certain
conduct or position by such business partner.
The Company and any of its people shall not pay money or provide
gifts, entertainment, hospitality or any other thing or service of value
to any Government Official. This prohibition extends to payments to
consultants, agents or other intermediaries when the payer knows
or has reason to believe that some part of the payment will be used
to bribe or otherwise influence a public official.
Political contributions are not authorized.
Corporate Social Responsibility
The Company respects and promotes harmonious working rela-
tionship with the local communities where it operates, but refrains
from participating in local politics. The Company seeks to foster a
sustainable business for its many stakeholders.
The Company is fully committed to comply with local laws and
regulations throughout its global operations.
The Company is committed to employ local staff where applicable
and possible in all countries where it is operating and conducting
business. The Company is committed to providing equal opportunity
and fair treatment to all individuals on the basis of merit, without
discrimination on the grounds of race, colour, religion, national origin,
sex, pregnancy, age, disability, marital status or other characteristics
protected by applicable law.
98 SIEM OFFSHORE INC. ANNUAL REPORT 2016
The Company is dedicated in creating a high-quality working
environment under which its people respect and trust each other
such that everyone acts in an honest, friendly and proactive way
with a responsible attitude and high moral standards. The Company
prohibits bullying and harassment in any form including sexual,
racial, ethnic, and other forms of harassment.
At Christmas 2012 The Company donated funds to Jaynii Street-
wise in Ghana. No funds have been donated in 2016. Jaynii Streetwise
is a charity and non-governmental organization founded in Ghana by
Jay Borquaye and Emmanuel (Nii) Quartey in the deprived area of
Jamestown (Accra) with the aim of improving the lives of children
and youth. Jaynii Streetwise was born out of their Jaynii Cultural
Troupe, a traditional music and dance group which has performed
at countless functions locally and internationally.
Over time, Jaynii has identified the need to support ongoing
efforts by government and civil society to keep children off the
streets and in school. As a poor, marginalized and deprived area,
many children are found walking on the beach and in the streets
during school hours. Most of these children come from very deprived
homes. So far Jaynii has identified fifty children aged between 4 to
16 years who have been enrolled into the Streetwise Project, based
at Jaynii Beach, a small stretch of beach just below the Jamestown
lighthouse which is now their centre.
These 24 girls and 26 boys, who were spending their childhood
walking aimlessly on the Jamestown Beach, are now enrolled at
schools in the communities- Accra Sempe Primary School in Classes
1 to 6 and St. Thomas Day Care Centre. Jaynii, without assistance
from parents, buys them school uniforms, shoes, bags and exercise
books and registers them in school. After school hours, the children
go to Jaynii Beach where they get fed as well as get extra classes,
homework help and afternoon activities and entertainment.
During 2013 the Company has also donated funds for the funeral
and family support of passed away gardener of the Company’s
office in Ghana.
The Company has furthermore previously donated funds to Pro
Criança Cardíaca in Rio de Janeiro, Brasil, a non-profit organiza-
tion helping children with heart diseases. Pro Criança Cardíaca is
a hospital founded in 1996 by Cardiologist Doctor Celia Rose. The
mission of the organization is to provide medical care to cardiac
children focusing in cardiac surgery and any other procedure that
requires high technology treatment to children. No funds have been
donated in 2016
The Company has also in previous years made donations to
the Norwegian Salvation Army, Redningsselskapet and the street
magazine “Klar”. No donations have been made in 2016.
 RESPONSIBILITY STATEMENT

We confirm, to the best of our knowledge that the financial statements

for the period 1 January to 31 December 2016 have been prepared in
accordance with current applicable accounting standards, and give
a true and fair view of the assets, liabilities, financial position and
profit or loss of the entity and the group taken as a whole. We also
confirm that the Board of Directors’ Report includes a true and fair
review of the development and performance of the business and the
position of the entity and the group, together with a description of
the principal risks and uncertainties facing the entity and the group.

19 April 2017

Eystein Eriksrud Kristian Siem John C. Wallace

Chairman Director Director
(Sign.) (Sign.) (Sign.)

Michael Delouche Alexander Monnas Idar Hillersøy

Director Director Chief Executive Officer
(Sign.) (Sign.) (Sign.)

106 SIEM OFFSHORE INC. ANNUAL REPORT 2016

BOARD OF DIRECTORS
The Company has a Board of five Directors. Members of the
Company’s management are not members for the Board, but the
Company’s management does attend Board meetings.
Eystein Eriksrud (born 1970), Chairman
Mr Eriksrud joined the Board of Directors of Siem Offshore in May
2010 and became Chairman in May 2012. Mr Eriksrud is the Deputy
CEO of the Siem Industries Group. Prior to joining Siem Industries
in October 2011, Mr Eriksrud was a partner in the Norwegian law
firm Wiersholm Mellbye & Bech, from 2005, working as a business
lawyer, particularly in the shipping, offshore and oil service sectors.
Mr Eriksrud was Group Company Secretary of the Kvaerner Group
from 2000–2002 and served as Group General Counsel of the Siem
Industries Group from 2002–2005. He is a candidate of jurisprudence
from the University of Oslo. Mr Eriksrud has served on the boards
of Privatbanken ASA and Tinfos AS as well as a number of other
boards. He is the Chairman of Flensburger Schiffbau-Gesellschaft
mbH & Co. KG and Electromagnetic Geoservices ASA and a Director
of Subsea 7 SA and a director of several subsidiaries in the Siem
Industries Group. Mr Eriksrud is a Norwegian citizen.
Kristian Siem (born 1949), Board member
Mr. Siem is the Chairman of Siem Industries Inc., Subsea 7 SA and
Siem Shipping Inc. (former Star Reefers Inc.) and is a Director of
Siem Offshore Inc., Flensburger Schiffbau Gesellschaft mbH, North
Atlantic Smaller Companies Investment Trust plc. and London and
Frupor S.A., Portugal. Mr Siem is a Norwegian citizen.
Michael Delouche (born 1957), Board Member
Mr. Delouche is the president and the secretary of Siem Industries
Inc. and is in charge of the Company’s operations at the head office
in George Town, Cayman Islands. He is a director of Siem Shipping
Inc. Mr. Delouche received degrees in civil engineering (structural)
and business and was previously an audit manager with KPMG Peat
Marwick LLP. Mr. Delouche is a US citizen.
John C. Wallace (born 1938), Board member
John C. Wallace is a Chartered Accountant having qualified with
PricewaterhouseCoopers in Canada in 1963, after which he joined
Baring Brothers & Co., Limited in London, England. Prior to his re-
tirement in 2010, he served for over twenty-five years as Chairman
of Fred. Olsen Ltd., a London-based corporation that he joined in
1968 and which specializes in the business of shipping, renewable
energy and property development. He received his B. Comm degree
majoring in Accounting and Economics from McGill University in
1959. In November 2004, he successfully completed the International
Uniform Certified Public Accountant Qualification Examination and
has received a CPA Certificate from the State of Illinois. Mr. Wallace
also retired from the board of directors of Ganger Rolf ASA and
Bonheur ASA, Oslo, both publicly-traded shipping companies with
interests in offshore energy services and renewable energy. He is a
Director of Callon Petroleum Co , USA where he is Chairman of the
Audit Committee. He is a former director of Secunda Holdings LP.
He was inducted as a 2011 Industry Pioneer by the Offshore Energy
Centre in Houston. Mr. Wallace is a Canadian citizen.
Alexander Monnas (born 1951), Board Member
Mr. Monnas is a non-executive advisor to Daiwa Capital Markets
Europe Ltd., and attends the Board Risk Committee and the Audit
Committee. Mr. Monnas is also an advisor on investment and finan-
cial matters in Geneva, and on the board of a private trust company.
He is a board member of Siem Offshore Inc. Mr. Monnas has spent
over 40 years in the commercial and investment banking industries,
specialising in financial markets. He was CEO of Daiwa Securities’
European operations from 1994 to 2001, and was a board member
of Veripos Inc. from 2012 to 2014. He has a degree in Chemistry.
Mr. Monnas is a British citizen.
SIEM OFFSHORE INC. ANNUAL REPORT 2016 107
 FINANCIAL CALENDAR 2017

Siem Offshore Inc. will release financial figures on the following dates in 2017:

Q1 2017 Monday 8 May

Q2 2017 Thursday 24 August

Q3 2017 Thursday 26 October

The Annual General Meeting of the Company will be held on Friday 5 May 2017.

108 SIEM OFFSHORE INC. ANNUAL REPORT 2016

 INNOVENTI
Siem Offshore Inc

c/o Siem Offshore AS

Nodeviga 14
4610 Kristiansand
Norway

POSTAL ADDRESS
P.O. Box 425
N-4664 Kristiansand S, Norway

TELEPHONE
+47 38 60 04 00

TELEFAX
+47 37 40 62 86

E-MAIL
siemoffshore@siemoffshore.com

www.siemoffshore.com

Siem Offshore Inc. Annual Report 2016

 Appendix C: Subscription Form

SIEM OFFSHORE INC. SUBSCRIPTION FORM

RIGHTS ISSUE Securities no. ISIN KYG813131011

General information: The terms and conditions of the Rights Issue by Siem Offshore Inc.
(the “Company”) are set out in the prospectus dated 26 May 2017 (the “Prospectus”). Terms
defined in the Prospectus shall have the same meaning in this Subscription Form. All
announcements referred to in this Subscription Form will be made through Oslo Børs’
information system under the Company’s ticker “SIOFF”.
Subscription procedures: The subscription period is from 30 May 2017 to 16:30 hours
(CET) on 12 June 2017 (the “Subscription Period”). Correctly completed Subscription Forms
must be received by the Manager before the end of the Subscription Period at the following
address: Swedbank, P.O Box 1441 Vika, N-0115 Oslo, Norway, telefax +47 23 23 80
11 (the “Subscription Office”). The subscriber is responsible for the correctness of the
information filled in on the Subscription Form. Subscription Forms that are incomplete or
incorrectly completed, or that are received after the end of the Subscription Period, and any
subscription that may be unlawful, may be disregarded, at the discretion of the Manager on
behalf of the Company. Subscribers who are residents of Norway with a Norwegian
personal identification number may also subscribe for Offer Shares through the VPS
online subscription system by following the link on the following website:
www.swedbank.no. Subscriptions made through the VPS online subscription system must
be duly registered before the expiry of the Subscription Period. Neither the Company nor the
Manager may be held responsible for postal delays, unavailable fax lines, internet lines or
servers or other logistical or technical problems that may result in subscriptions not being
received in time or at all by the Subscription Office. Subscriptions are irrevocable and binding
upon receipt and cannot be withdrawn, cancelled or modified by the subscriber after having
been received by an Subscription Office, or in the case of subscriptions through the VPS online
subscription system, upon registration of the subscription.
Subscription Price: The Subscription Price in the Rights Issue is NOK 1.90 per Offer Share.
Subscription Rights: Registered holders of the Company’s shares (the “Existing
Shareholders”) as appearing in the VPS as of 23 May 2017 (the “Record Date”) will be granted
Subscription Rights giving a preferential right to subscribe for, and be allocated, the Offer
Shares. Each Existing Shareholder will be granted 0.1187 Subscription Rights per existing
share registered with the respective Existing Shareholder on the Record Date. The number of
Subscription Rights issued to each Existing Shareholder will be rounded down to the nearest
whole Subscription Right. Each Subscription Right will, subject to applicable securities laws,
give the right to subscribe for and be allocated one Offer Share in the Rights Issue. Over-
subscription and subscription without Subscription Rights is permitted. Subscription Rights
not used to subscribe for Offer Shares before 12 June 2017 will lapse without
compensation to the holder, and, consequently, will be of no value from that point
in time.
Allocation of Offer Shares: The Offer Shares will be allocated to the subscribers based on
the allocation criteria set out in the Prospectus. The Company reserves the right to reject or
reduce any subscription for Offer Shares not covered by Subscription Rights. The Company
will not allocate fractional Offer Shares. Allocation of fewer Offer Shares than subscribed for
does not impact on the subscriber’s obligation to pay for the Offer Shares allocated.
Notification of allocated Offer Shares and the corresponding subscription amount to be paid by each subscriber is expected to be distributed in a letter on or about 15
June 2017. Subscribers who have access to investor services through an institution that operates the subscriber’s VPS account should be able to see how many Offer
Shares they have been allocated from 12:00 hours (CET) on or about 14 June 2017.
Payment: In completing this Subscription Form, or registering a subscription through the VPS online subscription system, subscribers authorise Swedbank to debit
the subscriber’s Norwegian bank account for the total subscription amount payable for the Offer Shares allocated to the subscriber. Accounts will be debited on or
about 19 June 2017 (the “Payment Date”), and there must be sufficient funds in the stated bank account from and including the date falling 2 banking day prior to the
Payment Date. Subscribers who do not have a Norwegian bank account must ensure that payment for the allocated Offer Shares is made on or before the Payment
Date. Details and instructions can be obtained by contacting Swedbank, telephone: +47 23 23 80 00. Swedbank is only authorized to debit each account once, but
reserves the right (but has no obligation) to make up to three debit attempts through 27 June 2017 if there are insufficient funds on the account on the Payment Date.
Should any subscriber have insufficient funds in his or her account, should payment be delayed for any reason, if it is not possible to debit the account or if payments
for any other reasons are not made when due, overdue interest will accrue and other terms will apply as set out under the heading “Overdue and missing payments”
below.

PLEASE SEE PAGE 2 OF THIS SUBSCRIPTION FORM FOR OTHER PROVISIONS THAT ALSO APPLY TO THE SUBSCRIPTION

DETAILS OF THE SUBSCRIPTION

Subscriber’s VPS account: Number of Number of Offer Shares subscribed (For broker:
Subscription Rights: (incl. over-subscription): consecutive
no.)

SUBSCRIPTION RIGHT’S SECURITIES NUMBER: ISIN KYG812291170 Subscription Price Subscripti

per Offer Share: on amount
NOK 1.90 to be paid:
NOK

IRREVOCABLE AUTHORIZATION TO DEBIT ACCOUNT (MUST BE COMPLETED BY SUBSCRIBERS WITH A NORWEGIAN BANK ACCOUNT)
Norwegian bank account to be debited for the payment for Offer Shares allocated (number of
Offer Shares allocated x NOK 1.90).
(Norwegian bank account no.)

I/we hereby irrevocably (i) subscribe for the number of Offer Shares specified above subject to the terms and conditions set out in this Subscription Form and in the
Prospectus, (ii) authorize and instruct the Manager (or someone appointed by any of them) acting jointly or severally to take all actions required to transfer such Offer
Shares allocate to me/us to the VPS Registrar and ensure delivery of the beneficial interests to such Offer Shares to me/us in the VPS, on my/our behalf, (iii) authorize
Swedbank to debit my/our bank account as set out in this Subscription Form for the amount payable for the Offer Shares allotted to me/us, and (iv) confirm and warrant
to have read the Prospectus and that I/we are eligible to subscribe for Offer Shares under the terms set forth therein.

111
 Place and date
must be dated in the Subscription Period.
Binding signature
The subscriber must have legal capacity. When signed on
behalf of a company or pursuant to an authorization,
documentation in the form of a company certificate or
power of attorney must be enclosed.

INFORMATION ON THE SUBSCRIBER – ALL FIELDS MUST BE COMPLETED

First name

Surname/company

Street address

Post code/district/
country
Personal ID number/ organization
number
Nationality

E-mail address

Daytime telephone number

112
ADDITIONAL GUIDELINES FOR THE SUBSCRIBER

Regulatory issues: In accordance with the Markets in Financial Instruments Directive (“MiFID”) of the European Union, Norwegian law imposes
requirements in relation to business investments. In this respect, the Manager must categorize all new clients in one of three categories: eligible
counterparties, professional clients and non-professional clients. All subscribers in the Rights Issue who are not existing clients of the Manager will be
categorized as non-professional clients. Subscribers can, by written request to the Manager, ask to be categorized as a professional client if the
subscriber fulfils the applicable requirements of the Norwegian Securities Trading Act. For further information about the categorization, the subscriber
may contact Swedbank (Swedbank, Filipstad Brygge 1, P.O Box 1441 Vika, N-0115 Oslo, Norway). The subscriber represents that he/she/it is
capable of evaluating the merits and risks of a decision to invest in the Company by subscribing for Offer Shares, and is able to bear
the economic risk, and to withstand a complete loss, of an investment in the Offer Shares.

Selling Restrictions: The attention of persons who wish to subscribe for Offer Shares is drawn to Section 14 “Selling and transfer restrictions” of the
Prospectus. The Company is not taking any action to permit a public offering of the Subscription Rights or the Offer Shares (pursuant to the exercise
of the Subscription Rights or otherwise) in any jurisdiction other than Norway. Receipt of the Prospectus will not constitute an offer in those jurisdictions
in which it would be illegal to make an offer and, in those circumstances, the Prospectus is for information only and should not be copied or redistributed.
Persons outside Norway should consult their professional advisors as to whether they require any governmental or other consent or need to observe
any other formalities to enable them to subscribe for Offer Shares. It is the responsibility of any person wishing to subscribe for Offer Shares under
the Rights Issue to satisfy himself as to the full observance of the laws of any relevant jurisdiction in connection therewith, including obtaining any
governmental or other consent which may be required, the compliance with other necessary formalities and the payment of any issue, transfer or
other taxes due in such territories. The Subscription Rights and Offer Shares have not been registered, and will not be registered, under the United
States Securities Act of 1933, as amended (the “U.S. Securities Act”) and may not be offered, sold, taken up, exercised, resold, delivered or transferred,
directly or indirectly, within the United States, except pursuant to an applicable exemption from the registration requirements of the U.S. Securities
Act and in compliance with the securities laws of any state or other jurisdiction of the United States. The Subscription Rights and Offer Shares have
not been and will not be registered under the applicable securities laws of Australia, Canada or Japan and may not be offered, sold, taken up, exercised,
resold, delivered or transferred, directly or indirectly, in or into Australia, Canada or Japan. This Subscription Form does not constitute an offer to sell
or a solicitation of an offer to buy Offer Shares in any jurisdiction in which such offer or solicitation is unlawful. A notification of exercise of Subscription
Rights and subscription of Offer Shares in contravention of the above restrictions may be deemed to be invalid. By subscribing for the Offer Shares,
persons effecting subscriptions will be deemed to have represented to the Company that they, and the persons on whose behalf they are subscribing
for the Offer Shares, have complied with the above selling restrictions.

Execution Only: The Manager will treat the Subscription Form as an execution-only instruction. The Manager is not required to determine whether
an investment in the Offer Shares is appropriate or not for the subscriber. Hence, the subscriber will not benefit from the protection of the relevant
conduct of business rules in accordance with the Norwegian Securities Trading Act.

Information exchange: The subscriber acknowledges that, under the Norwegian Securities Trading Act and the Norwegian Commercial Banks Act
and foreign legislation applicable to the Manager there is a duty of secrecy between the different units of the Manager as well as between the other
entities in its respective groups. This may entail that other employees of the Manager or the its respective groups may have information that may be
relevant to the subscriber and to the assessment of the Offer Shares, but which the Manager will not have access to in their capacity as Manager for
the Offering.

Information barriers: The Manager is a securities firm that offer a broad range of investment services. In order to ensure that assignments
undertaken in the Manager's corporate finance departments are kept confidential, the Manager's other activities, including analysis and stock broking,
are separated from the its respective corporate finance departments by information walls. Consequently the subscriber acknowledges that the
Manager's analysis and stock broking activity may conflict with the subscriber’s interests with regard to transactions in the Shares, including the Offer
Shares.

VPS account and mandatory anti-money laundering procedures: The Offering is subject to the Norwegian Money Laundering Act of 6 March
2009 No. 11 and the Norwegian Money Laundering Regulations of 13 March 2009 No. 302 (collectively, the “Anti-Money Laundering Legislation”).
Subscribers who are not registered as existing customers of the Manager must verify their identity to one of the Manager and the Receving Agent in
accordance with requirements of the Anti-Money Laundering Legislation, unless an exemption is available. Subscribers who have designated an existing
Norwegian bank account and an existing VPS account on the Subscription Form are exempted, unless verification of identity is requested by the
Manager. Subscribers who have not completed the required verification of identity prior to the expiry of the Subscription Period will not be allocated
Offer Shares. Participation in the Offering is conditional upon the subscriber holding a VPS account. The VPS account number must be stated in the
subscription form. VPS accounts can be established with authorized VPS registrars, who can be Norwegian banks, authorized securities brokers in
Norway and Norwegian branches of credit institutions established within the EEA. Establishment of a VPS account requires verification of identity to
the VPS registrar in accordance with the Anti-Money Laundering Legislation. However, non-Norwegian investors may use nominee VPS accounts
registered in the name of a nominee. The nominee must be authorized by the Financial Supervisory Authority of Norway.

Terms and conditions for payment by direct debiting - securities trading: Payment by direct debiting is a service the banks in Norway provide
in cooperation. In the relationship between the payer and the payer’s bank the following standard terms and conditions apply:

a) The service “Payment by direct debiting – securities trading” is supplemented by the account agreement between the payer and the
payer’s bank, in particular Section C of the account agreement, General terms and conditions for deposit and payment instructions.

b) Costs related to the use of “Payment by direct debiting – securities trading” appear from the bank’s prevailing price list, account
information and/or information given in another appropriate manner. The bank will charge the indicated account for costs incurred.

c) The authorization for direct debiting is signed by the payer and delivered to the beneficiary. The beneficiary will deliver the instructions to
its bank that in turn will charge the payer’s bank account.

d) In case of withdrawal of the authorization for direct debiting the payer shall address this issue with the beneficiary. Pursuant to the
Norwegian Financial Contracts Act the payer’s bank shall assist if the payer withdraws a payment instruction that has not been
completed. Such withdrawal may be regarded as a breach of the agreement between the payer and the beneficiary.

e) The payer cannot authorize payment of a higher amount than the funds available on the payer’s account at the time of payment. The
payer’s bank will normally perform a verification of available funds prior to the account being charged. If the account has been charged
with an amount higher than the funds available, the difference shall immediately be covered by the payer.

f) The payer’s account will be charged on the indicated date of payment. If the date of payment has not been indicated in the authorization
for direct debiting, the account will be charged as soon as possible after the beneficiary has delivered the instructions to its bank. The
charge will not, however, take place after the authorization has expired as indicated above. Payment will normally be credited the
beneficiary’s account between one and three working days after the indicated date of payment/delivery.

g) If the payer’s account is wrongfully charged after direct debiting, the payer’s right to repayment of the charged amount will be governed
by the account agreement and the Norwegian Financial Contracts Act.

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Overdue and missing payments: Overdue payments will be charged with interest at the applicable rate under the Norwegian Act on Interest on
Overdue Payment of 17 December 1976 No. 100; 9.00% per annum as of the date of the Prospectus. If the subscriber fails to comply with the terms
of payment or should payments not be made when due, the subscriber will remain liable for payment of the Offer Shares allocated to it and the Offer
Shares allocated to such subscriber will not be delivered to the subscriber. In such case the Company and Swedbank reserve the right to, at any time
and at the risk and cost of the subscriber, re-allot, cancel or reduce the subscription and the allocation of the allocated Offer Shares, or, if payment
has not been received by the third day after the Payment Date, without further notice sell, assume ownership to or otherwise dispose of the allocated
Offer Shares in accordance with applicable law. If Offer Shares are sold on behalf of the subscriber, such sale will be for the subscriber’s account and
risk and the subscriber will be liable for any loss, costs, charges and expenses suffered or incurred by the Company and/or Swedbank as a result of,
or in connection with, such sales. The Company and/or Swedbank may enforce payment for any amounts outstanding in accordance with applicable
law.

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 Siem Offshore Inc. Siem Offshore Management AS
Harbour Place 5th Floor Nodeviga 14
P.O.Box 10718 4610 Kristiansand
George Town Norway
Grand Cayman KY1-1006
Cayman Islands

Manager

Swedbank
Filipstad Brygge 1
P.O Box 1441 Vika
N-0115 Oslo
Norway
Tel: +47 23 23 80 00
Fax: +47 23 23 80 11
www.swedbank.no

Legal counsel

Advokatfirmaet Wiersholm AS
Dokkveien 1
Postboks 1400 Vika, 0115 Oslo
Norway
Tel: +47 21 02 10 00

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