Prospectus - SBM Offshore

2. RISK FACTORS
Investing in the Offer Securities involves a high degree of risk. Potential investors should carefully consider
the risks and uncertainties described below together with all of the other information in this Prospectus before
deciding to invest in the Offer Securities. If any of the events or developments and risks described below
actually occurs, the Group's business, financial condition, prospects or results of operations could be
materially adversely affected. In that event, the value of the Offer Securities could decline and investors could
lose all or part of the value of their investments.
Although the Group believes that the risks and uncertainties described below are the risks and uncertainties
which the Group currently considers to be material for the Group, these are not the only risks the Group faces.
Additional risks and uncertainties not presently known to the Group, or that the Group currently deems
immaterial, may also have a material adverse effect on the Group's business, financial condition, prospects or
results of operations and could adversely affect the price of the Offer Securities.
Before making an investment decision with respect to the Offer Securities, prospective investors should consult
their own stockbroker, bank manager, lawyer, auditor or other financial, legal and tax advisers and carefully
review the entire Prospectus including the risks associated with an investment in the Offer Securities. Any
investment decision should also be considered in light of the prospective investor's personal circumstances.
2.1 Risks related to the industry in which the Group operates
(a) The Group's business and operations depend upon conditions prevailing in the oil and gas industry
and changes in the prevailing market conditions could have a material adverse effect on the
Group's business, results or financial condition.
The Group's business and operations depend principally upon conditions prevailing in the oil and gas industry
and, in particular, the exploration and production (E&P) spending of oil and gas companies. Demand for
Floating Production, Storage and Offloading (FPSO) services and services of other categories of offshore
exploration, development and production vessels can be negatively affected by a number of political and
economic factors beyond the Group's control, including, but not limited to, fluctuations in worldwide demand
for oil and gas, decreases in oil and gas prices, fluctuations in investments in offshore developments, political
and economic conditions in areas where offshore oil and gas exploration occurs, disappointing exploration
results and the introduction of new regulatory restrictions. On the supply side, there is uncertainty when it
comes to the level of construction of new production units, the upgrading and maintenance of existing
production units, the conversion of tankers into FPSO vessels, the level and cost of future demobilisation and
redeployment activities and alternative uses for equipment as market conditions change.
Historically, demand for offshore exploration, development and production has been volatile and linked to the
price of oil and gas. Low oil prices typically lead to a reduction in exploration as oil companies scale down
their own E&P budgets. In the Lease and Operate segment, most of the Group's units are leased on long-term
contracts, and this, to some extent, reduces the Group's exposure against intermediate oil and gas fluctuations.
The probability of existing contracts being extended or new contracts being obtained, as well as the
attractiveness of the terms of new contracts, may be negatively affected by reductions in actual reservoir
reserves or in low oil and gas prices generally, which in turn could adversely affect the Group's business,
results and financial condition.
In addition, a down-turn in global economic growth may result in the Group's customers reducing their E&P
budgets and spending and delaying, limiting or cancelling proposed and existing projects, which would
negatively impact demand for the Group's products and services and impact the prices the Group is able to
charge its customers. In an economic downturn, the Group, its customers and its partners may also find it more
difficult to raise capital due to limitations on, and limited availability of, credit, together with other
uncertainties in the credit markets. By way of example, in the period from mid-2008 through to mid-2009, no
FPSO contracts were awarded to the Group as customer E&P budgets reduced as a result of the global
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