Prospectus - SBM Offshore

adverse weather and environmental conditions, mechanical failures, crew negligence or navigation errors. In
relation to these and other risks, the Group maintains the following insurance coverage:
· Insurance cover for hull and machinery, which covers loss of, or damage to, a vessel due to marine
accidents (such as collisions), grounding, weather conditions, war, piracy and terrorism.
· Protection and indemnity insurance, which covers liabilities incurred while operating vessels,
including injury to crew and third parties, loss of and damage to third party property, and pollution.
· Construction insurance that covers physical loss and/or physical damage to the Group's projects. If a
customer purchases this insurance instead of the Group, then the customer contract typically provides
that the insurance cover is required to be of the same standard and provide the same coverage as that
which the Group would typically purchase.
· Insurance for general liability, including product liability.
The Group does not typically purchase professional indemnity, delay in start up or business interruption
insurances.
Pursuant to the settlement reached with Talisman under the Yme Agreement, Talisman, as the operator of the
field, will be responsible for the decommissioning of the MOPU. The Group will take over the MOPU when it
exits the 500 meter zone, where the platform is currently located, and will be responsible for transporting it to a
yard where the MOPU will be scrapped. During decommissioning, ownership of the MOPUstor will remain
with the Group. Upon handover by Talisman of the MOPU to the Group, ownership of the subsea structure
will pass to Talisman. The Group has put insurance in place to cover the primary risks during the
decommissioning stage, during which the ownership and risk (including the risk of collapse) of the MOPUstor
will remain with the Group, and intends to put insurance in place to cover risks during the transportation to the
yard where the MOPU will be scrapped.
The Group believes that it is adequately insured in accordance with industry standards against normal risk in
its operations and its hull and machinery insurances have recently been adjusted to better reflect replacement
values. However, this insurance coverage generally may not continue to be available on reasonable terms.
Should risks materialise (including the assertion of one or more large claims against the Group) that are not
covered by the Group's or customer insurances, that exceed the available insurance coverage, or that are
repudiated or otherwise not honoured by the insurer for any reason (including the insolvency of that insurer, or
as a result of default by the relevant customer), this may cause the Group to suffer loss or, even if honoured by
the insurer, may result in changes in the insurance policies (including insurance premium increases or the
imposition of a large deductible or co-insurance requirement). This may have an adverse effect on the Group's
business, results and financial condition.
(u) Maintenance and repair for the Group's vessels and equipment may require substantial
expenditure.
The Group is required to maintain its vessels and equipment to certain standards and to maintain the
certification of such vessels and equipment. Such maintenance may involve substantial costs. The Group's
operations are dependent on the operating efficiency and reliability of its vessels and equipment in terms of
operational worthiness and the safety environment. Any unexpected breakdown or non-performance of vessels
and equipment is difficult to predict and in the event of downtime, additional costs and losses may be incurred
by the Group's customers arising from the disruption of their workflow and scheduled activities and some of
these costs may be passed on to the Group. Rectification of the breakdown or non-performance, depending on
its severity, may also require replacement or repair of key components and there may be long lead times
required in the procurement of these components. Such rectification on the affected vessels and equipment
may require the Group to incur significant costs and may result in such vessels and equipment being out of
service and being unable to generate revenue for the Group over extended periods of time. In such an event,
the Group may be unable to meet its contractual obligations with its customers, which in turn may lead to
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