MODEC, Inc.
Mid-term Business Plan 2017

May 2015

Table of Contents

1. Review of previous Mid-term Business Plan (2012-2014)
2. Environment analysis for the next three years
3. Countermeasures and strategies
4. Quantitative goals
5. What we want to be 10 years from now

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1. Review of previous Mid-term Business Plan (2012-2014)
2. Environment analysis for the next three years

3. Countermeasures and strategies
4. Quantitative goals

5. What we want to be 10 years from now31-1. Review : Projects
Secured orders in Brazil and Africa, our major target regions2012 Petrobras
Iracema NorteFPSO(Brazil)2013

 Petrobras
Carioca FPSO
(Brazil)2014

 Petrobras
Tartaruga FPSO(Brazil)

 Tullow TEN FPSO
(Ghana)4

1-2. Review : Financial Results
Revenue 378.5 billion yen (3,140 million USD)
Operating profit 8.5 billion yen (71 million USD) /(12.8 billion yen before deferred profit adjustment)

Revenue(Million USD)

Revenue

Operating Profit

Operating Profit(Million USD)

4,000

80.0

3,500

70.0

3,000

60.0

2,500

50.0

2,000

40.0

1,500

30.0

1,000

20.0

500

10.0

00.0
2009

2010

20112012

201320145

1-3. Review : New Business Development
Executed R&D for LNG and other new businessskwidLiBro® FLNG



Executed FEED**FEED: Front-End Engineering & Design

DWAL

Floating Wind & Current
Hybrid Power GenerationsystemCompleted prototype unit
Sunken unit underinvestigation

Deep Water Air LiftsystemR&D ongoing
Cooperating with JOGMEC
for basic research61. Review of previous Mid-term Business Plan (2012-2014)
2. Environment analysis for the next three years

3. Countermeasures and strategies
4. Quantitative goals

5. What we want to be 10 years from now72-1. External Environment
Later half of 2014-2015

2016

Mid-long term view

Macroeconomy

Economy slowed down,
shale oil & geopolitical risks
impacted

Shale development will slow
down, energy demand will
increase due to economic
recovery

Energy demand will increase
due to growth in global
population and economy of
emerging countries

Oil prices

Plunged, hit bottom

Level off, then will start torecover

Will rise graduallyFielddevelopment

Field development deferred(E&P limited to keep thecurrent production volume)

Capital spending will returnfor new field developments

Number of projects will
increase esp. in ultra-deepwater, field life will get longer

Competition

Pursuing limited number ofviable projects

Same environment
will continueMarket entry (in deep watermarket) by mid-small FPSO
contractors and new players

Million
bopd
100
8060

Mtoe

Oil Production
2.9
3.2

5.5
5.3

6.2
6.4

6.6
7.7

6.4
9.2

24.3 24.8 25.1 25.3 25.3

 Tight oil Other unconventional
Conventional

4020

Unconventional

56.8 57.8 58.7 58.9 58.9

01990 2013 2020 2025 2030 2035 2040
Source: World Energy Outlook 2014 (IEA)*Offshore ratio: MODEC analysis based on various data Offshore
1990=20%*
2013&onwards=30%*
 Onshore

Primary Energy Demand

5,000

Oil
Coal

4,000

Gas

3,000

2,000

Bioenergy

1,000

Nuclear
Other renewables
Hydro0
1990

2000

2010

2020

Source: World Energy Outlook 2014 (IEA)
Mtoe: Million Tonnes of Oil Equivalent

2030

2040

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2-1. FPS Market
Floating Production Systems (in service, on order, prospects）as of April 2015
FPS market will continue to expand
Northern Europe

China

27

Canada98104816

Mediterranean

2

Gulf of Mexico

Southeast Asia

1336227141080Africa

54

Southwest Asia & Middle East
44

Brazil101241661■ FPSO, Semi, TLP, Spar, FLNG,Production barge, FSRU, MOPU
■ FSO

60

Other South America &Caribbean

Australia & New Zealand■Planning■Appraisal

In service

1918

Prospects ■Bidding/Final Design
On order41339315

Source: Floating Production Systems Quarterly Report - 2015 Q2 Report (EMA) *1 project in bidding & final design phase for unidentified region is not included.

492-2. Internal Environment
Earning
Capability

EPCI* Revenue from EPCI has expanded due to increase in projectsizes and stable order intake
 Constant profit from charter business has increased as anoutcome of accumulation of good charter projects

 Project Management capability has been strengthened forexecution of larger, deeper and technically challenging projects

 Robust track record of 45 EPCI projects

Cash FlowAssetManagement

 Project finance for investment in SPCs has increased due toincrease in project sizes Know-how from approx. 150 years of cumulative O&M*
experiences Technical challenges in Asset Management phase have emerged
due to increase in project sizes and complexity as well as longer
field life

*EPCI: Engineering, Procurement, Construction and Installation*O&M: Operation & Maintenance10

2-2. Robust Charter/O&M Experiences
2000
O&M experiences:
7 years +EPCI track record:
11 projects +(At year-end 2000)

2015-2017■ Charter projects（First oil during 2015-2017）■ Charter/O&M projects（including option periods）

O&M experiences:
200 years +EPCI track record:
45 projects +MV29(At year-end 2017)

MV27
MV25
MV26

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2-2. Focus on High-spec Projects
FPSO Awards (2010-2015) As of April 2015
Production(bopd)
200,000

Contractor managed project

MODEC Project

Oil company managed project

High-spec projects(Larger/Complex/Deeper)

Larger production volume150,000

100,000

50,000Deeper
00500

1,000

1,500

2,000

2,500

3,000
Water depth (m)Source: Floating Production Systems Quarterly Report - 2015 Q2 Report (EMA)

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2-3. Environment Analysis Summary
InternalStrength

Current
Environment
Challenges

MainIssues
to besolvedWell-balanced earnings structure
between EPCI and charterTrack record in large scale and deep
water projects



150 years of cumulative O&Mexperiences

Increasing technical challenges in AssetManagement phase

Increasing investment cash out

ExternalOpportunities

Threats

Expansion of technicallychallenging projects esp. inultra-deep water market in along term

Increasing customer needs forlong-term, stable productionCurrent weakness in oilmarketMarket entry by new players

How to meet ever-increasing customers needs (technical capabilities, cost,operation service quality) and Differentiation from other players

How to meet the technical challenges in Asset Management phase

How to enhance our finance-ability to satisfy ever-increasing investment cash out

What is needed to achieve
higher customer satisfaction

Strong commitment toASSET INTEGRIGY13

2-4. What is ASSET INTEGRITY?
ASSET INTEGRITY isAssetManagement

To design and construct afacility which can produce oiland gas stably and efficiently
in a long period as required byclients,
FEED

and
To maintain the productivity
and condition of the facility inorder to provide expected
services through O&M andAsset Management

ASSET
INTEGRIGY

Operation &Maintenance

MODEC is able to realize the ASSETINTEGRITY in a high level by utilizing
in-house know-how gained throughlifecycle experiences of facilities –EPCI

FEED, EPCI, O&M and Assetmanagement.

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1. Review of previous Mid-term Business Plan (2012-2014)
2. Environment analysis for the next three years

3. Countermeasures and strategies
4. Quantitative goals

5. What we want to be 10 years from now15

3-1. ASSET INTEGRITY enhancement
Pursue higher customer satisfaction

Customerperspective

 Provision of design and production service necessaryfor long term and stable oil and gas production

ASSET INTEGRITY enhancement New technology, innovative production facility

Execution of R&D

ASSET INTEGRITY enhancement
 Strengthening asset management function, andcooperation with design & EPCI teams
Internalbusinessprocess

 Utilization of asset management know-how
 Research and development for facility optimization

perspective

Execution of R&D
 Execution of R&D by utilizing MODEC’s coretechnologies and know-how

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3-2. New Business Development
Continuous endeavor for the future business
Natural gas hydrates

Submarine hydrothermal
polymetallic ore deposit

Source: JOGMEC(Left) Burning of synthetic natural gas hydrates
Source: MH21 Research Consortium

Rare earth elements

Source: JOGMEC, University of Tokyo

Development of deepwater mineral resources
Utilization of MODEC’s
core technologies and experiences
Floating facility
Mooring system

Asset management
O&M

Project Management

Offshore production
technology

Design for limited
space on board

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3-3. Strengthening CompetitivenessPursue higher customer satisfaction
Customerperspective

 Provision of FEED, EPCI and production services
with competitive price and quality

Strengthening competitivenessStrengthening competitiveness Streamlining of EPCI and O&M, strengthening cost
control, while keeping EPCI quality
Internalbusinessprocess
perspective

Efficient organization Reinforcement of cooperation between function-based
subsidiaries (for total optimization and consolidatedmanagement) Enhancement of group cash management for efficientuse of funds

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3-4. Countermeasures and Strategies
Financeperspective

Customerperspective

Revenue
Net profit
ROE

3,500 million USD
100 million USD
10%

Pursue higher customer satisfaction
ASSET INTEGRIGY
enhancement

Internalbusiness
process

Strengthening
competitiveness
Execution of R&D

perspective

Efficient organization
 Robust Project Management resources
Growthperspective

 Strategic resource injection to asset
management

Continuous commitment toCompliance & HSE

 Strengthening engineering capability

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1. Review of previous Mid-term Business Plan (2012-2014)
2. Environment analysis for the next three years

3. Countermeasures and strategies
4. Quantitative goals

5. What we want to be 10 years from now

20

4. Quantitative Goals
Robust & well-muscled
structure to realize
further growthRevenue(Million USD)

size

Net profit

color

Net profit ratio

207%

numberNet profit (million USD)
Net profit ratio(%)

Improvement ofearning capability

3,000
2,000

100
2.9%

Expansion inbusiness scale

Increase in Revenue(with market re-expansion)x Improved earning capability

392.4%= Increase in Profit

1,00020112014

2017

Revenue

1,672 mil USD

3,140 mil USD

3,500 mil USD

Net profit

39.5 mil USD

45.0 mil USD

100 mil USD

Net profit ratio

2.4%

1.4%

2.9%

ROE

5.9%

4.9%

10%

2020

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1. Review of previous Mid-term Business Plan (2012-2014)
2. Environment analysis for the next three years

3. Countermeasures and strategies
4. Quantitative goals

5. What we want to be 10 years from now

22

5. What we want to be
10 years from now
MODEC WILL BE THE NO.1 ENERGY PRODUCTIONSERVICE PROVIDER by utilizing variety of floating
facilities.

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Disclaimer

The information contained in this material is based ona set of assumptions and is not guaranteed as to its
materialization of financial visions or corporate strategies.

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