INDEX

APRIL 09

SUBSEA 7 INC. MANDATORY NOTIFICATION OF TRADE
SUBSEA 7 INC. AGM NOTICE AND PROXY STATEMENT
SUBSEA 7 INC. ANNUAL OVERVIEW OF RELEASED INFORMATION
SUBSEA 7 INC. FIRST QUARTER 2009 RESULTS

MAY 09

SUBSEA 7 INC MINUTES OF 2009 AGM

JULY 09

SUBSEA 7 ANNOUNCES CONTRACT AWARD IN ANGOLA
PRIMARY INSIDER NOTIFICATION FORMS
SUBSEA 7 INC. SECOND QUARTER 2009 RESULTS

AUGUST 09

SUBSEA 7 CONFIRMS MAJOR CONTRACT AWARD ON BLOCK 18 FOR BP IN ANGOLA

SEPTEMBER 09

SUBSEA 7 AWARDED LONG-TERM PIPELAY CONTRACT IN BRAZIL
SUBSEA 7 INC. LAUNCH OF $200 MILLION CONVERTIBLE BOND DUE 2014 TO FUND GENERAL CORPORATE PURPOSES AND FOR REFINANCING CONVERTIBLE DEBT
PRICING OF US$275 MILLION CONVERTIBLE BOND DUE 2014 TO FUND GENERAL CORPORATE PURPOSES AND FOR REFINANCING CONVERTIBLE DEBT
SUBSEA 7 ANNOUNCES MAJOR CONTRACT WITH SANTOS LIMITED

OCTOBER 09

SUBSEA 7 INC. MANDATORY NOTIFICATION OF TRADE
SUBSEA 7 ANNOUNCES CONTRACT AWARD ON P-55 DEVELOPMENT
SUBSEA 7 INC. THIRD QUARTER 2009 RESULTS

NOVEMBER 09

SUBSEA 7 INC. MANDATORY NOTIFICATION OF TRADE
SUBSEA 7 INC. FINANCIAL CALENDAR 2010

FEBRUARY 10
- SUBSEA 7 INC. FOURTH QUARTER 2009 RESULTS
- SUBSEA 7 INC. INVESTOR PRESENTATION
- PRIMARY INSIDER NOTIFICATION FORMS
- SUBSEA 7 INC MANDATORY NOTIFICATION OF TRADE

MARCH 10
- SUBSEA 7 INC. 2009 ANNUAL REPORT
- SUBSEA 7 INC. 2010 AGM NOTICE AND PROXY STATEMENT

APRIL

01.04.09

SUBSEA 7 INC. MANDATORY NOTIFICATION OF TRADE

Subsea 7 Inc. (Oslo Stock Exchange: SUB) today announces that it has purchased US$15 million (par value) of the US$300 million 2.8% Subsea 7 Inc. Convertible Notes due 2011 for US$11.03 million (average unit price of US$0.735). The Company did not previously hold any of its own bonds.

16.04.09

SUBSEA 7 INC. AGM NOTICE AND PROXY STATEMENT

Subsea 7 Inc. today issues its Notice of Annual General Meeting of Shareholders for 2009 together with the associated Proxy Statement and voting card.

subsea 7

SUBSEA 7 INC.

REGISTERED OFFICE ADDRESS:
P.O. BOX 309, UGLAND HOUSE, SOUTH CHURCH STREET
GEORGE TOWN, GRAND CAYMAN KY1-1104, CAYMAN ISLANDS

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

TO BE HELD AT 10:00AM, FRIDAY, 8 MAY 2009

To the Shareholders of SUBSEA 7 INC.:

Please accept notice that the Annual General Meeting of Shareholders of Subsea 7 Inc. (the "Company") will be held at 10:00am Cayman Islands local time on Friday, 8 May 2009, at the Company's registered office located at the offices of Maples and Calder, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands. The purpose of the meeting will be to:

Approve the Company's financial statements for the financial year ended 31 December 2008;
Re-appoint PricewaterhouseCoopers as the Company's Auditors for fiscal year 2009;
Grant authority to the Board of Directors to fix the remuneration to the Company's Auditors for 2008;
Re-elect Kristian Siem, Arild Schultz and Michael Delouche as Directors of the Company;
Grant authority to the Board of Directors to fix the remuneration to the Company's Directors;
Approve and ratify the actions of the Directors and Officers of the Company;
Approve and ratify the establishment of a new Company Restricted Stock Award Plan;
Subject to the approval and ratification of Resolution 7, approve and ratify the granting of awards of restricted shares under the new Company Restricted Stock Award Plan;
Approve an increase in the authorised share capital of the Company from US$2,000,000.00 divided into 200,000,000 Common Shares of a nominal or par value of US$0.01 each to US$3,000,000.00 divided into 300,000,000 Common Shares of a nominal or par value of US$0.01 each by the creation of an additional 100,000,000 shares of a nominal or par value of US$0.01 each;
Subject to the approval of Resolution 9, amend and restate the Company's Memorandum and Articles of Association in their entirety in order to have one composite set of constitutive documents that are available to the Company and that reflect the changes effected by the adoption of Resolution 9; and
Transact such other business as may be properly brought before the Meeting.

If you do not plan to attend the meeting, we request that each shareholder complete, date, sign and deliver the enclosed form of proxy to either of the following: (1) the offices of Subsea 7 Limited at Prospect Road, Arnhall Business Park, Westhill, Aberdeenshire AB32 6FE, Scotland, telefax no. +44.1224.527.000 or (2) the Company's offices at P.O. Box 309, George Town, Grand Cayman KY1-1104, CAYMAN ISLANDS, telefax no. +1.345.946.3342, no less than 24 hours prior to the stated time of the Annual General Meeting.

If you are uncertain as to any aspect of this Notice, Proxy Statement and form of Proxy, you should consult the Company Assistant Secretary or your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional advisor.

The Directors, whose names appear on page 1 of the Proxy Statement, accept responsibility for the information contained in this document. To the best of the knowledge and belief of the Directors who have taken reasonable care to ensure that such is the case, the information contained in this Notice and Proxy Statement is in accordance with the facts and does not omit anything likely to affect the import of such information.

17 April 2009

By order of the Board of Directors of
Subsea 7 Inc.

subsea 7

SUBSEA 7 INC.

REGISTERED OFFICE ADDRESS:
P.O. BOX 309, UGLAND HOUSE, SOUTH CHURCH STREET
GEORGE TOWN, GRAND CAYMAN KY1-1104, CAYMAN ISLANDS

PROXY STATEMENT

ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD FRIDAY, 8 MAY 2009

Directors:
Kristian Siem
Arild Schultz
Allen Stevens
Michael Delouche
Mel Fitzgerald

Registered Office Address:
P.O. Box 309
Ugland House
South Church Street
George Town
Grand Cayman KY1-1104
CAYMAN ISLANDS

Assistant Secretary:
Barry Mahon

GENERAL

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Subsea 7 Inc., a Cayman Islands corporation (the "Company"), for the Annual General Meeting of Shareholders to be held at 10:00am Cayman Islands local time, Friday, 8 May 2009 (the "Annual General Meeting") and at any adjournments thereof at the Company's registered office located at Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands.

This proxy statement and the enclosed form of proxy are first being mailed to shareholders on or about 17 April 2009. At the date of mailing, the Company had 146,919,380 Common Shares issued and outstanding and each Common Share is entitled to one vote.

ANNUAL REPORT AND FINANCIAL STATEMENTS

A copy of the Company's annual report and accounts for the financial year ended 31 December 2008 is enclosed.

BACKGROUND ON THE PROPOSED RESOLUTIONS

Ordinary Business

The ordinary business to be conducted at the Annual General Meeting will be a vote on the following proposed Ordinary Resolutions:

Resolution 1. To approve the Company's financial statements for the financial year ended 31 December 2008.

Resolution 2. To approve the re-appointment of PricewaterhouseCoopers LLP as the Company's Auditors for financial year 2009. PricewaterhouseCoopers has acted as the Company's Auditors since the 2002 financial year audit.

Resolution 3. To grant authority to the Board of Directors to fix the remuneration payable to the Company's Auditors for 2008.

During 2008, the Company paid the Auditors a total amount of US$1,351,000 for services including statutory audit services (US$1,183,000), tax services (US$122,000) and other services (US$46,000).

Resolution 4. To re-elect Kristian Siem, Arild Schultz and Michael Delouche as Directors for 2-year terms and to serve until the expiration of the respective Director's term and until a successor has been elected and qualified. Messrs. Siem, Schultz and Delouche have

been Directors of the Company or its predecessor company for 5 or more years.

Resolution 5. To grant authority to the Board of Directors to fix the remuneration to the Company's Directors. Details of the remuneration are included in the Notes to the Annual Report.

Special Business

The special business to be conducted at the Annual General Meeting will be a vote on the following proposed resolutions:

Resolution 6. As an Ordinary Resolution, to approve and ratify the actions of the Company's Directors and Officers during 2008.

This proposal to approve and ratify any and all actions of the Company's Directors and Officers is not required since the Articles of Association provides certain protections to the Directors and Officers for actions taken and decisions made during the course of business. However, this resolution is proposed so that the Company's shareholders can demonstrate their confidence in the actions and efforts of the Directors and Officers that were made in good faith on behalf of all shareholders.

Resolution 7. As a Special Resolution, to approve and ratify the establishment of a new Company Restricted Stock Award Plan.

A Summary of the proposed plan is included as Appendix 1 attached hereto.

The Company considers that offering long-term remuneration to the Company's employees through a Restricted Stock Award Plan will serve as a proper incentive for the employees and improve the Company's competitive position in terms of attracting and retaining key personnel and thereby is in the interests of the Company and its Shareholders. The Directors have approved the adoption by the Company of the new Restricted Stock Award Plan.

Resolution 8. As an Ordinary Resolution and subject to the approval and ratification of Resolution 7, to approve and ratify the granting of awards of restricted shares under the new Company Restricted Stock Award Plan set out in Resolution 7 above.

In addition to the awards of grants for restricted shares, the holders of share options will be invited to replace share options with restricted shares on the basis of a surrender of 3 share options under the existing Share Option Plans (such plans being those approved by the Shareholders at the Company's 2006 Annual General Meeting) for 1 new restricted share. It is intended that no new share options will be granted under the existing Share Option Plans.

Resolution 9. As an Ordinary Resolution, pursuant to the terms of Article 7 of the Articles of Association of the Company, to approve an increase in the authorised share capital of the Company from US$2,000,000.00 divided into 200,000,000 Common Shares of a nominal or par value of US$0.01 each to US$3,000,000.00 divided into 300,000,000 Common Shares of a nominal or par value of US$0.01 each by the creation of an additional 100,000,000 shares of a nominal or par value of US$0.01 each.

The increase in the authorised share capital provide the Board with flexibility to finance investments, acquisitions and other business combinations on short notice through the issuance of shares or certain other equity-related instruments in the Company.

Resolution 10. As a Special Resolution, subject to the adoption of Resolution 9, to approve the amendment and restatement of the Company's Memorandum and Articles of Association in their entirety.

The purpose of this proposal is to ensure that the Company has one composite set of constitutive documents that are available for the Company and that reflect the changes effected by the adoption of Resolution 9.

VOTING BY PROXY AND THROUGH DEPOSITORIES

Registered shareholders should properly complete, date, sign and deliver the enclosed form of proxy to either of the following: (1) the offices of Subsea 7 Limited at Prospect Road, Arnhall Business Park, Westhill, Aberdeenshire, AB32 6FE, Scotland, telefax no. +44.1224.527.000 or (2) the Company's offices at P.O. Box 309, George Town, Grand Cayman KY1-1104, CAYMAN ISLANDS, telefax no. +1.345.946.3342, no less than 24 hours prior to the stated time of the Annual General Meeting. Any shareholder signing and returning a proxy may revoke such proxy at any time prior to its being voted by delivering a written revocation or a duly executed proxy bearing a later date with the Company or by voting in person or duly authorized representative at the meeting.

Properly completed and signed proxies that are received prior to the Annual General Meeting will be voted in accordance with the instructions of the persons executing the proxies. In the absence of such instructions, the proxies will be voted "FOR" each of the above-proposed resolutions.

The Directors and Officers know of no matters that will be presented to the meeting other than the business set forth in this Proxy Statement. If any other matter properly comes before the meeting (such matters would be presented to shareholders in one or more subsequent Notices and Proxy Statements with Proxy Cards), the persons named as proxies will vote on such matter in their discretion.

RECOMMENDATION

The Company's Directors consider the approval of the proposed resolutions to be voted upon during the course of Ordinary Business and Special Business at the Annual General Meeting to be in the Company's best interests and recommend that you vote in favour of each of the ordinary resolutions. Except where required to abstain by law or by the provisions of the Company's Articles of Association, Siem Industries Inc. and the Directors who hold shares in the Company intend to vote in favour of each of the resolutions with respect to their respective shareholdings. Siem Industries Inc. owns a beneficial interest of 65,429,045 Common Shares in the Company, Arild Schultz owns 748,147, Allen Stevens owns 10,000 and Mel Fitzgerald owns 69,586. The other Directors, Kristian Siem and Michael Delouche, hold an indirect interest in the Company's Common Shares through their ownership interests in Siem Industries Inc.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the Memorandum and Articles of Association of the Company will be available for inspection by appointment only at the offices of Subsea 7 Limited at Prospect Road, Arnhall Business Park, Westhill, Aberdeenshire, AB32 6FE, Scotland and the offices of Maples and Calder, Ugland House, South Church Street, Grand Cayman, Cayman Islands during normal business hours until 8 May 2009 and at the Annual General Meeting itself.

SHAREHOLDER PROPOSALS FOR ANNUAL GENERAL MEETING

Following the financial year ending 31 December 2009, shareholders may present proposals to be considered by the Company for possible inclusion in the Company's proxy statement and for discussion and vote at the next Annual General Meeting of Shareholders by submitting their proposals to the Company in a proper form and in a timely manner. In order to be considered for the meeting following the conclusion of financial year 2009, shareholder proposals must be received at Subsea 7 Limited's office in Aberdeen or the Company's office in George Town by 31st January 2010.

Yours faithfully,

Kristian Siem, Chairman
17 April 2009

Appendix 1

Resolution 7

SUMMARY

of the Principal Terms of the Proposed

Subsea 7 Inc. Restricted Stock Award Plan (the "Share Plan")

The Share Plan has been designed to help retain, motivate and recruit executives and employees and to align their interests with the interests of shareholders.

Form of Awards

The Share Plan relates to common stock of par value $0.01 in the Company (the "Shares") and provides for eligible employees (the "Participants") to be granted a right to receive Shares (an "Award") if certain conditions are met. Awards will be made in the form of forfeitable, restricted stock where this is advisable for local tax or regulatory reasons.

An Award will normally vest and Shares will be issued or transferred to the Participant subject to the Participant remaining in employment with the Company and its subsidiaries (the "Group") until the vesting dates that are specified in the award certificate. Awards may also vest early in certain circumstances, described below.

Eligibility

Employees of the Group will be chosen to participate in the Share Plan at the discretion of the Board of Directors of the Company (the "Board"). Awards will only be granted to Participants who are employed with the Group on the date the Award is made.

Granting of Awards

Awards can be granted at any time between the adoption date and the termination date of the Plan, having regard to relevant trading restrictions.

No payment is required for the grant of Awards.

Vesting of Awards

Awards will normally vest at the rate and on the vesting dates that are specified in the Participant's award certificate.

The vesting of an Award may also be made subject to performance conditions or other conditions that shall be specified by the Board no later than the award date. It is not, however, proposed that the initial Awards will be made subject to performance conditions.

Early vesting of Awards is only permissible in the following circumstances.

(a) the death of a Participant;
(b) the Participant becoming a Good Leaver;
(c) a Participant's employing company ceasing to be a Group company;
(d) a Participant's employment being transferred outside the Group, as part of a business transfer;
(e) a change of control event or winding up; and
(f) notice being given and/or the Board determining that a transaction relating to the Company or the Shares, will result in the Shares no longer being listed or traded on any recognised exchange.

A Good Leaver is a Participant who ceases to be a Group Employee:

(a) by reason of injury, ill-health or disability;
(b) by reason of redundancy;
(c) by reason of retirement (except in the U.S.); or
(d) if the Board determines in its sole discretion within 30 days of his cessation of employment that he should be treated as a Good Leaver.

In such an event, Awards are normally deemed to vest at the rate of 20% per annum and a Participant is entitled to early vesting of the number of Shares granted by the Award that are deemed to have vested through the most recent vesting date. For example, if a Participant was made redundant after 28 months, 40% of the Participant's Award would normally vest early. The Board has discretion, however, to provide for early vesting on a different basis.

On a change of control event, Participants may be offered the opportunity to replace the Award with an equivalent award over shares in another company. If a replacement award is offered, the Board can determine that early vesting will not occur.

5. Rights Attaching to Shares

Awards will not attract any dividends or dividend equivalents prior to the delivery of Shares.

A Participant will not have any voting rights in respect of the vested number of Shares comprised in an Award prior to the delivery of Shares. All Shares allotted under the Share Plan carry the same rights as any other issued ordinary shares in the Company.

U.S. Participants who receive awards in the form of restricted stock are required to waive voting and dividend rights during the restricted period as a term of the Award.

Awards granted under the Share Plan are not pensionable and may not be assigned or transferred except on a Participant's death.

6. Adjustment of Awards

If there is a variation in the share capital of the Company (including without limitation a capitalisation, rights issue, open offer, consolidation, sub-division or reduction of capital, a capital distribution, demerger or other event having a material impact on the value of the shares), the number of Shares granted under an Award may be adjusted as the Board reasonably considers appropriate to reflect that variation.

7. Alterations to the Share Plan

The Board will have authority to amend the rules of the Share Plan.

8. Plan Administration

The Share Plan will be administered by RBC cees Trustee Ltd (the "Trustee") on behalf of the Subsea 7 Employee Share Trust (the "Trust").

9. Limits on the issue of Shares in Awards

The Share Plan will be subject to the limit that, in any ten-year period, not more than five percent of the issued ordinary share capital of the Company from time to time may be issued or issuable under the Share Plan (or any sub-plan).

In addition, in any one-year period, not more than one percent of the issued ordinary share capital of the Company from time to time may be issued or issuable under the Share Plan (or any sub-plan).

Where Awards are granted over existing Shares, these may be held in the Trust or another employee trust nominated by the Board for the purposes of the Share Plan. Existing Shares will not count towards the two dilution limits referred to above except to the extent that the Trust subscribes for new Shares for the purposes of the Share Plan.

– 2 –

10. Proposed Initial Awards

The Board proposes making initial Awards following approval of the Share Plan by the Shareholders.

There will be two vesting periods for the initial Awards:

1) 60% of the Awards will normally vest on the 3rd anniversary of the initial Award date, and
2) the remaining 40% of the Awards will normally vest on the 5th anniversary of the initial award date.

11. Replacement Awards

In addition, the Board proposes to invite employees of the Group who hold existing share options under the Subsea 7 Inc Company Share Option Plan, the UK Approved Company Share Option Sub-Plan and the US Sub-Plan (the "Share Option Plans") with a strike price at or greater than NOK 44.85 to surrender those options in exchange for an Award under the Share Plan (the "Replacement Awards"). The Replacement Awards will be offered on the basis of one share under award for each three shares under option under the Share Option Plans.

There will be two vesting periods for the Replacement Awards:

1) 60% of the Replacement Awards will normally vest on the 3rd anniversary of the date Replacement Awards are made, and
2) the remaining 40% of the Replacement Awards will normally vest on the 5th anniversary of the date Replacement Awards are made.

The Board considers the Replacement Awards to be in the best interests of the Company.

The Trustee holds sufficient Shares to make the proposed initial Awards and Replacement Awards, including the Replacement Awards, having been provided with funds by the Company to purchase the required Shares in the market during December 2008. The terms of that funding provided for the return of funds to the Company by means of a repayment to the extent that the Trustee is able to do so.

Note: This Appendix summarises the main features of the Share Plan but does not form part of the Share Plan and should not be taken as affecting the interpretation of the detailed terms and conditions constituting the rules.

subsea 7

SUBSEA 7 INC.

PROXY

I/We ____ being a shareholder of the above Company holding ___ shares HEREBY APPOINT the Chairman of the meeting or ____ of ___ or failing him ____ of ____ to be my/our proxy to vote for me/us at the meeting of the members to be held at 10:00am Cayman Islands local time on Friday, 8 May 2009 (the "Meeting") and at any adjournment thereof at the at the registered office of the Company at the offices of Maples and Calder, Ugland House, South Church Street, George Town, Grand Cayman KY1-1104, CAYMAN ISLANDS. My/our proxy should vote as indicated below at such Meeting:

Resolution *	For	Against	Number of Common Shares
Resolution 1	____	____	____
Resolution 2	____	____	____
Resolution 3	____	____	____
Resolution 4	____	____	____
Resolution 5	____	____	____
Resolution 6	____	____	____
Resolution 7	____	____	____
Resolution 8	____	____	____
Resolution 9	____	____	____
Resolution 10	____	____	____

Please indicate your voting preference and the number of shares entitled to vote. In the absence of voting instructions for any resolution, the form of proxies will be voted "FOR" such resolution.

Date

Owner or Authorised Signatory for Shares

(d) In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the votes of the other joint holders and for this purpose seniority will be determined by the order in which the names stand in the register of members. Names of all joint holders should be stated.

(e) To be valid, this form of proxy should be delivered no less than 24 hours prior to the stated time of the Annual General Meeting to either of the following: (1) the offices of Subsea 7 Limited at Prospect Road, Arnhall Business Park, Westhill, Aberdeenshire, AB32 6FE, Scotland, telefax no. +44.1224.527.000 or (2) the offices of PO Box 309, Ugland House, South Church Street, George Town, Grand Cayman KY1-1104, CAYMAN ISLANDS, telefax no. +1.345.946.3342.

(f) Completion of this form of proxy will not prevent you from attending and voting at the Meeting.

(g) A proxy may vote on a show of hands or on a poll.

20.04.09

SUBSEA 7 INC. ANNUAL OVERVIEW OF RELEASED INFORMATION

Subsea 7 Inc. Annual Overview of Released Information

21.04.09

SUBSEA 7 INC. FIRST QUARTER 2009 RESULTS

Subsea 7 Inc. First Quarter 2009 Results

subsea 7

SUBSEA 7 INC.

REPORT FOR THE FIRST QUARTER 2009

21 April 2009

Subsea 7 Inc. (Oslo Stock Exchange: SUB) today reports results for the first quarter of 2009.

PERFORMANCE SUMMARY

Quarter Highlights

Good project execution and profitable in all regions.
Successful completion of a number of projects, including Chevron's Tombua Landana development.
Awarded contract by Petrobras in Brazil valued at approximately USD 200 million in support of the Tambau Urugua and P-56 developments.

Financial Results

The Group's accounts are prepared in accordance with International Financial Reporting Standards (IFRS).

In USD millions	Three months ended
	31/03/2009 Unaudited	31/03/2008 Unaudited
Revenue	602.8	562.1
Adjusted EBITDA	110.1	106.9
Net operating profit	82.0	84.7
Profit before tax	79.8	81.6
Net profit attributable to equity shareholders	55.0	55.1
Earnings per share, in USD per share
Earnings per share, basic	0.37	0.37
Earnings per share, diluted	0.37	0.37

OPERATIONS

North Sea

Highlights for the quarter included the successful completions of Venture's Chestnut P2 development and Ithaca's Jacky project.

Engineering and procurement activity continued on Centrica's Grove project during the quarter and offshore work on Venture's Channon / Barbarossa and Eon's Rita developments also progressed as planned.

In Norway, offshore activity on the StatoilHydro Vega project commenced towards the end of the quarter whilst onshore fabrication of the pipeline was undertaken at the Vigra base. Project management, engineering and procurement continued on BP's Skarv and Valhall Re-Development projects.

Inspection, Repair and Maintenance (IRM) operations continued on the Shell, ConocoPhillips, Total and BP frame agreements.

The Rockwater 1, Toisa Polaris and Kommander Subsea vessels all completed scheduled drydocks during the quarter.

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Africa

The final offshore phase of Chevron's Tombua Landana project in Angola was successfully completed during the quarter.

Operations continued on the BP Block 18 Life of Field project offshore Angola and engineering and project management activities progressed in respect of BP's Block 31 contract.

Activity continued in support of Addax's Okwori field in Nigeria.

Brazil

The pipe for the StatoilHydro Peregrino project and the shore-approach section of the Petrobras Sul Capixaba project were installed during the quarter. The remainder of the Sul Capixaba pipeline will be installed during the third quarter of 2009.

Shell's BC-10 project continued to progress with completion scheduled for the third quarter of 2009. The Seven Oceans and Seven Seas continued to perform well in support of this development.

The K3000 and Lochnagar continued to support Petrobras on day-rate operations. The Normand Seven made good progress on the Roncador project for Petrobras having temporarily suspended work to successfully complete Shell's Salema riser replacement project.

North America

The Skandi Neptune continued to support BP's Thunder Horse project with some further work being undertaken for BP's Atlantis development. This vessel was off-hire from the end of January 2009 until the middle of February 2009 for a planned drydock.

Engineering and project management continued in respect of the Petrobras Cascade and Marathon Droshky projects.

Construction work at the Port Isabel spoolbase in Texas progressed well. The works are on track to be concluded in the second quarter of 2009 with welding in respect of the Marathon Droshky project due to commence on schedule.

Asia Pacific

The Rockwater 2 continued to support Allseas offshore India, before commencing a scheduled drydock at the end of March 2009. The Venturer continued to support Woodside's operations in Australia during the quarter.

In February 2009, the Company and Technip announced their agreement to dissolve their joint venture, Technip Subsea 7 Asia Pacific, once it has completed all its existing projects and tendered work. The companies intend to pursue separate strategic development opportunities in the region.

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INVESTMENTS

During the quarter, the Company continued to hold investments in listed equity shares and debt securities.

At 31 March 2009, these investments were treated as ‘Available-for-sale financial assets’ and were marked-to-market in the balance sheet, giving rise to an increase in their carrying value during the quarter of USD 23.8 million. USD 15.7 million of this increase in the quarter has been reflected directly in Shareholders’ equity. The remaining USD 8.1 million, which reflects the re-measurement at fair value of the embedded option contained within the debt securities, is included in the consolidated income statement.

FINANCING

On 31 March 2009, the Company repurchased USD 15 million (par value) of the USD 300 million 2.8% Subsea 7 Inc. convertible notes due 2011 for US$11.03 million, or 73.5% of the par value. The Company did not previously hold any of its own convertible notes. A gain of USD 2.5 million in respect of this repurchase has been included within finance income in the consolidated income statement.

On 2 April 2009, the Company concluded a three-year revolving credit facility with HSBC Bank plc for USD 50 million.

The undrawn loan facilities available to the Company at the date of this report total USD 150 million.

FINANCIALS

Revenue for the first quarter 2009 was USD 602.8 million compared to USD 562.1 million for the same period in 2008.

Net operating profit for the first quarter 2009 was USD 82.0 million compared to USD 84.7 million for the same period in 2008.

Net financial expense for the first quarter 2009 was USD 5.1 million compared to USD 4.9 million for the first quarter 2008.

Taxation expense for the first quarter 2009 was USD 24.7 million, which equates to an effective rate of 31%.

Net profit attributable to equity shareholders for the first quarter 2009 was USD 55.0 million, or USD 0.37 per share, compared to a net profit of USD 55.1 million, or USD 0.37 per share, for the first quarter 2008.

CAPITAL EXPENDITURE

The construction of the diving support vessel Seven Atlantic progressed during the quarter with delivery expected by the end of the third quarter of 2009.

Engineering and procurement continued in respect of the new-build pipelay and construction vessel to be named Seven Pacific. This vessel is scheduled for delivery in the fourth quarter of 2010.

SHARE CAPITAL

During the quarter, 7,500 share options were exercised under the Group’s share option plan at a strike price of NOK 29.49 per share.

The Company had 146,919,380 shares issued and outstanding at 31 March 2009.

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BACKLOG

The Group was awarded new contracts, including commitments under frame agreements, of an aggregate amount of USD 0.3 billion during the quarter. The worldwide order book of the Group at 31 March 2009 was approximately USD 2.9 billion, comprised of approximately USD 1.9 billion of day-rate contracts and USD 1.0 billion of lump-sum contracts. This compares to a worldwide order book of the Group of USD 3.9 billion at 31 March 2008.

MAJOR NEW CONTRACT AWARDS SINCE 1 JANUARY 2009

In March 2009, the Company announced that it had been awarded a contract by Petrobras for the Tambau Urugua and P-56 developments in the Santos and Campos basins, offshore Brazil. The contract is valued at approximately USD 200 million, with the offshore pipeline installation campaign scheduled to take place during 2010.

OUTLOOK

The market outlook continues to retain a degree of uncertainty for the medium term as a result of the current economic climate. As indicated previously, national oil companies and major operators are generally expected to maintain their spending levels.

Notwithstanding this, the whole industry is taking time to re-assess projects and take advantage of potential cost reductions given the current environment. This is resulting in delays in contract awards and, in respect of some of the smaller players in the North Sea and North America, a cancellation or deferment of projects.

The Company continues to focus on its efforts to reduce costs and improve efficiencies in the supply chain in order to remain competitive in the current market.

On behalf of the Board of Directors of Subsea 7 Inc.
21 April 2009
Kristian Siem, Chairman
www.subsea7.com

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subsea 7

CONSOLIDATED INCOME STATEMENT

(Amounts in USD 1,000)	Three months ended		Year ended
	31/03/2009 Unaudited	31/03/2008 Unaudited	31/12/2008 Audited
Revenue	602,826	562,109	2,373,252
Operating expenses	(495,625)	(456,937)	(1,864,331)
Depreciation, amortisation and impairments	(25,168)	(20,735)	(95,300)
Profit on disposal of property, plant and equipment	-	252	11,671
Net operating profit	82,033	84,689	425,292
Changes in fair value of derivative financial instruments	11,644	5,135	(34,177)
Net currency (loss)/gain	(11,249)	(4,772)	18,761
Finance income	3,452	2,361	5,881
Finance expense	(8,968)	(7,604)	(33,014)
Net financial items	(5,121)	(4,880)	(42,549)
Share of post-tax profit from joint ventures	2,488	1,580	11,768
Share of post-tax profit/(loss) from associates	385	190	(8)
Profit before tax	79,785	81,579	394,503
Taxation expense	(24,740)	(26,499)	(130,506)
Net profit attributable to equity shareholders	55,045	55,080	263,997
Average number of issued shares (1,000)	146,916	147,044	146,938
Earnings per share, in USD per share	0.37	0.37	1.80
Average number of issued shares, diluted (1,000)	164,624	165,122	164,975
Earnings per share, diluted, in USD per share	0.37	0.37	1.74

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subsea 7

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Amounts in USD 1,000)	Three months ended		Year ended
	31/03/2009 Unaudited	31/03/2008 Unaudited	31/12/2008 Audited
Net profit attributable to equity shareholders	55,045	55,080	263,997
Other comprehensive income/(expense):
Currency translation differences	(11,989)	(8,066)	(302,219)
Available-for-sale financial assets – fair value adjustment	15,707	-	(71,801)
	3,718	(8,066)	(374,020)
Total comprehensive income/(expense) for the period	58,763	47,014	(110,023)

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subsea 7

CONSOLIDATED BALANCE SHEET

(Amounts in USD 1,000)	At 31/03/2009 Unaudited	At 31/03/2008 Unaudited	At 31/12/2008 Audited
ASSETS
Non-current assets
Goodwill	98,533	98,533	98,533
Other intangible assets	989	1,636	1,130
Property, plant and equipment	994,205	980,678	991,408
Deferred tax assets	14,774	3,458	15,113
Retirement benefit asset	-	858	-
Investment in joint ventures	14,972	2,394	12,582
Investment in associates	1,985	1,799	1,601
	1,125,458	1,089,356	1,120,367
Current assets
Inventories	46,417	21,038	22,567
Trade and other receivables	772,091	686,209	659,097
Available-for-sale financial assets	109,203	-	85,414
Derivative financial instruments	3,869	9,274	1,483
Cash and cash equivalents	89,207	148,498	114,066
	1,020,787	865,019	882,627
TOTAL ASSETS	2,146,245	1,954,375	2,002,994
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity
Share capital	1,469	1,468	1,469
Share premium reserve	271,270	270,816	271,238
Shares held by Employee Share Trust	(9,430)	-	(9,430)
Other reserves	(226,075)	143,243	(225,650)
Retained Earnings	712,194	436,704	652,039
	749,428	852,231	689,666
Non-current liabilities
Borrowings	553,994	394,886	559,737
Deferred tax liabilities	98,034	63,292	99,610
Retirement benefit obligations	1,101	-	1,002
Other non-current liabilities	4,222	4,369	4,237
	657,351	462,547	664,586
Current liabilities
Trade and other payables	694,703	595,935	605,358
Current tax liabilities	35,284	42,165	32,728
Derivative financial instruments	9,479	1,301	10,656
Finance lease obligations	-	196	-
	739,466	639,597	648,742
Total liabilities	1,396,817	1,102,144	1,313,328
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	2,146,245	1,954,375	2,002,994

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CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

(Amounts in USD 1,000)	Share capital	Share premium	Shares held by Employee Share Trust	Other reserves	Retained earnings	Total
At 1 January 2009 (Audited)	1,469	271,238	(9,430)	(225,650)	652,039	689,666
Foreign currency translation	-	-	-	(11,989)	-	(11,989)
Available-for-sale financial assets – fair value adjustment	-	-	-	15,707	-	15,707
Other comprehensive income/(expense)	-	-	-	3,718	-	3,718
Net result for the period	-	-	-	-	55,045	55,045
Total comprehensive income/(expense)	-	-	-	3,718	55,045	58,763
Share based payments	-	-	-	-	967	967
Shares issued – exercise of options	-	32	-	-	-	32
Repurchase of convertible notes	-	-	-	(3,163)	3,163	-
Depreciation on re-valued assets	-	-	-	(980)	980	-
At 31 March 2009 (Unaudited)	1,469	271,270	(9,430)	(226,075)	712,194	749,428
At 1 January 2008 (Audited)	1,477	286,508	-	152,362	379,410	819,757
---	---	---	---	---	---	---
Foreign currency translation	-	-	-	(8,066)	-	(8,066)
Other comprehensive income/(expense)	-	-	-	(8,066)	-	(8,066)
Net result for the period	-	-	-	-	55,080	55,080
Total comprehensive income/(expense)	-	-	-	(8,066)	55,080	47,014
Purchase of own shares	(9)	(15,707)	-	-	-	(15,716)
Share based payments	-	-	-	-	1,161	1,161
Shares issued – exercise of options	-	15	-	-	-	15
Depreciation on re-valued assets	-	-	-	(1,053)	1,053	-
At 31 March 2008 (Unaudited)	1,468	270,816	-	143,243	436,704	852,231

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subsea 7

CONSOLIDATED CASH FLOW STATEMENT

(Amounts in USD 1,000)	Three months ended		Year ended
	31/03/2009 Unaudited	31/03/2008 Unaudited	31/12/2008 Audited
Cash flows from operating activities
Cash generated from operations	38,375	122,900	590,414
Finance income received	927	2,635	6,237
Finance expense paid	(1,048)	(19)	(10,578)
Taxation paid	(23,421)	(26,235)	(115,016)
Net cash from operating activities	14,833	99,281	471,057
Cash flows from investing activities
Proceeds from sale of property, plant and equipment	-	277	26,073
Purchase of property, plant and equipment	(45,128)	(105,841)	(449,282)
Purchase of Available-for-sale financial assets	-	-	(179,381)
Net cash used in investing activities	(45,128)	(105,564)	(602,590)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital	32	15	438
Purchase of own shares	-	(15,716)	(15,716)
Shares purchased by Employee Share Trust	-	-	(9,430)
Drawdown of loans	-	-	150,000
Government grants received	-	-	15
Finance lease principal payments	-	(198)	(394)
Net cash generated from/(used in) financing activities	32	(15,899)	124,913
Effects of exchange rate changes	5,404	3,023	(46,971)
Net decrease in cash and cash equivalents	(24,859)	(19,159)	(53,591)
Cash and cash equivalents at start of period	114,066	167,657	167,657
Cash and cash equivalents at end of period	89,207	148,498	114,066

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NOTES TO THE FINANCIAL INFORMATION

1. Basis of preparation

The condensed consolidated financial information for the period 1 January to 31 March 2009 has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union, but has not been audited or reviewed. The condensed consolidated financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2008 which have been prepared in accordance with IFRSs as adopted by the European Union.

2. Accounting policies

The accounting policies adopted in the preparation of the condensed consolidated financial information are consistent with the annual financial statements for the year ended 31 December 2008, as described in those annual financial statements. In addition the following new standards, amendments to standards and interpretations have been adopted from 1 January 2009:

Improvements to IFRSs
IAS 39 and IFRS 7
'Reclassification of Financial Assets'
IFRS 2 (Amendment)
'Share Based Payment – vesting conditions and cancellations'
IFRS 8
'Operating Segments'
IAS 1 (Revised)
'Presentation of Financial Statements'
IAS 23
'Borrowing Costs' (Revised)
IAS 27
'Consolidated and Separate Financial Statements – Cost of an investment in a subsidiary, jointly controlled entity or associate (Amendments)'

As a result of the adoption of IAS 1 (Revised) and IFRS 8, the Group has made some presentational changes to the interim statements. As a result of the adoption of IFRS 8, the Group has reviewed its reportable segments. The segments presented under IFRS 8 have not changed from those presented as primary segments under IAS 14.

The Group has updated its accounting policy in respect of borrowing costs to include requirements of IAS 23 to capitalise attributable interest on assets which necessarily take a substantial period of time to get ready for their intended use or sale. This has had no material impact in the quarter.

The adoption of the remaining standards, amendments to standards and interpretations above had no impact on the reported income or net assets of the Group in the quarter.

3. Segment reporting

(Amounts in USD 1,000)	North Sea	Africa	Brazil	North America	Asia Pacific	Global	Total
Three months ended 31/03/2009 (Unaudited)
Revenue	216,669	74,879	275,157	23,330	12,791	-	602,826
Profit/(loss) before tax	26,315	18,021	26,311	10,060	5,580	(6,502)	79,785
Three months ended 31/03/2008 (Unaudited)
Revenue	200,819	146,522	150,536	50,118	14,090	24	562,109
Profit/(loss) before tax	22,252	37,689	12,244	13,428	11,720	(15,754)	81,579

The "Global" segment comprises the global support functions, including the vessel and equipment management group which is responsible for the management and maintenance of the vessels and equipment. Finance income and expense, derivative instrument fair value changes, net currency items, profits or losses on disposals of property, plant and equipment and share of profits from associates are also allocated to this segment.

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4. Cash flow from operating activities

(Amounts in USD 1,000)	Three months ended		Year ended
	31/03/2009 Unaudited	31/03/2008 Unaudited	31/12/2008 Audited
Net profit attributable to equity shareholders	55,045	55,080	263,997
Adjustments for:
Taxation expense	24,740	26,499	130,506
Depreciation and amortisation	25,168	20,735	95,300
Share based payments	967	1,161	4,640
Profit on disposal of property, plant and equipment	-	(252)	(11,671)
Deferred government grant income	(5)	(6)	(39)
Finance income	(3,452)	(2,361)	(5,881)
Finance expense	8,968	7,604	33,014
(Gain)/loss on embedded derivative within convertible notes	(8,082)	-	22,166
Share of post tax profit from joint ventures	(2,488)	(1,580)	(11,768)
Share of post tax (profit)/loss from associates	(385)	(190)	8
Changes in working capital:
(Increase)/decrease in inventories	(23,850)	4,171	2,642
(Increase)/decrease in trade and other receivables	(115,356)	(31,498)	3,325
Increase in trade and other payables	77,105	43,537	64,175
Cash generated from operations	38,375	122,900	590,414

5. Adjusted EBITDA

(Amounts in USD 1,000 except percentages)	Three months ended
	31/03/2009 Unaudited	31/03/2008 Unaudited
Net profit attributable to equity shareholders	55,045	55,080
Adjustments:
Taxation expense	24,740	26,499
Net financial items	5,121	4,880
Depreciation, amortisation and impairments	25,168	20,735
Profit on disposal of property, plant and equipment	-	(252)
Adjusted EBITDA	110,074	106,942
Revenue	602,826	562,109
Adjusted EBITDA %	18.3%	19.0%

The Group calculates "Adjusted EBITDA" (adjusted earnings before interest, taxation, depreciation and amortisation) as net profit attributable to equity shareholders adjusted for taxation, net financial items, depreciation, amortisation, impairments and profits or losses on disposals of property, plant and equipment.

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6. Repurchase of Convertible Notes

7. Contingent liabilities

The Group is party to indemnities, legal actions and claims that arise in the ordinary course of business. Whilst the outcome of such legal proceedings cannot be readily foreseen, management believes that they will be resolved without material effect on the Group's results, financial position or liquidity.

8. Events occurring after the balance sheet date

On 2 April 2009, the Company concluded a three-year revolving credit facility with HSBC Bank plc for USD 50 million.

There were no other subsequent events between the balance sheet date and the date the condensed consolidated financial information was authorised for issue that require disclosure.

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subsea 7

Subsea 7 Inc.

Earnings Presentation

Quarter Ended

31 March 2009

21.04.2009

www.subsea7.com

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subsea 7

Highlights

Good project execution and profitable in all regions

Successful completion of a number of projects including Chevron's Tombua Landana development

Awarded contract by Petrobras in Brazil valued at approximately USD 200 million, in support of the Tambua Urugua and P-56 developments

Company focused on optimising position for the current and future market

21.04.2009

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subsea7

Operational Performance by Region

North Sea

Three Months Ended 31 March

Successful completion of Venture's Chestnut P2 development and Ithaca's Jacky project.
Commencement of offshore activity on StatoilHydro's Vega project
Inspection, Repair and Maintenance operations continued on the Shell, ConocoPhillips, Total and BP frame agreements

Africa

Three Months Ended 31 March

Final offshore phase of Chevron's Tombua Landana project in Angola successfully completed
Operations continued on BP Block 18 Life of Field project offshore Angola
Activity continued in support of Addax's Okwori field in Nigeria

21.04.2009

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subsea7

Operational Performance by Region

Brazil

Three Months Ended 31 March

Pipe for StatoilHydro Peregrino project and shore - approach section of the Petrobras Sul Capixaba project installed
Shell's BC-10 development and Roncador project for Petrobras continued to progress
K3000 and Lochnagar continued to support Petrobras on day-rate operations

North America

Three Months Ended 31 March

Skandi Neptune continued to support BP Thunder Horse project
Engineering and project management continued on Petrobras Cascade and Marathon Droshky projects
Construction work on Port Isabel spoolbase in Texas progressed well

21.04.2009

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Operational Performance by Region

Asia Pacific

Three Months Ended 31 March

Rockwater 2 continued to support Allseas offshore India
Venturer continued to support Woodside's operations in Australia

21.04.2009

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subsea 7

Backlog at Q1 2009 & Q1 2008

By Region

$2,907 M
$3,911 M
65
31 Mar 2009
31 Mar 2008
65
1,456
112
2,013
31 Mar 2008

By Contract Type

$2,907 M
$3,911 M
977
31 Mar 2009
31 Mar 2008
2,133
1,778
31 Mar 2008

21.04.2009

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subsea 7

Backlog at 31 March 2009 by Year of Execution

21.04.2009

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subsea 7

Financial Highlights

(Amounts in USD millions)	Three months ended
	31/03/2009
Unaudited	31/03/2008
Unaudited
Revenue	602.8	562.1
Adjusted EBITDA	110.1	106.9
Net operating profit	82.0	84.7
Profit before tax	79.8	81.6
Net profit attributable to equity shareholders	55.0	55.1
Earnings per share, in USD per share
Earnings per share, basic	0.37	0.37
Earnings per share, diluted	0.37	0.37

21.04.2009

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subsea 7

Cash Flows

	Three months ended
(Amounts in USD 1,000)	31/03/2009
Unaudited	31/03/2008
Unaudited
Net profit	55,045	55,080
Non-cash income statement items	45,431	51,610
Changes in working capital	(62,101)	16,210
Cash generated from operations	38,375	122,900
Purchase of property, plant and equipment	(45,128)	(105,841)
Purchase of own shares	-	(15,714)
Other cash flows	(18,106)	(20,504)
Net decrease in cash and cash equivalents	(24,859)	(19,159)
Cash and cash equivalents at start of period	114,066	167,657
Cash and cash equivalents at end of period	89,207	148,498

21.04.2009

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Balance Sheet

| (Amounts in USD 1,000) | At 31/03/2009
Unaudited | At 31/03/2008
Unaudited |
| --- | --- | --- |
| Assets | | |
| Non-current assets | 1,125,458 | 1,089,356 |
| Cash and cash equivalents | 89,207 | 148,498 |
| Other current assets | 931,580 | 716,521 |
| Current assets | 1,020,787 | 865,019 |
| Total assets | 2,146,245 | 1,954,375 |
| Shareholders' equity and liabilities | | |
| Shareholders' equity | 749,428 | 852,231 |
| Borrowings | 553,994 | 394,886 |
| Other non-current liabilities | 103,357 | 67,661 |
| Non-current liabilities | 657,351 | 462,547 |
| Current liabilities | 739,466 | 639,597 |
| Total liabilities | 1,396,817 | 1,102,144 |
| Total shareholders' equity and liabilities | 2,146,245 | 1,954,375 |

21.04.2009

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Shareholders' equity

	Three months ended
(Amounts in USD 1,000)	31/03/2009
Unaudited	31/03/2008
Unaudited
Shareholders' equity at start of period	689,666	819,757
Share issues	32	15
Purchase of own shares	-	(15,716)
Result for the period	55,045	55,080
Share based payments	967	1,161
Available-for-sale assets - fair value adjustment	15,707	-
Currency translation differences	(11,989)	(8,066)
Shareholders' equity at end of period	749,428	852,231

21.04.2009

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Adjusted EBITDA

Reconciliation of net profit attributable to equity shareholders to Adjusted EBITDA

	Three months ended
(Amounts in USD 1,000)	31/03/2009
Unaudited	31/03/2008
Unaudited
Net profit attributable to equity shareholders	55,045	55,080
Adjustments:
Taxation expense	24,740	26,499
Net financial items	5,121	4,880
Depreciation, amortisation and impairments	25,168	20,735
Profit on disposal of property, plant and equipment	-	(252)
Adjusted EBITDA	110,074	106,942
Revenue	602,826	562,109
Adjusted EBITDA %	18.3%	19.0%

The Group calculates "Adjusted EBITDA" (adjusted earnings before interest, taxation, depreciation and amortisation) as the net profit attributable to equity shareholders adjusted for taxation, net financial items, depreciation, amortisation, impairments and profits or losses on disposals of property, plant and equipment.

21.04.2009

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MAY

11.05.09

SUBSEA 7 INC MINUTES OF 2009 AGM

SUBSEA 7 INC.

(the "Company")

MINUTES OF THE COMPANY'S ANNUAL GENERAL MEETING HELD AT 10:00 A.M. CAYMAN ISLANDS LOCAL TIME, FRIDAY, 8 MAY 2009 AT THE COMPANY'S REGISTERED OFFICE IN UGLAND HOUSE, SOUTH CHURCH STREET, GEORGE TOWN, GRAND CAYMAN, CAYMAN ISLANDS

Present:	See Schedule I
In Attendance:	See Schedule II

IT WAS RESOLVED THAT Kristian Siem and Michael Delouche be appointed Chairman and Secretary, respectively, of the meeting.

GENERAL

1. Notice and Quorum

The Chairman said that notice of the meeting (the "Notice") had been sent to the Shareholders in accordance with the Articles of Association and that, accordingly, due notice of the meeting had been given. The Chairman further noted that there were one or more Shareholders present in person or by proxy holding not less than one-third of the Shares carrying the right to vote and that, accordingly, a quorum was present.

ORDINARY BUSINESS

2. Adoption of Financial Statements for the Year Ended 31 December 2008 and the Reports of the Directors and the Auditors

The financial statements for the year ended 31 December 2008, including the reports prepared by the Directors and by the Auditors (the "Financial Statements") were tabled. It was noted that the Financial Statements had already been approved by the Directors. Following discussion and a motion duly made, IT WAS RESOLVED, with 96,853,454 shares voting "FOR" and 51,007 shares voting "AGAINST", THAT the Accounts be and are hereby confirmed, ratified and approved.

3. Appointment of Auditors of the Company

It was proposed that PricewaterhouseCoopers be appointed as Auditors of the Company for the financial year ending 31 December 2009. After discussion, IT WAS UNANIMOUSLY RESOLVED THAT PricewaterhouseCoopers be and is hereby appointed as Auditors of the Company for the period ending 31 December 2009 and to hold office subject to the Articles of Association.

4. Remuneration of Auditors

The Chairman noted that, in accordance with the Notice of the Annual General Meeting of the Company, a proposal has been made to ratify and confirm the Board of Directors' authority to fix the remuneration of the Auditors. During the year, the Company paid $1,183,000 for statutory audit services, $122,000 for tax services and $46,000 for other services.

After discussion, IT WAS RESOLVED, with 96,867,011 shares voting "FOR" and 37,450 shares voting "AGAINST", THAT the authority of the Board of Directors to fix the remuneration of the Auditors for fiscal 2008 be and is hereby confirmed, ratified and approved.

5. Election of Directors

It was noted that Messrs. Kristian Siem, Arild Schultz and Michael Delouche have been nominated for re-election as Directors of the Company and, after discussion, IT WAS RESOLVED THAT Mr. Arild Schultz be and is hereby re-elected as a Director of the Company with immediate effect, with 86,965,615 shares voting “FOR”, 9,937,108 shares voting “AGAINST” and 1,738 shares “ABSTAINING”, and Messrs. Kristian Siem and Michael Delouche be and are hereby elected as Directors of the Company with immediate effect, with 86,329,215 shares voting “FOR”, 10,573,508 shares voting “AGAINST” and 1,738 shares “ABSTAINING”, each for a period of approximately two years until the date of the Annual General Meeting in 2011 and that all corporate actions necessary in relation to such appointment be and are hereby approved.

6. Remuneration of Directors

The Chairman reported to the Meeting that the remuneration paid for the services of each Director, excluding Messrs. Siem, Delouche and Fitzgerald, was $25,000- and the remuneration paid for the various services provided by Messrs. Siem and Delouche was $800,000- during 2008 as reported in the Annual Report.

After discussion, IT WAS RESOLVED, with 96,867,361 shares voting “FOR” and 37,100 shares voting “AGAINST”, THAT the remuneration paid for the services of each Director, excluding Messrs. Siem, Delouche and Fitzgerald, in the amount of $25,000- and the remuneration paid for the various services provided by Messrs. Siem and Delouche in the amount of $800,000 as reported in the 2008 Annual Report be and are hereby confirmed, ratified and approved.

SPECIAL BUSINESS

Ordinary Resolution

7. Ratify the Actions of Directors and Officers

The Chairman summarised the business of the meetings of the Board of Directors held, and the resolutions of the Board of Directors passed, in each case, during 2008. On a motion duly made, IT WAS RESOLVED, with 96,004,111 shares voting “FOR” and 350 shares voting “AGAINST”: -

7.1 THAT each and all of the acts, transactions and proceedings of the Directors, Officers and employees of the Company for the last fiscal year of the Company be and they are hereby sanctioned, approved, ratified and confirmed.

7.2 THAT the Company does fully and effectively indemnify and save harmless all Directors, Officers and employees of the Company in respect of any claims, demands or suits made upon or against them or any one or more of them concerning their duties or actions as Directors, Officers or employees of the Company.

7.3 THAT the Directors of the Company (notwithstanding the personal interest of all or any of them) be and they are hereby authorised to execute on behalf of the Company forms of indemnity in favour of such Directors, Officers and employees as and when necessary.

7.4 THAT in the event of any claim or necessity to defend proceedings of the board against such Directors, Officers and employees, said defence shall be undertaken by the Company.

Special Resolution

8. Approve and Ratify the Establishment of a New Restricted Stock Award Plan

The Board of Directors has approved the adoption of a new Restricted Stock Award Plan. The Company and the Board believes that such a plan is in the best interests of the Company and its Shareholders by improving the Company’s competitive position with respect to attracting and retaining key personnel by providing a long-term incentive.

Following the discussion, a motion was duly made and IT WAS RESOLVED as a Special Resolution, with 87,003,209 shares voting “FOR”, 9,728,114 shares voting “AGAINST” and 173,178 shares “ABSTAINING”, THAT the establishment of the Restricted Stock Award Plan is hereby approved and ratified.

Ordinary Resolutions

9. Approve and Ratify the Granting of Restricted Stock Awards and Replacement of Share Options with Restricted Shares

The Chairman said that, following the approval and ratification of the Restricted Stock Award Plan in the preceding resolution, the Shareholders are asked to approve and ratify the proposal to grant awards of restricted shares under the Restricted Stock Award Plan and to replace tendered share options with restricted shares on the basis of 3 surrendered share options for each 1 new restricted share. A motion was duly made and IT WAS RESOLVED, with 87,003,209 shares voting “FOR”, 9,728,114 shares voting “AGAINST” and 173,178 shares “ABSTAINING”, THAT the granting of restricted stock awards and the replacement of tendered share options with restricted shares at the agreed-upon exchange ratio is hereby approved and ratified.

10. Approve Increase in Authorised Share Capital

The Chairman said that it is proposed that the authorized share capital of the Company be increased from US$2,000,000- divided into 200,000,000 Common Shares of a nominal or par value of US$0.01 each to US$3,000,000- by the creation of an additional authorized 100,000,000 Common Shares of a nominal or par value of US$0.01 each.

Following a discussion, IT WAS RESOLVED, with 94,708,088 shares voting “FOR” and 2,200,373 shares voting “AGAINST”, THAT the authorized share capital of the Company be increased from US$2,000,000- divided into 200,000,000 Common Shares of a nominal or par value of US$0.01 each to US$3,000,000- by the creation of an additional authorized 100,000,000 Common Shares of a nominal or par value of US$0.01 be and is hereby approved.

Special Resolution

11. Approve Amendment and Restatement of Memorandum and Articles of Association

The Chairman said that, following the adoption of the resolutions to amend the Company’s Memorandum and Articles of Association, it is proposed that the Memorandum and Articles of Association be amended and restated to incorporate the updates and amendments into one composite document reflecting the Company’s Memorandum and Articles of Association.

On a motion duly made, IT WAS RESOLVED as a Special Resolution, with 95,023,250 shares voting “FOR” and 1,881,211 shares voting “AGAINST”, THAT the Company’s Memorandum of Association and the Articles of Association be amended and restated to

incorporate approved changes and to have one composite document reflecting the Company's Memorandum and Articles of Association.

12. Any Other Business Properly Brought Before the Meeting

There being no further business, the Chairman declared the meeting closed.

Schedule I

SUBSEA 7 INC
VOTES OF MEMBERS REPRESENTED AT ANNUAL GENERAL MEETING ON 8 MAY 2009
OF 146,919,380 TOTAL SHARES OUTSTANDING

Name	Own Shares	Proxies	Total	% of Total
Chairman, Kristian Siem	0	96,904,461	96,904,461	65.9%
Total	0	96,904,461	96,904,461	65.9%

-5-

Schedule II

Present in attendance
Kristian Siem
Michael Delouche
Sasha Siem

JULY

06.07.09

SUBSEA 7 ANNOUNCES CONTRACT AWARD IN ANGOLA

Subsea 7 Inc. (OSE Symbol: SUB), one of the world's leading subsea engineering and construction companies, announced today that it has been awarded a pipeline engineering, construction and installation contract in Angola, offshore west Africa. The project is valued in excess of $ (US) 150 million.

The engineering work will commence immediately. The offshore phase will commence in 2010 and complete in 2011.

Further information regarding the contract award will be released at the earliest opportunity.

06.07.09

PRIMARY INSIDER NOTIFICATION FORMS

Please find attached Primary Insider Notification Forms in respect of trading of shares in Subsea 7 Inc (SUB).

28.07.09

SUBSEA 7 INC. SECOND QUARTER 2009 RESULTS

Subsea 7 inc. Second Quarter 2009 Report and Presentation

PRIMARY INSIDER NOTIFICATION FORM

AWARD OF RESTRICTED STOCK OPTIONS

Please be advised that on 6 July 2009 I, Barry Mahon, being a Primary Insider of Subsea 7 Inc. (the "Company") received an award of 100,000 restricted stock under the Subsea 7 Inc. Restricted Stock Award Plan which was approved at the Company's AGM on 8th May 2009.

These restricted stock awards will vest over a 5 year period, 60% on the 3rd anniversary of the initial award with the remaining 40% on the 5th anniversary of the initial award.

Following this award, I will hold 100,000 restricted stock awards and 135,000 share options in Subsea 7 Inc.

PRIMARY INSIDER NOTIFICATION FORM

AWARD OF RESTRICTED STOCK OPTIONS

Please be advised that on 6 July 2009 I, David Cassie, being a Primary Insider of Subsea 7 Inc.(the "Company") received an award of 100,000 restricted stock under the Subsea 7 Inc. Restricted Stock Award Plan which was approved at the Company's AGM on 8th May 2009.

These restricted stock awards will vest over a 5 year period, 60% on the 3rd anniversary of the initial award with the remaining 40% on the 5th anniversary of the initial award.

Following this award, I will hold 100,000 restricted stock awards and 159,000 share options in Subsea 7 Inc.

PRIMARY INSIDER NOTIFICATION FORM

AWARD OF RESTRICTED STOCK OPTIONS

Please be advised that on 6 July 2009 I, Jan Willem van der Graaf, being a Primary Insider of Subsea 7 Inc. (the "Company") received an award of 40,000 restricted stock under the Subsea 7 Inc. Restricted Stock Award Plan which was approved at the Company's AGM on 8th May 2009.

These restricted stock awards will vest over a 5 year period, 60% on the 3rd anniversary of the initial award with the remaining 40% on the 5th anniversary of the initial award.

Following this award, I will hold 40,000 restricted stock awards, 30,000 share options and 7,500 in Subsea 7 Inc.

PRIMARY INSIDER NOTIFICATION FORM

AWARD OF RESTRICTED STOCK OPTIONS

Please be advised that on 6 July 2009 I, John Evans, being a Primary Insider of Subsea 7 Inc. (the "Company") received an award of 100,000 restricted stock under the Subsea 7 Inc. Restricted Stock Award Plan which was approved at the Company's AGM on 8th May 2009.

These restricted stock awards will vest over a 5 year period, 60% on the 3rd anniversary of the initial award with the remaining 40% on the 5th anniversary of the initial award.

Following this award, I will hold 100,000 restricted stock awards, 157,000 share options and 487 shares in Subsea 7 Inc.

subsea 7

Subsea 7 Inc.

Earnings Presentation Quarter Ended 30 June 2009

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30.06.2009

subsea 7

Highlights

Good operational performance in all regions

Very high levels of activity in Brazil, with the offshore phase of Shell's BC-10 project progressing well

Completed construction of the Port Isabel spoolbase in Texas and commenced pipeline fabrication activities on Marathon's Droshky project

Implemented cost-cutting initiatives

Awarded a pipeline engineering, construction and installation contract in Angola, offshore west Africa, valued in excess of USD 150 million in July 2009

Subsea Partner of Choice

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30.06.2009

subsea 7

Operational Performance by Region

North Sea

Three Months Ended 30 June

Six Months Ended 30 June

Centrica's Grove project continued, with the pipelay scope completed
StatoilHydro's Vega project progressed well
Subsea Viking completed scheduled drydock during the quarter

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30.06.2009

subsea 7

Operational Performance by Region

Africa

Three Months Ended 30 June

2009 2008

Six Months Ended 30 June

2009 2008

Scope of work being undertaken for Addax Okwori in Nigeria completed
Close out of Chevron's Tombua Landana contract, with settlement of variation orders
BP's Block 18 Life of Field and Block 31 projects ongoing

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30.06.2009

subsea 7

Operational Performance by Region

Three Months Ended 30 June

Brazil
Six Months Ended 30 June

Activity levels remained high
Shell's BC-10 project progressed well, with high levels of offshore activity
StatoilHydro's Peregrino project progressed well during the quarter
Petrobras' Sul Capixaba pipeline fabrication continued at the Ubu spoolbase

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30.06.2009

subsea 7

Operational Performance by Region

North America

Three Months Ended 30 June

Six Months Ended 30 June

BP's Thunder Horse project ongoing with support of the Skandi Neptune
Construction of the Port Isabel spoolbase was completed, allowing pipeline fabrication to commence on Marathon's Droshky project

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30.06.2009

subsea 7

Operational Performance by Region

Asia Pacific

Three Months Ended 30 June

2009 2008

Six Months Ended 30 June

2009 2008

Rockwater 2 was in a planned drydock for 60 days during the quarter and Venturer off-hire due to drydock
Minimal offshore activity in region with the exception of some limited work for various Woodside developments in Australia

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30.06.2009

subsea 7

Backlog at 30 June 2009 & 30 June 2008

By Region

By Contract Type

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30.06.2009

subsea 7

Backlog at 30 June 2009 by Year of Execution

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30.06.2009

subsea 7

Financial Highlights

(Amounts in USD millions)	Three Months ended		Six Months Ended
	30/06/2009 Unaudited	30/06/2008 Unaudited	30/06/2009 Unaudited	30/06/2008 Unaudited
Revenue	637.2	598.9	1,240.1	1,161.0
Adjusted EBITDA	145.7	147.3	255.7	254.2
Net operating profit	117.8	131.3	199.9	215.9
Profit before tax	119.2	123.1	198.9	204.7
Net profit attributable to equity shareholders	82.2	86.3	137.3	141.4
Earnings per share, in USD per share
Earnings per share, basic	0.56	0.59	0.93	0.96
Earnings per share, diluted	0.55	0.56	0.93	0.92

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30.06.2009

subsea 7

Cash Flows

	Six Months Ended
(Amounts in USD 1,000)	30/06/2009
Unaudited	30/06/2008
Unaudited
Net Profit	137,284	141,403
Non-cash income statement items	125,220	104,847
Changes in working capital	(107,888)	6,230
Cash generated from operations	154,616	252,480
Purchase of property, plant and equipment	(115,796)	(281,971)
Proceeds from sale of property, plant and equipment	618	25,420
Dividends received	7,136	-
Repurchase of convertible notes	(11,025)	-
Purchase of own shares	-	(15,716)
Other cash flows	(64,834)	(56,170)
Net decrease in cash and cash equivalents	(29,285)	(75,957)
Cash and cash equivalents at start of period	114,066	167,657
Cash and cash equivalents at end of period	84,781	91,700

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30.06.2009

subsea7

Balance Sheet

| (Amounts in USD 1,000) | 30/06/2009
Unaudited | 30/06/2008
Unaudited | 31/12/2008
Audited |
| --- | --- | --- | --- |
| Assets | | | |
| Non current assets | 1,271,544 | 1,227,547 | 1,120,367 |
| Cash and cash equivalents | 84,781 | 91,700 | 114,066 |
| Other current assets | 948,670 | 702,605 | 768,561 |
| Current assets | 1,033,451 | 794,305 | 882,627 |
| Total assets | 2,304,995 | 2,021,852 | 2,002,994 |
| Equity and liabilities | | | |
| --- | --- | --- | --- |
| Shareholders' equity | 942,646 | 938,306 | 689,666 |
| Borrowings | 410,591 | 398,353 | 559,737 |
| Other non current liabilities | 103,854 | 80,918 | 104,849 |
| Non current liabilities | 514,445 | 479,271 | 664,586 |
| Borrowings | 167,452 | - | - |
| Other current liabilities | 680,452 | 604,275 | 648,742 |
| Current liabilities | 847,904 | 604,275 | 648,742 |
| Total Liabilities | 1,362,349 | 1,083,546 | 1,313,328 |
| Total Shareholders' equity and liabilities | 2,304,995 | 2,021,852 | 2,002,994 |

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30.06.2009

subsea 7

Shareholders' equity

	Six Months Ended
(Amounts in USD 1,000)	30/06/2009
Unaudited	30/06/2008
Unaudited
Shareholders' equity at start of period	689,666	819,757
Share issues	32	388
Purchase of own shares	-	(15,716)
Result for the period	137,284	141,403
Share based payment	2,161	2,313
Available-for-sale assets – fair value adjustment	27,457	-
Currency translation differences	86,046	(9,839)
Shareholders' equity at end of period	942,646	938,306

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30.06.2009

subsea7

Adjusted EBITDA

Reconciliation of net profit attributable to equity shareholders to Adjusted EBITDA

(Amounts in USD 1,000)	Three months ended		Six Months Ended
	30/06/2009 Unaudited	30/06/2008 Unaudited	30/06/2009 Unaudited	30/06/2008 Unaudited
Net profit attributable to equity shareholders	82,239	86,322	137,284	141,403
Adjustments:
Taxation expense	36,924	36,750	61,663	63,249
Net financial items	(752)	11,728	4,369	16,608
Depreciation, amortisation and impairments	27,877	23,271	53,044	44,006
Profit on disposal of property, plant and equipment	(613)	(10,784)	(613)	(11,036)
Adjusted EBITDA	145,675	147,287	255,747	254,230
Revenue	637,231	598,938	1,240,057	1,161,047
Adjusted EBITDA %	22.9%	24.6%	20.6%	21.9%

The Company calculates "Adjusted EBITDA" (adjusted earnings before interest, taxation, depreciation and amortisation) as the net profit attributable to equity shareholders adjusted for taxation, net financial items, depreciation, amortisation, impairments and profits or losses on disposals of property, plant and equipment.

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30.06.2009

subsea 7

SUBSEA 7 INC.

SECOND QUARTER AND HALF YEAR REPORT 2009 - UNAUDITED

28 July 2009

Subsea 7 Inc. (Oslo Stock Exchange: SUB) today reports the results for the second quarter of 2009 and the half year 2009.

PERFORMANCE SUMMARY

Quarter Highlights

Good project execution in all regions.
Very high levels of activity in Brazil, with the offshore phase of Shell's BC-10 project progressing well.
Completed construction of the Port Isabel spoolbase in Texas and commenced pipeline fabrication operations on Marathon's Droshky project.
Implemented cost-cutting initiatives.

Half Year Highlights

In addition to the above, the following is of note for the half year:
- Successfully completed a number of projects, including Chevron's Tombua Landana development.
- Awarded a contract by Petrobras in Brazil valued at approximately USD 200 million in support of the Tambua Urugua and P-56 developments.

Post Quarter Highlights

Awarded a pipeline engineering, construction and installation contract in Angola, offshore west Africa, valued in excess of USD 150 million.

Financial Results

The Group's accounts are prepared in accordance with International Financial Reporting Standards (IFRS).

In USD millions	Three months ended		Half year ended
	30/06/2009 Unaudited	30/06/2008 Unaudited	30/06/2009 Unaudited	30/06/2008 Unaudited
Revenue	637.2	598.9	1,240.1	1,161.0
Adjusted EBITDA	145.7	147.3	255.7	254.2
Net operating profit	117.8	131.3	199.9	215.9
Profit before tax	119.2	123.1	198.9	204.7
Net profit attributable to equity shareholders	82.2	86.3	137.3	141.4
Earnings per share, in USD per share
Earnings per share, basic	0.56	0.59	0.93	0.96
Earnings per share, diluted	0.55	0.56	0.93	0.92

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OPERATIONS

North Sea

The North Sea region performed well during the quarter.

Activity on Centrica's Grove project continued, with the pipelay scope completed. Eon's Rita project was closed out following the completion of offshore activity during the first quarter.

Engineering, procurement and fabrication activity took place in respect of the F3-FA project for Venture, with offshore work being progressed for the Venture Channon / Barbarossa project.

In Norway, the StatoilHydro Vega project progressed well and, at the end of the quarter, the pipelay by the Seven Navica was substantially complete. The construction vessels Seven Seas, Toisa Perseus and Seven Sisters were also committed to umbilical lay and tie-ins on the Vega project.

The Vigra spoolbase was busy during the quarter with the fabrication of pipelines for StatoilHydro's Vega and Troll O2 projects. Project management, engineering and procurement continued on BP's Skarv and Valhall Re-Development projects.

Inspection, Repair and Maintenance (IRM) operations continued on the Shell, ConocoPhillips, Total and BP frame agreements.

The Subsea Viking completed a scheduled drydock during the quarter.

Other significant activities for the half year include the successful completion of Venture's Chestnut P2 development and Ithaca's Jacky project. The Rockwater 1, Toisa Polaris and Kommander Subsea vessels all completed scheduled drydocks during the first quarter.

Africa

The scope of work being undertaken for Addax Okwori, offshore Nigeria, was completed during the quarter. Operations continued on BP's Block 18 Life of Field project, offshore Angola, and engineering and project management activities continued in respect of BP's Block 31 contract.

Chevron's Tombua Landana contract was closed out during the quarter, with the settlement of variation orders and project costs.

Brazil

Activity levels remained high in Brazil.

Shell's BC-10 project continued to progress well during the quarter, with high levels of offshore activity.

StatoilHydro's Peregrino project also progressed well during the quarter, with post-lay survey and commissioning works completed on the rigid pipelay campaign.

Petrobras' Sul Capixaba pipeline fabrication continued at the Ubu spoolbase with offshore installation planned for the third quarter of 2009. The directional drilling shore-approach and pull-back of two kilometres of pipe was successfully completed in early July. This was a significant achievement as the shore-approach scope was a technically challenging phase of the project.

The K3000 and Lochnagar continued to support Petrobras on day-rate operations while the Normand Seven supported the Petrobras Roncador project.

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North America

The Skandi Neptune continued to support BP's Thunder Horse project during the quarter. Engineering and project management continued on the Petrobras Cascade project.

The construction of the Port Isabel spoolbase in Texas was completed by the end of the quarter which allowed pipeline fabrication operations to commence on Marathon's Droshky project.

Other significant activities for the half year include the successful completion of BP's Atlantis project.

Asia Pacific

The Rockwater 2 was in a planned drydock for 60 days and the Venturer was off-hire for a large part of the quarter due to a drydock. Accordingly, there was minimal offshore activity in the region, with the exception of some limited work for various Woodside developments in Australia.

Other significant activities for the half year include the announcement in February 2009 by the Company and Technip to dissolve their joint venture, Technip Subsea 7 Asia Pacific, once it has completed all its existing projects and tendered work.

INVESTMENTS

During the quarter, the Company continued to hold investments in listed equity shares and debt securities.

At 30 June 2009, these investments were treated as 'Available-for-sale financial assets' and were marked-to-market in the balance sheet, giving rise to an increase in their carrying value during the quarter of USD 23.6 million (half year increase of USD 47.4 million). USD 11.7 million of this increase in the quarter (USD 27.4 million for the half year) has been reflected directly in Shareholders' equity. The remaining USD 11.9 million (USD 20.0 million for the half year), which reflects the re-measurement at fair value of the embedded option contained within the debt securities, is included in the consolidated income statement.

FINANCING

In April 2009, the Company concluded a three-year revolving credit facility with HSBC Bank plc for USD 50 million. In June 2009, the Company concluded a three-year revolving credit facility with Bank of Scotland plc for USD 50 million. The undrawn loan facilities available to the Company at the date of this report total USD 200 million.

At 30 June 2009, the Company reassessed the expected maturity of the USD 175 million Subsea 7 Inc. zero coupon convertible notes 2007/2017. The notes were previously accounted for as if they would be redeemed either at the option of the holders on 29 June 2012 or at the option of the Company on 13 July 2012. It is now considered more likely that the convertible notes will be redeemed at their accreted principal amount at the option of the holders on 29 June 2010. The carrying value of the notes was therefore adjusted to reflect the revised estimated maturity. As a result, an additional USD 20.3 million of accretion was booked within finance expense in the consolidated income statement in June 2009. The revised carrying value of the notes of USD 167.5 million has been presented within current liabilities.

Other significant activities to note for the half year include the repurchase by the Company in March 2009 of USD 15 million (par value) of the USD 300 million 2.8% Subsea 7 Inc. convertible notes due 2011 for USD 11.03 million, or 73.5% of the par value. A gain of USD 2.5 million in respect of this repurchase was included within finance income in the income statement for the first quarter. The repurchased convertible notes remain outstanding and have not been cancelled.

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FINANCIALS

Second Quarter 2009

Revenue for the second quarter 2009 was USD 637.2 million compared to USD 598.9 million for the same period in 2008 primarily reflecting a higher level of project activity in Brazil.

Net operating profit for the second quarter 2009 was USD 117.8 million compared to USD 131.3 million for the same period in 2008. Net operating margin as a percentage of revenue for the second quarter 2009 was 18.5% compared to 21.9% in the second quarter 2008. The second quarter results for 2008 included a profit of approximately USD 10.8 million from the sale of the K2000 vessel, which contributed to the higher margin.

Net financial income for the second quarter 2009 was USD 0.8 million compared to net financial expense of USD 11.7 million for the second quarter 2008. The main reasons for this difference are gains made in the marking-to-market of derivative financial instruments during the quarter of USD 23.5 million (of which USD 11.9 million relates to the remeasurement at fair value of the embedded option contained within the available-for-sale financial assets), compared with losses of USD 6.6 million in the second quarter 2008. This was offset by USD 20.3 million of additional accretion expense recognised on reassessment of the term of the 2007 convertible note as noted previously.

Taxation expense for the second quarter 2009 was USD 36.9 million which equates to an effective rate of 31%.

Net profit attributable to equity shareholders for the second quarter 2009 was USD 82.2 million, or USD 0.56 per share, compared to a net profit of USD 86.3 million, or USD 0.59 per share, for the second quarter 2008.

Half Year 2009

Revenue for the half year ended 30 June 2009 was USD 1.24 billion, which represents an increase of 6.8% from USD 1.16 billion in 2008.

Net operating profit for the half year ended 30 June 2009 was USD 199.9 million, compared to USD 215.9 million for the same period in 2008.

Taxation expense for the half year ended 30 June 2009 was USD 61.7 million which equates to an effective rate of 31%, compared to an expense of USD 63.2 million and an effective rate of 31% in 2008.

Net profit attributable to equity shareholders for the half year ended 30 June 2009 was USD 137.3 million, or USD 0.93 per share, compared to a net profit of USD 141.4 million, or USD 0.96 per share in 2008.

Cash and short-term deposits at 30 June 2009 were USD 84.8 million compared to USD 91.7 million at 30 June 2008.

Shareholders' equity at 30 June 2009 totalled USD 942.6 million compared to USD 938.3 million at 30 June 2008.

CAPITAL EXPENDITURE

The construction of the diving support vessel Seven Atlantic progressed well. Work continues on commissioning the vessel and final installation and commissioning of the dive system. The vessel is scheduled for delivery in the fourth quarter of 2009.

Construction of the new-build pipelay and construction vessel to be named Seven Pacific progressed during the quarter with steel fabrication now well underway. The vessel is scheduled for delivery in the fourth quarter of 2010.

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SHARE CAPITAL

There were no options exercised during the quarter under the Company's share option plan.

During the half year, a total of 7,500 share options were exercised under the Company's share option plan at a strike price of NOK 29.49 per share.

The Company had 146,919,380 shares issued and outstanding at 30 June 2009.

BACKLOG

The Group was awarded new contracts and variation orders, including commitments under frame agreements, of an aggregate amount of USD 350 million during the quarter, and an aggregate amount of USD 600 million for the half year. The movement in backlog between the first and second quarters was impacted by the weakening of the US Dollar, primarily against Sterling, which had a positive effect of approximately USD 250 million in the quarter and USD 200 million for the half year. The worldwide order book of the Group at 30 June 2009 was approximately USD 2.9 billion, comprising of USD 2.1 billion of day-rate contracts and USD 800 million of lump-sum contracts.

MAJOR NEW CONTRACTS SINCE 1 JANUARY 2009

In March 2009, the Company announced that it had been awarded a contract by Petrobras for the Tambau Urugua and P-56 developments in the Santos and Campos basis, offshore Brazil. The contract is valued at approximately USD 200 million, with the offshore pipeline installation campaign scheduled to take place during 2010.

In July 2009, the Company announced that it had been awarded a pipeline engineering, construction and installation contract in Angola, offshore west Africa, valued in excess of USD 150 million.

OUTLOOK

The medium to long-term outlook for the subsea market continues to remain strong, however there is no doubt that the current economic environment is challenging. There continue to be delays in project awards and a greater pressure on margins, driven by both lower volumes of work available and a push by the operators to cut costs in the supply chain.

The Company is continuing to focus efforts on reducing costs and improving efficiencies, both within the organisation and throughout the supply chain. These initiatives, which have been implemented, will enable the Company to remain competitive in the current environment and be well-positioned to capitalise on future opportunities.

RISKS AND UNCERTAINTIES

The principal risks and uncertainties faced by the Group over the remainder of the year are typical to the industry: risks associated with the bidding process, vessel utilisation, project execution and supply chain management. To that end, we continue to focus on the strategic initiatives in place to mitigate these – the Gateway Bidding team, the Centres of Excellence, the Critical Supply Networks, the Vessel Support Teams and the Knowledge Management functions, all of which are referred to in the Company's annual report for 2008.

In particular, the significant risks faced by the Group over the remaining half of the year relate to project execution, especially with regards to BP's Skarv and Valhall Re-Development projects in Norway, the Petrobras Cascade project in North America, the Petrobras Sul Capixaba project in Brazil and the StatoilHydro Peregrino project in Brazil, all of which will be in offshore phases.

In addition to the above, the Group is also exposed to a variety of financial risks associated with multinational operations and debt financing. The Group has in place risk management policies that seek to limit the adverse effects of these risks on its financial performance. Further details regarding these risks are set out in Note 2 to the financial statements in the Company's annual report for 2008.

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RESPONSIBILITY STATEMENT

We confirm, to the best of our knowledge, that the condensed consolidated financial information for the period 1 January to 30 June 2009 included in this report has been prepared in accordance with IAS 34 'Interim Financial Reporting' and gives a true and fair view of the Group's assets, liabilities, financial position and profit or loss as a whole. We also confirm, to the best of our knowledge, that this report includes a fair review of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year.

On behalf of the Board of Directors of Subsea 7 Inc.
28 July 2009

Kristian Siem
Chairman

Mel Fitzgerald
Chief Executive Officer

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CONSOLIDATED INCOME STATEMENT

| (Amounts in USD 1,000) | 2Q 2009
Unaudited | 2Q 2008
Unaudited | Half year
2009
Unaudited | Half year
2008
Unaudited | Full year
2008
Audited |
| --- | --- | --- | --- | --- | --- |
| Revenue | 637,231 | 598,938 | 1,240,057 | 1,161,047 | 2,373,252 |
| Operating expenses | (492,140) | (455,201) | (987,764) | (912,138) | (1,864,331) |
| Depreciation, amortisation and impairments | (27,877) | (23,271) | (53,044) | (44,006) | (95,300) |
| Profit on disposal of property, plant and equipment | 613 | 10,784 | 613 | 11,036 | 11,671 |
| Net operating profit | 117,827 | 131,250 | 199,862 | 215,939 | 425,292 |
| Changes in fair value of derivative financial instruments | 23,501 | (6,626) | 35,145 | (1,491) | (34,177) |
| Net currency gain/(loss) | 4,154 | 1,304 | (7,094) | (3,468) | 18,761 |
| Finance income | 2,021 | 1,312 | 5,472 | 3,673 | 5,881 |
| Finance expense | (28,924) | (7,718) | (37,892) | (15,322) | (33,014) |
| Net financial items | 752 | (11,728) | (4,369) | (16,608) | (42,549) |
| Share of post tax profit from joint ventures | 506 | 3,406 | 2,993 | 4,986 | 11,768 |
| Share of post tax profit from associates | 78 | 144 | 462 | 335 | (8) |
| Profit before tax | 119,163 | 123,072 | 198,948 | 204,652 | 394,503 |
| Taxation expense | (36,924) | (36,750) | (61,663) | (63,249) | (130,506) |
| Net profit attributable to equity shareholders | 82,239 | 86,322 | 137,284 | 141,403 | 263,997 |
| Average number of issued shares (1,000) | 146,919 | 146,888 | 146,918 | 146,966 | 146,938 |
| Earnings per share, in USD per share | 0.56 | 0.59 | 0.93 | 0.96 | 1.80 |
| Average number of issued shares, diluted (1,000) | 158,013 | 164,982 | 147,122 | 165,056 | 164,975 |
| Earnings per share, diluted, in USD per share | 0.55 | 0.56 | 0.93 | 0.92 | 1.74 |

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

| (Amounts in USD 1,000) | 2Q 2009
Unaudited | 2Q 2008
Unaudited | Half year
2009
Unaudited | Half year
2008
Unaudited | Full year
2008
Audited |
| --- | --- | --- | --- | --- | --- |
| Net profit attributable to equity shareholders | 82,239 | 86,322 | 137,284 | 141,403 | 263,997 |
| Other comprehensive income/(expense): | | | | | |
| Currency translation differences | 98,035 | (1,773) | 86,046 | (9,839) | (302,219) |
| Available-for-sale financial assets – fair value adjustment | 11,750 | - | 27,457 | - | (71,801) |
| | 109,785 | (1,773) | 113,503 | (9,839) | (374,020) |
| Total comprehensive income/(expense) for the period | 192,024 | 84,549 | 250,787 | 131,564 | (110,023) |

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CONSOLIDATED BALANCE SHEET

| (Amounts in USD 1,000) | At 30/06/2009
Unaudited | At 30/06/2008
Unaudited | At 31/12/2008
Audited |
| --- | --- | --- | --- |
| ASSETS | | | |
| Non-current assets | | | |
| Goodwill | 98,533 | 98,533 | 98,533 |
| Other intangible assets | 895 | 1,498 | 1,130 |
| Property, plant and equipment | 1,143,100 | 1,115,858 | 991,408 |
| Derivative financial instruments | 1,563 | - | - |
| Deferred tax assets | 15,819 | 3,777 | 15,113 |
| Retirement Benefit Asset | - | 137 | - |
| Investment in joint ventures | 9,571 | 5,800 | 12,582 |
| Investment in associates | 2,063 | 1,944 | 1,601 |
| | 1,271,544 | 1,227,547 | 1,120,367 |
| Current assets | | | |
| Inventories | 23,218 | 21,351 | 22,567 |
| Trade and other receivables | 785,175 | 678,411 | 659,097 |
| Available-for-sale financial assets | 132,860 | - | 85,414 |
| Derivative financial instruments | 7,417 | 2,843 | 1,483 |
| Cash and cash equivalents | 84,781 | 91,700 | 114,066 |
| | 1,033,451 | 794,305 | 882,627 |
| TOTAL ASSETS | 2,304,995 | 2,021,852 | 2,002,994 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | | | |
| Shareholders' equity | | | |
| Share capital | 1,469 | 1,469 | 1,469 |
| Share premium reserve | 271,270 | 271,188 | 271,238 |
| Shares held by Employee Share Trust | (9,430) | - | (9,430) |
| Other reserves | (117,270) | 140,491 | (225,650) |
| Retained Earnings | 796,607 | 525,158 | 652,039 |
| | 942,646 | 938,306 | 689,666 |
| Non-current liabilities | | | |
| Borrowings | 410,591 | 398,353 | 559,737 |
| Deferred tax liabilities | 98,793 | 76,558 | 99,610 |
| Retirement benefit obligations | 1,097 | - | 1,002 |
| Derivative financial instruments | 297 | - | - |
| Other non-current liabilities | 3,667 | 4,360 | 4,237 |
| | 514,445 | 479,271 | 664,586 |
| Current liabilities | | | |
| Trade and other payables | 639,259 | 571,176 | 605,358 |
| Current tax liabilities | 38,492 | 31,585 | 32,728 |
| Borrowings | 167,452 | - | - |
| Derivative financial instruments | 2,701 | 1,496 | 10,656 |
| Finance lease obligations | - | 18 | - |
| | 847,904 | 604,275 | 648,742 |
| Total liabilities | 1,362,349 | 1,083,546 | 1,313,328 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 2,304,995 | 2,021,852 | 2,002,994 |

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subsea 7

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

(Amounts in USD 1,000)	Share capital	Share premium	Shares held by Employee Share Trust	Other reserves	Retained earnings	Total
At 1 January 2009 (Audited)	1,469	271,238	(9,430)	(225,650)	652,039	689,666
Foreign currency translation	-	-	-	86,046	-	86,046
Available-for-sale financial assets – fair value adjustment	-	-	-	27,457	-	27,457
Other comprehensive income	-	-	-	113,503	-	113,503
Net result for the period	-	-	-	-	137,284	137,284
Total comprehensive income	-	-	-	113,503	137,284	250,787
Share based payments	-	-	-	-	2,161	2,161
Shares issued – exercise of options	-	32	-	-	-	32
Repurchase of convertible notes	-	-	-	(3,163)	3,163	-
Depreciation on re-valued assets	-	-	-	(1,960)	1,960	-
At 30 June 2009 (Unaudited)	1,469	271,270	(9,430)	117,270	796,607	942,646
At 1 January 2008 (Audited)	1,477	286,508	-	152,362	379,410	819,757
---	---	---	---	---	---	---
Foreign currency translation	-	-	-	(9,839)	-	(9,839)
Other comprehensive expense	-	-	-	(9,839)	-	(9,839)
Net result for the period	-	-	-	-	141,403	141,403
Total comprehensive income/(expense)	-	-	-	(9,839)	141,403	131,564
Purchase of own shares	(9)	(15,707)	-	-	-	(15,716)
Share based payments	-	-	-	-	2,313	2,313
Shares issued – exercise of options	1	387	-	-	-	388
Depreciation on re-valued assets	-	-	-	(2,032)	2,032	-
At 30 June 2008 (Unaudited)	1,469	271,188	-	140,491	525,158	938,306

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subsea 7

CONSOLIDATED CASH FLOW STATEMENT

| (Amounts in USD 1,000) | Half year
2009
Unaudited | Half year
2008
Unaudited | Full year
2008
Audited |
| --- | --- | --- | --- |
| Cash flows from operating activities | | | |
| Cash generated from operations | 154,616 | 252,480 | 590,414 |
| Finance income received | 2,027 | 4,000 | 6,237 |
| Finance expense paid | (6,059) | (4,270) | (10,578) |
| Taxation paid | (57,422) | (60,618) | (115,016) |
| Net cash flows from operating activities | 93,162 | 191,592 | 471,057 |
| Cash flows from investing activities | | | |
| Proceeds from sale of property, plant and equipment | 618 | 25,420 | 26,073 |
| Purchase of property, plant and equipment | (115,796) | (281,971) | (449,282) |
| Purchase of Available-for-sale financial assets | - | - | (179,381) |
| Dividend received | 7,136 | - | - |
| Net cash flows used in investing activities | (108,042) | (256,551) | (602,590) |
| Cash flows from financing activities | | | |
| Net proceeds from issue of ordinary share capital | 32 | 388 | 438 |
| Purchase of own shares | - | (15,716) | (15,716) |
| Shares purchased by Employee Share Trust | - | - | (9,430) |
| Drawdown of bank loans | - | - | 150,000 |
| Government grants received | - | - | 15 |
| Repurchase of convertible notes | (11,025) | - | - |
| Finance lease principal payments | - | (376) | (394) |
| Net cash flows (used in)/from financing activities | (10,993) | (15,704) | 124,913 |
| Effects of exchange rate changes | (3,412) | 4,706 | (46,971) |
| Net decrease in cash and cash equivalents | (29,285) | (75,957) | (53,591) |
| Cash and cash equivalents at start of period | 114,066 | 167,657 | 167,657 |
| Cash and cash equivalents at end of period | 84,781 | 91,700 | 114,066 |

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subsea 7

NOTES TO THE FINANCIAL INFORMATION

1. Basis of preparation

The condensed consolidated financial information for the period 1 January to 30 June 2009 has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union, but has not been audited or reviewed. The condensed consolidated financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2008 which have been prepared in accordance with IFRSs as adopted by the European Union.

2. Accounting policies

The adoption of the remaining standards, amendments to standards and interpretations above had no impact on the reported income or net assets of the Group in the quarter.

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subsea 7

3. Segment reporting

(Amounts in USD 1,000)	North Sea	Africa	Brazil	North America	Asia Pacific	Global	Total
2Q 2009 (Unaudited)
Revenue	307,744	62,291	227,409	28,091	11,696	-	637,231
Profit/(loss) before tax	74,881	34,856	13,042	9,965	(11,698)	(1,883)	119,163
2Q 2008 (Unaudited)
Revenue	293,174	107,199	141,973	39,860	16,698	34	598,938
Profit/(loss) before tax	87,975	13,456	13,203	7,117	12,472	(11,151)	123,072
Half year 2009 (Unaudited)
Revenue	524,413	137,170	502,566	51,421	24,487	-	1,240,057
Profit/(loss) before tax	101,196	52,877	39,354	20,025	(6,118)	(8,386)	198,948
Half year 2008 (Unaudited)
Revenue	493,993	253,721	292,509	89,978	30,788	58	1,161,047
Profit/(loss) before tax	110,227	51,145	25,447	20,544	24,194	(26,905)	204,652

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subsea 7

4. Cash generated from operations

(Amounts in USD 1,000)	Half year 2009 Unaudited	Half year 2008 Unaudited	Full year 2008 Audited
Net profit attributable to equity shareholders	137,284	141,403	263,997
Adjustments for:
Taxation expense	61,663	63,249	130,506
Depreciation and amortisation	53,044	44,006	95,300
Share based payment charge	2,161	2,313	4,640
Profit on disposal of property, plant and equipment	(613)	(11,036)	(11,671)
Deferred government grant income	(10)	(13)	(39)
Finance income	(5,472)	(3,673)	(5,881)
Finance expense	37,892	15,322	33,014
(Gain)/Loss on embedded derivative within Convertible Notes	(19,990)	-	22,166
Share of post tax profit from joint ventures	(2,993)	(4,986)	(11,768)
Share of post tax (profit)/loss from associates	(462)	(335)	8
Changes in working capital (excluding effects of acquisitions and disposal of subsidiaries):
(Increase)/decrease in inventories	(651)	3,858	2,642
(Increase)/decrease in trade and other receivables	(133,575)	(17,323)	3,325
Increase in trade and other payables	26,338	19,695	64,175
Cash generated from operations	154,616	252,480	590,414

5. Adjusted EBITDA

	Three months ended		Half year ended
(Amounts in USD 1,000 except percentages)	30/06/2009 Unaudited	30/06/2008 Unaudited	30/06/2009 Unaudited	30/06/2008 Unaudited
Net profit attributable to equity shareholders	82,239	86,322	137,284	141,403
Adjustments:
Taxation expense	36,924	36,750	61,663	63,249
Net financial items	(752)	11,728	4,369	16,608
Depreciation, amortisation and impairments	27,877	23,271	53,044	44,006
Profit on disposal of property, plant and equipment	(613)	(10,784)	(613)	(11,036)
Adjusted EBITDA	145,675	147,287	255,747	254,230
Revenue	637,231	598,938	1,240,057	1,161,047
Adjusted EBITDA %	22.9%	24.6%	20.6%	21.9%

The Company calculates "Adjusted EBITDA" (adjusted earnings before interest, taxation, depreciation and amortisation) as net profit attributable to equity shareholders adjusted for taxation, net financial items, depreciation, amortisation, impairments and profits or losses on disposals of property, plant and equipment.

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subsea 7

6. Reassessment of Convertible Notes

As noted in the financing commentary on page 3, the Company reassessed the expected maturity of the USD 175 million Subsea 7 Inc. zero coupon convertible notes 2007/2017 at 30 June 2009. As a result an additional USD 20.3 million of accretion expense was booked in June 2009. The notes' revised carrying value of USD 167.5 million has been presented within current liabilities.

7. Contingent liabilities

8. Events occurring after the balance sheet date

There were no subsequent events between the balance sheet date and the date the condensed consolidated financial information was authorised for issue that require disclosure.

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AUGUST

19.08.09

SUBSEA 7 CONFIRMS MAJOR CONTRACT AWARD ON BLOCK 18 FOR BP IN ANGOLA

Subsea 7 Inc (OSE Symbol: SUB), one of the world's leading subsea engineering and construction companies, today confirmed that the announcement made on July 6th 2009 for a pipeline engineering, construction and installation contract in Angola, offshore west Africa is for a gas export pipeline (GEL) project for BP. The contract is valued in excess of US $150 million.

The Subsea 7 workscope is to engineer, construct and install a 74 km 12" gas pipeline from Block 18 to a gas delivery pipeline in Block 3. In addition, Subsea 7 will perform the tie-in of the pipelines, including installing three client supplied subsea manifold systems and a 1000m umbilical before carrying out the final commissioning of the completed gas export system.

The engineering work will commence immediately, followed by the fabrication of the rigid pipeline at Subsea 7's Luanda spoolbase in 2010. The offshore phase will commence in 2010 and complete in 2011, using Subsea 7 pipelay and construction vessels.

Graham Sharland, Subsea 7's Chief Operating Officer - Africa Region stated, "I am delighted that BP has chosen Subsea 7 to perform this scope of work for them. This award further strengthens our relationship with BP in the Africa region and highlights our capabilities in delivering projects efficiently, safely and on time, reinforcing our position as the Subsea Partner of Choice. Above all it allows Subsea 7 to strengthen its presence in Angola and increase the number of local Angolans in our workforce."

The Greater Plutonio Development is located within Block 18, approximately 125 km off the coast of Angola in water depths ranging from 171m to 1325m. It has been operational since 2007.

SEPTEMBER

10.09.09

SUBSEA 7 AWARDED LONG-TERM PIPELAY CONTRACT IN BRAZIL

Subsea 7 Inc (OSE Symbol: SUB), one of the world's leading subsea engineering and construction companies, announced today that it has been awarded a long-term contract by Petrobras (Petroleo Brasileiro S/A) for its pipelay vessel the Normand Seven*.

The contract, valued in excess of US $ 250 million, is for the exclusive use of the vessel for a period of four (4) years, commencing in the third quarter of 2009.

Subsea 7's Vice President for Brazil Victor Bomfim said, "Subsea 7 has a tremendous track record of successful and safe project execution for Petrobras built up over a number of years. We are delighted to extend this relationship with this long term commitment to Subsea 7. It reinforces Subsea 7's position as the Subsea

Partner of Choice in the region and recognises the strong local presence that it has developed over many years."

*The Normand Seven is a state-of-the-art pipelay vessel fitted with an advanced flexible pipelay system capable of operating in water depths of up to 2,000m. She joined the Subsea 7 fleet immediately after her commissioning in 2007 and has worked continuously in Brazil since that time, primarily supporting Petrobras in the development of the Roncador field in the Campos basin.

24.09.09

SUBSEA 7 INC. LAUNCH OF $200 MILLION CONVERTIBLE BOND DUE 2014 TO FUND GENERAL CORPORATE PURPOSES AND FOR REFINANCING CONVERTIBLE DEBT

Subsea 7 Inc, ("Subsea 7", the "Company"), a leading subsea engineering and construction contractor, today announces that it proposes to offer a private placement of US$200 million of convertible bonds due 2014 (the "Bonds"). In addition, Subsea 7 has granted ABG Sundal Collier, an option to purchase up to an additional US$25 million principal amount of Bonds.

The proceeds of the issue will be used for general corporate purposes and for refinancing convertible debt.

The senior unsecured Bonds will be convertible into ordinary shares of the Company and are expected to have an annual coupon in the range of 3.50% - 4.00% payable semi-annually in arrears and a conversion premium of 32.5% - 37.5% over the volume weighted average price of the Company's shares on the Oslo Stock Exchange (converted into US$) between launch and pricing.

The convertible Bonds will be issued and redeemed at 100% of their principal amount and will, unless previously redeemed, converted or purchased and cancelled, mature in October 2014.

The Bonds are expected to be settled on or around October 13 October, 2009. The bonds will be unlisted, however Subsea 7 may decide to list the bonds on an exchange at a later stage.

This announcement does not constitute or form part of an offer to sell or the solicitation of an offer to subscribe for any securities of Subsea 7.

ABG Sundal Collier is acting as sole bookrunner.

24.09.09

PRICING OF US$275 MILLION CONVERTIBLE BOND DUE 2014 TO FUND GENERAL CORPORATE PURPOSES AND FOR REFINANCING CONVERTIBLE DEBT

Subsea 7 Inc, ("Subsea 7", the "Company"), a leading subsea engineering and construction contractor, announces the pricing of its private placement of US$275 million convertible bond due 2014 (the "Bonds"). The size of the issue was upsized from US$200 million due to exceptionally strong investor demand.

The proceeds from the Bonds will be used for general corporate purposes and for refinancing convertible debt.

The senior unsecured convertible Bonds will have an annual coupon of 3.50% payable semi-annually in arrears and a conversion price of US$ 17.98 per bond representing a conversion premium of 37.5% of the volume weighted average price of the Company's shares on the Oslo Stock Exchange (converted into US$).

The Reference Price of the Company's shares was set at US$ 13.08 (based on a volume weighted average price of NOK 76.02, and the exchange rate of NOK 5.81 / USD1.00). The total number of underlying common shares to be issued if all bonds are converted is 15,294,772 shares.

The Bonds will be issued and redeemed at 100% of their principal amount and will, unless converted or purchased and cancelled, mature in October 2014.

The Bonds are expected to be settled on or around October 13 October, 2009. The bonds will be unlisted, however Subsea 7 may decide to list the bonds on an exchange at a later stage. This announcement does not constitute or form part of an offer to sell or the solicitation of an offer to subscribe for any securities of Subsea 7.

25.09.09

SUBSEA 7 ANNOUNCES MAJOR CONTRACT WITH SANTOS LIMITED

Subsea 7 Inc (OSE Symbol: SUB), one of the world's leading subsea engineering and construction companies, announced today that it has been awarded a major subsea pipeline and installation services contract from Santos Limited at the Casino-Henry field, offshore Victoria, Australia. The contract is valued in excess of US $80m.

The Subsea 7 work scope includes installation of a 22km long 12 inch rigid pipeline to connect the subsea production trees at the Henry-2 and Netherby locations, together with 4 rigid spool pieces and also the installation of a 22km long electro-hydraulic umbilical from Casino-4 to Pecten East locations. Project management and engineering work will commence immediately and will be performed at Subsea 7's offices in Singapore.

Offshore operations are scheduled to commence at the end of 2009 and will see the arrival of the Seven Navica, one of Subsea 7's fleet of global deepwater pipelay and construction vessels to the Asia Pacific region. The project will also be supported by the Rockwater 2 diving support vessel which has been operating long-term in the region on major projects such as Kikeh (Malaysia) and Stybarrow (Australia).

Steve Wisely, Vice-President of Operations Asia Pacific stated, "I am delighted that Santos has chosen Subsea 7 to perform this significant project which highlights our capabilities in the installation of subsea pipelines, umbilicals and associated subsea construction services. The award allows Subsea 7 to build upon its established track record of successful project execution in the region and further strengthens our relationship with Santos. We very much look forward to bringing the Casino-Henry field onstream in a safe and timely manner."

The Casino-Henry field is located in the Otway Basin, in water depths of 56m to 72m, 30km south of Port Campbell, Victoria. The Casino-Henry fields are operated by

Santos Limited on behalf of a joint venture it has with Australian Worldwide Exploration Pty Ltd and Mitsui E&P Australia Pty Ltd.

OCTOBER

01.10.09

SUBSEA 7 INC. MANDATORY NOTIFICATION OF TRADE

Subsea 7 Inc. (Oslo Stock Exchange; SUB) today announces that it has purchased US$25 million (par value) of the US$300 million 2.8% Subsea 7 Inc. Convertible Notes due 2011 for US$24.06 million (average unit price of US$0.9625).

The Company now holds US$40 million (par value) of the US$300 million 2.8% Subsea 7 Inc. Convertible Notes due 2011.

23.10.09

SUBSEA 7 ANNOUNCES CONTRACT AWARD ON P-55 DEVELOPMENT

Subsea 7 Inc (OSE Symbol: SUB), one of the world's leading subsea engineering and construction companies, announced today that it has been awarded an engineering, procurement, installation and commissioning (EPIC) contract from Petrobras (Petroleo Brasileiro S/A) for the Roncador field, offshore Brazil. The contract is valued in excess of US $200m.

The workscope is to engineer, procure, fabricate, install and commission one 12" gas export line (38.7km long) and one 12" oil export line (42km long), connecting the P-55 platform to the PRA-1 platform. The scope of work also includes the procurement and installation of associated subsea equipment.

The offshore pipelines and equipment installation campaign will take place between Q3 2010 and Q2 2011 and will be carried out by one of Subsea 7's pipelay installation vessels.

Engineering and project management work will be conducted at Subsea 7's offices in Niteroi, Rio de Janeiro, Brazil and the fabrication of the rigid pipelines will be carried out at Subsea 7's pipeline fabrication spoolbase at Ubu, Brazil.

Victor Snabaitis Bomfim, Vice President of Subsea 7 in Brazil stated: "I am delighted that Petrobras has chosen Subsea 7 once again to perform this very significant project for the development of the Roncador field. This award further strengthens our position in the steel pipeline installation marketplace and is a result of our long term commitment to the country."

The Roncador field is located in Campos Basin in Rio de Janeiro State coast in water depths range from 200m to 1800m.

27.10.09

SUBSEA 7 INC. THIRD QUARTER 2009 RESULTS

Subsea 7 inc. Third Quarter 2009 Report and Presentation

subsea 7

Subsea 7 Inc.

Earnings Presentation

Quarter Ended

30 September 2009

30.09.2009

www.subsea7.com

subsea partner of choice

subsea 7

Highlights

Strong project execution in all regions, delivering EBITDA of USD 140.1 million, equivalent to an EBITDA margin of 21.2%

Awarded four new significant projects since 30 June 2009, valued at a combined total of USD 680 million (including an award post-quarter)

Launched private placement of USD 275 million of convertible notes. The notes were issued and proceeds received post-quarter

Efficiencies being realised from cost-cutting initiatives

30.09.2009
www.subsea7.com
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subsea 7

Operational Performance by Region

North Sea

Three Months Ended 30 Sept

Nine Months Ended 30 Sept

Centrica's Grove and Venture's Channon/Barbarossa projects substantially completed
Seven Navica completed StatoilHydro's Vega, and Troll O2 pipelines, and the pipelay scope on the Venture F3-FA project before commencing a scheduled drydock
In Norway, four construction vessels worked on BP's Valhall Re-Development and a number of StatoilHydro's developments

30.09.2009

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Operational Performance by Region

Three Months Ended 30 Sept

2009 2008

Africa

Nine Months Ended 30 Sept

BP's Block 18 Life of Field and Block 31 projects ongoing
Completion of Mobil Equatorial Guinea Inc's Serpentina project in Equatorial Guinea
Settlement of variation orders and release of contingency on Addax's Okwori and Chevron's Tombua Landana projects

30.09.2009

www.subsea7.com

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subsea7

Operational Performance by Region

Brazil

Three Months Ended 30 Sept

2009 2008

Nine Months Ended 30 Sept

2009 2008

Offshore installation completed on Shell's BC-10 and Petrobras' Roncador projects
StatoilHydro's Peregrino project progressed well during the quarter
Petrobras' Sul Capixaba and Hybrid Steel pipeline installations were completed by the Seven Oceans
Provision booked for expected losses on Lochnagar and K3000 contracts

30.09.2009

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Operational Performance by Region

North America

Three Months Ended 30 Sept

Nine Months Ended 30 Sept

Engineering and project management continued on Petrobras' Cascade project
The Port Isabel spoolbase continued with pipeline operations on Marathon's Droshky project, with offshore installation scheduled for Q4 2009

30.09.2009

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Operational Performance by Region

Asia Pacific

Three Months Ended 30 Sept

2009 2008

Nine Months Ended 30 Sept

Rockwater 2 supported Woodside's Enfield development in Australia
ConocoPhillips' Xijiang project completed in the South China Sea
Engineering and project management commenced on the newly awarded Santos Henry project

30.09.2009

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subsea 7

Backlog at 30 September 2009 & 30 September 2008

By Region

By Contract Type

30.09.2009

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subsea 7

Backlog at 30 September 2009 by Year of Execution

30.09.2009

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subsea partner of choice

subsea7

Financial Highlights

(Amounts in USD millions)	Three Months Ended		Nine Months Ended
	30/09/2009	30/09/2008	30/09/2009	30/09/2008
	Unaudited	Unaudited	Unaudited	Unaudited
Revenue	661.0	628.6	1,901.1	1,789.7
Adjusted EBITDA	140.1	164.8	395.9	419.0
Net operating profit	107.8	136.0	307.6	351.9
Profit before tax	121.3	98.8	320.2	303.5
Net profit attributable to equity shareholders	86.6	65.7	223.9	207.1
Earnings per share, in USD per share
Earnings per share, basic	0.59	0.45	1.52	1.41
Earnings per share, diluted	0.58	0.43	1.52	1.36

30.09.2009

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Cash Flows

	Nine Months Ended
(Amounts in USD 1,000)	30/09/2009
Unaudited	30/09/2008
Unaudited
Net Profit	223,883	207,083
Non-cash income statement items	186,222	188,155
Changes in working capital	(16,994)	(36,963)
Cash generated from operations	393,111	358,275
Purchase of property, plant and equipment	(181,208)	(385,990)
Proceeds from sale of property, plant and equipment	815	25,458
Dividends received	7,136	-
(Repayment)/drawdown of loans	(50,000)	150,000
Repurchase of convertible notes	(11,025)	-
Purchase of available-for-sale financial assets	-	(179,381)
Purchase of own shares	-	(15,716)
Other cash flows	(77,729)	(78,919)
Net increase/(decrease) in cash and cash equivalents	81,100	(126,273)
Cash and cash equivalents at start of period	114,066	167,657
Cash and cash equivalents at end of period	195,166	41,384

30.09.2009

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Balance Sheet

| (Amounts in USD 1,000) | 30/09/2009
Unaudited | 30/09/2008
Unaudited | 31/12/2008
Audited |
| --- | --- | --- | --- |
| Assets | | | |
| Non-current assets | 1,301,200 | 1,234,799 | 1,120,367 |
| Cash and cash equivalents | 195,166 | 41,384 | 114,066 |
| Other current assets | 991,857 | 885,394 | 768,561 |
| Current assets | 1,187,023 | 926,778 | 882,627 |
| Total assets | 2,488,223 | 2,161,577 | 2,002,994 |

Shareholders' equity and liabilities

Shareholders' equity	1,039,866	875,205	689,666
Borrowings	342,369	556,103	559,737
Other non-current liabilities	105,577	83,737	104,849
Non-current liabilities	447,946	639,840	664,586
Borrowings	170,524	-	-
Other current liabilities	829,887	646,532	648,742
Current liabilities	1,000,411	646,532	648,742
Total liabilities	1,448,357	1,286,372	1,313,328
Total shareholders' equity and liabilities	2,488,223	2,161,577	2,002,994

30.09.2009

www.subsea7.com

subsea partner of choice

subsea 7

Shareholders' equity

	Nine Months Ended
(Amounts in USD 1,000)	30/09/2009
Unaudited	30/09/2008
Unaudited
Shareholders' equity at start of period	689,666	819,757
Share issues	231	438
Purchase of own shares	-	(15,716)
Repurchase of convertible notes	(1,146)	-
Net result for the period	223,883	207,083
Share based payments	3,308	3,350
Available-for-sale financial assets – fair value adjustment	44,151	(57,104)
Currency translation differences	79,773	(82,603)
Shareholders' equity at end of period	1,039,866	875,205

30.09.2009

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Adjusted EBITDA

Reconciliation of net profit attributable to equity shareholders to adjusted EBITDA

	Three Months Ended		Nine Months Ended
(Amounts in USD 1,000)	30/09/2009
Unaudited	30/09/2008
Unaudited	30/09/2009
Unaudited	30/09/2008
Unaudited
Net profit attributable to equity shareholders	86,599	65,680	223,883	207,083
Adjustments:
Taxation expense	34,687	33,157	96,350	96,406
Net financial items	(11,391)	38,148	(7,022)	54,756
Depreciation, amortisation and impairments	30,244	27,846	83,288	71,852
Profit on disposal of property, plant and equipment	-	(22)	(613)	(11,058)
Adjusted EBITDA	140,139	164,809	395,886	419,039
Revenue	661,043	628,611	1,901,100	1,789,658
Adjusted EBITDA %	21.2%	26.2%	20.8%	23.4%

30.09.2009

www.subsea7.com

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subsea 7

SUBSEA 7 INC.

THIRD QUARTER REPORT 2009 - UNAUDITED

27 October 2009

Subsea 7 Inc. (Oslo Stock Exchange: SUB) today reports the results for the third quarter of 2009.

PERFORMANCE SUMMARY

Quarter Highlights

Strong project execution in all regions, delivering EBITDA of USD 140.1 million, equivalent to an EBITDA margin of 21.2%.
Awarded three new significant contracts, valued at a combined total in excess of USD 480 million.
Launched a private placement of USD 275 million of convertible notes. The notes were issued and proceeds received post-quarter.
Efficiencies being realised from cost-cutting initiatives that have been implemented.

Post Quarter Highlights

Awarded an engineering, procurement, installation and commissioning contract for Petrobras in respect of the P-55 development in the Roncador field offshore Brazil. The contract is valued in excess of USD 200 million.

Financial Results

The Group's accounts are prepared in accordance with International Financial Reporting Standards (IFRS).

In USD millions	Three months ended		Year to date
	30/09/2009 Unaudited	30/09/2008 Unaudited	30/09/2009 Unaudited	30/09/2008 Unaudited
Revenue	661.0	628.6	1,901.1	1,789.7
Adjusted EBITDA	140.1	164.8	395.9	419.0
Net operating profit	107.8	136.0	307.6	351.9
Profit before tax	121.3	98.8	320.2	303.5
Net profit attributable to equity shareholders	86.6	65.7	223.9	207.1
Earnings per share, in USD per share
Earnings per share, basic	0.59	0.45	1.52	1.41
Earnings per share, diluted	0.58	0.43	1.52	1.36

OPERATIONS

North Sea

The North Sea region performed well during the quarter.

Centrica's Grove and Venture's Channon/Barbarossa projects were substantially completed.

The Seven Navica completed StatoilHydro's Vega and Troll O2 pipelines along with the pipelay scope of Venture's F3-FA project in the Netherlands. Following these campaigns, the vessel commenced a planned drydock.

In Norway, four of the Company's construction vessels, including the Seven Seas and Seven Sisters, were working on umbilical lay, riser installation and tie-ins on BP's Valhall Re-Development, and StatoilHydro's Vega, Troll O2, Snorre Riser and Vigdis Riser projects.

The Vigra spoolbase was busy with the fabrication of the clad pipeline for BP Skarv.

Inspection, Repair and Maintenance (IRM) operations continued on the Shell, ConocoPhillips, Total and BP frame agreements.

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Africa

Operations continued on BP's Block 18 Life of Field project, offshore Angola, while the Skandi Neptune completed Mobil Equatorial Guinea Inc.'s Serpentina project in Equatorial Guinea.

Project management and engineering continued in respect of BP's Block 31 contract and commenced in respect of the newly awarded Block 18 Gas Export Line contract.

During the quarter, additional income was recognised in respect of Chevron's Tombua Landana and Addax's Okwori projects as a result of the settlement of variation orders and releases of contingency.

Brazil

The Brazil region had another busy quarter.

Offshore installation was completed on both Shell's BC-10 and Petrobras' Roncador projects.

The Normand Seven commenced the flexible pipeline installation phase of StatoilHydro's Peregrino project.

Petrobras' Sul Capixaba and Hybrid Steel pipeline installations were completed by the Seven Oceans and final pre-commissioning is ongoing.

Pipeline fabrication operations on Petrobras' Tambau Urugua project were ongoing at the Ubu spoolbase.

The Lochnagar and K3000 continued to support Petrobras on day-rate operations. During the quarter, the Company booked a provision of $29.5 million for losses which are expected to arise during the remaining periods of these construction contracts.

North America

Engineering and project management continued on Petrobras' Cascade project and the Skandi Neptune commenced its mobilisation for offshore operations.

The Port Isabel spoolbase continued with pipeline fabrication operations on Marathon's Droshky project during the quarter, with offshore installation scheduled to be undertaken during the fourth quarter of 2009.

Asia Pacific

During the quarter, the Rockwater 2 supported Woodside's Enfield development in Australia.

ConocoPhillips' Xijiang project was successfully completed in the South China Sea.

Engineering and project management commenced on Santos' Henry project with the Seven Navica due to arrive in the region towards the end of the fourth quarter of 2009.

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INVESTMENTS

During the quarter, the Company continued to hold investments in listed equity shares and debt securities.

At 30 September 2009, these investments were treated as ‘Available-for-sale financial assets’ and were marked-to-market in the balance sheet, giving rise to an increase in their carrying value during the quarter of USD 26.5 million (YTD increase of USD 73.9 million). USD 16.7 million of this increase in the quarter (USD 44.2 million YTD) has been reflected directly in Shareholders’ equity. The remaining USD 9.8 million (USD 29.7 million YTD), which reflects the remeasurement at fair value of the embedded option contained within the debt securities, is included in the consolidated income statement.

FINANCING

On 30 September 2009, the Company repurchased USD 25 million (par value) of the USD 300 million 2.8% Subsea 7 Inc. convertible notes due 2011 for USD 24.06 million, or 96.2% of the par value. USD 1.1 million of the repurchase price has been treated as payment for the equity component of the note and has been recognised within equity. In addition a gain on repurchase of the liability component of USD 0.2 million has been included within finance income in the consolidated income statement.

In September 2009, the Company announced the pricing of its private placement of USD 275 million convertible notes. The notes have an annual coupon of 3.5% and are convertible into common shares of the Company at a conversion price of USD 17.98, representing a conversion premium of 37.5%. The reference price of the Company’s common shares has been set at USD 13.08 and the total number of new common shares to be issued, if all the notes are converted, would be 15,294,772. The notes are redeemable at 100% of their principal amount and will, unless converted or purchased and cancelled, mature in October 2014. The notes were issued and proceeds received on 13 October 2009.

In September 2009, the outstanding loan balance due to Siem Industries Inc. was repaid and following the quarter end, the revolving credit facility was cancelled. The remaining undrawn loan facilities available to the Company at the date of this report total USD 250 million.

FINANCIALS

Third Quarter 2009

Revenue for the third quarter 2009 was USD 661.0 million compared to USD 628.6 million for the same period in 2008.

Net operating profit for the third quarter 2009 was USD 107.8 million compared to USD 136.0 million for the same period in 2008. Net operating margins as a percentage of revenue were 16.3% in the third quarter 2009 compared to 21.6% in the third quarter 2008. One of the main reasons for this difference is the provision that was booked in Brazil in respect of anticipated losses which are expected to arise during the remaining periods of the Lochnagar and K3000 construction contracts.

Net financial income for the third quarter 2009 was USD 11.4 million compared to net financial expense of USD 38.1 million for the third quarter 2008. The main reasons for this difference are gains made in the marking-to-market of derivative financial instruments during the quarter of USD 14.9 million (of which USD 9.8 million relates to the remeasurement at fair value of the embedded option contained within the available-for-sale financial assets) compared with losses of USD 15.4 million in the third quarter 2008. Additionally, net currency gains of USD 3.3 million were recognised during the quarter compared to losses of USD 15.1 million in the third quarter 2008.

Taxation expense for the third quarter 2009 was USD 34.7 million which equates to an effective rate of 28.6%.

Net profit attributable to equity shareholders for the third quarter 2009 was USD 86.6 million, or USD 0.59 per share, compared to a net profit of USD 65.7 million, or USD 0.45 per share, for the third quarter 2008.

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CAPITAL EXPENDITURE

The construction of the diving support vessel Seven Atlantic continued to progress during the quarter. Work continues on commissioning the vessel and final installation and commissioning of the dive system. The vessel is scheduled for delivery in the fourth quarter of 2009.

Construction of the new-build pipelay and construction vessel to be named Seven Pacific also progressed during the quarter with steel fabrication and piping systems now well underway. The vessel is scheduled for delivery in the fourth quarter of 2010.

SHARE CAPITAL

During the quarter, 42,500 share options were exercised under the Company's share option plan at a strike price of NOK 29.49 per share.

The Company had 146,961,880 shares issued and outstanding at 30 September 2009.

BACKLOG

The Group was awarded new contracts, including commitments under frame agreements, of an aggregate amount of USD 800 million during the quarter. The worldwide order book of the Group at 30 September 2009 was approximately USD 3.0 billion, comprised of approximately USD 2.2 billion of day-rate contracts and USD 800 million of lump-sum contracts.

MAJOR NEW CONTRACTS SINCE 1 JULY 2009

In July 2009, the Company announced that it had been awarded a pipeline engineering, construction and installation contract in Angola, offshore West Africa. The contract was subsequently confirmed as being for a gas export pipeline for BP and is valued in excess of USD 150 million.

In September 2009, the Company announced that it had been awarded a contract by Petrobras for its pipelay vessel Normand Seven. The contract is for the exclusive use of the vessel for a period of four years and is valued in excess of USD 250 million.

In September 2009, the Company announced that it had been awarded a major subsea pipeline and installation services contract by Santos Limited for the Casino-Henry field, offshore Victoria, Australia. The contract is valued in excess of USD 80 million.

In October 2009, the Company announced that it had been awarded an engineering, procurement, installation and commissioning contract by Petrobras for the P-55 development in the Roncador field, offshore Brazil. The contract is valued in excess of USD 200 million.

OUTLOOK

The market outlook remains largely unchanged from that reported in the second quarter of 2009, although the award of a number of significant contracts during the past quarter has been positive.

In the short-term, the market continues to remain challenging and the Company's ongoing focus on cost-reduction and the supply chain efficiencies is helping mitigate the impact of reduced volumes of available work.

The medium to long-term outlook continues to be positive and the Company is confident that the actions it is taking in the current market will enable it to remain competitive and well-positioned going forward.

On behalf of the Board of Directors of Subsea 7 Inc.
27 October 2009

Kristian Siem, Chairman

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CONSOLIDATED INCOME STATEMENT

| Income Statement
(Amounts in USD 1,000) | 3Q 2009
Unaudited | 3Q 2008
Unaudited | Year to date
30/09/2009
Unaudited | Year to date
30/09/2008
Unaudited | Full year
2008
Audited |
| --- | --- | --- | --- | --- | --- |
| Revenue | 661,043 | 628,611 | 1,901,100 | 1,789,658 | 2,373,252 |
| Operating expenses | (523,039) | (464,804) | (1,510,804) | (1,376,942) | (1,864,331) |
| Depreciation, amortisation and impairments | (30,244) | (27,846) | (83,288) | (71,852) | (95,300) |
| Profit on disposal of property, plant and equipment | - | 22 | 613 | 11,058 | 11,671 |
| Net operating profit | 107,760 | 135,983 | 307,621 | 351,922 | 425,292 |
| Changes in fair value of derivative financial instruments | 14,909 | (15,399) | 50,054 | (16,890) | (34,177) |
| Net currency gain/(loss) | 3,308 | (15,115) | (3,786) | (18,583) | 18,761 |
| Finance income | 1,849 | 964 | 7,321 | 4,637 | 5,881 |
| Finance expense | (8,675) | (8,598) | (46,567) | (23,920) | (33,014) |
| Net financial items | 11,391 | (38,148) | 7,022 | (54,756) | (42,549) |
| Share of post-tax profit from joint ventures | 1,967 | 1,110 | 4,960 | 6,096 | 11,768 |
| Share of post-tax profit/(loss) from associates | 168 | (108) | 630 | 227 | (8) |
| Profit before tax | 121,286 | 98,837 | 320,233 | 303,489 | 394,503 |
| Taxation expense | (34,687) | (33,157) | (96,350) | (96,406) | (130,506) |
| Net profit attributable to equity shareholders | 86,599 | 65,680 | 223,883 | 207,083 | 263,997 |
| Average number of issued shares (1,000) | 146,945 | 146,909 | 146,926 | 146,947 | 146,938 |
| Earnings per share, in USD per share | 0.59 | 0.45 | 1.52 | 1.41 | 1.80 |
| Average number of issued shares, diluted (1,000) | 164,293 | 164,948 | 158,004 | 165,023 | 164,975 |
| Earnings per share, diluted, in USD per share | 0.58 | 0.43 | 1.52 | 1.36 | 1.74 |

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

| (Amounts in USD 1,000) | 3Q 2009
Unaudited | 3Q 2008
Unaudited | Year to date
30/09/2009
Unaudited | Year to date
30/09/2008
Unaudited | Full year
2008
Audited |
| --- | --- | --- | --- | --- | --- |
| Net profit attributable to equity shareholders | 86,599 | 65,680 | 223,883 | 207,083 | 263,997 |
| Other comprehensive income/(expense): | | | | | |
| Currency translation differences | (6,273) | (72,764) | 79,773 | (82,603) | (302,219) |
| Available-for-sale financial assets – fair value adjustment | 16,694 | (57,104) | 44,151 | (57,104) | (71,801) |
| | 10,421 | (129,868) | 123,924 | (139,707) | (374,020) |
| Total comprehensive income/(expense) for the period | 97,020 | (64,188) | 347,807 | 67,376 | (110,023) |

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CONSOLIDATED BALANCE SHEET

| (Amounts in USD 1,000) | At 30/09/2009
Unaudited | At 30/09/2008
Unaudited | At 31/12/2008
Audited |
| --- | --- | --- | --- |
| ASSETS | | | |
| Non-current assets | | | |
| Goodwill | 98,533 | 98,533 | 98,533 |
| Other intangible assets | 757 | 1,335 | 1,130 |
| Property, plant and equipment | 1,167,391 | 1,122,000 | 991,408 |
| Derivative financial instruments | 2,722 | - | - |
| Deferred tax assets | 18,069 | 4,015 | 15,113 |
| Retirement benefit asset | - | 170 | - |
| Investment in joint ventures | 11,497 | 6,910 | 12,582 |
| Investment in associates | 2,231 | 1,836 | 1,601 |
| | 1,301,200 | 1,234,799 | 1,120,367 |
| Current assets | | | |
| Inventories | 27,439 | 13,755 | 22,567 |
| Trade and other receivables | 795,715 | 758,738 | 659,097 |
| Available-for-sale financial assets | 159,317 | 107,613 | 85,414 |
| Derivative financial instruments | 9,386 | 5,288 | 1,483 |
| Cash and cash equivalents | 195,166 | 41,384 | 114,066 |
| | 1,187,023 | 926,778 | 882,627 |
| TOTAL ASSETS | 2,488,223 | 2,161,577 | 2,002,994 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | | | |
| Shareholders' equity | | | |
| Share capital | 1,470 | 1,469 | 1,469 |
| Share premium reserve | 271,468 | 271,238 | 271,238 |
| Shares held by Employee Share Trust | (9,430) | - | (9,430) |
| Other reserves | (113,099) | 9,643 | (225,650) |
| Retained earnings | 889,457 | 592,855 | 652,039 |
| | 1,039,866 | 875,205 | 689,666 |
| Non-current liabilities | | | |
| Borrowings | 342,369 | 556,103 | 559,737 |
| Deferred tax liabilities | 99,259 | 79,416 | 99,610 |
| Retirement benefit obligations | 1,189 | - | 1,002 |
| Derivative financial instruments | 878 | - | - |
| Other non-current liabilities | 4,251 | 4,321 | 4,237 |
| | 447,946 | 639,840 | 664,586 |
| Current liabilities | | | |
| Trade and other payables | 772,883 | 600,039 | 605,358 |
| Current tax liabilities | 56,903 | 41,817 | 32,728 |
| Borrowings | 170,524 | - | - |
| Derivative financial instruments | 101 | 4,676 | 10,656 |
| | 1,000,411 | 646,532 | 648,742 |
| Total liabilities | 1,448,357 | 1,286,372 | 1,313,328 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 2,488,223 | 2,161,577 | 2,002,994 |

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CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

(Amounts in USD 1,000)	Share capital	Share premium	Shares held by Employee Share Trust	Other reserves	Retained earnings	Total
At 1 January 2009 (Audited)	1,469	271,238	(9,430)	(225,650)	652,039	689,666
Foreign currency translation	-	-	-	79,773	-	79,773
Available-for-sale financial assets – fair value adjustment	-	-	-	44,151	-	44,151
Other comprehensive income	-	-	-	123,924	-	123,924
Net result for the period	-	-	-	-	223,883	223,883
Total comprehensive income	-	-	-	123,924	223,883	347,807
Share based payments	-	-	-	-	3,308	3,308
Shares issued – exercise of options	1	230	-	-	-	231
Repurchase of convertible notes	-	-	-	(8,435)	7,289	(1,146)
Depreciation on re-valued assets	-	-	-	(2,938)	2,938	-
At 30 September 2009 (Unaudited)	1,470	271,468	(9,430)	(113,099)	889,457	1,039,866
At 1 January 2008 (Audited)	1,477	286,508	-	152,362	379,410	819,757
---	---	---	---	---	---	---
Foreign currency translation	-	-	-	(82,603)	-	(82,603)
Available-for-sale financial assets – fair value adjustment	-	-	-	(57,104)	-	(57,104)
Other comprehensive expense	-	-	-	(139,707)	-	(139,707)
Net result for the period	-	-	-	-	207,083	207,083
Total comprehensive (expense)/income	-	-	-	(139,713)	207,083	67,376
Purchase of own shares	(9)	(15,707)	-	-	-	(15,716)
Share based payments	-	-	-	-	3,350	3,350
Shares issued – exercise of options	1	437	-	-	-	438
Depreciation on re-valued assets	-	-	-	(3,012)	3,012	-
At 30 September 2008 (Unaudited)	1,469	271,238	-	9,643	592,855	875,205

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CONSOLIDATED CASH FLOW STATEMENT

| | Year to date
30/09/2009 | Year to date
30/09/2008 | Full year
2008 |
| --- | --- | --- | --- |
| (Amounts in USD 1,000) | Unaudited | Unaudited | Audited |
| Cash flows from the operating activities | | | |
| Cash generated from operations | 393,111 | 358,275 | 590,414 |
| Finance income received | 3,707 | 4,990 | 6,237 |
| Finance expense paid | (6,802) | (5,118) | (10,578) |
| Taxation paid | (75,482) | (80,923) | (115,016) |
| Net cash from operating activities | 314,534 | 277,224 | 471,057 |
| Cash flows from investing activities | | | |
| Proceeds from sale of property, plant and equipment | 815 | 25,458 | 26,073 |
| Purchase of property, plant and equipment | (181,208) | (385,990) | (449,282) |
| Purchase of available-for-sale financial assets | - | (179,381) | (179,381) |
| Dividends received | 7,136 | - | - |
| Net cash used in investing activities | (173,257) | (539,913) | (602,590) |
| Cash flows from financing activities | | | |
| Net proceeds from issue of ordinary share capital | 231 | 438 | 438 |
| Purchase of own shares | - | (15,716) | (15,716) |
| Shares purchased by Employee Share Trust | - | - | (9,430) |
| (Repayment)/drawdown of loans | (50,000) | 150,000 | 150,000 |
| Government grants received | - | - | 15 |
| Repurchase of convertible notes | (11,025) | - | - |
| Finance lease principal payments | - | (394) | (394) |
| Net cash from financing activities | (60,794) | 134,328 | 124,913 |
| Effects of exchange rate changes | 617 | 2,088 | (46,971) |
| Net increase/(decrease) in cash and cash equivalents | 81,100 | (126,273) | (53,591) |
| Cash and cash equivalents at start of period | 114,066 | 167,657 | 167,657 |
| Cash and cash equivalents at end of period | 195,166 | 41,384 | 114,066 |

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NOTES TO THE FINANCIAL INFORMATION

1. Basis of preparation

The condensed consolidated financial information for the period 1 January to 30 September 2009 has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union, but has not been audited or reviewed. The condensed consolidated financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2008 which have been prepared in accordance with IFRSs as adopted by the European Union.

2. Accounting policies

The adoption of the remaining standards, amendments to standards and interpretations above had no impact on the reported income or net assets of the Group in the quarter.

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3. Segment reporting

(Amounts in USD 1,000)	North Sea	Africa	Brazil	North America	Asia Pacific	Global	Total
3Q 2009 (Unaudited)
Revenue	334,191	65,498	204,738	27,313	29,290	13	661,043
Profit before tax	74,099	23,643	7,098	8,545	4,786	3,115	121,286
3Q 2008 (Unaudited)
Revenue	335,273	109,782	119,941	32,485	31,130	-	628,611
Profit/(loss) before tax	92,944	27,390	316	11,380	10,643	(43,836)	98,837
Year to date 2009 (Unaudited)
Revenue	858,604	202,668	707,304	78,733	53,778	13	1,901,100
Profit/(loss) before tax	175,295	76,520	46,452	28,569	(1,332)	(5,271)	320,233
Year to date 2008 (Unaudited)
Revenue	829,266	363,503	412,450	122,463	61,918	58	1,789,658
Profit/(loss) before tax	203,171	78,535	25,763	31,924	34,837	(70,741)	303,489

4. Cash flow from operating activities

| (Amounts in USD 1,000) | Year to date
30/09/2009
Unaudited | Year to date
30/09/2008
Unaudited | Full year
2008
Audited |
| --- | --- | --- | --- |
| Net profit attributable to equity shareholders | 223,883 | 207,083 | 263,997 |
| Adjustments for: | | | |
| Taxation expense | 96,350 | 96,406 | 130,506 |
| Depreciation and amortisation | 83,288 | 71,852 | 95,300 |
| Share based payments | 3,308 | 3,350 | 4,640 |
| Profit on disposal of property, plant and equipment | (613) | (11,058) | (11,671) |
| Deferred government grant income | (15) | (19) | (39) |
| Dividend income | (944) | - | - |
| Finance income | (6,377) | (4,637) | (5,881) |
| Finance expense | 46,567 | 23,920 | 33,014 |
| (Gain)/loss on embedded derivative within convertible notes | (29,752) | 14,664 | 22,166 |
| Share of post tax profit from joint ventures | (4,960) | (6,096) | (11,768) |
| Share of post tax profit from associates | (630) | (227) | 8 |
| Changes in working capital (excluding effects of acquisitions and disposal of subsidiaries): | | | |
| (Increase)/decrease in inventories | (4,872) | 11,454 | 2,642 |
| (Increase)/decrease in trade and other receivables | (147,243) | (100,121) | 3,325 |
| Increase in trade and other payables | 135,121 | 51,704 | 64,175 |
| Cash generated from operations | 393,111 | 358,275 | 590,414 |

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5. Adjusted EBITDA

(Amounts in USD 1,000 except percentages)	Three months ended		Year to date
	30/09/2009 Unaudited	30/09/2008 Unaudited	30/09/2009 Unaudited	30/09/2008 Unaudited
Net profit attributable to equity shareholders	86,599	65,680	223,883	207,083
Adjustments:
Taxation expense	34,687	33,157	96,350	96,406
Net financial items	(11,391)	38,148	(7,022)	54,756
Depreciation, amortisation and impairments	30,244	27,846	83,288	71,852
Profit on disposal of property, plant and equipment	-	(22)	(613)	(11,058)
Adjusted EBITDA	140,139	164,809	395,886	419,039
Revenue	661,043	628,611	1,901,100	1,789,658
Adjusted EBITDA %	21.2%	26.2%	20.8%	23.4%

6. Contingent liabilities

7. Events occurring after the balance sheet date

On 13 October 2009, the Company received net proceeds of USD 272.9 million for the issuance of its private placement of USD 275 million 3.5% coupon convertible notes due 2014. The notes are convertible into common shares of the Company at a conversion price of USD 17.98, representing a conversion premium of 37.5%.

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NOVEMBER

12.11.09

SUBSEA 7 INC. MANDATORY NOTIFICATION OF TRADE

Subsea 7 Inc. (Oslo Stock Exchange; SUB) today announces that it has purchased US$40.5 million (par value) of the US$175 million zero coupon Subsea 7 Inc. Convertible Notes due 2017 for US$40.40 million (average unit price of US$0.9975).

The Company now holds US$40.5 million (par value) of the US$175 million zero coupon Subsea 7 Inc. Convertible Notes due 2017 and US$40 million (par value) of the US$300 million 2.8% Subsea 7 Inc. Convertible Notes due 2011.

FEBRUARY

02.02.10

SUBSEA 7 INC. FOURTH QUARTER 2009 RESULTS

Subsea 7 inc. Fourth Quarter 2009 Report and Presentation

subsea7

SUBSEA 7 INC.

REPORT FOR THE FOURTH QUARTER AND PRELIMINARY YEAR END RESULTS FOR 2009 - UNAUDITED

2 February 2010

Subsea 7 Inc. (Oslo Stock Exchange: SUB) today reports the fourth quarter and preliminary year end results for 2009.

PERFORMANCE SUMMARY

Quarter Highlights

Strong project execution in all regions delivering EBITDA of USD 130.9 million, equivalent to an EBITDA margin of 24.3%.
Awarded contract by Petrobras in Brazil valued in excess of USD 200 million in support of the P-55 development in the Roncador field.
Issued and received proceeds for private placement of USD 275 million convertible notes.

Financial Results

The Group's accounts are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

In USD millions	Three months ended		Year ended
	31/12/2009 Unaudited	31/12/2008 Unaudited	31/12/2009 Unaudited	31/12/2008 Audited
Revenue	538.2	583.6	2,439.3	2,373.3
Adjusted EBITDA	130.9	101.6	526.8	520.7
Net operating profit	96.4	73.4	404.0	425.3
Profit before tax	92.0	91.0	412.2	394.5
Net profit attributable to equity shareholders	64.5	56.9	288.4	264.0
Earnings per share, in USD per share
Earnings per share, basic	0.44	0.39	1.96	1.80
Earnings per share, diluted	0.42	0.38	1.94	1.74

OPERATIONS

North Sea

Highlights for the quarter include the successful completion of Statoil's Vega, Visund and Snorre B riser projects, as well as the subsea construction work for Statoil's Troll O2 and BP's Skarv and Valhall Re-Development projects. Onshore fabrication of the Skarv clad flowlines was undertaken at the Vigra spoolbase.

Diving work was performed for Maersk, Lundin and CNR.

Life-of-Field operations continued on the Shell, ConocoPhillips, Total and BP frame agreements. The new ROVSV, Normand Subsea, commenced operations on the Shell framework agreement during the quarter.

The Seven Navica completed a scheduled drydock before departing for Australia to support operations in Asia Pacific.

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Africa

Operations continued on BP's Block 18 Life-of-Field project, offshore Angola. Project management and engineering continued in respect of BP's Block 31 and Block 18 Gas Export Line contracts.

The Company successfully completed Total's Girassol pipeline repair project, offshore Angola.

Brazil

Activity levels in Brazil remained high during the quarter.

Petrobras' Sul Capixaba project was substantially completed whilst pipeline fabrication operations were completed on Petrobras' Tambau Urugua project at the Ubu spoolbase.

The scope of work planned for 2009 in respect of Statoil's Peregrino development was completed and the Seven Oceans will return to execute the final campaign early 2010.

Project management and engineering progressed in respect of the newly-awarded P-55 project for Petrobras in the Roncador field.

The Normand Seven commenced operations for Petrobras following the award of a four-year contract which was announced during the third quarter of 2009. The Lochnagar and K3000 continued to support Petrobras on day-rate operations.

North America

Offshore operations were completed on Petrobras' Cascade project supported by the Skandi Neptune and the Seven Seas. Marathon's Droshky pipelay scope was completed by the Seven Oceans.

The Skandi Neptune also undertook some work for BP on the Thunder Horse and Atlantis developments during the quarter.

The Toisa Perseus was returned to its owners at the end of its charter.

Asia Pacific

The Rockwater 2 continued supporting Woodside's Enfield project in Australia before commencing in-field activities on Santos' Casino-Henry project.

Santos' Casino-Henry project progressed well with the Seven Navica completing pipelaying activities in December 2009 before transiting back to Europe.

The Seven Seas commenced mobilisation activities for Murphy's Kikeh flexibles project in Malaysia.

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INVESTMENTS

During the quarter, the Company continued to hold investments in listed equity shares and debt securities.

At 31 December 2009, these investments were treated as 'Available-for-sale financial assets' and were marked-to-market in the balance sheet, giving rise to an increase in their carrying value during the quarter of USD 17.1 million (full year: USD 91.0 million). USD 12.6 million of this increase in the quarter (full year: USD 56.7 million) has been reflected directly in Shareholders' equity. The remaining USD 4.5 million (USD 34.3 million full year), which reflects the remeasurement at fair value of the embedded option contained within the debt securities, is included in the consolidated income statement.

FINANCING

Fourth Quarter 2009

On 13 October 2009, the Company issued and received net proceeds of USD 272.9 million for its private placement of USD 275 million convertible notes. The notes have an annual coupon of 3.5% and are convertible into common shares of the Company at a conversion price of USD 17.98 per share, representing a conversion premium of 37.5%. The reference price of the Company's common shares has been set at USD 13.08 and the total number of new common shares to be issued, if all the notes were converted, would be 15,294,772. The notes are redeemable at 100% of their principal amount and will, unless converted or purchased and cancelled, mature in October 2014.

During October 2009, the total amount drawn under existing revolving credit facilities of USD 100 million was repaid and the Siem Industries Inc. revolving credit facility was cancelled. The remaining undrawn loan facilities available to the Company at the date of this report total USD 250 million.

On 12 November 2009, the Company announced that it had repurchased USD 40.5 million (par value) of the USD 175 million zero coupon Subsea 7 Inc. convertible notes due 2017 for USD 40.4 million, or 99.8% of the par value. USD 0.1 million of the repurchase price has been treated as payment for the equity component of the note and has been recognised in shareholders' equity. In addition, a loss on repurchase of the liability component of USD 0.6 million has been included within finance expense in the consolidated income statement. The repurchased convertible notes remain outstanding and have not been cancelled.

Full Year 2009

In addition to the transactions above, other significant financing activities to note for the full year include the following:

In January 2009, the Company signed an amendment to its existing revolving credit facility with DnB NOR Bank ASA, increasing the facility from USD 100 million to USD 150 million. The revolving credit facility expires on 16 February 2012.

In April 2009, the Company concluded a three-year revolving credit facility with HSBC Bank plc for USD 50 million.

In June 2009, the Company concluded a three-year revolving credit facility with Bank of Scotland plc for USD 50 million.

At 30 June 2009, the Company reassessed the expected maturity of the USD 175 million Subsea 7 Inc. zero coupon convertible notes 2007/2017. The notes were previously accounted for as if they would be redeemed either at the option of the holders on 29 June 2012 or at the option of the Company on 13 July 2012. It is now considered more likely that the convertible notes will be redeemed at their accreted principal amount at the option of the holders on 29 June 2010. The carrying value of the notes was therefore adjusted to reflect the revised estimated maturity. As a result, an additional USD 20.3 million accretion was booked within finance expense in the consolidated income statement in June 2009. The revised carrying value of the notes has been presented within current liabilities.

In the nine months to 30 September 2009, the Company repurchased USD 40 million (par value) of the USD 300 million 2.8% Subsea 7 Inc. convertible notes due 2011 for USD 35.1 million, an average of 87.7% of the par value. The repurchased convertible notes remain outstanding and have not been cancelled.

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FINANCIALS

Fourth Quarter 2009

Revenue for the fourth quarter 2009 was USD 538.2 million compared to USD 583.6 million for the same period in 2008.

Net operating profit for the fourth quarter 2009 was USD 96.4 million compared to USD 73.4 million for the same period in 2008. Net operating margins as a percentage of revenue were 17.9% in the fourth quarter 2009 compared to 12.6% in the fourth quarter 2008. The main reasons for this improvement were the higher levels of offshore activity in North America and Asia Pacific and improved project execution generally, but particularly in Brazil, during the fourth quarter of 2009, compared to the same period in 2008. The fourth quarter 2009 has also benefited from the cost-cutting initiatives that were undertaken during the year.

Net financial expense for the fourth quarter 2009 was USD 5.6 million compared to net financial income of USD 12.2 million for the fourth quarter 2008. The main reasons for this difference are net currency gains of USD 8.6 million recognised during the fourth quarter 2009 compared to gains of USD 37.3 million in the fourth quarter 2008. There was also a higher finance expense of USD 13.4 million during the fourth quarter 2009 compared to USD 9.1 million during the same period for 2008, which relates to accretion in respect of the convertible notes that were issued during 2009. This was offset to some extent by losses in the marking-to-market of derivative financial instruments during the fourth quarter 2009 of USD 2.3 million (net of a USD 4.5 million gain relating to the remeasurement at fair value of the embedded option contained within the available-for-sale financial assets), which were significantly less than losses recognised of USD 17.3 million in the fourth quarter 2008.

Taxation expense for the fourth quarter 2009 was USD 27.5 million which equates to an effective rate of 29.9%.

Net profit attributable to equity shareholders for the fourth quarter 2009 was USD 64.5 million, or USD 0.44 per share, compared to a net profit of USD 56.9 million, or USD 0.39 per share, for the fourth quarter 2008.

Full Year 2009

Revenue for the year ended 31 December 2009 was USD 2.44 billion compared to USD 2.37 billion for the same period in 2008.

Net operating profit for the year ended 31 December 2009 was USD 404.0 million compared to USD 425.3 million in 2008. Net operating margins as a percentage of revenue were 16.6% in 2009 compared to 17.9% in 2008. The reduction in margins is attributable to lower levels of activity in the Africa and Asia Pacific regions and tougher trading conditions in the North Sea, offset by improved project execution, particularly in Brazil.

Net financial income for the year ended 31 December 2009 was USD 1.5 million compared to net financial expense of USD 42.5 million for the year ended 31 December 2008. The significant year-on-year movement is primarily due to gains made in the marking-to-market of derivative financial instruments during the year of USD 47.8 million (of which USD 34.3 million relates to the remeasurement at fair value of the embedded option contained within the available-for-sale financial assets) compared with losses of USD 34.2 million in 2008. This movement was offset by USD 20.3 million of additional accretion expense recognised on reassessment of the term of the 2007 convertible notes and net currency gains of USD 4.8 million recognised during the year compared to gains of USD 18.8 million in 2008.

Taxation expense for the year ended 31 December 2009 was USD 123.8 million which equates to an effective rate of 30.0%. This compares to a taxation expense of USD 130.5 million for the year ended 31 December 2008, which equates to an effective rate of 33.1%.

Net profit attributable to equity shareholders for the year ended 31 December 2009 was USD 288.4 million, or USD 1.96 per share, compared to a net profit of USD 264.0 million, or USD 1.80 per share, for the year ended 31 December 2008.

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CAPITAL EXPENDITURE

The construction of the new-build diving support vessel the Seven Atlantic continued to progress during the quarter. Work continues on commissioning the vessel and final installation and commissioning of the dive system. The vessel will be delivered during the first quarter of 2010 after which work will continue with manned diving trials.

Construction of the new-build pipelay and construction vessel the Seven Pacific also progressed during the quarter with steel fabrication and piping systems now well underway. A major milestone was achieved in January 2010 when the underdeck carousels were installed on schedule. The vessel is scheduled for delivery in the fourth quarter of 2010.

SHARE CAPITAL

During the quarter, 37,000 share options were exercised under the Company's share option plan at a strike price of NOK 29.49 per share.

During the full year, a total of 87,000 share options were exercised under the Company's share option plan at a strike price of NOK 29.49 per share.

The Company had 146,998,880 shares issued and outstanding at 31 December 2009.

MAJOR NEW CONTRACTS SINCE 1 OCTOBER 2009

BACKLOG

The Group was awarded new contracts, including commitments under frame agreements, of an aggregate amount of approximately USD 340 million during the quarter. The worldwide order book of the Group at 31 December 2009 was approximately USD 2.8 billion, comprised of approximately USD 1.8 billion of day-rate contracts and USD 1.0 billion of lump-sum contracts.

OUTLOOK

The market outlook remains challenging in the short-term but positive for the medium to longer-term.

Signs of a recovery are starting to appear in the North Sea with a significant number of projects being engineered for the potential of first production in 2011 and 2012.

Elsewhere in the world there are a number of major projects moving towards sanction but, given their larger scale, offshore installation is more likely to fall into the 2012 – 2013 period.

Meanwhile we see the cost-cutting efficiencies implemented in 2009 allowing us to remain competitive in the current aggressive pricing market. We also continue to see our new fleet being well matched to the project needs of our clients which will aid us in maintaining good utilisation of our assets.

On behalf of the Board of Directors of Subsea 7 Inc.
2 February 2010

Kristian Siem, Chairman

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CONSOLIDATED INCOME STATEMENT

| Income Statement
(Amounts in USD 1,000) | 4Q 2009
Unaudited | 4Q 2008
Unaudited | Year ended
31/12/2009
Unaudited | Year ended
31/12/2008
Audited |
| --- | --- | --- | --- | --- |
| Revenue | 538,178 | 583,594 | 2,439,278 | 2,373,252 |
| Operating expenses | (408,409) | (487,389) | (1,919,213) | (1,864,331) |
| Depreciation and amortisation | (33,927) | (23,448) | (117,214) | (95,300) |
| Profit on disposal of property, plant and equipment | 547 | 613 | 1,160 | 11,671 |
| Net operating profit | 96,389 | 73,370 | 404,011 | 425,292 |
| Changes in fair value of derivative financial instruments | (2,299) | (17,287) | 47,755 | (34,177) |
| Net currency gain | 8,554 | 37,344 | 4,767 | 18,761 |
| Finance income | 1,575 | 1,244 | 8,896 | 5,881 |
| Finance expense | (13,388) | (9,095) | (59,955) | (33,014) |
| Net financial items | (5,558) | 12,206 | 1,463 | (42,549) |
| Share of post-tax profit from joint ventures | 692 | 5,672 | 5,652 | 11,768 |
| Share of post-tax profit/(loss) from associates | 444 | (235) | 1,074 | (8) |
| Profit before tax | 91,967 | 91,013 | 412,200 | 394,503 |
| Taxation expense | (27,499) | (34,099) | (123,849) | (130,506) |
| Net profit attributable to equity shareholders | 64,468 | 56,914 | 288,351 | 263,997 |
| Average number of issued shares (1,000) | 146,983 | 146,912 | 146,941 | 146,938 |
| Earnings per share, in USD per share | 0.44 | 0.39 | 1.96 | 1.80 |
| Average number of issued shares, diluted (1,000) | 161,529 | 164,667 | 150,586 | 164,975 |
| Earnings per share, diluted, in USD per share | 0.42 | 0.38 | 1.94 | 1.74 |

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

| (Amounts in USD 1,000) | 4Q 2009
Unaudited | 4Q 2008
Unaudited | Year ended
31/12/2009
Unaudited | Year ended
31/12/2008
Audited |
| --- | --- | --- | --- | --- |
| Net profit attributable to equity shareholders | 64,468 | 56,914 | 288,351 | 263,997 |
| Currency translation differences | 17,239 | (219,616) | 97,012 | (302,219) |
| Available-for-sale financial assets – fair value adjustment | 12,592 | (14,697) | 56,743 | (71,801) |
| Other comprehensive income/(expense) | 29,831 | (234,313) | 153,755 | (374,020) |
| Total comprehensive income/(expense) | 94,299 | (177,399) | 442,106 | (110,023) |

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CONSOLIDATED BALANCE SHEET

| (Amounts in USD 1,000) | At 31/12/2009
Unaudited | At 31/12/2008
Audited |
| --- | --- | --- |
| ASSETS | | |
| Non-current assets | | |
| Goodwill | 98,533 | 98,533 |
| Other intangible assets | 621 | 1,130 |
| Property, plant and equipment | 1,189,389 | 991,408 |
| Derivative financial instruments | 194 | - |
| Deferred tax assets | 11,849 | 15,113 |
| Investment in joint ventures | 2,958 | 12,582 |
| Investment in associates | 2,675 | 1,601 |
| | 1,306,219 | 1,120,367 |
| Current assets | | |
| Inventories | 32,981 | 22,567 |
| Trade and other receivables | 505,978 | 659,097 |
| Available-for-sale financial assets | 176,443 | 85,414 |
| Derivative financial instruments | 5,337 | 1,483 |
| Cash and cash equivalents | 487,251 | 114,066 |
| | 1,207,990 | 882,627 |
| TOTAL ASSETS | 2,514,209 | 2,002,994 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | | |
| Shareholders' equity | | |
| Share capital | 1,470 | 1,469 |
| Share premium reserve | 271,664 | 271,238 |
| Shares held by Employee Share Trust | (9,430) | (9,430) |
| Other reserves | (43,603) | (225,650) |
| Retained earnings | 967,187 | 652,039 |
| | 1,187,288 | 689,666 |
| Non-current liabilities | | |
| Borrowings | 468,540 | 559,737 |
| Deferred tax liabilities | 106,577 | 99,610 |
| Retirement benefit obligations | 279 | 1,002 |
| Other non-current liabilities | 3,246 | 4,237 |
| | 578,642 | 664,586 |
| Current liabilities | | |
| Trade and other payables | 573,198 | 605,358 |
| Current tax liabilities | 40,368 | 32,728 |
| Borrowings | 133,465 | - |
| Derivative financial instruments | 1,248 | 10,656 |
| | 748,279 | 648,742 |
| Total liabilities | 1,326,921 | 1,313,328 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 2,514,209 | 2,002,994 |

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CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

(Amounts in USD 1,000)	Share capital	Share premium	Shares held by Employee Share Trust	Other reserves	Retained earnings	Total
At 1 January 2009 (Audited)	1,469	271,238	(9,430)	(225,650)	652,039	689,666
Foreign currency translation	-	-	-	97,012	-	97,012
Available-for-sale financial assets – fair value adjustment	-	-	-	56,743	-	56,743
Other comprehensive income	-	-	-	153,755	-	153,755
Net profit for the period	-	-	-	-	288,351	288,351
Total comprehensive income	-	-	-	153,755	288,351	442,106
Share based payments	-	-	-	-	4,595	4,595
Shares issued – exercise of options	1	426	-	-	-	427
Repurchase of convertible notes	-	-	-	(19,548)	18,283	(1,265)
Convertible note 2009-2014 – equity component	-	-	-	51,759	-	51,759
Depreciation on re-valued assets	-	-	-	(3,919)	3,919	-
At 31 December 2009 (Unaudited)	1,470	271,664	(9,430)	(43,603)	967,187	1,187,288
At 1 January 2008 (Audited)	1,477	286,508	-	152,362	379,410	819,757
Foreign currency translation	-	-	-	(302,219)	-	(302,219)
Available-for-sale financial assets – fair value adjustment	-	-	-	(71,801)	-	(71,801)
Other comprehensive expense	-	-	-	(374,020)	-	(374,020)
Net profit for the period	-	-	-	-	263,997	263,997
Total comprehensive (expense)/income	-	-	-	(374,020)	263,997	(110,023)
Purchase of own shares	(9)	(15,707)	-	-	-	(15,716)
Share based payments	-	-	-	-	4,640	4,640
Shares issued – exercise of options	1	437	-	-	-	438
Shares purchased by Employee Share Trust	-	-	(9,430)	-	-	(9,430)
Depreciation on re-valued assets	-	-	-	(3,992)	3,992	-
At 31 December 2008 (Audited)	1,469	271,238	(9,430)	(225,650)	652,039	689,666

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CONSOLIDATED CASH FLOW STATEMENT

| (Amounts in USD 1,000) | Year ended
31/12/2009
Unaudited | Year ended
31/12/2008
Audited |
| --- | --- | --- |
| Cash flows from operating activities | | |
| Cash generated from operations | 639,977 | 590,414 |
| Finance income received | 4,551 | 6,237 |
| Finance expense paid | (11,941) | (10,578) |
| Taxation paid | (90,998) | (115,016) |
| Net cash from operating activities | 541,589 | 471,057 |
| Cash flows from investing activities | | |
| Proceeds from sale of property, plant and equipment | 1,413 | 26,073 |
| Purchase of property, plant and equipment | (246,331) | (449,282) |
| Purchase of available-for-sale financial assets | - | (179,381) |
| Dividends received | 16,336 | - |
| Net cash used in investing activities | (228,582) | (602,590) |
| Cash flows from financing activities | | |
| Net proceeds from issue of ordinary share capital | 427 | 438 |
| Purchase of own shares | - | (15,716) |
| Shares purchased by Employee Share Trust | - | (9,430) |
| (Repayment)/drawdown of loans | (150,000) | 150,000 |
| Government grants received | - | 15 |
| Proceeds from issue of convertible notes | 272,902 | - |
| Repurchase of convertible notes | (75,486) | - |
| Finance lease principal payments | - | (394) |
| Net cash from financing activities | 47,843 | 124,913 |
| Effects of exchange rate changes | 12,335 | (46,971) |
| Net increase/(decrease) in cash and cash equivalents | 373,185 | (53,591) |
| Cash and cash equivalents at start of period | 114,066 | 167,657 |
| Cash and cash equivalents at end of period | 487,251 | 114,066 |

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NOTES TO THE FINANCIAL INFORMATION

1. Basis of preparation

The condensed consolidated financial information for the period 1 January to 31 December 2009 has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union, but has not been audited or reviewed. The condensed consolidated financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2008 which have been prepared in accordance with IFRSs as adopted by the European Union.

2. Accounting policies

The Group has updated its accounting policy in respect of borrowing costs to include requirement of IAS 23 to capitalise attributable interest on assets which necessarily take a substantial period of time to prepare for their intended use or sale. Under the transitional rules for IAS 23, this only applies to assets which commenced construction after 1 January 2009. This had no material impact in the quarter or the full year.

The adoption of the remaining standards, amendments to standards and interpretations above had no impact on the reported income or net assets of the Group in the quarter or the full year.

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3. Segment reporting

(Amounts in USD 1,000)	North Sea	Africa	Brazil	North America	Asia Pacific	Global	Total
4Q 2009 (Unaudited)
Revenue	220,007	41,906	140,915	66,858	68,492	-	538,178
Profit/(loss) before tax	33,325	12,057	27,141	18,545	16,343	(15,444)	91,967
4Q 2008 (Unaudited)
Revenue	222,196	98,062	208,127	43,729	11,490	(10)	583,594
Profit before tax	31,585	36,184	2,145	10,144	5,031	5,924	91,013
Full Year 2009 (Unaudited)
Revenue	1,078,612	244,574	848,218	145,591	122,270	13	2,439,278
Profit/(loss) before tax	208,620	88,577	73,593	47,114	15,010	(20,714)	412,200
Full Year 2008 (Audited)
Revenue	1,051,462	461,564	620,577	166,192	73,409	48	2,373,252
Profit/(loss) before tax	234,757	114,719	27,908	42,068	39,868	(64,817)	394,503

4. Cash flow from operating activities

(Amounts in USD 1,000)	Year ended 31/12/2009 Unaudited	Year ended 31/12/2008 Audited
Net profit attributable to equity shareholders	288,351	263,997
Adjustments for:
Taxation expense	123,849	130,506
Depreciation and amortisation	117,214	95,300
Share based payment charge	4,595	4,640
Profit on disposal of property, plant and equipment	(1,160)	(11,671)
Deferred government grant income	(20)	(39)
Finance income	(8,896)	(5,881)
Finance expense	59,955	33,014
(Gain)/loss on embedded derivative within convertible notes	(34,284)	22,166
Share of post tax profit from joint ventures	(5,652)	(11,768)
Share of post tax (profit)/loss from associates	(1,074)	8
Changes in working capital (excluding effects of acquisitions and disposal of subsidiaries):
(Increase)/decrease in inventories	(10,414)	2,642
Decrease in trade and other receivables	149,804	3,325
(Decrease)/increase in trade and other payables	(42,291)	64,175
Cash generated from operations	639,977	590,414

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5. Adjusted EBITDA

(Amounts in USD 1,000 except percentages)	Three months ended		Year ended
	31/12/2009 Unaudited	31/12/2008 Unaudited	31/12/2009 Unaudited	31/12/2008 Audited
Net profit attributable to equity shareholders	64,468	56,914	288,351	263,997
Adjustments:
Taxation expense	27,499	34,099	123,849	130,506
Net financial items	5,558	(12,206)	(1,463)	42,549
Depreciation and amortisation	33,927	23,448	117,214	95,300
Profit on disposal of property, plant and equipment	(547)	(613)	(1,160)	(11,671)
Adjusted EBITDA	130,905	101,642	526,791	520,681
Revenue	538,178	583,594	2,439,278	2,373,252
Adjusted EBITDA %	24.3%	17.4%	21.6%	21.9%

6. Contingent liabilities

7. Related party transactions

The total amount drawn of USD 50 million under the USD 100 million revolving credit facility from Siem Industries Inc. was repaid in September 2009. This facility was subsequently cancelled in October 2009.

8. Provision on construction contracts

The Lochnagar and K3000 continued to support Petrobras on day-rate operations throughout 2009. During the third quarter of 2009, the Company recognised losses which are expected to arise during the remaining periods of these construction contracts. At 31 December 2009, the anticipated losses of USD 25.5 million were included within trade and other payables.

9. Events occurring after the balance sheet date

There were no other subsequent events between the balance sheet date and the date the condensed consolidated financial information was authorised for issue that require disclosure.

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Subsea 7 Inc.

Earnings Presentation

Quarter Ended

31 December 2009

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Highlights

Strong project execution in all regions, delivering EBITDA of USD 130.9 million, equivalent to an EBITDA margin of 24.3%

Awarded contract by Petrobras in Brazil valued in excess of USD 200 million in support of the P-55 development in the Roncador field

Issued and received proceeds for private placement of USD 275 million convertible notes

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Operational Performance by Region

North Sea

Three Months Ended 31 Dec

Year Ended 31 Dec

Successful completion of Statoil's Vega, Visund and Snorre B riser projects
Life-of-Field operations continued on Shell, ConocoPhillips, Total and BP frame agreements. New ROVSV, Normand Subsea commenced operations on the Shell frame agreement

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Operational Performance by Region

Africa

Three Months Ended 31 Dec

Year Ended 31 Dec

BP's Block 18 Life-of-Field, Block 18 Gas Export Line and Block 31 projects ongoing
Successful completion of Total's Girassol pipeline repair project, offshore Angola

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Operational Performance by Region

Brazil

Three Months Ended 31 Dec

Year Ended 31 Dec

Petrobras' Sul Capixaba project substantially completed
Scope of work planned for 2009 in respect of Statoil's Peregrino development completed
New four-year contract with Petrobras for the Normand Seven commenced

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Operational Performance by Region

North America

Three Months Ended 31 Dec
2009 2008

Year Ended 31 Dec
2009 2008

Offshore operations were completed on Petrobras' Cascade project and Marathon's Droshky pipelay scope
Skandi Neptune undertook work for BP on the Thunder Horse and Atlantis developments

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Operational Performance by Region

Asia Pacific

Three Months Ended 31 Dec

Year Ended 31 Dec

Rockwater 2 supported Woodside's Enfield project in Australia
Santos' Casino-Henry project progressed well with the Seven Navica completing pipelaying activities in December
Seven Seas commenced mobilisation activities for Murphy's Kikeh flexibles project in Malaysia

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Backlog at 31 December 2009 & 31 December 2008

By Region

By Contract Type

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Backlog at 31 December 2009 by Year of Execution

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subsea7

Financial Highlights

(Amounts in USD millions)	Three Months Ended		Year Ended
	31/12/2009	31/12/2008	31/12/2009	31/12/2008
	Unaudited	Unaudited	Unaudited	Audited
Revenue	538.2	583.6	2,439.3	2,373.3
Adjusted EBITDA	130.9	101.6	526.8	520.7
Net operating profit	96.4	73.4	404.0	425.3
Profit before tax	92.0	91.0	412.2	394.5
Net profit attributable to equity shareholders	64.5	56.9	288.4	264.0
Earnings per share, in USD per share
Earnings per share, basic	0.44	0.39	1.96	1.80
Earnings per share, diluted	0.42	0.38	1.94	1.74

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Cash Flows

	Year Ended
	31/12/2009	31/12/2008
(Amounts in USD 1,000)	Unaudited	Audited
Net profit attributable to equity shareholders	288,351	263,997
Non-cash income statement items	254,527	256,275
Changes in working capital	97,099	70,142
Cash generated from operations	639,977	590,414
Purchase of property, plant and equipment	(246,331)	(449,282)
Proceeds from sale of property, plant and equipment	1,413	26,073
Dividends received	16,336	-
(Repayment)/drawdown of loans	(150,000)	150,000
Proceeds from issue of convertible notes	272,902	-
Repurchase of convertible notes	(75,486)	-
Purchase of available-for-sale financial assets	-	(179,381)
Other cash flows	(85,626)	(191,415)
Net increase/(decrease) in cash and cash equivalents	373,185	(53,591)
Cash and cash equivalents at start of period	114,066	167,657
Cash and cash equivalents at end of period	487,251	114,066

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subsea7

Balance Sheet

| (Amounts in USD 1,000) | 31/12/2009
Unaudited | 31/12/2008
Audited |
| --- | --- | --- |
| Assets | | |
| Non-current assets | 1,306,219 | 1,120,367 |
| Cash and cash equivalents | 487,251 | 114,066 |
| Other current assets | 720,739 | 768,561 |
| Current assets | 1,207,990 | 882,627 |
| Total assets | 2,514,209 | 2,002,994 |
| Shareholders' equity and liabilities | | |
| --- | --- | --- |
| Shareholders' equity | 1,187,288 | 689,666 |
| Borrowings | 468,540 | 559,737 |
| Other non-current liabilities | 110,102 | 104,849 |
| Non-current liabilities | 578,642 | 664,586 |
| Borrowings | 133,465 | - |
| Other current liabilities | 614,814 | 648,742 |
| Current liabilities | 748,279 | 648,742 |
| Total liabilities | 1,326,921 | 1,313,328 |
| Total shareholders' equity and liabilities | 2,514,209 | 2,002,994 |

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Net Debt Progression

(Amounts in USD millions)	Quarter 1	Quarter 2	Quarter 3	Quarter 4
	2009	2009	2009	2009
	Unaudited	Unaudited	Unaudited	Unaudited
Cash and cash equivalents	89,207	84,781	195,166	487,251
Available-for-sale financial assets	109,203	132,860	159,317	176,443
Total	198,410	217,641	354,483	663,694
Short-term debt	-	167,452	170,524	133,465
Long-term debt	553,994	410,591	342,369	468,540
Total	553,994	578,043	512,893	602,005
Net (Debt)/ Cash	(335,584)	(360,402)	(158,410)	61,689

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Shareholders' Equity

	Year Ended
	31/12/2009	31/12/2008
(Amounts in USD 1,000)	Unaudited	Audited
Shareholders' equity at start of period	689,666	819,757
Share issues	427	438
Purchase of own shares	-	(15,716)
Shares purchased by Employee Share Trust	-	(9,430)
Repurchase of convertible notes	(1,265)	-
Convertible note 2009-2014 – equity component	51,759	-
Net profit for the period	288,351	263,997
Share based payments	4,595	4,640
Available-for-sale financial assets – fair value adjustment	56,743	(71,801)
Currency translation differences	97,012	(302,219)
Shareholders' equity at end of period	1,187,288	689,666

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Adjusted EBITDA

Reconciliation of net profit attributable to equity shareholders to adjusted EBITDA

	Three Months Ended		Year Ended
(Amounts in USD 1,000)	31/12/2009
Unaudited	31/12/2008
Unaudited	31/12/2009
Unaudited	31/12/2008
Audited
Net profit attributable to equity shareholders	64,468	56,914	288,351	263,997
Adjustments:
Taxation expense	27,499	34,099	123,849	130,506
Net financial items	5,558	(12,206)	(1,463)	42,549
Depreciation and amortisation	33,927	23,448	117,214	95,300
Profit on disposal of property, plant and equipment	(547)	(613)	(1,160)	(11,671)
Adjusted EBITDA	130,905	101,642	526,791	520,681
Revenue	538,178	583,594	2,439,278	2,373,252
Adjusted EBITDA %	24.3%	17.4%	21.6%	21.9%

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04.02.10

SUBSEA 7 INC. INVESTOR PRESENTATION

Subsea 7 Inc. Investor Presentation

subsea 7

Subsea 7 Inc.

Investor Presentation
Quarter Ended
31 December 2009

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Highlights

Strong project execution in all regions, delivering EBITDA of USD 130.9 million, equivalent to an EBITDA margin of 24.3%

Awarded contract by Petrobras in Brazil valued in excess of USD 200 million in support of the P-55 development in the Roncador field

Issued and received proceeds for private placement of USD 275 million convertible notes

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Operational Performance by Region

North Sea

Three Months Ended 31 Dec

Year Ended 31 Dec

Successful completion of Statoil's Vega, Visund and Snorre B riser projects
Life-of-Field operations continued on Shell, ConocoPhillips, Total and BP frame agreements. New ROVSV, Normand Subsea commenced operations on the Shell frame agreement

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Operational Performance by Region

Africa

Three Months Ended 31 Dec

Year Ended 31 Dec

BP's Block 18 Life-of-Field, Block 18 Gas Export Line and Block 31 projects ongoing
Successful completion of Total's Girassol pipeline repair project, offshore Angola

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Operational Performance by Region

Brazil

Three Months Ended 31 Dec

Year Ended 31 Dec

Petrobras' Sul Capixaba project substantially completed
Scope of work planned for 2009 in respect of Statoil's Peregrino development completed
New four-year contract with Petrobras for the Normand Seven commenced

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subsea 7

The crew of the Lochnagar on passing their 5 year LTI free milestone

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subsea 7

Paranaguá base

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Paranagua base - Details

Total area of the site 6,440 acres

Total area of industrial site 1,302 acres

Length of waterfront 2.2km

Useable commercial waterfront 1.7km

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Operational Performance by Region

North America

Three Months Ended 31 Dec
2009 2008

Year Ended 31 Dec
2009 2008

Offshore operations were completed on Petrobras' Cascade project and Marathon's Droshky pipelay scope
Skandi Neptune undertook work for BP on the Thunder Horse and Atlantis developments

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subsea 7

The Seven Oceans alongside our new Port Isabel spoolbase in the Gulf of Mexico

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Operational Performance by Region

Asia Pacific

Three Months Ended 31 Dec

Year Ended 31 Dec

Rockwater 2 supported Woodside's Enfield project in Australia
Santos' Casino-Henry project progressed well with the Seven Navica completing pipelaying activities in December
Seven Seas commenced mobilisation activities for Murphy's Kikeh flexibles project in Malaysia

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The Seven Navica alongside the temporary spoolbase facility at Crib Point

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Backlog at 31 December 2009 & 31 December 2008

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subsea7

Backlog at 31 December 2009 by Year of Execution

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subsea7

Financial Highlights

(Amounts in USD millions)	Three Months Ended		Year Ended
	31/12/2009	31/12/2008	31/12/2009	31/12/2008
	Unaudited	Unaudited	Unaudited	Audited
Revenue	538.2	583.6	2,439.3	2,373.3
Adjusted EBITDA	130.9	101.6	526.8	520.7
Net operating profit	96.4	73.4	404.0	425.3
Profit before tax	92.0	91.0	412.2	394.5
Net profit attributable to equity shareholders	64.5	56.9	288.4	264.0
Earnings per share, in USD per share
Earnings per share, basic	0.44	0.39	1.96	1.80
Earnings per share, diluted	0.42	0.38	1.94	1.74

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subsea7

Cash Flows

	Year Ended
	31/12/2009	31/12/2008
(Amounts in USD 1,000)	Unaudited	Audited
Net profit attributable to equity shareholders	288,351	263,997
Non-cash income statement items	254,527	256,275
Changes in working capital	97,099	70,142
Cash generated from operations	639,977	590,414
Purchase of property, plant and equipment	(246,331)	(449,282)
Proceeds from sale of property, plant and equipment	1,413	26,073
Dividends received	16,336	-
(Repayment)/drawdown of loans	(150,000)	150,000
Proceeds from issue of convertible notes	272,902	-
Repurchase of convertible notes	(75,486)	-
Purchase of available-for-sale financial assets	-	(179,381)
Other cash flows	(85,626)	(191,415)
Net increase/(decrease) in cash and cash equivalents	373,185	(53,591)
Cash and cash equivalents at start of period	114,066	167,657
Cash and cash equivalents at end of period	487,251	114,066

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Balance Sheet

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subsea7

Net Debt Progression

(Amounts in USD millions)	Quarter 1	Quarter 2	Quarter 3	Quarter 4
	2009	2009	2009	2009
	Unaudited	Unaudited	Unaudited	Unaudited
Cash and cash equivalents	89,207	84,781	195,166	487,251
Available-for-sale financial assets	109,203	132,860	159,317	176,443
Total	198,410	217,641	354,483	663,694
Short-term debt	-	167,452	170,524	133,465
Long-term debt	553,994	410,591	342,369	468,540
Total	553,994	578,043	512,893	602,005
Net (Debt)/ Cash	(335,584)	(360,402)	(158,410)	61,689

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Outlook

Market outlook challenging in short-term but positive for medium to long-term

Signs of recovery starting to appear in the North Sea

Tendering activity very high

Number of major projects moving towards sanction, but given larger scale, offshore installation likely to be in 2012-2013

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10.02.10

PRIMARY INSIDER NOTIFICATION FORMS

Please find attached Primary Insider Notification Forms in respect of trading of shares in Subsea 7 Inc (SUB).

SUBSEA 7 INC.

PRIMARY INSIDER NOTIFICATION FORM

EXERCISE OF OPTIONS AND IMMEDIATE SALE OF UNDERLYING SHARES

Please be advised that on 10 February 2010 I, Barry Mahon, being a Primary Insider of Subsea 7 Inc. exercised 50,000 share options at an exercise price of 29.49 NOK per option and sold 50,000 shares in Subsea 7 Inc. at a price of 103.61 NOK per share.

Following this transaction I hold 128,333 restricted share awards in Subsea 7 Inc.

SUBSEA 7 INC.

PRIMARY INSIDER NOTIFICATION FORM

EXERCISE OF OPTIONS AND IMMEDIATE SALE OF UNDERLYING SHARES

Please be advised that on 10 February 2010 I, David Cassie, being a Primary Insider of Subsea 7 Inc. exercised 12,000 share options at an exercise price of 29.49 NOK per option and sold 12,000 shares in Subsea 7 Inc. at a price of 103.61 NOK per share.

Following this transaction I hold 135,000 restricted share awards in Subsea 7 Inc.

SUBSEA 7 INC.

PRIMARY INSIDER NOTIFICATION FORM

EXERCISE OF OPTIONS AND IMMEDIATE SALE OF UNDERLYING SHARES

Please be advised that on 10 February 2010 I, Jan Willem van der Graaf, being a Primary Insider of Subsea 7 Inc. exercised 2,500 share options at an exercise price of 29.49 NOK per option and sold 2,500 shares in Subsea 7 Inc. at a price of 103.61 NOK per share.

Following this transaction I hold 46,666 restricted share awards in Subsea 7 Inc.

SUBSEA 7 INC.

PRIMARY INSIDER NOTIFICATION FORM

EXERCISE OF OPTIONS AND IMMEDIATE SALE OF UNDERLYING SHARES

Please be advised that on 10 February 2010 I, John Evans, being a Primary Insider of Subsea 7 Inc. exercised 60,000 share options at an exercise price of 44.85 NOK per option and sold 60,000 shares in Subsea 7 Inc. at a price of 103.61 NOK per share.

Following this transaction I hold 900 shares, 12,000 share options and 128,333 restricted share awards in Subsea 7 Inc.

22.02.2010

SUBSEA 7 INC. MANDATORY NOTIFICATION OF TRADE

Subsea 7 Inc. (Oslo Stock Exchange; SUB) today announces that it has purchased US$11 million (par value) of the US$300 million 2.8% Subsea 7 Inc. Convertible Notes due 2011 for US$11.00 million (average unit price of US$1.00).

The Company now holds US$51 million (par value) of the US$300 million 2.8% Subsea 7 Inc. Convertible Notes due 2011 and US$40.5 million (par value) of the US$175 million zero coupon Subsea 7 Inc. Convertible Notes due 2017.

-ends- 22 February 2010

For additional information please contact:

Barry Mahon
Chief Financial Officer
Subsea 7

MARCH

29.03.10

Subsea 7 Inc. (OSE Symbol: SUB) today issues its 2009 Annual Report.

For further information contact:

Barry Mahon, Chief Financial Officer

Tel: +44 (0) 1224 526147

2009 SUBSEA 7 ANNUAL REPORT

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3

Who We Are

Subsea 7 is one of the world's leading subsea engineering and construction companies servicing the oil and gas industry. Our skilled and experienced multinational workforce, in excess of 5,000 personnel, supports our onshore and offshore operations in Africa, Asia Pacific, Brazil, North America and the North Sea.

Who We Are
What We Do
Where We Operate
How We Operate
Chairman's Message
Financial Results
Business Review
Highlights Of The Year
Regional Reports
Executive Management Team
Vessel Fleet
Operational Bases
Financial Report

We Are Focused On:

optimising the value from the investments we have made in new assets and equipment;
driving efficiency and value creation throughout our operations via our business improvement initiatives; and
being able to attract and retain the best people and provide them with the support they need to help us deliver excellence in our project execution.

What We Delivered In 2009

“These results would not have been achieved without... the early management action to align the scale of the organisation to the challenging market conditions that we were facing as we approached 2009. As a result of this, we now have a leaner operation, a much more competitive cost base and a stronger balance sheet from which to address the challenging short-term market in 2010. Equally, we are well placed to maximise the opportunities that the expected upturn will bring.”

Mel Fitzgerald, Chief Executive Officer

2009 Financial Highlights

Revenue - $2.4bn

Net Profit - $288m

EBITDA* - $527m
EBITDA is calculated as net profit adjusted for taxation, net financial items, depreciation, amortisation, impairments and profits or losses on disposals of property, plant and equipment.

Shareholders' Equity - $1.2bn
at 31 December

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Subsea 7 Annual Report

4
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What We Do

Subsea 7 has a strong focus on the growing high-tech and high-value deepwater subsea umbilical, riser and flowline markets in Africa, Asia Pacific, Brazil and the Gulf of Mexico, but also retains a leading role in the North Sea. We are respected globally for our strong project management capability and excellent project execution, while retaining a strong focus on safety.

We offer the full spectrum of products and capabilities to deliver Subsea Field Developments and Life-of-Field (LoF) services to clients. These include project management, conceptual engineering, pipeline design, fabrication and installation through to inspection, repair and maintenance and asset integrity management. Projects are delivered by a large pool of experienced in-house project managers and engineers, who have an exceptional track record and technical knowledge base from which to deliver large-scale engineering, procurement, installation and commissioning contracts or projects executed on a long-term day-rate basis.

Subsea 7 has a fleet of over 20 world-class pipelay, construction, remotely operated vehicle and diving support vessels. In recent years, the fleet has undergone a $1bn+ capital investment programme to upgrade and expand its capability and capacity, in particular to serve deepwater markets. In addition, our offshore operations are supported by a number of global pipeline fabrication and logistics bases, such as the recently opened pipeline fabrication spoolbase at Port Isabel in the Gulf of Mexico.

> “We are respected globally for our strong project management capability and excellent project execution, while retaining a strong focus on safety.”

Subsea Field Development

Subsea 7 has a presence in all the major oil and gas basins globally. We have a proven track record in all types of subsea field development activities including pipelines, risers, umbilicals and construction.

RIGID PIPELINES

A proven track record demonstrates our ability to design, build and install a range of high-quality, cost-effective rigid pipeline solutions. In addition, we are recognised as the market leader in the design, fabrication and installation of pipeline bundles*. An ongoing technical development programme, allied to investment in new vessels and equipment, helps to ensure our position as a leading provider of rigid pipelay services globally.

FLEXIBLES AND UMBILICALS

We have a track record built up over many years for successfully installing some of the deepest umbilicals in the world, including at Independence Hub in the Gulf of Mexico where we installed umbilicals down to almost 2,750m. We also played a key role in the development of Petrobras' Roncador field in the Campos Basin, a field with over 40 flexible lines, totalling a length in excess of 400km.

RISERS

Subsea 7 has a long-established track record in the design, fabrication and installation of rigid risers, including most recently in Brazil where we installed the world's first "lazy-wave" steel catenary risers for Shell on the BC-10 project. In addition, Subsea 7 has a strong track record in deepwater flexible riser installation, using flexlay and triple-lay methods.

CONSTRUCTION

Subsea 7 can provide project management and engineering support to a wide range of subsea construction services including the lifting and installation of templates, spools, flying leads, manifolds and jumpers. These are in addition to pipeline installation support services such as tie-ins, trenching, survey, inspection, testing and commissioning.

Life-of-Field Services

Subsea 7 delivers a full suite of services across all categories of subsea LoF work. We can offer these from a flexible menu of traditional contracts and services (either segmented or integrated), new technologies and innovative contracting packages using either our own or client-supplied vessels. These services are enhanced by a strong collaborative approach to working with industry partners in developing and delivering cutting-edge products and technologies.

INTEGRITY ASSURANCE

Subsea 7 provides integrity assurance services to clients around the world in both deep and shallow water. We are well placed to deliver a comprehensive service through the depth of our engineering and management resources as well as the size of our pool of qualified offshore personnel. As a result of the large number of contracts undertaken, we have acquired an extensive working knowledge of integrity assurance systems.

INTERVENTION

Subsea 7 is a world leader in underwater remote intervention technology services and is one of the largest saturation diving companies in the world. Our fleet of over 120 remotely operated vehicles is supported by a team of in-house electrical, software, structural and mechanical engineers who are specialists in the design and operation of bespoke remote tooling for global deepwater markets.

INCREMENTAL CAPEX

Modifications to the infrastructure of subsea fields to extend life or expand capacity is becoming increasingly required on fields to maximise recovery from the field assets. Subsea 7 is able to deliver this capability as part of a LoF service by combining it with inspection, maintenance and other operations support activities.

A pipeline bundle integrates a combination of flowlines, water injection, gas lift, chemical injection and control systems necessary for any subsea development and assembles them within a steel carrier pipe.

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5

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7

> “i-Tech is uniquely positioned to use the knowledge gained and lessons learned from working in these challenging areas to continue to develop fresh solutions to meet the technological demands of new environments.”

What We Do cont'd

ROV Services for Exploration and Production

i-Tech, a division of Subsea 7, is a premier provider of remotely operated vehicles (ROVs) and remote intervention technology services to the global exploration and production industry. i-Tech's primary focus is the provision of intervention services onboard semi-submersibles, drill-ships, jack-ups, platforms and floating production units. More recently i-Tech has focused on the expanding vessel market where it is currently providing ROV services onboard a number of anchor-handling tugs and field support vessels. Since it pioneered the use of the first ROV onboard a drill rig for BP Norway in 1980, i-Tech has been at the forefront of remote intervention technology. It has a fleet of more than 70 advanced work class ROV systems and employs in excess of 650 highly skilled engineers, technicians, managers and business support personnel around the world. i-Tech operates out of four regional centres: Asia Pacific, Brazil, Europe and Africa, and North and Central America, together with several country and project support facilities.

With its long and established history, i-Tech can demonstrate a proven track record of providing market-leading ROV and remote intervention technology services throughout the world, including in the deepwater markets such as the Gulf of Mexico and the harsh environmental conditions encountered West of Shetland, North Atlantic. i-Tech is uniquely positioned to use the knowledge gained and lessons learned from working in these challenging areas to continue to develop fresh solutions to meet the technological demands of new environments.

i-Tech

Precise Positioning Services

VERIPOS, a division of Subsea 7, has over 20 years of experience in the delivery of precise positioning services to the global marine market. VERIPOS' mission is "to be a market leader in the supply of precise navigation and positioning services and solutions, through the innovative application of technology, continuous product development and operational excellence, while creating maximum value for both our customers and our shareholders".

VERIPOS' core business is the provision of data broadcast services for the purposes of enhancing accuracy, reliability and integrity of precise navigation and positioning. It offers a range of such services to meet individual client requirements.

VERIPOS recognises that market-leading product technology is not enough, in isolation, to ensure the best solution for clients. Other factors contribute to optimum operational and commercial effectiveness, from the provision of fit-for-purpose products maintained at a high level of operability to rapid, reliable delivery and a high standard of user support.

VERIPOS aims to meet all of these requirements without compromise. At the centre of its business philosophy is a firm commitment to provide superior quality service and support while giving appropriate consideration to health, safety and the protection of the environment. From project planning to preventative maintenance, every aspect of VERIPOS' service is designed towards delivering products and services to its clients in the most professional manner possible.

veripos

Front-End Engineering Services

Subsea Engineering Solutions Inc (SES) is a global engineering company providing subsea front-end engineering and design, integrity management and engineering consulting services to operators in the oil and gas industry. SES has offices in Houston, Texas and Shanghai, China.

Subsea Engineering Solutions is a joint venture between Subsea 7 Inc. and Richtech International Holding Inc.

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Subsea 7 Annual Report

Where We Operate

Significant projects worked on or completed in 2009 include:

AFRICA

Addax - Disson

BP - Block 18 Life-of-Field, Block 18 Gas Export Line, Block 31 (PSVM)

Chevron - Tombus Landana

Mobil Equatorial Guinea - Serpentina

Total - Block 17 Girasol

ASIA PACIFIC

ConocoPhillips - Xipang

Murphy - Kikam

Santos - Henry

Woodside - Frame Agreement, Enfield

BRAZIL

Petrobras - Flexible pipelay day rate, "Hybrid" steel rigid pipelay, Sul Cepixaba

Shell - BC-10

Statoil - Peregrino

NORTH AMERICA

BP - Thunder Horse, Atlantis

Marathon - Droshky

Murphy - Thunder Hawk

Petrobras - Cascade / Chinook

NORTH SEA

BP - Vathail, Skarv, West of Shetland, IRM* Frame Agreement

Centric Energy - Grove Extension / Seven Seas

ConocoPhillips - IRM Frame Agreement

Ithaca - Jacky

Shell - Pan-European USC

Statoil - Vega, Visund, Snorre B, Troll 02, Troll B

Total - IRM Frame Agreement

Venture (Centric Energy) - Chestnut P2, Channon / Barbarossa, F3-FA

inspection, repair and maintenance

2009

Subsea 7

Annual Report

How We Operate

Our Values

The health and safety of our employees, clients, subcontractors and all those who work with Subsea 7 is one of our key priorities. Having a focus on improving the quality of services we provide to clients, being more efficient at how we do this and minimising the impact of our activity on the environment is critical for all our operations.

The Subsea 7 Code of Business Conduct reflects the Company's values and commitment to our shareholders, customers and people. It also provides a framework for our people in applying legal and ethical practices to their everyday work. Our key values are:

Safe

We do not want to see anyone hurt or injured through their efforts for Subsea 7. It is avoidable, unnecessary and morally unacceptable.

Clean

We will minimise the impact of our activities on the environment with the aim of continually improving our environmental performance.

Smart

Success will come through applying our collective intellect which will entail the development of people through training, innovation in our thinking and the application of new technology.

Fair

To sustain our business, people need to want to work together. Treating customers, colleagues and subcontractors fairly will build trust, which will bring success.

Anywhere

The business is global; our growth will come from understanding the different markets and encouraging localisation.

Collectively these values continue to play a major part in developing Subsea 7's unique culture.

Our People

Subsea 7 is comprised of people from many different cultural and professional backgrounds. By working together, onshore and offshore, they have helped us build a reputation for excellence and continue to reinforce Subsea 7's position as one of the world's leading subsea engineering and construction companies.

We recognise that Subsea 7's ability to deliver value for all our stakeholders depends upon the continued positive contribution from our people. We are committed to providing the training, development and support systems required to help them develop the skills and knowledge that enable them to do their jobs safely and effectively. In addition, we work closely with our supply-chain and local communities to ensure that they are provided with the necessary support to develop their own resources.

Subsea 7 actively promotes a culture of openness. Through regular leadership visits, line management briefings and employee forums, everyone is encouraged to contribute their views and ideas on how to further develop the Company.

Our Communities

Subsea 7 seeks to play an active part in building upon the level of skills, the opportunities for personal development and the provision of educational facilities in the communities in which we operate.

It is our goal to build Subsea 7 globally to have a number of strong regional businesses, resourced locally, that can deliver high-quality services for our clients. The employment of local people and the provision of training and support to local suppliers have been critical to the growth of Subsea 7 to date. An example of this is in Brazil, where we have strong local management and engineering teams, and in Angola where we have recruited and trained a locally resourced welding team to work in our fabrication facility in Luanda.

The work that we do with our communities is vital to the continued development of Subsea 7 globally.

Picture above right: As part of Subsea 7's commitment to the development of local communities and resources, in early 2009 a group of four Angolan nationals were recruited to join a new Officer Cadet training programme in Cape Town, South Africa. The programme is the first of its kind in the region, with the graduates being selected after a period of rigorous assessment. The cadets are being trained so that they can work globally on the full range of vessels within the Subsea 7 fleet. Two of the four cadets are expected to graduate as Deck Officers in 2012, while the other two are expected to graduate as Engineering Officers in 2013. We expect to have three additional recruits join the programme in 2010.

Corporate Governance

Subsea 7 is committed to ensuring high standards of corporate governance. As we are listed on the Oslo Stock Exchange, we comply with relevant aspects of Norwegian securities law and the Norwegian Code of Practice for Corporate Governance. As a Cayman Islands incorporated company, we are also subject to Cayman Islands laws and regulations with respect to corporate governance.

A full copy of the Group's Corporate Governance Report is available to read on pages 47 to 51.

The Board of Subsea 7 is comprised of directors with varied backgrounds and the necessary expertise, diversity and capacity to enable it to function effectively. Regular board meetings are held at which the Executive Management Team attend to present on strategic, operational and financial matters.

The Board recognises that it has responsibility for ensuring that there is a system of internal control in place and reviewing its effectiveness. This system is designed to manage rather than eliminate risk and can only provide reasonable but not absolute assurance against material misstatement or loss.

The key components of the Group's system of internal control are:

clearly defined lines of responsibility and limits of delegated authority;
regular meetings between the Executive Management Team and the Global Leadership Team;
maintaining a comprehensive annual planning and management reporting process;
regular reviews by the Board of projected and actual financial performance; and
reports from the Audit Committee.

subsea partner of choice

2009

Subsea 7

Annual Report

Chairman's Message

2009 was another record year with good progress for Subsea 7. The performance of the Company was better than expected and is particularly pleasing when considered against the uncertain and challenging economic environment that prevailed during the year.

The worldwide economic recession, which was triggered by the global financial crisis in 2008, impacted our market significantly. The oil price had dropped from a high of $147 in July 2008 to $30 at the end of December 2008. This had a dramatic impact on the subsea sector in 2009. We had already started to see larger clients deferring projects as they reassessed their commercial viability and sought the opportunity to obtain cost reductions from the supply chain. For smaller clients, the lack of liquidity in the financial markets and the cost of available borrowing made it difficult for them to obtain funding for projects. This combination of factors resulted in a significant reduction in the number of projects being sanctioned around the globe.

In light of these events we recognised the need to act quickly to align the size and cost base of our organisation to the anticipated market demand. It was also imperative that we remained disciplined to ensure we are competitive in the short-term, without compromising our ability to deliver strong returns when the market recovers.

"We were also confident that the investments we had made in our business improvement initiatives over the previous three years would help us to deliver continued strong performance. The $1bn+ capital investment programme in new vessels, equipment and infrastructure has provided Subsea 7 with enhanced capability to help meet our clients' needs and has provided them with the level of flexibility, efficiency and predictability they require.

As a Board we are pleased with the record financial results which the Company delivered for shareholders in 2009. In addition, we are pleased to report that our balance sheet has strengthened significantly over the year and our borrowings are offset by our cash and available-for-sale financial assets.

Although we continue to be optimistic about the outlook for the Company, there is no doubt that 2010 will be a more challenging year. The reduced number of projects sanctioned during 2009 will impact on levels of activity and margins in 2010. The medium to long-term outlook, however, is positive. We have a strong management team that has delivered continuous improvement in operational and financial performance over recent years. This gives the Board great confidence in the ability of the Company to deliver sustainable value for shareholders.

Let me close by acknowledging the contribution made by our clients, suppliers and people. We endeavour to foster strong relationships with our clients to minimise costs and we must continue to work together to maximise value for mutual benefit. We have worked closely with our supply chain with the joint aim of removing inefficiencies, reducing cost and improving quality. Finally, the strong performance in 2009 could not have been delivered without the efforts of our global workforce, both onshore and offshore. I thank them for their continued commitment to the values of Subsea 7 and support in providing excellent service for our clients.

Kristian Stern
Chairman

> "In light of these events we recognised the need to act quickly to align the size and cost base of our organisation to the anticipated market demand."

subsea partner of choice

Subsea 7 Annual Report

14
15

2009 Financial Summary

Year ended 31 December (in $ millions, except per share data)	2009	2008
Revenue	2,439	2,373
Operating expenses	(2,035)	(1,948)
Net operating profit	404	425
Net financial items	1	(43)
Profit before tax	412	395
Net profit attributable to equity shareholders	288	264

Earnings per share ($)

- Basic	1.96	1.80
- Diluted	1.94	1.74

As at 31 December

Shareholders' equity	1,187	690
Backlog	2,798	3,268
Capital expenditure	246	449

Financial Results

"These results would not have been achieved without... the support and engagement we had from the people of Subsea 7 to the cost-efficiency challenges that we faced."

Mel Fitzgerald, Chief Executive Officer

EBITDA is calculated as net profit adjusted for taxation, net financial items, depreciation, amortisation, impairments and profits or losses on disposals of property, plant and equipment.

2009 Revenue by region*

2009 Profit before tax by region*

Excludes Global segment

Backlog at 31 December 2009

Backlog by year of execution 2010 - 2014

1994-2014	2009-2014
$1,504m	$1,504m

Earnings

2009

Subsea 7 Annual Report

Business Review

Mel Fitzgerald
Chief Executive Officer

Our Performance

2009 was another successful year for the Company, with revenue of $2.4bn and a net profit of $288m. We ended the year with a backlog of $2.8bn comprising of a good mix of day-rate and lump-sum work. This was a tremendous result during a year of changing market conditions brought about by the global economic crisis.

These results would not have been achieved without three important factors: the early management action to align the scale of the organisation to the challenging market conditions that we were facing as we approached 2009; the support and engagement we had from the people of Subsea 7 to the cost-efficiency challenges that we faced; and the first-class execution of our projects driven by the key business improvement initiatives that we had in place.

As a result of this, we now have a leaner operation, a much more competitive cost base and a stronger balance sheet from which to address the challenging short-term market in 2010. Equally, we are well placed to maximise the opportunities that the expected upturn will bring.

> “These results would not have been achieved without... the first-class execution of our projects driven by the key business improvement initiatives that we had in place.”

Our Vision

In 2005 we carried out a review of how we operated our business. This led to a number of business improvement initiatives being implemented over subsequent years to help us achieve our vision of becoming the Subsea Partner of Choice in our niche market.

We stated that we would build the Company around three particular areas:

people and teamwork – having the right people in place to win, engineer, manage and execute projects safely and efficiently;
assets and infrastructure – having the correct balance of capability and capacity to deliver the range and quality of services our clients require, in particular for deepwater markets; and
excellence in project execution – designing and implementing safe and efficient business processes that ensure repeatability and predictability in our operations.

The strong operational performance in 2009 demonstrates that we have come a long way to reaching our vision.

Subsea Partner of Choice

Our Strategy

Being able to provide a range of services that supports both new subsea field development and life-of-field operations is a major part of Subsea 7's business strategy. This was a critical factor in being able to deliver a strong financial performance in 2009 and will continue to be so throughout 2010.

Equally important is that we continue to demonstrate that we can provide a reliable service for our clients. The successful delivery of large complex projects, such as BC-10 for Shell in Brazil, demonstrated once again that Subsea 7 is one of the few subsea engineering companies globally that has the technical capability and operational expertise required to execute such a major project.

Our Investments

In 2009 we started to see a return on the $1bn+ capital investment programme in new assets and equipment that we have been making since 2006. The Seven Oceans and Seven Seas showed that they can deliver high service levels for our customers and generate increased efficiencies as we become consistently better at optimising vessel capability and equipment performance.

The latest new-build vessels to join the fleet are the Normand Subsea and the Seven Atlantic. Both vessels are already committed to work for Shell on a long-term contract.

In 2009 we opened our new pipeline fabrication spoolbase at Port Isabel in the Gulf of Mexico. With its credentials proven on the Marathon Droshky pipelay project, this strategically-positioned base will allow Subsea 7 to offer clients an enhanced level of service, and make us more competitive in the deepwater markets in the Gulf of Mexico and offshore Mexico.

The recent opening of the new Aberdeen Campus has been extremely beneficial in helping to drive high

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subsea partner of choice
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Subsea 7 Annual Report

Business Review cont'd

performance levels and operational efficiencies in the UK region. We expect to be able to deliver similar benefits at the new Norwegian campus in Stavanger.

In Brazil, we continued our investment in the region with the opening of a new logistics base in Rio das Ostras, and are progressing plans for our development site at Paranaguá in southern Brazil. This site is ideally placed to take advantage of the early activity related to the pre-salt region in the Santos Basin.

Our strong financial performance, coupled with additional long-term funding, places us in a strong position to take advantage of any opportunities that may arise for further investment in new assets.

Our Initiatives

As we started 2009, we knew that it was going to be a challenging year. As a response, we focused our attention more than ever on reducing our cost base. We questioned how we did things, and worked with our supply-chain to remove unnecessary costs and non-value creating activities.

Crucially, the relationships that we have built up with key suppliers through our Critical Supply Network focus in recent years helped us to drive cost and efficiency improvements together. Through engineering efficiencies we standardised products which allowed us to shorten lead delivery times, and we reviewed the scope of framework agreements to ensure we cut out unnecessary costs. In some areas we actively sourced new suppliers who were prepared to work with us to reduce costs and drive efficiency. We explored and introduced new technologies that enabled us to be more efficient, and we are encouraged by the willingness of clients to be flexible in project planning and vessel scheduling.

During the year we completed a full review of our global and regional processes and introduced an updated global Business Management System to ensure that

we operate more efficiently globally. Combined with a focus on knowledge sharing and collaboration, additional investment in new information technologies is making us a more efficient organisation.

Operationally, excellent project execution was a key feature of the year. We delivered very high utilisation of all our assets, made possible by the mobility of vessels and crews across the regions to meet varied and difficult challenges. We continue to bring new vessels, equipment and spoolbases into our operations with minimal disruption to safety, schedules and project delivery. These achievements have been made possible by the fact that, organisationally and culturally, we are more globally aligned today than we were a few years ago. The regional business units have worked together productively, with the valuable support of functions such as Global Operations, the Vessel and Equipment Management Group, the Vessel and Spoolbase Support Team and the new Pipeline Production Group. By working closely together, these groups are helping to ensure our bidding, engineering and offshore execution is more robust, efficient and effective. This places us in a very strong position going forward.

The 17 Centres of Excellence that we created in 2008 are now well embedded into day-to-day operations, supporting the business globally and continuing to deliver essential value to bidding and operations. This year we benefited in particular from the work they did supporting the BC-10 project, which helped to make this challenging scope of work an outstanding success.

Our Gateway bidding team, working with regional operations and the Technology and Assets group, ensures that there is a continued focus on arriving at robust technical solutions with proper risk-assessed cost and contingency for major projects. Their work gives us great confidence in being able to provide commercially sound, innovative technical solutions for our clients.

Picture: The latest of Subsea 7's new-build pipelay vessels, the Seven Pacific, was named and successfully launched at Krimpen aan den Ijssel, The Netherlands on 20th March 2010. The vessel is due for delivery late 2010.

Our focus areas for 2010

In 2010, the focus of our business improvement activity will be on building a company that is lean and efficient by embedding:

cost-reduction and efficiency generation across all our operations;
continuous improvement of our processes to ensure functional, operational and global alignment; and
a "right first time" quality ethos.

The creation of the new global Business Improvement function will drive this focus in recognition of the ongoing value to be gained from an improvement in quality. In particular, this will be achieved through increased standardisation of processes and the removal of non-value generating activities.

We will continue to build on the breadth of portfolio of services we offer to clients such as the mix of day-rate and long-term Life-of-Field contracts. This will protect us to an extent when the market is tight and the larger engineering, procurement, installation and commissioning contracts are being delayed.

In light of the expected upturn, and the associated demand for skilled resources that this will bring, we are working hard to develop local talent in each of our regions.

Outlook

The market outlook remains challenging in the short-term. There are signs of a recovery starting to appear with a significant number of projects moving towards sanction. In addition, there is no doubt that a higher oil price and improved access to finance will see a greater level of confidence in the market starting to return. In conclusion, the market outlook for the medium to long-term is positive and we are well placed to take advantage of the expected upturn when it comes.

Mel Fitzgerald
Chief Executive Officer

subsea partner of choice

2009

Subsea 7 Annual Report

QUARTER 1

Tombua Landana project completed

The Tombua Landana EPIC* project was successfully completed for Chevron in Angola.

$200 million contract award in Brazil

Award of $200m Tambua Urugua and P-56 rigid pipelay projects in Brazil by Petrobras.

Brazil gets busy offshore

Eight of the Company's vessels were operating in Brazil at the same time - Kommandor 3000, Lochnagar, Amazonia, Normand Seven, Seisranger, Seven Seas, Seven Oceans and Seven Navica.

VERIPOS 20th anniversary

VERIPOS marked its 20th anniversary – it was founded in 1989 as a joint venture between Brown & Root Survey and Ormston Technology.

New global BMS launched

New global Business Management System launched.

engineering, procurement, installation and commissioning

Highlights Of The Year:

QUARTER 2

Frame agreement with Nexen

Award of an exclusive three-year frame agreement contract with Nexen for subsea field development works on all its UK assets.

Port Isabel spoolbase opens

Completion of the Port Isabel pipeline fabrication spoolbase in the Gulf of Mexico and commencement of pipeline fabrication work for the Marathon Droshky project.

Subsea 7 goes it alone again in Asia Pacific

Subsea 7 became a stand-alone operation in Asia Pacific again with the announcement of the dissolution of the Technip Subsea 7 joint venture.

SAFETY PERFORMANCE

	2009	2008
Lost-Time-Incident (LTI) Frequency (per 200,000 man hours)	0.09	0.17
Total Recordable Case (TRC) Frequency (per 200,000 man hours)	0.45	0.51
No of LTI incidents	10	18
No of TRC cases	48	54

QUARTER 3

$150 million contract award in Africa

Award of $150m pipelay project by BP for the Block 18 Gas Export Line, offshore Angola.

Serpentina project delivered

Serpentina fast-track project successfully completed for Mobil Equatorial Guinea.

BC-10 project completed

Following an eight-month offshore campaign, the BC-10 project was successfully completed.

Xijang IRM* completed

Xijang IRM scope completed in the South China Sea for ConocoPhillips.

Normand Seven $250 million contract award

$250m four-year contract awarded by Petrobras for the Normand Seven to support its pipelay operations.

inspection, repair and maintenance

QUARTER 4

$200 million contract award in Brazil

Award of $200m pipelay project by Petrobras for the P-55 project in the Roncador field.

Normand Subsea joins the fleet

One of the most modern ROVSVs* in the world, the new-build Normand Subsea, commenced operations working for Shell on the long-term Pan-European underwater services contract.

Henry pipelay scope completed

The Seven Navica successfully completed her pipelay scope for Santos' Henry project. This was Subsea 7's first rigid pipelay job in the Asia Pacific region.

Girassol project completed

Successful completion of the deepwater Girassol pipeline repair project for Total in Angola.

$275 million convertible notes issued

Issued and received proceeds for the private placement of $275m convertible notes.

remotely operated vehicle supply vessel

AWARDS AND SAFETY ACHIEVEMENTS

Subsea UK Company of the Year

Awarded in recognition of excellence throughout the Company and its operations. February 2009

Scottish Offshore Achievement Safety Award

Awarded in recognition of the Company's overall commitment to safety, including the processes in place for risk awareness and mitigation. March 2009

Honourable Distinction for Safety Performance from ExxonMobil - Saxi Batuque project

Awarded in recognition of the Company's safety performance during the execution of the Saxi Batuque project. March 2009

Excellence in Safety Award - Chevron Tahiti project

Awarded in recognition of achieving zero TRCs and zero LTIs throughout the project. May 2009

Chevron Safety Award - Tombua Landana Project

Awarded in recognition of 500,000 LTI-free hours. May 2009

Kommandor Subsea - Eight years LTI-free. May 2009

Lochnagar - Five years LTI-free. October 2009

Offshore Energy Technology Pioneers Award

In recognition of services to the ROV industry. October 2009

Subsea Viking - Nine years LTI-free. November 2009

subsea partner of choice

Subsea 7 Annual Report

22
subsea partner of choice

Location
Block 17, offshore Angola in water depths of up to 1,300m.

Main scope of work
The design, manufacture, assembly, testing and offshore operation of a diverless pipeline repair system.

Regional Report: Africa

HIGHLIGHTS FOR THE YEAR

Successful completion of the Tombus Landana project for Chevron.
Completion of another successful campaign for Addax at the Okwori field in Nigeria.
Engineering and project management continued for the offshore phase of the BP Block 31 (PSVM) and Block 18 Gas Export Line projects.
The BP Block 18 life-of-field scope continued to progress well.
Successful completion of the Serpentina project for Mobil Equatorial Guinea.
Designed a pipeline repair system that was used in the deepwater Girassol field in Block 17, offshore Angola, to successfully complete a pipeline repair for Total.

Financial Performance

Total - Girassol

This complex project demonstrated Subsea 7's capabilities to provide design engineering services, efficiently manufacture and test specialist equipment, and provide safe and timely project management. The project provided further evidence of Subsea 7's capability to engineer effective life-of-field solutions in deepwater environments.

The concept behind the pipeline repair system (PRS) involved a mix of proven and new technologies with the majority of equipment designed in-house by Subsea 7. It comprised key equipment items such as handling frames, connector installation tool, intervention tools for pipeline cutting and end preparation and coating removal - all powered and controlled by remotely operated vehicles. The successful design required a team of in-house engineers with a diverse range of engineering skills including pipeline analysis, geotechnical, structural, mechanical, electrical, electronic and software design, combined with operational and installation experience, all integrated together to provide the completed system. The availability and continuity of this team of engineers and technicians to follow the project from design to the offshore phase was fundamental to its success.

The innovative PRS design was completed in June 2009. Full system integration trials were carried out in Nigg, Scotland, with further tests carried out in Angola before the system went offshore in late 2009. The offshore phase presented a unique set of challenges for the project team who had responsibility for the subsea operations onboard a client-provided vessel. The project team was able to foster good integrated teamwork to get the job completed safely and successfully.

As well as setting the benchmark for future pipeline repair operations in Angola, the system has a modular design that can be adapted to suit a range of future repair scenarios and provide cost-effective solutions that meet the needs of the industry. This solution was awarded the 2010 Pipeline Industries Guild Award for Subsea Pipeline Technology in March 2010.

Picture: System integration testing for the pipeline repair system being carried out in the UK.

Location
Block 18, offshore Angola, in water depths of up to 1,300m.

Main scope of work
Long-term project management and life-of-field services including inspection, repair and maintenance, light construction and intervention.

BP - Block 18 Life-of-Field

The project was the first deepwater Life-of-Field contract to be awarded in the region and built on the experience and relationship Subsea 7 has developed with BP in the North Sea.

In Angola, work scopes are planned and managed by a dedicated project management and engineering support team from Subsea 7's Luanda office. A 45-strong offshore team delivers the project from a client-supplied vessel on which we installed twin remotely operated vehicles (ROVs) and rigid spool deployment systems. We also designed and installed an entire on-line and off-line survey and reporting suite onboard the vessel which includes a full network and server system, satellite communications, multi-beam, metrology and pipeline inspection systems. The project is further supported by Subsea 7's wide range of in-house services such as remote technology engineering, design engineering and technical Centres of Excellence.

To date the scope of work has included routine metrology and inspection, repair and maintenance activity. We also successfully deployed and connected 17 rigid production and water injection spools. In addition to planned activities, unplanned works are carried out to help maintain the long-term serviceability of the subsea infrastructure.

Picture: Production jumper load-out during a port call at the Soya base.

Subsea Partner of choice
23
Subsea 7 Annual Report

24
subsea partner of choice

Location Otway Basin, Victoria, Australia
Main scope of work
Installation of 22km of 12" rigid pipeline, installation of 22km of four sections of umbilical and 650 stabilisation mattresses.

Regional Report: Asia Pacific

HIGHLIGHTS FOR THE YEAR

Successful completion of the rigid pipelay scope by the Seven Navica for Santos on the Henry project.
First-ever rigid pipelay scope completed in the Asia Pacific region by Subsea 7.
Rockwater 2 continued to perform well on the KGD6, Enfield and Henry projects.
Re-established Subsea 7 as a stand-alone business in the region, although work will continue with Technip on existing joint venture projects.
Opened a new office in Kuala Lumpur, Malaysia.

Financial Performance

Santos - Henry

The fast-track Henry project (VIC/P44 Stage 2 Development) was awarded to Subsea 7 by Santos in August 2009. The project was a subsea tie-back to the existing Casino field development.

This was the first rigid pipelay job that Subsea 7 had carried out in the region, and the first project to be undertaken by Subsea 7 following the dissolution of the Technip Subsea 7 joint venture. It demonstrated that Subsea 7 has the ability to engineer, manage and execute a major offshore pipelay construction project in the region, safely and on time.

Engineering and project management was carried out in Subsea 7's Singapore office. A temporary spoolbase facility was set up at Crib Point in south-eastern Australia for the spooling of the client-supplied pipe on to the Seven Navica. The offshore execution phase commenced with the installation of the 12" pipe in December 2009. The Seven Navica installed 22km of rigid pipe, complete with two in-line tee skids, over two trips in less than 18 days.

The Rockwater 2 supported the Seven Navica on the project, installing the four sections of umbilical, three pipeline end manifolds, associated subsea infrastructure and 650 stabilisation mattresses to complete the tie-ins and freespan rectification. The umbilicals ranged from 3.3km to 6.5km in length and were installed utilising an in-line tensioner and reel drive system. The vessel also installed rigid spools and performed the associated metrology. After completing this scope, the Rockwater 2 remained in field to assist Santos with field commissioning and start-up activities. In total over the life of the project, the Rockwater 2 performed over 2,000 successful lifts with its 300t active heave compensated crane.

The excellent performance of the offshore crew on this fast-track project will help reinforce Subsea 7's vision of becoming the Subsea Partner of Choice in Asia Pacific.

Picture: Seven Navica deploys the 12" rigid pipeline in the field.

Location Exmouth, North West Shelf, Australia
Main scope of work
Installation of manifold, foundation, four 300m flexible flowline jumpers and umbilicals, fabrication and installation of production, water injection and gas lift spoolpieces.

Woodside - Enfield 2009*

The Enfield development has been operational since 2006 with the Nganhuma floating, production, storage and offloading facility producing via subsea wells and flowlines. To improve production output, Woodside modified the existing Enfield subsea architecture by adding a production well at a new well centre and an additional water injection well at the existing E-DC3 well centre.

As the project was executed in water depths of up to 550m, all tie-ins were completed using remote intervention technology, specifically the ROVCON system. The design of the water injection spoolpiece added an additional complexity to the project; being an e-spool with two tree legs to one manifold hub, the spool was required to be deployed to the seabed in a cradle before being lifted and installed between the trees and manifold.

The project was heavily dependent on the 300t lift capability of the Rockwater 2's active heave compensated crane for installation of the spools, structures and foundations. Despite the project being carried out in an area which is remote and often exposed to adverse weather, the vessel was able to work productively throughout with less than four days of downtime.

The ability of Subsea 7 to demonstrate flexibility and commitment was evident towards the end of the project when the client requested that the vessel return to the field to assist with the reconfiguration around the production manifold. This required detailed engineering preparation to be executed simultaneously while the Rockwater 2 was in transit from Singapore to Dampier to carry out the work.

*This project was undertaken by the Technip Subsea 7 joint venture.

Picture: A 130t foundation being mobilised to the Rockwater 2 for offshore installation.

2009
Subsea 7 Annual Report

HIGHLIGHTS FOR THE YEAR

Financial Performance

Regional Report: Brazil

Seven Oceans and Seven Seas demonstrated their combined capabilities by successfully completing the BC-10 project for Shell.
The world's first lazy-wave steel catenary riser was successfully installed on the BC-10 project.
A horizontal directional drill shore approach was completed successfully on the Sul Capixaba project.
The Normand Seven joined the Lochnagar and Kommandor 3000 to work on long-term pipelay contracts for Petrobras.
Environmental plan for the Paranaguá development site was submitted.

Petrobras - Sul Capixaba

The Sul Capixaba gas export pipeline will eventually connect the floating, production, storage and offloading P-57 facility in the Jubarte field to the Petrobras onshore installation in Anchieta, Espirito Santo. The system will also receive the interconnection of a gas export pipeline from the BC-10 field - with installation also to be carried out by Subsea 7. All engineering and project management work for this project was conducted at Subsea 7's offices in Niteroi, Rio de Janeiro.

The fabrication of the 12" rigid pipeline was carried out at Subsea 7's pipeline fabrication spoolbase in Ubu, 80km from the field location, confirming the strategic value of having an in-country pipeline fabrication facility. Welding procedures were developed by Subsea 7's Pipeline Production Group and the pipeline was fabricated on schedule for the offshore installation campaign which took place during 2009. The project scheduling benefited from having both of Subsea 7's rigid pipelay vessels, the Seven Oceans and the Seven Navica, in the region to carry out the offshore phase.

One of the main challenges on the project was to deliver the pipeline onshore via a shoreline approach using a horizontal directional drilled (HDD) tunnel. Such shore approaches have been attempted before but with limited success. The 1,200m HDD shore approach on the Sul Capixaba project was the longest ever built on the Brazilian coast, and proved particularly challenging to construct due to the environmentally sensitive beach location. Certain species of sea turtles lay their eggs between September and March every year on the beach; for this reason offshore construction schedules had to be carefully planned.

The project field activities were all completed in December 2009, almost six months ahead of schedule, and involved more than 700,000 man hours being worked with no lost-time-incidents, onshore or offshore.

Picture: Quality control check being carried out on the 12" rigid pipeline fabrication at Subsea 7's Ubu base.

Location

BC-10, Campos Basin, offshore Brazil, in water depths of up to 2,500m.

Main scope of work

EPIC* contract for 11 steel pipelines (130km), seven lazy-wave SCRs (21km) and 25" rigid pimpers and installation of five unspacely (55km) and four manifolds.

Shell - BC-10

The successful completion of BC-10 was a significant milestone for Subsea 7 for a number of reasons. Firstly the scope included the fabrication and installation of the world's first lazy-wave steel catenary risers (SCRs). It was the first project to utilise both of the Company's flagship pipelay vessels, the Seven Oceans and the Seven Seas. Together with the Seisranger, the vessels were utilised for 770 days on the project, while the Ubu pipeline fabrication spoolbase supported the project for 450 days. The positioning of Subsea 7's Ubu base, the only base of its type operational in Brazil today, was a significant advantage to the project because of its close proximity to the BC-10 field.

The project was technically very challenging, and was the largest reeled steel pipeline installation project ever performed in Brazil. Working to very strict welding criteria on elements like the lazy-wave SCRs and the Flex Joints, with enormous stress to be exerted on the risers, the project team had to ensure that the welding would meet the required quality to assure the 30-year field design life-cycle. The automatic Tungsten Inert Gas welding procedures used to meet these challenging specifications were developed in-house by Subsea 7's Pipeline Production Group and Central Engineering department.

BC-10 was also the first time all the jumpers required on any Brazilian project had been manufactured in the region. Each of the 25 jumpers were successfully installed by the Seven Seas due to very accurate metrology, control of the dimensions and connector angles during manufacture and excellent offshore execution.

The successful completion of the BC-10 project could not have been achieved without the high level of engineering and project management that was undertaken at the Company's Brazilian offices.

Picture: The automatic Tungsten Inert Gas welding process being used on the SCR fabrication.

engineering, procurement, installation and commissioning

subsea partner of choice

Subsea 7 Annual Report

HIGHLIGHTS FOR THE YEAR

Financial Performance

Location
P.O. Box 1000
Gulf of Mexico, Green Chinook Block
344 Inwater depths of up to 1,500m.

Regional Report: North America

Marathon - Droshky

In October 2008, Subsea 7 was contracted by Marathon to support its Droshky development, the first offshore development by Marathon in the Gulf of Mexico in 14 years and its first-ever deepwater project in the region. For Subsea 7, the project was also a historic one; it was the first project to use Port Isabel, our new pipeline fabrication spoolbase. It was also the first time the Seven Oceans used a cross-haul technique for the transfer and installation of two 70t pipeline end termination manifolds (PLEMs).

During the project a number of operational challenges were successfully overcome including:

initiation of two flowlines within a drill rig anchor pattern from a single initiation point;
the lifts of the initiation PLEMs from a supply boat and cross-hauling them into the Seven Oceans workstation offshore;
initiation of two flowlines via platform j-tube pull-ins; and
managing a tight schedule and simultaneous operations to minimise the impact on drill rig operations.

The successful delivery of the Droshky project demonstrated the professional and safe nature of offshore execution that clients have come to expect from Subsea 7. It also confirmed the value which the Port Isabel spoolbase offers clients in the Gulf of Mexico region.

Pictures: A pipeline lateral mitigation buoyancy module being fitted to the 8" pipeline being deployed from the Seven Oceans.

Location
Culf of Mexico, Walker Ridge Block
355 Inwater depths of up to 2,500m.

Main scope of work

Engineering, fabrication and installation of steel propers and installation of dynamic control architects, in field power cable, propers and flying leads.

Petrobras - Cascade / Chinook

The ultra-deepwater Cascade and Chinook development is Petrobras' first in the Gulf of Mexico, and involved the installation of the first-ever floating, production, storage and offloading vessel (FPSO) in the Gulf of Mexico, and the world's deepest FPSO to date.

For Subsea 7, this was the first time the Seven Seas had worked in the Gulf of Mexico and during her stay she completed her deepest-ever (2,660m) large-diameter (166mm) umbilical installation to the submerged turret FPSO.

Throughout the duration of the project, the project team and vessel crews demonstrated engineering expertise and technical capabilities by overcoming a number of challenges including:

working in water depths of up to 2,800m;
high umbilical installation loads;
installation of umbilicals under the FPSO mooring wires;
laying the umbilicals across subsea furrows 10m deep and up to 100m wide;
pulling in the umbilicals into a submerged turret buoy 70m below the surface, prior to the arrival of the FPSO; and
managing a tight schedule and simultaneous operations with drilling rigs and other installation vessels in the field.

The team also had to contend with unavoidable environmental factors including Hurricane Ida which hit the Gulf of Mexico in November 2009, requiring the temporary lay-down of the Chinook umbilical.

The project team and vessel crew were commended by Petrobras for their successful management of this project, completing it safely and on schedule.

Pictures: One of the dynamic control umbilicals being installed through the vertical lay system on the Seven Seas.

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Subsea 7 Annual Report

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subsea partner of choice

Location
South-west coast of Norway in a water depths of up to 80m.

Main scope of work

The Valhall scope of work is divided into two projects: Valhall Re-development and Valhall Flanks Gas Lift & WP River.

HIGHLIGHTS FOR THE YEAR

Successful completion of Vega, Troll 02 and the fast-track Visund and Snorre projects for Statoil.
Continued progress on the Valhall Re-development and Skarv projects for BP.
Normand Subsea joined the fleet to work on the long-term Shell contract.
New Norwegian campus opened in Stavanger.
Diving scope successfully completed at the Ekofisk field for ConocoPhillips.

Financial Performance

BP - Valhall

Subsea 7 was awarded the Valhall Re-development (VRD) project in 2007, which comprised the engineering, procurement, fabrication and installation of a range of subsea components in order to re-route oil production to a new platform in the field. The offshore scope of the project will be performed between 2009-2011.

In 2009 we fabricated and installed a pipeline bundle, a 185m towed spool and 15 conventional spools, including associated protection structures and the preservation of the pipeline system. The fabrication of the 50" diameter bundle took place at our dedicated bundle fabrication facility at Wick, Scotland.

Following some preparatory offshore work in 2010, the VRD scope will be completed in 2011 when we will deploy both a diving support vessel and construction vessel to disconnect and re-route the existing production lines by installing and re-connecting the final five tie-in spools. An extensive pre-commissioning scope will also be performed prior to production re-start from the new Valhall facility. Subsea 7's contribution to the VRD project will play a major role in enabling the extension of the Valhall field life until 2050.

Building on our well-established partnership with BP, we were awarded the Valhall Flanks Gas Lift and WP River (VFG) project in July 2009. The scope of work on VFG will involve engineering, procurement, fabrication and installation of a 30" riser caisson, two 8" rigid pipelines (13km in total) and five tie-in spools. The 8" pipelines will be fabricated at our pipeline fabrication spoolbase at Vigra in Norway.

As part of the VFG offshore scope during 2009, some preparatory diving work was performed by the dive support vessel Seven Pelican. The success of this campaign, which was the first diving work commissioned by BP in Norway for many years, led to additional diving work being awarded by BP to us for 2010.

Picture: Installation of a reinforcement clamp on the Valhall platform using a combination of climbers from the platform and divers.

Location
The Vega field is located 80km west of Flora in Sogn og Fjordane, in water depths of up to 380m.

Main scope of work

Major pipway contract for the Vega and Vega South fields in the Norwegian sector of the North Sea.

Statoil - Vega

The Subsea 7 scope of work on the project comprised the engineering, fabrication and installation of one 14" and two 12" rigid flowlines, totalling 52km from Vega South to the Vega field and then to the Gjøa platform. The scope also covered the engineering, fabrication and installation of three umbilicals and three MEG* lines, totalling 52km each and the protection of all flowlines and umbilicals on the seabed.

The rigid flowlines were fabricated at Subsea 7's North Sea pipeline fabrication spoolbase at Vigra, one of the most modern and longest facilities of its type in the world.

The offshore installation phase took place over 260 vessel days. A major success on the project was the coordination of six vessels in the field at the same time. Another notable achievement on the project was the installation by the Seven Navica of the largest-ever reeled diameter pipe (21" including coating) installed to date by Subsea 7.

Subsea 7's flexlay vessel, the Seven Seas, installed the umbilical and MEG lines. One major challenge on the project was the handling of the dynamic section of the 28km static umbilical linking the Vega field to the Gjøa platform. This section had a four tonne transition module that to be lifted over the vertical lay system with the dynamic umbilical section attached to it. The scope was achieved safely because of excellent project engineering and offshore execution.

*mono ethylene glycol

Picture: 3" MEG line being installed from the Seven Seas using the vertical lay system.

Subsea 7 Annual Report

HIGHLIGHTS FOR THE YEAR

Location Southern sector of the UK North Sea. Main scope of work
Project management, design, procurement, fabrication, installation of 6" and 8" gas pipeline systems, including four piled structures and two control umbilicals.

Awarded integrity management contract by Venture (now Centrica Energy) for its North Sea subsea assets.
Awarded an exclusive three-year frame agreement by Nexen for subsea field development works on all of its UK assets.
Successful completion of the Grove Extension and Seven Seas project for Centrica Energy.

Regional Report: North Sea cont'd

Centrica Energy - Grove Extension and Seven Seas

This major pipelay project, encompassing two southern North Sea shallow water field developments, was awarded to Subsea 7 in May 2008 by Centrica Energy, operator of the fields. Following the onshore design and installation engineering, along with procurement and fabrication, the project transitioned to a busy offshore installation campaign in March 2009.

Approximately 220 construction vessel days were utilised on the project. The Seven Sisters installed and piled four structures over four trips. A twin-reel drive system was installed on the Seven Sisters, and the steel tube umbilicals were deployed through the ship's moonpool, a first for the vessel. The Seven Navica and the Kommandor Subsea initiated the pipelines in close proximity to a fixed platform and drilling rig, while a third-party vessel was used to bury the pipelines and umbilicals.

The Rockwater 1 tied-in the pipelines and umbilicals, installed concrete mattresses, and completed pre-commissioning of the Grove and Seven Seas pipeline systems and intelligent pigging of the Seven Seas pipeline.

Around 50 coaster and supply vessel days and 360 guard vessel days were spent in support of the offshore installation campaign. Over 20 mobilisations and demobilisations were completed successfully. Offshore work on the Grove West pipeline system was completed in September 2009, while work on the Seven Seas pipeline system was completed in October 2009.

On successful delivery of the project, commendations were received from the client recognising the safe and professional manner in which the work was performed.

Picture: Filing hammer deployment from the Seven Sisters ahead of piling of the Grove West manifold.

Location UK, Dutch and Norwegian waters Main scope of work

The main scope of work is centred on the ongoing inspection, repair and maintenance of Shell's North Sea assets, including well scale squeeze activities, assuring asset integrity and production continuity.

Shell - Pan-European underwater services contract

In 2006, Subsea 7 was awarded two long-term contracts by Shell to provide all-year round diving and remote operated vehicle services across Europe using dedicated support vessels. These contracts, known collectively as the underwater services contract, are the continuation of an ongoing long-term relationship between Subsea 7 (and its predecessor companies) and Shell which goes back over 20 years.

Recent work scopes include a project to disconnect, tow and reconnect the Curlew floating, production, storage and offloading vessel. This involved disconnecting the vessel from its moorings and risers, to enable it to be towed to dry dock to undergo inspection, repair and maintenance modifications. In addition, during the year, we continued to deploy Xmas trees from one of our construction vessels at the deepwater Ormen Lange field using the flexible 'Tree on Wire' method of installation, saving a substantial amount of time over conventional delivery methods.

In late 2009, the Normand Subsea - the new-build remotely operated vehicle support vessel specifically designed for inspection, repair and maintenance work - joined the Subsea 7 fleet to service the contract. Its first mobilisation included template and pipeline inspections and shipwreck surveys at Shell's Ormen Lange field, in the Norwegian sector of the North Sea.

Also joining the fleet in 2010 to service this contract is the new dive support vessel, the Seven Atlantic, one of the world's largest and most capable vessels of its type. Although specifically designed for saturation and air-diving support works, the vessel has the capability to deliver substantial added-value when used in construction mode.

Picture: The new-build Seven Atlantic during her sea trials, prior to commencing operations for Shell in March 2010.

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Subsea 7 Annual Report

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subsea partner of choice

HIGHLIGHTS FOR THE YEAR

Divisional Report: i-Tech

Opening of new facility at Rio das Ostras, near Macae, Brazil.
Awarded five-year field support contract by Tullow for the Jubilee field offshore Ghana, onboard client provided vessel.
First-ever 230hp Quantum ROV ordered following award of a five-year contract by IPC onboard new-build deepwater rig offshore Mexico.
Five-year contract awarded on new-build deepwater drill ship which will operate globally.
First field simulation completed for West Africa client including complex spool piece installation.
Development of Class I-V torque tool to support internal tooling requirements.

HIGHLIGHTS FOR THE YEAR

Successful entry and growth in the dynamic positioning vessel and drill rig markets.
Several multi-year global fleet contracts extended by major clients in seismic, construction and survey sectors.
A range of new hardware products and services developed.

Divisional Report: VERIPOS

Location

Australia, in water depths of up to 3,500m.

Main scope of work

The provision of remotely operated vehicle services onboard the new-build semi-submersible sixth generation drill rig, Maersk Doozowne.

Woodside - Maersk Discoverer

In late 2007, Woodside extended its major services contract with i-Tech to include the provision of remotely operated vehicle (ROV) services onboard Maersk's new-build semi-submersible Maersk Discoverer, an ultra-deepwater (3,000m) development semi-submersible with a variable deck load of over 7,700t and a hull measuring 256m by 376m.

The i-Tech work scope included provision of a new-build Centurion QX ROV, deployed by means of a bespoke guide wire heavy weather launch system to equal the operating envelope of the rig.

The Centurion QX ROV system QX310 is installed within an internal ROV hanger onboard the rig, and the ROV and Tether Management System deployed through a moonpool using a two-wire heavy weather launch system and cursor frame. The ROV system's controls are housed within a dedicated control room onboard the rig instead of the conventional zoned control container.

The installation of the ROV system was completed in Singapore during the last quarter of 2009 prior to the rig departing the shipyard for transit to Western Australia's North West Shelf to conduct trials and testing. The project was delivered both on-budget and on-time and confirms the international capability of i-Tech in working closely with our client, rig owner Maersk, yard owner Keppel FELS and a number of subcontractors.

Picture: The Centurion QX ROV deployed using a guide wire heavy weather launch system.

Marine and Drilling Dynamic Positioning market

2009 saw the continued growth of business in the marine dynamic positioning (DP) market sector in which VERIPOS has been successful in selling its proprietary reception hardware to major DP system manufacturers for integration into large packages for new-build vessels and conversions.

Following these hardware sales, VERIPOS secured ongoing signal services contracts with vessel operators throughout the world. In the marine DP market the number of vessels operating using VERIPOS services has increased from approx 250 at the start of 2009 to an expected 500 by the end of 2010. Growth in this market sector has been particularly strong in the Middle East, South America and Europe.

2009 was also a breakthrough year for penetration of the DP drill rig market, where VERIPOS had no market share at the start of 2008.

Picture: The VERIPOS control and customer service centre oversees the Company's global service delivery.

2009
Subsea
Africa Report

Executive Management Team

Mel Fitzgerald

Chief Executive Officer
Born: 1950

Mel has been involved in the oil industry since he joined Brown & Root in 1974 and has worked in Malaysia, Indonesia, Singapore, Bahrain, Egypt and the UK. He joined European Marine Contractors (EMC) in 1988, holding a number of management positions before joining Haliburton Subsea as a Vice President in 2000. In 2001 he took up the role of UK Vice President for Haliburton's Energy Services Group. Mel joined Subsea 7 as Chief Executive Officer in July 2004. He has a Bachelor of Engineering degree from Galway University of Ireland and a Masters in Business Administration from the University of Kingston, UK.

Barry Mahon

Chief Financial Officer
Born: 1962

Barry has over 25 years of experience in finance and general management. He started his career with KPMG in Dublin qualifying as a Chartered Accountant in 1987 before moving to Perth, Australia with KPMG where in 1992 he joined publicly-listed Orbital Engine Corporation Ltd as its Group Financial Controller, later becoming Company Secretary. In 1996 he joined Haliburton as its Shared Services Manager in Australia and New Zealand. In 2000 he joined Haliburton Subsea in Aberdeen as Shared Services Director. Barry joined Subsea 7 as Chief Financial Officer in July 2004. He has a Bachelor of Commerce degree from University College Dublin.

John Evans

Chief Operating Officer
Born: 1963

John has over 20 years of experience in the engineering and contracting sector. During 18 years with Kellogg Brown & Root (KBR) and European Marine Contractors he built a successful record in general management, commercial and operational roles in the offshore oil and gas industry. Between 2002 and mid-2005 John was Chief Operating Officer for KBR Infrastructure business in Europe and Africa; John joined Subsea 7 as Chief Operating Officer in July 2005. He has a Bachelor of Engineering (Tech) degree in Mechanical Engineering from the University of Wales, Cardiff and is a Chartered Mechanical and Marine Engineer.

David Cassie

Executive Vice President - Commercial
Born: 1956

David is a Chartered Quantity Surveyor with over 25 years of oil and gas experience. He began his career with Construction John Brown, Press & Worley Offshore and British before moving into the subsea sector with Wharton Williams in 1985. After joining Stena Offshore in 1987 as Commercial Manager, David held a number of posts including Managing Director for the merged company Coflexip Stena Offshore, and latterly at Technip where he was Senior Executive Vice President, responsible for the North Sea, Canada and Caspian region. David joined Subsea 7 as Executive Vice President - Commercial in October 2002.

Jan Willem van der Graaf

Vice President - Africa Region
Born: 1956

Jan Willem is a Naval Architect with 25 years of experience in the oil and gas industry and shipbuilding. He started his offshore career with Smit International. In 1990 he joined Rockwater in Rotterdam and moved to Singapore where he became general manager for the Asia Pacific region. In 1997 he moved to van der Giessen de Noord shipyard in the Netherlands with responsibility for operations and production. In 2003 Jan Willem became Vice President for Subsea 7's Africa region. He was appointed to the role of Executive Vice President - Commercial (acting) in January 2009.

Regional Management Team

| Victor Bomfim
Vice President
Brazil | Craig Broussard
Vice President
Asia Pacific | Ian Cobban
Vice President
North America |
| --- | --- | --- |
| Steph McNeill
Vice President
UK | Tor Espedal
Vice President
Norway | Graham Sharland
Vice President
Africa (acting) |

Global Management Team

| Dave Adams
Vice President
Project Management & Engineering | Stuart Cameron
Commercial Director & Deputy Vice President
North America | Robin Davies
Vice President
Business Improvement | Jackie Doyle
Head of Communications |
| --- | --- | --- | --- |
| Nina El-Imad
Group Financial Controller | Neill Kelly
Director
Strategy Development | Dick Martin
Vice President
Life-of-Field Services | Neil Milne
Managing Director
i-Tech |
| Graeme Murray
General Counsel and Vice President
Commercial & Procurement | Martin Ridley
Vice President
Business Acquisition & Risk | Dr. Stuart N Smith
Vice President
Technology & Asset Development | Russell Stewart
Vice President
Human Resources |
| Jonathan Tame
Vice President
Vessel and Equipment Management Group | Judith Tocher
Vice President
Legal | Steve Wisely
Vice President
Business Acquisition
Asia Pacific | Andy Woolgar
Vice President
Global Operations |

subsea partner of choice

2009

Subsea 7

Africa Region

VESSEL FLEET WORLDWIDE

PIPELAY AND CONSTRUCTION

The Seven Oceans is a purpose built deepwater rigid pipelay vessel fitted with an advanced reeled pipelay system, capable of operating in water depths up to 3,000m with a top tension capacity of 400/450t.

The Seven Seas is a pipelay and construction vessel fitted with an advanced rigid and flexible pipelay system capable of operating in water depths of up to 3,000m with a top tension capacity of 400t (rigid J-lay mode) and 430t (flexlay mode).

The Seven Pacific® is a pipelay and construction vessel for installing flexible flowlines and umbilicals, capable of operating in water depths of up to 3,000m. The vessel is equipped with a Vertical Lay System (260t top tension capacity), twin underdeck canousels, a 250t crane and twin 3,000m rated ROVs.

The Kommandor 3000 is a pipelay vessel with an extensive and purpose built pipelay system to install flexible pipelines in up to 1,000m water depth with a top tension capacity of 200t.

The Lochnagar is a pipelay vessel specifically equipped for the installation of flexible pipelines in up to 2,000m water depth with a top tension capacity of 255t.

The Seven Navica is a pipelay vessel capable of both rigid and flexible pipelay in water depths of up to 2,000m with a top tension capacity of 205t.

The Normand Seven is a pipelay vessel fitted with an advanced flexible pipelay system capable of operating in water depths of up to 2,000m with a top tension capacity of 300t.

The Seven Sisters is a multi-purpose subsea construction vessel and is capable of working in water depths of up to 3,000m.

The Skandi Neptune is a pipelay and construction vessel equipped with a Vertical Lay System (100t top tension capacity) and can support flexible pipelay and umbilical installation and deepwater construction.

The Skandi Seven is a pipelay and construction vessel fitted with a Vertical Lay System for deployment of a range of flexible products, capable of operating in water depths of up to 3,000m with a top-tension capacity of 110t.

The Subsea Viking is a multi-purpose subsea support vessel with multi functional capabilities including flexible pipelay, construction, module handling, ROV support and well abandonment.

The Seven Pacific is currently under construction and is due for delivery late 2010.

DIVING SUPPORT

The Rockwater 1 is a diving support vessel with multi-purpose capabilities. The vessel has an 18-man single-bell saturation dive system consisting of three chambers and a hyperbaric lifeboat.

The Rockwater 2 is a diving support vessel with multi-purpose capabilities. The vessel has a 16-man single-bell saturation diving system rated to 300m, consisting of three living chambers and a self-propelled hyperbaric lifeboat. A single centreline moonpool is provided for diving operations.

The Seven Atlantic is one of the largest and most capable diving support vessels in the world, featuring a 24-man saturation diving system. The system is rated to 350m and includes twin diving beds orientated port and starboard with two hyperbaric lifeboats.

The Seven Pelican is a diving support vessel with multi-purpose capabilities. An 18-man twin-bell saturation diving system rated to 370m provides a flexible platform for subsea operations. The system consists of three chambers and two 16-man hyperbaric lifeboats.

The Tolsa Polaris is a diving support vessel with multi-purpose capabilities. The vessel has an 18-man twin-bell saturation diving system rated to 300m, consisting of three twin-lock and a single triple lock chamber with an 18-man self propelled hyperbaric lifeboat. Forward and aft moonpools are provided.

The Seven Spray is a modern, highly manoeuvrable, safe and compact shallow diving support vessel. The relatively small footprint and its autonomous diving capability allows access to areas around jackets and alongside FPSOs. The Seven Spray can be deployed from any suitable (mother) vessel.

REMOTELY OPERATED VEHICLES (ROV) SUPPORT

The Normand Subsea is a ROV support vessel equipped with a suite of ROVs capable of operating in water depths of up to 1,200m. The ROV suite includes two workclass and four eyeball ROV systems. A handling system is under cover and adjusts to suit a range of modules.

The Seieranger is a multi-purpose offshore support vessel, with a primary ROV support function. The main workclass ROV has the capability to operate in deepwater locations up to 2,000m, deployed through the vessel's centreline moonpool.

The Kommandor Subsea is an ROV support vessel with an extensive ROV spread onboard. Fitted as standard are a centreline moonpool launched workclass ROV and a port side door launched observation class ROV.

subsea partner of choice

2009

Subsea

Annual Report

OPERATIONAL BASES WORLDWIDE

LUANDA

ANGOLA

Opened in 2005, this pipeline fabrication spoolbase is located within the Sonils Oil Service Centre in the Port of Luanda, Angola. The base covers an area of 65,376m² and is 715m long including a 75m load-out jetty. The base had a major expansion and upgrade in 2008.

UBU

BRAZIL

The Ubu pipeline fabrication spoolbase is located in Espirito Santo state, within the Samarco iron ore processing plant, one hour's flying time north of Rio de Janeiro, Brazil. The base runs 2,225m (including spooling line to vessel) and covers an area of 88,000m².

VIGRA

NORWAY

Opened in 2008, the Vigra pipeline fabrication spoolbase is located beside Ålesund airport, Vigra, on the north west coast of Norway. The base runs 3.7km across the island and includes a purpose built deepwater quay, covering a total area of 284,505m². This makes it one of the longest spoolbase facilities of its type in the world.

WICK

UK

Established in 1978, Subsea 7's pipeline bundle fabrication yard is located 6 miles north of the town of Wick, Caithness, in the far North of Scotland. This unique site runs 7.8km inland, covers a total area in excess of 300,000m² and has a sheltered bay in which to launch the pipeline bundles.

PORT ISABEL

USA

Opened in 2009, this pipeline fabrication spoolbase is located in Cameron County on the US/Mexico border of Texas. The base covers a total area of 235,000m² and is 1,500m long (1,200m stalk rack and 300m fabrication building). It is one of the longest spoolbase facilities of its type in the world.

Financial Report

42 Board of Directors
43 Board of Directors' Report
47 Corporate Governance Report
52 Directors' Responsibility Statement
53 Report of the Independent Auditor
54 Income Statements
55 Statements of Comprehensive Income
56 Balance Sheets
57 Statements of Changes in Shareholders' Equity
59 Cash Flow Statements
60 Notes to the Financial Statements
104 Financial Calendar

subsea partner of choice

Subsea 7 Annual Report

Board of Directors

Pursuant to the Company's Articles of Association, the Board of Directors of Subsea 7 Inc. shall have from three to seven shareholder-elected members. All Directors served for the full year.

Kristian Siem

Chairman of the Board
Born: 1949

Mr Siem is the Chairman of Subsea 7 Inc. and is also chairman of Siem Offshore Inc., Siem Industries Inc., Siem Industrikapital AB, and a director of Star Reefers Inc., and North Atlantic Smaller Companies Investment Trust plc. Mr Siem is a citizen of Norway.

Michael Delouche

Board Member
Born: 1957

Mr Delouche is the President and Secretary of Siem Industries Inc. He is responsible for the financial and corporate management function and is in charge of the company's operations at the head office in George Town, Cayman Islands. Mr Delouche is a director of Siem Offshore Inc. and STAR Reefers Inc. He holds a civil engineering degree and an MBA and was previously an audit manager with KPMG Peat Marwick LLP prior to joining Siem Industries Inc. Mr Delouche is a US citizen.

Mel Fitzgerald*

Board Member
Born: 1950

Mr Fitzgerald, who is also the Chief Executive Officer of Subsea 7 Inc., is a qualified civil/structural engineer and has thirty five years of industry experience, having worked in Malaysia, Indonesia, Singapore, Bahrain, Egypt and the UK for Brown & Root before holding several management positions at European Marine Contractors and Halliburton Subsea. He has an MBA from the University of Kingston and is an Irish citizen.

Arild Schultz

Board Member (independent)
Born: 1944

Mr Schultz has held several leading positions within shipping, chartering and broking and, since 1980, has been conducting his own business within project financing and consulting. He has an MBA from the University of Utah, USA. Mr Schultz is a Norwegian citizen.

Allen L Stevens

Board Member (independent)
Born: 1943

Mr Stevens has extensive marine and financing experience, previously holding senior executive positions with Great Lakes Transport Limited, McLean Industries Inc. and Sea-Land Service Inc. Mr Stevens is chairman of Trailer Bridge Inc. He is a graduate of the University of Michigan and Harvard Law School and is a US citizen.

*Independent of the Company's main shareholder but a member of the Company's Executive Management Team

Board of Directors' Report

The directors of Subsea 7 Inc. present their report for the year ended 31 December 2009 together with the audited financial statements of the Group and the Company for the year. The financial statements and related notes on pages 54 to 104 were authorised for issue by the Board of Directors (the 'Board') on 26 March 2010 and will be laid before the shareholders at the Annual General Meeting (the 'AGM') to be held on 10 May 2010.

Results and dividend

In 2009 the Group recorded revenues of $2.44 billion and a net profit of $288.4 million, compared to revenues of $2.37 billion and a net profit of $264.0 million in 2008.

The increase in revenue relates predominantly to increased project activity in Brazil offset by a decrease in project activity in Africa. In addition more project activity in Asia Pacific was undertaken by the Group directly, rather than through its Technip Subsea 7 joint venture, increasing revenue recognised in 2009.

Net operating profit for the year ended 31 December 2009 was $404.0 million compared to $425.3 million for the same period in 2008. Net operating margins as a percentage of revenue were 16.6% in 2009 compared to 17.9% in 2008. The reduction in margins was attributable to lower margins achieved in the North Sea and Asia Pacific regions offset by improved project execution, particularly in Africa, North America and Brazil.

Net financial income for the year ended 31 December 2009 was $1.5 million compared to net financial expense of $42.5 million for the year ended 31 December 2008. The significant year-on-year movement was primarily due to gains made in the marking-to-market of derivative financial instruments during the year of $47.8 million (of which $34.3 million relates to the remeasurement at fair value of the embedded option contained within the available-for-sale financial assets) compared with losses of $34.2 million in 2008. This movement was offset by $20.3 million of additional accretion expense recognised on reassessment of the term of the 2007 convertible notes and net currency gains of $4.8 million recognised during the year compared to gains of $18.8 million in 2008.

Taxation expense for the year ended 31 December 2009 was $123.8 million (2008: $130.5 million) which equates to an effective rate of 30.0% (2008: 33.1%).

Net profit attributable to equity shareholders for the year ended 31 December 2009 was $288.4 million, or $1.96 per share, compared to a net profit of $264.0 million, or $1.80 per share, for the year ended 31 December 2008.

Allocation of net profit

The directors do not recommend the payment of a dividend for the year (2008: $nil), preferring that the Group's profit is reinvested in the business.

Financing activities

In January 2009, the Group concluded an amendment to its revolving credit and guarantee facilities with DnB NOR Bank ASA dated 20 December 2004, increasing the revolving credit facility from $100 million to $150 million.

In April 2009, the Group concluded a three-year revolving credit facility with HSBC Bank plc for $50 million.

In June 2009, the Group concluded a three-year revolving credit facility with Bank of Scotland plc for $50 million.

During the year, the total amount drawn under existing revolving credit facilities of $150 million was repaid and the Siem Industries Inc. revolving credit facility was cancelled.

The remaining undrawn loan facilities available to the Group at the date of this report were $250 million.

At 30 June 2009, the Group reassessed the expected maturity of the $175 million Subsea 7 Inc. zero coupon convertible notes 2007/2017. The notes were previously accounted for as if they would be redeemed either at the option of the holders on 29 June 2012 or at the option of the Company on 13 July 2012. It is now considered more likely that the convertible notes will be redeemed at their accreted principal amount at the option of the holders on 29 June 2010. The carrying value of the notes was therefore adjusted by booking an additional $20.3 million of accretion to reflect the revised estimated maturity. The revised carrying value of the notes has been presented within current liabilities.

subsea partner of choice

2009

Subsea 7

Annual Report

On 13 October 2009, the Group received net proceeds of $272.9 million for its private placement of $275 million convertible notes. The notes have an annual coupon of 3.5% and are convertible into common shares of the Company at a conversion price of $17.98 per share, representing a conversion premium of 37.5%. The reference price of the Company's common shares has been set at $13.08 and the total number of new common shares to be issued, if all the notes were converted, would be 15,294,772. The notes are redeemable at 100% of their principal amount and will, unless converted or purchased and cancelled, mature in October 2014.

During the year, the Group repurchased $40 million (par value) of the $300 million 2.8% Subsea 7 Inc. convertible notes due 2011 for $35.1 million, an average of 87.7% of the par value and $40.5 million (par value) of the $175 million zero coupon Subsea 7 Inc. convertible notes due 2017 for $40.4 million, or 99.8% of the par value. The repurchased convertible notes remain outstanding and have not been cancelled.

Financial risk management

The Group's multinational operations and debt financing expose it to a variety of financial risks. The Group has in place risk management policies that seek to limit the adverse effects of these risks on the financial performance of the Group. Further details explaining the Group's financial risk management are detailed in note 2 to the financial statements.

Share options and restricted stock awards

In May 2009, at the AGM, the shareholders approved a restricted stock award plan in order to attract, retain and incentivise employees. Subsequently the Group awarded 1,110,000 restricted shares to certain employees. The shares had a market price of $9.93 (NOK 63.6) on the grant date. 60% of the awards vest on the 3rd anniversary of the award date and the remaining 40% of the awards vest on the 5th anniversary of the award date.

The shareholders also approved a modification to the existing stock option plan. Employees of the Group who held existing share options under the share option plan with a strike price greater than NOK 44.85 were given the opportunity to surrender those options in exchange for an award under the restricted stock award plan (the 'replacement awards'). The replacement awards were offered on the basis of one restricted share for three share options under the share option plans. Of the 1,797,120 share options eligible, 1,732,620 were exchanged for restricted stock. 60% of the awards vest on the 3rd anniversary of the modification date, and the remaining 40% of the awards will vest on the 5th anniversary of the modification date.

During the year, 87,000 share options awarded through previous option schemes were exercised. Further details relating to these share options and restricted stock awards can be found in note 22 to the financial statements.

Directors and Board committees

The names of the current directors and their biographical details are presented on page 42. The directors are subject to re-election by the shareholders every two years and, accordingly, Mr Fitzgerald and Mr Stevens will be standing for re-election at the AGM. Information on the audit and compensation committees is included in the corporate governance report on pages 47 to 51.

Health, Safety, Environment and Quality Management (HSEQ)

Subsea 7 has a deep-rooted health, safety, environmental and quality culture. Equally important is a continued focus on improving our record on safety performance through a proactive safety management culture.

The Group has a formal health and safety policy and an environmental policy which are brought to the attention of every employee and contractor.

The Group shall comply with all applicable laws and relevant industry standards of practice concerning protection of the health and safety of its employees in the workplace, other persons affected by its business activities and the protection of the environment.

Protection of health, safety and the environment and the provision of quality services and products are primary goals of Subsea 7, and the management of the Group shall take such actions as are reasonable and necessary to achieve such goals and carry out its HSEQ policy.

Employees and equal opportunity

Subsea 7 promotes equal opportunity and addresses unfair discrimination in every aspect of its operations. This is reflected in the Group's corporate governance, management systems, and operational activities.

The Group recognises that this goal can only be achieved by establishing a clear policy agenda which is then implemented and enforced by systematic management action. The Group's equal opportunities and diversity in employment policy is supported by encouraging open communications through line management, employee forums and environment committees. This is further underpinned by the provision of a confidential whistle-blowing helpline and training which focuses on the application of the Subsea 7 code of business conduct.

The Group has invested in open communications with the workforce through a variety of channels including regular newsletters and updates. In addition to day-to-day line manager briefings, this is achieved by formal employee representative and environment committee forums.

Offshore, competence assessments and appraisals are conducted regularly whilst onshore a comprehensive performance management system is deployed.

The Group holds a number of 'town hall' presentations every year which are hosted by the CEO. These meetings are delivered around the organisation. At a local level, there are various meetings to address safety and operational issues as well as localised department and function meetings as appropriate.

Considerable effort is applied to ensure all employees are both informed and aware of organisational performance and goals for the future.

Shareholders

After the 2009 AGM, the Company's authorised share capital was increased to $3 million divided into 300,000,000 ordinary shares of a nominal value of $0.01 each. The issued share capital at 24 March 2010 was $1.47 million divided into 147,193,380 shares. The shares of the Company are listed on the Oslo Stock Exchange with the ticker code SUB. Over the course of 2009 the share price rose from NOK 40.50 on the first day of trading to NOK 96.10 on the last.

The Company's 20 largest shareholders at 24 March 2010 were as follows:

Shareholder	Number of shares	Owner interest %
Siem Industries Inc. *	53,844,145	36.58%
Folketrygdfondet	7,244,324	4.92%
SIX SIS Ag	6,963,963	4.73%
DNB Nor Bank ASA	5,700,000	3.87%
DNB Nor Bank ASA	5,620,000	3.82%
JP Morgan Chase Bank	3,964,985	2.69%
JP Morgan Chase Bank	3,350,182	2.28%
JP Morgan Chase Bank	3,232,416	2.20%
Clearstream Banking S.A.	3,186,666	2.16%
The Northern Trust Company	3,100,000	2.11%
Euroclear Bank S.A./N.V.	2,535,783	1.72%
MP Pensjon	2,112,500	1.44%
JP Morgan Chase Bank	2,074,103	1.41%
The Northern Trust Co.	1,843,517	1.25%
RBC Cees Trustee Limited	1,789,990	1.22%
Skandinaviska Erskilda Banken	1,428,639	0.97%
State Street Bank and Trust Co.	1,241,680	0.84%
Pensjonskassen Statoilhydro	1,040,448	0.71%
Bank Of New York Mellon (Lux) S.A.	987,428	0.67%
DNB Nor Markets, Aksjehand/Analyse	857,068	0.58%
Total 20 largest shareholders	112,117,837	76.17%

Siem Industries Inc. is the beneficial owner of 65,429,045 shares which represents 44.5% of the total issued shares.

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2009

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Annual Report

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47
2009
Subsea 7 Annual Report

Going concern

The financial statements have been prepared under the assumption of going concern. This assumption is based on the level of cash and cash equivalents at the year end, the credit facilities in place, the forecast cash flows for the Group and the backlog position at 31 December 2009.

Market outlook

The market outlook remains challenging in the short-term but positive for the medium to longer-term.

Signs of a recovery are starting to appear in the North Sea with a significant number of projects being engineered for the potential of first production in 2011 and 2012.

Elsewhere in the world there are a number of major projects moving towards sanction but, given their larger scale, offshore installation is more likely to fall into the 2012 – 2013 period.

The cost-cutting efficiencies implemented in 2009 are allowing the Group to remain competitive in the current aggressive pricing market. The fleet continues to be well matched to the project needs of the Group's clients.

Board of Subsea 7 Inc.

26 March 2010

Corporate Governance Report

As a Company incorporated in the Cayman Islands, Subsea 7 Inc. is 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. Furthermore, as a consequence of being listed on the Oslo Stock Exchange, the Company must comply with relevant aspects of Norwegian securities law and is also obligated to adhere to the Norwegian Code of Practice for Corporate Governance of 21 October 2009 ('the Code') on a 'comply or explain' basis.

Subsea 7 Inc. is committed to ensuring that high standards of corporate governance are maintained and supports the principles set out in the Code. However, since the Company is governed by Cayman Islands laws and regulations, certain practices are applied which deviate from some of the recommendations of the Code.

The Group's corporate governance policies and procedures are explained below, with reference to the principles of corporate governance as set out in the sections identified in the Code.

Implementation and reporting on corporate governance

Subsea 7 Inc. acknowledges the division of roles between shareholders, the Board of Directors and the executive management team. The Group further ensures good governance is adopted by holding regular Board meetings which the executive management team attend to present on strategic, operational and financial matters.

The Group's mission statement is:

We will be the Subsea Partner of Choice in the challenging and exciting global oil and gas industry. We will build our business around a motivated and valued workforce. We will be the recognised leader in safety and quality, delivering exceptional performance with the appropriate technical solutions and creating sustainable value for all our stakeholders.

Our key values are:

Safe: We do not want to see anyone hurt or injured through their efforts for Subsea 7. It is avoidable, unnecessary and morally unacceptable.
Clean: We will minimise the impact of our activities on the environment with the aim of continually improving our environmental performance.
Smart: Success will come through applying our collective intellect which will entail the development of people through training, innovation in our thinking and the application of new technology.
Fair: To sustain our business, people need to want to work together. Treating customers, colleagues and subcontractors fairly will build trust, which will bring success.
Anywhere: The business is global; our growth will come from understanding the different markets and encouraging localisation.

Further to these values, the Group has a code of business conduct which reflect its commitment to shareholders, customers and employees to conduct business legally and with integrity and honesty. The code of business conduct was approved by the Board prior to issue to all directors, officers and employees and is subject to periodic review and updating.

Business

As stated, Subsea 7 Inc. is subject to Cayman Islands laws and regulations which do not require the objects clause of the Company's Memorandum and Articles of Association to be clearly defined. The Company's Articles of Association can be referred to on the Company's website: www.subsea7.com.

The Board has set clear strategies and targets for the Company's business.

Subsea 7 provides all the products and services required for subsea field development, including project management, design and engineering, procurement, fabrication, survey, installation, and commissioning of production facilities on the seabed and the tie-back of these facilities to fixed or floating platforms or to the shore.

The Group also offers the full spectrum of products and capabilities to deliver full Life-of-Field services to its clients.

Through the i-Tech division, the Group provides remotely operated vehicles and tooling services to support exploration and production activities.

The Veripos division provides precise navigation and positioning services to the marine industry.

Further details of the Group's business are outlined in the 'What We Do' section on pages 4 to 7.

Equity and dividends

Shareholders' equity

Total shareholders' equity at 31 December 2009 was $1.19 billion (2008: $690 million) which the directors believe is satisfactory given the Group's strategy and objectives.

Dividend policy

It is Subsea 7's objective to give its shareholders a competitive return on their invested capital over time. The return is to be achieved through a combination of an increase in the value of the shares and dividend payments. In recent years, the Company has retained all earnings to support and develop operations and, therefore, has not paid dividends.

Equity mandates

The Board of Directors' mandate to increase the Company's issued share capital is limited only to the extent of the authorised share capital of the Company in accordance with the Company's Memorandum and Articles of Association under Cayman Islands law.

The Code sets out that board authorisations to issue new shares should be divided into separate mandates with a defined scope, each to be voted upon by the shareholders in a general meeting. Complying with this part of the Code would require an amendment to the Company's Articles of Association, and would also be a clear deviation from Cayman Islands' company law. The Company will therefore maintain its current practice where the Board has greater flexibility to issue new shares than is required by the Code.

The Board of Directors can approve the purchase of Company shares up to a limit of 10% of the issued share capital in any 12 month period in accordance with the Articles of Association.

Equal treatment of shareholders and transactions with close associates

The Company has one class of shares which are listed on the Oslo Stock Exchange. Each share carries equal rights including an equal voting right at annual or extraordinary general meetings of shareholders of the Company. The Articles of Association contain no restrictions on voting rights.

The Board's right to acquire the Company's own shares (as detailed above) is conditional on such purchases being made in open market transactions through the Oslo Stock Exchange.

Related party transactions

Any transactions between the Group and members of the Board of Directors, executive management or close associates are detailed as related party transactions in note 34 to the financial statements.

The Group's code of business conduct requires any director or employee to declare if they hold any direct or indirect interest in any transaction entered into by the Group.

Freely negotiable shares

Subsea 7's shares are listed on the Oslo Stock Exchange. The shares are freely negotiable. The Articles of Association contain no form of restriction on the negotiability of shares in the Company.

Annual general meeting

The annual general meeting ('AGM') is held each year in the Cayman Islands. The notice of meeting and agenda documents for the AGM are posted on the Group's website at least 21 days prior to the meeting and shareholders receive the information at least 14 days prior to the meeting. Documentation from previous AGMs can be found on the Group's website.

All shareholders that are registered with the Norwegian Central Securities Depository System receive a written notice of the AGM. Subject to the procedures described in the Articles of Association, all shareholders have the right to submit proposals and may vote on each resolution either directly or by proxy. The registration deadline is at least 24 hours prior to the commencement of the AGM.

The chairman of the Board of Directors ordinarily chairs the AGM. However, if a majority of the shareholders request an independent chairman, one would be appointed.

All directors are encouraged to attend the AGM. The AGM of shareholders elects the Board of Directors, approves the Annual Report and financial statements of the Group and Company, appoints the external auditor and determines the remuneration of the Board and auditor. The chairman of the Board is elected by the directors annually.

Nomination committee

The appointment of a nomination committee is not a requirement under Cayman Islands law and the Company has so far not seen sufficient reason to appoint such a committee.

Corporate assembly and Board of Directors: composition and independence

As a Cayman Islands incorporated entity, the Company does not have a corporate assembly.

The Board comprises five directors at 26 March 2010, three of whom are independent of the Company's main shareholder. Mr Fitzgerald, the Chief Executive Officer ('CEO'), was first appointed to the Board in May 2007. The Board operates controls to ensure that no conflicts of interest exist in this regard, including, but not limited to, the establishment of the compensation committee and audit committee. Mr Fitzgerald does not sit on either of these committees. The composition of the Company's Board of Directors, including the controls to avoid conflicts of interest, is in accordance with both Cayman Islands company law and good corporate governance practice.

The Board endeavours to ensure that it is constituted by directors with a varied background and with the necessary expertise, diversity and capacity to ensure that it can effectively function as a cohesive body. Prior to proposing candidates to the general meeting for election to the Board, the Board of Directors seeks to consult with the Company's major shareholders. The directors of the Board are elected by the shareholders of the Company at the AGM for a two-year term, following which they can stand for re-election. Biographies of the individual directors are detailed on page 42.

Attendance by directors, either in person or via telephone conference, at the meetings of the Board and its committees during 2009 is summarised below:

Meeting	Board	Audit committee	Compensation committee
Number of meetings	23	3	2
Attendance by:
Kristian Siem^{1,2}	23	3	2
Michael Delouche^{1}	23	3	-
Arild Schultz^{2,3}	22	-	2
Allen L Stevens^{2,5}	22	-	-
Mel Fitzgerald^{4}	23	-	-

1 Member of audit committee
2 Member of compensation committee
3 Independent of the Company's main shareholder and the Company's executive management team
4 Independent of the Company's main shareholder but a member of the Company's executive management team
5 Appointed to the audit committee 8 March 2010

The directors of the Board are encouraged to hold shares in the Company which the Board believes promotes a common financial interest between the members of the Board and the shareholders of the Company.

The work of the Board of Directors

Each December the Board of Directors sets a plan for its work for the following year which includes a review of strategy, objectives and their implementation, the review and approval of the annual budget and review and monitoring of the Group's current year financial performance. The Board is scheduled to meet in person approximately four times a year, and four times by telephone conference, but the schedule is flexible to react to operational or strategic changes in the market and Group circumstances.

The Board of Directors has overall responsibility for the management of the Group and has delegated the daily management and operations of the Group to the CEO, Mel Fitzgerald, who is appointed by and serves at the discretion of the Board of Directors. The CEO is supported by the other members of the executive management

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2009

Subsea 7

Annual Report

team, further details of whom are on page 36. The executive management team has the collective duty to implement Subsea 7's strategic, financial and other objectives, as well as to safeguard the Group's assets, organisation and reputation.

The Board receives appropriate, precise and timely information on the operations and financial performance of the Group from the executive management team, which is imperative for the Board to perform its duties.

The Board has established a compensation committee and an audit committee, each of which has formal terms of reference approved by the Board of Directors. Matters are delegated to the committees as appropriate. The directors appointed to these committees are selected based on their experience and to ensure the committees operate in an effective manner. The minutes of all committee meetings are circulated to all directors. The work of these committees is explained in the sections below on 'Remuneration of the executive management' and 'Auditor' respectively.

The Norwegian Code of Practice for Corporate Governance issued in October 2009 included a new requirement that the majority of members of the audit committee should be independent. During 2009, the audit committee consisted of Kristian Siem and Michael Delouche who are independent of management and represent the Company's main shareholder. In March 2010, Allen L Stevens was appointed to the audit committee. Mr Stevens is independent of both management and the Company's main shareholder.

In the event that the chairman of the Board cannot attend a meeting or is conflicted in leading the work of the Board, a deputy chairman will be appointed.

The performance of the Board of Directors is constantly monitored and reviewed to ensure the composition and the way in which the directors function both individually and as a collegiate body is effective and efficient.

Risk management and internal control

The Board acknowledges its responsibility for the Group's system of internal control and for reviewing its effectiveness. The Group's system of internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable but not absolute assurance against material misstatement or loss.

The Group adopts internal controls appropriate to its business and culture. The key components of the Group's system of internal control are described below.

The Group has in place clearly defined lines of responsibility and limits of delegated authority. Comprehensive procedures provide for the appraisal, approval, control and review of capital expenditure. The executive management team meet with the global leadership team on a regular basis to discuss particular issues affecting each region and business unit, including their key risks, health and safety statistics, legal and financial matters.

The Group maintains a comprehensive annual planning and management reporting system and a detailed annual budget is prepared in advance of each year and supplemented by revised forecasts during the course of the year. Actual financial results are reported monthly and compared to budget, revised forecasts and prior year results.

The Board reviews and approves all reports on actual and projected financial performance.

The Board derives further assurances from the reports from the audit committee. The audit committee has been delegated responsibility to review the effectiveness of the internal financial control systems implemented by management and is assisted by internal audit and the external auditors where appropriate.

Remuneration of the Board of Directors

The Company's directors receive remuneration in accordance with their individual roles. The remuneration of the CEO is detailed in note 6 to the financial statements. For all other directors, remuneration is not linked to the performance of the Company but is based on participation at meetings and sub-committees. The directors are encouraged to own shares in the Company but do not participate in any incentive or share option schemes, with the exception of Mr Fitzgerald. The remuneration of the Board of Directors is approved at the AGM annually and is disclosed in note 6 to the financial statements.

Directors are not permitted to undertake specific assignments for the Group unless this has been disclosed and approved in advance by the full Board of Directors.

Remuneration of the executive management

The compensation committee is responsible for determining and reviewing the remuneration and terms and conditions of the members of executive management. Subsea 7 is committed to offering executive management competitive remuneration based on current market conditions, Group and individual performance.

During 2005, the shareholders approved the implementation of a share option plan designed to promote value creation and align the interests of executive management and other senior employees with those of the shareholders. Options vest in equal proportions on a quarterly or annual basis over a period of time, generally five years. Options vested cannot be exercised until at least one year after grant. During 2009, the shareholders approved a restricted stock award plan. The restricted shares vest in either three or five years. Refer to note 22 to the financial statements for further details of the share option and restricted stock award plans.

All proposals to issue share options or restricted shares under the plans are presented and approved by the Board of Directors prior to issue.

The number of options awarded is monitored due to the share option plan restriction that options issued within any 12 month period ending on and including the proposed date of issue cannot exceed 1% of the issued share capital of the Company at the proposed date of issue.

Similarly the number of restricted shares awarded is subject to the limit that, in any ten-year period, not more than five percent of the issued ordinary share capital of the Company may be issued under the restricted stock award plan and in addition, in any one-year period, not more than one percent of the issued ordinary share capital of the Company may be issued under the plan.

Further details on the remuneration of executive management are contained in note 6 to the financial statements.

Information and Communication

Subsea 7 Inc.'s Board of Directors concurs with the principles of equal treatment of all shareholders and the Company is committed to reporting financial results and other information that is open, accurate and timely. The Group provides information to the market through quarterly and annual reports, investor and analyst presentations which are open to the media, and by making operational and financial information available on the Group's website. Announcements are released through notification to the Oslo Stock Exchange's company disclosure system and simultaneously on the Group's website. As a listed company, the Company complies with the relevant regulations regarding disclosure. Information is only provided in English.

Take-overs

Subsea 7 Inc.'s Board of Directors endorses the principles concerning equal treatment of all shareholders, and it is obliged to act professionally and in accordance with the applicable principles for good corporate governance if a situation were to arise in which this principle in the Code of Practice is put to the test.

Auditor

The audit committee is responsible for ensuring that the Group has an independent and effective external and internal audit process.

The audit committee supports the Board of Directors in the administration and exercise of its responsibility for supervisory oversight of financial reporting and internal control matters and to maintain appropriate relationships with the Group's auditor. The audit committee charter details the terms of reference for the audit committee.

The Group's auditor meets the audit committee annually regarding the planning and preparation of the financial statements and subsequently to present their report on the internal control procedures. The audit committee members hold separate discussions with the external audit partner once during the year without executive management being present. The scope, resources and level of fees proposed by the external auditor in relation to the Group's audit are approved by the audit committee.

The audit committee recognises that it is occasionally in the interests of the Group to engage its auditor to undertake certain other non-audit assignments. Fees paid to the auditor for audit and non-audit services are presented and approved at the AGM. The audit committee also requests the Group's auditor to confirm annually in writing that the auditor is independent.

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Subsea 7 Annual Report

Directors' Responsibility Statement

We confirm that, to the best of our knowledge, the financial statements for the period from 1 January to 31 December 2009 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 of the Company and the Group taken as a whole. We also confirm that, to the best of our knowledge, the Annual Report includes a true and fair overview of the development and performance of the business and the position of the Company and the Group, together with a description of the principal risks and uncertainties facing the Company and the Group.

Board of Directors of Subsea 7 Inc.

26 March 2010

Kristian Siem, Chairman
Michael Delouche
Mel Fitzgerald

Arild Schultz
Allen L Stevens

Report of the Independent Auditor

We have audited the Group and Company financial statements (the “financial statements”) of Subsea 7 Inc. (the ‘Group’) for the year ended 31 December 2009 which comprise the Group and Company Income Statements, the Group and Company Statements of Comprehensive Income, the Group and Company Balance Sheets, the Group and Company Statements of Changes in Shareholders’ Equity, the Group and Company Cash Flow Statements and the related notes. These financial statements have been prepared under the accounting policies set out therein. The financial reporting framework that has been applied in their preparation is International Financial Reporting Standards (IFRSs) as adopted by the European Union.

Respective responsibilities of directors and auditors

As explained more fully in the Directors’ Responsibilities Statement set out on page 52, the directors are responsible for preparing the financial statements in accordance with current applicable accounting standards and for being satisfied that they give a true and fair view.

Our responsibility is to audit the financial statements in accordance with International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

This report, including the opinion, has been prepared for and only for the Company’s members and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come, save where expressly agreed by our prior consent in writing.

We read other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. The other information comprises only the: Chairman’s Message; Financial Results; Business Review; Highlights of the Year; Regional Reports; Board of Directors’ Report; Corporate Governance Report and all other information listed in the contents on page 3. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group’s and the Company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements.

Opinion on financial statements

In our opinion:

the financial statements give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 December 2009 and of the Group’s and the Company’s profit and the Group’s and the Company’s cash flows for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
the Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and;
the financial statements have been prepared in accordance with the regulations of the Oslo Stock Exchange.

PricewaterhouseCoopers LLP

Chartered Accountants and Registered Auditors
Aberdeen
26 March 2010

Notes:

(a) The maintenance and integrity of the Subsea 7 Inc. website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

(b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Income Statements

For the year ended 31 December 2009

	Note	Group		Company
		2009 $000	2008 $000	2009 $000	2008 $000
Revenue	4	2,439,278	2,373,252	16,374	18,478
Project and vessel expenses		(1,861,990)	(1,799,082)	-	-
Other operating expenses		(57,223)	(65,249)	(14,164)	(8,775)
Depreciation and amortisation	12, 13	(117,214)	(95,300)	-	-
Profit on disposal of property, plant and equipment		1,160	11,671	-	-
Total operating expenses		(2,035,267)	(1,947,960)	(14,164)	(8,775)
Net operating profit		404,011	425,292	2,210	9,703
Changes in fair value of derivative financial instruments	19, 20	47,755	(34,177)	48,013	(34,143)
Net currency gain/(loss)		4,767	18,761	34,854	(108,012)
Finance income	8	8,896	5,881	22,897	22,042
Finance expense	8	(59,955)	(33,014)	(63,000)	(34,704)
Net financial items		1,463	(42,549)	42,764	(154,817)
Share of post tax profit from joint ventures	15	5,652	11,768	-	-
Share of post tax profit/(loss) from associates	16	1,074	(8)	-	-
Profit/(loss) before tax		412,200	394,503	44,974	(145,114)
Taxation expense	9	(123,849)	(130,506)	-	-
Net profit/(loss) for the year attributable to equity shareholders		288,351	263,997	44,974	(145,114)
Earnings per share, in $ per share
- basic	10	1.96	1.80
- diluted		1.94	1.74

Statements of Comprehensive Income

For the year ended 31 December 2009

	Group		Company
	2009 $000	2008 $000	2009 $000	2008 $000
Net profit/(loss) attributable to equity shareholders	288,351	263,997	44,974	(145,114)
Other comprehensive income/(expense):
Currency translation differences1	97,012	(302,219)	-	-
Available-for-sale financial assets – fair value adjustment1	56,743	(71,801)	56,743	(71,801)
Other comprehensive income/(expense) for the year, net of tax	153,755	(374,020)	56,743	(71,801)
Total comprehensive income/(expense) for the year, net of tax attributable to equity shareholders	442,106	(110,023)	101,717	(216,915)

1 The tax effect of these elements of other comprehensive income was $nil (2008: $nil).

2009

www.inspeetings.ind

Balance Sheets

As at 31 December 2009

	Note	Group		Company
		2009 $000	2008 $000	2009 $000	2008 $000
ASSETS
Non-current assets
Goodwill	11	98,533	98,533	-	-
Other intangible assets	12	621	1,130	-	-
Property, plant and equipment	13	1,189,389	991,408	-	-
Derivative financial instruments	20	194	-	194	-
Deferred tax assets	26	11,849	15,113	-	-
Investment in subsidiary undertakings	14	-	-	203,389	113,785
Investments in joint ventures	15	2,958	12,582	-	-
Investments in associates	16	2,675	1,601	-	-
Amounts due from Group companies		-	-	432,487	368,715
		1,306,219	1,120,367	636,070	482,500
Current assets
Inventories	17	32,981	22,567	-	-
Trade and other receivables	18	505,978	659,097	31,012	531,639
Available-for-sale financial assets	19	176,443	85,414	176,443	85,414
Derivative financial instruments	20	5,337	1,483	5,337	1,225
Cash and cash equivalents	21	487,251	114,066	342,296	49,959
		1,207,990	882,627	555,088	668,237
TOTAL ASSETS		2,514,209	2,002,994	1,191,158	1,150,737
SHAREHOLDERS' EQUITY AND LIABILITIES
---	---	---	---	---	---
Shareholders' equity
Share capital	22	1,470	1,469	1,470	1,469
Share premium reserve	22	271,664	271,238	271,664	271,238
Shares held by Employee Share Trust	22	(9,430)	(9,430)	-	-
Other reserves	23	(43,603)	(225,650)	100,874	11,920
Retained earnings		967,187	652,039	(81,646)	(149,498)
Total shareholders' equity		1,187,288	689,666	292,362	135,129
Non-current liabilities
---	---	---	---	---	---
Borrowings	25	468,540	559,737	468,540	559,737
Deferred tax liabilities	26	106,577	99,610	-	-
Retirement benefit obligations	27	279	1,002	-	-
Other non-current liabilities	28	346	4,237	121,232	37,900
		575,742	664,586	589,772	597,637
Current liabilities
Borrowings	25	133,465	-	133,465
Trade and other payables	24	576,098	605,358	174,311	407,315
Current tax liabilities		40,368	32,728	-	-
Derivative financial instruments	20	1,248	10,656	1,248	10,656
		751,179	648,742	309,024	417,971
Total liabilities		1,326,921	1,313,328	898,796	1,015,608
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES		2,514,209	2,002,994	1,191,158	1,150,737

Statements of Changes in Shareholders' Equity

For the year ended 31 December 2009

Group

	Share capital (note 22) $000	Share premium reserve (note 22) $000	Shares held by Employee Share Trust (note 22) $000	Other reserves (note 23) $000	Retained earnings $000	Total $000
At 1 January 2009	1,469	271,238	(9,430)	(225,650)	652,039	689,666
Foreign currency translation	-	-	-	97,012	-	97,012
Available-for-sale financial assets	-	-	-	56,743	-	56,743
- fair value adjustment
Total expense recognised directly in equity	-	-	-	153,755	-	153,755
Net result for the year	-	-	-	-	288,351	288,351
Total income and expense for the year	-	-	-	153,755	288,351	442,106
Share based payments	-	-	-	-	4,595	4,595
Shares issued - exercise of options	1	426	-	-	-	427
Repurchase of convertible notes	-	-	-	(19,548)	18,283	(1,265)
Convertible note 2009 - 2014 equity component	-	-	-	52,157	-	52,157
Transaction costs	-	-	-	(398)	-	(398)
Depreciation on re-valued assets	-	-	-	(3,919)	3,919	-
At 31 December 2009	1,470	271,664	(9,430)	(43,603)	967,187	1,187,288
At 1 January 2008	1,477	286,508	-	152,362	379,410	819,757
---	---	---	---	---	---	---
Foreign currency translation	-	-	-	(302,219)	-	(302,219)
Available-for-sale financial assets	-	-	-	(71,801)	-	(71,801)
- fair value adjustment
Total expense recognised directly in equity	-	-	-	(374,020)	-	(374,020)
Net result for the year	-	-	-	-	263,997	263,997
Total income and expense for the year	-	-	-	(374,020)	263,997	(110,023)
Share based payments	-	-	-	-	4,640	4,640
Shares issued - exercise of options	1	437	-	-	-	438
Depreciation on re-valued assets	-	-	-	(3,992)	3,992	-
Purchase of own shares	(9)	(15,707)	-	-	-	(15,716)
Shares purchased by Employee Share Trust	-	-	(9,430)	-	-	(9,430)
At 31 December 2008	1,469	271,238	(9,430)	(225,650)	652,039	689,666

2009

Annual Report

Statements of Changes in Shareholders' Equity - continued

For the year ended 31 December 2009

Company

	Share capital (note 22) $000	Share premium reserve (note 22) $000	Other reserves (note 23) $000	Retained earnings $000	Total $000
At 1 January 2009	1,469	271,238	11,920	(149,498)	135,129
Available-for-sale financial assets – fair value adjustment	-	-	56,743	-	56,743
Total income recognised directly in equity	-	-	56,743	-	56,743
Net result for the year	-	-	-	44,974	44,974
Total income and expense for the year	-	-	56,743	44,974	101,717
Share based payments	-	-	-	4,595	4,595
Shares issued – exercise of options	1	426	-	-	427
Repurchase of convertible notes	-	-	(19,548)	18,283	(1,265)
Convertible notes 2009 – 2014 equity component	-	-	52,157	-	52,157
Transaction costs	-	-	(398)	-	(398)
At 31 December 2009	1,470	271,664	100,874	(81,646)	292,362
At 1 January 2008	1,477	286,508	83,721	(9,024)	362,682
Available-for-sale financial assets – fair value adjustment	-	-	(71,801)	-	(71,801)
Total expense recognised directly in equity	-	-	(71,801)	-	(71,801)
Net result for the year	-	-	-	(145,114)	(145,114)
Total income and expense for the year	-	-	(71,801)	(145,114)	(216,915)
Share based payments	-	-	-	4,640	4,640
Shares issued – exercise of options	1	437	-	-	438
Purchase of own shares	(9)	(15,707)	-	-	(15,716)
At 31 December 2008	1,469	271,238	11,920	(149,498)	135,129

Cash Flow Statements

For the year ended 31 December 2009

	Note	Group		Company
		2009 $000	2008 $000	2009 $000	2008 $000
Cash flows from operating activities
Cash generated from/(used in) operations	30	639,977	590,414	239,252	(1,122)
Finance income received		4,551	6,237	19,284	22,042
Finance expense paid		(11,941)	(10,578)	(14,986)	(12,268)
Taxation paid		(90,998)	(115,016)	-	-
Net cash from operating activities		541,589	471,057	243,550	8,652
Cash flows from investing activities
Proceeds from sale of property, plant and equipment		1,413	26,073	-	-
Purchase of property, plant and equipment		(246,331)	(449,282)	-	-
Purchase of available-for-sale financial assets		-	(179,381)	-	(179,381)
Dividends received		16,336	-	944	-
Net cash used in investing activities		(228,582)	(602,590)	944	(179,381)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital		427	438	427	438
Purchase of own shares		-	(15,716)	-	(15,716)
Shares purchased by Employee Share Trust		-	(9,430)	-	-
(Repayment)/drawdown of loans		(150,000)	150,000	(150,000)	150,000
Government grants received		-	15	-	-
Proceeds from issue of convertible notes		272,902	-	272,902	-
Finance lease principal payments		-	(394)	-	-
Repurchase of convertible notes		(75,486)	-	(75,486)	-
Net cash from financing activities		47,843	124,913	47,843	134,722
Effects of exchange rate changes		12,335	(46,971)	-	-
Net increase/(decrease) in cash and cash equivalents		373,185	(53,591)	292,337	(36,007)
Cash and cash equivalents at 1 January		114,066	167,657	49,959	85,966
Cash and cash equivalents at 31 December		487,251	114,066	342,296	49,959

2009
Shares
Annual Report

Notes to the Financial Statements

1 Summary of significant accounting policies

The separate and consolidated financial statements of Subsea 7 Inc. for the year ended 31 December 2009 were authorised for issue in accordance with a resolution of the Board of Directors on 26 March 2010. The Company is a limited company incorporated and domiciled in the Cayman Islands with publicly traded shares. The registered office address is PO Box 309, South Church Street, George Town, Grand Cayman, KY1-1104, Cayman Islands.

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of preparation

Subsea 7 Inc.'s separate and consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations as issued by the International Accounting Standards Board (IASB) and endorsed by the European Union (EU) and the regulations of the Oslo Stock Exchange. The financial statements have been prepared under the historical cost convention as modified by the revaluation of available-for-sale investments and financial assets and financial liabilities at fair value through profit or loss. The financial statements have been prepared on the going concern basis.

The preparation of financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenue and expenses during the year. The estimates and judgments which are most significant or complex are disclosed in note 3 to the financial statements.

Basis of consolidation

The Group consists of Subsea 7 Inc. (the Company) and its subsidiaries as at 31 December 2009.

Subsidiaries

Subsidiaries, consisting of those entities in which the Group has either an interest or more than one half of the voting rights or otherwise has the power to exercise control over the operations, are fully consolidated. Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. Investments in subsidiaries are consolidated according to the purchase method. The financial statements of subsidiaries are prepared for the same reporting year as the Company, using consistent accounting policies. All inter-company balances, income and expenses, unrealised gains and losses and dividends resulting from intra-group transactions are eliminated in full.

The purchase price is assigned to identifiable assets and liabilities in the subsidiary, and is included in the consolidated financial statements at fair value at the time of purchase. Any premium paid over and above the market value of the identifiable assets and liabilities at the acquisition date is recognised as goodwill in the balance sheet.

Other entities' interests in subsidiaries not wholly owned by the Group are reflected as minority interests based on the book value of the subsidiaries' net assets. Losses incurred by the Group are attributed to the minority interest until the balance reduces to nil. All further excess losses are attributable to the Group.

Joint ventures

A joint venture is a commercial business governed by an agreement between two or more participants, giving them joint control over the business.

In the consolidated financial statements, joint ventures are consolidated according to the equity method. The share of earnings recorded in the consolidated income statement is the after tax earnings of the joint ventures.

Jointly controlled operations

A jointly controlled operation is an operation involving two or more participants where each participant uses its own resources and carries out its own part of the operations separately from the activities of the other participant(s). Each participant owns and controls its own resources that it uses in the joint operation and incurs its own expenses and raises its own financing. Rules are established governing how revenues and any common expenses are shared among the participants. Jointly controlled operations do not involve the establishment of a corporation, partnership, entity, or a financial structure that is separate from the investors themselves.

Jointly controlled operations are accounted for as if the operations were conducted independently. The Group accounts for its share of the assets, liabilities and cash flows arising from the operations in its own accounting records, with no further adjustments or consolidation procedures being necessary.

Associates

An associate is an entity over which an investor has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee entity without control or joint control over those policies.

In the consolidated financial statements, associates are consolidated according to the equity method. The share of earnings recorded in the consolidated income statement are the earnings of the associate after tax.

Disclosure of impact of changes to existing standards

The following standards, amendments and interpretations to published standards, which are of relevance to the Group's and Company's operations, were mandatory for the year ended 31 December 2009:

The Group has adopted the following new and amended IFRS and IFRIC interpretations as of 1 January 2009:

IFRS 2 'Share-based Payment: Vesting Conditions and Cancellations' effective 1 January 2009
IFRS 7 'Financial Instruments: Disclosures' effective 1 January 2009
IAS 39 and IFRS 7 'Reclassification of Financial Assets' effective 1 July 2008
IFRS 8 'Operating Segments' effective 1 January 2009
IAS 1 'Presentation of Financial Statements' (revised) effective 1 January 2009
IAS 23 'Borrowing Costs (Revised)' effective 1 January 2009
IAS 27 'Consolidated and Separate Financial Statements – Cost of an investment in a subsidiary, jointly controlled entity or associate (Amendments)' effective 1 January 2009
IAS 32 'Financial Instruments: Presentation and IAS 1 Puttable Financial Instruments and Obligations Arising on Liquidation' effective 1 January 2009
IFRIC 9 'Remeasurement of Embedded Derivatives' and IAS 39 'Financial Instruments: Recognition and Measurement' effective for periods ending on or after 30 June 2009
IFRIC 13 'Customer Loyalty Programmes' effective 1 July 2008 but EU endorsed for use effective from 1 January 2009
IFRIC 16 'Hedges of a Net Investment in a Foreign Operation' effective 1 October 2008 but EU endorsed for use effective from 1 July 2009
'Improvements to IFRSs' (May 2008)

When the adoption of the standard or interpretation is deemed to have an impact on the financial statements or performance of the Group, its impact is described below:

IFRS 8 'Operating Segments'

IFRS 8 replaced IAS 14 Segment reporting. The Group concluded that the operating segments determined in accordance with IFRS 8 are the same as the geographic segments previously reported under IAS 14. IFRS disclosures are shown in note 4.

IAS 1 (Revised) 'Presentation of Financial Statements'

The revised standard separates owner and non-owner changes in equity. The statement of changes in equity includes only details of transactions with owners, with non-owner changes in equity presented in a reconciliation of each component of equity. In addition, the standard introduces the statement of comprehensive income: it presents all items of recognised income and expense, either in one single statement, or in two linked statements. The Group and Company have elected to present two statements.

IAS 23 'Borrowing Costs' (Revised)

The revised IAS 23 requires capitalisation of borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset. The Group's previous policy was to expense borrowing costs as they were incurred. In accordance with the transitional provisions of the amended IAS 23, the Group has adopted the standard on a prospective basis. Therefore, borrowing costs are capitalised on qualifying assets with a commencement date on or after 1 January 2009. During the 12 months to 31 December 2009, $54,000 of borrowing costs have been capitalised on qualifying assets.

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Subsea International
2009

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Disclosure of impact of future accounting standards

Relevant new standards, amendments and interpretations issued by the IASB and endorsed by the EU but not yet effective and not applied in these financial statements are as follows.

Effective for financial years beginning on or after 1 July 2009, to be adopted by the Group from 1 January 2010:

IFRS 3 'Business Combinations (Revised)' and IAS 27 'Consolidated and Separate Financial Statements (Amended)'

IFRS 3 (Revised) introduces significant changes in the accounting for business combinations occurring after implementation. Changes affect the valuation of non-controlling interest, the accounting for transaction costs, the initial recognition and subsequent measurement of a contingent consideration and business combinations achieved in stages. These changes will impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs and future reported results.

IAS 27 (Amended) requires that a change in the ownership interest of a subsidiary (without loss of control) is accounted for as a transaction with owners in their capacity as owners. Therefore, such transactions will no longer give rise to goodwill, nor will it give rise to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary.

The changes made by IFRS 3 (Revised) and IAS 27 (Amended) will affect future acquisitions or loss of control of subsidiaries and transactions with non-controlling interests. The changes in accounting policy will be applied prospectively.

The following standards, amendments and interpretations are not expected to have an impact on the Group's or Company's financial statements:

Title	Effective Date
IFRS 2 'Share-based Payment: Group Cash-settled Share-based Payment Transactions'	1 January 2010
IAS 39 'Financial Instruments: Recognition and Measurement – Eligible hedged items'	1 July 2009
IFRIC 17 'Distributions of Non-Cash Assets to Owners'	1 July 2009
IFRIC 18 'Transfers of Assets from Customers'	1 July 2009

Functional and presentation currency

Items included in the financial statements of each entity of the Group are measured using the currency of the primary economic environment in which each entity operates (the functional currency). The United States dollar ($) is the functional currency of Subsea 7 Inc. and is the currency in which the consolidated financial statements are presented.

Foreign currency translation

Income statements of entities in the Group that prepare their results in a currency other than the United States dollar are translated into United States dollars at the weighted average exchange rates for each year and balance sheets are translated at the exchange rates ruling at year end. The cumulative translation adjustments arising from the re-translation of the net investment in such entities are included in shareholders' equity.

Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transactions. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

The main exchange rates used throughout the Group at the balance sheet date, compared to $, were as follows:

GBP: 0.62332
EUR: 0.70006
NOK: 5.87648

Goodwill

Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets and liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. Each unit or group of units to which the goodwill is so allocated:

represents the lowest level within the Group at which the goodwill is monitored for internal management purposes; and
is not larger than an operating segment determined in accordance with IFRS 8 'Operating Segments'.

Impairment is determined by assessing the recoverable amount of the cash-generating unit (or group of cash-generating units), to which the goodwill relates. Recoverable amounts are determined based on value in use calculations using discounted cash flow projections based on financial budgets approved by executive management. The discount rate applied to the cash flow projections is the Group's cost of capital at the impairment test date, adjusted for an appropriate margin and risk factors. Where the recoverable amount of the cash-generating unit (or group of cash-generating units) is less than the carrying amount, an impairment loss is recognised. Where goodwill forms part of a cash-generating unit (or group of cash-generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Other intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets are not capitalised 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 amortised over their useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and treated as a change in accounting estimate. The amortisation expense on intangible assets with finite lives is recognised 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 impairment annually either individually or at the cash-generating unit level. Such intangibles are not amortised. 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.

A summary of the policies applied to intangible assets is as follows:

Intellectual property and patent rights – finite-lived – duration of licence or rights
Customer contracts – finite-lived – contract duration, 2 to 5 years

Property, plant and equipment

Property, plant and equipment are stated at initial cost including any directly related costs of acquisition, less accumulated depreciation and accumulated impairments in value. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. Depreciation is provided on all property, plant and equipment at annual rates calculated to write off the cost of each asset to its estimated residual value evenly over its expected useful life as follows:

Buildings – 25 years
Plant and equipment – 3 to 10 years
Vessels and marine equipment – 5 to 20 years

Assets under construction and land are not depreciated.

Expenditure incurred during inspections, major repairs or dry-docking is recognised in the carrying amount of property, plant and equipment as a replacement if the recognition criteria are satisfied. Dry-docking costs are considered a separate component of the vessels' cost that have a different pattern of economic benefits and are therefore depreciated separately. Dry-docking expenses are amortised over the period until the next scheduled dry-docking, up to a maximum of 5 years.

Upon retirement or disposal of property, plant and equipment, the costs and related accumulated depreciation are derecognised and any gain or loss arising (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement.

Investments in subsidiary undertakings

Investments in subsidiaries are included in the financial statements at cost less provisions for impairment.

Inventories

Inventories are stated at the lower of cost or net realisable value. Cost is computed using standard cost which approximates actual cost, on a first in, first out basis. The Group makes inventory provisions for impairment based on an assessment of excess and obsolete inventories.

Financial instruments

Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial assets at initial recognition.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.

The Group's financial assets include cash and short-term deposits, trade and other receivables, loans and other receivables, quoted financial instruments, and derivative financial instruments.

Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

The Group determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, plus directly attributable transaction costs.

The Group's financial liabilities include trade and other payables, borrowings and derivative financial instruments.

Trade and other receivables

Trade and other receivables are recognised initially at fair value and subsequently at amortised cost less provision for impairment. Provision is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified.

Available-for-sale financial assets

Available-for-sale financial assets include equity and debt securities. Equity investments classified as available-for-sale are those which are neither classified as held for trading nor designated at fair value through profit and loss. Debt securities in this category are those which are intended to be held for an indefinite period of time and which may be sold in response to needs for liquidity, changes in market conditions or other market factors. Where these assets include a convertibility option, this option is considered to be an embedded derivative. The fair value of any such embedded derivative is determined by using a Black-Scholes model.

After initial measurement, available-for-sale financial assets (excluding any embedded derivatives) are measured at fair value with unrealised gains or losses recognised directly in equity until the investment is derecognised or determined to be impaired, at which time the cumulative loss recorded in equity is recognised in the income statement. Interest and dividends receivable are recognised in the income statement.

For available-for-sale financial assets, the Group assesses at each balance sheet date whether there is objective evidence that an asset or group of assets is impaired. In the case of equity shares classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost.

Where there is evidence of impairment, the cumulative loss, measured as the difference between the acquisition cost and the current fair value, less any impairment loss previously recognised in the income statement, is removed from equity and recognised in the income statement.

Impairment losses on equity shares are not reversed through the income statement; increases in their value after impairment are recognised directly in equity.

Embedded Derivatives

After initial measurement, embedded derivatives are recognised at fair value with unrealised gains or losses recognised in the income statement.

The Group will only reassess the existence of an embedded derivative if the terms of the host financial instrument change significantly.

Derivative financial instruments

After initial measurement, derivative financial instruments are subsequently re-measured at their fair value. The Group has not elected to account for any of its derivative financial instruments as hedges for accounting purposes as prescribed in IAS 39 and, accordingly, all changes in the fair value of derivative financial instruments are recognised in the income statement when they occur.

The fair values of derivative financial instruments are classified as either current or non-current assets or liabilities according to the maturity dates of the derivative contracts.

Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the consolidated cash flow statement, cash and cash equivalents comprise cash on hand, deposits held on call with banks and other short-term highly liquid investments, less bank overdrafts. Deposits held with banks with interest rate maturities up to 12 months have been classified as cash equivalents where deposits could be repaid within 3 months without penalty.

Borrowings

After initial recognition, interest bearing borrowings are subsequently measured at amortised cost using the effective interest rate (EIR) method. Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the effective interest rate method amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the EIR. The EIR amortisation is included in finance cost in the income statement.

Convertible notes

The fair value of the liability component of a convertible note is determined using a market interest rate for an equivalent non-convertible note. This amount is recorded as a liability, on an amortised cost basis, until extinguished on conversion, redemption or maturity. The remainder of the proceeds of a convertible note represents the estimated fair value of the equity conversion option at inception and this component of the note is recorded in shareholders' equity.

Borrowing costs

Borrowing costs which are directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the costs of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that are incurred in connection with the borrowing of funds.

The Group capitalises borrowing costs for all eligible assets where construction commenced on or after 1 January 2009. The Group continues to expense borrowing costs relating to construction projects which commenced prior to 1 January 2009.

Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset.

Operating lease payments are recognised as an expense in the income statement on a straight line basis over the lease term.

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Subsea Annual Report

Government grants

Government grants are recognised as income over the periods necessary to match them with the costs which they are intended to compensate. Grants which are related to assets are credited to deferred income on receipt and released to the income statement over the expected useful life of the related asset. Grants which are of a revenue nature are credited to the income statement so as to match them with the expenditure to which they relate.

Deferred consideration

Deferred consideration relates to the future cash consideration payable in respect of acquisitions which is contingent on the outcome of future events. When an acquisition agreement provides for an adjustment to the consideration contingent on future events, provision is made for that amount if the adjustment is probable and can be measured reliably. The amount provided is included in the cost of the acquisition. When the final amount payable is determined, or when revised estimates are made, the acquisition cost and provision are adjusted accordingly. Deferred consideration is recorded at its fair value.

Retirement benefits

The Group operates a number of defined contribution schemes. These schemes are administered separately from the Group and the Group has no further obligations in respect of these schemes once the contributions have been paid. Contributions to these schemes are recognised as an expense when incurred.

At the year end the Group operated two defined benefit schemes in Norway. One of the schemes is funded through payments to an insurance company determined by periodic actuarial calculations and one scheme is unfunded.

The liability recognised in the balance sheet in respect of the defined benefit schemes is the excess of the present value of the schemes' obligations at the balance sheet date over the fair value of the schemes' assets at the balance sheet date, together with adjustments for unrecognised actuarial gains or losses. The schemes' obligations are calculated annually at the balance sheet date by independent actuaries using the projected unit credit method. The present value of the schemes' obligations is calculated by discounting the estimated cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the pensions will be paid and that have terms to maturity approximating to the terms of the schemes' liabilities.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions in excess of the greater of 10% of the value of the schemes' assets or 10% of the schemes' obligations are charged or credited to the income statement over the schemes members' expected average remaining working lives.

Share-based payment transactions

Certain employees (including executive management) of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments ('equity-settled transactions').

Equity-settled transactions

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which they are granted. The fair value of options granted is determined by using a Black-Scholes model, further details of which are given in note 22.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ('the vesting date'). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The income statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

Shares held by Employee Share Trust

Own equity instruments which are reacquired by the Subsea 7 Employee Share Trust are recognised at cost and deducted from equity. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of the Group's own equity instruments.

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured.

Sale of goods

Product revenue is generally recognised when a signed contract or other persuasive evidence of an arrangement exists. the product has been shipped, the fee is fixed or determinable and collection of resulting receivables is reasonably assured.

Rendering of services

Service revenue consists primarily of revenue received from billings that provide for specific services for customers, material and equipment charges which accrue daily and are billed periodically, ranging from weekly to monthly billing for the delivery of subsea services to customers over a contractual term. Service revenue is generally recognised 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.

Construction contracts

The Group's long-term construction contracts can be classified as day-rate or lump-sum contracts. Revenue under day-rate contracts is recognised on an accruals basis as services are provided.

For lump-sum contracts the Group follows the generally accepted practice of accounting for long-term construction, engineering and project management contracts on the percentage of completion basis as costs are incurred. Under this method, revenue is recognised according to the stage of completion reached in the contract by reference to the value of work done. If a contract can be split into sub-projects, each sub-project is treated separately.

For all lump-sum contracts, no profit is recognised before the outcome of the contract can be measured reliably, and generally this will mean no profit is recognised until progress has reached at least 20% of completion. The estimated cost used to determine profit at completion reflects all facts or occurrences expected to affect the final cost of the contract.

For lump-sum contracts which satisfy certain criteria, profit is recognised in accordance with the risk profile of the contract as assessed by management instead of being recognised in accordance with the simple percentage of total costs principle. The pattern of revenue recognition for these contracts depends on individual contract circumstances and terms, but generally the application of this policy may result in there being a requirement for a larger percentage of completion prior to any profit being recognised, the application of variable profit margins at separately identifiable stages of the contract, and the majority of profit being recognised in the later stages of the contract.

Due to the nature of the services performed variation orders and claims are commonly billed to clients in the normal course of business. Additional contract revenue arising from variation orders is recognised when it is probable that the client will approve the variation and the amount of revenue arising from the variation can be reliably measured. Revenue resulting from claims is recognised in contract revenue only when negotiations have reached an advanced stage such that it is probable that the client will accept the claim and that the amount can be measured reliably.

For both day-rate and lump-sum contracts the entire amount of any estimated contract loss is recognised when it first becomes evident.

On a contract or sub-project basis, the amount by which costs incurred plus recognised profit less recognised losses exceeds progress billings is presented as 'construction contracts - assets', and the amount by which progress billings exceed total costs incurred plus recognised profit less recognised losses is presented as 'construction contracts - liabilities'.

subsea partner of choice

Taxation

Current tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:

Where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date.

Sales tax

Revenues, expenses and assets are recognised net of the amount of sales tax except:

Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
Receivables and payables that are stated with the amount of sales tax included.

The net amount of sales tax recoverable from, or payable to, the taxation authorities is included as part of receivables or payables in the balance sheet.

2 Financial risk management

The Group's multinational operations and debt financing expose it to a variety of financial risks. The Group has in place risk management policies that seek to limit the adverse effects of these risks on its financial performance. The Board of Directors has overall responsibility for the establishment and oversight of the Group's financial risk management framework. The responsibility for managing and monitoring the day-to-day financial risks is delegated to the treasury department with an authorisation matrix agreed with the Chief Financial Officer. The risk management policies are implemented by the treasury department which receives regular reports from all the operating companies to enable prompt identification of financial risks so that appropriate action may be taken.

(a) Foreign exchange risk

The Group is exposed to foreign exchange risk arising on sales, purchases and borrowings that are denominated in a currency other than the functional currencies of individual Group entities which are principally United States dollars($), United Kingdom pounds (GBP), Brazil real (BRL), Norwegian krone (NOK) and Euros (EUR). As the Group's presentation currency is $, it is also subject to foreign exchange translation risk in respect of the results and underlying net assets of foreign operations.

Techniques in managing foreign exchange risk include, but are not limited to, foreign currency borrowing and investing and the use of currency derivative instruments. The Group selectively manages significant exposures to potential foreign exchange losses considering current market conditions, future operating activities and the associated cost in relation to the perceived risk of loss.

The Group manages currency exposures through the use of currency derivative instruments related to the major currencies, which are generally the currencies of the countries of the majority of the Group's international business. These contracts generally have an expiration date of two years or less. Forward exchange contracts, which are commitments to buy or sell a specified amount of a foreign currency at a specified price and time, are the primary derivative instruments used to manage identifiable foreign currency commitments and generally relate to long-term engineering and construction projects. While derivative instruments are subject to fluctuations in value, the fluctuations are generally offset by the value of the underlying exposures being managed. The use of some contracts may limit the ability of the Group to benefit from favourable fluctuations in foreign exchange rates.

At 31 December 2009, if the $ had strengthened/weakened by 10% against GBP with all other variables held constant, net profit attributable to equity shareholders and correspondingly, total shareholders' equity would have been $7,134,000 (2008: $5,046,000) lower/higher, mainly as a result of foreign exchange losses/gains on the remeasurement of GBP denominated trade receivables, trade payables, short-term inter-company receivables, short-term inter-company payables and cash and cash equivalents.

(b) Cash flow and fair value interest rate risk

The Group has interest rate risk arising from long-term borrowings. Borrowings at variable rates expose the Group to cash flow interest rate risk and borrowings at fixed rates expose the Group to fair value interest rate risk.

During 2009 and 2008, the Group had fixed rate borrowings in the form of convertible notes, further details of which are set out in note 25.

At 31 December 2009 the Group had access to variable rate borrowings in the form of a $150 million and two $50 million revolving credit and guarantee facilities. The Group is able to draw down on these facilities, as needed, any amount which is a multiple of $2.5 million (DnB NOR Bank ASA), $0.5 million (HSBC Bank plc) or $1.0 million (Bank of Scotland plc) for contractually specified or other negotiated periods of time, at interest rates determined with reference to LIBOR at the time of borrowing. Further details of these facilities are set out in note 25.

The Group has no significant interest bearing assets other than cash and cash equivalents and the Acergy S.A. convertible loan notes, therefore the Group'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 less than one week, which mitigates the potential interest rate risk.

The Group monitors its exposure to interest rate risk as part of its overall monitoring of financial risk management, and has entered into an interest rate swap to manage its cash flow and fair value interest rate risks.

2009
Bureaucr
Annual Report

c) Credit risk

Financial instruments that potentially subject the Group to a concentration of credit risk consist primarily of cash and cash equivalents and accounts receivable. Cash and cash equivalents, primarily composed of deposits and investments in money market funds, are maintained with a number of major financial institutions in each of the regions that the Group operates. The Group has, from time to time, significant short-term credit exposure from receivables from major companies in the oil and gas exploration and production sector. Credit risk from the ordinary course of trade activities is managed by the regional business units applicable to where the receivables are located. The Group performs ongoing credit evaluations of its customers and generally does not require collateral from its customers.

Concentration of counterparty risk:

At 31 December 2009, 86% of cash and cash equivalents were invested with 7 counterparties based in 4 countries.

The table below shows the concentration of trade receivables counterparty risk at the balance sheet date by ranking customers by size of receivable balance at the balance sheet date. Further details of the evaluation of counterparty risk are set out in note 18.

	2009 $000	2008 $000
Total receivables from customers ranked 1-5	68,386	90,693
Total receivables from customers ranked 6-10	31,712	41,932
Total receivables from customers ranked 11-15	19,675	22,431
Total receivables from customers ranked 16-20	11,339	10,963
Total receivables from customers ranked 21-25	7,582	8,488
Total receivables from other customers	16,361	28,217
	155,055	202,724

(d) Liquidity risk

The Group actively maintains a mixture of long-term and short-term committed facilities that are designed to ensure the Group has sufficient available funds for operations and planned expansions. Further details of the composition of funding are set out in note 25.

The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans and convertible notes.

The table below analyses the Group's non-derivative financial liabilities which will be settled on a net basis into relevant maturity groupings based on the remaining contractual period at the balance sheet date. The amounts disclosed are the contractual undiscounted cash flows.

	Less than 1 year $000	Between 1 and 2 years $000	Between 2 and 5 years $000	More than 5 years $000
At 31 December 2009
Convertible notes 2009-2014	9,625	9,625	303,875	-
Convertible notes 2007-2017	138,379	-	-	-
Convertible notes 2006-2011	7,280	263,640	-	-
Trade and other payables	576,098	-	-	-
At 31 December 2008
Convertible notes 2007-2017	-	-	-	192,397
Convertible notes 2006-2011	8,400	8,400	304,200	-
Trade and other payables	605,358	-	-	-

The table below analyses the Group's derivative financial instruments which will be settled on a gross basis into relevant maturity groupings based on the remaining contractual period at the balance sheet date. The amounts disclosed are the contractual undiscounted cash flows.

	Less than 1 year $000
At 31 December 2009
Forward foreign currency contracts - outflow	190,890
Currency swaps - outflow	7,606
At 31 December 2008
Forward foreign currency contracts - outflow	182,969
Currency swaps - outflow	1,973

The Group's interest rate swap contract will be settled on a net basis. The contract matures in 2016.

(e) Equity price risk

The Group is exposed to equity price risk arising due to market fluctuations on the Group's investment in Acergy S.A., which include convertible loan notes, shares and American Depositary Receipts (ADRs).

At 31 December 2009, if the Acergy S.A. convertible loan notes, shares and ADR prices had been 10% higher/ lower with all other variables held constant, the value of the total investment would have been $17,644,000 (2008: 8,541,000) higher/lower. Any increase in value (excluding the movement in value attributed to the embedded derivative) would be recorded in equity and any decrease in value below cost would be recorded in either equity or income depending on whether the decline is significant or prolonged. The movement in value attributed to the embedded derivative would be recognised in income.

Capital management

The objective when managing capital is to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure the Group may, amongst other things, adjust the amount of dividends paid to shareholders, issue new shares, repurchase existing shares, or sell assets to reduce debt. There were no changes to the Group's approach to capital management in the year.

Capital for the Group is total shareholders' equity and is detailed in the Group's statement of changes in shareholders' equity on page 57.

The Group is subject to externally imposed capital requirements through covenants in place under its revolving credit facilities. All covenants are tested quarterly and the Group complied with the covenants throughout 2009 and 2008.

subsea partner of choice

2009

Business 7 Annual Report

3 Critical accounting estimates and judgments

The most important estimates and judgments are discussed below. Estimates and judgments are continually evaluated and are based on historical experience and other factors management believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of revision and future periods if the revision affects both current and future periods.

Revenue recognition

The Group accounts for long-term construction, engineering and project management contracts using the percentage of completion basis as costs are incurred. Under this method, revenue is recognised according to the stage of completion reached in the contract by reference to the value of work done as a proportion of the total work to be performed, and for certain contracts also with reference to the risk profile of the contract. The calculation of the stage of completion on contracts requires estimates to be made, especially regarding the cost to complete, and actual results may differ from these estimates.

Due to the nature of the services performed, variation orders and claims are commonly billed to clients. A variation order is an instruction by the client for a change in the scope of the work to be performed under the contract which may lead to an increase or a decrease in contract revenue based on changes in the specifications or design of an asset and changes in the duration of the contract. A claim is an amount that may be collected as reimbursement for costs not included in the contract price. A claim may arise from delays caused by clients, errors in specifications or design, and disputed variations in contract work.

Additional contract revenue is included within the percentage of completion calculation when it is probable that the client will approve the variation or claim and the amount of revenue arising from the variation can be reliably measured.

Taxation

The Group is subject to taxes in numerous jurisdictions and significant judgement is required in calculating the consolidated tax provision. There are many transactions for which the ultimate tax determination is uncertain and for which the Group makes provisions based on an assessment of internal estimates and appropriate external advice, including decisions regarding whether to recognise deferred tax assets in respect of tax losses. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the tax charge in the period in which the outcome is determined.

Goodwill carrying value

An impairment review has been performed for all goodwill balances held across the Group on a cash generating unit basis. The impairment review is performed on a value-in-use basis which requires estimation of future net operating cash flows and the time period over which they will occur. Further details relating to the impairment review can be found in note 11.

Property, plant and equipment

Property, plant and equipment are recorded at cost, and depreciation is recorded on a straight-line basis over the useful lives of the assets. Management uses its experience to estimate the remaining useful life of assets.

Fair value of derivatives and other financial instruments

Management uses judgment in selecting an appropriate valuation technique for financial instruments not quoted on an active market. Valuation techniques commonly used by market practitioners are applied. For derivative financial instruments, assumptions are made based on quoted market rates adjusted for specific features of the instrument. Other financial instruments are valued using a discounted cash flow analysis based on assumptions supported, where possible, by observable market prices or rates.

4 Segment reporting

Group

For management purposes, the Group is organised into business units based on geographical areas and has six reportable operating segments as follows:

North Sea

This covers all operations in the UK, Norway, Denmark, the Netherlands and any other works offshore continental Europe. There are regional project management and engineering organisations in Aberdeen, Scotland and

Stavanger, Norway. There is a pipeline fabrication spoolbase in Vigra, Norway and a pipeline bundle fabrication yard at Wick, Scotland.

Africa

This covers operations in the continent of Africa. These operations are supported from offices in London, England; Lagos, Nigeria and both an office and a pipeline fabrication spoolbase in Luanda, Angola.

Brazil

This covers all works in Brazil. There is a project management and engineering organisation based in Rio de Janeiro, a logistics support base near Macae, a pipeline fabrication spoolbase at Ubu and a development site at Paranaguá.

North America

This covers all works in North America, the Gulf of Mexico and offshore Mexico. There is a project management and engineering organisation based in Houston supporting all operations and a pipeline fabrication spoolbase at Port Isabel.

Asia Pacific

This covers operations in Asia Pacific. There is an office in Perth, Australia, a project management and engineering organisation based in Singapore and an office in Kuala Lumpur, Malaysia.

Global

This comprises the global support functions, including the vessel and equipment management group. Finance income and expense, derivative instrument fair value changes, net currency items and profits or losses on disposals of property, plant and equipment are also allocated to this segment.

No operating segments have been aggregated to form the above reportable operating segments.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on Earnings before interest, tax, depreciation and amortisation (EBITDA) and profit before tax. Segment profit before tax is measured consistently with profit before tax in the consolidated financial statements.

The accounting policies for each segment are the same as the accounting policies of the Group as described in note 1.

Year ended 31 December 2009	North Sea $000	Africa $000	Brazil $000	North America $000	Asia Pacific $000	Global $000	Group $000
Revenue
External customers	1,078,612	244,574	848,218	145,591	122,270	13	2,439,278
Share of profit from joint ventures and associates	-	-	-	-	5,652	1,074	6,726
Segment EBITDA	254,544	109,644	111,015	49,761	20,907	(19,080)	526,791
Depreciation and amortisation	(45,924)	(21,067)	(37,422)	(2,647)	(5,897)	(4,257)	(117,214)
Profit on disposal of property, plant and equipment	-	-	-	-	-	1,160	1,160
Changes in fair value of derivative financial instruments	-	-	-	-	-	47,755	47,755
Net currency gain	-	-	-	-	-	4,767	4,767
Finance income	-	-	-	-	-	8,896	8,896
Finance expense	-	-	-	-	-	(59,955)	(59,955)
Profit/(loss) before tax	208,620	88,577	73,593	47,114	15,010	(20,714)	412,200
Segment total assets	1,077,087	361,898	325,668	67,466	68,766	613,324	2,514,209

2009
British American
American Report

Goodwill is allocated to operating segments rather than subsidiaries therefore it is not possible to allocate to individual countries – the allocation of goodwill to segments is shown in note 11.

Based on the country of incorporation of the Group subsidiary, other non-current assets excluding goodwill, financial instruments and deferred tax assets are located in the following countries:

	2009	2008
	$000	$000
Cayman Islands	96,178	107,757
United Kingdom	889,370	742,571
The Netherlands	110,133	114,526
United States of America	40,819	10,321
Brazil	17,636	16,778
Other countries	41,507	14,768
	1,195,643	1,006,721

Company

The Company operates as a holding company and provides support and treasury services to the Group. Its results are reported within a single segment. Revenues relate to the provision of these services.

5 Construction contracts

Group

	2009	2008
	$000	$000
All construction contracts
Amount of contract revenue recognised as revenue in the year	1,848,400	1,852,112
Construction contracts in progress at 31 December
Costs incurred and recognised profits, less recognised losses to date	2,133,605	1,309,958
less: progress billings	(2,074,779)	(1,240,985)
	58,826	68,973
Construction contracts – assets (note 18)	131,587	157,949
Construction contracts – liabilities (note 24)	(72,761)	(88,976)
	58,826	68,973

6 Employee benefits

Group

Employee costs for the Group during the year

	2009	2008
	$000	$000
Wages and salaries	402,736	419,286
Social security costs	37,511	35,033
Termination benefits	2,732	-
Pension costs – defined contribution schemes	19,057	16,948
Pension (credit)/costs – defined benefit schemes (note 27)	(344)	4,933
	461,692	476,200

subsea partner of choice

2009

Subsea

Annual Report

Executive management compensation

	Salaries and short-term employee benefits $000	Post employment benefits $000	Share based payments (note 22) $000	Total $000
Year ended 31 December 2009
Chief Executive Officer	872	-	192	1,064
Other executive management	3,098	151	966	4,215
	3,970	151	1,158	5,279
Year ended 31 December 2008
Chief Executive Officer	975	-	332	1,307
Other executive management	2,349	150	644	3,143
	3,324	150	976	4,450

Executive management share options and restricted stock units
Share options and restricted stock awards held by members of the executive management team are as follows:

Issue date	Exercise price	Expiry	2009 Number outstanding	2008 Number outstanding
Chief Executive Officer
2005	29.49	2015	166,500	166,500
2006	110.90	2016	-	28,620
2007	144.25	2017	-	70,000
2009 - Restricted stock	-	-	32,873	-
Other executive management
2005	29.49	2015	64,500	104,000
2005	44.85	2015	72,000	72,000
2006	110.90	2016	-	105,000
2007	144.25	2017	-	170,000
2009 - Restricted stock	-	-	438,332	-

Directors' fees

The annual fees payable to each of the directors who served during the year, excluding Mr Siem, Mr Delouche and Mr Fitzgerald were $25,000 (2008: $25,000). The fees payable to Mr Siem and Mr Delouche are included in fees totalling $800,000 (2008: $800,000) payable to Siem Industries Inc., a related party, for services rendered during the year.

With the exception of Mr Fitzgerald, none of the directors had any entitlement to share options or restricted shares.

7 Research and development costs

Group

Research and development costs recognised as an expense in the income statement during the financial year amount to $4,449,000 (2008: $5,379,000)

8 Finance income and expense

	Group		Company
	2009 $000	2008 $000	2009 $000	2008 $000
Finance income:
Dividends received	944	-	944	-
Interest receivable on bank deposits	2,990	5,881	1,020	3,269
Interest receivable on inter-company balances	-	-	15,971	18,773
Gain on repurchase on convertible notes (liability component)	2,555	-	2,555	-
Interest on available-for-sale financial assets	2,407	-	2,407	-
Total finance income	8,896	5,881	22,897	22,042
Finance expense:
Interest payable on loans	(3,373)	(1,870)	(3,373)	(1,870)
Interest payable on convertible notes	(7,555)	(8,400)	(7,555)	(8,400)
Accretion on convertible notes	(48,202)	(22,436)	(48,202)	(22,436)
Loss on repurchase on convertible notes (liability component)	(575)	-	(575)	-
Interest payable on inter-company balances	-	-	(3,295)	(1,990)
Other interest payable	(304)	(300)	-	(8)
Interest payable on finance leases	-	(8)	-	-
Interest capitalised	54	-	-	-
Total finance expense	(59,955)	(33,014)	(63,000)	(34,704)

Capitalised borrowing costs

The amount of borrowing costs capitalised during the year ended 31 December 2009 was $54,000 (2008: $nil). The weighted average interest rate used to determine the amount of borrowing costs eligible for capitalisation was 6%.

9 Taxation

Group
	2009	2008
	$000	$000
Current tax
- current tax	100,871	97,596
- adjustments in respect of prior periods	1,500	2,782
	102,371	100,378
Deferred tax (note 26)	21,478	30,128
Total taxation	123,849	130,506

The tax for the year was higher (2008: lower) than the weighted average statutory rate of corporation tax for the Group of 25.9% (2008: 38.7%). The weighted average rate of corporation tax for the Group is approximated through reference to the statutory rates prevailing in the respective jurisdictions in which the Group operates.

subsea partner of choice

2009

Business 2

Annual Report

The differences are explained below:

	2009 $000	2008 $000
Profit before tax	412,200	394,503
Profit before tax multiplied by the weighted average rate of corporation tax for the Group of 25.9% (2008: 38.7%)	106,689	152,576
Effects of:
Adjustments to tax in respect of prior periods	3,845	(1,481)
Previously unrecognised tax losses	-	(9,362)
Unrecoverable foreign tax	5,831	12,063
Expenses not deductible for tax purposes	4,653	4,213
Deferred tax assets not recognised	7,388	9,891
Losses brought forward	(4,878)	-
Other including income not taxable	321	(37,394)
Total taxation	123,849	130,506

10 Earnings per share

Group

Basic earnings per share amounts are calculated by dividing the profit or loss attributable to equity shareholders of the Group by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the profit or loss attributable to equity shareholders of the Group (adjusted where applicable for interest and other costs associated with any dilutive securities) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive securities into ordinary shares.

Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.

	Earnings $000	Weighted average number of shares	Per share $
Basic EPS 2009	288,351	146,941,122	1.96
Effect of dilutive securities
Share options	-	292,665
Convertible notes 2009-2014	3,979	3,352,279
Diluted EPS 2009	292,330	150,586,066	1.94

The 2006-2011 convertible notes, 2007-2017 convertible notes, the restricted stock units issued during the year (as detailed in note 22) and the share options granted in 2006 and 2007 could potentially dilute basic earnings in the future but were not included in the calculation above because they are anti-dilutive for 2009.

	Earnings $000	Weighted average number of shares	Per share $
Basic EPS 2008	263,997	146,938,202	1.80
Effect of dilutive securities
Share options	-	430,863
Convertible notes 2006-2011	15,288	11,395,232
Convertible notes 2007-2017	7,412	6,210,695
Diluted EPS 2008	286,697	164,974,992	1.74

11 Goodwill

Group

	2009 $000	2008 $000
Cost and net book amount	98,533	98,533

The carrying amounts of goodwill allocated to the cash-generating units are as follows:

	2009 $000	2008 $000
North Sea	62,368	62,368
Africa	18,750	18,750
Brazil	17,415	17,415
	98,533	98,533

The Group performed its annual impairment test as at 31 December 2009.

The recoverable amount of the cash-generating units (CGUs) have been determined based on a value in use calculation using cash flow projections approved by senior management covering a one-year period (2008: four-year period). The pre-tax discount rate applied to cash flow projections was 13.02% (2008: 13.24%) and for the purposes of these calculations, cash flows beyond the one-year period were extrapolated using a 3.0% growth rate (2008: projections were not extrapolated).

As a result of the analyses, management did not identify an impairment for any of the CGUs to which goodwill is allocated.

Due to the similarities between the operating segments to which goodwill has been allocated, the calculations of value in use for all three CGUs are most sensitive to the following assumptions:

Gross margins;
Discount rates;
Asset utilisation;
Market share during the period; and
Growth rate used to extrapolate cash flows.

Gross margins – Gross margins are based on forecast margins for confirmed work, tender pricing, management expectations and past experience for new work.

Discount rates – Discount rates reflect the current market assessment of the risks specific to each CGU. The discount rate was estimated based on the average percentage of a weighted average cost of capital for the Group.

Asset utilisation – The level of utilisation of our fleet of vessels and equipment has a significant impact on our ability to earn revenue and on our profitability. Asset utilisation is based on historic utilisation rates, adjusted for any foreseen changes in the market and for new vessels being delivered.

Market share assumptions – These assumptions are important because management assesses how much of the available work will be won by the CGU, relative to its competitors.

Growth rate estimates – For the purposes of these calculations the long-term rate used to extrapolate the budget is 3%. This is below market expectation for long-term growth in the subsea sector, but reflects the current market conditions and market uncertainty.

Sensitivity to changes in assumptions

With regard to the assessment of value-in-use of the North Sea, Africa and Brazil CGUs, management believes that no reasonably possible change in any of the above key assumptions would cause the carrying value of the CGU to materially exceed its recoverable amount.

subsea partner of choice

2009

Business & Annual Report

12 Other intangible assets

Group

	Intellectual property and patent rights $000	Customer contracts $000	Total $000
Cost
At 1 January 2009	374	12,516	12,890
Exchange adjustments	28	-	28
At 31 December 2009	402	12,516	12,918
Aggregate amortisation and impairment
At 1 January 2009	71	11,689	11,760
Charge for the year	44	486	530
Exchange adjustments	7	-	7
At 31 December 2009	122	12,175	12,297
Net book amount at 31 December 2009	280	341	621
Cost
At 1 January 2008	506	12,516	13,022
Exchange adjustments	(132)	-	(132)
At 31 December 2008	374	12,516	12,890
Aggregate amortisation and impairment
At 1 January 2008	38	11,204	11,242
Charge for the year	54	485	539
Exchange adjustments	(21)	-	(21)
At 31 December 2008	71	11,689	11,760
Net book amount at 31 December 2008	303	827	1,130

13 Property, plant and equipment

Group

	Land and buildings $000	Fixtures and Fittings $000	Vessels and marine equipment $000	Total $000
Cost
At 1 January 2009	137,944	13,186	1,059,215	1,210,345
Additions at cost	57,236	10,881	178,214	246,331
Disposals	-	-	(29,844)¹	(29,844)
Exchange adjustments	14,083	3,792	63,471	81,346
At 31 December 2009	209,263	27,859	1,271,056	1,508,178
Accumulated depreciation
At 1 January 2009	7,197	11,889	199,851	218,937
Charge for the year	12,234	10,869	93,581	116,684
Disposals	-	-	(29,476)¹	(29,476)
Exchange adjustments	2,221	2,511	7,912	12,644
At 31 December 2009	21,652	25,269	271,868	318,789
Net book amount at 31 December 2009	187,611	2,590	999,188	1,189,389
Cost
At 1 January 2008	75,097	5,959	1,022,490	1,103,546
Additions at cost	87,610	11,060	350,612	449,282
Disposals	-	-	(36,751)	(36,751)
Exchange adjustments	(24,763)	(3,833)	(277,136)	(305,732)
At 31 December 2008	137,944	13,186	1,059,215	1,210,345
Accumulated depreciation
At 1 January 2008	5,889	4,821	186,285	196,995
Charge for the year	4,153	9,375	81,233	94,761
Disposals	-	-	(26,109)	(26,109)
Exchange adjustments	(2,845)	(2,307)	(41,558)	(46,710)
At 31 December 2008	7,197	11,889	199,851	218,937
Net book amount at 31 December 2008	130,747	1,297	859,364	991,408

Included in the table above are assets under construction of $364,757,000 (2008: $262,373,000) for which expenditure in the current year amounted to $155,828,000 (2008: $202,696,000).

¹ Includes disposals of $28,364,000 cost and $28,364,000 accumulated depreciation which represent the derecognition of fully amortised capitalised dry-docking expenditure.

Operating lease charges included in the income statement amount to:

	2009 $000	2008 $000
Vessels	134,335	138,434
Land and buildings	14,837	13,278
Plant and machinery	1,378	1,455
	150,550	153,167

2009

www.industrydocuments.ucsf.edu/docs/rlp0126

subsea partner of choice

14 Investment in subsidiary undertakings

The Company's principal subsidiaries as at 31 December 2009 are detailed in note 36.

Company

	2009	2008
	$000	$000
At 1 January	113,785	109,145
Additions due to share based payments	4,595	4,640
Additions	85,009	-
At 31 December	203,389	113,785

The $85 million addition during the year relates to an internal group reorganisation.

15 Investments in joint ventures

The Group's principal joint ventures as at 31 December 2009 are detailed in note 36.

Group

	2009	2008
	$000	$000
Net assets at 1 January	12,582	814
Share of post tax profit	5,652	11,768
Dividends received	(15,392)	-
Exchange adjustment	116	-
Net assets at 31 December	2,958	12,582

In relation to the Group's interests in joint ventures, the Group's net share of the assets, liabilities, income and expenses are shown below:

	2009	2008
	$000	$000
Current assets	25,012	42,169
Current liabilities	(22,054)	(29,587)
Net assets	2,958	12,582
Income	32,024	92,922
Expenses	(23,286)	(75,401)
Profit before tax	8,738	17,521
Taxation charge	(3,086)	(5,753)
Net profit after tax	5,652	11,768

The joint ventures have no significant contingent liabilities to which the Group is exposed nor has the Group any significant contingent liabilities in relation to its interests in the joint ventures.

16 Investments in associate

The Group's associate as at 31 December 2009 is detailed in note 36.

Group

	2009	2008
	$000	$000
Net assets at 1 January	1,601	1,609
Share of post tax profit/(loss)	1,074	(8)
Net assets at 31 December	2,675	1,601

In relation to the Group's associate, the Group's net share of assets, liabilities, income and expenses are shown below:

	2009	2008
	$000	$000
Current assets	3,909	3,481
Non-current assets	1,741	2,273
Current liabilities	(801)	(786)
Non-current liabilities	(2,174)	(3,367)
Net assets	2,675	1,601
Income	1,323	1,432
Expenses	(249)	(1,440)
Profit/(loss) before tax	1,074	(8)
Taxation	-	-
Profit/(loss) after tax	1,074	(8)

The associate has no significant contingent liabilities to which the Group is exposed nor has the Group any significant contingent liabilities in relation to its interest in the associate.

17 Inventories

Group

	2009	2008
	$000	$000
Consumables and spares	32,981	22,567

The Group's inventories consist of consumable items held in support of workshops and project operations and ROV and marine equipment spares. All inventories are carried at cost less a provision for slow moving and obsolete items.

The cost of inventories recognised as an expense in the current year was $127,474,000 (2008: $42,492,000). The amount recognised as an expense in the current year as a provision for slow moving and obsolete items was $73,000 (2008: $468,000).

18 Trade and other receivables

	Group		Company
	2009	2008	2009	2008
	$000	$000	$000	$000
Trade receivables	155,055	202,724	20	110
Provision for impairment of receivables	(1,093)	(1,003)	-	-
Trade receivables – net	153,962	201,721	20	110
Amounts due from Group companies (note 34)	-	-	17,040	516,061
Amounts due from related parties (note 34)	3,374	5,807	9	3
Amounts due from the Employee Share Trust	-	-	9,430	9,979
Other receivables	86,169	126,746	543	529
Prepayments and accrued income	130,628	166,168	3,970	4,957
Construction contracts – assets (note 5)	131,587	157,949	-	-
Retentions	258	706	-	-
	505,978	659,097	31,012	531,639

Group

At 31 December 2009, trade receivables of $1,093,000 (2008: $1,003,000) were considered to be impaired. These receivables are a combination of individual balances which are assessed by management to be at risk of default and other receivables which are considered as a homogenous group and impaired based on the age of the balances. The amount of the provision was $1,093,000 (2008: $1,003,000).

2009

Subsea

Annual Report

The ageing of these receivables was as follows:

	2009 $000	2008 $000
Less than 3 months	-	879
Between 3 and 6 months	-	-
More than 6 months	1,093	124
	1,093	1,003

The movements in the Group's provision for impairment of trade receivables were as follows:

	2009	2008
	$000	$000
At 1 January	(1,003)	(4,735)
Unused amounts reversed	474	4,077
Utilised	529	658
Provision for impairment	(1,093)	(1,003)
At 31 December	(1,093)	(1,003)

Company

The Company had no trade receivables which were impaired.

At 31 December 2009, the following amounts were past due but not impaired. The receivables relate to customers for whom there is no recent history of default. The ageing of these receivables was as follows:

	Group		Company
	2009 $000	2008 $000	2009 $000	2008 $000
Less than 3 months	25,274	45,770	4	5
Between 3 and 6 months	6,430	5,745	-	7
More than 6 months	4,738	186	-	64
	36,442	51,701	4	76

The carrying amounts of the Group's trade receivables were denominated in the following currencies:

	Group		Company
	2009	2008	2009	2008
	$000	$000	$000	$000
United States dollars	38,072	87,575	13	-
United Kingdom pounds	49,180	62,972	-	-
Norwegian krone	7,979	8,041	-	-
Brazil real	40,458	31,569	-	-
Euros	4,641	8,265	-	-
Australian dollars	14,390	3,929	7	110
Singapore dollars	56	56	-	-
Other currencies	279	317	-	-
	155,055	202,724	20	110

The other classes of receivables within trade and other receivables did not contain impaired assets.

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. Neither the Group nor the Company hold any collateral as security.

19 Available-for-sale financial assets

Group and Company

	2009	2008
	$000	$000
Quoted equity shares	71,958	26,157
Quoted debt securities – non derivative element	58,407	47,465
Quoted debt securities – embedded derivative	46,078	11,792
	176,443	85,414

The Company has investments in listed equity shares and debt securities. The net gain on embedded derivatives recognised in the income statement was $34,286,000 (2008: net loss of $22,166,000).

20 Derivative financial instruments

	Group		Company
	Assets $000	Liabilities $000	Assets $000	Liabilities $000
At 31 December 2009
Non-current
Interest rate swap contracts – non-current	194	-	194	-
Current
Currency swaps	35	-	35	-
Forward foreign currency contracts	5,302	(1,248)	5,302	(1,248)
	5,337	(1,248)	5,337	(1,248)
At 31 December 2008
Current
Currency swaps	27	(3)	27	(3)
Forward foreign currency contracts	1,456	(10,653)	1,198	(10,653)
	1,483	(10,656)	1,225	(10,656)

Changes in the fair value of derivative financial instruments are recognised in the income statement line item 'changes in fair value of derivative financial instruments' when they occur.

Group

The net gain on financial assets and liabilities at fair value through profit and loss was $13,469,000 (2008: net loss of $12,011,000).

Company

The net gain on financial assets and liabilities at fair value through profit and loss was $13,727,000 (2008: net loss of $11,977,000).

21 Cash and cash equivalents

	Group		Company
	2009	2008	2009	2008
	$000	$000	$000	$000
Cash at bank and in hand	122,856	69,678	11,322	14,840
Short term bank deposits	364,395	44,388	330,974	35,119
	487,251	114,066	342,296	49,959

Short term bank deposits had an average maturity of less than one month.

2009
Subsea
Annual Report

22 Share capital, share premium reserve and shares held by Employee Share Trust

Group	Number of shares	Share capital $000	Share premium reserve $000	Shares held by Employee Share Trust $000	Total $000
At 1 January 2009	146,911,880	1,469	271,238	(9,430)	263,277
Allotted under share option schemes	87,000	1	426	-	427
At 31 December 2009	146,998,880	1,470	271,664	(9,430)	263,704
At 1 January 2008	147,737,480	1,477	286,508	-	287,985
Allotted under share option schemes	64,400	1	437	-	438
Purchase of own shares	(890,000)	(9)	(15,707)	-	(15,716)
Shares purchased by employee share trust	-	-	-	(9,430)	(9,430)
At 31 December 2008	146,911,880	1,469	271,238	(9,430)	263,277
Company	Number of shares	Share capital $000	Share premium reserve $000	Total $000
---	---	---	---	---
At 1 January 2009	146,911,880	1,469	271,238	272,707
Allotted under share option schemes	87,000	1	426	427
At 31 December 2009	146,998,880	1,470	271,664	273,134
At 1 January 2008	147,737,480	1,477	286,508	287,985
Allotted under share option schemes	64,400	1	437	438
Purchase of own shares	(890,000)	(9)	(15,707)	(15,716)
At 31 December 2008	146,911,880	1,469	271,238	272,707

Group and Company

The total authorised number of common shares is 300,000,000 shares (2008: 200,000,000 shares) with a par value of $0.01 per share. All issued shares are fully paid.

Group

Shares held by Employee Share Trust

This represents the cost of shares held by the Subsea 7 Employee Share Trust ('the Trust') at 31 December 2009. The number of shares held by the Trust at 31 December 2009 was 1,789,990 (2008: 1,789,990). These shares are held in trust under the restricted stock schemes described at (b) and (c) below. At 31 December 2009, 102,514 shares remain unallocated (2008: 1,789,990).

Share based payments

The expense recognised for employee services received during the year arising from equity-settled share based transactions was $4,918,000 (2008: $4,640,000).

The share-based payment plans are described below.

(a) Share option plans

Certain employees of the Group receive remuneration in the form of share options. The exercise price of the options is equal to the market price of the shares on the grant date. The options are only exercisable within seven days after the announcement of quarterly results. The options awarded are subject to employment status and a change of control event.

Awards dated 5 January 2005 and 15 June 2005

5% of the total number of options granted vest each quarter. Vested options may be exercised within seven days after the announcement of quarterly results but no options were permitted to be exercised in the first year after the award date. Seven days after the announcement of the results for the fourth quarter of 2014, all options not exercised will lapse without further notice. For options not exercised after the announcement of the results for the fourth quarter 2009, the exercise price shall be subject to a quarterly increase equal to 3 months NIBOR +1% margin per annum.

Awards dated 10 May 2006, 25 April 2007 and 17 September 2007

20% of the total number of options granted vest each year. Vested options may be exercised within seven days after the announcement of quarterly results. Seven days after the last exercise date, all options not exercised will lapse without further notice.

During the year these awards were modified. Further details of the modification are given below.

The following table illustrates the number and weighted average exercise prices of, and movements in, share options during the year:

	2009		2008
	Number	Weighted average exercise price (NOK)	Number	Weighted average exercise price (NOK)
Outstanding at 1 January	2,513,020	107.46	2,793,920	105.91
Opening balance correction	38,600	50.09	-	-
Forfeited	(75,700)	190.76	(216,500)	107.95
Exercised	(87,000)	29.49	(64,400)	38.19
Expired	(43,800)	121.37	-	-
Exchanged for restricted stock -see (c)	(1,732,620)	131.68	-	-
Outstanding at 31 December	612,500	43.73	2,513,020	107.46
Exercisable at 31 December	553,600	37.82	758,020	90.23

The weighted average share price for the dates options were exercised was NOK 75.58 (2008: NOK 133.37).

The weighted average remaining contractual life for the share options outstanding at 31 December 2009 was 5.26 years (2008: 7.76).

The range of exercise prices for options outstanding at the year end was NOK 29.49 – NOK 144.25.

(b) Restricted stock award plan

On 8 May 2009, the annual general meeting of shareholders approved a restricted stock award plan (the 'share plan') in order to attract, retain and incentivise employees.

During the year certain employees of the Group were awarded a total of 1,110,000 shares under the share plan. The shares had a fair value of $9.93 (NOK 63.6) per share equivalent to the market price on the grant date.

An award will normally vest and shares will be issued or transferred to the employee subject to the employee remaining in employment with the Group until the vesting dates that are specified in the award certificate. 60% of the awards will normally vest on the 3rd anniversary of the initial award date, and the remaining 40% of the awards will normally vest on the 5th anniversary of the initial award date.

Awards will not attract any dividends or dividend equivalents prior to the delivery of shares. Participants will not have any voting rights in respect of the vested number of shares awarded prior to the delivery of the shares. All shares allotted under the share plan carry the same rights as any other issued ordinary shares in the Company. US participants who receive awards in the form of restricted stock are required to waive voting and dividend rights during the restricted period as a term of the award.

No restricted stock had vested at 31 December 2009 (2008: nil).

subsea partner of choice

2009

Subsea 7 Annual Report

The annual general meeting of shareholders in May 2009 also approved a modification to the existing stock option plan. Employees of the Group who held existing share options under the share option plan with a strike price greater than NOK 44.85 were given the opportunity to surrender those options in exchange for an award under the share plan (the 'replacement awards'). The replacement awards were offered on the basis of one restricted share for three share options under the share option plans.

Of the 1,797,120 share options eligible, 1,732,620 were exchanged for 577,476 shares.

The replacement awards have the same vesting terms, dividend and voting rights as the restricted stock award discussed above.

The incremental fair value, measured on the modification date, was $nil. To calculate the incremental fair value, the replacement awards were valued at their market price of $8.90 (NOK 57.00) at the modification date and the fair values of the options being replaced were valued at the modification date using a Black-Scholes model. The key inputs into the options valuation were:

Share price at grant date	57.00
Exercise price at grant date	110.90 - 144.25
Expected volatility	65% – 69%
Expected option life (years)	5.0 – 6.3
Maximum option life (years)	7.0 - 8.3
Risk free rate	3.7%
Fair value per option at modification date (NOK)	25.41 – 26.67
Fair value per option at modification date ($)	3.97 – 4.16

The expected volatility reflects the assumption that the historical volatility over a period similar to the expected option life is indicative of future trends, which may not necessarily be the actual outcome. The expected life is the average expected period to exercise based on historical data and is not necessarily indicative of exercise patterns that may occur. The risk free rate of return is the yield on Norwegian State bonds of a term consistent with the expected option life.

No replacement awards had vested at 31 December 2009 (2008: nil).

(d) Employee share purchase plan

The employee share purchase plan allows participating employees, depending on their governing tax jurisdiction, to acquire shares in the Company at a discount to the market price and to receive additional matching shares paid for by the Group.

Employees must remain in continuous service with the Group for a period of 3 years in order to receive the additional matching shares.

23 Other reserves

Group	Other reserve $000	Net unrealised gains and losses reserve $000	Revaluation reserve $000	Cumulative translation reserve $000	Convertible notes equity component $000	Total $000
At 1 January 2009	(27,563)	(71,801)	13,341	(250,911)	111,284	(225,650)
Currency translation differences	-	-	-	97,012	-	97,012
Available-for-sale financial assets – fair value adjustment	-	56,743	-	-	-	56,743
Repurchase of convertible notes	-	-	-	-	(19,548)	(19,548)
Convertible note 2009 – 2014 – equity component	-	-	-	-	52,157	52,157
Transaction costs	-	-	-	-	(398)	(398)
Depreciation on re-valued assets transfer to retained earnings	-	-	(3,919)	-	-	(3,919)
At 31 December 2009	(27,563)	(15,058)	9,422	(153,899)	143,495	(43,603)
At 1 January 2008	(27,563)	-	17,333	51,308	111,284	152,362
Currency translation differences	-	-	-	(302,219)	-	(302,219)
Available-for-sale financial assets – fair value adjustment	-	(71,801)	-	-	-	(71,801)
Depreciation on re-valued assets transfer to retained earnings	-	-	(3,992)	-	-	(3,992)
At 31 December 2008	(27,563)	(71,801)	13,341	(250,911)	111,284	(225,650)
Company	Other reserve $000	Net unrealised gains and losses reserve $000	Convertible notes equity component $000	Total $000
---	---	---	---	---
At 1 January 2009	(27,563)	(71,801)	111,284	11,920
Available-for-sale financial assets – fair value adjustment	-	56,743	-	56,743
Repurchase of convertible notes	-	-	(19,548)	(19,548)
Convertible note 2009-2014 – equity component	-	-	52,157	52,157
Transaction costs	-	-	(398)	(398)
At 31 December 2009	(27,563)	(15,058)	143,495	100,874
At 1 January 2008	(27,563)	-	111,284	83,721
Available-for-sale financial assets – fair value adjustment	-	(71,801)	-	(71,801)
At 31 December 2008	(27,563)	(71,801)	111,284	11,920

Other reserve

The other reserve was created on transition to IFRS with a reclassification from the share premium reserve. This was offset during 2005 by an adjustment arising on the demerger of the non-subsea business.

Net unrealised gains and losses reserve

This reserve records fair value changes on available-for-sale financial assets.

subsea partner of choice

2009

Business

Annual Report

Revaluation reserve

The revaluation reserve was used to record increases in the fair value of assets on acquisition of Subsea 7 Holding Inc. The revaluation gains are depreciated and a reclassification made between the revaluation reserve and retained earnings to offset the depreciation charge in retained earnings.

Cumulative translation reserve

The cumulative translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.

Convertible notes equity component

This is the equity component of the convertible notes issued in 2006, 2007 and 2009 (see note 25).

24 Trade and other payables

	Group		Company
	2009	2008	2009	2008
	$000	$000	$000	$000
Trade payables	51,507	74,450	87	629
Other tax and social security payable	40,664	55,883	-	-
Amounts due to Group companies (note 34)	-	-	172,286	405,211
Amounts due to related parties (note 34)	2,692	2,421	800	800
Other payables and accruals	345,529	293,426	1,096	675
Construction contracts – liabilities (note 5)	72,761	88,976	-	-
Advances received	56,448	77,333	-	-
Deferred consideration on acquisitions	2,900	-	-	-
Deferred income	3,597	12,869	42	-
	576,098	605,358	174,311	407,315

Deferred consideration relates to amounts payable in respect of the acquisition of Subsea 7 Pipeline Production Limited, the amount and timing of which is dependent upon the continued employment of certain personnel and the future performance of the acquired company.

25 Borrowings

	Group		Company
	2009	2008	2009	2008
	$000	$000	$000	$000
Non-current
Convertible notes 2006-2011	243,418	267,900	243,418	267,900
Convertible notes 2007-2017	-	141,837	-	141,837
Convertible notes 2009-2014	225,122	-	225,122	-
DnB NOR Bank ASA Revolving Credit Facility	-	100,000	-	100,000
Siem Industries Inc. Revolving Credit Facility	-	50,000	-	50,000
	468,540	559,737	468,540	559,737
Current
Convertible notes 2007-2017	133,465	-	133,465	-
Total borrowings	602,005	559,737	602,005	559,737

Group and Company

Convertible notes 2006-2011

The Company has issued $300 million of convertible notes with the following characteristics:

Oslo Bars ticker SUB01

Interest per annum: 2.80% coupon

Maturity: 6 June 2011

Term: 6 June 2006 - 6 June 2011

Conversion price: $26.3268 per share

Conversion dates: The period from 17 July 2006 to the close of business 7 days prior to the final maturity date, or seven days before any redemption date indicated by the Company.

Convertible notes 2007-2017

The Company has issued $175 million of convertible notes with the following characteristics:

Oslo Bars ticker SUB02

Interest per annum: zero coupon

Yield to maturity: 0.95% per annum

Maturity: 29 June 2017

Term: 29 June 2007 - 29 June 2017

Conversion price: $28.1772 per share

Conversion dates: The period from 9 August 2007 to the close of business 7 days prior to the final maturity date, or seven days before any redemption date indicated by the Company.

Redemption options: The bonds may be redeemed at their accreted principal amount at the option of the holder on each of 29 June 2010, 29 June 2012 and 29 June 2014, and at the option of the Company on or after 13 July 2012.

Convertible notes 2009-2014

The Company has issued $275 million of convertible notes with the following characteristics:

Interest per annum: 3.50% coupon

Maturity: 13 October 2014

Term: 13 October 2009 - 13 October 2014

Conversion price: $17.98 per share

Conversion dates: The period from 14 October 2009 to the close of business 10 banking days prior to the final maturity date.

At 31 December 2009, and at the date of this report, none of the convertible notes had been converted into new shares.

During the year, the Company reassessed the expected maturity of the $175 million Subsea 7 Inc. zero coupon convertible notes 2007/2017. The notes were previously accounted for as if they would be redeemed either at the option of the holders on 29 June 2012 or at the option of the Company on 13 July 2012. It is now considered more likely that the convertible notes will be redeemed at their accreted principal amount at the option of the holders on 29 June 2010. The carrying value of the notes was therefore adjusted to reflect the revised estimated maturity. As a result, an additional $20.3 million acceleration of accretion was booked within finance expense in the consolidated income statement. The revised carrying value of the notes has been presented within current liabilities.

During the year the Company repurchased $40.5 million (par value) of the $175 million zero coupon Subsea 7 Inc. convertible notes due 2017 for $40.4 million, or 99.8% of the par value. $118,000 of the repurchase price was treated as payment for the equity component of the note and has been recognised in shareholders' equity. In addition, a loss on repurchase of the liability component of $575,000 has been included within finance expense in the consolidated income statement.

In addition the Company repurchased $40 million (par value) of the $300 million 2.8% Subsea 7 Inc. convertible notes due 2011 for $35.1 million, an average of 87.7% of the par value. $1,147,000 of the repurchase price was treated as payment for the equity component of the note and has been recognised in shareholders' equity. In addition, a gain on repurchase of the liability component of $2,555,000 has been included within finance income in the consolidated income statement.

The repurchased convertible notes remain outstanding and have not been cancelled.

subsea partner of choice

2009

Subsea 7

Annual Report

The values of the liability component and the equity conversion component for each bond were determined at the issuance of each bond. The fair value of the liability component was calculated using a market interest rate for an equivalent non-convertible note. The residual amount, representing the value of the equity conversion option, is included in shareholders' equity in other reserves (note 23).

The convertible notes recognised in the balance sheet are calculated as follows:

Convertible notes 2006-2011	$000
Face value of convertible notes issued on 6 June 2006	300,000
Equity component	(63,265)
Liability component on initial recognition	236,735
Interest expense	71,923
Interest paid	(28,630)
Repurchase of convertible notes	(36,610)
Liability component at 31 December 2009	243,418
Convertible notes 2007-2017	$000
Face value of convertible notes issued on 29 June 2007	175,000
Equity component	(48,019)
Liability component on initial recognition	126,981
Interest expense	46,188
Repurchase of convertible notes	(39,704)
Liability component at 31 December 2009	133,465
Convertible notes 2009-2014	$000
Face value of convertible notes issued on 13 October 2009	275,000
Equity component	(52,157)
Liability component on initial recognition	222,843
Transaction costs	(1,700)
Interest expense	3,979
Liability component at 31 December 2009	225,122

Loans

During the year, the funds drawn under the Siem Industries Inc. revolving credit facility were repaid and the facility was cancelled. This facility was on market terms.

During the year the Group concluded an amendment to its revolving credit and guarantee facilities with DnB NOR Bank ASA dated 20 December 2004, increasing the revolving credit facility from $100 million to $150 million. The amended facility includes a first priority mortgage over three of the Group's vessels with a carrying value at 31 December 2009 of $69,966,000 (2008: $94,911,000). The facility has no mandatory reduction mechanisms with any outstanding debt repayable on 13 February 2012.

In addition the Company concluded a three-year revolving credit facility with HSBC Bank plc for $50 million and a three-year revolving credit facility with Bank of Scotland plc for $50 million. The facility has no mandatory reduction mechanisms with any outstanding debt repayable on 1 April 2012.

The HSBC facility includes a first priority mortgage over one of the Group's office sites with a carrying value at 31 December 2009 of $49,143,000. The facility has no mandatory reduction mechanisms with any outstanding debt repayable on 17 June 2012.

The Bank of Scotland facility includes a first priority mortgage over one of the Group's vessels with a carrying value at 31 December 2009 of $19,056,000.

At 26 March 2010 the maximum revolving credit facilities available were $250 million of which the Group had drawn down $nil.

26 Deferred tax

Group

The movements in deferred tax assets and liabilities during the year, prior to any offset of balances within the same jurisdiction, are shown below. Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and the taxes relate to the same fiscal authority.

Deferred tax relates to the following:

Deferred tax liabilities	Accelerated tax depreciation $000	Provisions $000	Total $000
At 1 January 2009	87,425	12,185	99,610
Charged/(credited) to income statement	22,115	(2,905)	19,210
Exchange adjustments	(11,216)	2,490	(8,726)
At 31 December 2009	98,324	11,770	110,094
Deferred tax assets	Tax losses $000	Depreciation in excess of capital allowances $000	Provisions $000
---	---	---	---
At 1 January 2009	12,264	1,330	1,519
(Charged)/Credited to income statement	(3,488)	(41)	1,261
Exchange adjustments	2,578	(283)	226
At 31 December 2009	11,354	1,006	3,006

Deferred tax is reflected in the balance sheet as follows:

	2009	2008
	$000	$000
Deferred tax assets	11,849	15,113
Deferred tax liabilities	(106,577)	(99,610)
	(94,728)	(84,497)

Deferred tax assets are recognised for tax losses carried forward to the extent that it is probable that a tax benefit will be realised in the future. The Group has gross unrecognised tax losses of $93,546,000 (2008: $117,220,000) to carry forward against future taxable income of which $715,000 expire within 5 years (2008: $nil), $2,349,000 expire within 20 years (2008: $nil) and $90,482,000 (2008: $117,220,000) do not expire.

27 Retirement benefit obligations

Group

The Group has two (2008: two) defined benefit pension schemes for employees in Norway. The number of employees included in these schemes as at 31 December 2009 was 415 (2008: 432).

	2009	2008
	$000	$000
Balance sheet obligation for pension benefits	279	1,002
	2009	2008
	$000	$000
Income statement (credit)/charge for pension benefits	(344)	4,933

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2009
Subsea 7 Annual Report

The amounts recognised in the balance sheet were determined as follows:

	2009	2008
	$000	$000
Present value of funded obligations	1,608	1,197
Fair value of scheme assets	(1,898)	(1,213)
	(290)	(16)
Present value of unfunded obligations	775	1,466
Unrecognised actuarial losses	(206)	(448)
Liability in the balance sheet	279	1,002

The movement in the defined benefit obligation over the year was as follows:

	2009	2008
	$000	$000
At 1 January	2,663	33,458
Current service cost	523	4,631
Interest cost	116	135
Actuarial gains	(1,305)	(114)
Exchange differences	457	(891)
Settlement	-	(34,476)
Benefits paid	(71)	(80)
At 31 December	2,383	2,663

The movement in the fair value of scheme assets over the year was as follows:

	2009	2008
	$000	$000
At 1 January	1,213	19,536
Expected return on scheme assets	96	93
Actuarial losses	(39)	(182)
Exchange differences	274	(433)
Employer contributions	425	4,951
Settlement	-	(22,673)
Benefits paid	(71)	(79)
At 31 December	1,898	1,213

The amount recognised in the income statement was as follows:

	2009	2008
	$000	$000
Current service cost	523	4,631
Interest cost	116	135
Expected return on scheme assets	(96)	(93)
Net actuarial (gains)/losses recognised during the year	(899)	10
Past service costs	12	21
Settlement	-	229
Total, included in note 6	(344)	4,933

The actual return on plan assets was a $57,000 gain (2008: $89,000 loss).

The principal actuarial assumptions used were as follows:

	2009	2008
	$000	$000
Discount rate	4.40%	4.30%
Expected return on scheme assets	5.60%	6.30%
Future salary increases	4.25%	4.50%
Future pension increases	1.30%	2.00%

Assumptions regarding future mortality experience are set based on advice in accordance with published statistics and experience. The average life expectancy in years of a pensioner retiring at 60, on the balance sheet date, was as follows:

	2009	2008
	$000	$000
Male	21.4	21.4
Female	25.1	25.1

The average life expectancy in years of a pensioner retiring at 60, 20 years after the balance sheet date, was as follows:

	2009	2008
	$000	$000
Male	22.3	22.3
Female	25.5	25.5

The scheme assets at each balance sheet date are comprised as follows:

	2009	2008
	$000	$000
Equity	5.0%	5.0%
Property	17.0%	35.4%
Other	78.0%	59.6%

The expected return on scheme assets was determined by considering the expected returns available on the assets underlying the current investments. Expected yields on fixed interest investments are based on gross redemption yields at the balance sheet date. Expected returns on equity and property investments reflect long-term real rates of return experienced in the respective markets.

Expected employer contributions to the scheme for the year ending 31 December 2010 are $565,900.

Amounts for the current and previous years were as follows:

	2009	2008	2007	2006	2005
	$000	$000	$000	$000	$000
Defined benefit obligation	(2,383)	(2,663)	(33,458)	(20,815)	(16,486)
Fair value of scheme assets	1,898	1,213	19,536	14,238	11,361
Deficit	(485)	(1,450)	(13,922)	(6,577)	(5,125)
Experience adjustments on scheme liabilities	1,305	114	(5,555)	488	(4,072)
Experience adjustments on scheme assets	(39)	(182)	(315)	(1,327)	(766)

2009
www.industrydocuments.ucsf.edu/docs/rlx0191

28 Other non-current liabilities

	Group		Company
	2009	2008	2009	2008
	$000	$000	$000	$000
Deferred government grant income	346	341	-	-
Deferred consideration on acquisitions	-	3,896	-	-
Amounts due to Group companies (note 34)	-	-	121,232	37,900
	346	4,237	121,232	37,900

29 Financial instruments – fair value

Set out below is a comparison by class of the carrying amounts and fair value of the Group's financial instruments that are carried in the financial statements.

Group

	Carrying amount		Fair value
	2009	2008	2009	2008
	$000	$000	$000	$000
Financial assets
Interest rate swap contracts	194	-	194	-
Currency swaps	35	27	35	27
Forward foreign currency contracts	5,302	1,456	5,302	1,456
Trade and other receivables	505,978	659,097	505,978	659,097
Available-for-sale financial assets	176,443	85,414	176,443	85,414
Cash and cash equivalents	487,251	114,066	487,251	114,066
	1,175,203	860,060	1,175,203	860,060
Financial liabilities
Convertible notes 2006-2011	243,418	267,900	242,226	277,621
Convertible notes 2007-2017	133,465	141,837	135,485	150,055
Convertible notes 2009-2014	225,122	-	224,717	-
Floating rate borrowings	-	150,000	-	150,000
Trade and other payables	576,098	605,358	576,098	605,358
Currency swaps	-	3	-	3
Forward foreign currency contracts	1,248	10,653	1,248	10,653
	1,179,351	1,175,751	1,179,774	1,193,690

Company

	Carrying amount		Fair value
	2009	2008	2009	2008
	$000	$000	$000	$000
Financial assets
Interest rate swap contracts	194	-	194	-
Currency swaps	35	27	35	27
Forward foreign currency contracts	5,302	1,198	5,302	1,198
Amounts due from Group companies	432,487	368,715	432,487	368,715
Trade and other receivables	31,012	531,639	31,012	531,639
Available-for-sale financial assets	176,443	85,414	176,443	85,414
Cash and cash equivalents	342,296	49,959	342,296	49,959
	987,769	1,036,952	987,769	1,036,952
Financial liabilities
Convertible notes 2006-2011	243,418	267,900	242,226	277,621
Convertible notes 2007-2017	133,465	141,837	135,485	150,055
Convertible notes 2009-2014	225,122	-	224,717	-
Floating rate borrowings	-	150,000	-	150,000
Trade and other payables	174,311	407,315	174,311	407,315
Amounts due to Group companies	121,232	37,900	121,232	37,900
Currency swaps	-	3	-	3
Forward foreign currency contracts	1,248	10,653	1,248	10,653
	898,796	1,015,608	899,219	1,033,547

Group and Company

The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

Cash and cash equivalents, trade receivables and trade payables approximate their carrying amounts largely due to the short-term maturities of these instruments.
Long-term fixed-rate and variable-rate receivables / borrowings are evaluated by the Group based on parameters such as interest rates, specific country risk factors, individual creditworthiness of the customer and the risk characteristics of the financed project. Based on this evaluation, allowances are taken to account for the expected losses of these receivables. As at 31 December 2009, the carrying amounts of such receivables, net of allowances, are not materially different from their calculated fair values.
The fair value of unquoted notes is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities. The fair value of quoted notes is also estimated in this way due to the lack of transactions in these notes.
The fair value of the available-for-sale shares and debt securities are determined by reference to published price quotations in an active market, the embedded derivative is valued using a Black-Scholes model.
The Group enters into derivative financial instruments with various counterparties, principally financial institutions with investment grade credit ratings. Derivatives valued using valuation techniques with market observable inputs are mainly interest rate swaps, foreign exchange forward contracts and foreign currency swaps. The most frequently applied valuation techniques include forward pricing and swap models, using present value calculations. The models incorporate various inputs including foreign exchange spot and forward rates and interest rates. As at 31 December 2009, the fair value of the derivative asset position is net of a credit valuation adjustment attributable to derivative counterparty default risk. The changes in counterparty credit risk had no material effect on the financial instruments recognised at fair value.

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Fair value hierarchy

Group and Company

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

As at 31 December 2009, the Group and Company held the following financial instruments measured at fair value:

	2009 $000	Level 1 $000	Level 2 $000	Level 3 $000
Assets measured at fair value
Currency swaps	35	-	35	-
Forward foreign currency contracts	5,302	-	5,302	-
Interest rate swap contracts	194	-	194	-
Available-for-sale financial assets:
Quoted equity shares	71,958	71,958	-	-
Quoted debt securities – non-derivative element	58,407	-	58,407	-
Quoted debt securities – embedded derivative	46,078	-	46,078	-
Liabilities measured at fair value
Forward foreign currency contracts	1,248	-	1,248	-

During the year ended 31 December 2009, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into or out of Level 3 fair value measurements.

30 Cash flow from operating activities

Reconciliation of net profit to net cash generated from operating activities:

	Group		Company
	2009 $000	2008 $000	2009 $000	2008 $000
Net profit/(loss) attributable to equity shareholders	288,351	263,997	44,974	(145,114)
Adjustments for:
Taxation charge	123,849	130,506	-	-
Depreciation and amortisation	117,214	95,300	-	-
Profit on disposal of property, plant and equipment	(1,160)	(11,671)	-	-
Share based payment charge	4,595	4,640	-	-
Deferred government grant income	(20)	(39)	-	-
Finance income	(8,896)	(5,881)	(22,897)	(22,042)
Finance expense	59,955	33,014	63,000	34,704
(Gain) / loss on embedded derivative within convertible loan notes	(34,284)	22,166	(34,284)	22,166
Share of post tax profit from joint ventures	(5,652)	(11,768)	-	-
Share of post tax (profit)/loss from associates	(1,074)	8	-	-
Changes in working capital (excluding the effects of acquisitions and disposals of subsidiaries):
(Increase)/decrease in inventories	(10,414)	2,642	-	-
Decrease/(increase) in trade and other receivables	149,804	3,325	432,545	1,743,188
(Decrease)/ increase in payables	(42,291)	64,175	(244,086)	(1,634,024)
Cash generated from/(used in) operations	639,977	590,414	239,252	(1,122)

31 Operating lease commitments

Group

The Group has entered into a number of vessel charters and also has various plant and equipment including remotely operated vehicles and motor vehicles under non-cancellable operating lease agreements. The Group also leases offices, warehouses and other work sites. The leases have various terms, escalation clauses and renewal rights. The minimum commitments under non-cancellable operating leases fall due as follows:

	2009 $000	2008 $000
Within one year	129,670	125,452
Later than one year and no later than five years	231,111	310,469
Later than five years	14,498	37,037
	375,279	472,958

32 Capital and other financial commitments

Group

	2009 $000	2008 $000
Contracts placed for future capital expenditure not provided for in the financial statements	169,601	276,085

The Group had no such capital or other financial commitments in respect of its interests in joint ventures in either year.

33 Contingent liabilities

Group and Company

There were no contingent liabilities at 31 December 2009.

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2009
Subsea 7 Annual Report

34 Related party transactions

Group

The following table provides the total value of transactions which have been entered into with related parties for the relevant financial years as well as the outstanding balances at each year end. Transactions were at arm's length and in the ordinary course of business. Key management compensation is disclosed in note 6 and therefore has not been shown below.

	Sales to related parties $000	Purchases from related parties $000	Amounts due from related parties $000	Amounts due to related parties $000
2009
Joint ventures in which the Group was a venturer
Technip Subsea 7 Asia Pacific Pty Limited	2,706	242	342	-
Technip Subsea 7 Asia Pacific Singapore Pte Limited	10,597	223	2,578	90
Technip Subsea 7 Asia Pacific BV	10,071	1,041	354	334
Technip Subsea 7 Asia Pacific UK Limited	27	2,477	-	113
Associates of the Group
Deep Seas Insurance Limited	-	6,703	11	-
Directors' Interests
Siem Industries Inc.	-	800	-	800
Siem Offshore Rederi AS	-	15,085	-	1,355
Siem Offshore Inc.	-	405	-	-
Siem Meling Offshore DA	55	-	-	-
Siem Offshore AS	173	-	89	-
DSND Bygg AS	-	772	-	-
Luster Mekaniske Industri AS	-	2	-	-
2008
Joint ventures in which the Group was a venturer
Technip Subsea 7 Asia Pacific Pty Limited	7,577	-	1,246	-
Technip Subsea 7 Asia Pacific Singapore Pte Limited	6,739	189	1,288	189
Technip Subsea 7 Asia Pacific BV	15,125	-	3,273	-
Associates of the Group
Deep Seas Insurance Limited	-	6,945	-	172
Directors' Interests
Siem Industries Inc.	-	800	-	50,800
Siem Offshore Rederi AS	-	1,260	-	1,260
DSND Bygg AS	-	263	-	-
Luster Mekaniske Industri AS	-	12	-	-

Ultimate parent and ultimate controlling party

The Company did not have an ultimate parent or ultimate controlling party at 31 December 2009 or 31 December 2008.

Joint ventures in which the Group is a venturer

Sales in relation to vessel and equipment hire and associated costs and employee services totalling $23,401,000 were made to joint venture companies during the year (2008: $29,441,000). Purchases in relation to vessel and equipment costs and employee services totalling $3,983,000 were made from joint venture companies during year (2008: $189,000).

Associates of the Group

Purchases in relation to insurance policies totalling $6,703,000 were made from associate companies during the year (2008: $6,945,000). In addition the Group had claims paid of $1,462,000 ($2008: $1,083,000).

Directors' interests

Group and Company

Siem Industries Inc. is controlled through trusts where certain members of Mr Siem's family are potential beneficiaries. Mr Siem is the company chairman and Mr Delouche is the company president and secretary. Payments in relation to the services of Mr Siem and Mr Delouche as directors, the provision of an office in the Cayman Islands, and other services totalling $800,000 were made during the year (2008: $800,000). In addition at 31 December 2009 the Group had an outstanding balance on the revolving credit facility described in note 25 of $nil (2008: $50,000,000).

Group

Siem Offshore Rederi AS is ultimately controlled by Siem Industries Inc. Purchases from Siem Offshore Rederi AS relating to vessel charter costs totalling $15,085,000 were made during the year (2008: $1,260,000). At 31 December 2009 the Group had an outstanding balance due to Siem Offshore Rederi AS of $1,355,000 (2008: $1,260,000).

Siem Offshore Inc. is ultimately controlled by Siem Industries Inc. Purchases from Siem Offshore Inc. relating to vessel charter costs totalling $405,000 were made during the year (2008: $nil).

Siem Meling Offshore DA is ultimately controlled by Siem Industries Inc. Sales to Siem Meling Offshore DA relating to vessel positioning costs totalling $55,000 were made during the year (2008: $nil).

Siem Offshore AS is ultimately controlled by Siem Industries Inc. Sales to Siem Offshore AS relating to vessel positioning costs totalling $173,000 were made during the year (2008: $nil). At 31 December 2009 the Group had an outstanding balance due from Siem Offshore AS of $89,000 (2008: $nil).

DSND Bygg AS is ultimately controlled by Siem Industries Inc. Purchases from DSND Bygg AS in relation to the rental of office accommodation totalling $772,000 were made during the year (2008: $263,000).

Mr Siem exercises significant influence over Luster Mekaniske Industri AS. Purchases from Luster Mekaniske Industri AS in relation to pipeline welding services totalling $2,000 were made during the year (2008: $12,000).

Company

The following table provides the total value of transactions which have been entered into with related parties for the relevant financial years as well as the outstanding balances at each financial year end. Transactions were at arm's length and in the ordinary course of business.

	Sales to related parties $000	Purchases from related parties $000	Amounts owed by related parties $000	Amounts owed to related parties $000
2009
Group Entities
Subsidiary undertakings	16,198	6,157	449,527	293,518
Joint ventures	14	-	9	-
Directors' Interests
Siem Industries Inc.	-	800	-	800
Other Related Parties
Subsea 7 Employee Share Trust	-	-	9,430	-
2008
Group Entities
Subsidiary undertakings	18,182	3,639	884,776	443,111
Joint ventures	297	-	3	-
Directors' Interests
Siem Industries Inc.	-	800	-	50,800
Other Related Parties
Subsea 7 Employee Share Trust	-	-	9,979	-

2009

Subsea

Annual Report

Directors' fees, as disclosed in note 6 to the financial statements, are borne by the Company.

Subsidiary undertakings and joint ventures

The Company provides parent company guarantees on behalf of the Group. A charge for this is invoiced to subsidiary undertakings and joint ventures. A subsidiary undertaking incurs costs on behalf of the Company and invoices the Company for these. The Company pays and charges interest on amounts due to and from Group companies. These amounts are detailed in note 8 to the financial statements.

Subsea 7 Employee Share Trust

In 2006, the Subsea 7 Employee Share Trust ('the Trust') was established with RBC Cees Trustee Ltd as trustee to administer the Company's share plans. In December 2008, the Company lent $9,979,000 to the Trust, out of which it purchased 1,789,990 shares. During the year the trust repaid part of the loan. At 31 December 2009, the Company had an outstanding balance due from the Trust of $9,430,000.

35 Post balance sheet events

Group and Company

In February 2010, the Company repurchased $11 million (par value) of the US$300 million 2.8% Subsea 7 Inc. Convertible Notes due 2011 for US$11 million (par value). The Company now holds $51 million (par value) of the $300 million 2.8% Subsea 7 Inc. Convertible Notes due 2011 and $40.5 million (par value) of the US$175 million zero coupon Subsea 7 Inc. Convertible Notes due 2017.

36 Principal subsidiaries, joint ventures and associates

Group and Company

Subsidiary undertakings

The subsidiaries of the Group at 31 December 2009, all of which are consolidated in these financial statements, were as follows:

Company name	Ownership %	Country of registration
Subsea7 Cayman Guarantee Company^{1}	100	Cayman Islands
Veripos Limited^{1}	100	Scotland
DSND Coreco Inc.	100	Cayman Islands
Subsea 7 Holding Inc.	100	Cayman Islands
Seveneas Angola Limited	100	Cayman Islands
Subsea 7 (Cayman Vessel Company) Limited	100	Cayman Islands
Subsea 7 (UK Service Company) Limited	100	Scotland
Subsea 7 (US) LLC	100	USA
Subsea 7 Port Isabel LLC	100	USA
Subsea 7 Netherlands Cooperatief U.A.	100	The Netherlands
Subsea 7 do Brasil Servicos Ltda.	100	Brazil
Subsea 7 Marine LLC	100	USA
Subsea 7 International Limited	100	Cayman Islands
Subsea 7 Contractors Limited	100	Cayman Islands
Subsea 7 West Delta Deep Marine IV Limited	100	Cayman Islands
Subsea 7 Procurement Limited	100	Cayman Islands
Subsea 7 Installation Limited	100	Cayman Islands
Subsea 7 (Luxembourg) Sarl	100	Luxembourg
Subsea 7 Luxembourg Finance Sarl	100	Luxembourg
Subsea 7 Ireland Finance Limited^{2}	100	Ireland
Subsea 7 (Vessel Company) BV	100	The Netherlands
Subsea 7 Asia Pacific Sdn. Bhd.	100	Malaysia
Subsea 7 Eiendom AS	100	Norway
Seveneas Contractors S. de R.L. de C.V.	100	Mexico
Subsea 7 Shipping AS	100	Norway
Subsea 7 BV	100	The Netherlands
Subsea 7 Nigeria Limited	100	Nigeria
Engineering Subsea Solutions Limited	75	Scotland
SES Subsea Engineering Solutions Inc.	75	USA
SES Subsea Engineering (Shanghai) Co. Limited	75	China
Subsea 7 (Singapore) PTE LTD	100	Singapore
Subsea 7 Australia PTY LTD	100	Australia
Subsea 7 Limited	100	England
Subsea 7 (Vessel Company) Limited	100	England
Subsea 7 Construction Limited	100	England
Subsea 7 Engineering Limited	100	England
Subsea 7 Pipeline Production Limited	100	Scotland
Subsea 7 Deep Sea Limited	100	Scotland

1 held directly by the Company, all other subsidiaries, associates and joint ventures held by subsidiary undertakings
2 company in liquidation

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Joint ventures

At 31 December 2009, the active joint ventures of the Group, all of which were equity accounted in these financial statements, were as follows:

Joint venture name	Ownership %	Country of registration
Technip Subsea 7 Asia Pacific Pty Limited	45	Australia
Technip Subsea 7 Asia Pacific Singapore Pte Limited	45	Singapore
Technip Subsea 7 Asia Pacific UK Limited	45	England
Technip Subsea 7 Asia Pacific BV	45	The Netherlands

The Technip Subsea 7 Asia Pacific joint ventures are to be dissolved once all existing projects and tendered work have been completed.

Associates

At 31 December 2009, the Group had one associate, equity accounted in these financial statements, details of which were as follows:

Associate name	Ownership %	Country of registration
Deep Seas Insurance Limited	49	Cayman Islands

Financial Calendar

Quarterly results

The Group will release its financial figures for 2010 on the following dates:

Tuesday 27 April 2010
First quarter 2010 result

Tuesday 27 July 2010
Second quarter 2010 result

Tuesday 26 October 2010
Third quarter 2010 result

February 2011
Fourth quarter 2010 and preliminary full year result

Annual general meeting

The AGM of the shareholders of Subsea 7 Inc. will be held on 10 May 2010, at the Company's registered office located at the offices of Maples and Calder, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands.

subsea 7

www.subsea7.com

20.03.10

SUBSEA 7 INC. 2010 AGM NOTICE AND PROXY STATEMENT

Subsea 7 Inc. 2010 AGM Notice and Proxy Statement

subsea 7

SUBSEA 7 INC.

REGISTERED OFFICE ADDRESS: P.O. BOX 309, UGLAND HOUSE, SOUTH CHURCH STREET

GEORGE TOWN, GRAND CAYMAN KY1-1104, CAYMAN ISLANDS

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS TO BE HELD AT 10:00 AM, MONDAY, 10 MAY 2010

To the Shareholders of SUBSEA 7 INC.:

Please accept notice that the Annual General Meeting of Shareholders of Subsea 7 Inc. (the "Company") will be held at 10:00 am Cayman Islands local time on Monday, 10 May 2010, at the Company's registered office located at the offices of Maples and Calder, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands. The purpose of the meeting will be to:

Approve the Company's financial statements for the financial year ended 31 December 2009;
Re-appoint PricewaterhouseCoopers as the Company's Auditors for fiscal year 2010;
Grant authority to the Board of Directors to fix the remuneration to the Company's Auditors for 2009;
Re-elect Mel Fitzgerald as a Director of the Company;
Re-elect Allen L. Stevens as a Director of the Company;
Grant authority to the Board of Directors to fix the remuneration to the Company's Directors;
Approve and ratify the actions of the Directors and Officers of the Company;
Transact such other business as may be properly brought before the Meeting.

If you do not plan to attend the meeting, we request that each shareholder complete, date, sign and deliver the enclosed form of proxy to either of the following: (1) the offices of Subsea 7 Limited at Prospect Road, Arnhall Business Park, Westhill, Aberdeenshire AB32 6FE, Scotland, telefax no. +44.1224.527.000 or (2) the Company's offices at P.O. Box 309, George Town, Grand Cayman KY1-1104, CAYMAN ISLANDS, telefax no. +1.345.946.3346, no less than 24 hours prior to the stated time of the Annual General Meeting.

29 March 2010

By order of the Board of Directors of
Subsea 7 Inc.

subsea 7

SUBSEA 7 INC.

PROXY

I/We ____ being a shareholder of the above Company holding ___ shares HEREBY APPOINT the Chairman of the meeting or ____ of ___ or failing him ____ of ____ to be my/our proxy to vote for me/us at the meeting of the members to be held at 10:00 am Cayman Islands local time on Monday, 10 May 2010 (the "Meeting") and at any adjournment thereof at the at the registered office of the Company at the offices of Maples and Calder, Ugland House, South Church Street, George Town, Grand Cayman KY1-1104, CAYMAN ISLANDS. My/our proxy should vote as indicated below at such Meeting:

Resolution *	For	Against	Number of Common Shares
Resolution 1
Resolution 2
Resolution 3
Resolution 4
Resolution 5
Resolution 6
Resolution 7

Please indicate your voting preference and the number of shares entitled to vote. In the absence of voting instructions for any resolution, the form of proxies will be voted "FOR" such resolution.

Date

Owner or Authorised Signatory for Shares

NOTES:
(a) This form of proxy is only for use by a shareholder.
(b) If you wish to appoint a proxy other than the Chairman of the Meeting, please insert his/her name and address, delete "the Chairman of the Meeting or" and initial all amendments. A proxy need not be a shareholder.
(c) In the case of a corporation, this form of proxy must be executed under its common seal or under the hand of an officer or attorney duly authorised in writing.
(d) In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the votes of the other joint holders and for this purpose seniority will be determined by the order in which the names stand in the register of members. Names of all joint holders should be stated.

(f) Completion of this form of proxy will not prevent you from attending and voting at the Meeting.

(g) A proxy may vote on a show of hands or on a poll.

subsea 7

SUBSEA 7 INC.

REGISTERED OFFICE ADDRESS: P.O. BOX 309, UGLAND HOUSE, SOUTH CHURCH STREET

GEORGE TOWN, GRAND CAYMAN KY1-1104, CAYMAN ISLANDS

PROXY STATEMENT

ANNUAL GENERAL MEETING OF SHAREHOLDERS

TO BE HELD MONDAY, 10 MAY 2010

Directors:
Kristian Siem
Arild Schultz
Allen Stevens
Michael Delouche
Mel Fitzgerald

Registered Office Address:
P.O. Box 309
Ugland House
South Church Street
George Town
Grand Cayman KY1-1104
CAYMAN ISLANDS

Assistant Secretary:
Barry Mahon

GENERAL

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Subsea 7 Inc., a Cayman Islands corporation (the "Company"), for the Annual General Meeting of Shareholders to be held at 10:00 am Cayman Islands local time, Monday, 10 May 2010 (the "Annual General Meeting") and at any adjournments thereof at the Company's registered office located at Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands.

This proxy statement and the enclosed form of proxy are first being issued on 29 March 2010. At the date of issue, the Company had 147,193,380 Common Shares issued and outstanding and each Common Share is entitled to one vote.

ANNUAL REPORT AND FINANCIAL STATEMENTS

A copy of the Company's annual report and accounts for the financial year ended 31 December 2009 is enclosed.

BACKGROUND ON THE PROPOSED RESOLUTIONS

Ordinary Business

The ordinary business to be conducted at the Annual General Meeting will be a vote on the following proposed Ordinary Resolutions:

Resolution 1. To approve the Company's financial statements for the financial year ended 31 December 2009.

Resolution 2. To approve the re-appointment of PricewaterhouseCoopers LLP as the Company's Auditors for financial year 2010. PricewaterhouseCoopers has acted as the Company's Auditors since the 2002 financial year audit.

Resolution 3. To grant authority to the Board of Directors to fix the remuneration payable to the Company's Auditors for 2009.

During 2009, the Company paid the Auditors a total amount of US$1,300,000 for services including statutory audit services (US$1,092,000), tax services (US$67,000) and other services (US$141,000).

Resolution 4. To re-elect Mel Fitzgerald as a Director for a 2-year term and to serve until the expiration of that term and until a successor has been elected and qualified. Mr Fitzgerald has been a Director of the Company since May 2007.

Resolution 5. To re-elect Allen L. Stevens as a Director for a 2-year term and to serve until the expiration of that term and until a successor has been elected and qualified. Mr Stevens has been a Director of the Company since December 2005.

Resolution 6. To grant authority to the Board of Directors to fix the remuneration to the Company's Directors. Details of the remuneration are included in the Notes to the Annual Report.

Special Business

The special business to be conducted at the Annual General Meeting will be a vote on the following proposed resolutions:

Resolution 7. As an Ordinary Resolution, to approve and ratify the actions of the Company's Directors and Officers during 2009.

VOTING BY PROXY AND THROUGH DEPOSITORIES

Registered shareholders should properly complete, date, sign and deliver the enclosed form of proxy to either of the following: (1) the offices of Subsea 7 Limited at Prospect Road, Arnhall Business Park, Westhill, Aberdeenshire, AB32 6FE, Scotland, telefax no. +44.1224.527.000 or (2) the Company's offices at P.O. Box 309, George Town, Grand Cayman KY1-1104, CAYMAN ISLANDS, telefax no. +1.345.946.3346, no less than 24 hours prior to the stated time of the Annual General Meeting. Any shareholder signing and returning a proxy may revoke such proxy at any time prior to its being voted by delivering a written revocation or a duly executed proxy bearing a later date with the Company or by voting in person or duly authorized representative at the meeting.

RECOMMENDATION

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the Memorandum and Articles of Association of the Company area available at all times on the Company's website www.subsea7.com and will be available for inspection by appointment only at the offices of Subsea 7 Limited at Prospect Road, Arnhall Business Park, Westhill, Aberdeenshire, AB32 6FE, Scotland and the offices of Maples and Calder, Ugland House, South Church Street, Grand Cayman, Cayman Islands during normal business hours until 10 May 2010 and at the Annual General Meeting itself.

SHAREHOLDER PROPOSALS FOR ANNUAL GENERAL MEETING

Following the financial year ending 31 December 2010, shareholders may present proposals to be considered by the Company for possible inclusion in the Company's proxy statement and for discussion and vote at the next Annual General Meeting of Shareholders by submitting their proposals to the Company in a proper form and in a timely manner. In order to be considered for the meeting following the conclusion of financial year 2010, shareholder proposals must be received at Subsea 7 Limited's office in Aberdeen or the Company's office in George Town by 31st January 2011.

Yours faithfully,

Kristian Siem, Chairman
29 March 2010

AI assistant

Subsea 7 — Proxy Solicitation & Information Statement 2010

6244_rns_2010-04-08_41a972f8-aeaf-493b-8807-c7c3ef5e9a36.pdf

INDEX

APRIL 09

MAY 09

JULY 09

AUGUST 09

SEPTEMBER 09

OCTOBER 09

NOVEMBER 09

SUBSEA 7 INC.

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

Special Business

5. Rights Attaching to Shares

6. Adjustment of Awards

7. Alterations to the Share Plan

8. Plan Administration

9. Limits on the issue of Shares in Awards

10. Proposed Initial Awards

11. Replacement Awards

SUBSEA 7 INC.

PERFORMANCE SUMMARY

Quarter Highlights

Financial Results

OPERATIONS

North Sea

Africa

Brazil

North America

Asia Pacific

INVESTMENTS

FINANCING

FINANCIALS

CAPITAL EXPENDITURE

SHARE CAPITAL

BACKLOG

MAJOR NEW CONTRACT AWARDS SINCE 1 JANUARY 2009

OUTLOOK

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED BALANCE SHEET

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

CONSOLIDATED CASH FLOW STATEMENT

NOTES TO THE FINANCIAL INFORMATION

1. Basis of preparation

2. Accounting policies

3. Segment reporting

4. Cash flow from operating activities

5. Adjusted EBITDA

6. Repurchase of Convertible Notes

7. Contingent liabilities

8. Events occurring after the balance sheet date

Subsea 7 Inc.

Highlights

North Sea

Three Months Ended 31 March

Africa

Three Months Ended 31 March

Brazil

North America

Asia Pacific

Three Months Ended 31 March

Backlog at Q1 2009 & Q1 2008

SUBSEA 7 INC.

GENERAL

1. Notice and Quorum

ORDINARY BUSINESS

2. Adoption of Financial Statements for the Year Ended 31 December 2008 and the Reports of the Directors and the Auditors

3. Appointment of Auditors of the Company

4. Remuneration of Auditors

5. Election of Directors

6. Remuneration of Directors

SPECIAL BUSINESS

Ordinary Resolution

7. Ratify the Actions of Directors and Officers

Special Resolution

8. Approve and Ratify the Establishment of a New Restricted Stock Award Plan

Ordinary Resolutions

9. Approve and Ratify the Granting of Restricted Stock Awards and Replacement of Share Options with Restricted Shares

10. Approve Increase in Authorised Share Capital

Subsea 7 Proxy Solicitation & Information Statement 2010