Offshore Support Services
Four of the company's units, the Safe Britannia, Safe Lancia, Jasminia and Safe Regency, have been engaged in the Gulf of Mexico throughout the year. The Safe Caledonia was on contract in the Gulf of Mexico until May, and subsequently she went on contract with Statoil on Sleipner, where she operated until October. The Safe Hibernia (ex. Polyconcord), which the company acquired in February, commenced a one-year contract in the Gulf of Mexico in May.
In 2002, the Safe Scandinavia has been on contract with Chevron on Alba in the UK sector from April to July. Subsequently, the rig was engaged by Statoil on Statfjord from August to October. In November, the rig was taken to yard to increase accommodation capacity. In 2002, the MSV Regalia has been on contract with Statoil on Åsgard and with BP west of Shetland. In October, the rig was taken to yard to undergo upgrade to subsea well intervention mode.
In 2002, the operating revenues from Offshore Support Services came to NOK 990m (NOK 918m), and the operating profit amounted to NOK 513m (NOK 416m). Utilisation ratio in 2002 was 84% (80%). The increased operating profit is mainly attributable to higher utilisation of the Safe Britannia, the contract for the Safe Hibernia, and also lower depreciation due to revised estimate of useful life of the vessels. Factors which have had an opposite effect on the operating profit are lower USD/NOK exchange rate, and lower utilisation of the Safe Caledonia and MSV Regalia, the former due to mobilisation from the Gulf of Mexico to the North Sea, and subsequently to the Timor Sea, and the latter due to upgrade.
Operating profit for the fourth quarter equalled NOK 79m (NOK 101m). Utilisation ratio in the fourth quarter was 73% (84%). The decreased operating profit is due to lower utilisation ratio and lower USD/NOK exchange rate. The MSV Regalia and Safe Scandinavia have been taken to yard during the fourth quarter to undergo upgrade work. Depreciation is suspended during the yard stays for these units.
Floating Production
The FPSO Espoir Ivoirien commenced the ten-year contract offshore the Côte d'Ivoire in February 2002. The FPSO Petróleo Nautipa completed the contract with Canadian Natural Resources on Kiame offshore Angola in April 2002, and commenced a 2 + 3 x 1 year contract with Vaalco offshore Gabon in September 2002. Throughout the year, the FSO Endeavor, FSO Madura Ayu and FPSO Al Zaafarana have operated in India, Indonesia and the Gulf of Suez, respectively.
In 2002, Floating Production generated operating revenues of NOK 460m (NOK 253m), and the operating profit before goodwill amortisation equalled NOK 173m (NOK 84m). Operating profit for the fourth quarter amounted to NOK 39m (NOK 27m) before goodwill amortisation. The improvement is mainly attributable to the contract for the FPSO Espoir Ivoirien offshore the Côte d'Ivoire. Adverse factors are lower USD/NOK exchange rate and the sale of the FPSO Ruby Princess in October, whereas she was in operation in the full fourth quarter last year.
Drilling Services
In 2002, the activity within Drilling Services has increased and profitability has improved. The company started drilling on Ringhorne for Esso in October 2002, and has also achieved extensions of important contracts which expired in 2002. Specifically, the contracts that have been extended are Snorre B, Snorre TLP, and the contract for Rubicon on Snorre TLP. In addition, the contracts on Gullfaks and Heidrun have been extended to the summer of 2004.
In 2002, the operating revenues reached NOK 1,459m (NOK 1,252m), and the operating profit was NOK 109m (NOK 82m). The operating profit is the best result so far for this division. Operating profit for the fourth quarter equalled NOK 42m (NOK 20m). The main reason for the improvement, both for the full year and for the fourth quarter alone, is high efficiency.
Outlook
Prospects for the Norwegian continental shelf are positive for the segments in which the company operates. Despite a declining rate of investments in general, prognoses show that considerable amounts still are to be invested on operations and maintenance in the years ahead. Increasing focus on increased recovery from existing fields, and hook-up of satellite fields to existing installations, are strong driving forces. In addition, there are opportunities for new exploration areas in the north, dependent on the Norwegian authorities' ongoing study of consequences relating to this issue.
Internationally, there is a similar focus on increased recovery, and also a potential for new discoveries as the industry is moving towards deeper water. Development solutions based on floating concepts and subsea technology, and also cost-effective solutions for development of marginal fields, e.g. FPSO, are other important trends.
In connection with a continuous, global growth in demand for oil and gas, this justifies maintaining an optimistic view on the outlook for the segments in which Prosafe operates.
As regards Offshore Support Services, also the first quarter of 2003 will be influenced by the company having two rigs undergoing upgrade works, the MSV Regalia and Safe Scandinavia, and also by the Safe Caledonia mobilising for the Timor Sea. The MSV Regalia will start testing and preparations in the course of March, prior to the first contract for intervention of four wells for Statoil in April. Subsequently, she will prepare for the accommodation contract for Norsk Hydro on Fram at the end of the second quarter and in the beginning of the third quarter. Prosafe is currently working on further engagements for the rig after the Fram contract, alternatively in the Gulf of Mexico. The Safe Scandinavia will finish her yard stay in Gothenburg in the course of February, and subsequently start preparations for the contract with Statoil on Gullfaks in March, followed by a 152 days contract with Norsk Hydro on Grane which is to start in May. The Safe Caledonia is expected to start her engagement with Phillips on Bayu Undan in the course of May. Five of Prosafe's rigs, the Safe Lancia, Safe Britannia, Safe Regency, Safe Hibernia and Jasminia are currently in the Gulf of Mexico. The contracts for the units expire during the period from late March to mid May 2003. The activity level in Mexico is high. Pemex has expressed goals relating to increased oil recovery on the Mexican shelf, and several accommodation contracts relating to development, operation and maintenance, are currently out for tender. Prosafe, and the partner Cotemar, which is responsible for the operation of Prosafe's rigs in the Gulf of Mexico, regard the opportunities high for new engagements in the region.
Within Floating Production start up for the Abo FPSO, the company's third FPSO, is approaching. The conversion was completed within time and on budget, and the vessel arrived on the field at the end of January. The vessel is currently being anchored and hooked up, so that production testing can start. First oil is expected by the end of first quarter 2003. Effective late January 2003, the FSO Madura Ayu has been replaced by a larger vessel, the FSO Madura Jaya. Prosafe is currently seeking new assignment for the FSO Madura Ayu. The contract for the FSO Endeavor was recently extended until July 2004. Activity in the floating production segment remains high, although some projects are being postponed. Prosafe is considering several new tenders, and sees interesting opportunities for a new contract in the periods ahead.
Activity within Drilling Services has been high during the recent periods. During the first quarter 2003, the activity on Oseberg C and Oseberg East will be reduced, whereas the activity on the rest of the installations is expected to remain high. On Kvitebjørn, the activity will increase towards June 2003 when Prosafe will start drilling for Statoil in June 2003. In the fourth quarter, Drilling Services has established representation in Aberdeen, the purpose being to follow opportunities for future drilling assignments in the UK sector. Prosafe is one of the bidders on Norsk Hydro's new drilling contract on Oseberg C, Oseberg East, Oseberg South (from the summer of 2004), Oseberg B, Njord and Brage. A decision is expected by the end of the first quarter 2003. The general prospects for the company's business are positive.
Prosafe is listed on the Oslo Stock Exchange with ticker code PRS.
Oslo, 10 February 2003
