Main figures
(Figures in brackets refer to the same period last year)
The operating profit for 2003 came to NOK 366m (NOK 702m). Adjusted for goodwill amortisation of NOK 69m, the operating profit equalled NOK 435m (NOK 770m). The main reasons for the decrease are lower utilisation within Offshore Support Services due to the upgrade of the fleet prior to start-up of the five-year charters in the Gulf of Mexico, lower USD/NOK exchange rate and costs relating to subsea well intervention.
In 2003, net financial items equalled NOK 206m (NOK -138m) after a currency gain of NOK 326m in connection with the refinancing which took place in the first quarter. Taxes for the year increased to NOK 120m (NOK 40m) as a consequence of the currency gain. Net profit for 2003 amounted to NOK 462m (NOK 524m), and fully diluted earnings per share equalled NOK 13.62 (15.39). Adjusted for goodwill amortisation, fully diluted earnings per share equalled NOK 15.65 (17.38).
The operating profit for the fourth quarter came to NOK 50m (NOK 136m). Adjusted for goodwill amortisation, the operating profit equalled NOK 67m (NOK 153m). The main reasons for the decrease are write-downs of NOK 20m, costs relating to subsea well intervention and lower USD/NOK exchange rate. Net profit for the fourth quarter amounted to NOK 37m (NOK 88m), and fully diluted earnings per share equalled NOK 1.09 (2.60). Adjusted for goodwill amortisation, fully diluted earnings per share equalled NOK 1.59 (3.10).
In line with the company's dividend policy, the board of directors proposes a dividend for 2003 of NOK 4.00 per share, an increase from the ordinary dividend of NOK 3.00 for 2002. In December 2003, the company decided to pay an extraordinary dividend of NOK 4.00 per share.
Offshore Support Services
Five of the company's units, Safe Britannia, Safe Lancia, Safe Regency, Jasminia and Safe Hibernia have throughout the year operated on charters in the Gulf of Mexico. The three former units have, however, been off-hire for a period due to upgrades prior to start-up of the five-year charters which were awarded last spring.
Safe Caledonia commenced the charter with ConocoPhillips in the Timor Sea in May. This is the first charter for Prosafe in this region. In 2003, Safe Scandinavia has operated on Gullfaks in March/April and on Grane from May to October. Prior to the Gullfaks charter, the rig was upgraded to increase the accommodation capacity.
Also MSV Regalia has been upgraded during 2003. The work towards making the rig capable of intervention on subsea completed wells was finalised in February. The first campaign for Statoil was suspended due to problems with the equipment from a subcontractor. In June/July, the rig operated in accommodation mode on Fram, and in October/November the well intervention work for Statoil was performed successfully. Subsequently, the rig started mobilisation for the company's first rig charter in West Africa. The company has since 6 December received day rates for the rig.
In 2003, the operating revenues from Offshore Support Services equalled NOK 910m (NOK 990m), and the operating profit came to NOK 200m (NOK 513m). The utilisation ratio in 2003 was 73% (84%). The main reasons for the decrease in operating profit are lower utilisation ratio due to upgrades prior to the five-year charters in the Gulf of Mexico, lower USD/NOK exchange rate and costs relating to subsea well intervention.
The operating profit for the fourth quarter amounted to NOK 31m (NOK 79m). The utilisation ratio for the rig fleet in the fourth quarter was 82% (73%). The decreased operating profit is due to costs relating to subsea well intervention and lower USD/NOK exchange rate.
Floating Production
In 2003, Floating Production generated operating revenues of NOK 585m (460m), and the operating profit before goodwill amortisation came to NOK 159m (NOK 173m). The reasons for the reduction are a write-down of M/T Serene Sky of NOK 17m, engineering expenses which normally are capitalised as cost of a vessel under conversion, and lower USD/NOK exchange rate.
The operating profit for the fourth quarter amounted to NOK 29m (NOK 39m) before goodwill amortisation. The adverse factors compared to last year, are the write-down of M/T Serene Sky, lower USD/NOK exchange rate and engineering expenses. These factors are partly offset by the contracts for Abo FPSO and OPL98.
Drilling Services
In 2003, the operating revenues from Drilling Services reached NOK 1 444m (NOK 1 459m) and the operating profit equalled NOK 102m (NOK 109m). This is the second best operating profit ever for this business unit.
The operating profit for the fourth quarter equalled NOK 15m (NOK 42m). The main adverse factors are a write-down of the cuttings re-injection units, changed assumptions for calculation of the company's pension liabilities and finally the fact that Rubicon was off-hire throughout the fourth quarter this year.
Outlook
Prosafe enters 2004 with a solid contract reserve and a generally positive view on the market outlook.
Within Drilling Services, main focus is on safe and efficient operation of existing contracts. Rubicon is marketed internationally in competition with subsea completions / tie-back solutions and jack-up solutions. The company is optimistic with regards to securing a new assignment for the rig, but indicates now that this may take large parts of the current year to achieve. The company is preparing for the upcoming Tampen tender from Statoil, which will include platform drilling services on Statfjord, Visund, Gullfaks, Snorre and Heidrun. The prospects for a safe, efficient, committed and forward-looking drilling service company on the Norwegian shelf are good.
Floating Production has consolidated its position through 2003, and increased its operating efficiency. The company sees that the activity level within the FPSO segment will pick up in 2004. Focus onwards will be on safe and efficient operations, and on the target of winning an FPSO conversion project in line with the company's strategy and return targets. The company's strategy of a controlled and profitable growth based on conversion projects against firm contracts - primarily in the mid-segment in Africa and Asia - remains firm.
Offshore Support Services has secured a fleet utilisation of 81% excluding options for 2004, 62.5% for the years 2005-2007 and approximately 30% for 2008. The company has previously communicated limited opportunities for securing further utilisation in the first half of 2004, whereas the outlook for the second half is brighter. Beyond 2004, the company sees a number of opportunities both in the North Sea and internationally. The company will focus on the most attractive contract opportunities and capitalise on an increased potential for geographical diversification. In general, there are now more actual and indicative demand drivers and more geographical opportunities than before. The company will proactively refine its market position also in the future.
Oslo, 4 February 2004
