Operating profit for the fourth quarter came to USD 51.8 million and net profit amounted to USD 36.5 million. Operating profit for the year 2011 was USD 192.3 million and net profit for 2011 equalled USD 158 million. The utilization of the rig fleet was 80 per cent in 2011.
Financials
(Figures in brackets refer to the corresponding period of 2010)
Full year 2011
Operating profit for 2011 came to USD 192.3 million (USD 221.1 million), whereas the utilization of the rig fleet rose to 80 per cent (75 per cent). The lower result is mainly a reflection of lower contribution from Safe Bristolia, which has been on a bareboat charter in the Gulf of Mexico since May 2011 and Safe Astoria, which has been idle throughout 2011. These effects have been partly compensated by higher contribution from Safe Caledonia, Safe Concordia and Safe Scandinavia.
Net financial expenses for 2011 amounted to USD 35.2 million (USD 18.9 million). The 2011 figures include a net gain of USD 10.2 million on the sale of the shares in Floatel International and a write-off of USD 4.5 million of non-amortised borrowing costs relating to the previous credit facility, which was refinanced in the third quarter. The 2010 figures include a gain of USD 23.7 million on the sale of the shares in Prosafe Production Public Limited and BW Offshore Limited.
Net profit for 2011 equalled USD 158 million (USD 198.5 million) and diluted earnings per share were USD 0.71 (USD 0.89).
Fourth quarter 2011
Operating profit for the fourth quarter came to USD 51.8 million (USD 18.4 million). This improvement is mainly due to a rise in rig utilization to 80 per cent (61 per cent).
Safe Caledonia, Safe Lancia, Jasminia, Safe Hibernia, Safe Britannia, Safe Regency, Safe Bristolia have been fully utilized in the fourth quarter.
Safe Concordia was off-hire for five days due to smaller modifications of the DP system. Safe Scandinavia commenced operations at the Valhall field in October. Prior to contract start, the rig had a brief yard stay to adjust the gangway pedestal to fit with the landing height on Valhall. Together with normal mobilization procedures, this implied that the rig was out of operation for 21 days. Regalia commenced the contract with Talisman at the Yme field in Norway on 1 November, after completing operations at the Valhall field in mid-October. In total, Regalia was off-hire for 11 days in the fourth quarter. Safe Astoria and Safe Esbjerg were idle in the fourth quarter.
Net financial expenses for the fourth quarter were USD 14.8 million (USD 11.8 million positive). The fourth quarter 2010 figures include a gain of USD 23.7 million as described above.
Net profit for the fourth quarter amounted to USD 36.5 million (USD 30 million), and earnings per share equalled USD 0.16 (USD 0.13).
Total assets at 31 December amounted to USD 1 376.1 million (USD 1 266.4 million), and the book equity ratio rose to 33.6 per cent (32.4 per cent).
Dividend
The Board of Directors resolved on 29 February 2012 to declare a quarterly dividend equivalent to USD 0.133 per share to shareholders of record as of 9 March 2012. The shares will trade ex-dividend on 7 March 2012. The dividend will be paid in the form of NOK 0.74 per share on 21 March 2012.
The resolved dividend is in line with the policy of paying out up to 75 per cent of the previous year's net profit divided into quarterly payments, i.e. it has been based on the 2011 earnings per share of USD 0.71.
Revision of depreciation plan
Based on the current condition of the rigs and the planned maintenance programme, the depreciation plan for five of the rigs operating in the Gulf of Mexico has been revised. With effect from 1 January 2012, the remaining depreciation period of these five rigs has been increased to ten years from an average of four years previously. The impact of this change is an estimated annual reduction in depreciation of USD 5 million.
New build
Prosafe announced on 14 December 2011 that the company has entered into a turnkey contract for the construction of a semi-submersible accommodation rig at Jurong Shipyard Pte Ltd. in Singapore.
The new unit will be the most advanced and efficient harsh environment accommodation rig in the world and will be constructed to comply with Norwegian regulations. The rig will be constructed according to the GVA 3000E design and will be equipped with a DP3 (dynamic positioning) system as well as 12-point mooring arrangement. This will allow for operations in harsh environments both in DP and anchored mode, providing maximum cost efficiency and flexibility.
The unit will have the capacity to accommodate 450 persons in single man cabins for operation on the Norwegian Continental Shelf. Delivery from the yard is scheduled for the second quarter of 2014 and all-in cost including yard cost, owner-furnished equipment, project management and financing is estimated at USD 350 million. 20 per cent of the yard cost was paid at signing of the contract, while the remaining 80 per cent will be paid at delivery. The investment can be funded over the current balance sheet without impacting the dividend policy. The contract with Jurong also includes options for two more units, valid for approximately 12 and 18 months, respectively.
With the addition of the new harsh environment rig, Prosafe reinforces its leading position in the high-end accommodation rig segment, strengthening the company's ability to meet clients' needs related to increasingly complex operations in a growing market.
Outlook
Six of Prosafe's rigs are on bareboat charters in Mexico for end-user Pemex. The six rigs have firm contracts as follows: Safe Hibernia until December 2013, Safe Lancia until end-December 2012, Jasminia until end-December 2012, Safe Britannia until mid-January 2013, Safe Bristolia until end-March 2013 and Safe Regency until beginning of August 2013.
Safe Caledonia is operating for BG in the UK North Sea until end of March 2012.
Regalia is scheduled to operate for Talisman at the Yme field in Norway until end of August 2012.
Safe Scandinavia is operating for BP in Norway until end of March 2012. In May 2012 the rig is scheduled to commence operation for ConocoPhillips in Norway and thereafter moving to the UK North Sea with a firm contract until October 2012 and options until December 2012.
In the second quarter 2011 Safe Concordia commenced on a three-year contract with Petrobras in Brazil.
Safe Astoria has a 150-days contract with Woodside in Australia commencing between April and May 2012. In addition Prosafe has granted two one-month options.
Safe Esbjerg is currently idle. The rig is mainly being marketed for North Sea work.
Historically around 80 per cent of Prosafe's contracts have been related to oil and gas fields already in production. The accommodation rigs are typically assisting in connection with maintenance and modifications of production facilities, IOR projects, field redevelopments and tie-ins of new wells to existing facilities. Consequently, the bulk of the demand for offshore accommodation units tends to come from mature areas. Prosafe operates in the high end of the accommodation rig segment and is mainly working in areas where weather conditions or other factors favour the use of high-end semi rigs, typically the North Sea, Mexico and Brazil.
The demand in the North Sea is expected to be strong for at least the next couple of years. The number of concrete prospects is on a high level and no new supply is scheduled to arrive until 2014.
Most of the demand in the North Sea is driven by field redevelopments and modifications of existing production infrastructure. However, an increased amount of new finds lately bodes well for growing activity related to hook-up and commissioning work as well.
The demand in the Mexican market has been stable for a number of years. The rigs are all working on the Cantarell field assisting on maintenance and construction projects and the units play a vital role in the efforts of keeping up production at the field. Consequently, demand for accommodation semis in Mexico is anticipated to remain stable over the coming years. As such, the Board is reasonably optimistic with regards to renewals of the three contracts that expire around year-end 2012.
The accommodation demand offshore Brazil currently comes from the Campos basin, where accommodation units are assisting in connection with maintenance of FPSOs and fixed installations. Longer term it is expected that there will be more accommodation demand in other basins offshore Brazil.
There has also been a positive development in markets where semi accommodation rigs traditionally have not been widely used. Both the Australian and Asian markets appear promising and a number of concrete prospects have been identified.
Prosafe is the world's leading owner and operator of semi-submersible accommodation/service rigs. Operating profit reached USD 192.3 million in 2011. The company operates globally, employs 550 people and is headquartered in Larnaca, Cyprus. Prosafe is listed on the Oslo Stock Exchange with ticker code PRS. For more information, please refer to www.prosafe.com.
Attachments: Q4 2011 report, Q4 2011 presentation
Larnaca, 1 March 2012
The Board of Directors
Prosafe SE
For further information, please contact:
Karl Ronny Klungtvedt, Chief Executive Officer
Prosafe Management AS
Phone: +47 51 64 25 81
Sven Børre Larsen, Chief Financial Officer
Prosafe Management AS
Phone: +47 909 43 673
Cecilie Helland Ouff, Finance and IR Manager
Prosafe AS
Phone: +47 991 09 467
