Main figures
(Figures in brackets refer to the corresponding period of 2006)
Operating profit for the third quarter came to USD 70.3 million (USD 50.7 million), which is the highest quarterly operating profit ever for Prosafe. Operating profit in Offshore Support Services increased by USD 14.5 million to USD 57.3 million, and in Floating Production by USD 6.6 million to USD 16.2 million. Both business units have thus posted record profits this quarter. Corporate costs increased by USD 1.5 million due to costs relating to the company's share option plan and the set-up of the office in Cyprus.
Net profit for the third quarter amounted to USD 46.0 million (USD 34.9 million), and diluted earnings per share equalled USD 0.20 (USD 0.16). Interest expenses have increased by USD 5.1 million, which reflects the strong growth within Floating Production. Taxes for the period increased to USD 8.0 million (USD 3.7 million), of which USD 3 million relates to a provision for deferred tax on unrealised currency gains in Norway.
Operating profit year-to-date came to USD 152.2 million (USD 105.3 million). Net profit year-to-date equalled USD 108.3 million (USD 95.7 million), and diluted earnings per share were USD 0.47 (USD 0.50).
Total assets at 30 September amounted to USD 2 492.6 million (USD 2 178.8 million), while the equity ratio declined to 46.4 per cent (54.9 per cent) due to the dividend payments made last autumn and in May this year.
Offshore Support Services
Operating profit in the third quarter came to USD 57.3 million (USD 42.8 million). This improvement reflects significantly higher dayrates. Utilisation of the rig fleet was 92 per cent (91 per cent).
In the third quarter, Safe Caledonia continued on the two-year contract with Total on Elgin/Franklin which commenced in May. Safe Scandinavia was engaged on Snorre throughout the quarter. Off Sakhalin, Safe Bristolia has been in regular operation for the entire quarter. All six rigs working in the Gulf of Mexico, as well as MSV Regalia which is on contract for Total offshore Angola, have been in regular operation throughout the third quarter.
Floating Production
Operating profit for the third quarter amounted to USD 16.2 million (USD 9.6 million). This improvement reflects the commencement of the contracts for FPSO Polvo and FPSO Umuroa, which started to generate revenue in July and August, respectively.
For the FPSO Umuroa, there is an additional compensation of USD 2 million relating to the waiting period prior to first oil. This element will be shown as additional income spread over the firm period of the contract.
Outlook
The board of directors has initiated a process of evaluating a potential split of the company. The evaluation process is expected to be completed by December 2007.
Offshore Support Services
During the third quarter 11 of the 12 rigs were in full operation throughout the period. The only exception was Safe Astoria, which was laid up. In the fourth quarter, Safe Astoria will start mobilising in preparation for the letter of intent for Sakhalin Energy. The contract has a two-year duration commencing with a standby phase from December 2007.
Safe Concordia was scheduled to operate in the US Gulf in the fourth quarter of 2007. The contract has now been rescheduled to start at better terms in the third quarter of 2008. The vessel is currently employed for Pemex in Mexico.
Safe Concordia was scheduled to operate in the US Gulf in the fourth quarter of 2007. The contract has now been rescheduled to start at better terms in the third quarter of 2008. The vessel is currently employed for Pemex in Mexico.
MSV Regalia is working for Total in Angola, and is expected to complete the operation at the end of October. The vessel will then be mobilised to the North Sea and is expected to start its decommissioning assignment towards the end of January.
Safe Scandinavia started its assignment in the UK in the first half of October. The contract is expected to be completed around the middle of the first quarter of 2008.
Safe Scandinavia started its assignment in the UK in the first half of October. The contract is expected to be completed around the middle of the first quarter of 2008.
Safe Bristolia is employed at the Sakhalin field in eastern Russia. Upon completion of the contract in November the vessel will be mobilised to the North Sea, and will be ready for the next assignment starting March 2008.
Safe Caledonia and Safe Esbjerg are employed on longer term charters in the North Sea the coming quarters. The vessels which are on long-term contracts in Mexico are expected to remain in full operation in the coming period. The current charters for the five units in Mexico are ending in 2008. Prosafe are optimistic with regards to the prospects of extending the employment of the units in Mexico. The likely timing of new contract awards is late 2007 or early 2008.
The recent contract awards will ensure a high utilisation of the fleet in the coming year. The continued high industry activity supports a very positive market outlook for semi-submersibles also for the period 2009-2011.
Floating Production
The FPSOs Polvo and Umuroa commenced production in the third quarter this year. The projects marked the entry into two new offshore regions for Prosafe, namely Brazil and New Zealand. The charter contracts have firm periods of seven and five years and thereby provide a robust and long-term increase in revenues and profitability for the business unit.
The three other conversion projects are scheduled to be completed and installed by the end of 2008.
During the third quarter the management contract for FPSO Al Zaafarana was completed. The contract for FPSO Petroleo Nautipa was recently renegotiated with a new firm period extending to 2015.
The contract for FSO Endeavor was renegotiated in the third quarter with a new firm period of two years. The vessel will undergo a five-year classification and some minor upgrades in the coming quarters, but no significant impact on operations is expected.
In the third quarter, Prosafe was awarded a contract for the upgrade of FPSO Espoir Ivoirien. The upgrade project will enhance the value of the vessel and improve the returns on the initial investment. The project is scheduled to be completed in 2009.
The activity relating to new tenders remains high. Following the completion of the Umuroa and Polvo conversion projects, more resources will be available for pursuing and executing new contracts. Prosafe is targeting one project award around year-end 2007 and another in 2008.
Larnaca, 2 November 2007
The board of directors of Prosafe SE
For more information, please contact:
Arne Austreid
President and CEO, Prosafe SE
Phone no: +357 992 75 030
Karl Ronny Klungtvedt
Exec. Vice President and CFO, Prosafe SE
Phone no: +357 996 88 169
