Cyprus: Prosafe Production Announces 3rd Q 2010 Interim Update

Prosafe Production, a leading owner and operator of Floating Production, Storage and Offloading vessels (FPSOs), announces interim financial report for 3rd quarter 2010:

· Operating result before depreciation and restructuring charges of USD 56.8 million

· Extension of contract for Abo FPSO

· Production on FPSO Ningaloo Vision recommenced after shut-down

· Agreement to combine with BW Offshore – management to resign as a result

Main figures

(Figures in brackets refer to the corresponding period of 2009)

Operating revenues for the third quarter of 2010 amounted to USD 105.6 million (USD 83.5 million).

Operating profit before depreciation and expenses related to the BW Offshore transaction was USD 56.8 million (USD 51.0 million) for the quarter. FPSO Ningaloo Vision, which has been on dayrate since the beginning of January 2010, is the main reason for the growth.

This has been partly offset by the scheduled decline in the dayrate for FPSO Umuroa.

Operating result before depreciation was USD 49.2 million in the quarter, after subtracting USD 7.6 million in expenses related to the BW Offshore transaction.

The Letter of Intent regarding the sale of the turret and swivel business to National Oilwell Varco (NOV) expired on 30 September 2010. Moreover, it appears that the possibility to sell the turret and swivel business to others than NOV, or develop it further internally, is restricted by the agreement between BW Offshore and NOV regarding the sale of APL. As such, the commercial value of the business is uncertain and the related goodwill of USD 62.8 million has been written down to zero.

This gave an operating result of USD -49.9 million (USD 30.8) in the quarter.

Interest expenses amounted to USD 11.3 million (USD 11.0 million) for the quarter. Other financial items amounted to USD 1.2 million (USD -0.7 million).

The tax cost for the third quarter equalled USD 3.9 million (USD 5.4 million). This gave a net profit from continuing operations of USD -63.8 million. Subtracting a contribution from discontinued operations of USD -1.2 million (USD -0.5 million), the net result for the quarter equalled USD -65.0 million.

The operating profit before depreciation and restructuring expenses for the nine months ended 30 September 2010 amounted to USD 173.6 million (USD 136.2 million), while the net result was USD -50.6 million (USD 30.9 million).

Total assets amounted to USD 1,964 million (USD 2,117 million) as of 30 September 2010.

The reduction in book value is mainly attributable to impairment charges as well as depreciation over the period. Equity amounted to USD 735 million (USD 850 million), resulting in a book equity ratio of 37% (40%).

Net interest-bearing debt amounted to USD 969 million (USD 1,035 million).

About Prosafe Production

Prosafe Production is one of the world’s leading FPSO contractor. The fleet currently consists of eight FPSOs, two FSOs and one VLCC conversion candidate. The Group has approximately 1,000 employees and the head office is located in Limassol, Cyprus. On 13 September 2010 it was announced that Prosafe Production and BW Offshore has agreed to combine in order to create the world’s second-largest FPSO contractor. The combined company will have a fleet of 18 units in operation, whereof 15 are FPSOs, in addition to three units under conversion.

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Source: ProsafeProduction, October  25, 2010;