Cyprus: Prosafe Announces Rig Utilisation Drop

Operating profit for the first quarter came to USD 14.1 million (USD 40 million). Utilisation of the rigs declined to 61 per cent (73 per cent).

Safe Esbjerg, Safe Lancia, Jasminia, Safe Hibernia, Safe Britannia and Safe Regency have been fully utilised in the first quarter.

MSV Regalia operated for BP at Valhall on the Norwegian Continental Shelf from mid March.

Safe Scandinavia operated for BP at Valhall on the Norwegian Continental Shelf until mid March.

Safe Caledonia commenced operation for BG on the UK Continental Shelf in the beginning of March.

MSV Regalia, Safe Scandinavia and Safe Caledonia have carried out parts of their annual maintenance work in the first quarter. Safe Bristolia has undertaken a five-year special periodic survey during the first quarter.

In the first quarter, Safe Concordia was mobilising to Brazil. Safe Astoria and Safe Bristolia were idle in the first quarter.

Net financial expenses for the first quarter were USD 7.9 million (USD 12.4 million). This reduction is due to a favourable revaluation of forward exchange contracts.

Net profit amounted to USD 6.8 million (USD 26.8 million), and earnings per share to USD 0.03 (USD 0.12).

Total assets at 31 March amounted to USD 1 294 million (USD 1 352.6 million), while the book equity ratio rose to 32.5 per cent (22.2 per cent).

Dividend and refinancing

The Board of Directors resolved on 25 May 2011 to declare an interim dividend equivalent to USD 0.148 per share to shareholders of record as of 8 June 2011. The shares will trade ex-dividend on 6 June 2011. The dividend will be paid in the form of NOK 0.82 per share on 22 June 2011.

The board has resolved to initiate a process of exploring the possibilities of refinancing the company’s bank debt, followed by a review of the dividend policy.

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 Lancia until end-December 2012, Jasminia until end-December 2012, Safe Hibernia until mid-December 2011, Safe Britannia until mid-January 2013, Safe Bristolia until end-March 2013 and Safe Regency until beginning of August 2013.

Safe Esbjerg is operating for Mærsk Oil & Gas in the Danish North Sea until end-August 2011.

Safe Caledonia commenced on a nine-month contract with BG in the UK North Sea in the beginning of March 2011. The contract has two months of extension options.

MSV Regalia commenced operations for BP Norge in the Norwegian North Sea in mid-March and is expected to operate until October 2011. MSV Regalia has a six-month contract with Talisman, expected to commence in the beginning of March 2012.

Safe Scandinavia commenced a six-month contract with Statoil in early April 2011. Thereafter the rig is scheduled to start operation for BP in October 2011.

Safe Concordia arrived in Rio de Janeiro on 10 April, and was on standby dayrate from 18 April up to charter commencement in late May. The rig has a three-year contract with Petrobras.

Safe Astoria is currently idle and will undertake an upgrade and a five-year special periodic survey until the end of September.

In the North Sea, the majority of fixed installations are mature and require both maintenance and modifications to keep up production and ensure safe operations. Furthermore, the technological development in combination with the high oil price should lead to increased activity related to improved oil recovery (IOR) and life extensions of fields. Consequently, the outlook for modification, IOR and maintenance projects over the coming years appears positive.

In Mexico we expect stable demand going forward. The demand is mainly driven by the efforts of keeping up oil production at the Cantarell field in Mexico.

Brazil has been established as a substantial market for safety and maintenance units through three contract awards over the past year. Prosafe won one of these contracts. Based on the high exploration and development activity offshore Brazil, the long-term demand picture looks promising. There is also potential for increases in demand in the short-to-medium term, but timing remains uncertain.

In summary, the demand outlook for semi-submersible accommodation rigs for the core market regions appears to be positive. Furthermore, there is a growing interest for semi-submersible accommodation rigs in other regions.

[mappress]

Source: Prosafe , May 25, 2011;