Farstad Shipping Releases Results for 1st Quarter 2011 (Norway)

Results for the 1st quarter 2011

Farstad Shipping achieved an operating income of NO K 801.0 million for the 1st quarter (NO K 730.5 million for the same period in 2010). The operating costs for the period were NO K 526.0 million (NO K 432.6 million). The operating profit (EBIT ) was NO K 142.8 million (NO K 172.9 million) after depreciations of NO K 132.2 million (NO K 125.1 million).

Net finance was negative NO K 42.1 million (negative NO K 103.1 million). Currency loss of NO K 4.3 million is booked during the 1st quarter (gain of NO K 95.7 million). Further an unrealised currency gain of NO K 46.1 million (loss NO K 120.5 million) is booked due to the adjustment of the company’s long term liabilities in foreign currency. The profit after taxes was NO K 90.4 million (NO K 59.9 million). The Group’s cash flow*) for the period was NO K 186.9 million compared to NO K 315.2 million for the same period in 2010.

Financing and capital structure

In the balance sheet at 31.03.11, interest bearing mortgage debt totals NO K 6,975.2 million (NO K 7,138.3 million at 31.03.10). Of the company’s mortgage debt 72.2% is in NO K, 13.2% in USD , 6.1% in GBP, 3.1% in EURO and 5.4% in AUD . Interest bearing current assets at 31.03.11 were NO K 2,016.9 million (NO K 1,897.6 million). The Group’s booked equity at 31.03.11 was NO K 6,700.7 million (NO K 6,284.5 million) corresponding to NO K 171.81 (NO K 161.14) per share. Equity ratio was 46.8% (45.0%).

Accounting principles

The quarterly report has been prepared in accordance with today’s International Financial Reporting Standards (IFRS ) and interpretations, and the IAS 34 standard for quarterly reporting. The accounting principles used are in accordance with principles used in the last annual report. The financial statements for the first quarter of 2011 are unaudited.

Fleet changes

There has been no changes to the fleet during the 1st quarter.

New contracts

Farstad Shipping has achieved the following charter commitments during the first quarter 2011: PS V Far Symphony and PS V Far Server were awarded a six years contract and a one year contract respectively with ConocoPhillips Skandinavia AS . Startup of the six years contract was in April 2011, and the one year contract commenced in February 2011. Both contracts contain clauses for additional option periods.

AHTS Far Scimitar and AHTS Far Sky were both awarded a 14 month firm contract by Apache Energy to support drilling operations offshore Western Australia. The charters commenced in March and include an option on each vessel for further 12 months.

AHTS Lady Sandra and AHTS Far Fosna were awarded a four well contract by Santos Limited, Australia. The program commenced in March and is expected to be of approx. six months duration.

Esso Australia exercised a three month option for PS V Lady Kari-Ann. This commenced in April and 3 x 3 month options remain on the vessel.

McDermott Industries Ltd. has extended the contract for AHTS Lady Cynthia for a further 3 month period, and Statoil extended the contract for PSV Far Seeker for a further 12 month period from April.

Subsea Far Saga was awarded a six months firm contract by Subsea 7 in Norway with startup in April. The contract includes an option for further 15 months.

AHTS Far Sabre was awarded a five month firm contract by Shell in Brazil. Startup of the contract was in April. The contract includes an option for Shell for further 3 x 1 month.

Petrobras exercised their option to extend the contract for AHTS Far Scout for further 144 days. The vessel is now on contract with Petrobras until March 2012.

Contract coverage

The contract coverage of the Farstad fleet is approximately 73% for 2011 and approximately 50% for 2012 (incl. options).

Shareholder matters

The company’s shares have during the quarter been traded between NO K 168.00 and NO K 188.00 and were NO K 182.00 at the end of the quarter.

The share price at 31.03.11 values the company to approx. NO K 7.1 billion.

The market

Most regions experience a positive development in the activity level offshore. However, the rate level and the utilization rate for supply vessels remain low as a consequence of oversupply of tonnage. Especially the expectations for the North Sea market have not yet proven right. The situation is expected to persist during most of 2011 because of the considerable number of newbuilds that are still to be delivered.

Source: Farstad Shipping, May 19, 2011;