Russia: Sovcomflot Reports First Half 2010 Results

Sovcomflot Board of Directors reviewed the 2010 First Half results of Sovcomflot and its subsidiaries at a regular meeting, held on 21 September in Moscow.

Highlights of the First Half 2010 (Six months ended 30 June 2010):

– Total fleet increased to 144 vessels with total deadweight of 10.5 million tonnes

– Grand Aniva, LNG tanker, carried the 100th shipment of Russian LNG from the Prigrodnoye terminal (Sakhalin 2 project)

– SCF Arctic shuttle tankers safely transported 10 million tonnes of crude oil from the Varandey offshore terminal (Barents sea) since June 2008

–  Agreement signed with Gazprom in respect of LNG transportation from the Stockman project

–  Transportation of the first ever Aframax shipment of gas condensate along the Northern Sea Route (from Murmansk to Ningbo) was arranged within strategic cooperation with OAO Novatek on Yamal LNG project

– Mikhail Ulyanov, technologically advanced Arctic shuttle tanker, was delivered from the Admiralty Yards, St.Petersburg and it started a long-term t/c with Gazprom Neft Shelf (100 pct subsidiary of OAO Gazprom)

– Long term USD 230 million financing for acquisition of two Arctic shuttle tankers of 70,000 DWT Mikhail Ulyanov and Kirill Lavrov provided by VEB (Russian State Development Bank)

– Net profit USD 111.2 million

– EBITDA USD 292.6 million

Commenting on the Group’s results Sergey Frank, President & CEO of Sovcomflot, said: “Whereas the freight market remained challenging throughout first half 2010 we were able to demonstrate steady performance across business lines thanks to a well-balanced fleet employment structure. We consistently continued the build-up of our fleet in line with the Group’s strategy and the needs of our customers.

During the period we took delivery of a number of newbuild Suezmax tankers and the first Russian-built Panamax-size Arctic shuttle tanker. This technologically advanced shuttle tanker with unique capabilities of operating in heavy ice conditions of the Russian Arctic will further strengthen Sovcomflot’s position in servicing new upstream offshore projects pursued by its Russian and international clients.”

Evgeny Ambrosov, Executive Vice-President and Group COO said: “Sovcomflot has demonstrated a strong performance despite continued pricing pressure in the conventional tanker market segments. With a growing portion of our revenues coming from the Group’s industrial business portfolio with project vessels employed under long-term fixed rate contracts (in such specialized areas as LNG, shuttle-tanker and offshore supply vessel operations) our fleet as a whole continued to earn in excess of market expectations.

Our steady financial results allows the company to focus on the quality of services offered to our customers, on the implementations of all the provisions, envisaged by the Safety Comes First 2020 (SCF-2020) programme.”

Nikolai Kolesnikov, Executive Vice-President, Chief Strategy & Financial Officer said: “We are pleased with the Group’s results for the first half of 2010, which exceeded our budget targets and serve to demonstrate the sustainability of Sovcomflot’s business model. With a high quality asset base – one of the most modern tanker fleets in the world, and with the net debt to capital ratio further reduced over the period the company is in a strong financial position even at the trough of the shipping cycle and has the capacity for further investments if the right business opportunities arise.”

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Source: Sovcomflot, September 23, 2010