Main figures
(Figures in brackets refer to the same period last year)
Operating profit for the first quarter equalled NOK 80m (NOK 144m). Adjusted for goodwill amortisation, the operating profit was NOK 97m.
Net financial items amounted to NOK 294m (NOK -45m). The increase is mainly attributable to a realised currency gain of NOK 326m in connection with the refinancing of the company's USD debt. Correspondingly, taxes increased to NOK 109m (NOK 6m), resulting from the refinancing.
Net profit for the first quarter came to NOK 264m (NOK 93m), and fully diluted earnings per share equalled NOK 7.75 (2.74). Adjusted for goodwill amortisation, fully diluted earnings per share equalled NOK 8.25 (3.23).
Offshore Support Services
Five of the company's eight rigs - Safe Britannia, Safe Lancia, Jasminia, Safe Hibernia and Safe Regency - have been employed in the Gulf of Mexico throughout the first quarter. MSV Regalia and Safe Scandinavia have been off hire due to upgrades, and Safe Caledonia has been mobilising for the Timor Sea.
Operating profit in the first quarter came to NOK 33m (NOK 115m). The utilisation ratio for the rig fleet was 65% (79%). The decrease in operating profit reflects the low utilisation ratio, and that ordinary operating expenses have been incurred for the rigs which have been off hire.
On 2 May, Prosafe concluded to suspend the well intervention campaign for Statoil, as a consequence of repeated technical problems with equipment provided from a subcontractor. The decision was made in understanding with Statoil, and the negative impact for Prosafe on the second quarter result is estimated to be around NOK 34m. However, the commitment remains firm, and Prosafe aims to be in the market for well intervention with MSV Regalia as soon as practically and commercially possible.
Floating Production
Abo FPSO arrived on the field offshore Nigeria in mid-February, and started production in early April subsequent to a successful 72 hours production test. Prosafe has taken contractual stand-by rates from the vessel arrived on the field to income, and has started depreciating the vessel from the same date.
FSO Madura Jaya, which the company acquired in December 2002, has replaced FSO Madura Ayu on the contract with Kodeco Energy off Java in Indonesia in January. The other vessels and operations - FPSO Espoir Ivoirien, FPSO Petróleo Nautipa, FSO Endeavor and FPSO Al Zaafarana - have operated according to plan.
Operating profit for the first quarter equalled NOK 38m (NOK 38m) before goodwill amortisation. When comparing with the same period last year, the main positive contributor is FPSO Espoir Ivoirien, which came on stream in February last year, whereas the vessel has been on hire throughout the first quarter this year. Factors with the opposite effect are a lower USD/NOK exchange rate, and the sale of FPSO Ruby Princess in October last year.
Drilling Services
During the first quarter, Drilling Services has continued the positive trend from the prior periods, in spite of traditionally lower activity levels during the winter months. The operations on Oseberg C and Oseberg East have been in maintenance phase throughout the first quarter. Operating profit in the first quarter came to NOK 32m (NOK 14m). The improvement in operating profit primarily reflects high efficiency and good HSE performance.
Outlook
The combination of strong market positions and contracted earnings, give Prosafe a good basis for development. An oil price around historical average levels, and focus on operations and increased recovery, contribute to a promising outlook.
Within Offshore Support Services, earnings are expected to improve subsequent to three rigs being off hire for upgrade/mobilisation during the first quarter. On 30 April, Prosafe announced five-year contracts for five of the company's rigs in Mexico. This will contribute to stable and high earnings in the periods ahead, even if activity in the third quarter will be influenced by upgrades of Safe Britannia, Safe Lancia and Safe Regency.
In early June, MSV Regalia will start the two-month contract on Fram for Norsk Hydro. Work is ongoing to provide additional employment thereafter, either within well intervention, accommodation or construction. The vessel is already secured a 115 days charter from July 2004 with Statoil on Troll. In May, Safe Scandinavia has started the five-month charter with Norsk Hydro on Grane. Safe Caledonia is expected to start the eight-month charter for ConocoPhillips on Bayu Undan in late May. Four of six one-month extension options remains for ConocoPhillips. As five rigs are on firm five-year bareboat-charters, focus onwards will be on maximum utilisation of the three other units.
Within Floating Production, Abo FPSO, the company's third FPSO, has performed a successful production start on the field off Nigeria. Further, the company was recently awarded a contract with Addax for production and maintenance on the OPL98 field off Nigeria. The contract commenced in April 2003, and has a firm period of three years. Consequently, Prosafe now owns a fleet of three FPSOs and two FSOs, operates one FPSO on behalf of the client, and holds one production/maintenance contract.
The company maintains its view on a long-term growth in the FPSO-segment, but notes that projects are postponed. Prosafe's focus will be on efficient operation of the existing contracts, and the company is at the same time optimising the cost level in Singapore. The company's aim of developing a leading position remains firm.
The activity level within Drilling Services is expected to remain high. Drilling on Jotun is, however, expected to be finished during May. On the other hand, Prosafe was awarded the drilling contract with Norsk Hydro for operations on Oseberg C, Oseberg East, Oseberg South, Oseberg B, Njord and Brage in March. The contract has a fixed term of three years and runs until June 2006. Norsk Hydro has options to extend the contract by up to six years. In addition, the company will start drilling on Kvitebjørn for Statoil during the third quarter. The lightweight rig, Rubicon, comes off a three-year contract on Snorre in August. Work is ongoing to secure new employment for the unit.
Prosafe is listed on the Oslo Stock Exchange with ticker code PRS.
Oslo, 9 May 2003
