Torch Says Conversion of Midnight Express in Final Stages

Torch Offshore reports that the conversion project of the Midnight Express is in its final stages. The Company has spent $90.0 million to date of the total of approximately $109.0 million to be expended on the conversion project. The Midnight Express, the Company's 520-foot DP-2 deepwater capable pipelay vessel, is being converted at Davie Maritime, Inc. in Quebec, Canada, and is over 90% complete and expected to leave the shipyard on May 21, 2004. The patented pipelay system that is being constructed by Huisman-Itrec and the 500-metric ton crane constructed by Hydralift AmClyde, Inc. are essentially completed and ready for installation on the Midnight Express. Upon leaving the shipyard, the Company's patented pipelay system and crane will be installed and the vessel will then undergo final sea trials. The Company expects the vessel will enter the active fleet in the latter part of the third quarter of 2004.

The Company said the response to the Midnight Express has been very positive and several customers have shown strong interest in utilizing the vessel. The Company is currently pricing various jobs to lay pipe in the Gulf of Mexico in the fourth quarter of 2004 and internationally in 2005 with the vessel. Management of the Company has been actively marketing the vessel to customers throughout the world by presenting the patented pipelay technology at conferences in Houston and Amsterdam. Furthermore, management of the Company has made personal visits to various operators and contractors and hosted customer visits to the patented pipelay system at Huisman-Itrec in the Netherlands and to the vessel in Quebec, Canada.

Lyle G. Stockstill, Torch Offshore, Inc. Chairman and Chief Executive Officer, commented, "As for the utilization of the vessel, the future continues to look bright as we have been speaking in detail with several customers to use the vessel in deepwater pipelay mode. In fact, we are working closely with a customer to utilize the vessel in the Gulf of Mexico as soon as sea trials are complete. We have been quite happy with the response to the vessel from our customer base both domestically and internationally."

The $109.0 million cost to complete the conversion of the Midnight Express is approximately 20% higher than the earlier cost estimate of $90.0 million at March 31, 2003. Approximately $5.0 million of this cost overrun relates to the devaluation of the U.S. dollar against the Euro. Of the remaining $14.0 million, $11.6 million resulted from increases at the Davie Maritime, Inc. shipyard and the balance consisted of additions and upgrades of equipment, increased supervision and management costs due to the 5-month extension to the conversion project and increases in equipment installation costs.

"We consider the cost overruns on the conversion of the Midnight Express to be relatively normal for a vessel conversion of existing equipment and of this size. We are proud of our engineering staff for keeping the costs to a relative minimum," added Stockstill.

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