Lyle G. Stockstill, Torch Offshore, Inc. Chairman and Chief Executive Officer, commented, "The first quarter of 2004 turned out exactly as we had expected given the market conditions and seasonality of our business. However, as we turn the corner into the second quarter and the construction season, we are beginning to see an increase in our workload. For example, in April 2004 our vessels worked 172 revenue days and we expect increasing utilization for the remainder of the second quarter. The Midnight Wrangler will be under contract through June 2004 and the Midnight Hunter has contracted work into July 2004. In addition, we have begun preparation for the Marathon Alba project in Africa which will utilize the Midnight Brave and Midnight Carrier for a five month period."
Stockstill added, "As for the Midnight Express conversion, we expect that the vessel will be leaving the shipyard by the end of the month for its DP-2 sea trials in the North Atlantic Ocean. The vessel is scheduled to then travel to Amsterdam for installation of the patented pipelay system and the 500-ton crane before returning to the Gulf of Mexico for final outfitting and installation of the pipe handling system. The sea trials on the pipelay system are expected to occur in the latter half of the third quarter of 2004. As we have previously announced, we have begun contract negotiations for the first pipelay project for the Midnight Express. These negotiations are continuing, and we will announce further details once the contract is finalized. In addition, we are pursuing several other opportunities for work with the vessel in the fourth quarter of 2004 and early 2005."
As of March 31, 2004, the Company has a working capital deficit position primarily resulting from the current classification of the Midnight Express Finance Facility. This position places pressure on the Company's liquidity management and could impact the Company's operations and future business plans. Management continues to believe that the Company has the ability to sustain operations and meet its financial commitments through effective management of its operations and the available liquidity provided by its credit facilities. However, if the Company incurs significant losses or if the Company's ability to access its credit facilities is curtailed, the Company's ability to continue to manage its liquidity needs and its operating and other financial commitments may be jeopardized in the future.
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