Smedvig Reports Good 2nd Quarter Results

Smedvig reported consolidated operating profit for the second quarter of NOK 260 million, an increase of NOK 28 million from the previous quarter.

The operating profit is the best quarterly result ever posted by the Company. The result reflects increased utilization, higher dayrates and improved efficiency. Operating profit for the first half year was NOK 492 million, an increase of NOK 220 million as compared to the first half of the previous year.

Net financial expenses for the second quarter was NOK 99 million, as compared to net financial expenses of NOK 217 million in the preceding quarter. The rig owning subsidiary, Smedvig Rig AS, has adopted the US dollar as functional currency for its consolidated accounts, thus reducing the exposure to NOK/USD currency translations. A capital gain of NOK 721 million is recognized from the sale of the drilling rig West Delta.

Income taxes for the second quarter was NOK 132 million, as compared to a tax income of NOK 37 million in the previous quarter. The Company has included West Navion in the Norwegian tax scheme for offshore companies and reversed a deferred tax asset of approximately NOK 100 million in that respect.

Net income for the second quarter was NOK 750 million, as compared to NOK 52 million in the first quarter. Net income for the first half of the year was NOK 802 million. Earnings per share were NOK 9.06 for the second quarter. Cash flow for the quarter amounted to NOK 696 million. Cash flow per share was NOK 8.41.

Operating profit from the Mobile Unit Division amounted to NOK 175 million, up from NOK 169 million in previous quarter. The result is the best ever posted by this division. The increase is primarily attributable to improved profit margins for West Venture, and increased utilization of the mobile drilling units. The operations of all mobile units have proceeded satisfactorily during the quarter, and the utilization rate averaged approximately 99 percent, up from 96 percent in the preceding quarter.

Operating profit from the Platform Drilling Division amounted to NOK 20 million, marking a significant improvement from NOK 8 million in first quarter. The increase is mainly due to improved efficiency and increased activities.

Operating profit from the Tender Rigs Division amounted to NOK 80 million, up from NOK 70 million in the previous quarter. The increase is primarily attributable to increased utilization of the tender rig fleet. The operations of all units have proceeded satisfactorily during the quarter, and the utilization rate averaged approximately 86 percent, up from 79 percent in the preceding quarter.

"Smedvig's strong operating profit in the second quarter reflects improved operational performance in all business units. In particular, the operations of the two new deep water units have been very satisfactory," says Christian Bull Eriksson, CEO of Smedvig.

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