Despite the decreased revenues in Southeast Asia, the Company anticipates overall improved EBITDA for the second half of 2004 compared to the first half of this year due to the commencement of work on its significant contracts offshore Israel for Israel Electric Corporation and offshore Mexico for Pemex. Horizon collateralized a $9.1 million letter of credit to Israel Electric Corporation required under the contract with proceeds from the issuance of subordinated secured notes on May 27, 2004. The Sea Horizon and the Canyon Horizon have begun mobilization to Israel and are scheduled to arrive in late July 2004 to begin work on the installation of a 30" diameter natural gas transmission system pipeline. This project is estimated to be substantially complete by the end of 2004.
Horizon has begun work on a contract for the construction and installation of several pipelines in the Bay of Campeche for Pemex. The Company has completed the engineering and the procurement of 24" diameter pipe required for the project. The Lone Star Horizon is scheduled to mobilize during the first half of July 2004 to lay and trench pipelines ranging in size from 10'' diameter to 24" diameter and will perform one shore approach. The Atlantic Horizon is scheduled to mobilize in early September 2004 to complete minor trenching and perform tie-ins on the Pemex project, which will be substantially completed during the fourth quarter of 2004.
The Gulf Horizon is currently at a shipyard in South Carolina undergoing a damage assessment. The Company purchased a marine hull insurance policy to cover physical damage to the Gulf Horizon while being towed to Israel, which this insurance policy provides for a $0.5 million deductible. Management believes that Horizon's safety assurance programs and training were key components in the crew's response during the initial fire-fighting effort and the evacuation of personnel on board the Gulf Horizon with no reports of injury.
"While we expect the existing competitive market conditions to continue in the Gulf of Mexico, we intend to keep a small fleet of vessels available to capitalize on any increase in activity in the Gulf. We will strategically disburse our remaining fleet to international markets. As we begin work on the significant contracts offshore Israel and offshore Mexico, we look forward to increased utilization of our fleet and improved EBITDA during the second half of this year," said Bill Lam, President and Chief Executive Officer.
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