Most of the damage to the company's four semisubmersible rigs was to their mooring systems. Three of these rigs, the GSF Arctic I, GSF Development Driller II and GSF Celtic Sea, are projected to begin normal operations in the U.S. Gulf of Mexico during the fourth quarter of 2005. The GSF Development Driller I, which also sustained water damage to some of its thruster control systems, is projected to start work in the first half of 2006 due to longer delivery times for critical replacement parts.
All of the damaged rigs are covered under a hull and machinery insurance policy with a combined deductible of $10 million for this event. In addition, the GSF Arctic I, GSF Development Driller II and GSF Development Driller I are insured under a policy that provides reimbursement to the company for 100 percent of each rig's contracted dayrate following 60 days of lost revenue, up to a maximum of 270 days per rig.
While GlobalSantaFe's financial results in the second half of 2005 will be adversely impacted by the storm, the company does not anticipate any negative impact on its 2006 earnings.
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