The third quarter 2005 financial results, when compared to the same period in 2004, continue to reflect a dramatic turnaround in the market. The 56% increase in revenue from $34.1 million to $53.0 million, and significant increase in operating income from $5.7 million to $18.5 million, quarter over quarter versus 2004, are primarily the result of: (1) increased day rates in all regions; (2) the addition of new vessels including the full year effect of the Austral Abrolhos delivered in September of 2004, the Highland Citadel delivered late in 2004, and the addition of the Titan and Coloso late in the second quarter of 2005; and (3) improved vessel utilization. Improved day rates, primarily in the North Sea, was the single most significant factor comprising $10.8 million or 57.1% of the increase. Capacity increases, with the addition of the new vessels beginning in the third quarter of 2004 and second quarter of 2005, accounted for $6.1 million, or 32.3 % of the increase with the balance related to increased utilization of $2.0 million, primarily in the North Sea and Americas regions.
Mr. Bruce Streeter, President and COO of the company commented: ``Our results for the third quarter reflect not only the strength of the marketplaces where we work, but also the strategic decisions that we as a company have made. This is particularly true for the North Sea where we have benefited from the strengthening conditions in that market. These conditions have: (1) allowed the vessels from our 2000-2003 new construction program to achieve high utilization and day rates; (2) let our existing vessels obtain rollover term contracts at much stronger rates; and (3) enable our vessels in the ''spot market`` to take advantage of a relatively robust market. Our contract outlook continues to improve with approximately 90% contract cover for the remainder of 2005 and more than 50% already secured for 2006. This should not only help provide earnings stability as we enter the traditionally weaker winter period, but also creates a strong cash flow base for next year without sacrificing the opportunity for additional growth as the year develops. In Southeast Asia, the high utilization is indicative of strengthening market demand in the area with improving average day rates reflecting our fleet mix and the higher day rate levels that several of our vessels can obtain. In the Americas, the average dayrate is lower in comparison to the year ago period, but that is as a result of the change in the mix of equipment in the area with the third quarter being the first full operating quarter for our new Mexican venture which includes somewhat smaller vessels.
Very late in the third quarter we took delivery of the Sea Intrepid, the first of two China newbuild vessels. We are very pleased with the timing of the delivery as the vessel is already working ahead of when we expected. Progress on the second China new build continues and this vessel, along with the AKER 09 vessel also under construction, is on schedule. We believe fleet additions are important as demand has increased and continued to change around the world. As we discussed in previous quarters, we have seen improved demand for vessel services in an increasing number of locations. Several recent notable events involving expansion of operations were: (1) this quarter was the first full quarter in Mexico, where the start of operations has gone well; (2) the drilling support program in the Black Sea has continued; (3) an existing client has sent one of our vessels to Australia; and (4) subsequent to the end of the quarter, a major oil company awarded us a two year plus options contract supporting deepwater work off Egypt. This fixture is important not only because of the vessels involved and the revenue generated, but because it better positions us in the Eastern Mediterranean and Black Sea area, a locale of greater focus and interest on the part of our customers. Our employees have responded and done an excellent job in working to increase fleet usage, support a wider array of vessel locations, and maintain reliability and safety in an environment of expanding vessel operations.``
At September 2005 the company had working capital of $39.9 million, including $17.9 million in cash and cash equivalents. The company had total debt of $242.9 million, consisting of $159.4 million of 7.75% senior notes, $14.1 million related to certain vessel mortgages, $0.3 million related to the Aker Joint Venture capital contribution (construction of the Aker PSV09 vessel), and $69.1 million under our revolving credit facilities.
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