Scorpion Offshore Announces Unaudited Second Quarter Financial Results

The Board of Directors of Scorpion Offshore approved its second quarter 2006 unaudited financial statements.

These financial statements have been prepared in accordance with US Generally Accepted Accounting Principles ("GAAP").

Net loss for the second quarter totaled US $1.8 million of which $1.9 million was attributable to equity private placement fees and $1.2 million to general and administrative expenses. These expenses were offset by $1.3 in interest income. All interest costs for the quarter were capitalized.

For the period April 15th (date of inception) to December 31, 2005, the net loss was US $7.7 million. This period included equity private placement fees of US $6.7 million and general and administrative expenses of US $1.9 million which was offset by US $1.4 in interest income.

Total assets as of December 31, 2005 were US $416 million. This consists of US $215 million in cash and cash equivalents and US $194 in construction in progress. Long Term debt totaled US $225 million and shareholder's equity US $188 million.

As of September 30, 2005, total assets were US $131 million, with cash and cash equivalents of US $55 million and construction in progress of US $77 million. Shareholder's equity totaled US $131 million.

During the 2nd quarter 2005, the Company increased its share capital as follows:

  • On November 3rd 1.8 million new shares were issued at NOK 192 per share to complete the equity financing of the first four rigs;
  • On November 30th 13,000 new shares were issued at NOK 192 per share to finance part of the fifth's rig's LeTourneau Kit option payment;
  • On December 6th, the previously shareholder approved 5:1 share split was effective. The number of common shares outstanding increased from 8 million to 40 million;
  • On December 28th 750,000 new shares were issued at NOK 50 per share to finance an additional part of the fifth's rig's LeTourneau Kit option payment.

As of December 31, 2005, Scorpion had 40.8 million shares outstanding, each with a par value of US $0.002, corresponding to a share capital of US $195.8 million. On January 13, 2006, the Company issued 3 million new shares at NOK 55.50 per share to finance the remaining down payment on the fifth's rig's Kit and twenty percent of the shipyard price.

Rig Construction

The Offshore Courageous and Offshore Defender are currently under construction at the Keppel AmFELS shipyard in Brownsville, Texas. Both rigs are on or ahead of schedule and have met their progress milestones on time.


The jackup market has continued to strengthen in all regions world-wide. Utilization is at 100% for all marketed rigs in the ultra premium and premium market segments. Leading edge dayrates have reached around US $200,000 in several markets, including Tunisia and Malaysia and US $250,000 in the North Sea. The US Gulf of Mexico is experiencing an increase in the length of its contracts with leading edge dayrates exceeding $170,000.


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