Financial expenses for the period were US $8.6 million of which US $3.9 million is a non-cash item related to the change of value in an option issued in connection with a lease agreement for a blow out preventer entered into in October 2005.
The income for the period is related to mobilization fee from customers and management fee from the joint venture Songa Management.
Main events in the 1st quarter:
Songa Offshore entered into a memorandum of agreement for the purchase of the semisubmersible drilling rig Stena Dee, to be renamed Songa Dee.
The company issued a US $75 million secured bond loan as part financing for the Stena Dee rig acquisition.
A private placement issuing 6,300,000 new shares at a subscription price of NOK 58 per share was done as part financing of the Stena Dee rig acquisition.
A drilling contract was entered into with Noble Energy for the drill ship Songa Saturn.
A Letter of Intent for a drilling contract was entered into for Deepsea Bergen. Songa Offshore ASA owns 20.187% of Deepsea Bergen.
Tom E. Jebsen accepted employment as Chief Financial Officer (CFO) in the Group.
There are many long term development requirements for rigs of this kind in the North Sea - for start 1Q/2Q 2009 - and the company will actively pursue these opportunities.
Financing and share capital issues In connection with the acquisition of the rig Stena Dee, Songa Offshore issued 6.3 million shares in a private placement. The subscription price of NOK 58 per share raised net gross proceeds of NOK 365.4 million.
During the first quarter a total of 5,431,189 shares were issued following conversion of freely tradable warrants. Conversion price is US $1.50. As of March 31, 2006 a total of 13,838,044 freely tradable warrants were remaining in the market. The warrant program expires in May 2008.
As of March 31, 2006 Songa Offshore's interest bearing debt was US $179.6 million, of which US $108.1 million was a bond loan and US $71.5 million was bank loan facilities. Unused bank loan facilities totaled US $42.8 million. In addition, Songa Offshore had lease obligations totaling US $18.8 million in connection with a lease agreement for a blow out preventer. Bank deposits and cash at March 31, 2006 was US $26.6 million. Market conditions and outlook
The demand for drilling vessels continues to be strong in all segments. Due to limited near-term availability of drilling rigs, the market expects increases in day rates in the short to medium term.
Songa Offshore is well positioned to exploit the good market conditions. The company has established a competent management team and necessary infrastructure in order to operate its vessels under contract.
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