The agreement with JCE is entered into on condition that (i) no material matters are identified during the due diligence which is to be completed by 24 May 2006, (ii) the transaction is approved by the extraordinary general meeting of Prosafe by 31 May 2006, (iii) that the transaction does not trigger a mandatory offer in accordance with laws and regulations, (iv) that Consafe does not carry out transactions like acquisition or disposal of material assets, and (v) that required approvals from authorities are achieved at acceptable terms to the buyer.
An acquisition of Consafe confirms Prosafe's communicated strategy of consolidating the market for semi-submersible accommodation/service rigs, and would cement Prosafe's leading position in this market. Prosafe has seen a tightening of the market for accommodation/service rigs. This is due to increased demand in new regions like Asia, west Africa and the USA, and increased application of units in connection with other floaters, e.g. FPSOs and TLPs. A combination with Consafe would secure the company an effective geographical distribution of units, and significantly increase the capacity to serve a growing market. Demand primarily relates to the installation and production phases of an oil field. Market development is late cyclic, and has traditionally followed the fluctuations of drilling and seismic with some delay. The current high drilling activity is expected to increase the number of field developments, and result in continued growth in demand for accommodation and service rigs.
In addition, Prosafe expects to achieve operational and administrative synergies, e.g. within business development, insurance, finance and procurement. In a longer term, the company would take further advantage of extensive operational experience and market knowledge from the growing markets in Asia and West Africa.
Subsequent to a possible acquisition of Consafe, Prosafe would have two leading business areas, where Offshore Support Services would complement the company's strong commitment to growth within Floating Production. Today's high drilling activity is expected to result in a substantial increase in the number of field developments in the course of a period of two to three years. Floating production solutions are cost effective for deep water and for field developments in regions where infrastructure is limited.
Prosafe has a leading position in this market, and has the expertise, capacity and financial resources to consolidate its position in a steadily growing market.
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