The construction of the three harsh-environment jackup rigs at Keppel FELS Shipyard in Singapore is developing as scheduled, and all three will be delivered in 2010. The market conditions are still very strong and operators are showing great interest in the rigs. Steel strike for rig no. 1 started February 1. while steel strike for rig no. 2 will start June 1. All three rigs are fully financed.
Skeie Drilling & Production ASA (SKDP) expects no material revenues before delivery of the three jack-up rigs from Keppel FELS in 2010.
The operating result for the first quarter 2008 was a loss of USD 0.274 million, compared with a loss of USD 0.098 million in the first quarter 2007. The main reason for the deviation between 2007 and 2008 first quarter result, was that SKDP started the operation by building the jack-up rigs later in 2007.
The operating expenses in first quarter 2008 mainly consist of costs related to management of the companies (SKDP and its subsidiaries) and costs related to bids. Net result for the first quarter 2008 was a loss of USD 5.08 million compared to a loss of USD 77 thousand for the same period in 2007. The net financial loss for the first quarter 2008 was USD 4.8 million and consist mainly of foreign exchange loss (USD/NOK), mainly unrealized.
Interest income and expenses related to the Bonds and convertible bond loan for construction of the rigs are capitalized under construction contract in the Group Balance Sheet. The remaining interest income and expense are expensed in the P&L statement.
As of 31 March 2008, the total assets amounted to USD 770.4 million of which the capitalization of construction in progress on the jack-up units represented USD 429.6 million. Initial project costs and project management costs in accordance with management agreements are included in the capitalized amount.
Cash and cash equivalents amounted to USD 340.1 million at the end of first quarter 2008.
Financing of the rigs The loan agreements for the first priority loans amounting to USD 675 million are about to be finished and are expected to be signed shortly. Together with the secured bond loans and the convertible bond loan all three rigs are now fully financed.
Market outlook The market outlook is still very strong looking forward to the year of delivery of the rigs in 2010. As it seems now the demand will be bigger than the supply. A great interest for the rigs is shown from operators in the Norwegian Sector of the North Sea. Based on this the management is working hard to secure contracts for all three rigs within this year.
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