PGS in the Works for 4 New 3D Seismic Vessels
PGS has reported on its operations for the third quarter.
New-Builds and Conversion Programs
The Company's first new and enhanced Ramform design new-build vessel, Ramform Sovereign, was delivered on original plan in March 2008 and commenced operations in the North Sea around end March. The second Ramform new-build, Ramform Sterling, is on schedule at Aker Yards' hull building facility in Romania (Aker Yards, Tulcea). The Company expects the vessel to be delivered end June 2009 according to original plan. The total cost of the vessel, including 14 streamers, but excluding project management and capitalization of interest in the construction period is expected to be $180 million (measured at currency exchange rates at
project start), of which $135 million is remaining at end of Q3 (excludes capitalized interest and project management).
PGS is constructing four 10-12 streamer seismic 3D vessels at the Factorias Vulcano shipyard group in Spain (the Arrow newbuilds). During Q3 PGS entered into revised agreements with the shipyard, Pymar (the
Spanish shipbuilders association) and WesternGeco on incentives, delivery times and guarantees. The shipyard group is experiencing a tight liquidity situation and PGS is monitoring the status of the yard closely.
The first two vessels (NB 532 and 533) are being constructed at Juliana fabrication facility and are on charters with a purchase obligation to WesternGeco. Under the revised delivery schedule, NB 532 is planned to be delivered end November 2008 and NB 533 end March 2009, but with a risk of further delays. With respect to NB 532 and 533, PGS’ agreements with the shipyard and WesternGeco, respectively, are generally designed to be
At end Q3, only the last installment for each vessel, due at delivery, is still remaining. At the time of delivery corresponding amounts will be receivable by PGS from WesternGeco.
The two other new-builds (NB 534 and 535, which will be named PGS Apollo and PGS Artemis) will be included in PGS seismic operations when completed. Under the revised agreements both new-builds will be managed
and delivered from the Vulcano yard facilities in Vigo, with planned delivery July 2009 and February 2010.
Conditional upon timely delivery, PGS will pay a bonus of EUR 4 million per vessel in addition to the original
yard contract. PGS has decided to lengthen PGS Artemis by 8 meters and introduce improved NOX cleaning systems at an additional cost of approximately $10 million.
Remaining capital expenditures at the end of Q3 is estimated at $80 million for Apollo and $130 million for Artemis (including 12 GeoStreamers) (excludes capitalized interest and project management).
The 3D vessel Laurentian has been released from the time charter with CGGVeritas. The vessel will be rigged as a 2D GeoStreamer vessel.
Arrow had three source/2D conversion projects/candidates at the time of the PGS acquisition. Conversion of Polar Sea to a source vessel was completed in November 2007. Polar Explorer has been renamed to Southern Explorer and is currently being converted to a GeoStreamer 2D vessel at a yard in Poland. Completion of this conversion is expected to be delayed well into 2009. PGS is reviewing its alternatives for the third conversion candidate, Polar Pearl.
PGS currently has sufficient availability of source and 2D vessels, and the vessel has been announced as available for sale in the market.
On July 7, 2008, CGGVeritas issued a claim against Arrow Seismic ASA, acquired by PGS in 2007, of $70 million. CGGVeritas claims to have a binding agreement with Arrow for a charter and ultimately the purchase of NB 534. PGS views the CGGVeritas claim against Arrow as unfounded.
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