Prosafe SE on Thursday reported its financial results for the second quarter of 2009.
Operating profit for the second quarter came to USD 46.8 million and net profit amounted to USD 43.1 million. Utilization of the rig fleet was 86 percent in the second quarter, even though MSV Regalia was in the yard throughout the quarter. A good market outlook, combined with a robust financial position, provides a good basis for further profitable growth.
(Figures in brackets refer to the corresponding period of 2008)
After the spin-off of Prosafe Production (the floating production division) in May 2008, only one division remains in Prosafe; the Offshore Support Services. Consequently, no segment information is presented in the notes to the accounts.
In accordance with IFRS, the figures relating to Prosafe Production Public Limited are presented net on a separate line in the income statement of Prosafe SE. Thus, when references are made to prior periods below, these figures are exclusive of the discontinued operations.
First half 2009
Operating profit for the first half of 2009 came to USD 84.3 million (USD 105.4 million). MSV Regalia has undergone a major refurbishment throughout the period, and this reduced the utilization of the rig fleet down to 82 percent (93 percent). The impact of the lower utilization was partly offset by higher day rates for the rigs on hire.
The contract for Safe Astoria was terminated for convenience by the client in February. The client had originally contracted the rig for a period of around two years from December 2007. Prosafe receives 85 percent of the day rate until the new contract with Shell starts in October.
Safe Concordia completed the contract in the US Gulf of Mexico in early February, and commenced operation for Pemex in the Gulf of Mexico on 8 May. Safe Bristolia commenced on a bareboat contract in the Gulf of Mexico in mid-March.
Safe Caledonia has operated for Total in the UK North Sea throughout the period, interrupted by a period of 40 days due to a planned yard stay.
Safe Scandinavia completed the contract with BP in the Norwegian sector of the North Sea in early June.
All other vessels have been fully utilized in the first half year of 2009.
Net financial costs amounted to USD 4.3 million (USD 29.5 million). This improvement reflects lower interest costs and increased market value of currency forwards as at 30 June 2009.
Tax costs expensed in the first half equaled USD 10.6 million (USD 3.3 million). The increased level is due to a provision relating to an unrealized currency gain in a Norwegian subsidiary.
Net profit amounted to USD 69.4 million (USD 72.6 million excl. discontinued operations), corresponding to diluted earnings per share of USD 0.31 (USD 0.32 excl. discontinued operations).
Total assets at 30 June amounted to USD 1 387.9 million (USD 1 362.7 million), while the book equity ratio declined to 13.7 percent (14.7 percent).
Utilization of the rig fleet was 86 percent (99 percent) in the second quarter. Operating profit amounted to USD 46.8 million (USD 63.4 million), which reflects the lower rig utilization mainly due to the yard stay of MSV Regalia throughout the second quarter this year. USD 1 million relating to a settlement of a previous operation has been charged to the accounts for the second quarter.
Safe Astoria was on 85 percent of contracted standby day rate in April and on 85 percent of full operating day rate from 1 May 2009.
Safe Concordia commenced operation for Pemex in the Gulf of Mexico on 8 May, and Safe Scandinavia completed the contract with BP in the Norwegian sector of the North Sea in early June.
All other vessels have been fully utilized in the second quarter.
Net financial items amounted to USD 4.6 million (net costs of USD 14.7 million). The main reason for this change is increased market value of currency forwards as at 30 June 2009.
Tax costs expensed in the second quarter amounted to USD 8.3 million (USD 0.2 million). This increase is due to a provision relating to an unrealized currency gain in a Norwegian subsidiary.
Net profit amounted to USD 43.1 million (USD 48.5 million excl. discontinued operations), corresponding to diluted earnings per share of USD 0.19 (USD 0.21 excl. discontinued operations).
The board of directors resolved on 26 August 2009 to declare an interim dividend of NOK 0.35 per share to shareholders of record as of 9 September 2009. The shares will trade ex. dividend as from 7 September 2009. The dividend will be paid on 23 September 2009.
Seven of the company's rigs are bareboat chartered to Interpetroleum Services, operating for Pemex offshore Mexico. Safe Bristolia started a one-year contract in Mexico in mid-March. Safe Concordia started a 240-day contract 8 May. The other five rigs have firm contracts as follows: Jasminia until December 2010, Safe Hibernia until May 2011, Safe Lancia until January 2010, Safe Regency until August 2013 and Safe Britannia until January 2013.
Safe Esbjerg is in operation for Mrsk Oil & Gas in the Danish North Sea until June 2011.
At the end of July 2009, Safe Scandinavia commenced a 65-day contract for Shell in the UK North Sea, after completing a five-year special periodic survey (SPS) at a yard in Invergordon, Scotland.
Safe Caledonia is operating on a long-term contract for Total in the UK North Sea until September 2010.
MSV Regalia started operation for BP at the Valhall field on 12 July. This contract has a firm duration until January 2011 with an option period of six months.
Safe Astoria will start a 243-day contract, including mobilization and demobilization, for Shell in the Philippines early October 2009. Safe Astoria is now in layup at the Kemaman yard in Malaysia, after SEIC in the beginning of February terminated the contract for convenience. Prosafe receives 85 percent of the day rate from SEIC until the new contract with Shell starts in early October.
Within the harsh and semi-harsh offshore environments where most of Prosafe's accommodation rigs operate, there is a good supply-demand balance and the number of new-builds to be delivered over the next few years is limited.
In the North Sea, the majority of the fixed installations are mature and require greater maintenance and modifications to uphold production and safe operation. Increased recovery and tie-ins of satellite fields to existing installations have extended the lifetime for many fields in the North Sea with ten to 20 years. Therefore, we foresee a good outlook for modification and maintenance projects over the next years, and we expect that some of these projects will require additional accommodation offshore in order to carry out the projects efficiently.
The market for semi-submersible accommodation rigs remains strong in Mexico, where Pemex has high activity offshore in order to keep up production of the Cantarell field.
In summary, we expect a good long-term demand for semi-submersible accommodation rigs, especially in Mexico and the North Sea, with growth potential in other deepwater regions.
Prosafe is the world's leading owner and operator of semi-submersible service rigs. Operating profit reached USD 232.2 million in 2008. The company operates globally, employs approx. 400 persons and is headquartered in Larnaca, Cyprus.
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