Abbot Says Loss of Shell North Sea Contract Negligible

Abbot Group reports that its subsidiary, KCADeutag ('KCAD'), has not been successful in a recent tender exercise undertaken by Shell in respect of all of its North Sea platform drilling operations, and consequently KCAD will cease operations at the end of August on the 9 platforms for which it currently holds the contract. Although the loss of the contract is to be regretted, it was intimated at the time of the preliminary results in March that the loss of North Sea contracts was a possibility.

Abbot considers that the financial effect on its 2004 results of this loss of contract will be negligible representing as it does approximately 4% of total Group turnover, and looking forward remains confident of continuing growth in its international business.

Whilst KCAD had an opportunity to retain the contract, the terms were considered to be wholly inappropriate and unacceptable. The contract has been awarded to a Norwegian contractor, a new entrant to the UK Sector. Unfortunately, whilst Norwegian contractors have recently been encouraged to enter the UK market and awarded contracts by leading operators, no such initiative has been offered to UK or other non-Norwegian contractors in the Norwegian market.

Commenting, Alasdair Locke, Executive Chairman of Abbot, stated: 'Whilst it is disappointing to cease working with Shell in the North Sea after more than 17 years of continuous operations, the Group continues to have substantial business with Shell in various parts of the world and an exciting and expanding business on an international basis. At the same time the Group is wholly committed to servicing its remaining North Sea customers on 19 platforms. It is, however, regrettable that market circumstances and practices means that the UK North Sea will form a reduced part of our business in the future, although we will continue to tender for North Sea contracts as the opportunities arise.'