ProSafe Sees Best Ever Quarterly Result

Prosafe's operating profit for the third quarter came to USD 31.6 million (USD 19.5 million in the same period last year), which is the best quarterly result in the company's history. Operating profit before goodwill amortization equaled USD 33.5 million (USD 21.4 million).

Net financial items amounted to USD - 7.1 million (USD - 4.6 million). The reason for increased financial costs is mainly an unrealized currency loss relating to the company's bond loan of NOK 500 million.

Net profit for the third quarter came to USD 23.2 million (USD 13.7 million), and fully diluted earnings per share equaled USD 0.68 (0.40). Adjusted for goodwill amortization, fully diluted earnings per share equaled USD 0.74 (0.46).

Cash flow from operating activities amounted to USD 29.8 million (USD 22.5 million), or USD 0.87 (0.66) per share.

Year-to-date operating profit amounted to USD 68.7 million (USD 47.8 million), whilst operating profit before goodwill amortization equaled USD 74.4 million (USD 53.5 million).

Year-to-date net profit equaled USD 47.6 million (USD 14.5 million). Cash flow from operating activities amounted to USD 67.2 million (USD 9.8 million), whilst fully diluted earnings per share and fully diluted cash flow per share were USD 1.40 (USD 0.43) and USD 1.98 (USD 0.29), respectively. Adjusted for goodwill amortization, fully diluted earnings per share equaled USD 1.57 (USD 0.60).

Offshore Support Services
Operating profit for the third quarter came to USD 23.4 million (USD 11.4 million). Fleet utilization was 98 % (68 %). The main reason for the improved operating profit is the high fleet utilization, but also higher contributions from Safe Caledonia and MSV Regalia.

All five rigs which are engaged in the Gulf of Mexico have been in regular operation throughout the third quarter. Safe Caledonia has operated off west-Africa throughout the third quarter, whilst Safe Scandinavia and MSV Regalia have operated on Sleipner and Troll, respectively, from mid July.

Floating Production
Operating profit for the third quarter amounted to USD 5.9 million (USD 5.3 million). Deprecation is somewhat lower due to contract extension for FSO Endeavor, and the fact that FPSO PetrĂ³leo Nautipa has continued beyond the initial, firm two-year period. In addition, the third quarter last year was charged with lay-up costs relating to M/T Serene Sky, which was sold in January this year.

Drilling Services
Operating profit for the third quarter amounted to USD 3.1 million (USD 3.6 million). The reason for the decrease is mainly that the light-weight rig, Rubicon, has been off-hire throughout the third quarter this year. Completion of activities and downmanning on Tampen (Gullfaks, Snorre and Heidrun) have developed better than expected, in spite of Heidrun and Gullfaks A being completed in September, whereas activity on the other installations was finalised successively in October. Regularity problems on two of the company's other installations, mainly due to equipment failure, have lead to a substantial decline in the profit for the period. Sale of equipment in connection with discontinuation of activities on Tampen has, however, resulted in a gain of USD 2.5 million, which secures a good profit for the period.

Within Offshore Support Services, the company has so far this year been awarded new contracts at a combined value of USD 161 million. In addition, Safe Scandinavia and MSV Regalia have got contract extensions of two weeks on Sleipner and four weeks on Troll in 2004, respectively. MSV Regalia has, however, been non-operating in the period from 26 October through to 31 October in order to change a thruster with a hydraulic leakage. Now, the rig fleet is secured 87 % utilization in 2004, 79 % in 2005, 82 % in 2006, 62 % in 2007 and 34 % in 2008. The company maintains a positive view on the market outlook, both in the North Sea and internationally. However, as earlier indicated by the company, the number of current prospective requirements is lower in 2005 than in 2004. Long-term market outlook is positive based on more demand drivers and more geographical areas of application. The number of prospective requirements increases again from 2006.

Within Floating Production, operations are going well. On the market side, only two FPSO-projects have been awarded so far this year, one in west-Africa and one in Brazil. Several projects are, however, identified in west-Africa, Brazil and Asia, and activity is expected to increase in 2005. Low cost base and high operating efficiency secure good results in periods without any new conversion projects.

Within Drilling Services, the downmanning and cost cuts which are being carried out following the discontinuation on Tampen, and the measures which are being effectuated after operational challenges in the last period, will be the basis for expecting an improvement in underlying operation from remaining contracts in the periods ahead. Operation of Rubicon, which now is scheduled to commence operation on Montrose in the British sector in December, will be important for the profitability within Drilling Services.

The company anticipates a high activity level within the platform drilling market in the North Sea going forward, based on high oil prices and focus on enhanced oil recovery. The company will monitor future contract opportunities in both the Norwegian and British sector, and at the same time focus on safe and efficient operation of platform drilling contracts, Rubicon and technical services.