Prosafe Wins FPSO Contract in New Zealand

Prosafe Production Services has been awarded a contract by New Zealand Overseas Petroleum Ltd for the provision of an FPSO for the Tui field in the Taranaki basin offshore New Zealand. The contract has a fixed term of 5 years plus 5 x 1 year options. The value of the fixed term of the contract is US $178 million.

Prosafe will convert a Suezmax tanker, M/T Ionikos, and will own and operate the unit on a wholly owned basis. The vessel will be turret-moored in a water depth of 120 meters using Prosafe's turret/swivel technology. Production is expected to start in Q2 2007. Based on a strong market outlook, Prosafe has worked systematically to increase its internal capacity for executing FPSO conversion projects. The contract confirms the strategic development of the company and the strength of the lease-operate FPSO market.

It also brings the company into a new region and establishes the company's presence in all the major offshore regions in the southern hemisphere.

The contract has a significant frontloading of earnings to match the expected production profile of the field. This enhances the economic attractiveness of the project as it improves Prosafe's ability to accelerate growth on the back of a strong FPSO market. The lease dayrates are fixed and the operations day rate is subject to escalation over the life of the contract. Prosafe carries no risks regarding reservoir performance or oil price. Prosafe remains very optimistic on the outlook for the overall FPSO market, and expects a high activity level also in the coming years. Based on the phasing of the project work and the build-up of resources, the company will continue to pursue new projects going forward.

New Zealand Overseas Petroleum Ltd is the operator of the field. The co-venturers are New Zealand Overseas Petroleum Ltd (45%), AWE New Zealand Pty Ltd (20%), Mitsui E&P New Zealand Ltd (12.5%), Stewart Petroleum Company Ltd (12.5%) and WM Petroleum LTD (10%).