Petrojack Reports 4Q and Full Year 2005 Results

Petrojack was incorporated on October 4, 2004 by Larsen Oil & Gas AS. LOG AS is engaged as manager for Petrojack ASA.

Petrojack has entered into EPC contracts with Jurong Shipyard for the construction of three jackup rigs. The jackup rigs have an operating water depth capacity of 375 feet and drilling depth capacity of approximately 30,000 feet.

The rig price for the first jack-up rig (Petrojack I) is MUSD 125.3. Development Bank of Singapore (DBS Bank) has provided Petrojack with a loan facility of up to MUSD 106.0 (but subject to a maximum of 80 percent of the rig price plus certain other defined costs) for the construction of Petrojack I. Delivery date is on or before March 15, 2007.

The rig price for the second jack-up rig (Petrojack II) is MUSD 127.1, with 80 % yard financing during the construction period. Delivery date is on or before January 15, 2008.

The rig price for the third jack-up rig (Petrojack III) is MUSD 131.2, with 80% yard financing during the construction period. Delivery date is on or before June 30, 2008.

Construction progress

There has been no lost time accidents on the projects and the projects are developing according to overall progress schedule and on budget. There has, however, been some delays in the dock erection work on Petrojack I, caused by delayed access to the construction dock and bad weather. A recovery plan has been implemented to ensure no milestones are delayed. This recovery plan is in good progress with top focus by the yard management. Overall schedule, price and Delivery Date is evaluated not to suffer by recent events.

Financial information

The financial data have been prepared in accordance with the international Financial Reporting Standards (IFRS). No material revenues are expected in the company before delivery of the rigs.

Operating loss for the fourth quarter 2005 came to MNOK (11.6). The expenses consists mainly of costs related to the management of the company, hereunder project management costs. Net financial items came at MNOK 0.35, as a result of currency gains. Net profit for the 4th quarter was negative with MNOK (11.3).

The full-year 2005 operating loss was MNOK (19.2). Net financial Items were positive with MNOK 8.3 and the net result was negative with MNOK (10.9).

As of December 31, 2005 total assets amounted to MNOK 417.5, of which MNOK 363.3 was related to capitalization of construction in progress of the jack-up units. Initial project costs and project management costs related to the project management agreements are included in the capitalized amounts.

On October 28, 2005, Petrojack carried out a private placement of 2,850,000 new shares, at a subscription price of NOK 16.0 per share. As per year-end 2005 the number of shares outstanding equaled 60.675.000, each with a par value of NOK 5.0, corresponding to a share capital of NOK 303.375.000. Total equity equaled MNOK 396.7 as of December 31, 2005.

Petrojack has no outstanding or authorized stock options, warrants or convertible debt.

Recent events

With reference to stock exchange notice January 5, 2006, Petrojack ASA has entered into agreements for Petrojack I, II and III with one of the worlds largest drilling contractors, Transocean Inc., whereby Petrojack has granted Transocean exclusive marketing rights until March 15, 2006 for the three rigs, as well as options to purchase Petrojack I, II and III until March 15, 2006. A sale of all three rigs will give an estimated average sales price of approximately MUSD 180 per rig. According to the purchase agreement, the sale of Petrojack II and II is subject to approval by the general meeting of Petrojack.


The jackup market has continued to develop positively, with improving day rates and rig utilization. The utilization for modern jack-up rigs is close to 100%, and the day-rates for high specification jackups are in the US $180,000 - $200,000 range.

The average age of the global jack-up fleet is approximately 23 years. There are currently approximately 45 jack-up rigs under construction, including options, corresponding to approximately 12% of the global jack-up fleet. In spite of the significant newbuilding activity, the expected medium-term demand for modern rigs is expected to remain strong. Petrojack's jackup rigs will be delivered in 2007 and 2008.