Scorpion's Net Loss Shrinks for Q1

Scorpion Offshore Ltd.

The board of directors of Scorpion Offshore Ltd on Thursday approved the company's first quarter 2007 unaudited financial statements. These financial statements have been prepared in accordance with US Generally Accepted Accounting Principles (GAAP).

Net loss for the quarter totaled USD 0.8 million compared to a net loss of USD 5.1 million for the same period in 2005. For the quarter, interest income of USD 1.6 million partially offset stock-based compensation and debt commitment fees of USD 0.7 million and USD 0.7 million, respectively. All interest costs for the quarter were capitalized.

For the period from 15 April 2005 (date of inception) to 30 September 2006, the company's net loss was USD 5.7 million. The net loss was comprised of equity private placement fees of USD 7.5 million, debt commitment fees of USD 2.2 million and general and administrative expenses of USD 2.9 million which was offset by USD 7.5 million in interest income.

Total assets as of 30 September 2006 were USD 450.6 million. This consists of USD 96.3 million in cash and cash equivalents and USD 344.1 in construction in progress. Long-term debt totaled USD 225.0 million and shareholder's equity USD 218.5 million.

As of 30 June 2006 total assets were USD 458.2 million. This consisted of USD 153.6 million in cash and cash equivalents and USD 294.5 in construction in progress. Long Term debt totaled USD 225.0 million and shareholder's equity of USD 217.9 million.

Private Placement

On 24 October 2006, the company issued 3.5 million new shares at NOK 68 per share raising USD 35.0 million in gross proceeds. These funds will be used to finance the international upgrades for the Offshore Courageous and Offshore Defender (USD 8.2 million per rig) and USD 15 million for shipyard progress payments related to the company's fifth jack-up drilling rig, the Offshore Intrepid. The remaining proceeds will be used for working capital purposes.

Rig Construction

The Offshore Courageous, Offshore Defender, Offshore Resolute and Offshore Vigilant are currently under construction at the Keppel AmFELS shipyard in Brownsville, Texas . The Offshore Courageous was launched on 4 November 2006 and is approximately 80% complete. The rig is now undergoing final outfitting which includes installation of the drilling equipment and remaining leg sections. Scorpion anticipates an on time delivery of the rig in May 2007.

The other three rigs remain ahead of schedule and have met their progress milestones on time. The Offshore Defender is scheduled to be launched ahead of schedule on 29 March 2007. Construction on the Offshore Intrepid is expected to begin during the first quarter of 2007.


With the exception of the Gulf of Mexico commodity jackup market, all other jackup rig markets remain strong world-wide. Utilization remains at 100% for all marketed rigs in the ultra premium and premium market segments. Leading edge dayrates exceed USD 200,000 per day in most markets, except the North Sea and Australia, which have seen dayrates in excess of USD 260,000 per day.

Over the last several months, the company has been in discussions with several clients regarding drilling programs with start dates that coincide with the delivery of the company's drilling units. In light of these discussions, and the projected increases in demand for drilling rigs during 2007, the company is optimistic regarding its prospects and expects to secure drilling contracts well in advance of the delivery of its units under construction.