Prosafe: Best Results Ever
Prosafe said that its net financial costs in the fourth quarter equaled USD 5.1 million (USD 5.9 million). Taxes at USD 7.2 million for the quarter are somewhat higher than usual due to the weakening of the USD against NOK, and a consequential tax cost on the unrealized currency gain in NOK on the USD debt.
The net profit for the fourth quarter equaled USD 32.4 million (net loss of USD 98.3 million), and earnings per share were USD 0.14 (negative at USD 0.58).
Total assets at 31 December amounted to USD 2 145.9 million (USD 1 060.7 million), while the equity ratio was 51 percent (41 percent). The increases in both assets and equity reflect the acquisition of Consafe and the purchase of the shares in Teekay Petrojarl ASA.
The extraordinary general meeting resolved on 22 December 2006 to distribute a special dividend of NOK 20 per share for 2005, and subsequently to split the existing shares in the ratio 1:5. The shares were split by reducing the par value from NOK 10 to NOK 2, and by increasing the number of shares accordingly. The share split was carried out with effect from the Oslo Stock Exchange's closing time on 22 December 2006.
Transformation to SE company
The general meeting on 22 December 2006 also resolved to transform the company from a Norwegian ASA to a SE (Societas Europaea) company. Accordingly, the company's name was changed to Prosafe SE on February 2007.
Relocation to Cyprus
The board of Prosafe has today resolved to propose to the general meeting to relocate Prosafe's headquarter from Norway to Cyprus.
The relocation will require amendments to the Articles of association. The resolution to relocate is therefore subject to the company being able to incorporate all applicable corporate governance guidelines into the amended Articles of association.
The purpose of the relocation is to position the company in a jurisdiction which provides a predictable fiscal regime and improved growth opportunities. In this context the following points have been given weight:
- Prosafe SE is a holding company for the subsidiaries domiciled in and operating in other countries. The company's subsidiaries abroad are conducting global business within two business segments: accommodation/service rigs and floating production.
- The group has limited operational activity in Norway following the sale of Prosafe Drilling Services AS in 2005 and the transfer of the accommodation/service rigs to Singapore in 2006.
- The group's international character is underlined by the fact that currently 75 percent of its shareholders are non-Norwegian.
- The fiscal regime in Cyprus is expected to be more predictable, and hence favorable from a competition perspective, compared to the Norwegian fiscal regime in which the parent company today is operating.
On this basis, the board regards the relocation of Prosafe's headquarter to Cyprus to be a strategic decision which would benefit the company and the shareholders.
Dividend proposal for 2006
Based on the company's strong result and balance sheet, the board of directors will, in accordance with the company's dividend policy, propose a dividend of NOK 1.25 per share for 2006, as compared to NOK 1.10 per share for 2005.
Offshore Support Services
Operating revenues in Offshore Support Services amounted to USD 272.6 million for 2006 (USD 186.7 million), while operating profit came to USD 117.3 million (USD 69.6 million). The utilization ratio for the rig fleet in 2006 was 92 percent (92 percent). The improvement reflects higher day rates and the expansion of the rig fleet.
Operating profit for the fourth quarter came to USD 36.4 million (USD 13.6 million). The fleet utilization ratio for the quarter was 92 percent (80 percent).
All six rigs working in the Gulf of Mexico, as well as MSV Regalia which is on contract for Total offshore Angola, have been in regular operation throughout the fourth quarter. Safe Caledonia and Safe Scandinavia operated in the UK sector of the North Sea, while Safe Bristolia and Safe Esbjerg have operated off Russia and Denmark, respectively. Safe Astoria was located in Australia.
Floating Production generated revenues of USD 92.6 million in 2006 (USD 108.3 million), and an operating profit of USD 37.8 million (USD 37.9 million).
Operating profit for the fourth quarter amounted to USD 9.6 million (USD 9.9 million). Work continued during the quarter on the conversion of MT Apollo for the Polvo field off Brazil and MT Ionikos for the Tui field off New Zealand. A naming ceremony was held for FPSO Polvo in Singapore on 9 January. The vessel is scheduled to leave the yard in Singapore in mid February. Both projects are progressing as planned, with contracts expected to commence in the second quarter of 2007.
The fourth quarter represented a strong operational period for both business units and a record high order intake for the Floating Production division. The letter of intent for the undisclosed client and the contract for the Petrobras FPSO yielded a total revenue including option periods of circa USD 1.9 billion.
Within Offshore Support Services the focus has been towards securing full employment for the vessels in the near term. The letter of intent secured for the Safe Scandinavia in the second half of 2007 ensures a high utilization of the vessel and a very strong financial contribution. The contract shows further progression relative to previous awards, with a record dayrate for the given time period.
The activity in the North Sea market continues to be strong, and specific projects are targeted which will maintain a high requirement for accommodation services at least over the coming three to five year period. The overall interest for vessels in this region supports the view of a growing market medium to long term.
Prosafe is currently receiving interest from clients in several regions, including Asia and America in addition to the established markets. The Safe Astoria is currently uncontracted, and good employment for the vessel is a near term target. The vessel is now also being marketed outside Australasia.
The new FPSO awards secure a continued strong growth within Floating Production. The vessels will be converted during 2007 and 2008, with expected first oil late 2008. Full earnings impact is expected from 2009. The vessel M/T Navarin will be used for the Petrobras FPSO, and the M/T Europe towards the letter of intent.
The general FPSO market has remained strong during the quarter, and indications are that 2007 will be another year with high bidding activity. Prosafe is actively pursuing new opportunities, and is currently working on a FEED study that may lead to a new FPSO conversion project. MT Kudam would be a suitable candidate for this project.
Prosafe is currently launching a disconnectable turret solution for harsh environments. This will be a significant milestone, and positions the company well for the upcoming FPSO market in the US Gulf.
Engineering and project capacity is available if the company should win another FPSO conversion contract in the near future. In the second half of the year, further engineering resources will be freed up from the existing projects. As such, the company has the capacity to take on a fourth project in the second half of 2007.
Prosafe has focused on increasing the company's capability of supplying clients with flexible and cost effective floating production solutions. The recent awards confirm the value of this competence to both clients and shareholders.
Operates 34 Offshore Rigs
Manages 10 Offshore Rigs
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