Delivery Date for Viking Producer Pushed Back

The reactivation of the SS Viking Producer is making good progress and all long lead equipment has been secured. However, upgrades to the originally planned technical specifications has pushed back the completion date.

A detailed construction budget and master scheduled was presented and approved by the board recently, subject to an acceptable financing plan being arranged. The revised budget shows and estimated construction cost of $160 million excluding financing costs and completion in June 2008.

The increased construction budget and new completion date is a result of the following:

  • Significant upgrade of the originally planned technical specification of the rig to improve the operational capabilities and strengthen the contract opportunities, and is expected to generate a higher dayrate.
  • Installation of additional buoyancy to increase the variable deck load
  • A more sophisticated mooring system which complies with the new regulation in the US Gulf of Mexico.
  • A vertical pipe handling system and iron rough neck
  • 650 ton top drive and hoisting equipment
  • New marine riser system
  • Less used equipment available in the market than expected
  • As previously announced, equipment and labor prices have increased significantly and are expected to continue to increase going forward

Based on the revised cost budget and completion date, an additional $75 - $80 million in financing is required in order to secure the completion of the reactivation program. Pareto Securities ASA has been engaged to arrange the financing, which will be a combination of equity and bond debt.

Mr. Christen Sveass, the company's chairman and lead investor, is personally prepared to underwrite an equity issue of $20 million valid for a period of 12 months, on acceptable terms and conditions. All shareholders will be given subscription rights on equal terms.