FPS Ocean Reports 1Q07 Results
FPS Ocean says its consolidated unaudited accounts for the 1st Quarter 2007, including profit & loss accounts and balance sheet shows EBITDA of US $-1.0 million and net result of US $-0.9 million. As of March 31,, 2007, the Company had consolidated cash reserves of approximately US $114.8 million, compared to US $133.4 million at year end 2006.
Activities were focused on detailed engineering and procurement in respect of the "DeeP Producer 1" conversion project, sourcing and inspecting vessels for a second FPSO conversion project ("DeeP Producer 2"), recruitment of personnel, implementation of a new financial accounting and project management system and converting the Company's accounts to IFRS (International Financial Reporting Standard).
Purchase of a second vessel
The Company has agreed to purchase the 1988 built Aframax double-sided crude oil tanker "Semakau Spirit". The purchase price is USD 23 million. The vessel will be delivered in April 2008 alongside Dubai Drydocks with which the company has secured a conversion slot. The Company has commenced planning for conversion of the vessel into an FPSO with dynamic positioning, to be renamed "DeeP Producer 2". However, a full conversion budget has not yet been committed, except for securing certain long lead items.
"DeeP Producer 1" - cost issues and improvements
The Company owned shuttle tanker "Laurita" is entering Dubai Drydocks during the week starting May 20th for conversion to an FPSO with dynamic positioning to be renamed "DeeP Producer 1". The Company has recently carried out a thorough review of cost and schedule with its suppliers and yards. The review confirms that the delivery from Dubai Drydocks will be extended by 2 months until the end of February 2008, resulting in increased costs. Furthermore, certain costs have increased relating to improvements of the FPSO's capabilities, underestimation due to the tight supplier market, safety review and requirements of the classification society.
The additional costs include increasing the project team to enhance the management of conversion activities, improved technical solutions and added work-scope. The technical improvements include a deck area with flexibility for addition of future service functions as well as safety features in connection with the thruster rooms. The increased work-scope includes addition of four riser passes through the Disconnectable Riser Buoy (DRB) to a full five-pass swivel-system.
The revised project budget has been increased to US $209 million, including a somewhat higher level of contingency.
The reported project schedule and cost additions increase the total funding requirement of the Company. The Company is working on a plan to secure further funding and will communicate this plan at the earliest possible time.
The market outlook for FPSOs remains strong as a result of growing demand from offshore field developments coming on stream over the next few years, many in deep waters. The Company is working actively with prospective clients on a number of project leads for potential start-up during 2008. The Brazilian market is relevant for the Company's deepwater FPSO solution and in April an office was established in Rio de Janeiro.
FPSOcean has acquired the shuttle tanker "Nordic Laurita" and the Aframax tanker "Semakau Spirit" for conversion into deepwater dynamically positioned Floating Production, Storage and Offloading (FPSO) vessels. The "Nordic Laurita", to be renamed the "DeeP Producer 1", is scheduled for completion by 1st quarter 2008 and ready for first oil by 2nd quarter 2008. The "Semakau Spirit" will be renamed "DeeP Producer 2" and is likely to start conversion at Dubai Drydocks during first half of 2008. FPSOcean is seeking to develop a fleet of 4 - 6 deepwater FPSOs over a period of 5 - 6 years.