Abbot Group Pleased with Recent Results
Alasdair Locke, executive chairman of Abbot Group had the following to say at the company's annual general meeting: "Since the announcement of our last set of results the Group has continued to perform well. This has been as a result of the ongoing strength of the market combined with our own strategy playing out as we planned. The acquisition of Songa drilling last year provided us with an important critical mass in the mobile offshore drilling unit market. All three of the rigs which came with that acquisition are now fixed; one for two years and two for three years, all at stronger than anticipated day rates.
"We are also now beginning to see some firming of day rates in the Gulf of Mexico, which allows us to keep our options open in that region, particularly with regard to our Ben Loyal jackup rig whose contract expires in 2008.
"Additionally, land rig rates across the market are continuing to strengthen, which effects further earnings growth for the Group as contracts roll over into both new contracts, or the take up of extension options for our fleet at new, higher rates. This has been particularly evident in Libya where we have renewed the contracts on nine rigs and have seen significant day rate increases.
"I am also pleased to be able to announce that KCA DEUTAG's joint venture with Marlin Offshore International Ltd has been awarded a two year extension, by Chevron Thailand Exploration and Production (CTEP), to its contract for the Charley Graves self erecting tender rig (SETR) and a new, two year contract by CTEP for the W D Kent SETR. Both contracts are for operations offshore Thailand and together are worth $135 million in total, of which $34 million is attributable to the Group.
"The Charley Graves contract will run from April 2008, as a direct continuation of the current contract and also incorporates a further one year option on the rig from April 2010. The WD Kent is currently in a shipyard in Malaysia being refurbished and upgraded and its contract will run from January 2008; it also provides Chevron with two, one year extension options.
"Transfer of ownership and operations of the Charley Graves to KCA DEUTAG took place in January this year without a break in operations. It marked Abbot's re-entry into Thailand after a three year absence and underlines our strategy of concentrating the Group's assets in key strategic areas of future growth.
"I would also like to take this opportunity to confirm that we have signed an agreement through KCA DEUTAG with Standard Drilling ASA of Norway for the marketing, management and operation of two new build jack-up rigs, which are scheduled to be completed in 2009. This agreement will increase Abbot's involvement in the mobile offshore drilling unit (MODU) sector to more than 10 units, making us a market leader in the international, non-US MODU market, without the high capital intensity normally associated with this sector of the business.
"Standard Drilling will own the two MSC CJ-46-X 100D design jack-ups, rated to 350ft water depth. They are currently being built by Singapore-based Labroy Marine in its Batam Island, Indonesia facility.
"Following an incident during the initial loading of the Group's Ben Avon and Ben Rinnes jack-up rigs, I can now confirm that the heavy-lift transport vessel, Transshelf, has been repaired and both rigs are en route to West Africa. We expect them to commence operations as previously announced, but with a delay of approximately one month from the original schedule.
"As stated previously, our strategy has been to position our subsidiary Bentec as a design and engineering business in its own right. The acid test for this will always be the number of contracts won from third party operators, so I am pleased to be able to announce that it has been awarded a €15 million contract to build a "Euro Rig" for MND, a drilling contractor based in the Czech Republic. This unit is a similar rig to the T208, which was delivered last year to KCA DEUTAG for use in Austria, and its concept seems to be developing into a significant market as Bentec currently has three further enquiries for the design.
"I would also like to take this opportunity to announce two retirements from the Board. John Hollis, who has been one of our non executive directors since 1999, has decided to step down, having reached the age of 65. I would like to thank him for all his help and wish him well for the future.
"In addition, having recently celebrated his 60th birthday, Mike Salter, who has been our chief operating officer since 1997, has made the decision to retire from the Board in order to pursue other business and personal interests. Mike joined the Abbot board in 1995 as Business Development Director and his help in that, and his subsequent role, has been invaluable. The Company has changed dramatically over the past ten or so years and Mike's help in bringing about and seeing through those changes has been fundamental to their success. I would therefore also like to thank him for his enormous contribution to the Group and wish him well for the future.
"Once again I would like to restate my confidence for the future. For the
reasons outlined above I expect 2007 to be a year of growth for the Group which
will flow through to an even stronger performance in 2008."
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