Skeie Drilling & Production Group Reports 3Q07 Results
Skeie Drilling says the construction of the three ultra harsh environment jackup rigs at Keppel FELS shipyard in Singapore is developing as scheduled. The main activities up to now have been engineering and procurement of steel and equipment. The steel strike for the first rig will take place February 1, 2008 as planned. The three rigs will all be delivered from the yard in the year 2010, March 31, August 31 and December 31.
The consolidated condensed financial statements have been prepared in accordance with International Financial Standards (IFRS) and accounting standards for quarterly reporting (IAS 34).
We expect no material revenues before delivery of the rigs in 2010.
The operating loss for the third quarter of 2007 was US $0.3 million. The operating expenses mainly consist of costs related to the management of the company and lawyer costs related to bid preparations etc.
The company established, in July 2007, a Convertible Bond amounting NOK 660 million to finance part of the third jack-up rig under construction at Keppel FELS.
According the IFRS rules the conversion right has to be valued. The change in the value of the conversion right has to be booked in the profit and loss account under financial items. Net financial items for the third quarter amounted to US $3.6 million. The net financial income consists mainly of change in value of the conversion right. The financial expenses consist of net foreign exchange loss (USD/NOK), mainly unrealized.
Net profit for the quarter amounts to US $3.345 million.
As of September 30, 2007, the total assets amounting to US $765 million of which the capitalization of construction in progress on the jack-up units represented US $283.8 million. Yard costs, project management costs in accordance with management agreements and financial items related to the project are all included in the capitalized amount under "Rig under Construction" in the Balance Sheet.
Financing of the rigs
The company is presently finalizing the long-term bank financing for all three rigs, i.e. US $225 million per rig. With that in place a total financial package for the rigs has been secured.
The financing already arranged is consisting of three secured bond loans of US $165 million each, a convertible loan of US $115 million and equity amounting to US $150 million.
The market conditions are remaining strong both for pure drilling as well as combined drilling and production. On the Norwegian Continental shelf there are a considerable number of licenses that have not started exploration drilling yet while a big number of discovered fields have not started development yet. The major operators as well as smaller ones in the North Sea (NCS) are expected to come out with tenders within the next few months.
A limited number of rigs available for this market make the company confident that contracts can be secured within a reasonable short time.
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