Petrojack Rolls Out of First Half of 2008 with Increased Revenues
Petrojack ASA has released its preliminary results for the second quarter 2008.
Operation and Business Management
The Company has one jackup rig under construction at the Jurong Shipyard in Singapore and one jackup rig on contract with Saipem. The jackup rigs have an operating water depth capacity of 375 feet and drilling depth capacity of approximately 30.000 feet. The jackup rig under construction is scheduled for delivery in the 4th quarter 2008.
In addition, Petrojack holds about 24.98 % of Petrolia Drilling ASA. The investment gives Petrojack exposure to the strong semi market, which has continued to develop positively during 2006-2008, with improving day rates and rig utilization.
Petrojack also holds 24.575.800 shares (28.1 %) in PetroProd Ltd, and 12.383.000 (14.15 %) shares in PetroProd Ltd held under a forward contract with September 17, 2008 delivery, giving a total ownership of 42.3%.
PetroProd intends to convert three Aframax tankers to FPSOs at Jurong, and has ordered an enhanced CJ70 jackup rig from Jurong. PetroProd released and update on conversion, employment and contract status on July 21, 2008. Larsen Oil & Gas is manager for the Petrojack.
Petrojack's original construction program included four rigs. However, two rigs were sold to Maersk in Q3-2006, for a total consideration of US $420 million. Petrojack II was delivered from the yard according to schedule
and on budget March 28, 2008. There have been no significant lost time accidents regarding the remaining jackup rig, and the construction process is developing according to schedule and on budget. The total rig construction cost for the remaining jackup rig is US $180 including project cost.
Petrojack II Pte Ltd, a subsidiary of Petrojack ASA, has together with the manager, Larsen Oil & Gas Ltd, entered into a charter agreement with Saipem for hire of Petrojack II. The contract for Petrojack has duration
of four years, beginning April 2, 2008. The hire under the contract is US $100,000 per day. The Charter Agreement includes a put/call option at a price of US $199.1 million, 12 months after the beginning of the
The Company may, as previously discussed with Saipem, seek to revisit the terms of the contract for the charter and the put/call option. Final accounting reporting of the Petrojack II contracts, with respect to IFRS and taxes, will be concluded at year end, and presented in the annual accounts.
Petrojack has with effect from 01.01.2008 changed functional currency from NOK to US$ in accordance with IFRS. The financial figures are also presented in US$ as of 2Q 2008 and 1H 2008. All comparative figures have
for presentation purposes been changed to US$ as presentation currency.
Profit and Loss - First half year
Petrojack's total revenues in the first half year was US $6.2 million compared to US $0.2 million in first half 2007. Revenues in the first half year came from rental of drilling equipment, US $1.2 million and time charter hire in Q2.
Operating profit before depreciation was mUSD -0.8 in the first half 2008 compared to mUSD -2.1 in the first half last year. The main explanation for the deviation between H1 2007 and H1 2008 is the time charter hire from Saipem. Operating expenses includes primarily expenses for management services under the contracts with LOG, and various other administrative expenses.
H1 2008 operating profit was US $ -4.3 million, compared to mUS $ -3.2 million in H1 2007.
Net financial expenses in H1 2008 were US $ -22.3 million. Net financial expenses include the effect of Petrojack's change of functional currency from NOK to US$. Petrojack's debt nominated in NOK are converted to US$ as per of June 30, 2008. The USD has during H1 2008 depreciated resulting in an unrealized loss of US $12.8 million related to the debt nominated in NOK. In H1 2008 Petrojack also incurred interests of US $10.1 million related to a bond loan which was drawn up in Q2 2007 and interest from bond loan related to PJII. The net result for H1 2008, US $ -43.8 million, includes negative result from investment in associated companies of US $17.2 million for the first half year 2008. Interest income and expenses related to the bonds for construction of the rigs are capitalized under the construction contract in the group balance sheet.