Petrolia Drilling Posts 3Q Preliminary Results
Petrolia Drilling continues to strengthen its exposure to the drilling market through the investments in PetroMena (51.5%), Venture Drilling (50%), Petrojack (39.9 %), Larsen Rig (30%), and PetroProd (16.9 % indirectly through Petrojack). The market value of the company's deepwater floaters under construction has increased during 2008. Construction of similar rigs is more expensive and financing is both more expensive and more difficult to obtain. The current situation in the financial markets will impact the industry and available funding going forward.
Petrolia Drilling has with effect from January 1, 2008 changed presentation currency from NOK to USD. All comparative figures have been converted and presented in USD for information purposes. As a consequence of this, the Company has booked an unrealized currency gain of US $61.7 million for the first nine months of 2008 on bond loans nominated in NOK. Total net result after tax was US $31.6 million for the third quarter 2008 and -13.2 YTD 2008.
PetroMena's PetroRig I, II and III have an average contract price of US $490 million per unit, excluding project- and financing costs. Contract prices for recent contracts for similar units are approximately US $680 million, excluding project- and financing costs. The construction programs in PetroMena are running according to schedule and on budget. On February 3, 2008, SS Petrolia started operations under the contract with Pemex. Operating result before depreciation for the subsidiary PetroMena was mUSD 11.5 YTD 2008 and net result was US $29.4 million. The result was positively impacted by an unrealized USD/NOK currency gain on PetroMena's debt nominated in NOK of US $50.8 million.
Petrojack took delivery of Petrojack II on March 28, 2008 and entered into an agreement with Saipem for hire of the jackup rig. The hire under the time charter is US $100,000 per day. The agreement includes a put/call option at a price of US $199.1 million, with expiration 12 months after the beginning of the contract. The construction program for the remaining jackup rig is developing according to schedule. Operating profit before depreciation for Petrojack was US $5.8 million for the first nine months of 2008 and the net result was US$ -103.5 million including impairment of Petrojack's shareholdings in Petrolia Drilling ASA and PetroProd Ltd of US $81.3 million and 24.2 respectively.
In order to fully finance the last instalment on Petrojack IV, payable upon delivery in January 2009, Petrojack estimates that they need US $30.8 million of additional cash. Petrojack has therefore asked its bondholders for certain amendments to the loan agreements, freeing up cash from the possible sale of Petrojack II that may be used to finance the last instalment on Petrojack IV. The bondholders meeting will take place on November 19, 2008.
Operating profit before depreciation for Venture Drilling was US $62.8 million for the first nine months of 2008. Net result after tax was US $40.6 million.
Revenues and operating profit before depreciation for Petrolia Services for the first nine months of 2008 totalled US $64.9 million and US $26.1 million respectively. Drilling equipment is depreciated over five years. Depreciation amounts to US $22.3 million for the first nine months of 2008. Book value of drilling equipment as of September 30, 2008 is US $108.6 million. Market value is expected to be higher.
Petrolia Drilling has invested US $42.0 million in Larsen Rig and thereby controls 30% of the company, which is building a new deepwater semisubmersible drilling rig at Jurong Shipyard in Singapore, identical to the PetroMena rigs. The rig is planned to be delivered in the second quarter 2011.