Financials
(Figures in brackets refer to the corresponding period of 2011)
Second quarter
Utilisation of the rig fleet was 78 per cent (85 per cent) in the second quarter. Operating profit amounted to USD 49.8 million (USD 57.4 million).
Regalia, Safe Concordia, Safe Lancia, Jasminia, Safe Hibernia, Safe Britannia, Safe Regency and Safe Bristolia have been on contract throughout the second quarter.
The day rate for Safe Concordia, which is working on a long-term contract in Brazil, is subject to monthly adjustments based on currency exchange movements. In the second quarter, the average effective day rate was USD 141,000. Cost inflation continues to be high in Brazil, and operating expenses are now in the range of USD 80,000 to 90,000 per day. This includes USD 12,000 per day of amortised contract related investments.
Safe Scandinavia commenced operation for ConocoPhillips at Eldfisk in Norway on 28 April, and was in full operation in May and June. The operating expenses for Safe Scandinavia were USD 1 to 1.5 million higher than normal in the second quarter due to a shorter yard stay in April and extraordinary maintenance spending.
After completing the work at Eldfisk on 1 July, Safe Scandinavia will operate for BP at Valhall in Norway instead of the planned work for ConocoPhillips in the UK sector. The operating period and the net contribution remain unchanged.
Regalia operated at Yme throughout the second quarter. During this quarter, the rig had an average day rate of USD 273,000.
Safe Astoria remained at the yard during the beginning of the quarter, before commencing operations in Australia in May. The rig was on mobilisation day rate from 5 May, until 25 May, from when the full day rate was payable. Prior to contract commencement, approximately USD 2 million of non-reimbursable expenses were incurred in connection with yard and preparation work.
Safe Esbjerg was idle in the second quarter during which some additional maintenance and repair work was carried out. Operating expenses totalled around USD 3.5 million in the quarter.
Safe Caledonia was at the yard throughout the quarter, undertaking a life extension upgrade.
Net financial costs increased to USD 13.3 million (USD 6.1 million). This change is mainly due to an unrealised gain on currency forwards in the second quarter last year.
Net profit amounted to USD 35.9 million (USD 51.9 million), corresponding to diluted earnings per share of USD 0.16 (USD 0.23).
Total assets at 30 June amounted to USD 1 389.8 million (USD 1 376.4 million), while the book equity ratio rose to 34.7 per cent (31.3 per cent). Net interest-bearing debt stood at USD 674 million (672 million).
Dividend
On 21 August 2012 the Board of Directors resolved to declare an interim dividend equivalent to USD 0.133 per share to shareholders of record as of 3 September 2012. The shares will trade ex-dividend on 30 August 2012. The dividend will be paid in the form of NOK 0.78 per share on 13 September 2012.
Outlook
Six of Prosafe's rigs are on bareboat charters in Mexico for end-user Pemex. The six rigs have firm contracts as follows: Safe Hibernia until December 2013, Safe Lancia until end-December 2012, Jasminia until end-December 2012, Safe Britannia until mid-January 2013, Safe Bristolia until end-March 2013 and Safe Regency until beginning of August 2013.
Regalia is scheduled to operate for Talisman at the Yme field in Norway until end of August 2012. In addition, the rig has a contract with Shell in Norway, with a planned start-up in April 2013.
Safe Scandinavia is operating for BP in Norway with a firm contract until October 2012 with options until December 2012. From April 2013 the rig is scheduled to work for six months in the UK.
In the second quarter 2011 Safe Concordia commenced a three-year contract with Petrobras in Brazil.
Safe Astoria has a 150-days contract with Woodside in Australia which commenced in May 2012. In addition Prosafe has granted two one-month options.
Safe Caledonia is at the yard undertaking a life extension project. The rig has a 15-month contract with BP in UK North Sea commencing approximately end of 2012.
Safe Esbjerg was divested on 7 August 2012. Total proceeds amounted to USD 55 million and are divided into two tranches. USD 38.5 million is payable within 60 days after closing. The remaining USD 16.5 million will be paid as a three-year term loan with an interest rate of 10 per cent.
The divestment of the Safe Esbjerg is in line with Prosafe's strategy of focusing on growth within the high end of the offshore accommodation industry.
Prosafe has experienced strong order inflow in the first half of 2012. As of 30 June orders of more than USD 450 million have been signed (including approximately USD 70 million of options). A further USD 168 million (including approximately USD 50 million of options) have been booked following the end of the second quarter. As a result, the order backlog currently stands at around USD 900 million including options.
Most of the contracts booked so far this year have been for work in the North Sea. The strong development in this region is largely driven by MMO projects and redevelopments, although some hook-up and commissioning work has been awarded as well. Due to the strong order inflow experienced in the 1st half of the year there are fewer potential contracts in the pipeline and it is fair to assume that the North Sea order inflow will be lower in the second half.
The activity level in Mexico has increased gradually over the past two-three years and Pemex has had a growing need for offshore accommodation capacity. All of Prosafe's rigs are working at or close to the Cantarell field, where construction and logistics support are the main demand drivers. It appears likely that at least the same amount of units will therefore be needed going forward.
Demand outlook in Brazil remains promising. All the units currently working in Brazil are deployed in the Campos basin, assisting with maintenance and upgrades of existing production infrastructure. In the longer term, there should be potential for growth related to other basins or other types of work.
The market in Australia and Southeast Asia appears increasingly promising. A number of concrete prospects have been identified, particularly in Australia, where weather conditions combined with relatively strict regulatory requirements should favour high-end accommodation units.
In summary, the worldwide demand for high-end accommodation rigs appears robust. The order inflow in the North Sea has been strong so far this year, with relatively low activity in other regions. This picture is expected to change somewhat going forward, with several non-North Sea tenders in the pipeline.
Risk
Prosafe's main operational risks are the day rate level and the utilisation rate of the accommodation fleet. The company's results also depend on operating costs, interest expenses and exchange rates. These risks are described in detail in the Directors' Report as set out in the Annual Report 2011.
Statement from the board and the CEO
We confirm that, to the best of our knowledge, the financial statements for the first half year of 2012, which have been prepared in accordance with IAS 34 Interim Financial Statements as adopted by the European Union and the requirements of the Cyprus Companies Law, give a true and fair view of the company's assets, liabilities, financial position and results of operations, and that the interim management report includes a fair review of the information required under the Norwegian Securities Trading Act section 5-6 fourth paragraph and the Cyprus Companies Law.
Prosafe is the world's leading owner and operator of semi-submersible accommodation/service rigs. Operating profit reached USD 192.3 million in 2011. The company operates globally, employs 550 people and is headquartered in Larnaca, Cyprus. Prosafe is listed on the Oslo Stock Exchange with ticker code PRS. For more information, please refer to www.prosafe.com.
Attachments: Q2 2012 report, Q2 2012 presentation
Larnaca, 23 August 2012
The Board of Directors of Prosafe SE
Prosafe SE
For further information, please contact:
Karl Ronny Klungtvedt, Chief Executive Officer
Prosafe Management AS
Phone: +47 51 64 25 81
Sven Børre Larsen, Chief Financial Officer
Prosafe Management AS
Phone: +47 909 43 673
Cecilie Helland Ouff, Finance and IR Manager
Prosafe AS
Phone: +47 991 09 467
