Key financial figures
(Figures in brackets refer to the corresponding period of 2004)
Operating profit for the first quarter amounted to USD 19.6 million (USD 21.5 million).
Pre-tax profit came to USD 14.7 million (USD 14 million), and fully-diluted earnings per share were USD 0.43 (USD 0.41).
Prosafe had a bond loan at 31 December 2004 of NOK 500 million falling due in March 2007. During the first quarter, the company redeemed NOK 411 million of this loan and issued a new bond loan for the same amount which falls due in March 2010. A new bond loan of USD 50 million falling due in March 2012 was also raised, while an extraordinary repayment of USD 48.1 million was made on the ordinary bank debt. The total cost of refinancing the bond loan and issuing a new loan came to USD 2 million. In return, the new bond loans have a significantly longer term and lower interest margin. In connection with repayment of the bank loan, a tax provision of USD 1.6 million has been made for a realised currency gain in the parent company (USD against NOK). This gain has not been recorded in the group accounts, which are compiled in USD.
The total balance sheet at 31 March was USD 986 million (USD 957.7 million), while the equity ratio was 47.1 per cent (45.6 per cent).
The accounts for the first quarter of 2005 have been prepared in accordance with the International Financial Reporting Standards (IFRS), and accord with International Accounting Standard (IAS) 34 for interim reporting. Prosafe has previously reported in accordance with Norwegian generally-accepted accounting principles (NGAAP). Figures for 2004 have been recalculated to the IFRS in order to be comparable. The effect on equity and results is shown in connection with the profit and loss account and balance sheet in this report, and in a separate stock exchange announcement issued on 26 April 2005.
Prosafe has taken advantage of the opportunity to implement IAS 32 and 39 relating to financial instruments with effect from 1 January 2005, so that the comparative figures for 2004 are based on NGAAP. From 1 January 2005, financial instruments are recorded at market value in the balance sheet and the change in value is recorded in the profit and loss account. The positive effect on book equity at the implementation date was USD 1.9 million. A gain of USD 3.5 million from the increased market value of financial instruments was recorded for the first quarter.
Offshore Support Services
Operating profit for the first quarter was USD 10.6 million (USD 13 million). The utilisation factor for the rig fleet was 86 per cent (87 per cent). The reduction in operating profit reflects lower utilisation of MSV Regalia and a 15-day period without day rate during January for Safe Caledonia, which operates off west Africa, in order to replace equipment.
All five of the rigs working in the Gulf of Mexico were in regular operation throughout the first quarter. Safe Scandinavia was also on contract off Tunisia from the beginning of February until mid-April, while MSV Regalia has operated on Visund from mid-February.
Floating Production
Operating profit for the first quarter was USD 9.2 million (USD 7.4 million). This improvement reflects the upgrading project for FPSO Espoir Ivoirien and reduced depreciation for FSO Endeavor and FPSO Petróleo Nautipa.
Drilling Services
Operating profit for the first quarter was USD 0.7 million (USD 2 million). One-off expenses of USD 0.7 million were charged to the accounts as a result of differences between NGAAP and the IFRS with regard to maintenance provisions. The rest of the decrease can primarily be attributed to the loss of the Tampen contracts and the fact that Rubicon was not in ordinary operation until mid-March. The first quarter is normally the weakest of the year for this division.
Prospects
In Offshore Support Services, the company has won a contract during 2005 for MSV Regalia worth a total of USD 6.5 million. This has secured 85 per cent fleet utilisation for 2005, 82 per cent in 2006, 62 per cent in 2007 and 34 per cent in 2008. Only two of the company's rigs have spare capacity in 2005 and 2006. Contract opportunities have been identified which could increase the utilisation factor in this period. Long-term market prospects for accommodation and service rigs are also positive. The company accordingly takes a positive view of opportunities for continued profitable development of the division.
All units in Floating Production are under contract. During 2005, the company has secured contract extensions with an estimated total value of USD 51 million for FPSO Petróleo Nautipa and FSO Madura Jaya. This means that all the units owned by the company have been secured employment until at least the summer of 2007. The company is also working on a possible renewal of the operating agreement for FPSO Al Zaafarana, which expires in the autumn of 2005.
On the market side, the number of possible new FPSO project awards in 2005 is significantly higher than in the two previous years. A good cost structure, high operating regularity and upgrading projects for existing units also ensure good results in periods without new conversion projects.
Market prospects in Drilling Services are positive, with demand for technical services and hire of drilling equipment showing a particular increase. Despite the delayed start-up of Rubicon in March and the loss of the Tampen contracts, the company expects an operating profit in 2005 which is on a par with last year. In the longer term, the company sees good opportunities for further profitable growth based on additional services relating to drilling operations, technical services, drilling equipment hire and underbalanced operations.
Oslo, 27 April 2005
