The quarter in brief
* Agip awards Prosafe a contract for the supply and operation of an FPSO for the Abo field offshore Nigeria. The contract has a fixed term of eight years, and the value is about USD 220m.
* The FPSO Espoir Ivoirien undergoes a successful production test and commences a ten-year contract offshore the Ivory Coast.
* The contract for the FSO Endeavor is extended by one year from August 2002. The contract value is about USD 5.5m.
* Prosafe acquires the semi-submersible accommodation/service rig Polyconcord for USD 34.5m.
* Prosafe receives a letter of intent from Statoil for delivery of flotel services on the Gullfaks field on the Norwegian continental shelf in April 2003.
* Prosafe receives a letter of intent from Phillips for use of the Safe Caledonia offshore Australia from April 2003, and enters thus a new geographical market. The contract has a fixed term of 241 days, and an option period of six months. The value of the fixed part of the contract amounts to USD 24.1m.
* Prosafe receives a letter of intent from Ocean Oil for use of the Polyconcord in the Gulf of Mexico. The bareboat contract has a fixed term of one year and the value is about USD 13.3m.
* PetroVietnam exercises an option to purchase the FPSO Ruby Princess effective October 2002.
Main figures
(Figures in brackets refer to the same period last year)
The operating profit for the first quarter equalled NOK 144m (NOK 62m). Adjusted for goodwill amortisation of NOK 17m, the operating profit equalled NOK 161m. The operating profit of NOK 144m includes a reduction in depreciation of NOK 18m as a consequence of revised estimates for the economically useful life of the company's accommodation/service rigs.
In the first quarter, profit after taxes amounted to NOK 93m (NOK 59m). Cash flow from operating activities equalled NOK 246m (NOK 75m), while earnings per share fully diluted and cash flow per share fully diluted equalled NOK 2,74 (NOK 2,23) and NOK 7,21 (NOK 2,83), respectively. Adjusted for goodwill amortisation, earnings per share fully diluted equalled NOK 3.23.
Operations
In the first quarter, Offshore Support Services achieved an operating profit of NOK 115m (NOK 46m). Utilisation ratio of the rigs was 79% (60%). Five of the rigs - the Safe Britannia, Safe Caledonia, Safe Lancia, Jasminia and Safe Regency - have throughout the quarter been engaged on Cantarell in the Gulf of Mexico. In May, Safe Caledonia will finish its engagement in the Gulf of Mexico and be mobilised to the contract with Statoil on the Sleipner field in the North Sea which starts in July. The Polyconcord, which Prosafe acquired in February, will commence a contract in the Gulf of Mexico at the end of May. The MSV Regalia has been engaged by Statoil on the Åsgard field in the first quarter. The rig was off hire for 16 days due to winter storms. This contract was completed in April, and the rig was thereafter moved to west of Shetland to start the contract with BP. The Safe Scandinavia has during the first quarter mobilised for the contract with Chevron on Alba in the British sector of the North Sea. This contract commenced in April.
In the first quarter, Floating Production achieved an operating profit of NOK 38m before goodwill amortisation of NOK 17m. This division was not included in the consolidated accounts before the second quarter 2001, but as a comparison the operating profit in the prior quarter (fourth quarter 2001) was NOK 27m before goodwill amortisation. The FPSO Espoir Ivoirien started production in February, which explains the improvement within this division. The conversion of the Grey Warrior to an FPSO for the Abo field offshore Nigeria has commenced, and the ship is for the time being at a yard in Subic on the Philippines. The project will be completed in the spring of 2003.
In April, Prosafe received a letter from PetroVietnam, in which the company informed that it intends to exercise an option to purchase the FPSO Ruby Princess effective October 2002. Prosafe is, however, still in dialogue with PetroVietnam. The sale proceeds will equal the book value of the ship at the transaction date, and the sale itself will consequently not have any impact on the profit and loss account. Out of the other FPSO/FSO contracts which Prosafe holds today, a purchase option is an element in the contracts for the FPSO Espoir Ivoirien and Abo. As opposed to the FPSO Ruby Princess, the purchase option prices on these units are based on expected cash flow plus estimated residual value of the vessel.
In the first quarter, Drilling Services achieved an operating profit of NOK 14m (NOK 22m). First quarter is normally the weakest quarter due to a lower scope of extra work during the winter months. As a comparison the operating profit in the first quarter 2000 was NOK 13m, whereas the operating profit in the first quarter 2001 was characterised by an exceptionally high activity within technical services.
Prospects
The general outlook for the company's divisions is positive. Within Offshore Support Services demand from Mexico is expected to remain high, and the company also sees a potential for a continued engagement in Australia. Main focus in the next quarters is to secure further engagement for the Safe Britannia and Safe Lancia.
The activity within Floating Production is high. Main focus in 2002 is effective operations of existing units and a safe and successful conversion of the Grey Warrior into an FPSO for the Abo field. In April, the FPSO Petroleo Nautipa came off the contract on the Kiame field offshore Angola. The vessel will now undergo necessary upgrade work for the contract with Vaalco offshore Gabon, which will commence in the third quarter.
The activity within Drilling Services is expected to pick up in the next quarters and contribute to an improved operating profit. Main focus in 2002 is safe and effective operations, and secure extensions of the contracts on Oseberg and Snorre including Rubicon for Norsk Hydro. The company has delivered a bid for the drilling contract on Ekofisk for Phillips, and a decision is expected before the summer this year.
Prosafe is listed on the Oslo Stock Exchange with ticker code PRS.
Oslo, 8 May 2002
