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Utilisation of the fleet was 37 per cent in the first quarter of 2016 (80 per cent in the first quarter of 2015).
Safe Scandinavia Tender Support Vessel (“TSV”) commenced a contract in mid-March in Norway with a firm period through to July 2018. Drilling support operations commenced in early April. The mobilisation fee of USD 12 million for the TSV was recognised as income in the first quarter.
Safe Zephyrus was delivered from the Singapore construction yard in the first quarter of 2016 and commenced transit to the North Sea. The vessel is scheduled to commence its first contract in Norway early in Q3 2016.
Safe Notos was delivered from COSCO, (Qidong) Co., Ltd. in the first quarter of 2016 and is currently in international anchorage offshore Singapore. The vessel was delivered to carry out a 4.5 year contract of ca. USD 145 million pursuant to a letter of intent which was subsequently cancelled.
Safe Zephyrus and Safe Notos are not included in the first quarter utilisation ratio above.
Safe Boreas commenced a contract in the UK in mid-March.
Safe Concordia and Safe Caledonia were fully contracted during the quarter.
Regalia was off-hire in the quarter and will commence a contract in the UK during May.
Safe Bristolia was completing class renewals in the yard during the quarter and is scheduled to commence a contract in the UK during May.
Safe Astoria was off-hire in the quarter and is currently cold-stacked in Batam, Indonesia.
Jasminia and Safe Britannia were off-hire during the first quarter and Safe Hibernia came off contract mid-February. Based on a strategic fleet review, Prosafe has decided to scrap these three vessels.
The contracts for Safe Lancia and Safe Regency were suspended in mid-March 2016 and the vessels remained in Mexico in the first quarter. Safe Lancia is being prepared for cold-stacking in the US. Safe Regency is being mobilised to a suitable lay-up location.
Prosafe and Statoil (U.K.) Ltd agreed to re-phase the contract for the Mariner Project on the UK Continental Shelf of the North Sea from 2016 into 2017. A re-phasing charge of USD 30 million has been recognised as income in the first quarter 2016.
The Company has been working to optimise fleet deployment and utilisation in a situation where the fleet renewal strategy is being completed while the market is historically soft and contracts are being suspended. Examples of these are deferred deliveries, seller’s credit and the replacement of Safe Boreas for Safe Notos for Talisman in the UK. In addition, the Company has decided to scrap three of its oldest units, respectively Jasminia, Safe Hibernia and Safe Britannia, and to cold stack other units starting with Safe Astoria.
(Figures in brackets refer to the corresponding period of 2015)
Operating profit for the first quarter amounted to USD 21.9 million (USD 55.4 million). This decline reflects the lower utilisation of the fleet in poor market conditions.
Net financial expenses for the first quarter were USD 20.3 million (USD 26.1 million). Interest expenses have increased mainly due to higher interest-bearing debt.
Net loss amounted to USD 1.8 million (net profit of USD 27 million), and earnings per share were USD 0.01 negative (USD 0.11 positive).
Total assets at 31 March amounted to USD 2,630.8 million (USD 2,157.5 million), while the book equity ratio declined to 25.9 per cent (34.5 per cent). Net interest-bearing debt stood at USD 1,650.7 million (USD 977.4 million).
Despite a recent increase in oil price, general market uncertainty remains and bidding activity is low. Clients remain focused on cost reduction and cash preservation. Prosafe therefore maintains a cautious view in the near and medium term and anticipate a possible upturn from 2018.
Prosafe is in an ongoing dialogue with the Company’s key stakeholders, including the main shareholders, bondholders, bank lenders and yards, and the Company is currently working with stakeholders and advisors to evaluate alternatives to improve the financial situation. The Company has obtained a reduced minimum liquidity bank covenant of USD 20 million until the end of the third quarter 2016. This temporary reduced level is applicable to both the USD 1.3 billion facility and the USD 288 million newbuild facility. In addition, the Company will utilize the 2nd skipped payment option that was granted by the banks in the previous amendment process closed around year-end 2015. Further amendments to the bank and bond agreements will, however, be required in order to secure a robust financial foundation and to safeguard and further strengthen Prosafe’s market leading position in the industry. The dialogue is constructive and the Company intends to communicate its updated financial plan during the second quarter of 2016.
Reference is also made to note 5 to the financial statements.
The Board of Prosafe has appointed Stig H. Christiansen as the new interim Chief Executive Officer (“CEO”) for Prosafe Management AS. He replaces Karl Ronny Klungtvedt who has agreed to step down. Mr Christiansen will continue to serve as the Chief Financial Officer of Prosafe Management AS in addition to his position as acting CEO.
In due course, the Board will start a recruitment process for a new permanent CEO evaluating both internal and external candidates for the position.
Prosafe is the world's leading owner and operator of semi-submersible accommodation vessels. The company operates globally, employs 850 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
Larnaca, 12 May 2016
Georgina Georgiou, General Manager
For further information, please contact:
Stig Harry Christiansen, Acting CEO and CFO
Prosafe Management AS
Phone: +47 51 64 25 17 / +47 478 07 813
Cecilie Helland Ouff, Senior Manager Finance and Investor Relations
Phone: +47 47 51 64 25 20