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Second quarter 2017 results
Utilisation of 38.5 per cent and EBITDA of USD 24.4 million in the quarter.

Mr. Jesper Kragh Andresen, Prosafe CEO says, “We are pleased with Statoil nominating the earliest start date of the Johan Sverdrup contract, with a delivery window around 1 June 2018. Total value is approx. MUSD 53 and provides visibility and stability in a generally soft market with low visibility. The contract is anticipated to position Safe Zephyrus well for any additional work for the Johan Sverdrup development.”

Highlights

  • Good operating performance
  • Safety focus – zero mindset – no compromise
  • Q3 event: Safe Notos off hire for 35 days for preventative repair and maintenance of gangway
  • Safe Boreas commenced firm 13-month contract early August
  • Focus on positioning the TSV Safe Scandinavia towards and beyond summer 2018
  • Delivering on cost and capex reductions. Focus on continuous improvement remains
  • Safe Regency the 5th vessel sold for scrap to preserve cash and to high-grade the fleet
  • Looking for optionality and value creation potential from financing terms, price and timing of delivery of COSCO new builds.

(Figures in brackets refer to the corresponding period of 2016)

Operations

The fleet utilisation rate in the second quarter of 2017 was 38.5 per cent (41 per cent).

The Safe Scandinavia tender support vessel (TSV) was fully contracted in the quarter with Statoil for a firm contract period until the end of June 2018.

Safe Notos commenced a three-year and 222 day contract for Petrobras on 7 December 2016 and was on contract throughout the second quarter. From 1 July 2017 Safe Notos was off-hire to allow preventive maintenance and repair of the gangway. Safe Notos recommenced operations with Petrobras in early August.

Safe Concordia was fully contracted in the second quarter for Petrobras at a market adjusted dayrate. The vessel completed contracted operations with Petrobras late July and will transit to Curacao for lay-up and is available for future work.

Safe Boreas continued the Repsol Sinopec contract in the UK at market adjusted rates until 24 April 2017. Following preparation and mobilisation, the vessel commenced a 13 month firm period with Statoil at the Mariner installation in the UK in early August.

Safe Caledonia commenced a contract with Total for firm period of 134 days plus a 30 day option in the UK mid May 2017.

Safe Zephyrus, Regalia, Safe Bristolia and Safe Astoria were idle in the quarter. Safe Zephyrus, Regalia and Safe Bristolia are laid up in Norway, while Safe Astoria is laid up in Indonesia.

During June 2017, Safe Regency was sold for recycling for USD 1.25 million. Prosafe has now scrapped five vessels as part of its strategy to high grade the fleet and preserve cash flow. 

Safe Eurus is in a preserved, strategic stacking mode with COSCO (Qidong) Offshore Co. Ltd. (COSCO) in China.

The standstill agreement between Prosafe and COSCO relating to Safe Nova and Safe Vega has been extended until December 2017. Prosafe remains in negotiations with COSCO and related parties for a workable commercial solution for these vessels. The aim is to include Safe Eurus in a commercial solution along with the Safe Nova and Safe Vega to improve flexibility and terms also for that vessel.  If an agreement is not reached, Prosafe has the right to cancel the Safe Nova and Safe Vega newbuild contracts due to delay and claim a refund of the gross deposit of approx. USD 60 million secured by Bank of China, and retain the current agreement and financing for the Safe Eurus.

Financials

Revenues for the second quarter of 2017 were USD 61.7 million (USD 115.4 million). This decline reflects lower utilisation and day rates for Safe Boreas, Safe Caledonia, Regalia and Safe Bristolia compared to the same period last year.

Operating expenses declined to USD 37.3 million (USD 53.8 million). This reduction is due to cost savings and lower activity. EBITDA was USD 24.4 million in the quarter (USD 61.6 million).

Depreciation increased to USD 33.8 million (USD 29.1 million) mainly due to the new build vessel, Safe Notos. Operating loss was USD 9.4 million (operating profit of USD 32.5 million).

Net financial expenses for the second quarter were USD 22.5 million (USD 26.4 million).

Net loss amounted to USD 33 million (net profit of USD 5.2 million).

Total assets at 30 June amounted to USD 2,591.3 million (USD 2,599.7 million). The book equity ratio increased to 41.9 per cent (26.1 per cent) due to the financial restructuring completed during last year and remained steady in the quarter. Net interest-bearing debt stood at USD 1,134.8 million (USD 1,648.5 million).

Outlook

Prosafe was awarded the contract for the Johan Sverdrup field in the quarter. The contract has a duration of 12 months and will commence during the summer in 2018. The total value is approx. USD 53 million and provides visibility and stability in a generally soft market with low visibility.

Continued low oil prices and cautious E&P spending are indicating that activity levels may stay lower for longer than previously expected. Consequently the near term market activity in terms of bidding has reduced. However the prospect list with a three-year look-out remains at a relatively high level.

In the medium to longer term, it is anticipated that a combination of efficiency gains implemented and accumulating work related to producing and ageing infrastructure, will lead to activity growth. It is further anticipated that exploration activity, new field developments and tie backs will result in demand also for offshore accommodation services. From a longer term perspective, activity may also be supported by the decommissioning market.

Prosafe retains its focus on efficiency measures and improvements, both in the organisation and across its fleet of vessels, whilst prioritising and ensuring safe and efficient operations. The goal is to continue to rebuild its position to be well placed for global opportunities as they arise.

Risk

Prosafe’s key risks are described in detail in the Directors’ Report as set out in the Annual Report 2016 and include Prosafe’s main operational risks e.g. day rate level and  utilisation rate of the accommodation vessels. The company’s results also depend (inter alia) on operating costs, interest expenses and exchange rates.

Statement from the Board, the CEO and CFO

We confirm that, to the best of our knowledge, the financial statements for the first half year of 2017, 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 profit or loss of the company, 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 and Cyprus Transparency Requirements Law No:190(1) 2007 section 10.

Prosafe is a leading owner and operator of semi-submersible accommodation vessels. The company is headquartered in Larnaca, Cyprus and listed on the Oslo Stock Exchange with ticker code PRS. For more information, please refer to www.prosafe.com

Larnaca, 23 August 2017
The Board of Directors of Prosafe SE

Downloads:

Q2 2017 report >> (PDF, 104 kB)

Q2 2017 presentation >> (PDF, 1.9 MB)

For further information, please contact:

Jesper K. Andresen, CEO
Prosafe Management AS
Phone: +47 907 65 155

Stig Harry Christiansen, Deputy CEO and CFO
Prosafe Management AS
Phone: +47 478 07 813

Cecilie Helland Ouff, Senior Manager Finance and Investor Relations
Prosafe AS
Phone: +47 991 09 467