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Third quarter 2017 results
Utilisation of 38.9 per cent and EBITDA of USD 27.6 million in the quarter.

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

Mr. Jesper Kragh Andresen, Prosafe CEO says, “In early August, Safe Boreas commenced on a 13-month firm contract with Statoil at the Mariner installation in the UK North Sea. In addition, Statoil can exercise six one-month options. Total value of the firm contract is approximately USD 131.8 million, including a re-phasing charge of USD 30 million that was paid to the company in 2016. For Prosafe this is a very important contract and an equally important customer. Hopefully the period at the Mariner installation will continue to showcase our capabilities as operator of the highest quality flotels and creator of customer satisfaction.”

Highlights

  • Good operating performance
  • Impairment of goodwill, older vessels and Safe Scandinavia
  • Delivering on cost and capex reductions. Focus on continuous improvement remains
  • No Lost Time Injury (LTI) in the quarter

Operations
The fleet utilisation rate of the vessels was 38.9 per cent (52 per cent).

The Safe Scandinavia TSV was fully contracted in the quarter to Statoil with a firm contract period until the end of June 2018.

Safe Caledonia commenced a contract with Total in the UK in mid-May 2017 and was fully contracted in the quarter. The contract ended late October 2017.

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

Safe Concordia completed the contract with Petrobras in late July. The vessel then moved from Brazil to Curacao for lay-up.

Safe Boreas commenced the 13-month firm contract period for Statoil at the Mariner installation in the UK in early August.

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.

Safe Eurus is in a preserved, strategic stacking mode with COSCO (Qidong) Offshore Co., Ltd. (COSCO) in China. Consistent with previous quarters, the company has accrued for lay-up cost for Safe Eurus. According to the agreement with COSCO, 50 per cent of the accrued lay-up cost shall be paid on delivery and the remaining 50 per cent after delivery.

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 to find a workable commercial solution for these vessels. 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 instalments plus interest equal to approx. USD 60 million secured by Bank of China.

Financials
Revenues for the third quarter of 2017 were USD 68.9 million (USD 129.8 million). This decline is due to the lower utilisation referred to above as well as lower day rates.

Operating expenses declined to USD 41.3 million (USD 61.5 million) mainly due to lower activity and cost reductions.

EBITDA was USD 27.6 million (USD 68.3 million).

Depreciation has increased to USD 34.8 million (USD 29.1 million) mainly due to the new build Safe Notos.

Due to a continued weak market outlook an impairment charge has been made to the third quarter accounts. The impairment amounts to USD 609 million, out of which USD 226.7 million relates to goodwill which has been fully impaired. The remaining USD 382.3 million relates to the vessels.

Operating loss equalled USD 616.2 million (operating profit of USD 39.2 million). Excluding the impairment charge, the operating loss is USD 7.2 million.

Net financial costs were USD 16.3 million (USD 168.2 million positive including a gain on forgiveness of bond debt of USD 197.6 million).

Taxes declined to USD 2.5 million (USD 5.5 million).  Net loss amounted to USD 635 million (net profit of USD 201.9 million).

Total assets at 30 September amounted to USD 1,957.3 million (USD 2,711.2 million).

The reduction is due to the impairment of vessel values in the quarter. Net interest-bearing debt equalled USD 1,139.8 million (USD 1,242.9 million), while the book equity ratio declined to 23.3 per cent (39.7 per cent) mainly as a consequence of the impairment charge made in the quarter.

Outlook
Despite positive signals like oil price development, reduced break even levels across the industry and oil companies returning to cash positive positions, activity pick-up is slower than expected. As a result Prosafe anticipates a continued volatile market for the foreseeable future. In the meantime, the company is continuing its focus on cost and spend efficiencies and business improvements to protect its financial runway. In combination with efforts to enhance its strategic position Prosafe aims to be well placed for an upturn.

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, 1 November 2017
The Board of Directors of Prosafe SE

Downloads:
Q3 2017 report >> (PDF, 40 kB)

Q3 2017 presentation >> (PDF,2.4 MB)