Operational and financial update Q1 2020
Operational and financial update Q1 2020

Operational and financial update Q1 2020


The fleet utilisation rate in the first quarter of 2020 was 32.7 per cent (Q1 2019: 62.5 per cent).  Prosafe refers to the press release from the March 2020 regarding discussions with clients about current and upcoming contracts in light of COVID-19 and the oil price collapse. These discussions are ongoing. Please see status and update per vessel below.

On 13 March 2020, Safe Zephyrus was awarded a 21-day contract by EnQuest. The vessel was ready to mobilize from Averøy in Norway to support EnQuest’s Thistle project, but was instructed by EnQuest on 20 March 2020 not to mobilize. Prosafe has claimed the full contract value, ca. USD 2 million. After the EnQuest contract, Safe Zephyrus was scheduled to mobilise to Shell at Shearwater to commence a 110-day contract with a 30-day option in Q2 2020. Prosafe has been informed by Shell that this project will not be performed in 2020 and discussions with the client are ongoing.

Safe Caledonia was laid up in the UK. The vessel was initially prepared to commence a 162-day contract with a 30-day option for Total at the Elgin complex in the UK sector of the North Sea from mid-April 2020. As previously informed, Prosafe has now agreed with the client to defer this project by one year.

Safe Notos has been operating on a three-year and 222-day contract for Petrobras in Brazil since 7 December 2016. Safe Eurus has been providing safety and maintenance support to Petrobras during a three-year contract since November last year. On 21 March 2020, client personnel on both vessels were demobilised and the vessels were moved closer to shore. During this period, the vessels were on 95% stand-by day rate. From early April 2020, Prosafe has been requested to agree a suspension of the contract for a period of up to 120 days during which period all logistical services, fuel and catering support will continue to be provided by Petrobras, and any days of suspension will be added to the firm period of the contract. Commercial and payment terms related to the recommencement are subject to ongoing discussions.

Safe Concordia commenced the contract for Equinor at the Peregrino FPSO in the Campos Basin offshore Brazil in mid-January 2020. The contract has a duration of 120 days. The vessel was on full day rate during the whole operation in the quarter. No options are expected to be called by the client.

Safe Scandinavia, Regalia and Safe Boreas were idle in the quarter and were laid up in Norway. On 15 March 2020, the sale of Safe Bristolia for recycling was completed in accordance with all relevant conventions.


The company has incurred non-recurring costs of approximately USD 1 million in the quarter, which were largely related to the ongoing process with lenders for a long-term financial solution.

In light of the commercial discussions with clients as outlined above, there is uncertainty related to the extent to which the order backlog will materialize in 2020, as well as to the final outcome of these negotiations.

Further, Prosafe refers to information on its financial status and process with lenders that was provided in the Q4 2019 report published on 6 February 2020, as well as in press release updates and the detailed description provided in the 2019 Annual Report which was released on 16 April 2020. Prosafe has agreed an extension to the forbearance from the non-payments and defaults with a majority of its lenders across its USD 1,300 million and USD 288 million facilities until 31 May 2020. As part of this arrangement, the company will continue to defer making payments of scheduled instalments and interests under both facilities. Similarly, payment of the final instalment owed and due under the seller credit to Cosco for the Safe Notos remains subject to ongoing discussions with Cosco and the lenders.

The forbearance arrangement secures stability for the company to continue to work with the lenders to agree on a long-term financial solution while lenders reserve their rights.

As communicated in the 2019 Annual Report that was released on April 16 2020, the company has prepared a revised business plan which forms part of the basis for continued and ongoing discussions with the lenders to agree a sustainable financial solution after several years of low activity across the industry and currently unsustainable debt. The business plan initially focused on the near years, and work remains to conclude on the longer term and consequent financial and accounting effects.

The company has on the basis of the business plan and in agreement with lenders presented a restructuring proposal that if approved as proposed, will result in a sustainable balance sheet. However, due to ongoing discussions and the uncertainty related to the outcome of the process, it is too early to know whether this proposal or a variant of it will eventually be agreed.

The Covid19 pandemic and the oil price collapse since March have resulted in a dramatic change in market conditions, economic outlook and ways of living and working. The entire oil and gas services industry is exposed to a “double Black Swan event”, and short term planning as well as longer term forecasting is extremely challenging, whilst at the same time being critical.

Against the aforesaid, taking a view on the combined effects of Covid-19 and related national and international measures taken, the oil price crash, the industry dynamics and the company specific factors, both in the short and long term, are very demanding. While earnings potential in the longer term is particularly difficult to predict and work remains ongoing to conclude on related financial and accounting effects, the ongoing forecasting work indicates that both asset values and debt levels are in the company’s opinion unsustainable although the magnitude is yet to be concluded.

The company aims to arrive at a sustainable solution in order to protect values to the extent possible and establishing a sound basis upon which to create value in the future. Meanwhile, the company continues to operate on a going concern basis to protect and create value through challenging market conditions on the assumption that there is justified hope for a sustainable financial solution.

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

Stavanger, 14 May 2020
Prosafe SE

For further information, please contact:

Jesper K. Andresen, CEO
Phone: +47 51 65 24 30 / +47 907 65 155

Stig Harry Christiansen, Deputy CEO and CFO
Phone: +47 51 64 25 17 / +47 478 07 813

This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act

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