REPORT 2ND QUARTER OF 1995

Date: 07.95, From: I.M. Skaugen

Summary
Significantly better results for I.M. Skaugen due to market improvement.

I.M. Skaugen's result for the 2nd Quarter of 1995 was NOK 33 mill. while the corresponding result the same period in 1994 was minus NOK 2 mill. The operating result was NOK 53 mill. representing an improvement over the same period in 1994 of NOK 59 mill. The consolidated cash flow before unrealized currency gains/losses was NOK 78 mill. compared to NOK 32 mill. the same period of 1994.

I.M. Skaugen currently operates vessels for the transport of petrochemical gases and LPG, through the subsidiary Norwegian Gas Carriers. Together with Unigas International B.V., of the Netherlands, the company operates 22 vessels in a cooperation organized as an income pool representing a world wide market share of 25% in the segment 2.000 - 25.000 cbm. The activity in the market has shown a significant upturn since June 1993, and the freight rates have shown a continuous positive trend since January 1994. The company has significantly improved the efficiency of its marketing and operation, and in addition completed a full refinancing as well as strengthened the equity through a large share issue during February 1995. I.M. Skaugen currently operates vessels for the transport of petrochemical gases and LPG and serves, through its subsidiary Norwegian Gas Carriers (NGC), the leading companies in the global petrochemical industry.

The company operates 16 wholly or partly owned gas carriers of which one vessel is on timecharter. In a joint marketing pool with Unigas International B.V., of the Netherlands, NGC employs a total of 22 vessels with a carrying capasity of approx. 150.000 cbm. The company is among the world's leading operators in its segment. The group of companies has no other operative activities.

The Result
I.M. Skaugen's result for 2nd Quarter of 1995 was NOK 33 mill. representing an improvement over the same period in 1994 of NOK 35 mill.

The operating result was NOK 53 mill. compared to minus NOK 6 mill. for the same period in 1994, and consolidated cash-flow before unrealized foreign currency exchange gains/losses was NOK 78 mill. The corresponding figure for 1994 was minus NOK 32 mill.

Main figures in NOK mill:
2nd Quarter 1st Quarter
Freight income T/C basis 97 95
Operating result before sale
of shares in limited
partnerships 25 24
Result 17 16
NOK/USD rate 6,39 6,52

Capital

The consolidated current ratio is 4,5 and book equity ratio 40%. As of June 30, the company has NOK 323 mill. in liquid assets and book equity of NOK 508 mill. Independent brokers assess the market value of the fleet at NOK 289 mill. above book value. An unrealized foreign exchange gain of NOK 70 mill. related to USD debt following the fall in the USD/NOK exchange rate since year end is not included in the result. The company's earnings and debts are primarily in USD.

The company will focus on a step by step fleet renewal through the 2nd hand market while keeping a debt ratio that ensures financial flexibility. The debt has been reduced through the period by USD 18,5 mill corresponding to NOK 136 mill. through repayment and purchase of "Variable Rate Notes" issued by NGC.

Operations

The improvement in the results is due to a continuous increase in earnings. The average earnings pr. vessel during the 2nd Quarter was USD 412,000 per month, compared to USD 382,000 per month during the1st Quarter of 1995. In spite of the spotmarket having levelled out somewhat, the company has been renewing periodic time charter contracts at rates consistantly higher than during the first three months of 1995.

There has been a high utilization level of the fleet during the period. The number of freight-seeking days has accounted for approximately 1% of the available capasity compared to approx. 10% during 1994. The fleet contract coverage for 1995 is above 80%, a record high level. Increasing demand and activity for the petrochemical industry coupled with a continuous marginal supply of new tonnage within the segment of the company give support for a further improvement in average earnings. Concerning the supply of new vessels the order situation for ethylene vessels is still the same with three vessels on order counting for 4% of available capacity, while the situation for vessels below 20.000 cbm is somewhat different. In this segment about 250.000 cbm or abt. 10% of the capacity is on order. However about half of this new capacity concerns fully pressurized vessels which are aimed for local traffic in the Far East and mainly towards China with LPG.

In addition to several timecharters of 6 and 12 months duration, the ethylene vessel Norgas Voyager, built during 1972 with 7418 cbm capasity, has been fixed on three year timecharter starting in June 1995. The time fixtures concluded during the 2nd Quarter of 1995 are constantly better than the fixtures made during 1st Quarter. One 9 months timecharter made during the period is at the highest rate ever for the company. These fixtures indicate expectations for a positive market for 1996.

Operating Conditions

In spite of high levels of utilization, the vessel operations have been without any major problems during the period, and the operating cost level has been as expected. Figures relating to personnel injuries and damage to equipment and cargo continue the positive trend with very few incidents and damages. The company will perform all the sceduled three dockings between June and October. Two out of these are quite extensive. The combination of costs for the dockings and lack of earnings for 70-80 days call for a weaker result in the 3rd Quarter compared to the two previous periods. The direct costs for the dockings will be approximately NOK 20 mill. NOK 3 mill. of these costs are accounted for in the 2nd Quarter.

For possible questions, please contact Executive Vice President, Hans-Jørgen Blomseth, on telephone number 22 83 30 60.