Prosafe SE: First quarter 2017 results

Utilisation of 40 per cent and EBITDA of USD 30.8 million in the quarter.

Mr. Jesper Kragh Andresen, Prosafe CEO says, "We are pleased with the Company's operating performance in this challenging market and the successful award by Statoil of the Johan Sverdrup contract".

Highlights

• Good operating performance in the quarter - focus on safety and compliance
• Awarded important long-term contract for Safe Zephyrus at Johan Sverdrup field in Norway
• Safe Concordia still on contract in Brazil, and options exercised for Safe Boreas and Safe Zephyrus
• Delivering on cost and capex reductions. Focus on continuous improvement remains
• Looking for optionality and value creation potential from financing terms, price and timing of delivery of COSCO new builds
• Safe Regency in process of being sold for scrap to protect cash and to increase competitiveness of the fleet"

Operations

Good operating performance in the quarter. Safety and compliance have the highest focus in Prosafe.

Fleet utilisation was 40 per cent in the first quarter of 2017 (37 per cent in the first quarter of 2016).

The Company is delivering against its cost and capex reduction targets and maintains focus on continuous improvements.

Safe Boreas continued the contract with Repsol Sinopec in UK and was in full operation throughout the quarter. This contract at Montrose was extended until 24 April 2017 at market adjusted rates.

Safe Zephyrus completed the contract with Aker BP in Norway at the end of January and is currently laid-up in the UK.

Safe Notos commenced its three-year and 222 day contract for Petrobras on 7 December 2016 and was on contract throughout the quarter.

Safe Concordia was fully contracted in the quarter for Petrobras and continues on short-term extensions at a market adjusted day rate.

The Safe Scandinavia Tender Support Vessel (TSV) was fully contracted in the quarter with Statoil. This contract has a firm period until July 2018.

Safe Caledonia is undergoing a five-year SPS before commencing a 134 day plus 30-day option contract with Total in UK in mid-May 2017.

Safe Lancia was sold for scrap in the US in March 2017.  

Regalia, Safe Bristolia, Safe Astoria and Safe Regency were idle in the quarter. Regalia and Safe Bristolia are laid up in Norway while Safe Astoria is laid up in Indonesia. Safe Regency is laid up in Curaçao, and the company has taken the decision to sell the vessel for scrap in the near term. This will be the fifth vessel Prosafe has sold for scrap since summer 2016 to preserve cash and to increase competitiveness of the fleet.

Safe Eurus is in a preserved, strategic stacking mode with COSCO (Qidong) Offshore Co., Ltd. (COSCO) in China. Prosafe remains in negotiations with COSCO and related parties with the aim of reaching an acceptable commercial solution regarding timing and terms of delivery for the Safe Nova and the Safe Vega. If an agreement is not reached, Prosafe has the right to cancel the newbuild contracts due to delay and claim a refund of the gross deposit of approx. USD 60 million secured by Bank of China.

Financials

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

Operating loss for the first quarter amounted to USD 2.6 million (operating profit of USD 21.9 million). Operating profit for the first quarter last year benefitted from the mobilisation fee on the Safe Scandinavia TSV (USD 12 million) and a re-phasing charge related to the Safe Boreas Mariner contract of USD 30 million. Operating profit this quarter is impacted by higher depreciation compared to the same period last year. Taking these factors into account, the underlying performance in the quarter has improved compared to the same period last year. 

Net financial expenses for the first quarter were USD 14.9 million (USD 20.3 million).

Net loss amounted to USD 19.1 million (USD 1.8 million), and diluted earnings per share were USD 0.22 negative (USD 1.00 negative).

Total assets at 31 March amounted to USD 2,655.8 million (USD 2,630.8 million). The book equity ratio increased to 42 percent at the end of 2016 due to the financial restructuring completed during last year and remained at 42 percent at 31 March (25.9 per cent). Net interest-bearing debt stood at USD 1,133.6 million (USD 1,650.7 million).

Outlook

At end April Prosafe was awarded the flotel contract on Johan Sverdrup.

The award is anticipated to position Safe Zephyrus well for any additional work for the Johan Sverdrup development. Contract value is between USD 51 million and USD 53 million depending on the duration and start date nominated by Statoil, and includes mobilisation, demobilisation and fuel consumption.

The building of order back-log and longevity combined with the retained optionality of other vessels in the fleet represents a balanced situation for Prosafe.

The market remains generally soft and current accommodation activity is predominantly related to hook-up and commissioning work. Market improvement will require the maintenance and modification part of the market to return.

After several years of sharp decline in the global E&P spending, the company now sees market expectations of only moderate E&P capex reduction in 2017 and an increase in 2018/2019. Such a development is anticipated to be generally positive for the overall activity within the oil and gas sector as well as for offshore accommodation services beyond 2017. It is however anticipated that further scrapping and industry restructuring will be required in addition to activity increase, for the offshore accommodation market to recover. 

Prosafe continues to rebuild its position by taking the lead in respect of cost efficiency, scrapping, fleet renewal and consolidation while retaining its focus on safe operations at all times.

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, 11 May 2017
The Board of Directors of Prosafe SE

Attachments:
Q1 2017 report
Q1 2017 presentation

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