Stolt Comex Seaway announces first quarter results

News - April 7, 2000

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Stolt Comex Seaway SA has reported results for the first quarter ended February 29, 2000.

Net loss for the last quarter was $(15.7) million, or $(0.25) per share, on net operating revenue of $192.3 million, compared with net income of $0.6 million, or $0.01 per share, on net operating revenue of $145.1 million for the same period last year.

The weighted average number of common share equivalents outstanding for the quarter was 63 million compared with 59 million for the same period of 1999. Following the issuance of shares to Group GTM on February 4th and to the Stolt-Nielsen TransportationGroup Ltd on February 25th the number of shares outstanding as of February 29th 2000 was 77.5 million. The result for the quarter reflects a one-off gain of $2.2 million from the sale of assets.

Commenting on the results, Bernard Vossier, Chief Executive Officer, said "Market conditions throughout the quarter in the UK sector of the North Sea, the Gulf of Mexico and Asia Pacific continued to be very weak".

"In addition, in the Danish sector of the North Sea the Maersk Halfdan pipelay programme has experienced significant weather delays as has the installation of the Saga Tordis template moorings in the Norwegian sector. The weather related delays on both of these projects have had a significant negative impact on earnings in the quarter".

"In the UK sector the Amerada Hess Triton FPSO, which was to have been towed out and hooked up in the first quarter, was not towed out until March 17th. Revenues from this project will move to the second quarter".

"We have recently been awarded three contracts in the North Sea and in West Africa", said Vossier.

"The first of these is a $48 million contract from Triton Energy for the first phase of the development of the La Cieba field offshore Equatorial Guinea. This is a very fast track project, in a water depth of 900m, for which our recently enhanced engineering ability and assets are well suited".

"The project involves the installation and tie-in of 60km of 8 5/8" rigid flowlines, 2.8km of flexible risers and 60km of well control umbilicals to connect each of the first four production wells to an FPSO. A 614 T subsea support structure for the subsea well control umbilicals and risers will be fabricated at the Stolt Offshore yard in Nigeria. The Seaway Polaris and the Seaway Falcon will undertake the installation work in the third quarter of this year".

"The second contract to be awarded is the Statoil seabed mapping, pipelay support and pipeline inspection frame contract for the Norwegian sector of the North Sea, which is for three years with two additional two-year options".

"The contract includes general survey work, shallow water survey and other work within the capacity of the survey ship. There is also a provision for technology development throughout the life of the contract".

"The third award is a $10 million contract in the UK sector of the North Sea for the tie-back of BP Amoco's South Everest subsea wells to the CATS riser platform. This involves the installation and trenching of a 7.4 km flexible flowline and control umbilical. The flexible flowline, to be supplied by NKT Flexibles will have an unplasticised PVdF liner to accommodate high well temperatures. It will be the longest flowline of its type to be used offshore. The installation work at South Everest is scheduled for the third quarter of 2000".

"Our backlog now stands at $1.2 billion of which $697 million is for the remainder of 2000, with the balance for future years. This compares with a backlog of $1.3 billion at the same time last year of which $837 million was for 1999. The 1999 comparative figures include the backlog for ETPM at that time".

"The integration of ETPM into Stolt Offshore is proceeding well. The new organisation was in place on February 16th. The integration team is now working on establishing common working practices and processes throughout the group and redeveloping the corporate management systems to suit the wider capabilities of the new company, with a target date to implement these new systems of June 1st. The previously announced synergies and savings from bringing the two companies together will start to show from the second half of this year".

"The subsea construction sector is always the last to benefit from increased exploration and production expenditure and we therefore do not expect to see any significant increase in the level of activity this year. Market conditions will therefore continue to be weak for the remainder of 2000, particularly in the UK sector of the North Sea, the Gulf of Mexico and in Asia Pacific and, accordingly, we expect that our second quarter and full year results results will be lower than consensus estimates".

"There are now clear indications of a significant increase in market volume in 2001 and we therefore expect to see stronger market conditions. In support of this view, the level of bids outstanding for 2001 is now at a record level and we expect to seemore very large projects for West Africa come into the market later this year", Mr Vossier concluded.

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