Siem Offshore Reports 3Q Results (Norway)

Siem Offshore Reports 3Q ResultsResults

The operating revenues for the third quarter were USD 93.4 million (2010: USD S8.0 million).The operating margin was USD 3S.7 million (2010: USD 19.S million) and the operating margin as a percentage of revenues was 38% (2010:34%).

Operating profit was USD 12.6 million (2010:14.8 million) and includes depreciation and amortisation of USD 21.3 million (2010: USD 15.0 million). Net currency exchange gain (loss) of USD (1.8) million was recorded on forward contracts, of which USD (2.4) million is unrealised.

Net financial items were USD (30.9) million (2010: USD 13.0 million) and include a revaluation gain (loss) of non-USD currency items of USD (16.4) million (2010: USD 17.4 million) due to the stronger USD. Non-USD currency items are held to match short- and long-term liabilities, including off-balance sheet liabilities, in similarcurrencies.The financial expenses includes an unrealised loss of USD (6.7) million for interest swap agreements which were entered into for hedging long-term interest rate exposure on floating rate debt.

The net profit(loss) attributable to shareholders was USD (20.1) million, or USD (0.05) per share (2010: USD 27.0 million, or USD 0.07 per share).

The Company had eleven PSVs in operation at the end of third quarter (2010: twelve). All PSVs operated on long-term contracts, of which one was on a bareboat contract The PSV fleet earned operating revenue of USD 25.3 million and had 100% utilisation (2010: USD 2S.8 million and 97%). The operating margin for the PSV fleet was USD 13.5 million, (2010: USD 13.3 million) and the operating margin as a percentage of revenue was 53% (2010:52%).

The PSV fleet recorded 0 days off-hire related to dry-dockings or contract demobilisation (2010:30 days).

The Company had four MRSVs in operation at the end of third quarter (2010: four). All MRSVs operated on long-term contracts, of which one was on a bareboat contract The MRSV fleet earned operating revenue of USD 14.5 million and had 100% utilisation (2010: USD 13.6 million and 100%). The operating margin for the MRSV fleet was USD 8.9 million (2010: USD 8.9 million) and the operating margin as a percentage of revenue was 61 % (2010:65%).The MRSV fleet recorded 0 days off-hire related to dry-dockings or contract demobilisation (2010: Odays).

The Company had ten AHTS vessels in operation at the end of third quarter (2010: six), of which two are owned by our pool partner. During third quarter, four AHTS vessels have operated on long-term contracts in Brazil, one AHTS vessel has operated for Statoil in the North Sea, two AHTS vessels have operated offshore Greenland and the remaining three AHTS vessels have operated in the North Sea spot market.

The AHTS fleet earned operating revenue of USD 36.9 million and had 90% utilisation (2010: USD 10.1 million and 73%). The operating margin for the AHTS fleet was USD 19.1 million (2010: USD 1.3 million) and the operating margin as a percentage of revenue was 52% (2010:13%). The AHTS fleet recorded 0 days off-hire related to dry-dockings or contract demobilisation (2010: 88 days).

The Company had a fleet often Brazilian vessels at the end of third quarter (2010: nine), of which eight vessels operated on long-term contracts and two vessels were idle. The Brazilian vessels earned operating revenue of USD 8.0 million and had 76% utilisation (2010: USD 6.4 million and 83%). The operating margin for the Brazilian vessels was USD 2.1 million (2010: USD 2.0 million) and the operating margin as a percentage of revenue was 26% (2010: 31%). The Brazilian vessels recorded 21 days off-hire related to dry-dockings or contract mobilization (2010:18 days).

The cable installation segment, including the vessel “Siem Carrier”, earned operating revenue of USD 0.4 million. The operating margin for the cable installation segment was negative USD 2.1 million.

Results for the Nine Months Ended 30 September 2011

The operating revenue for the nine months ended 30 September was USD 240.9 million (2010: USD 167.4 million). The operating margin was USD 82.4 million (2010: USD 56.7 million) and the operating margin as a percent of revenue was 34% (2010:34%).

Operating profit for the nine months ended 30 September was USD 22.7 million (2010: USD 9.4 million) and includes depreciation and amortisation of USD 60.3 million (2010: USD 38.6 million).

Net currency exchange gains of USD 0.3 million were recorded on forward contracts, of which USD 1.9 million is unrealised.

Net financial items were USD (37.0) million (2010: USD (2.0) million) and includes a revaluation gain(loss) of non-USD currency items of USD (8.2) million (2010: USD 4.2 million) due to the stronger USD during the period. Non-USD currency items are held to match short-and long-term liabilities, including off-balance sheet liabilities, in similar currency. The result from associ-ated companies was USD 2.3 million and includes, among others, net results of USD 4.1 million for the 50% owned “Joides Resolution” until its consolidation effective 1 August 2011, USD (1.7) million for the 35%-owned limited partnership KS Ocean Commander, and USD (0.7) million for the 41 %-ownership in the well stimulation vessel “Big Orange XVIII”.

The net profit (loss) attributable to shareholders was USD (17.1) million or USD (0.04) per share (2010: USD 6.1 million or USD 0.02 per share).

The PSV fleet earned operating revenue of USD 72.5 million and had 95% utilisation during the first nine months (2010: USD 71.5 million and 96%). The operating margin for the PSV fleet was USD 37.4 million (2010:37.7 million) and the operating margin as a percentage of revenue was 52% (2010:53%). The PSV fleet recorded 121 days off-hire related to dry-dockings or contract mobilisation (2010:96 days).

Submarine Cable Installation Market

During the course of the third quarter, Five Oceans Services changed its name to Siem Offshore Contractors (SOC).The name change reflects the successful integration of the company into the Siem Offshore Group.

The vessel “Siem Carrier” the main asset of Siem Offshore Contractor’s operations, stayed idle in the third quarter as the Middle East market remained slow. As a result, the operating profit from SOC in the third quarter was negative.

The market has shown some improve-ment and SOC has recently secured a minimum of 45 days work in the fourth quarter, with options for another 34 days. In addition, SOC is pursuing further opportunities in the Middle East region for work later in the fourth quarter and for work in 2012. It is expected that the Middle East market will continue to improve.

SOC is currently bidding for and pursuing a number of projects in the market for installation of submarine cables for European offshore wind farms.The installation campaigns for these projects will be for the years 2013-2016. As previously stated, the Company’s objective is to turn the Cable Installation Segment profitable in 2012.

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Source: siemoffshore, October 27, 2011

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