Sea Production Ltd Financial Information Second Quarter 2011
Sea Production Ltd Financial Information Second Quarter 2011
Sea Production Ltd Financial Information Second Quarter 2011
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<strong>Sea</strong> <strong>Production</strong> <strong>Ltd</strong><br />
<strong>Financial</strong> <strong>Information</strong> <strong>Second</strong> <strong>Quarter</strong> <strong>2011</strong><br />
Background<br />
This financial information has been prepared in accordance with International <strong>Financial</strong> Reporting<br />
Standards.<br />
General <strong>Information</strong><br />
<strong>Sea</strong> <strong>Production</strong> <strong>Ltd</strong> and its subsidiaries own and operate two Floating, <strong>Production</strong>, Storage and<br />
Offloading (“FPSO”) vessels and one Aframax tanker vessel.<br />
<strong>Financial</strong> Statements<br />
Income Statement<br />
(<strong>Second</strong> quarter 2010 figures in brackets)<br />
The Group’s revenue in the quarter was US$2.0 million (US$1.8 million), with EBITDA of US$1.9 million<br />
negative (US$1.5 million negative).<br />
The Crystal Ocean generated bareboat hire revenue of US$1.8 million. The Front Puffin and the <strong>Sea</strong> Cat<br />
were laid up during the quarter and did not generate any revenue.<br />
Operating expenses for the quarter amounted to US$0.04 million (US$1.7 million) and administrative<br />
expenses for the period were US$3.9 million (US$1.5 million).<br />
Total depreciation for the quarter was US$3.8 million (US$3.7 million). The Group’s vessels are<br />
depreciated on a straight‐line basis over their economically useful lives, taking into account their<br />
estimated residual value. Assessment of the remaining economic life of the assets is done on a yearly<br />
basis. Capital costs incurred in relation to a specific contract are depreciated over the expected life of<br />
the relevant contract. At the end of the contract any remaining balance is written off.<br />
Net financing charges for the period were US$1.6 million (US$1.6 million). The interest expense on the<br />
US$130.0 million bond was US$1.7 million.<br />
The net result for the quarter was a net loss of US$6.8 million (net loss of US$6.9 million).<br />
Balance Sheet<br />
Current assets as at 30 June <strong>2011</strong> were US$61.8 million (US$69.6million) and non‐current assets were<br />
US$189.3 million (US$216.6 million). The majority shareholder is planning to inject US$10 million of cash<br />
into the Company by way of a shareholder loan. A circular, including details of the transaction, will be<br />
sent to shareholders shortly. The Company has a 5 year callable bullet bond loan with a nominal value of<br />
US$124.5 million outstanding and a final maturity of February 2012. The Company had no other<br />
borrowings at the end of the quarter. The Company’s equity as at 30 June <strong>2011</strong> was US$61.1 million<br />
(US$97.6 million).
Group Update <strong>Second</strong> <strong>Quarter</strong> <strong>2011</strong><br />
The Crystal Ocean was chartered to Anzon/Roc throughout the period. The FPSO Front Puffin has been<br />
laid‐up pending the securing of a new contract and the <strong>Sea</strong> Cat was laid‐up during the quarter.<br />
Update on Puffin Dispute<br />
On 4 August <strong>2011</strong>, the Board of <strong>Sea</strong> <strong>Production</strong> announced that on 3 August <strong>2011</strong> the Tribunal which<br />
heard the arbitration had made an award in favour of Puffin FPSO <strong>Ltd</strong> requiring that AED Services Pte <strong>Ltd</strong><br />
(“AED”) shall pay to Puffin FPSO <strong>Ltd</strong> (“Puffin FPSO”) US$72.39 million by 2 September <strong>2011</strong> (the<br />
“Award”). The Tribunal directed both parties to provide submissions as to legal costs, following which<br />
the Tribunal will in due course make a determination of entitlement to recovery of legal costs.<br />
AED is a 100% subsidiary of AED Oil Limited (“AED Oil”), a public company listed on the Australian Stock<br />
Exchange. AED Oil Limited is a 40% joint venture partner in the Puffin Field, offshore North‐western<br />
Australia. The field operator and owner of the remaining 60% of the joint venture is Sinopec Oil & Gas<br />
Australia (Puffin) Pty Limited (“Sinopec Australia”), a wholly‐owned subsidiary of Sinopec Group<br />
(“Sinopec”). Under signed agreements forming part of the FPSO contract pursuant to which the Award<br />
was made, Puffin FPSO has the benefit of certain security, including a financial and performance<br />
guarantee from AED Oil and fixed charge security over AED Oil’s assets and the aggregate 100% interests<br />
of AED Oil and Sinopec Australia in the Puffin and Talbot Fields.<br />
AED Oil went into voluntary administration on 12 August <strong>2011</strong> and the amount due to Puffin FPSO under<br />
the Award was not paid by 2 September <strong>2011</strong>.<br />
Puffin FPSO is taking, and will continue to take, all necessary steps to recover all amounts due from<br />
Sinopec, Sinopec Australia and AED. Initial steps taken by Puffin FPSO have resulted in insolvency<br />
practitioners from KPMG having been replaced as the voluntary administrator of AED Oil by insolvency<br />
practitioners from PPB Advisory on 24 August <strong>2011</strong>, a judicial manager having been appointed to AED on<br />
6 September <strong>2011</strong> by the Court of Singapore and on 16 September <strong>2011</strong>, a receiver and manager having<br />
been appointed to AED Oil, each with a view to enforcing Puffin FPSO’s contractual rights and security<br />
held in order to recover all amounts due to Puffin FPSO.<br />
The Board will keep shareholders appropriately informed.<br />
Board of Directors, September <strong>2011</strong><br />
Important <strong>Information</strong>:<br />
This document does not constitute an invitation or inducement to sell or an offer to purchase shares in <strong>Sea</strong> <strong>Production</strong> <strong>Ltd</strong>. It is not intended to<br />
form the basis of any investment decision, does not constitute and may not be relied upon as constituting any form of investment advice, and is<br />
not to be construed as an undertaking or assurance that any specific course of action will be followed. Prospective investors are advised to<br />
ensure that they obtain appropriate independent professional advice before making any investment. The information and any opinions<br />
contained in this document have been compiled in good faith, but no representation or warranty, express or implied, is made as to their<br />
accuracy, completeness or correctness. Save to the extent (if any) that exclusion of liability is prohibited by any applicable law or regulation, <strong>Sea</strong><br />
<strong>Production</strong> <strong>Ltd</strong>, its officers, employees, representatives and agents expressly advise that they shall not be liable in any respect whatsoever for<br />
any loss or damage, whether direct, indirect, consequential or otherwise however arising (whether in negligence or otherwise) out of or in<br />
connection with the contents of or any omissions from this document. Statements contained in this document may constitute "forward‐looking<br />
statements" which are generally identifiable by the use of the words "may", "will", "should", "plan", "expect", "anticipate", "estimate",<br />
"believe", "intend", "project", "goal" or "target" or the negative of these words or other variations on these words or comparable terminology.<br />
Forward‐looking statements involve a number of known and unknown risks, uncertainties and other factors that could cause <strong>Sea</strong> <strong>Production</strong>’s<br />
actions to be materially different from any actions expressed or implied by such forward‐looking statements. <strong>Sea</strong> <strong>Production</strong> <strong>Ltd</strong> cannot<br />
guarantee that such actions will be put into effect in whole or in part in the future, nor does <strong>Sea</strong> <strong>Production</strong> <strong>Ltd</strong> undertake publicly to update or<br />
revise any forward looking statement that may be made in this document, whether as a result of new information, future events or otherwise.
<strong>Sea</strong> <strong>Production</strong> <strong>Ltd</strong><br />
Consolidated Income Statement<br />
(Unaudited)<br />
(US$000)<br />
Operating revenues<br />
Charter revenues 1,987<br />
Other income 50<br />
Total operating revenues 2,037<br />
Operating expenses<br />
Operating expenses (41)<br />
Administrative expenses (3,907)<br />
Total operating expenses (3,949)<br />
Loss before depreciation (1,912)<br />
Depreciation (3,807)<br />
Net operating loss (5,719)<br />
<strong>Second</strong> <strong>Quarter</strong> First Half<br />
Full Year<br />
<strong>2011</strong> 2010 <strong>2011</strong> 2010 2010<br />
1,779 4,287<br />
‐<br />
50<br />
1,779 4,337<br />
(1,760) (682)<br />
(1,535) (8,385)<br />
(3,295) (9,067)<br />
(1,516) (4,730)<br />
(3,737) (7,422)<br />
(5,253) (12,153)<br />
3,863 7,410<br />
‐ 5,171<br />
3,863 12,581<br />
(3,242) (6,991)<br />
(3,552) (10,501)<br />
(6,794) (17,492)<br />
(2,931) (4,911)<br />
(7,475) (19,401)<br />
(10,406) (24,312)<br />
Other income/(expenses)<br />
Interest income 0<br />
0 1<br />
1 2<br />
Interest expense (1,693) (1,470) (3,151) (2,881) (6,414)<br />
Amortization of deferred charges 111 (151) ‐ (302) (135)<br />
Other financial items, net (15) (15) (26) 28 (54)<br />
Gain on disposal of fixed assets 467<br />
‐ 467<br />
‐<br />
86<br />
Net other income/(expenses) (1,129) (1,636) (2,709) (3,154) (6,515)<br />
Taxation ‐<br />
Net loss (6,848)<br />
Attributable to:<br />
Equity holders of the Company (6,848)<br />
‐<br />
(6,889) (14,861)<br />
(6,889) (14,861)<br />
‐<br />
‐<br />
(4,207)<br />
(13,560) (35,034)<br />
(13,560) (35,034)
<strong>Sea</strong> <strong>Production</strong> <strong>Ltd</strong><br />
Consolidated Balance Sheet<br />
(Unaudited)<br />
(US$000)<br />
ASSETS<br />
Current assets<br />
30‐Jun‐11 30‐Jun‐10 31‐Dec‐10<br />
Cash and cash equivalents 457 13,217<br />
6,555<br />
Trade accounts receivable 14,133 13,503 13,496<br />
Prepaid expenses and accrued income 46,647 40,288<br />
1,155<br />
Inventory 0<br />
153<br />
2<br />
Other receivables 614<br />
2,466 45,066<br />
Total current assets 61,851 69,627 66,274<br />
Non‐current assets<br />
Vessels and equipment 188,714<br />
Other non‐current assets 629<br />
Total non‐current assets 189,343<br />
Total assets 251,194<br />
LIABILITIES AND STOCKHOLDERS' EQUITY<br />
Current liabilities<br />
Trade accounts payable 6,252<br />
Deferred revenue 620<br />
Short‐term debt 124,248<br />
Accrued expenses 1,352<br />
Current income tax liabilities 45,066<br />
Total current liabilities 177,538<br />
Non‐current liabilities<br />
Long‐term debt ‐<br />
Deferred revenue ‐<br />
Deferred income tax liabilities 12,552<br />
Other non‐current liabilities ‐<br />
Total non‐current liabilities 12,552<br />
Total liabilities 190,090<br />
Stockholders' equity<br />
Share capital 90,000<br />
Other equity 20,901<br />
Retained losses (49,797)<br />
Stockholders' equity 61,104<br />
Total liabilities and stockholders' equity 251,194<br />
214,945<br />
1,687<br />
216,632<br />
286,259<br />
2,101<br />
620<br />
‐<br />
‐<br />
4,526<br />
7,247<br />
129,276<br />
2,037<br />
50,058<br />
‐<br />
181,371<br />
188,618<br />
90,000<br />
21,104<br />
(13,463)<br />
97,641<br />
286,259<br />
197,472<br />
1,243<br />
198,715<br />
264,989<br />
4,893<br />
620<br />
‐<br />
1,433<br />
45,083<br />
52,029<br />
124,026<br />
‐<br />
11,418<br />
1,359<br />
136,803<br />
188,832<br />
90,000<br />
21,093<br />
(34,936)<br />
76,157<br />
264,989
<strong>Sea</strong> <strong>Production</strong> <strong>Ltd</strong><br />
Consolidated Cashflow Statement<br />
(Unaudited)<br />
(US$000)<br />
OPERATING ACTIVITIES<br />
Net loss<br />
Adjustments to reconcile net income to net cash<br />
generated from operating activities:<br />
(6,848)<br />
Stock options/retention scheme 1<br />
Dividends paid ‐<br />
Depreciation and amortization 3,807<br />
Gain on assets disposal (467)<br />
Net change in working capital/non‐current items 1,257<br />
Cash generated from operating activities (2,249)<br />
INVESTING ACTIVITIES<br />
Sale/(purchase) of property, plant and equipment 1,805<br />
Net cash provided by investing activities 1,805<br />
FINANCING ACTIVITIES<br />
Repayment of borrowings and interest (1,436)<br />
Net cash provided by financing activities (1,436)<br />
Net decrease in cash and cash equivalents (1,880)<br />
Cash and cash equivalents at start of period 2,338<br />
Cash and cash equivalents at end of period 457<br />
<strong>Second</strong> <strong>Quarter</strong> First Half<br />
Full Year<br />
<strong>2011</strong> 2010 <strong>2011</strong> 2010 2010<br />
(6,889)<br />
‐<br />
‐<br />
3,737<br />
‐<br />
2,128<br />
(1,024)<br />
(1,008)<br />
(1,008)<br />
(2,916)<br />
(2,916)<br />
(4,948)<br />
18,165<br />
13,217<br />
(14,861)<br />
3<br />
‐<br />
7,422<br />
(467)<br />
2,864<br />
(5,039)<br />
1,805<br />
1,805<br />
(2,864)<br />
(2,864)<br />
(6,098)<br />
6,555<br />
457<br />
(13,560)<br />
‐<br />
‐<br />
7,475<br />
‐<br />
72<br />
(6,013)<br />
(1,008)<br />
(1,008)<br />
(2,916)<br />
(2,916)<br />
(9,937)<br />
23,154<br />
13,217<br />
(30,827)<br />
‐<br />
‐<br />
19,401<br />
(86)<br />
1,718<br />
(9,794)<br />
4,626<br />
4,626<br />
(11,431)<br />
(11,431)<br />
(16,599)<br />
23,154<br />
6,555
<strong>Sea</strong> <strong>Production</strong> <strong>Ltd</strong><br />
Statement of Changes in Equity<br />
(Unaudited)<br />
(US$000)<br />
Share capital<br />
Balance as at 31 March <strong>2011</strong> 90,000<br />
Total recognized income and expense for the period from 1<br />
April <strong>2011</strong> to 30 June <strong>2011</strong><br />
Currency translation difference ‐<br />
Balance as at 30 June <strong>2011</strong> 90,000<br />
Attributable to equity holders of the Company<br />
‐<br />
Other<br />
reserves<br />
21,087<br />
‐<br />
(185)<br />
20,901<br />
Retained<br />
earnings<br />
(42,950)<br />
(6,848)<br />
‐<br />
(49,797)<br />
Total equity<br />
68,137<br />
(6,848)<br />
(185)<br />
61,104