1st Quarter

Transcription

1 Report for Global Rig Company ASA 1st Quarter

2 Rig 2 ready for drilling operations. The rig is on a well contract and started earning money in January. Highlights Strong momentum in US market Economies of scale from additional rigs may generate significant profits Operating profit of NOK 4.1 million for the Group Interest expenses and currency losses from the depreciating dollar generate a post-tax loss Expecting future positive development 2

3 1st Quarter st Quarter Summary 1st quarter 2008 was the first quarter in which the Global Group started generating positive operating results. Global Rig Company ASA subsidiary NorAm Drilling Company generated income from all three rigs, though not for all days in the quarter, as neither Rig 2 nor Rig 3 contractors had been ready on location. As a consequence, somewhat reduced standby rates were charged for parts of the quarter. On the other hand, expenses were reduced due to this standby state, and the rig was not subject to wear and tear. In the coming quarter, we expect all rigs to earn full rates. The Global Group s focus this quarter was on laying the groundwork for increasing the number of rigs. More rigs will generate more profits through solid margins and economies of scale. Based on two new drilling contracts, subject to financing, and one LOI, Global Rig Company ASA entered into a contract for the purchase of two new, more powerful rigs with a reputable rig manufacturer. The contract was also subject to successful financing and offered options for the purchase of additional rigs. On this basis, the Board of Global Rig Company ASA got approval from the extraordinary general assembly, held March 13, to finance the purchase of the new rigs. This process was still ongoing at the end of the quarter. The capital markets are currently characterized by considerable uncertainty. The market for land rigs in the US did, however, strengthen substantially throughout the quarter, and we are determined to take part in this development. 2. The Group Global Rig Company ASA was established Feb 19, On May 14 of that year, the company raised NOK 115 mill in equity, and on June 28, a loan agreement for NOK 120 mill in bonds with warrants was signed. The total of NOK 235 mill went to finance the purchase of 3 onshore drilling rigs, as well

4 Global Rig Company ASA 100% 100% Global Rig Active AS NorAm Drilling Company Rig 1 Rig 2 Rig 3 Marketing Crewing Operations - engineering IT/ Finance - Legal as the establishment and operations of a subsidiary drilling company in the US. Global Rig Company ASA owns 100% of NorAm Drilling Company and Global Rig Active AS. The three rigs are owned by Global Rig Active AS and are leased to NorAm Drilling Company. The rig purchases of the Norwegian subsidiary and the drilling operations of the US subsidiary have been financed through intercompany loans from Global Rig Company ASA. Parts of these loans were converted to equity in the 1st quarter. with a strategy for newbuilds. Global Rig Company shares this strategy, and our fleet is brand new. We aim to add rigs to our fleet and manpower to NorAm Drilling Company to suit the needs of our clients. The market pays a premium for new rigs as these are more efficient and cost-effective, and horizontal drilling increases the clients recoverable reserves. There is strong momentum in the US land rig market, and provided sufficient financing is achieved, our company will benefit from a strategy of increasing the number of rigs. 3. Market Strategy Oil and gas prices rose substantially during the 1st quarter. While US growth in total number of rigs in operation has slowed over the last year, the number of rigs capable of drilling horizontal wells has had strong growth. Old rigs are being phased out and new, more advanced rigs are taking over. These factors are reflected in the share prices of established US land rig companies 4. Largest Share Holders 20 largest shareholders in Global Rig Company ASA. As of March 31, 2008 Name Share % Pactum A/S 9,6 Rogaland Vekst A/S 8,3 SEB Private Bank S.A., Luxembourg 6,8 Bank of New York, Brussels branch 4,7 Aksjevold AS 4,2 Consafe Invest AB 4,2 Havila 4,2 Olympia Holding AS, c/o Banque Invik S.A. 3,3 Crown Hill Chartering AS 2,5 Banque Invik S.A., Luxembourg 2,4 Nilsen, Sven Irgens 2,0 Juuhl, Michael Stensrød 1,9 Lang, Svein 1,7 Dragesund Invest A/S 1,7 Sundt AS 1,7 Johs Lunde Invest A/S, c/o Johs Lunde 1,4 Risa & Øglend AS 1,4 BÅTSTØ Maritim AS 1,3 KG Investment Comp AS 1,3 BSN AS 1,0

5 5. Financial statements The statements below have not been reviewed by an auditor. Global Rig Company ASA and Group s financial statements are presented herein. In the consolidated statement, intercompany transactions and balances have been eliminated. The same accounting principles (NGAAP) apply in this report as in the annual accounts. Profit and loss The financial post-tax result for the Group for the period Jan 1 Mar 31, 2008 was NOK -1.5 mill. Global Rig Company ASA: NOK 1.2 mill Global Rig Active AS: NOK -1.9 mill NorAm Drilling Inc: USD -0.2 mill Global Rig Company incurred NOK 2.0 mill in operating expenses during this quarter. Of this, NOK 1.2 mill was payroll related. The company earned NOK 7.6 mill in interest on intercompany loans. The main financial expense was NOK 3.4 mill in payments of bond interest. Profits before tax were NOK 1.6 mill, and the after-tax result was NOK 1.2 mill. The Group had operating income of NOK 21.7 mill from drilling and associated activities in the first quarter, nearly double the income of Operating expenses were NOK 17.6 mill, approximately 40% of which was payroll related. The Group had its first quarter with operating profits. The operating result was NOK 4.1 million. Group net financial expenses of NOK 5.8 mill were mostly related to interest on bonds, while some NorAm Drilling Company interest expenses pertained to loan financing of vehicles and warehouses; there were also losses due to the falling US dollar. The result before tax was NOK -1.7 mill, and NOK -1.5 mill post tax. Balance Sheet The balance sheet has not been audited. Global Rig Company ASA s main assets are the intercompany loans and shares in the subsidiaries. During the first quarter, NOK 35 mill of the loans were converted to shares in Global Rig Active AS, and USD 1.5 mill was converted to shares in NorAm Drilling Company. This was done to ensure sufficient equity in the subsidiaries. Global Rig Company had deferred tax assets from losses in 2007 and other receivables including NOK 2.0 mill in reimbursable MVA (Norwegian VAT) and a technical accrual of expenses related to bonds. Bank deposits amounted to NOK 7.0 mill by the end of the quarter. The company had equity of NOK 99.3 mill, and a bond loan of NOK mill. Other liabilities were mainly interest on the loan that had accrued but was not paid by the end of the quarter. The Group had NOK 9.6 mill in deferred taxes from losses in Its tangible assets included rigs, vehicles, warehouses, and office equipment, all amounting to NOK mill. Accounts receivable were NOK 16.4 mill, as some of NorAm Drilling Company s clients have yet to pay their obligations. The receivables are substantial, and ensuring payment of these has a high priority. Other receivables involve mainly NOK 3.1 mill in drill pipe prepayments. The group as a whole reported NOK 12.2 mill in cash holdings at the end of the quarter. The equity of the group stood at NOK 80.3 mill. In addition to parent company bonds, NorAm Drilling Company has certain long-term liabilities related to vehicles and purchase of land and warehouses. In addition to the bond interest, current liabilities consist primarily of accounts payable to vendors of rig accessories. Cash flow Global Rig Company ASA had a change in cash of NOK -6.6 mill due mostly to additional intercompany loans. Interest accrued was added to the loans. Cash and cash equivalents amounted to NOK 7.0 mill at the end of the quarter. The Group s net change in cash of NOK -7.3 mill resulted from the purchase of land and warehouses, plus a number of additional accessories for the rigs, while also covering operating and financial expenditures. Accounts receivable have increased by NOK 10.8 mill. Cash and cash equivalents stood at NOK 12.3 mill at the end of the quarter. 5

6 Profit & Loss per March 31, 2008 (Norwegian krone - NOK) NOT AUDITED Global Rig Company ASA Group Revenue/Expense - Sales Other Income - - Total operating income Payroll Expenses Depreciation of tangible and intangible assets Rig mobilization, service and supplies Insurance rigs and employees Other Operating Expenses Total Operating Expenses Operating profit (+)/ loss (-) Financial Income and Expenses Interest Income from Group Companies Other Interest Income Other Financial Income Interest Expense to Group Companies Other Interest Expenses Other Financial Expenses Net Financial Items Profit (+)/Loss(-) before Income Tax Income Tax Expense Net Profit (+)/Loss (-) Allocation Transferred to Other Equity Total Allocation ,10 Earnings per share -0,12 0,09 Earnings per share (including warrants) -0,11 Cash Flow Statement (Norwegian krone - NOK) NOT AUDITED Global Rig Company ASA Group Pre-tax profit/loss Tax paid for the period 0 0 Depreciation of fixed assets Change in accounts receivable Change in accounts payable Impact of changes in rate of exchange Change in other current balance sheet items Net cash flow from operational activities Purchase of tangible fixed assets Purchase of investments in shares 0 0 Net cash flow from investing activities Proceeds from issuance of long term debt Issue of share capital Net change in long-term intercompany balances Net cash flow from financing activities Net change in cash and cash equivalent Cash and cash equivalents jan 01, Cash and cash equivalents mar 31,

7 Balance Sheet per March 31, 2008 (Norwegian krone - NOK) NOT AUDITED Global Rig Company ASA Group Assets Intangible Assets Deferred Tax Assets Total Intangible Assets Tangible Assets - Rigs and accessories Other tangible assets Total Tangible Assets Assets Investment in Subsidiaries Loans to Group Companies Total Financial Assets Total Fixed Assets Current Assets Receivable - Accounts Receivable Other Receivable Total Receivable Cash and cash equivalents Bank Deposits/Cash Total Current Assets Total Assets Equity Owners Equity Issued Capital Share Premium Total Owners Equity Accumulated Profits Other Equity Total Accumulated Profits Total Equity Liabilities Non-Current Liabilities Liabilities to Financial Institutions Intercompany loan - - Other Long Term Liabilities Total Non-Current Liabilities Current Liabilities Accounts Payable Public Duties Payable Other Current Liabilities Total Current Liabilities Total Liabilities Total Equity & Liabilities

8 GLOBAL RIG COMPANY ASA Fortunen 7 N-5013 Bergen, Norway Phone: Fax: post@globalrig.no Prodution: dragefjellet.no Photo: AP Torres, MD Cowan Global Rig Comany ASA 2008