PETROMENA ASA - PRELIMINARY RESULT AS PER 4th QUARTER 2009

Operation and business management

PetroMENA ASA (“PetroMENA” or the “Company”) has entered into EPC contracts with Jurong Shipyard for the construction of three 6th generation semi-submersible drilling rigs. The semi rigs have operating water depth capacity of 7,500 - 10,000 ft. The units will thus meet design criteria for operation in areas such as Gulf of Mexico (GoM), Brazil and West Africa. All rigs will be equipped for harsh environment operations, but will initially not be designed for arctic operations. The rigs are scheduled for delivery in first quarter 2009 (PetroRig I), third quarter 2009 (PetroRig II) and first quarter 2010 (PetroRig III).

PetroMENA also owns the upgraded 2nd generation semisubmersible drilling rig SS Petrolia. SS Petrolia started on a 913 day contract for Pemex in the Gulf of Mexico on 3 February 2008.

Larsen Oil & Gas Ltd. is manager for PetroMENA and drilling contractor for PetroMENA’s rigs.

Contract situation

PetroMENA has secured long-term drilling contracts with Petrobras America Inc. for PetroRig I, with Petroleo Brasileiro S.A for PetroRig II and with Pemex for PetroRig III. The gross values of these contracts are estimated to be approximately mUSD 700 for PetroRig I, mUSD 645 for PetroRig II and mUSD 942 for PetroRig III, respectively, excluding options and possible bonus. The contracts will commence upon delivery of the rigs from Jurong Shipyard.

The gross value of the current 913-day contract undertaken by SS Petrolia equals approximately mUSD 269.

Construction and manning

There have been no lost time accidents on the planning and construction of the rigs. Jurong Shipyard Pte Ltd has delivered two semis in a series of seven units of the Friede Goldman Design. Delivery was on budget and time and proves the shipyard’s ability to deliver complex turnkey contracts.

A manning plan and schedule is developed for each vessel to crew up the vessel in a structured and planned mode. The key personnel are sourced first and the lower rankings are sourced last.

Financial Information

(All figures in mUSD)
PetroMENA has with effect from 1 January 2008 changed functional currency from NOK to USD in accordance with IFRS. The financial figures for 4Q and the fiscal year 2008 are also presented in USD. All comparative figures have for illustration purposes been presented in USD. The financial data have been prepared in accordance with the IFRS. The current situation in the financial markets will impact the industry and available funding going forward.

Unrealised currency gain

USD versus NOK has increased from 5.83 as of 30 September 2008 to 7.00 as of 31 December 2008. Unrealised gains in fourth quarter are mUSD 97.6, mainly related to debt nominated in NOK.

Profit and loss

Year 2008
For the fiscal year 2008, revenues mainly came from the upgraded 2nd generation semi-submersible drilling rig, SS Petrolia. The operations under the current contract started on 3 February 2008. SS Petrolia will be PetroMENA’s single source of revenue until delivery of the newbuildings from Jurong.

Total revenues for the fiscal year 2008 were mUSD 83.8, of which mUSD 76.9 relates from operating income from SS Petrolia contract with Pemex. Operating profit before depreciation in same period totalled mUSD 17.8. PetroMENA’s operating expenses were mUSD 66 includes primarily operating expenses for SS Petrolia with mUSD 34.7 and mUSD 15.8 from rig expenses for mobilization of PetroRig I. Other operating expenses are payment for management services under the contracts with LOG, and various other administrative expenses. Depreciation in the fiscal year of 2008 mainly relates to the 2nd generation semi-submersible drilling unit.

Net financial income in the fiscal year 2008 is mUSD 113.7. Net financial income includes the effect of PetroMENA’s change of functional currency from NOK to USD. PetroMENA’s liabilities nominated in NOK were converted to USD as of 31 December 2008. The USD has increased in 2008 resulting in an unrealised gain of mUSD 147.3 mainly related to the net debt nominated in NOK. In addition, net financial income includes interest expenses of mUSD 32.4 mainly related to the bond loan issued in Q4 2007 for financing of the acquisition of SS Petrolia.
The net, after-tax result for the fiscal year of 2008 was mUSD 117.7 The net result was impacted by an unrealised gain on the Company’s debt nominated in NOK, as the USD appreciated during fourth quarter 2008. Interest income and expenses related to the bonds issued to fund construction of the rigs are capitalised under the construction contract in the group balance sheet.

Fourth quarter 2008

PetroMENA’s revenues in the fourth quarter 2008 was mUSD 29.2 compared to mUSD 3.1 in fourth quarter 2007. Revenues in the fourth quarter relates to mUSD 22.3 from SS Petrolia’s contract with Pemex and mUSD 6.9 from profit from sale of equipment.

Operating profit before depreciation was mUSD 6.3 in the fourth quarter 2008 compared to mUSD -1.7 in the fourth quarter last year.

PetroMENA’s operating expenses were mUSD 22.8 and include primarily operating expenses for SS Petrolia with mUSD 9.9 and rig expenses related to PetroRig I with mUSD 9.1. Other expenses are payment for management services under the contracts with LOG and various other administrative expenses. Depreciation in the fourth quarter 2008 relates to the 2nd generation semi-submersible drilling unit.

Net financial income in the fourth quarter 2008 is mUSD 85.8. Net financial income includes the effect of PetroMENA’s change of functional currency from NOK to USD. In the fourth quarter, net unrealised currency gain is mUSD 97.6 mainly related to bond loan. Interest expenses in the fourth quarter 2008 of mUSD 7.3 relate to the bond loan issued to finance the acquisition of SS Petrolia.

The net, after-tax result for the fourth quarter 2008 was mUSD 88.3 Interest income and expenses related to the bonds issued to fund construction of the rigs are capitalised under the construction contract in the group balance sheet.


Enclosure : Preliminary result as per 4th quarter 2008.


For further information please contact : Mr. Lars Moldestad, phone +47 906 99 197.

Bergen/Oslo, 19 February 2009
Board of Directors of PetroMENA ASA