Q2 2005 Smedvig ASA Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Good morning. My name is Charity and I will be your conference facilitator today. At this time I would like to welcome everyone to the Smedvig second quarter 2005 results conference call. [OPERATOR INSTRUCTIONS] Thank you, I would now like to turn the call over to Mr. Jim Datland Investor Relations Manager. Please go ahead sir.

JIM DATLAND, INVESTOR RELATIONS MANAGER, SMEDVIG ASA: Thank you. Welcome to today's Smedvig conference call. With me from management are CEO Mr. Kjell Jacobsen, CFO Mr. Alf Thorkildsen and Corporate Controller Mr. Livar Voll.

The agenda for today's conference call covers opening remarks by the CEO. A presentation of the second quarter results by the CFO, comments on market outlooks by the Chief Executive Officer. And expect a question and answer session.

But before we start let me mention to you that forward-looking statements are being made under the Safe Harbor of the Securities Litigation Reform Act of 1995. Actual performance could differ materially from that anticipated in the forward-looking comments as a result of risks, uncertainties and other factors, as put forward in the annual report on Form 20-F for the year 2004. I now give the word to our CEO, Mr. Jacobsen please go ahead.

KJELL JACOBSEN, CEO, SMEDVIG ASA: Good afternoon everyone. The second quarter was a good quarter for Smedvig. Operations proceeded well in all business positions. We had really no significant deviations. After a long period of strong safety performance, we had some issues related to 1 operation in the quarter, which are now being rectified.

We are in the process of drawing the final lines under the Balder affair. And subject to documentation, we will receive NOK55m under the warranty insurance. You may recall that we mentioned this when we announced the ruling in the Balder affair about 2 years ago. We said that we would seek coverage under this insurance. We have done so and the outcome is as we have now reported.

During the quarter we have secured a few new contracts for West Alliance for our new build with West Setia. And also well services 2.5 years with Statoil for the Statoil shore late life project. We took a 25% ownership interest in Crest Eastern Drilling during the quarter, an investment of NOK50m. And also entered into various management agreements, for that new build rig for the construction project, and also for operations management.

The building of the sixth generation harsh environment ultra-deep water unit is now underway at the Samsung in Korea. And we are now starting the marketing of this unit for start of operations in early 2008. We have also initiated yet another deep water semi-tender project at Keppel FELS. This will be our fifth semi-submersible tender rig. And this 1 is for delivery in the fourth quarter of 2006. We did take delivery, although I said here last week, delivered on time, on budget. And we expect the unit to be in operation by the end of this month, again as planned.

These were the main comments to be made in terms of our operations and the actions that we took in the second quarter. I will come back and add some comments to the way we look upon the market. But I would now like to hand over to my colleague Alf Thorkildsen our CFO, who will take us through the second quarter numbers. Please Alf.

ALF THORKILDSEN, CFO, SMEDVIG ASA: Thank you Kjell. I will start with some comments regarding the second quarter consolidated income statement, before I review the various business segments. Please note that all numbers are in Norwegian Krona unless otherwise stated. And all numbers are subject to final audit.

Second quarter was characterized by improved operating profit for all business units. In addition we had warrant insurance which Kjell mentioned, a settlement on that related to the Balder FPU, which added another NOK55m to the result. We also had partial reversal of previous write-down of the value for West Navigator. New contract, as mentioned for West Alliance and the sector services. Eastern drilling up and running and Smedvig invested NOK50m. And that is the main events for second quarter.

Consolidated revenues for the second quarter amounted to NOK1.68m, an increase of NOK174m compared to the preceding quarter. The increase was primarily related to higher activity within all business units, as well as an income of NOK55m related …