Monday, April 17 2000

$300 million Nigeria project includes major FPSO
Halliburton's Brown & Root Energy Services (BRES) has been selected by the Shell Petroleum Development Company of Nigeria (SPDC) and its partners to work on the development of the first major offshore oil and gas facility for SPDC in Nigeria. The contract, valued at approximately $300 million including options, was awarded to BRES after successfully completing a consolidation study for the project.

The engineering, procurement, installation and commissioning (EPIC) lump sum contract is a 33-month project, plus an option for a two-year operational support period. The contract will also include fabrication of a mooring facility and one of the largest floating production, storage and offloading (FPSO) vessels built in the last five years.

Upfront engineering, project management and procurement for the project will be completed in BRES' Leatherhead, England, office. The vessel hull will be completed under a separate contract in Korea. In parallel with the hull construction, topsides modules will be fabricated at a nominated fabrication site in the Middle East or Far East.

On completion of the hull with all marine systems, BRES will tow the vessel to the module fabrication site. The pre-assembled modules will then be installed on the vessel, fully integrated with all existing hull systems and commissioned as fully as possible prior to tow to Nigeria.

In tandem with this operation, a soft yoke mooring platform (SYMP) will be provided by Single Buoy Moorings (SBM) on an EPC sub-contract basis. This platform will be the first component installed at the site. The FPSO will be towed from the topsides fabrication and integration site to Nigeria and moored to the SYMP, ready for final commissioning and start-up. Following the successful commissioning and start-up, the facility will be turned over to the Shell Operations Group at which time a two-year operational support period will begin.

Star switches Meyer Werft newbuild to NCL brand
Star Cruises has moved quickly to put new life into Norwegian Cruise Line, following its recently completed take-over. A 91,000-ton newbuilding on order at Germany's Meyer Werft as part of Star Cruises' multi-ship new build program, will instead be built as an NCL vessel. It will enter service in October 2002. As yet unnamed, the panamax ship will be NCL's largest, accommodating 2,300 passengers and 1,150 crew.

"This will be NCL's first 'purpose built' ship for what we are calling Freestyle Cruising, an innovative style of cruising which NCL will introduce progressively aboard our new builds and some of our existing ships over the next two years,'' said Colin Veitch, President and Chief Executive Officer of NCL.

Among other things, Freestyle Cruising will offer NCL passengers something unique in big-ship cruising: open seating in the main dining rooms. With Freestyle Cruising, NCL will also staff up to a level of one crew member per cabin. With more crew the ship can provide a higher level of service and keep the many public rooms and restaurants open longer. With more crew the ship can dedicate people to operating a more flexible and passenger-friendly checkout and disembarkation procedure on the final morning. NCL's new flexible approach to cruising will also offer passengers the option of having tips automatically added to their bill to do away with the final night merry-go-round of cash in envelopes. This will create the environment for what, in Freestyle Cruising, is being referred to as non-intrusive service.

A unique feature of the Meyer newbuilding will be what's described as "a top of the ship fantasy-world complex of multi-room villas with private gardens featuring open-air dining, massage, Jacuzzis, and totally private sunning and relaxing areas. "This complex is unlike anything seen on any other vessel today,'' says Veitch.

"We are absolutely delighted that the Star Cruises connection has so quickly resulted in giving us a new ship which will keep us on track with our ambition of introducing a new mega-ship a year from now on,'' said Veitch. ``Innovation and NCL used to go hand in hand, but not in recent years,'' he continued. "Well, with Freestyle Cruising, we're back!''


Taiwan seeks to order four Aegis destroyers from U.S. yards
The Clinton Administration is in a bind. It can upset the Chinese, or it can turn down a vital $4billion defense order.

Taiwan has handed the U.S. its annual shopping list for arms. At the top of the list, according to the Washington Post, are four Aegis destroyers, at about $1 billion a copy. "But," says the Washington Post, "the Aegis destroyer has important friends in Congress, beginning with Senate Majority Leader Trent Lott (R-Miss.), whose home state is one of two where the warship is made. Lott and other top Republicans have warned the White House that refusing to sell destroyers to Taiwan might torpedo the trade bill on China."

"The administration is trying to find a straddle not to anger Beijing, please Congress and do what is right for Taiwan," the Post quotes Douglas Paal as saying.

Paal, president of the Asia Pacific Policy Center, said: "It has become pretty clear that Senator Lott is quite interested in having those ships built in Pascagoula." Taiwan is seeking to buy two ships from Litton Industries' Ingalls Shipbuilding in Pascagoula and two from General Dynamics Bath Iron Works in Bath, Maine. Paal says this is "a very deft move" that "dangles bait before both the northern and southern delegations and appeals to both Democrats and Republicans."

The Washington Post story says that both General Dynamics Corp., owner of the Bath Iron Works, and the Taiwan Research Institute, associated with the Nationalist Party of outgoing Taiwanese President Lee Teng-hui, have retained the lobbying firm of Cassidy & Associates Inc. Cassidy's key lobbyists include Carl Ford, a former Reagan administration defense official who has circulated a memo saying that a recently leaked Pentagon report "demonstrates in airtight terms Taiwan's need for the Aegis and other systems to offset Beijing's ballooning arsenal."

The Post story notes that "many lawmakers outside Maine and Mississippi also have constituent companies interested in
the deal." The Aegis Industrial Alliance says 1,938 contractors in 49 states are involved in making the destroyer.

The paper quotes a General Dynamics spokesman as saying that the Taiwanese purchases are necessary to keep the shipyards functioning and to avoid laying off workers who will be needed in a few years to make the next generation of U.S. Navy destroyers, the first of which is to be built in 2005.Without the Taiwanese order, the number of destroyers built every year is due to drop from three to two in 2002.


Hvide forced to sell more vessels
Hvide Marine Inc. reported Friday that it had filed its 1999 Form 10-K with the SEC and that it had also reached agreement with its bank syndicate on the terms of an amendment to its bank credit facility. The amendment is intended to enable the company to remain in compliance with its loan covenants as of March 31, 2000. Hvide had anticipated that it would not be in compliance with one or more covenants in the absence of an amendment.

Under the terms of the amendment, and in return for covenant modification through March 31, 2001, the company is required to prepay principal under its term loans in scheduled increments totaling $60 million by January 1, 2001. To make the prepayments of principal, Hvide will sell underperforming vessels and other assets.

"The good news is that we have reached agreement with our banks and filed our 1999 year-end report,'' commented president and COO Eugene F. Sweeney. "The bad news is that our first quarter results will be below our original projections due to the delayed recovery in the offshore sector and lower revenues from tankers and towing.''

In its 10-K filing, which incorporates "fresh start'' reporting practices resulting from its emergence from Chapter 11 on December 15, 1999, Hvide recorded a net loss in the fourth quarter ended December 31, 1999, of $197.0 million, including charges related to its reorganization. In the year- earlier period, the company had net income of $1.9 million or $0.12 per diluted share. Revenues for the 1999 quarter totaled $76.8 million, compared with $108.8 million in the fourth quarter of 1998, as the year-to-year decline in offshore drilling activity -- and the consequent impact on day rates and utilization for the company's fleet of offshore energy support vessels -- continued to take its toll.

Hvide says the fourth quarter saw continued softness in its worldwide offshore energy support business, with revenues only slightly ahead of the previous quarter. In the Gulf of Mexico, day rates for Seabulk Offshore's 21 supply boats averaged $3,174 versus $3,596 in the third quarter, while utilization stood at 73% versus 75% in the third quarter. Seabulk Offshore's 33 Gulf of Mexico crewboats averaged $1,837 and an 87% utilization rate versus $1,754 and 75%, respectively, in the prior quarter. Internationally, where the Hvide has major operations in West Africa and the Middle East and Far East, day rates for Seabulk Offshore's fleet of 67 anchor handling tug and tug supply vessels averaged
$4,803 against $4,662 in the third quarter, while utilization slipped to 47% from 49%. Day rates for the company's international fleet of 39 crew/utility vessels averaged $1,749 versus $1,629 in the prior quarter, while utilization rose to 52% from 47%.

Results from the company's two other businesses, harbor and offshore towing and marine transportation, were "adversely affected by new competitive pressures, higher fuel costs and the retirement of two single-hull tankers."

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