2001 Maritime

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December 20, 2001

Carnival results show 9/ll impact

Cruise giant Carnival Corporation today reported quarterly and full year earnings that reflect the severe impact of the September 11 events. Nonetheless, the numbers were in line with analysts' expectations. Fourth quarter net income fell to $116.3 million ($0.20 Diluted EPS) on revenues of $959.1 million, compared to net income of $193.8 million ($0.33 Diluted EPS) on revenues of $850.3 million for the same quarter in 2000.

Net income for the year ended November 30, 2001, was $926.2 million ($1.58 Diluted EPS) on revenues of $4.54 billion, compared to net income of $965.5 million ($1.60 Diluted EPS) on revenues of $3.78 billion for the same period in 2000.

In the wake of the September 11 attacks, comparable net revenue yields (net revenue per available berth day) for the quarter were down by approximately 7 percent compared to the fourth quarter of 2000.

Commenting on fourth quarter results, chairman and CEO Micky Arison said , "In light of the significant impact of the September 11 events on the vacation market, the achievement of quarterly net income of more than $116 million with occupancies of 98 percent is a testament to the strength of our vacation products."

Looking to 2002, Arison indicated that booking levels have noww started to recover.In the last five weeks, net booking levels have been 45 percent above prior year levels, although cumulative advance bookings for 2002 still remain well behind last year's levels at this time. While 2002 pricing has improved, it is still below last year's levels.

Currently, the company's advance booking occupancy levels for the first quarter of fiscal 2002, are approximately 92 percent, which is approximately seven percentage points behind last year's levels at this point. Carnival expects that net revenue yields for the first quarter of 2002 will be down between 10 to 15 percent compared to last year.

Bookings for the second and third quarters of fiscal 2002 are also behind last year's levels, with occupancy down by approximately 11 percentage points each quarter. Pricing on these bookings is also down from the prior year.

Arison indicated that, given the current booking trends, he is optimistic that net revenue yield comparisons for the remainder of 2002 will improve compared to the first quarter.

The company also recently changed the delivery schedule for Holland America's Vista-class newbuilds, assigning one slot to Cunard Line and signing an option on a fifth newbuild..

Based on these new delivery dates, the company's shipbuilding commitments for fiscal years 2002 through 2005 are now estimated to be approximately $1.75 billion, $1.5 billion, $2.0 billion and $700 million, respectively.

The resulting percentage increase in average passenger capacity resulting from the delivery of ships currently under contract for fiscal 2002 through 2006 is expected to approximate 4.5 percent, 16.5 percent, 17.3 percent, 10.6 percent and 2.5 percent, respectively. Carnival does not expect to reschedule any further deliveries.

"To enable us to overcome challenges in these times of increased uncertainty," commented Arison, "as well as to take advantage of opportunities as they present themselves, it is important for us to maintain our solid operating margins and strong balance sheet."

Carnival currently has more than $2.4 billion of cash, short-term investments and undrawn credit lines, and also relatively low debt levels. As a result of its financial strength and operating results, the company believes that it maintains the highest credit ratings in the leisure industry.

Takeover ding dong continues

Carnival is continuing its battle to acquire P&O Princess, thwarting that company's plans to merge with Royal Caribbean. After P&O Princess announced that it was deferring a planned Extraordinary General Meeting until February 14, Carnival asked for a meeting with P&O Princess to enable it to reduce the "conditionality" of its uninvited bid. Carnival also denied that it was in any way acting as a "spoiler"

Conoco to develop Magnolia field

Conoco this week announced that it, will develop the Magnolia Field , in partnership with Ocean Energy, Inc. Magnolia is located in nearly 4,700 feet of water in the Gulf of Mexico. Initial estimates call for the $600 million deepwater development project, located in Garden Banks blocks 783 and 784, to deliver 150 million barrels of oil equivalent (MMBOE).

Conoco, as operator, holds a 75-percent working interest in the field with Ocean owning the remaining 25-percent.

The Magnolia Field was discovered with the first well drilled by Conoco’s Deepwater Pathfinder in May 1999, and two further appraisal wells confirmed the field’s commerciality.

A platform capable of supporting a completion rig will be installed during the summer of 2004, some 180 miles south of Cameron, Louisiana. The location of the Magnolia facilities, approximately 30 miles from existing infrastructure, will enable Magnolia to be a regional off-take point for future Conoco-operated developments or third party tie-ins located in Southeastern Garden Banks.

Negotiations are underway to determine whether a Tension Leg Platform (TLP) or a Spar will be utilized, and to determine the off-take provider and route.

The design capacity of the production facilities will be 50,000 barrels of oil per day and 150 million standard cubic feet of gas per day. First production from the field is anticipated in the fourth quarter of 2004, with peak production occurring in 2005.

"The Magnolia facilities will strategically position Conoco by providing early infrastructure in a very active part of the deepwater Gulf of Mexico to handle the tie-in of future production, " said Rob McKee, Conoco's EVP, exploration and production. "The deepwater Gulf is one of the foundations for Conoco's growth in North America, and the rapid development of fields such as Magnolia supports that growth strategy."