2001 Maritime

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May 10, 2001

Kurz continues cutting Seabulk losses
"While we have not yet achieved bottom-line profitability, which remains our number one priority, we did post solid quarter-over-quarter gains," said President and CEO Gerhard E.Kurz, reporting first quarter results for Seabulk International, Inc. (the former Hvide Marine).

Seabulk reported a net loss of $7.2 million or $0.71 per diluted share for the quarter ended March 31, 2001, versus a net loss of $12.9 million or $1.29 per diluted share in the year-earlier period. Revenues of $81.4 million were up 4% from $78.6 million a year ago, led by a strong increase in offshore activity. Operating income was $8.4 million versus $2.0 million in the 2000 first quarter.

"Our biggest business, Seabulk Offshore, is benefiting from rising rates in the worldwide offshore energy support market, which we expect to continue through the remainder of 2001 and into 2002," commented Kurz.

Supply boat day rates in the Gulf of Mexico, Seabulk's biggest market, averaged $6,946 for the quarter and are nearly double what they were a year ago. In West Africa, Seabulk's second biggest offshore market, average supply boat day rates rose 19% on a year-over-year basis to $6,325. In Southeast Asia, the increase was 33% to an average of $5,347.

"Seabulk Tankers, our second biggest business," said Kurz, "is in a strong position in the domestic product tanker market, where the supply/demand balance is firming and we have a number of low-value contracts due to expire by year-end. Seabulk Towing, our third business, continues to be a steady performer. In the meantime, we are also evaluating financing alternatives to support future growth and enhance shareholder value.''

Sembcorp Marine unit invests in Brazil yard and
bags FPSO conversion order
SembCorp Marine Ltd subsidiary, Jurong Shipyard Pte Ltd. (JSPL), will be investing S$16 million (about US $8.8 million in newly formed joint-venture company, Mauà Jurong S.A. in Rio de Janeiro, Brazil. JSPL will take a 70 per cent share in Mauà Jurong while the remaining 30 per cent will be held by its joint venture partner, the Mauà Group.

JSPL will be using its internal funds to pay for this investment which is not expected to have a material impact on SembCorp Marine's earnings and net tangible assets per share.

Mauà Jurong's business is in the conversion and construction of floating production and drilling units for deep-water oil and gas exploration and production. The company has the exclusive use of a shipyard and its ancillary facilities owned by Companhia Comercio e Navegcao for a period of 28 years. The yard and its facilities are located in Ponta d'Areia, Niteroi in the State of Rio de Janeiro.

Chairman of Mauà Jurong is Omar Peres, a well-known member of Brazil's maritime community while the CEO is Chew Yam Poey, previously the executive director of JSPL.

SembCorp Marine deputy president Heng Chiang Gnee said the Mauà investment was "part of our growth strategy to create a network of strategically located yards in Singapore, Brazil, China and the Middle East. It will position SembCorp Marine closer to the offshore and conversion markets in the Gulf of Mexico and West Africa, henceforth allowing us to carry out our ship conversion, offshore and repair works for customers in these markets."

Presently the joint-venture company is negotiating with Kellogg Brown & Root for the fabrication of process topside modules for the Barracuda and Caratinga fields, offshore Brazil, where Kellogg Brown & Root is the main contractor to Petrobras, the Brazilian state oil company.

Kellogg Brown & Root has already awarded JSPL the Barracuda
P-43 FPSO conversion.

The $80 million P-43 project involves the conversion of the 270,000 dwt VLCC Stena Continent to a floating production, storage and offloading (FPSO) platform for the deepwater Barracuda oilfield in the Campos Basin offshore Brazil is presently under way at JSPL.

The tanker, renamed P-43 will have the capacity to produce 150,000 barrels per day of oil plus gas compression capacity of 6 million cu.m/d. It will be equipped with water injection capacity of 40,000 cu.m/d and can accommodate 100 personnel offshore. The P-43 will be spread-moored in water depth of 800 m using a recently developed Petrobras-patented mooring system.

When completed in the third quarter of 2002, the converted vessel will be towed to Brazil where the process topside modules' integration and commissioning works will commence.

South Korea plans strong WTO defense
Today's South China Morning Post reports officials in Seoul as saying that the European Commission will face a strong defense from South Korea if the commission takes World Trade Organization action against that country's shipbuilding practices.

"If the European Commission takes action at the WTO, we will actively defend our position as we believe we have a strong case," a foreign ministry official is quoted as saying. "South Korean shipyards share the view that the European Union is picking a quarrel with them in order to justify the resumption of its own subsidies to the European shipbuilding industry."

New deepwater drilling record
Transocean Sedco Forex Inc.says it set a new world record for ultra-deepwater drilling when the company's Discoverer Spirit drillship spudded an exploration well in 9,687 feet of water in the Gulf of Mexico for Unocal Corporation.

Blowout prevention equipment was installed and tested after the May 2 spudding, and drilling operations are under way.

The exploration well, on Unocal's Trident prospect in Alaminos Canyon block 903, surpasses the previous claimed industry record of drilling in 9,157 feet of water set offshore Gabon earlier this year.
The Discoverer Spirit utilizes Transocean Sedco Forex's proprietary dual-activity drilling process. Along with Unocal's unique approach to low-cost drilling, dual activity is designed to reduce by approximately 15% the time required to drill exploration wells and up to 40% for production wells. Dual-activity time savings are achieved by performing drilling tasks in parallel steps instead of sequentially with conventional offshore drilling rigs. To date, the Discoverer Spirit has drilled three deepwater exploration wells in the Gulf of Mexico for Unocal, resulting in significant time savings.

Strong quarter for Conrad
First quarter results for Conrad Industries, Morgan City, La.were the "best from operations since the third quarter ended September 30, 1998," said president and CEO William H. Hidalgo

Conradcurrently operates three shipyards located along the Gulf Coast in Morgan City and Amelia, Louisiana and Orange, Texas.

Conradreported net income of $951,000 and earnings per diluted share of $0.13 for the three months ended March 31, 2001 compared to net income of $782,000 and earnings per diluted share of $0.11 for the three months ended March 31, 2000.
Revenues for the three months ended March 31, 2001 were $11.9 million compared to $9.9 million for the three months ended March 31, 2000. The company's backlog was $13.2 million at March 31, 2001 as compared to $18.8 million at March 31, 2000.

Hidalgo said the vessel construction segment continued to remain competitive but "we believe that our strategies of managing our backlog to take advantage of favorable pricing trends and pursuing opportunities in our key niche product areas will continue to produce favorable results."

"We are currently in discussions and negotiations with various customers for vessel construction projects," he continued, "and have learned that the U.S. Army is planning to purchase three additional ST Tugs, which have already been authorized and appropriated by Congress for approximately $7.5 million. We are optimistic that some of these projects will be added to our backlog soon. Our new 10,000 ton drydock is now in operation and the
140 ft distance between wing walls has been well received by our customers."

Hidalgo also stated, "Development of the 52 acres of land located in Amelia, Louisiana is continuing with clearing of the land virtually completed. The project is in its final design stages with actual construction expected to begin within sixty days. This first phase of development, which will cost approximately $4 million, will also include dredging a slip, bulkheading and partial construction of an infrastructure to support repair and conversion activities. A $800,000 expansion of the Morgan City facility which will increase capabilities for pre-fabricated components and modular construction techniques will begin during the latter part of May which will add additional vessel construction capacity and efficiencies."

Mosvold board takes Frontline offer
Members of the board of Mosvold Shipping have sold all their shares to Frontline. They took the step after Frontline raised its bid to NOK 5.75 a share and waived various conditions it had set.

The board and its financial advisor, Fondsfinans ASA, recommend all shareholders to accept the offer from Frontline.

PGS in gas-to-liquids venture
Petroleum Geo-Services ASA and Syntroleum Corporation have signed a letter of intent to pursue a joint venture to develop, market, and operate mobile marine production facilities, based on Syntroleum’s proprietary gas-to-liquids (GTL) technology.

The planned joint venture would offer multi-year contract GTL services to gas producers to convert otherwise stranded natural gas from multiple offshore fields into environmentally friendly hydrocarbon products ranging from synthetic crude to finished fuels.

The mobility of the floating facilities would permit their use at multiple locations, thereby providing access to fields that are otherwise too small to justify permanent GTL facilities. Such facilities could also enable conversion and monetization of gas that is normally flared or wasted.

If completed, the joint venture company will be the exclusive means by which Syntroleum and PGS offer marine-based GTL services to third parties.

Syntroleum believes there is significant market potential for such GTL facilities for use in small associated gas fields, for monetization of gas caps (gas cap blow down), short-term use as an early production system on large fields while a large permanent GTL plant is being built, and as a long-term solution for offshore gas in a range of water depths, including the expanding activity in deepwater regions around the world. In association with UK-based AMEC, engineering and design work necessary to marinize the Syntroleum Process has been underway for a number of months. Increasing interest in GTL technology from companies with stranded offshore gas has prompted both Syntroleum and PGS to accelerate development efforts.

"This is a concept we’ve envisioned for a long time but have always known that it required the right partner," stated Larry Weick, Syntroleum’s Vice President for licensing and business development. “With PGS, we feel that we have found that partner. They have both the field operations and marine experience, coupled with ownership of marine FPSOs. Syntroleum’s GTL design enables smaller footprints and more compact plants than other technologies, thereby opening opportunities for ship-mounted, mobile facilities. Syntroleum’s air-based design is inherently safer than oxygen-based designs, which is an important consideration for offshore applications. In total it all seems like a very good fit for both companies.’

“This is a natural extension of our business model,’ stated Kaare Gisvold, President of PGS Production. "The abilities to offer GTL in the offshore environments around the world mark a major step forward for the industry. We are pleased to be at the forefront of this initiative with Syntroleum. It has huge strategic value for many areas of the world where there is a willingness to avoid the pollution and waste gas flaring from existing operations. In addition, this places both PGS and Syntroleum in a strong position to offer methods of producing the huge reserves of offshore gas, which until now were considered stranded.’

PGS, via its Joint Venture with Clough Engineering of Australia, has also contracted with Syntroleum to provide operating and maintenance services for the Sweetwater project, a 10,000-barrel per day GTL specialty products plant that is being developed in Western Australia.