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Norway''s Nexus says plans to lay up only vessel
2009/2/27
Norwegian oilfield services firm Nexus Floating Production said on Wednesday it would lay up its first production vessel upon delivery in June because of a lack of projects. Nexus, located inSingapore, has ordered two floating production, storage and offloading (FPSO) vessels from Samsung Heavy Industries in Korea.
The global economic downturn has led to delays and cancellations of several petroleum developments as crude prices have plummeted from peaks hit in mid-2008.
"Short term, the number of FPSO projects is limited," Nexus said in its fourth-quarter report.
Delivery of Nexus'' second vessel has been postponed to late 2012 with an option for Nexus to terminate the contract due to the global financial turmoil.
The company said it is "preparing for a potential lay-up period" for the first vessel, but added that it still believed it could get a contract for it before delivery.
"A commitment prior to delivery is possible," Nexus said.
Nexus said a preliminary deal with Burgundy Global Exploration Corporation for a seven-year job worth about $800 million had not been confirmed, and added this would not happen unless Burgundy provided satisfactory guarantees.
Transocean Inc., the world''s largest offshore oil and gas driller, said in January it had cancelled a contract with Burgundy because the Philippines oil exploration firm did not post escrow.
The construction work for Nexus'' first vessel is fully financed, but it will need additional funds to cover interest payments and lay-up costs, Nexus said.
"The funds will have to be secured at the latest in the fourth quarter 2009," Nexus said, adding it was pursuing alternative financing strategies.
Shares in Nexus rose 8.1 percent in thin trade by 1055 GMT, against a 3.1 percent rise in the Oslo bourse''s benchmark index .OSEBX, giving it a market capitalisation of $11.2 million.
Nexus has $387 million in interest-bearing debt and the vessel projects are valued at $573 million on its balance sheet
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2009/2/27