Thursday, April 13 2000

Improved results from Rowan
"The future looks bright. It would be nice if the future would hurry!" That was the word from C. R. Palmer, Chairman and Chief Executive Officer, Rowan Companies, Inc., which today reported improved financial results. For the three months ended March 31, 2000, the company generated net income of $6.1 millionon revenues of $127.7 million, compared to a net loss of $10.0 million on revenues of $100.1 million in the first quarter of 1999.

The improvement in results between the first quarters of 1999 and 2000 was largely due to the contribution of the drilling division. Results for the first quarter of 2000 were negatively impacted by mobilization expense of approximately $3.2 million, or about $.02 per share, to relocate Gorilla IV and the Arch Rowan from the North Sea to the Gulf of Mexico.

"Quarter- to-quarter comparisons reflect the volatility in the contract drilling business," Palmer commented. He said Rowan's offshore rig utilization was 86% during the first quarter of 2000, versus 49% in the first quarter of 1999 and 83% in the fourth quarter of 1999. "Our average offshore day rate during the first quarter of 2000," he noted, "was $42,600, versus $57,300 in the first quarter of 1999 and $38,600 in the fourth quarter of 1999."

"The relocation of Gorilla IV and the Arch Rowan completes our redeployment of Rowan assets to our two most promising markets at present, the Gulf of Mexico and offshore eastern Canada.," said Palmer. "We continue to believe that the fundamentals are in place for continued improvement in the company's financial performance."


NNS chairman's pay doubles
The Virginian-Pilot has been looking at the annual proxy statement filed by Newport News Shipbuilding and reports that, for the second year in a row, chairman William P. Fricks has seen his pay at least double.

Last year, reports the newspaper, Fricks, who is also the shipyard's chief executive, earned $2.74 million in salary, bonuses and other compensation. He made $1.33 million in 1998 and $593,836 in 1997.

The paper cites a shipyard statement crediting Fricks for "leading the company's outstanding financial performance in 1999 through substantial challenges that included a merger attempt, two unsolicited takeover proposals and a labor dispute.''

Despite the distractions, the yard's earnings rose 47 percent to $97 million, or $2.72 a share, last year.

Fricks' 1999 compensation includes $560,000 in base salary, an annual bonus of $850,000, a long-term incentive payout of $1,017,500 and other compensation of $310,915. He also received options to buy 61,040 shares of company stock.

Those options are "underwater,'' meaning the exercise price is above the stock's current trading price. The exercise price is $32.44 each, and the stock closed Wednesday at $30.31 a share, unchanged for the day.

However, Fricks has until Jan. 3, 2009, to exercise the options. Should the stock price rise 10 percent a year, the options could be worth $3.16 million.


Meeting on managing High-Speed Commercial Vessel Traffic
The useful e-mail newsletter produced by law firm Haight Gardner Holland & Knight notes that the U.S. Coast Guard will hold a public meeting in Oakland, California on May 2, 2000, to solicit comments on the impact of high-speed commercial vessels, both ferries and cargo vessels, on the users of the navigable waters of the United States. By their speed and potential numbers, high-speed commercial vessels introduce another dimension into the conventional mix of slower commercial vessels, fishing vessels, and recreational vessels. Some mariners already believe the waterways to be too congested with existing vessels. The Coast Guard hopes to receive input from all stakeholders on this issue so it can determine if there is a need for regulatory and other policy action that will enhance waterways safety for all vessels. It is particularly interested in which options should be dealt with locally, and which have regional or national implications. It will consider all comments received from this
meeting and those submitted to the docket to formulate policy on the
management of national waterways. Comments on this issue should be
submitted by July 2, 2000. 65 Fed. Reg. 19806 (April 12, 2000).


 

European Commission approves shipbuilding aid schemes in Netherlands.
The European Commission has decided to approve the prolongation of a shipbuilding aid scheme for Dutch shipyards into the current year. It has also decided not to raise any objections to amendments in the application of general export credit arrangements to ships for the remainder of this year which will result in support being changed instead to direct grants to the exporting yards. Both schemes, when used alone or together, will respect the aid ceilings laid down in Council Regulation 1540/98 establishing new rules on state aids to shipbuilding.

The prolonged shipbuilding aid scheme, which is unchanged from that approved by the Commission in 1999, provides contract-related aid to Dutch shipyards in the form of grants for the building of ships. Expenditure under this scheme in 2000 is expected to be HFL 130 million (about $60million).

What all this means is that for the remainder of 2000, funds hitherto available for interest rate support for exports of ships will now be used as direct grants to exporting Dutch shipyards of up to 3.5% of the contract value. Expenditure under these new arrangements for the export of ships in 2000 is
expected to be around HFL 40 million (about $18 million).


 

Change of tack at Ocean Rig
Ocean Rig ASA, which has two Bingo 9000 rigs under construction at Friede Goldman Offshore, may be courting acquisition suitors.

On April 3 it announce that its main shareholder, Bjarne Skeie, had assumed the position as Chairman of the Board of Ocean Rig, succeeding Tom B. Knudsen whocontinues as legal advisor to the company.

On April 10, it announced that the Board of Directors had decided to change the company's business strategy. "The company will now create value for the shareholders by actively seeking to participate in the ongoing restructuring and consolidation of the drilling industry," said a statement which added that
the company had retained Pareto Fonds ASA as financial advisor in this connection.

Meantime, Umoe Olje og Gass AS (Umoe), the independent project evaluation team hired under Ocean Rig's January 2000 settlement agreement with Friede Goldman, has confirmed expected completion
of Bingo 9000-1 during the fourth quarter 2000. Umoe is currently reviewing the progress on Bingo 9000-2 and expects to render an opinion in the near future as to the status of that project's December 31, 2000 delivery date.

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