Stock market notification – for immediate release
Eastern Echo orders two new vessels and aims for Oslo Axess
(Cyprus, 20 September 2007): Eastern Echo has negotiated a letter of intent making it possible to build two more vessels for delivery in Q1 and Q2 2009. The company has also decided to upgrade vessels 1 through 4 from 10 to 12 streamer capacity in order to increase operational efficiency. In addition, the board of directors has resolved to file an application for listing on Oslo Axess.
‘Eastern Echo is pleased to announce that the company has negotiated a letter of intent (LOI) for building of vessels five and six. The delivery date will be as early as 17 months from signing the LOI. This is more than 1.5 years earlier than the original ship building options and will have a significant financial impact. The accelerated delivery time is expected to generate some USD 120 million in profit for the period’, comments CEO Rolf Rønningen in Eastern Echo.
‘We are quite excited to be able to build the vessels at Dubai Drydocks. Firstly, being a company with a main office in Dubai the management is given easy access to follow the building process closely. Secondly, we get a good exposure to the Eastern hemisphere’, Rønningen says.
The estimated project cost for the new builds is USD 130 million per vessel including 12 streamer capacity, compared with USD 117 million dollars per upgraded vessel 1 through 4 (see below). Options for long lead time items have previously been secured.
The project cost for vessels five and six will be financed through a sale leaseback financing with a callable ten year bareboat agreement and an equity injection of USD 10 million. The bareboat rate is set to a competitive rate.
Eastern Echo has also decided to upgrade vessels 1 through 4 from 10 to 12 streamer capacity. The company is confident that this will provide additional market opportunities and make it possible to get higher day rates. The estimated payback time for this investment will be less than two years. The upgrade will have a maximum impact of two weeks on delivery time for the first two vessels and no impact on vessels three and four.
In connection with the decision to upgrade, Eastern Echo has undertaken a thorough and comprehensive review of the project. This has lead to a revised project cost of USD 117 million per vessel, compared with originally estimated project cost of USD 100.5 million. The upgraded streamer capacity represents an increased investment cost of USD 5 million. The balance represents USD 3 million in currency loss and USD 3 million in increased installation and transportation cost in addition to USD 6 million in increased contingency.
‘The upgrading of vessels 1 through 4 will provide Eastern Echo with improved efficiency in the ten streamer segment and increase our exposure to the high density 3D market, paving the way for enhanced long term profitability’, Rønningen says.
Eastern Echo will have a strong focus on project management going forward. The vessel project manager – Mr. Odd Nordam – is currently in place in Spain. Mr. Nordam has an impressive track record with over 30 new builds of which 12 are from Ulstein Design. Eastern Echo will have a dedicated project management team at Dubai Drydocks.
All the Eastern Echo new builds are based on the SX 124 Ulstein design (X-bow). Higher transit speeds, more uptime, improved fuel efficiency and more efficient back deck operations position these vessels firmly in the high end 3D seismic market, opening opportunities for premium day rates. The vessels will also represent a new environmental standard and the new clean design will give the vessels access to environmental challenging areas.
In addition to the decisions to expand the Eastern Echo business, the board of directors has resolved to file an application for listing on Oslo Axess with the aim to be listed in October/November 2007. The company will revert with more information regarding the listing.
‘This forms an important milestone in the company’s history. We believe that we get an even better foundation to continue to grow Eastern Echo as a public company’, chairman Tore Karlsson comments.
For further information please contact:
Rolf Rønningen Tore Karlsson
CEO Chairman of the board
Mobile +971 50 45 96982 Mobile: +44 79099 15 114
About Eastern Echo Holding plc:
Eastern Echo Holding Plc is a geophysical company specialising in acquisition of high quality 3D seismic data. Both marine and seismic operations are managed by Eastern Echo.
Eastern Echo has developed an advanced 12 streamer 3D seismic vessel based on a revolutionary ship design.
Eastern Echo has agreed to build four such vessels at Shipyard Barrereas in Spain. In addition Eastern Echo plans to build two more vessels at Dubai Drydocks.