Third quarter 2009 Financial Report

Q3 2009 Financial Report

The Nexus#1 FPSO was completed by Samsung Heavy Industries on 27 July 2009. Due to lack of employment for the vessel, Nexus agreed with Samsung to defer effective delivery to January 2010. On 27 October 2009 Nexus entered into an agreement for the sale of the Nexus#1 FPSO with Centennial Assets Ltd, an affiliate of the Brazilian EBX Group. Closing of the agreement took place on 13 November. The value of the Nexus#1 FPSO has been impaired by USD 154 million in accordance with the agreed sales price. As this price was lower than the cost to build the vessel, the value of the Nexus#2 FPSO has been impaired to no value. The negative effect of the impairment of the Nexus#2 FPSO is USD 94 million.

Due to this impairment the company reports a negative result of USD 257 million by the end of the third quarter. The effect of the agreed bond loan restructuring will be seen in the fourth quarter, and will reduce the company’s debt and accordingly increase the equity by USD 95 million.

Through the sale of the Nexus#1 FPSO the company has sufficient funds for operations in a limited period. The contracts with Samsung Heavy Industries and with Advanced Production and Loading AS for the Nexus#2 FPSO have not been affected through the sale of Nexus 1. Short term market conditions are challenging. The number of FPSO contracts to be awarded in 2009 is limited, and the credit crisis and the development of the global economy have resulted in delays and cancellations of several oil field developments.

The intended locations for vessel contracts are in harsh environment such as the North Sea, the Atlantic West of Shetland and East of Canada, the Norwegian Sea and the Barents Sea. Also hurricane and typhoon infested areas like the Gulf of Mexico, Australia and South East Asia are regions where the Nexus FPSOs are well suited. The harsh environment segment of the market is characterised by projects being delayed or cancelled.

The operators have accumulated a backlog of projects that are likely to move forward on improved market conditions. The exploration activities in deeper waters and remote areas where FPSOs often are the chosen development solution are expected to continue.

The Board of Directors will evaluate the situation for the company in order to develop a new strategy.

Please see attached file:    Q3 2009 Financial Report

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