ROV NEWS: Oceaneering Acquires Medusa Spar Ownership Position
Posted on 19.12.2003 - 05:29 UTC in OFFSHORE NEWS by admin
December 18, 2003 – Houston, Texas – Oceaneering International, Inc. (NYSE:OII) announced today that it has
finalized its previously announced investment of approximately $45 million to acquire a 50% ownership position in Medusa
Spar LLC, a limited liability company (LLC)...
The LLC owns a 75% undivided ownership
position in the spar production platform moored in over 2,200 feet of water on the Medusa field in the Gulf of Mexico,
Mississippi Canyon Block 582.
The other LLC owners are units of Murphy Oil Corporation (NYSE:MUR) and Callon Petroleum Company (NYSE:CPE), with
interests of 40% and 10%, respectively.
The LLC will earn a tariff based on the hydrocarbon production volume throughput processed by the spar from the Medusa
field and surrounding dedicated blocks. The LLC has no spar operating, maintenance, or repair cost obligations and has
obtained non-recourse financing for one-half of its investment in the asset. The loan to the LLC is secured by minimum
throughput guarantees from Murphy and Callon, which Oceaneering believes will
be sufficient to extinguish the debt.
Oceaneering will account for its investment in the LLC and its share of the LLC’s results of operations using the equity
method of accounting for unconsolidated affiliates.
John Huff, Chairman and Chief Executive Officer, stated, “The first of six initial wells to be tied into the spar is now
flowing, and according to Murphy the other five are expected to be producing by the end of the third quarter, 2004. The
earnings contribution in 2004 and beyond will depend on the initial six well production profiles and production from
future wells that may be drilled and tied into the spar. During 2004 we expect the incremental net income impact from our
Medusa Spar investment to be in the range of $3.7 to $5.0 million.
“We believe the Medusa Spar, with a 20-year design life, will prove to be an active production hub and a key asset in the
deepwater infrastructure being put in place in the Gulf of Mexico. This will position us to participate in other projects
surrounding the spar and provide opportunities to market Oceaneering’s
engineering and project management services, subsea hardware and installation, maintenance, and repair services.
Oceaneering has commenced work on the first of such projects, a subsea tie-back to the spar. “As a result of our LLC
ownership position, we are increasing our estimate of Oceaneering’s 2004 EPS to a range of $1.55 to $1.60 from the $1.40
we announced in our third quarter earnings release.
This revised EPS estimate does not include the anticipated beneficial effects of the two pending ROV-related acquisitions
announced two weeks ago. Consequently, we now believe that it may be possible to achieve record EPS in
Source: Oceenering Press Release