Songa Offshore SE is pleased to announce that the documentation for the previously announced USD 1,014 million loan facilities for the financing of the first two Cat D drilling rigs, Songa Equinox and Songa Endurance, have been finalized and the loan agreements have been signed by all parties.

The new facilities are split into senior loans of USD 774 million and junior loans of USD 240 million and have an average amortization profile of 10.5 years. The junior loans include a pre-delivery tranche of USD 104 million. Drawdown of the pre-delivery tranche is expected to take place in early May 2014.

NYC-based PIRA Energy Group believes that Asian oil markets should remain supported. In the U.S., accelerated overall stock draw resuming so far in march.  In Japan, kerosene stocks reach record lows. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:

 Asian Oil Markets Should Remain Supported

Crude stock building peaks in March, and then in April builds will lessen. As we move further into the second quarter, refinery run increases absorb incremental crude. Asian gasoline cracks should improve seasonally with some further gains being forecast. Gasoil cracks have eased a bit, but further downward pressure is seen as limited as Asian turnarounds and low stocks levels help keep balances in check. Fuel oil cracks have been falling, but recently they have found a degree of support.

Japanese Kerosene Stocks Reach Record Lows

Total commercial stocks dropped on the week. Crude stocks fell only slightly, but finished product stocks declined 2 MMBbls, of which half was kerosene. This draw left kerosene stocks at record lows. Gasoil stocks declined for the eighth straight week and also remain very lean. This tight position in middle distillate stocks should prevent any large scale erosion in middle distillate cracks, though they have eased a bit of late. The indicative refining margin was modestly lower.

Inland North American Crude to Generally Reconnect to USGC, But Not Fully to Global Markets

The inland North America crude market is reconnecting to coastal markets as new infrastructure is put in place. Historically three distinct markets—the Northern Tier, Midcontinent and Gulf Coast — are now quickly becoming one integrated market. Producers' crude oil netbacks are generally aligning with coastal values after adjusting for quality and transportation costs, but there will still be occasions when inland congestion occurs. Moreover, the unlocking of inland markets by pushing crude oil supply to the Gulf Coast has unhinged Gulf Coast values from international prices, sometimes substantially. In a special report PIRA assesses the historical extent of crude prices disconnecting from refiner parity and our expectations for the remainder of 2014.

4Q13 Tight Oil Operator Review

Activity proceeded in line with operators’ expectations in 4Q13, notwithstanding temporary impacts from extreme weather. In this quarter, most operators shifted away capital from more gassy plays like the Woodford and focusing their attention on the Bakken, Eagle Ford, and Permian, where they reported better returns. Permian in particular experienced an industry-wide ramp in activity. In Bakken and Eagle Ford, operators focused mostly on improving the productivity of their acreage through better designs, well down-spacing, and tapping different intervals simultaneously. Significant cost reductions were not evident this quarter, but neither were there indications of cost escalation.

A Quick Note on Upstream Cost Escalation

There are two sources of reported increases in upstream costs that have very different causes and implications. One is the decision by industry to pursue upstream projects that have higher costs because these projects are now economic under a higher price regime. The second is the increase in costs for a given resource due to increases in contractor drilling, manpower and other capital or operating costs. It is extremely difficult to disentangle the two from company reports, but the former has been a major factor since prices began their sharp increase early last decade

Heating Season Coming to a Close

U.S. propane stocks will end the first quarter at quite low levels and comparisons will remain well behind the prior year. Exports continue to be quite active. Butane blending season is coming to a close soon. With the heating season ending, chemical feedstock users will be helping set the tone for the LPG markets in the months ahead.

Inventories Fall

The lack of rail movement continued to cause tightness in the market, particularly on the coasts. Inventories fell by 631 thousand barrels to a fifteen-week low 15.3 million barrels.

The information above is part of PIRA Energy Group's weekly Energy Market Recap, which alerts readers to PIRA’s current analysis of energy markets around the world as well as the key economic and political factors driving those markets.

Announcing its results for the 2013 financial year, VIKING Life-Saving Equipment A/S has again led the way in its industry, achieving growth in both turnover and profits for 10 straight years.

In doing so, the Danish-based company with a worldwide presence has once more beaten the
odds in an industry plagued by reductions in passenger and cargo ship newbuilds, falling exchange rates in key markets, and downward price pressure.

Photo: Viking Offshore Evacuation System

Adjusted for falls in the US dollar exchange rate, currencies pegged to the dollar, and European member state non-euro currencies, the company's turnover for 2013 increased 6 percent to DKK

1.612 billion. Profit before tax grew more than 20 percent to a record DKK 141.2 million.

"Our earnings have now reached an appropriate level for a healthy manufacturing company," says VIKING CEO Henrik Uhd Christensen. "In 2013, VIKING achieved moderate growth in turnover, and the increased profit level primarily reflects internal improvements. We have, in fact, been able to reduce the costs of administration, logistics and production while simultaneously strengthening customer service."

Long-term strategy in a sluggish market

As one of the world's leading manufacturers of maritime safety equipment, VIKING is closely tied to the newbuild market for passenger and cargo ships, a market that has been declining in recent years. Southern European countries, in particular, the traditional stronghold of ferry traffic in the Mediterranean, are still feeling the effects of the economic crisis. Moreover, low economic growth rates in several large markets have had considerable influence on global cargo traffic which, in turn, affects contracts for new cargo ships.

"We have been able to handle the worldwide market saturation of recent years because VIKING's owners take a long-term approach to expanding our global market position, focusing on growth and making sure we are right where our customers are," says Henrik Uhd Christensen. "During the
crisis years, we have continued to develop a competitive product portfolio based on concepts and
services tailored to each customer's specific needs."

Offshore market continues to grow

Henrik Uhd Christensen points to the VIKING Shipowner Agreement, where his company offers to take care of all aspects of a shipowner's safety equipment and servicing tasks for predictable, transparent prices. It's a concept that addresses shipowner needs for flexibility at a time where access to financing is limited, and has quickly become the industry's gold standard since its launch four years ago.

With its broad product portfolio, VIKING has also been able to compensate for slower activity in some market segments by expanding in more promising ones. Here the offshore industry stands out, with growth rates fueled by continued high oil prices.

"As the hunt for new oil and gas discoveries moves further from shore, higher-quality safety equipment and servicing arrangements are necessary," says Henrik Uhd Christensen. "With a product range well-suited to the North Sea and polar conditions, and with a specialised offshore business unit based in Norway, VIKING is uniquely positioned to dominate the offshore market for the foreseeable future."

2014 just as difficult

Despite difficult prevailing market conditions, VIKING expects to see growth both in turnover and profit during 2014.

"We are again facing a challenging year where there is little room for improvement in newbuilds, or strong growth in other areas. We expect the passenger and cargo markets will marginally improve, and that the offshore market will continue to show its strength. Within these largely unchanged parameters, we will continue to be on the offensive with our products and services, tailored to individual customer needs," says Henrik Uhd Christensen.

The positive earnings for 2013, combined with a conservative dividends policy, have contributed to further strengthening the company. VIKING's equity at the end of the financial year amounted to DKK 617.2 million.