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WITHDRAWAL OF THE OSLO BORS LISTING APPLICATION
17 February 2006
The Board of Reservoir Exploration Technology ASA (RXT) yesterday decided to withdraw the current application for listing on the Oslo Bors. The decision was made after extensive discussion between the Company`s advisers and the Bors Administration after the Oslo Bors Administration suggested that it wanted RXT to delay its potential listing.
RXT was seeking exemption from the requirement of three years of operational history. Oslo Bors Administration has informed RXT that the recommendation to the Board of Oslo Bors would be not to grant this exemption at this time. After discussion with its advisers, the Board of RXT concluded that the Oslo Bors wanted to see more quarterly reports and had an opinion that there is too little information in the market for investors to price the stock. The Board of RXT, and its advisers disagree with that evaluation, however sees no other course of action than to reluctantly accept that position given the methodology through which applications are processed.
A listing of the RXT shares is a part of the corporate strategy for the Board of RXT, and the Board had initially viewed Oslo as a natural choice given the strong history of supporting Oil and Gas Service related technology stocks, and the stated aim of the Oslo Bors to be a leading energy related share exchange. The Board will, over the medium term keep an open mind and will now evaluate the possibility of alternative markets and seek listing on the most appropriate market at a later stage.
Most importantly, the delay in listing will not affect the company`s operational strategy, growth plans or financing as indicated below. The core plan for growth remains the firm focus of the Board, management and employees, and the application for listing process has had no impact on the day to day core business of delivering service to clients.
The shares of RXT are listed on the OTC and the company will continue to distribute quarterly reports and press releases on relevant information. The Board has resolved that the Company will behave as `listed` demonstrating good corporate governance and practice as it moves to a senior stock market listing in due course.
The convertible bond offering
The current convertible bond offering, which is fully underwritten, will raise funds to facilitate Crew 3. The subscription period ends on the 20th of February 2006 at 10.00am Oslo time as previously announced. The convertible bond will secure the financing for the delivery of Crew 3 and will be an important milestone in our strategy to become the market leader in the 2C/4C seismic market.
The current market conditions
Crew 1 is currently operating in the Gulf of Mexico (GOM) and will start a 230 day survey for TGS at the end of February. Crew 1 is assumed to stay in that area long term as we have received several requests for additional work in the GOM after the current contract expires. Crew 2 is presently being outfitted and will be operational on contract to BP from delivery around the 1st of May this year. Crew 3 will be delivered for operational start up in January 2007. At this stage, it is estimated that Crew 4 will most likely be ordered for operational start up in July 2007.
In recent weeks RXT has noticed a material uplift in actual demand from potential clients for its seismic services. The flow of tenders and enquiries suggest that there will be substantial demand over supply in the sector. As the quality of data achieved through the RXT methodology, due in part to the exclusivity over the highly effective VectorSeis System from Input Output Inc, begins to be more widely reviewed by Oil Company experts, that pace will pick up further. In addition to demand rising, the Company notes upward movement of supply costs of vessels, fuel and staff, none of which are causing concern relative to our previously announced estimates for 2006. Crew 2 is already being created and rigging of the vessel began in Q4 of 2005, the cost during that period being expensed through the Profit and Loss Account. The managers remain watchful of sectoral and more widespread economics, managing costs and pursuing an optimal revenue mix.
Information: CEO Michael Scott, + 47 67828415 CFO Odd Erik Rudshaug, + 47 67828417