I would like to express our sincere appreciation to all our shareholders and investors for the continuing support and understanding for JDC Group.
Before briefing our corporate activities for the year ended March 31, 2011, may I take this opportunity to convey our deepest condolences for all those affected by Tohoku Pacific Ocean Earthquake in March early this year. We sincerely hope for the earliest recovery of the afflicted areas.
Highlights of the Year Ended March 31, 2011
During the year, the market demand for offshore rigs saw a moderate increase due mainly caused by a gradual rebound of crude oil prices. On the other hand, however, factors such as an increase in rig supply caused by the addition of newly built rigs and the moratorium in the U.S. as a result of the oil spill of Gulf of Mexico have led to a marginal decline in the average global rig utilization to 75.4% from 77.1% of the same recorded in the previous year.
Despite of such general weakness in the market environment, JDC Group rigs continued to perform their optimal level operations overall throughout the entire year. Five rigs directly owned by JDC Group achieved 94.1% rig utilization. This is far above the average global rig utilization level, but less than 98.6% of the same recorded in the previous year.
As a result, JDC Group's consolidated net sales for the year was ¥28,290 million (down 22.7% from the previous year), with ordinary income of ¥7,234 million (down 48.8%), and net income of ¥5,609 million (down 44.1%).
Construction of New Premium Class Jack-up Rig
We are determined to further expand our operations globally and strengthen our offshore rig fleet to address the diverse needs of our customers. In this regard, JDC has placed an order for the construction of one new premium class jack-up rig with Keppel FELS Limited of Singapore on March 15th of this year. This new rig, provisionally named HAKURYU-11, is designed and built pursuant to the industry's most advanced concept and technology. It will be equipped with the latest drilling equipment and various new service packages. We believe the rig will demonstrate our ability to perform more safely, more efficiently and more cost effectively. HAKURYU-11 is now scheduled for completion and delivery at the end of March 2013.
Deepwater Drillship CHIKYU
Mantle Quest Japan Company Ltd. (JDC Group) manages and operates CHIKYU for Japan Agency for Marine-Earth Science and Technology (JAMSTEC) since the year 2008. From this August, a new exploration drilling campaign for CHIKYU will start at deepwater offshore area of the Democratic Socialist Republic of Sri Lanka for three firm wells plus two optional wells for Cairn Lanka Pvt. Ltd. As CHIKYU has mainly been engaged in scientific research activities, this forthcoming Sri Lanka operations will open a new business frontier for JDC Group's deepwater operations for commercial purpose.
CHIKYU was berthed in Hachinohe Port of Aomori Prefecture, Japan when a massive tsunami triggered by the Tohoku Pacific Ocean Earthquake hit the area, causing some damages to one of her thruster units. It is very fortunate that we have been able to complete the repair works successfully in a short period of time and CHIKYU is ready to sail out to Sri Lanka after the sea trial. We are working in full cooperation with JAMSTEC to make this forthcoming deepwater operations fruitful and successful.
With regard to the global trend for oil and natural gas demand, the International Energy Agency (IEA) and other specialized institutions have forecasted that such demand would continue to be forward-driven by the growing needs of China, India and other emerging countries and also by the recovery of world economy. It is therefore reasonably expected that exploration and development activities by oil and natural gas exploration companies in various offshore areas of the world will continue to be firmly sustained.
As such, we will maintain our commitment for global operations while reinforcing and fortifying our rig fleet, increasing profitability, implementing safer operations and further strengthening our management foundation. We will continuously improve and enhance our corporate value for the benefits of all concerned.
President and Representative Director