Horizon Offshore announces outcome of Pemex arbitration

Horizon Offshore announces outcome of Pemex arbitration
Company News - August 9, 2006

Horizon Offshore in the US has announced that an arbitration panel in Mexico has rejected the claims of its subsidiary, ECH Offshore S de R L de CV against Petróleos Mexicanos (Pemex).
These claims were related to interruptions due to adverse weather conditions in connection with Pemex’s EPC 64 project.

In April 2005, Horizon submitted its weather related claims under the Pemex EPC 64 project to arbitration in Mexico, in accordance with the Rules of Arbitration of the International Chamber of Commerce.

These claims were presented to the arbitral panel on March 27, 2006, and on August 4, 2006, the company received notification that the arbitrators ruled that the contract precludes recovery for weather related interruptions.

Prior to the ruling, the carrying value of this claim, included in costs in excess of billings, totaled US$18.5 million, net of a US$33.1 million allowance for doubtful costs in excess of billings.
The company had announced its financial results for the second quarter prior to its previously scheduled earnings conference call on August 3rd 2006.

In order to account for the effect of the arbitrators ruling, the company expects to release revised financial results for the quarter ended June 30th 2006.