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Ocean Rig: reports and operation results

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Oilfield Technology,


Ocean Rig UDW Inc., the international contractor of offshore deepwater drilling services, has announced its unaudited financial and operating results for the quarter ended June 30, 2016.

Q2 2016 financial highlights

  • For the second quarter of 2016, the Company reported a net income of US$156.1 million, or US$1.83 basic and diluted earnings per share.
  • The company reported Adjusted EBITDA(1) of US$326.5 million for the second quarter of 2016.

Recent highlights

  • On August 11, 2016 we reached an agreement with Samsung Heavy Industries (SHI) related to the construction of our three drillships which provides for the re-scheduling of certain installments, the postponement of the delivery of the first two of these drillships currently under construction and the amendment of certain other terms (including the contract price).
  • The Leiv Eiriksson completed, as planned, its 15-year class survey and scheduled equipment and winterisation upgrades related to its next contract, and on July 18, 2016 mobilised on location in Norway to commence its previously announced contract with Lundin Norway AS.
  • On June 16, 2016, we reached an agreement with Repsol Sinopec to terminate the contract of the Ocean Rig Mylos operating offshore Brazil against full payment of the remaining backlog.
  • On April 27, 2016, we reached agreement with ENI to settle the dispute related to the termination of the contract of the Ocean Rig Olympia against a total payment of US$54 million and the extension by 81 days for the contract of the Ocean Rig Poseidon at a daily gross operating rate of US$115 000.

George Economou, Chairman and Chief Executive Officer of the Company, commented:

“Despite the continued positive operational performance of the Company (fleet utilisation for the second quarter of 96.3%) the market conditions remain extremely negative. Oil companies continue to reduce their offshore budgets and as more floaters come off contract in the next six months, an already grossly oversupplied market is expected to worsen. In this current and anticipated poor market environment, which we expect to persist for an extended period of time, we believe it is prudent to focus on maintaining liquidity and de-levering the Company.

Given the ongoing distressed market environment as well as the consensus view that a recovery may not occur for several years, we have engaged financial and legal advisors to assess the viability of our capital structure and alternatives that may be available to pursue. In the recent period, we have been approached by several of our debt holders who have in certain cases also retained legal counsel and financial advisors.

While we have not made any specific decisions, it is evident to the Company and a number of its creditors that its debt obligations will need to be amended or exchanged for new debt and/or equity securities, and some debt holders may have little or no recovery on their investment. We continue to explore and consider alternatives, which may include a possible reorganisation under US bankruptcy laws or another jurisdiction, so that we can ride out this very difficult cycle with feasible prospects for strong, long-term success.”

Financial review: Q2 2016

The company recorded net income of US$156.1 million, or US$1.83 basic and diluted earnings per share, for the three-month period ended June 30, 2016, as compared to a net income of US$74.9 million, or US$0.54 basic and diluted earnings per share, for the three-month period ended June 30, 2015.

Revenues increased by US$19.4 million to US$452.6 million for the three-month period ended June 30, 2016, as compared to US$433.2 million for the same period in 2015.

Drilling units’ operating expenses decreased to US$111.4 million and total depreciation and amortization decreased to US$82.8 million for the three-month period ended June 30, 2016, from US$142.8 million and US$88.8 million, respectively, for the three-month period ended June 30, 2015. Total general and administrative expenses increased to US$27.0 million in the second quarter of 2016 from US$25.4 million during the same period in 2015.

Interest and finance costs, net of interest income, decreased to US$55.0 million for the three-month period ended June 30, 2016, compared to US$73.5 million for the three-month period ended June 30, 2015.

Drill Rigs Holdings Inc - Supplemental Information

Leiv Eiriksson

The Leiv Eiriksson completed, as planned, its 15-year class survey and scheduled equipment and winterisation upgrades related to its next contract, and on July 18, 2016 mobilised on location in Norway to commence its previously announced contract with Lundin Norway AS.

Eirik Raude

The Eirik Raude is currently in its stacking location in Greece and is available for alternative employment.


Adapted from a press release by David Bizley

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/12082016/ocean-rig-reports-and-operation-results/

 

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