Shelf Drilling reports 1Q19 results

David Mullen, CEO, commented: “The recent closing of our transaction with China Merchants in May 2019 to add four premium new build jack-ups to our fleet further strengthens our competitive position at a time we are seeing indications across our markets of significant improvement for jack-up drilling services. Since the beginning of 2019, we have also secured new contracts or extensions on existing contracts for 8 rig years. We are in advanced discussions on a number of opportunities for the new build rigs and are confident that our strong customer relationships, proven operating track record and leading position in key geographies position Shelf Drilling very well to secure further contracts as the offshore drilling industry recovers.”

1Q19 highlights

• 1Q19 Revenue of US$147.2 million and Adjusted EBITDA of US$49.4 million. Adjusted EBITDA margin was 34%.
• 1Q19 Net loss of US$13.6 million.
• 1Q19 Capital Expenditures and Deferred Costs totalled US$26.9 million, including US$4.9 million associated with rig acquisitions.
• The Company’s cash and cash equivalents balance at 31 March 2019 was US$69.9 million.
• The Company’s total debt at 31 March 2019 was US$888.2 million.
• US$876 million in contract backlog at 31 March 2019 across 26 contracted rigs.
• In January 2019, the Company received an award for a three-year contract for the Ron Tappmeyer with Oil and Natural Gas Corporation (ONGC) for operations in India.
• In January 2019, the Company also received an award for a one-year contract for the Trident 16 with Belayim Petroleum Company (Petrobel) for operations in Egypt.
• In February 2019, the Company secured a six-month contract extension on the Shelf Drilling Resourceful in direct continuation of its current contract for drilling operations in Nigeria.
• In March 2019, the Company secured a three-year contract for the High Island V rig in direct continuation of its current contract with Saudi Arabian Oil Company (Saudi Aramco).
• The Company completed the sale of two stacked rigs in 1Q19. As of 31 March 2019, the Company’s fleet consisted of 33 marketable rigs and 4 stacked rigs.
• In February 2019, the Company entered into agreements with affiliates of China Merchants & Great Wall Ocean Strategy & Technology Fund to acquire two premium new build CJ46 jack-ups and to bareboat charter two additional premium new build CJ46 jack-ups, including options to purchase the rigs. The transaction closed on 9 May 2019 and the two acquired rigs, the Shelf Drilling Achiever and Shelf Drilling Journey, are under operations readiness projects.

1Q19 Results

Revenue was US$147.2 million in 1Q19 compared to US$153.1 million in 4Q18. The US$5.8 million decrease (3.8%) in revenue was largely due to lower dayrates for the extended operations of six rigs in India, Saudi Arabia and UAE, lower number of days in 1Q19 compared to 4Q18 and the completion of four contracts in India and UAE. This was partly offset by an increase in effective utilisation to 75% in 1Q19 from 68% in 4Q18 mainly due to new contracts in Nigeria and lower planned out of service time in Saudi Arabia.

Total operating and maintenance expenses decreased by US$2.2 million (2.3%) in 1Q19 to US$92.2 million compared to US$94.5 million in 4Q18. The decrease was mainly due to lower operating maintenance and rig mobilisation costs in 1Q19. This was partly offset by higher contract preparation expenses in 1Q19 for the Ron Tappmeyer in India and higher reactivation expenses for the Shelf Drilling Scepter and Compact Driller.

General and administrative expenses were US$11.6 million in 1Q19 compared to US$10.5 million in 4Q18.

Adjusted EBITDA for 1Q19 was US$49.4 million compared to US$49.5 million for 4Q18. The Adjusted EBITDA margin for 1Q19 was 34% compared to 32% in 4Q18.

The Company recorded a US$2.9 million of gain on disposal of assets in 1Q19 mainly resulting from the sale of two stacked rigs.

Capital expenditures and deferred costs were US$26.9 million in 1Q19 compared to US$29.6 million in 4Q18. This included in 1Q19 US$4.9 million relating to the reactivation of the Shelf Drilling Scepter and operations readiness for the Shelf Drilling Achiever and Shelf Drilling Journey, compared to US$4.6 million in 4Q18 for the Shelf Drilling Scepter. Capital expenditures and deferred costs excluding rig acquisitions decreased to US$22.0 million in 1Q19 from US$25.0 million in 4Q18 mainly due to a lower level of spending associated with a planned out of service project for a rig under contract in Saudi Arabia and for one rig that was undergoing preparation for a contract in Nigeria in 4Q18, as well as lower fleet spares expenditures. This was partly offset by higher contract preparation and activation costs in 1Q19 in India and UAE.

Read the article online at: https://www.oilfieldtechnology.com/offshore-and-subsea/15052019/shelf-drilling-reports-1q19-results/