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Sevan Drilling ASA: Sevan announces first quarter 2014 results

Highlights - First Quarter 2014

  • Operating revenue amounted to USD 60.1 million in the first quarter 2014 (Q1 2013 - USD 55.9 million) reflecting increased operational utilization of Sevan Driller. 
  • Sevan Driller achieved 93.8 percent technical utilization (Q1 2013 - 72.7 percent) and 87.5 percent economic utilization (Q1 2013 - 67.7 percent).
  • Sevan Brasil achieved 89.9 percent technical utilization (Q1 2013 - 92.4 percent) and 86.0 percent economic utilization (Q1 2013 - 92.3 percent).
  • EBITDA was USD 15.7 million, representing a significant increase (70.7 percent) from the first quarter of 2013, mainly due to higher operating efficiency following the transfer of management functions to Seadrill.
  • Sevan Louisiana was mobilized to the US Gulf of Mexico in accordance with plans and budgets.

Financial performance summary

Operating revenue
Sevan Drilling reports operating revenue of USD 60.1 million in the first quarter of 2014 compared to USD 55.9 million in the first quarter of 2013. Operating revenue consist of earnings from Sevan Driller and Sevan Brasil. The revenue increase is explained by significantly improved operational utilization of Sevan Driller, slightly offset by downtime on Sevan Brasil. 

Operating expenses
Total operating expenses were USD 59.3 million in the first quarter of 2014 compared to USD 61.7 million in the first quarter of 2013. 

The decrease is explained by improved operational efficiencies as a consequence of the benefit of the transfer of management function to Seadrill taking effect.  The cost reduction was achieved through reducing rental equipment expenses, adopting continuous repair and maintenance routines, eliminating end of well services and improving supply chain efficiencies. 

General and administrative expenses were reduced by USD 0.9 million compared to the first quarter of 2013 following workforce reductions (offset by one-time costs of USD 1.5 million relevant to the integration with Seadrill's management systems).

Restructuring expenses of USD 2.2 million relate to employee severance costs. Workforce reductions onshore continue to progress as planned, and will be concluded in May. 

The foreign exchange loss of USD 2.4 million is a consequence of the change in the exchange rate between USD and Brazilian Real.

Net financial items
Net financial items amounted to USD 11.5 million compared to USD 18.4 million in the first quarter of 2013, reflecting lower financing and foreign exchange costs. 

Amortisation of deferred finance cost was USD 5.3 million less than in the first quarter of 2013 due to one-time fees associated with the debt restructuring in the first quarter of 2013 and commitment and guarantee fees.  Interest expense was USD 2.9 million less in the first quarter of 2014 than in the same period in the preceding year. This was caused by a lower interest rate on the new facility and a larger amount of interest capitalized, offset by a higher amount of debt.  The net financial items in the first quarter of 2013 furthermore included a non-recurring gain of USD 4.4 million of interest rate swaps. No swaps were held in the first quarter of 2014. 

Balance sheet
Cash and cash equivalents amounted to USD 45.8 million as of 31 March 2014 (USD 128.7 million as of 31 December 2013).  In the first quarter of 2014, Sevan completed two payments of interest and principal (USD 20.6 million and USD 70.0 million, respectively) under its bank facility and funded construction and mobilization costs for two rigs with available cash and a drawdown on the revolving credit facility provided by Seadrill .

Financing
The cash position at the end of the first quarter, the flexibility of the revolving credit facility provided by Seadrill, and Sevan Louisiana's commence­ment of operations will provide adequate support of the Group's existing operations going forward.  Liquidity will, however, remain sensitive to the performance of the rigs under their contracts.

For further information, please contact:
Scott McReaken, CEO, Sevan Drilling ASA
+47 91194651 mobile

About Sevan Drilling:
Sevan Drilling ASA is an international offshore drilling contractor specializing in the ultra deepwater segment. Sevan Drilling ASA is listed on Oslo Børs.

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

Sevan Drilling ASA Q1 2014 Report

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