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Sevan Drilling Ltd: Sevan announces first quarter 2016 results

Highlights First Quarter 2016

  • Operating revenue in Q1 2016 was USD 52.8 million (Q1 2015 - USD 83.1 million).
  • EBITDA in Q1 2016 was USD 12.7 million (Q1 2015 - USD 38.3 million).
  • Net loss in Q1 2016 was USD 20.4 million (Q1 2015 - profit of USD 2.2 million).
  • On March 30, 2016 the Company announced the Sevan Driller contract with Petrobras was terminated effective December 1, 2015 and the Sevan Brasil contract with Petrobras was amended to a day rate of USD 250,000, effective February 26, 2016 through the remainder of its term to July 2018.
  • On March 30, 2016 the Company announced the Sevan Driller was awarded a contract with Shell for 60 days with two 30 day options to perform non-drilling services in Brazil. The contract commenced May 19, 2016.

Subsequent Events

  • On April, 14 2016 Sevan Developer exercised the second six-month option of the delivery deferral agreement with Cosco Shipyard, which extends the deferral period to 15 October 2016.
  • On April 29, 2016 the Company announced extension of the revolving credit facility to December 31, 2017 and amendments to certain covenants in its bank facility.

 

Financial performance summary

For the three months ended March 31, 2016

Operating revenue

Operating revenue was USD 52.8 million compared to USD 83.1 million in Q1 2015. The revenue decrease is explained by the Sevan Driller contract termination December 1, 2015, the reduced rate on the Sevan Brasil  offset by rate efficiencies on the Sevan Brasil and Sevan Louisiana during the quarter.  The Sevan Louisiana achieved a Q1 2016 technical utilization of 96.9% (80.8% in Q1 2015), and Sevan Brasil technical utilization was 90.8% (71.8% in Q1 2015).

Operating expenses

Total operating expense was USD 57.5 million compared to USD 63.3 million in Q1 2015. Vessel operating expenses were USD 33.7 million compared to USD 40.8 million in Q1 2015. The decrease is mainly attributable to lower operating costs from the Sevan Driller being idle and continued cost savings initiatives across the fleet.  General and administrative costs were USD 5.6 million compared to USD 4.1 million in Q1 2015, the increase is related to additional corporate activities part of which are reflected through higher costs from external advisors and in management services.  Depreciation expenses were USD 17.4 million compared to USD 18.5 million in Q1 2015.

Net financial items

Net financial items amounted to USD 16.8 million in Q1 2016 compared to USD 17.4 million in Q1 2015.  Interest and commitment fees on the Revolving Credit Facility ("RCF") with Seadrill decreased by USD 0.3 million. Interest expenses on the secured bank loan facility increased by USD 0.1 million.

Net loss for Q1 2016 was USD 20.4 million compared to a net profit of USD 2.2 million in Q1 2015.

Balance sheet

Cash and cash equivalents amounted to USD 36.1 million as of March 31, 2016 compared to USD 42.4 million as of December 31, 2015.  During Q1 2016, interest and principal payments under the debt facility and RCF were USD 11.5 million and USD 35.0 million, respectively. As of March 31, 2016, USD 200.0 million was drawn on the RCF.

At March 31, 2016 trade receivables were USD 66.5 million, including USD 34.1 million of receivables related to administrative delays from the import authorities in Brazil for the Sevan Driller. The full balance was collected in April 2016.

Sevan Drilling Limited ("Sevan Drilling") is preparing its accounts on the assumption that the company is a going concern. Liquidity remains sensitive to performance of the rigs under their contracts, the continued availability of the RCF and other market conditions.

 

For further information, please contact:

Scott McReaken, CEO, Sevan Drilling Management AS

+47 22 33 00 00 

 

About Sevan Drilling:

Sevan Drilling Limited is an international offshore drilling contractor specializing in the ultra deepwater segment. Sevan Drilling Limited 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 Ltd Q1 2016

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