Fred. Olsen Energy swings to loss. Braces for rig contract expiry with BP

fred-olsen-energy-swings-to-lossNorwegian offshore driller Fred. Olsen Energy sank to a loss in 3Q 2016 and saw a decrease in its revenues when compared to the prior-year quarter. The company also informed that a contract for one of its rigs is expiring tomorrow, October 27. 

The company on Wednesday posted a net loss totaling $33.9 million, including an estimated tax charge of $4.2 million, compared to a profit of $21.4 million in the same period last year.

Operating revenues in the third quarter this year were $213.6 million, a decrease when compared to $241.4 million in the same quarter last year.

Revenues from the offshore drilling division were $212.6 million, a decrease of $5.7 million compared to 2Q 2016. The company explained that the sequential decrease in revenues within the offshore drilling division was mainly due to reduced income for the rigs Belford Dolphin, Blackford Dolphin, and Bideford Dolphin, partly offset by an increased income for Borgland Dolphin due to early payment of the last well, which the client decided not to drill.

The driller’s operating costs were $94.5 million, an increase of $18 million compared with previous quarter this year. Operating costs within the offshore drilling division increased by $19.3 million, mainly due to cost related to the final settlement agreement regarding the cancellation of the Bollsta Dolphin rig with Hyundai Heavy Industries, to $91.9 million.

Fred. Olsen Energy also informed on Wednesday that a contract for its Byford Dolphin rig with the oil major BP is expiring on October 27, 2016. The unit will be preserved and maintained in Lyngdal, Norway, ready for new contracts.

Further, the company’s unit Borgsten Dolphin, operating as a Tender Support Vessel, will be cold stacked in Invergordon, Scotland following an early termination of its contract with Total at the end of September.

In addition, the ultra-deepwater drillship Bolette Dolphin continued drilling under its four-year drilling contract with Anadarko Petroleum Corporation. Fred. Olsen has agreed to drill approximately 240 days at a reduced rate ($419.000) and will be compensated with an extension of approximately 2.5 months at original contract rate. The corresponding contract expires in July 2018.

Offshore Energy Today Staff

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