Offshore drilling contractor Valaris booked a bigger quarterly loss as its revenues declined due to fewer rig operating days.
Valaris on Thursday reported a net loss attributable to the company of $216 million for fourth quarter 2019 compared to a net loss of $197 million in the third quarter 2019.
Revenues declined to $512 million in fourth quarter 2019 from $551 million in the prior quarter primarily due to the sale of Valaris 5006, which operated during third quarter 2019. Fewer rig operating days across the broader fleet also contributed to lower revenues and a three percentage point decline in utilization to 61% from 64% in the prior quarter.
Contract drilling expense declined to $477 million in fourth quarter 2019 from $497 million in the prior quarter primarily due to the sale of Valaris 5006 and lower costs for uncontracted floaters. This was partially offset by $11 million of merger transaction costs and $6 million of non-recurring charges for certain local employee benefits included in fourth quarter 2019 contract drilling expense, as compared to $8 million of merger transaction costs in third quarter 2019.
Chief Executive Officer and President, Tom Burke, said: “Last year was pivotal in the company’s evolution as an industry-leading offshore services provider. In April, we merged two leading offshore drillers to form Valaris and committed to delivering meaningful ongoing synergies from the combination. We made great strides to integrate the company in the months that followed, including completing the majority of our planned integration activities that have resulted in the company reaching approximately $135 million of annual run rate synergies by year-end 2019.
Burke concluded, “We also enjoyed commercial success, signing new contracts that added $1.8 billion to our contracted revenue backlog during the year, reflecting the success of our team’s efforts to win new work for our rigs in improving, albeit still challenging, market conditions. We have carried this contracting momentum into 2020 with the addition of incremental backlog and we are in advanced discussions with customers for several new contracts. While our diverse, high-quality modern rig fleet and technical expertise position us well to continue adding future backlog, we expect to report losses and have negative cash flows during 2020 despite gradual improvement in utilization and average day rates for Valaris’ fleet.”
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