North Sea rig utilization to reach historic low in 2017, Songa says

Drilling contractor Songa Offshore posted a smaller profit for the first quarter of the year despite increase in revenues. The driller expects the North Sea rig utilization to reach historic low during this year. 

The company’s net profit was halved during the first quarter of 2017 totaling $5 million, versus $10 million in the same period last year.

During the quarter, the driller’s revenues increased to $154 million from $137 million in the prior-year quarter. This was mainly due to increased revenue contribution from the company’s four Cat D rigs working for Statoil, Songa Equinox, Songa Endurance, Songa Encourage and Songa Enabler. This was partly offset by the absence of revenue contribution from Songa Delta and Songa Dee.

Operating revenues in the first quarter 2017 were negatively impacted by $15.9 million from Songa Encourage being on zero rate for 35 days, due to the water ingress incident, and by $6.8 million from Songa Enabler being on 75% suspension rate until March 4, 2017.

The group’s unrestricted cash position decreased by $12.6 million from $147.7 million in the fourth quarter 2016 to $135.1 million in the first quarter 2017, primarily due to loss of operating cash flow from the Songa Encourage water ingress incident and from Songa Enabler due to the suspension period.

The aggregate contract backlog for the four Cat D rigs is estimated at $4.2 billion as of March 31, 2017, with another $7.7 billion worth of options.

According to the driller, the North Sea drilling market continued to be very challenging during the first quarter 2017 with further rigs coming off contract to be stacked. While the North Sea rig utilization is projected to reach a historic low during 2017, there are indications of increased operator interest, tender activities and contract awards, the company concluded.

Offshore Energy Today Staff

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