Norwegian driller might soon have only one rig in operation. None in Norway

Norwegian offshore drilling contractor Fred. Olsen Energy might soon have no rigs working on the Norwegian continental shelf. What is more, the driller might soon have only one rig under contract overall.

The company’s fleet consists of nine rigs; three ultra/deepwater units and five mid-water semi-submersible drilling rigs in addition to one tender support vessel and one accommodation unit.

Three semi-submersibles are listed as “operating” in Norway, however, the truth is only one rig is operating in Norway, while the other two are idled there.

Namely, the contracts for the Borgland Dolphin expired in September 2016, and the rig has been warm stacked in Lyngdal, Norway “ready for new contracts.”

Bredford Dolphin has been cold-stacked in Norway, meaning the company doesn’t count on its contribution any time soon.

The Bideford Dolphin rig is the only one working in Norway, but its contract with Statoil is set to expire in early March, meaning that if no extension or a contract is found for Bideford and Bredford, Fred. Olsen will have no rigs operating in Norway as early as next month.

Worth noting, the Byford Dolphin semi is also in Norway, warm-stacked, however this rig has been considered as part of the company’s international fleet, as it had worked with BP in the UK, prior to its contract expiration in October 2016.

In its presentation on Wednesday, Fred. Olsen said that the utilization of the overall rig fleet in Norway is currently approaching an all time low.

The company, however, noted an increased number of requests and tenders for 2017 and 2018, although predominantly for shorter term work. Fred. Olsen also said that several new projects and in-field projects are being prepared for sanctioning in 2017 /18 and beyond, hinting there may be some work ahead for its Norwegian floaters.

Overall, including the work being done by the Bideford Dolphin with Statoil, Fred. Olsen has only three rigs under contract. Blackford Dolphin is working for Chevron, on a contract set to expire this month.

Out of the nine rigs owned by Fred. Olsen only one rig has a longer term contract – the Bolette Dolphin drillship, working for Anadarko in Colombia. The contract expires in July 2018.

Fred. Olsen posted revenues of $157 million for the fourth quarter of 2016, down from $265 million in the corresponding quarter of 2015. Revenues within the offshore drilling division decreased by $58.4 million, mainly due to Byford Dolphin and Borgland Dolphin coming off contract.

Profit for the quarter – loss for the year

The fourth quarter of 2016 turned a net profit of $9.7 million, versus a net loss of $114 million in 4Q 2015. For the full year 2016, Fred. Olsen reported a net loss of $105.4 million

Providing its take on the global market, Fred. Olsen said that, overall, there has been an increase in requests and tender activity, with main indicators pointing to improved market conditions. However, the strength and the pace of recovery still remains uncertain, Fred. Olsen said.

The driller said that cold stacking and some scrapping due to overcapacity continues to take place, and that the decrease in E&P spending seems to level off and E&P companies directing spending to short cycle, higher return activity.

Earlier recovery of the mid-water is expected to materialize as compared to the ultra-deepwater, Fred. Olsen said.

Talking about its approach to the current drilling market, the company said it was aggressively pursuing new contract opportunities, keeping rigs warm, ready for operation.

The company has a contract backlog of around $260 million, and had a cash balance of $290 million at the end of the year.

Offshore Energy Today Staff

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