George Economou, CEO of Ocean Rig UDW, a provider of ultra-deepwater drilling services, expects 2016 will be challenging, and it will be tough obtaining new contracts for drilling rigs.
The driller has posted a net income of $138.4 million for the third quarter of 2015. This is a rise compared to the third quarter of 2014, when the company’s profit was $104.2 million.
Included in the third quarter 2015 results are non-cash gains associated with the purchase of the 7.25% Senior Unsecured Notes due 2019 and the 6.5% Senior Secured Notes due 2017 totaling $52.2 million or $0.36 per share. Excluding the above items, Ocean Rig would have reported net income of $86.2 million, or $0.58 per share
Revenues decreased by $78.3 million to $437.2 million for the three-month period ended September 30, 2015, as compared to $515.5 million for the same period in 2014, due to fewer operating days of the drilling fleet.
During the quarter, the Ocean Rig Skyros drillship started its new six-year contract in Angola with Total. Also, the Ocean Rig Olympia began its new contract with Eni in Angola.
Low oil prices mean less exploration for new oil reserves, leading to a drop in demand for drilling rigs. This has led drilling companies around the world to defer deliveries of its new rigs until the market recovers. Ocean Rig is no exception.
George Economou, Chairman and Chief Executive Officer of the Company, said: “We continue to effectively manage our capital expenditures program by deferring installments and pushing out construction as evidenced by the new delivery date of the Ocean Rig Santorini in mid-2017. This agreement significantly reduces our obligations for the next two years.”
Three of the company’s drilling rigs will complete its contracts in 2016, with its two semi-submersible rigs Eirik Raude and Leiv Eiriksson, set to end their contracts soon, in the first quarter of 2016.
Economou hinted the company could reduce its rig fleet: “The market remains challenging with limited visibility of new contracts and is likely to remain so through the next year. Even though we remain positive for the long-term prospects of the industry, given the current environment, we will adjust our available capacity to the new market conditions.”
The CEO previously said Ocean Rig would be looking to stack or even scrap its rigs that run out of contract. The most likely candidates for stacking are the previously mentioned Eirik Raude and Leiv Eiriksson, as the company sees few new prospects of employment of the units. Ocean Rig currently owns ten drilling units, plus three under construction.
Offshore Energy Today Staff