Odfjell Drilling posts 4Q profit

Odfjell Drilling, an international drilling, well service and engineering company, on Monday posted a profit for the 4Q 2015 that was positively impacted by a reversed tax expense. 

Odfjell Drilling’s net profit for the 4Q 2015 was $37 million, compared to a loss of $26.8 million in the corresponding period of 2014.

Profit for the period is positively impacted by the reversed tax expense of $46 million as a result of the verdict passed by the Norwegian Supreme Court in favour of Odfjell Drilling.

Namely, Odfjell Rig Ltd. disputed the Norwegian Tax Authority’s view that Odfjell Rig Ltd. is taxable in Norway for its participation in Deep Sea Drilling Company II KS. Odfjell Rig Ltd. appealed the verdict from Gulating Lagmannsrett to the Supreme Court of Norway.

In December 2015, the Supreme Court of Norway passed a verdict ruling in favor of Odfjell Rig Ltd for tax assessment for the years 2009 – 2011.

Operating revenue for the fourth quarter of 2015 was $179 million, a decrease of $89 million or 33% when compared to the prior-year fourth quarter and revenues of $268 million.

According to Odfjell Drilling, the group’s financial results were impacted by the temporary lay-up of the Deepsea Atlantic rig, the finalization of Deepsea Stavanger’s contract in Angola and lower activity and continued pressure on rental prices in well services.

The decrease during the quarter is due to reduction of the drilling & technology and well services activity in Norway and in the UK compared to the 4Q 2014.

The reduction was also due to a decrease in revenues from Deepsea Atlantic rig which was idle in the quarter, in addition to the Deepsea Stavanger ending its contract during the quarter.

Deepsea Bergen also finalized its SPS in 4Q 2015, of which two weeks were off hire during the quarter.

Deepsea Aberdeen started drilling operations in the 2Q 2015 and has partly offset the decrease in the quarter’s revenues compared to last year.

Odfjell Drilling also said on Monday that the Deepsea Stavanger drilling rig was awarded a contract by JX Nippon for drilling one exploration well West of Shetland. Contract duration is estimated to be between 60 and 75 days with a contract value of $15.5 million – $20.6 million. The contract will start in the second quarter 2016.

The company said that, within the next few years, it believes the continued scrapping of older rigs in combination with required exploration and development drilling will bring the market back to balance and subsequent improved day rates.

Odfjell Drilling also said that, in the longer term, that the oil industry’s demand for drilling services will continue to be supported by the need for reserves replacement and by continued spending on exploration and field-development in the main offshore regions.

Offshore Energy Today Staff

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