Norwegian drilling contractor Odfjell Drilling posted a net loss for the first quarter of 2016. The reported loss was $21 million, down from a profit of $18 million in the first quarter of 2015.
Odfjell said its operating revenue fell to $158 million for the quarter due to a reduction in activity within the drilling rig segment. This is a decrease of $82 million or 34% when compared to the operating revenue achieved a year ago.
Also, both Drilling & Technology and Well Services are still facing a challenging market and lost revenue compared to Q1 2015, the company said.
Specifically, Odfjell stated that the lower operating revenue for the mobile offshore drilling units segment is explained by the Deepsea Atlantic rig being idle after ending the Statoil contract in the third quarter 2015 until it started the Johan Sverdrup contract on March 1, 2016.
Also, Deepsea Stavanger rig has been idle after ending its contract with BP Angola in the fourth quarter of 2015. This was partly offset by the Deepsea Aberdeen semi-submersible drilling rig, which started its contract for BP West of Shetland during in the second quarter last year.
No signs of improvement
Providing the outlook for the upcoming period, Odfjell said it doesn’t see any signs of improvement near- to medium-term. The soft market is due to the substantial supply of newbuilds, especially in the Ultra-Deepwater Drilling market where the trend of postponing or terminating remaining newbuild deliveries has continued, Odfjell Drilling said.
The company added that, at the same time, oil companies still focus on cost cutting programs and capital discipline which have further reduced demand for drilling capacity.
The results are an increasing number of stacked units and continued downward pressure on day rates and asset values.
“Within the next few years, we believe 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 said.