Paragon Offshore slips on impairments

Offshore drilling contractor Paragon Offshore has posted a loss for the fourth quarter of 2015 due to impairment charges. 

The company on Thursday reported a fourth quarter 2015 net loss of $23.3 million, as compared to fourth quarter 2014 net income of $2.8 million.

According to the drilling contractor, results for the fourth quarter 2015 included a $28.8 million, non-cash asset impairment charge related to fixed assets under construction and capital spare parts, a net gain on sale of assets of $0.5 million, and a $2.1 million, tax benefit as a result of the impairment.

Randall D. Stilley, President and Chief Executive Officer, said: “We lowered contract drilling costs in the fourth quarter by 18 percent and general and administrative costs by 20 percent, exclusive of restructuring costs, compared to the previous quarter.

“We also continued to reduce capital spending. Our restructuring efforts were rewarded as we were able to reach the recently announced agreements with debtholders to eliminate more than $1.1 billion in debt while preserving the flexibility to navigate this downturn.” 

Stilley also said: “It’s already clear that 2016 will be a year of significantly reduced activity across the industry.”

Total revenues for the fourth quarter of 2015 were $299.6 million, compared to $494.99 million in the fourth quarter of 2014.

Paragon reported utilization for its marketed rig fleet as 56 percent for the fourth quarter of 2015.

Paragon’s total contract backlog at December 31, 2015 was an estimated $1.01 billion, including approximately $142.1 million of backlog for the Paragon DPDS3 that Paragon’s customer Petrobras has indicated it may contest in connection with the length of prior shipyard projects relating to the rig.

The company reported that there were no new contracts or contract extensions in the fourth quarter of 2015.

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