Seadrill: 2Q profit falls. 2016 to be challenging too

Seadrill, one of the world’s largest offshore drilling contractors, on Thursday reported its second quarter 2015 net income was $423 million. Net income fell when compared to $653 million earned in the second quarter of last year. Revenue was $1.15 billion in 2Q 2015, vs $1.22 billion in 2Q 2014.

As there is a lack of demand for drilling rigs due to oil companies pulling a break on spending as the oil prices are low, Seadrill, which has 15 rigs under construction, deferred a number of its newbuild deliveries in the second quarter.

The deliveries of two rigs currently under construction, the West Draco and West Dorado, have been deferred from the third and fourth quarter of 2015 to the end of the first quarter of 2017.

The expected 2015 deliveries of eight jack-ups currently under construction have been amended, deferring one unit to the end of December 2015, five units to 2016 and two units to 2017.

In a statement on Thursday, Seadrill said it was in talks with shipyards regarding delivery dates for the remaining units. The rigs under construction comprise four drillships, three semi-submersibles, and eight jack-ups.

Per Wullf, CEO said: “Seadrill has continued to be proactive in order to manage through the current downcycle. Contract renegotiations with our customers are progressing and we have reached agreements with two shipyards to manage our delivery schedule. We believe market conditions will remain challenging through 2016, and we will continue to focus on safety, efficient operations and cost management.”

Rig oversupply and a drop in demand in the drilling market lead to increased competitiveness and a drop in day rates for the drilling rigs, even below the breakeven levels.

On that note Seadrill said: “Commercial contract renegotiation discussions continue to advance with some customers and the Company continues to look toward finding commercial agreements that are beneficial to both parties in order to be better positioned for future contract awards.”

Offshore Energy Today Staff

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Posted on August 27, 2015 with tags .

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