Seadrill 3Q numbers down on idle rigs, impairment

Seadrill 3Q numbers down on idle rigs, impairment

Offshore drilling specialist Seadrill saw its third-quarter revenue drop 25 percent on lower dayrates and rigs going out of work. Revenue was $743 million, down from $985 million in the third quarter of 2015.

During the quarter, the West Orion, West Phoenix, West Alpha, West Pegasus and Sevan Driller drilling rigs became idle. The West Hercules, West Castor, and West Prospero rigs had a full quarter of idle time.

Furthermore, the West Freedom operated the full quarter in flotel mode and two of Asia Offshore Drilling (AOD) rigs were extended at reduced dayrates. AOD is a partnership venture between Mermaid and Seadrill.

According to Seadrill, the reductions to revenue were partially offset by the agreement of a $17 million de-winterization payment for the West Alpha and the start of operations on the West Eclipse and West Vigilant.

Also, the company’s net loss narrowed to $656 million, from a loss of $1.9 billion a year ago. According to Seadrill, the 3Q 2016 loss reflects an $882 million non-cash impairment to investments primarily relating to Seadrill Partners.

Despite reporting the loss and the drop in revenue, the Oslo-listed driller’s CEO hinted there may be signs of improvement in the level of bidding opportunities.

Per Wullf, CEO and President of Seadrill Management Ltd., said: “The offshore drilling market continues to be challenging, however, we are seeing an improvement in the level of bidding activity. Most of the new work is for short term contracts at or near cash flow breakeven levels, and 2017 is expected to remain challenging. However, we expect the market to gradually improve as costs have been reset across the value chain and more drilling activity will be needed to avoid accelerated production declines.”

Offshore Energy Today Staff

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Posted on November 22, 2016 with tags , .

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