Sembcorp Marine sees signs of recovery in offshore drilling market

Singapore’s Sembcorp Marine returned to profit in the third quarter 2017, posting a net profit of $2.7 million, versus a net loss of $21.8 million a year ago. 

The offshore rig builder’s turnover was $316.9 million, down from $888 million a year ago. The lower revenue was due to lower rig building revenue, fewer floater and offshore platforms projects, and revenue reversal for two jack-up rigs which were terminated with a customer during the quarter.

Worth noting, Sembcorp Marine received a major boost just after the third quarter had ended. The company on October 6 announced a sale of nine Pacific Class 400 jack-up rigs to Borr Drilling for $1.3 billion.

Borr Drilling will take delivery of the nine jack-up rigs progressively over a 14-month period, from 4Q 2017 to 1Q 2019. Borr Drilling has made an upfront payment of about $500 million. The balance amount of approximately $800 million will be paid at any time within five years from the respective delivery dates of the rigs.

Commenting on the market, the company has noted an improvement in oil prices, which might entice the oil majors to increase the level of activity.

“Day rates and utilization levels for offshore drilling rigs have improved, with the higher specification and harsh environment units leading the uptick. Recent mergers and acquisitions amongst drilling companies, coupled with increasing secondary rigs sales are signs of an initial recovery in the drilling segment,” Sembcorp Marine said.

However, worth noting, Sembcorp Marine has started looking beyond drilling solutions in an attempt to diversify its offer and make itself less dependable on the offshore drilling market developments.

According to SembMarine, inquiries for non-drilling solutions continue to be encouraging: “We have been actively responding to more enquiries and tenders for developing engineering solutions for the production segment. Good progress has been made in the development and commercialization of our Gravifloat technology for near-shore gas infrastructure solutions.  For repairs and upgrades, niche markets in LNG carriers and cruise ships continue to underpin performance. We expect this trend to continue.”

Offshore Energy Today Staff

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