Odfjell Drilling posts higher revenues on increased rig activity

Norway-based offshore driller Odfjell Drilling saw a decrease in profit during the third quarter of 2017 despite higher revenues pushed up by increased rig activity. 

The driller on Thursday posted a profit of $18 million for the third quarter of 2017 compared to $21 million in the same period of 2016.

Odfjell Drilling’s operating revenue for 3Q 2017 was $178 million, compared to $167 million in the prior-year period. This was mainly due to increased activity in Mobile Offshore Drilling Units (MODUs), partly offset by the reduction in activity in Drilling & Technology and Well Services from 3Q 16 to 3Q 17.

Operating revenue for the MODU segment was $128 million, a 17% increase compared to $109 million in 3Q 2016. Namely, there was an increase in utilization for the semi-sub rig Deepsea Stavanger during the period compared to last year as the rig was mainly idle in 3Q 2016. However, this increase in activity was partly offset by lower revenue for Deepsea Bergen rig during parts of 3Q 2017.

Drilling & Technology segment’s operating revenue was $29 million in this year’s third quarter compared to $35 million in 3Q 2016. Finally, Well Services segment operating revenue for 3Q 2017 was $26 million compared to $29 million in 3Q 2016.

The group’s contract backlog at the end of the quarter was $2.6 billion, with $1.3 billion as firm backlog. The comparable figure at the end of 3Q 2016 was $2.8 billion, whereof $1.7 billion was firm backlog.

‘Clear signs of market stabilization’

Odfjell Drilling said in the report on Thursday that the drilling and oil service market remains weak, but there are, however, clear signs of market stabilization and an increasing number of inquiries. Due to the substantial supply of new build rigs in recent years, especially in the UDW market, the gap between supply and demand is significant. The effect of the efficiency programs carried out by the oil companies have led to a substantial cost reduction in field development and production. This combined with an increased oil price is expected to lead to an increased activity level in the medium to long term, said the company.

“Within the next few years we believe the continued scrapping of older midwater and harsh environment units in combination with required exploration and development drilling will bring the harsh environment market back to balance and subsequently improved day rates,” the company said.

However, Well Services is still facing fierce competition for its services globally. “We currently observe an increased tender activity in the European and Middle East markets, however the over-supply of equipment will, in the short to medium term, continue to keep pressure on prices. Well Services has maintained its low capital expenditures to enhance utilization of the existing equipment base,” Odfjell explained.

Offshore Energy Today Staff