Fred. Olsen slips on impairments

Fred. Olsen Energy, a Norwegian offshore drilling company, sank to a loss in the fourth quarter of 2015 after a non-cash impairment charge of $158 million, including an impairment of $91 million in connection with the cancellation of the Bollsta Dolphin rig.

To remind, Fred. Olsen’s subsidiary Bollsta Dolphin terminated a newbuilding contract with Hyundai Heavy Industries (HHI) for the construction of a semi-submersible drilling rig, the Bollsta Dolphin, as a result of delay in delivery of the rig. The disputes between HHI and Bollsta are now subject to arbitral proceedings.

As for the company’s performance in the fourth quarter of 2015, Fred. Olsen posted a net loss of $114.2 million, as opposed to a profit of $95.6 million in the same period a year earlier.

In addition, Fred. Olsen’s revenues dropped in the fourth quarter 2015 to $265.2 million, from $297.6 million in the corresponding period in 2014.

Stacked rigs

The offshore fleet of Fred. Olsen Energy consists of three ultra-deepwater/deepwater units, five mid-water semi-submersible drilling rigs, one tender support vessel and one accommodation unit. Three of the semi-submersible drilling rigs are located in Norway.

In the company’s 4Q 2015 report on Tuesday, Fred. Olsen said there has been a considerable reduction in the utilization of the rig fleet in Norway during the last year, with few new visible contract opportunities in the near to mid-term.

Fred. Olsen already stacked three of its drilling rigs and the company expects for a number of cold stacked units to increase.

According to the company, 1976-built rig Bredford Dolphin completed its operations under a drilling program for an AGR coordinated group of four oil companies, in the beginning of January. The rig is currently cold-stacked in Kvinesdal, Norway.

Further, 1975-built self-propelled, accommodation unit Borgholm Dolphin is cold stacked at Harland & Wolff shipyard.

In addition, 1977-built drilling rig Borgny Dolphin is cold stacked at the Harland & Wolff shipyard in Belfast.

The contract for the 2000-built drillship Belford Dolphin was terminated for convenience. The unit is currently located in Labuan, Malaysia, and is marketed for new contract possibilities worldwide.

The 1975-built rig Bideford Dolphin damaged the helideck due to bad weather in beginning of February 2016. The unit is currently inshore for repair of the damages. The yard-stay is estimated to be completed early March.

Offshore Energy Today Staff