Ocean Rig profit rises. ‘Athena’ starts drilling in Angola

Ocean Rig UDW, a Greece-based offshore drilling contractor, recorded a net income of $69.6 million for the three-month period ended June 30, 2014, as compared to a net income of $38.8 million, for the three-month period ended June 30, 2013.

Revenues from drilling contracts increased by $181.6 million to $441.4 million for the three-month period ended June 30, 2014, as compared to $259.8 million for the same period in 2013.

Drilling rigs and drillships’ operating expenses increased to $183.1 million and total depreciation and amortization increased to $81.4 million for the three-month period ended June 30, 2014, from $117.0 million and $55.6 million, respectively, for the three-month period ended June 30, 2013.

George Economou, Chairman and Chief Executive Officer of the Company, commented: “We are very pleased with our operating performance which is a testament to the superior operating results associated with modern assets and the collective efforts of our operating team. During the second quarter of 2014, our fleet operated at 96.3% utilization which is in line with our operating performance in 2013 as well as that of our fleet, excluding the Ocean Rig Mylos, during the first quarter of 2014. In addition, on June 7th the Ocean Rig Athena successfully completed acceptance testing and commenced drilling operations under the ConocoPhillips contract in Angola.”

The Ocean Rig Athena is a deepwater drillship recently delivered from South Korea. The drillship was built by Samsung Heavy Industries according to an Enhanced Saipem 10.000 design. The drillship will remain with ConocoPhillips until 2017 under a contract which will bring approximately $686 million to Ocean Rig.

Strong demand from premium rigs?

Economou added: “We continue to see some softness in the market as several units are coming off contract and certain uncontracted newbuilds are being delivered. As a result, we have seen the first signs of attrition of older units which are coming off contract and in some cases swapped out of existing contracts and replaced by newer units. As the forward contract coverage for older units is in steep decline, we believe that stacking of obsolete drilling assets will increase considerably in the coming months. We remain confident that the underlying demand for drilling in the deep water areas will result in a strong market for premium drilling assets.”

Ocean Rig UDW has a young fleet of seven deepwater drillships, with another four drillships scheduled for delivery between 2015 and 2017. In addition, the company owns two semi-submersible drilling rigs Leiv Eiriksson and Eirik Raude, built in 2001 and 2002 respectively.