Rig impairments drag Ocean Rig deeper into red

Offshore deepwater drilling services provider Ocean Rig on Wednesday posted a massive, deeper net loss for the last quarter of 2016 due to rig impairments. The driller is still looking into possible restructuring of its debt. 

For the fourth quarter of 2016, the company on Wednesday reported a net loss of $3.71 billion as compared to $174.4 million net loss for the year-before period.

The fourth quarter 2016 results included an impairment loss of $3.75 billion associated with the impairment of the book value of the company’s drilling rigs, compared to $415 million for the three-month period ended December 31, 2015.

Ocean Rig’s revenues decreased by $120.3 million to $355.4 million for the three-month period ended December 31, 2016, as compared to $475.7 million for the same period in 2015.

Drilling units’ operating expenses decreased to $93.7 million in 4Q 2016 from $150.9 million in the corresponding period of 2015.

Fleet wide utilization for the fourth quarter of 2016 was 95.49%. Total backlog as of February 22, 2017, amounted to $1.5 billion.

In the report, the company noted it will not host a conference call to discuss its unaudited financial and operating results for the fourth quarter 2016.

Restructuring

Ocean Rig has been considering a restructuring move since its second quarter of 2016 and continued to explore options in the third quarter. In the fourth quarter of 2016 report on Wednesday the company said it continues to explore and consider various strategic alternatives with its financial and legal advisors, which may include a possible restructuring of its debt.

The company expects that any comprehensive deleveraging plan is likely to result in significant dilution to current shareholders and potential losses for other financial stakeholders.

If a consensual solution cannot be reached among all stakeholders, the company will consider all available options including implementation of a restructuring plan through schemes of arrangement or under Chapter 11.

Offshore Energy Today Staff