Tender Rig Business Sale Boosts Seadrill’s Profit

Seadrill, one of the world’s largest offshore drilling contractors,  today announced  that its net income for the second quarter 2013 was US$1,750 million. To remind, for the same quarter 2012, Seadrill’s reported net income was $554 million.

This year’s 2Q income was improved by a $1.25 billion gain on sale of tender rig business to Malaysia’s SapuraKencana.

On April 30, 2013 Seadrill completed the sale of the entities which owned and operated the following tender rigs: T-4, T-7, T-11, T-12, West Alliance, West Berani, West Jaya, West Menang, West Pelaut, West Setia, and the newbuilds T-17, T-18, and West Esperanza. In addition, Seadrill’s 49% ownership in Varia Perdana and Tioman Drilling was sold as part of this transaction, which included the following rigs: T-3, T-6, T-9, T-10, and the Teknik Berkat. This is collectively referred to as the “tender rig businesses”.

The agreed upon price was for an enterprise value of US$2.9 billion. The purchase price is comprised of US$1.2 billion in cash, US$416 million in new shares in SapuraKencana (at RMB3.18 per share), US$760 million related to all the debt in the tender rigs business, future capital commitments of US$320 million and a deferred consideration of US$187 million.

Consolidated revenues for the second quarter of 2013 were US$1,268 million compared to US$1,265 million in the first quarter of 2013. The increase was despite the sale of the tender rig business, which operated for only 30 days in the quarter, resulting in a US$100 million revenue decline from 1Q 2013. Overall improvement in fleet performance more than offset this revenue reduction.

Offshore drilling units

During the second quarter, Seadrill had 17 floaters, 17 jack-up rigs and 1 tender rig in operation in Northern Europe, US Gulf of Mexico, Mexico, South America, Canada, West Africa, Middle East and Southeast Asia.
Seadrill’s floaters (drillships and semi-submersible rigs) achieved an economic utilization rate of 94% in the second quarter compared to 92% in the first quarter.

“We are pleased with the continuous improvement over the prior quarters. The main issues affecting our second quarter performance
were related to a planned 5-year classing yardstay for the West Phoenix and downtime on the West Capricorn for equipment change-outs.
Average economic utilization was 98% for our jack-up rigs in the second quarter compared to 99% in the preceding quarter,” said the company in a statement.

The tender rig fleet which has been divested and operated for 30 days in the quarter had an average economic utilization of 92% in the second quarter, below the first quarter economic utilization of 99%. The planned yardstay for the Teknik Berkat was the primary reason for the reduced utilization rate. The reminder of the fleet had operating performance above 96%.

[mappress]
August 28, 2013