Seadrill sees improvement in offshore drilling market with increased tendering activity

Offshore drilling contractor Seadrill is seeing continuous signs of improvement in offshore drilling market with increased tendering activity and better contract economics.

Seadrill on Tuesday posted revenues of $292 million for the fourth quarter of 2018, which is a 17% increase when compared to revenues of $249 million in the third quarter of 2018.

This was primarily due to the West Hercules and West Phoenix working at higher dayrates and for more days during the quarter, the West Elara moving to a higher contractual dayrate and the Sevan Louisiana returning to service. This was partially offset by lower floater economic utilization of 93% for the quarter (3Q18: 98%).

However, when compared to the fourth quarter of 2017, when Seadrill was in bankruptcy proceedings, the company’s revenues were $431 million.

The driller recorded a net loss of $360 million in 4Q 2018 compared to a $245 million loss in 3Q 2018 and a $2.7 billion loss in 4Q 2017.

Anton Dibowitz, CEO, commented: “The offshore drilling market continues to show signs of improvement with increased tendering activity and better contract economics. We expect more activity in 2019 to lead to a tighter supply demand balance and improved pricing in 2020 as the recovery progresses.

“We are delighted to have entered into a Joint Venture with Sonangol to manage and operate four rigs focused on the Angolan market. This relationship provides us with access to a market that is expected to show significant growth over the next five years as well as an opportunity to continue expanding our fleet of premium ultra-deepwater rigs.

“We remain focused on continued cost reduction and disciplined use of capital including the terms on which we will contract our premium fleet.”

As at December 31, 2018, total cash was $2 billion which includes $461 million in restricted cash. Seadrill’s order backlog as of February 26, 2019, totaled approximately $2 billion.

New drilling contracts 

Since its last earnings report in November, Seadrill has added $89 million of additional backlog.

Namely, the semi-submersible West Phoenix was awarded a two-well contract and six options with Equinor in the UK and Norway expected to start in direct continuation with its current contract. Three of the options have been exercised resulting in total backlog of approximately $51 million.

The West Castor jack-up rig was awarded a contract with Staatsolie in Suriname, starting in March 2019. The total backlog including mobilization is approximately $25 million.

The jack-up rig West Callisto was awarded a six-month extension with Saudi Aramco in Saudi Arabia, keeping the unit employed until July 2019 adding approximately $13 million in backlog.

Offshore Energy Today Staff