Seadrill targets further savings after profit nose-dives

Deepwater drilling contractor Seadrill is eyeing further cash savings after posting a lower profit and revenues for the first quarter of 2016 due to lower dayrates for several of its drilling rigs. 

During the quarter, Seadrill’s reported net income fell to $88 million, compared to $448 million in the first quarter 2015. Excluding non-recurring items and non-cash mark to market movements on derivatives, underlying net income was $153 million.

Seadrill’s revenues for the quarter dropped by 28% to $891 million, compared to $1.24 billion in the same period last year.

According to its 1Q 2016 report, the company’s revenues were down due to dayrate reductions on the following units: West Tellus; Sevan Brazil; Sevan Driller; AOD I, II and III; West Mischief; and West Polaris (reduced earnout received from Seadrill Partners).

The company’s order backlog totals approximately $9.1 billion.

Commenting today, Per Wullf, CEO and President of Seadrill Management Ltd., said: “Our key priorities for the year are cost reduction, managing newbuild deferments and concluding our financing plans, while ensuring that we continue to maintain safe and efficient operations.”

During the quarter, Seadrill’s vessel and rig operating costs declined by $79 million, resulting in a sequential increase of approximately 6% to the company’s operating margin. The improvements came from reduced stacking costs and improved operating costs on our working fleet with the savings split equally.

For 2016, Seadrill said it is targeting additional total cash savings of approximately $340 million at a Group level of which $305 million is sustainable cost savings and $35 million is deferred spend.

So far in 2016, Seadrill has deferred a number of newbuild rig deliveries including two ultra-deepwater drillships, the West Aquila and West Libra, in January.

In April, Seadrill entered into agreements with Dalian to further defer the deliveries of all eight jack-ups under construction. Following this latest deferral agreement, five units are now scheduled to be delivered in 2017, and three units in 2018.

Offshore Energy Today Staff

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