Shelf Drilling reports 3Q loss. Boosts contract backlog

Jack-up drilling company Shelf Drilling saw its third quarterly loss widen, however, the CEO is optimistic about upcoming rig contract starts which should generate positive cash flow and returns.

Shelf Drilling reported revenue of $132 million for the third quarter of 2019, down from $160 million in the third quarter of 2018. Shelf Drilling’s loss for the quarter was $35,9 million, compared to a loss of $10 million a year ago.

However, the offshore drilling company’s contract backlog has increased with $151 million worth of contracts secured only in October. Shelf Drilling currently has 31 out of 34 rigs under a contract.

David Mullen, Chief Executive Officer: “Since the beginning of the third quarter, we have added $433 million of contract backlog for a total of 22.5 rig years. During Q2 and Q3 2019, we have incurred significant contract preparation and reactivation costs in advance of long-term contracts which will yield positive cash flow and returns once rigs enter service beginning in Q4 2019.

“With 31 of our 34 rigs under contract, our strong customer relationships and a differentiated operating track record, we are very well positioned as the jack-up market continues to recover,” CEO said.

The company’s backlog at September 30, was $977 million across 29 contracted rigs, up from $846 million and 25 contracted rigs at June 30, 2019. The company added $282 million through new contracts and extensions during Q3 2019.

Post-September 30, Shelf Drilling added $151 million in contract awards, increasing the number of contracted rigs from 29 to 31.

The recent contracts – signed in October – include four-month extensions for the High Island II, High Island IV, Main Pass I and Main Pass IV jack-ups in continuation of their existing contracts in Saudi Arabia. Furthermore, Shelf in October secured a three-year contract extension on the High Island VII jack-up rig in direct continuation of its current contract for drilling operations in the United Arab Emirates.

Also – all in October – the company received an award for a three-year contract for the Trident II jack-up rig for operations in India, a six months extension on the Rig 141 jack-up rig in direct continuation of its current contract for drilling operations in Egypt, and a one-well contract on the Baltic jack-up rig for operations in Nigeria.

The offshore drilling firm has provided the Q4 2019 revenue guidance range of $156 million – $161 million, up from $132 million in Q3 2019.

Offshore Energy Today Staff

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