With entire fleet in lay-up, Fred. Olsen Energy swings to loss
Norwegian offshore driller Fred. Olsen Energy recorded a loss in the fourth quarter 2017 as its revenues tumbled due to its entire rig fleet being in lay-up mode.
According to its financial report on Friday, the company’s net loss for the fourth quarter 2017, including an estimated tax expense of $5.9 million, was $62.1 million compared to a profit of $9.7 million in the prior-year period.
Operating revenues in the fourth quarter 2017 were $49.5 million, a significant decrease compared to revenues of $156.8 million in the fourth quarter of 2016.
Compared to the third quarter 2017, the company’s revenues within the offshore drilling division decreased by $26.1 million, mainly due to a received settlement for Bredford Dolphin in the third quarter and Bolette Dolphin receiving termination fee in fourth quarter vs. partly on contract in third quarter.
Revenues within the engineering and fabrication division were $4.5 million.
The offshore fleet of Fred. Olsen Energy, with subsidiaries, consists of seven drilling units. Six out of seven rigs are without a contract. Only one rig, the Blackford Dolphin, currently has a contract, which starts in May.
Namely, BP in January 2018 hired the rig for a one-well contract plus four options. BP then on Wednesday, February 8 declared the first two options under the contract for the use of the Blackford Dolphin rig in the UK North Sea. The rest of the rigs are stacked in Norway, Tenerife, and Malaysia.
Engineering & fabrication division
According to the company, the profitability of the Harland & Wolff yard, with core activities within engineering, ship repair and shipbuilding, has improved in the fourth quarter compared to the previous quarter. However, the activities have in general been low through 2017. The company said that an increase in activity is expected through 2018.
Norwegian & UK market
Commenting on the offshore drilling market, the company said that the recovery in the Norwegian market was confirmed during the last year with continued increase in activity. New contracts have been awarded for work in 2019 and 2020, predominantly for field development activities. Further sanctioning of new development projects are expected through 2018. As for exploration requirements, an increase in requests and tenders for work in 2018 is now becoming evident, the company said.
The UK market is active with several contract awards and a number of tenders still ongoing, particularly targeting 2018 work. Additionally, a high number of requests for work in 2019 are still open.
Offshore Energy Today Staff