SEVAN DRILLING AS Operating revenue in Q2 2015 was USD 99.4 million (Q2 2014 - USD 88.6 million).
EBITDA in Q2 2015 was USD 52.1 million (Q2 2014 - USD 40.8 million).
Net profit in Q2 2015 was USD 13.7 million (Q2 2014 - USD 9.2 million)
Sevan Drilling completed the Migration of its parent company from Sevan Drilling ASA to Sevan Drilling Limited, incorporated in Bermuda. The old parent company was delisted from the Oslo Stock Exchange, and the new parent company began trading on 30th June 2015. The group continues to use the ticker 'SEVDR'.
Following the Migration the Board of the Bermuda parent company needed to be reconstituted to have majority non-Norwegian residents, and on 26 August, after approval of the Q2 2015 Interim Financial Report, Mr Erling Lind resigned as Chairman and Director. Ms Birgitte Ringstad Vartdal was appointed to replace Mr Lind as Chairman.
The Board is pleased to announce the appointment of Svend Anton Maier as a Director of the Company to fill the vacancy. Mr Maier is the Senior Vice President, Americas in the Seadrill Group.
except where noted
Operating revenue
99.4
83.1
88.6
182.5
148.7
EBITDA (1)
52.1
38.3
40.8
90.4
56.5
Operating profit/(loss)
33.0
19.8
24.3
52.8
25.1
Net financial items
(17.3)
(17.4)
(14.4)
(34.7)
(25.9)
Net profit/(loss)
13.7
2.2
9.2
15.9
(1.2)
EPS - basic and diluted (USD)
0.46
0.00
0.31
0.53
-0.04
Unaudited figures in USD million,
Q2 2015 Q1 2015 Q2 2014 YTD 2015 YTD 2014
Company performance:
Available days (2)
273
270
215
543
395
Technical Utilization (3)
94.6%
82.5%
95.4%
89.8%
93.8%
Economic Utilization (4)
95.1%
81.7%
95.7%
88.8%
91.6%
Average daily revenue (USD) (5)
385,000
373,000
423,000
382,000
401,000
Average daily operating expense (USD) (6)
158,000
151,000
197,000
155,000
193,000
EBITDA equals net profit/loss adding back net financial items, tax income/expense, depreciation and amortization expense and impairment expense
Available Days are the total number of operating rig calendar days in the period. A rig is operating when accepted by the customer.
Technical Utilization is the actual number of revenue earning days divided by Available Days. A revenue earning day is defined as a day on which a rig earns its dayrate after commencement of operations.
Economic Utilization is operating revenue divided by total potential charter revenue for the period.
The Average Daily Revenue is operating revenue divided by revenue earning days. The Average Daily Revenue will differ from the contract dayrate due to billing adjustments for any non-productive time, bonus and amortized mobilization and demobilization fees.
Average daily operating expense is total operating expense less general and administrative expenses, restructuring costs, depreciation and foreign exchange (loss)/gain related to operations divided by Available Days in the period.
Operating revenue was USD 99.4 million compared to USD 88.6 million in Q2 2014. The revenue increase is
explained by a full quarter of operations of the Sevan Louisiana, which commenced operations in May 2014 and operating for the full period in 2015. The Sevan Louisiana achieved a Q2 2015 technical utilization of 93.8% (89.9% in Q2 2014), Sevan Driller technical utilization was 91.0% (94.7% in Q2 2014), and Sevan Brasil technical utilization was 98.9% (98.2% in Q2 2014).
Total operating expense was USD 66.4 million compared to USD 64.3 million in Q2 2014. The increase is the result of Sevan Louisiana operating in this quarter compared to the prior year, offset by reductions in operating expenses realized across the fleet. Average operating costs per day per rig remained lower compared to historical averages, as the Company continued executing cost savings initiatives that began early this year. General and administrative costs reduced to USD 3.9 million compared to USD 5.6 million in Q2 2014, from conclusion of the integration and restructuring. Depreciation expense increased compared to Q2 2014 as a consequence of Sevan Louisiana in service for the full period in Q2 2015.
Net financial items amounted to USD 17.3 million in Q2 2015 compared to USD 14.4 million in Q2 2014. Interest and commitment fees on the Revolving Credit Facility with Seadrill ('RCF') increased by USD 2.3 million.
Net profit for Q2 2015 was USD 13.7 million compared to a net profit of USD 9.2 million in Q2 2014.
For the six months ended June 30, 2015
Operating revenueOperating revenue was USD 182.5 million for the six months ended June 30, 2015 compared to USD 148.7 million for the comparative period in 2014. The revenue increase is due to the Sevan Louisiana commencing operations in May 2014 and operating for the full period in 2015.
Total operating expense was USD 129.7 million for the six months ended June 30, 2015 compared to USD 123.6 million for the comparative period in 2014. In the first half 2015, operating expenses increased with USD 7.7 million mainly explained by Sevan Louisiana operating for the full 2015 period, offset through cost savings initiatives across the fleet. General and administrative costs were USD 3.5 million lower from conclusion of the integration and restructuring. Depreciation expense increased as a consequence of Sevan Louisiana in service in the full period.
Net financial items amounted to USD 34.7 million for the six months ended June 30, 2015 compared to USD
25.9 million for the comparative period in 2014. This is explained by increased interest and commitment fees on the RCF of USD 5.2 million and interest expense increased USD 2.7 million mainly due to no interest being capitalized in 2015 due to the Sevan Louisiana being completed.
The net profit was USD 15.9 million for the six months ended June 30, 2015 compared to a net loss of USD 1.2 million for the comparative period in 2014.
Balance sheet
Cash and cash equivalents amounted to USD 31.5 million as of June 30, 2015 compared to USD 30.2 million as of December 31, 2014. During Q2 2015, interest and principal payments under the debt facility and RCF were USD 11.6 million and USD 35.0 million, respectively. As of June 30, 2015, USD 160.0 million was drawn on the RCF.
Sevan is preparing its accounts on the assumption that the company is a going concern. Liquidity remains sensitive to performance of the rigs under their contracts, the continued availability of the RCF, and other market conditions.
In Q2 2015, the Sevan rigs achieved technical utilization of 94.6% and economic utilization of 95.1%. Sevan Driller achieved technical utilization of 91.0%, the Sevan Brasil achieved 98.9%, and the Sevan Louisiana achieved 93.8%. Sevan Developer remains ready for delivery (warm stacked) at the Cosco shipyard in China. The rig continues to be actively marketed for an acceptable drilling contract and, if such is obtained, delivery can occur under the deferral agreement. In October 2015, the initial delivery deferral period will conclude and the contract terminates if the options to defer delivery are not exercised.
At June 30, 2015, the fleet's backlog revenue is USD 0.9 billion, and as of the date of this report, the fleet is operating at satisfactory technical utilizations.
During the quarter, Sevan Drilling initiated an internal investigation regarding activities involving an agent under the Company's drilling contracts with Petrobras in Brazil. These contracts were entered into prior to the separation from the Sevan Marine Group and the subsequent listing in May 2011. The Company continues its investigation into the activities dating back to the separation from Sevan Marine. The Company has also voluntarily notified the Brazilian authorities of our willingness to cooperate with any inquiry.
OutlookThe ultra deepwater drilling market continues to remain challenging so far into 2015 and is expected to continue in this manner well into 2016 and possibly longer. While there was a recovery in oil prices in the first quarter, oil markets have subsequently fallen lower and approaching the lows witnessed at the beginning of 2015. Despite this development, there has been some new fixture activity in this period. However, dayrates for these new fixtures are at or below cash flow breakeven levels. Customers continue to renegotiate contract rate reductions in exchange for extended term, which has added to the downward pressure on rates. When rigs become idle, contractors face the decision of whether the rig will remain marketable or scrapped. Older rigs are often seen to be scrapped due to the significant investment needed in classing. In addition to the increase in scrapping, newbuild deliveries continue to be delayed which has changed estimates in the short term to forecast limited, or no growth, in the global fleet.
The market has historically been cyclical and the long term view remains unchanged, that demand for ultra deepwater drilling will continue to be required to meet the world hydrocarbon demand. However, uncertainty remains in the timing of the recovery and to what extent. The focus for the Company is therefore to continue with safe and efficient operation as well as cost reductions on the three rigs in operation. The Company continues to actively market the fleet, the benefits of the unique Sevan design and continue discussions with customers on potential future work. The Sevan Developer initial deferral period will conclude in Q4 and the Company is evaluating the option to extend under the agreement with Cosco.
The parent company Migration was completed on 30 June 2015, and the Group is now listed on the Oslo Stock Exchange under same ticker 'SEVDR' through Sevan Drilling Limited. Shareholders in Sevan Drilling ASA received the same ownership and control in Sevan Drilling Limited, as they had prior to the Migration. Sevan
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