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Highlights second quarter of 2021
· Total operating revenues of $54.8 million, an increase of 13% compared to
the first quarter of 2021
· Net loss of $59.9 million, an increase of $5.5 million compared the first
quarter of 2021, impacted by a $21.7 million decrease in income from equity
method investments, mainly related to the IWS JVs in Mexico
· Adjusted EBITDA of $3.7 million, an increase of $14.4 million compared to
the first quarter of 2021
· In June, entered into a MoU to sell the Company’s ownership in the IWS JVs
to streamline Mexico operations and improve liquidity. The transaction was
completed in August 2021 and released $26.5 million net in cash
· Substantially improved cash collections from Pemex to our Mexico JVs
· In late August 2021, the Company entered into two LOA/LOIs which have
previously not been announced for two rigs in West Africa for a total duration
of two years plus options
· In 2021 to the date of this report, the Company has been awarded 28 new
contracts, extensions, exercised options and LOA/LOIs, representing 6,398 days
of potential backlog and $542 million in revenues, excluding unexercised
optional periods
CEO, Patrick Schorn commented:
"We have seen a steady improvement in operations during the second quarter of
2021 with 13 rigs working at quarter end. Following our significant contract
wins year to date, we have added approximately $542 million in revenues to our
backlog. In our fleet we have an additional ten delivered rigs that can be
deployed in an improving market, and a further five rigs still to be delivered
by the Keppel FELS shipyard.
Based on ongoing negotiations expected to be concluded in the coming weeks, we
anticipate having 17 rigs operating and generating revenue by year end. Against
a backdrop of elevated oil prices, rig demand reverting to and outpacing pre
-pandemic levels and rig supply naturally reducing, we are well positioned to
benefit from the current environment, and on the way to having all of our 23
delivered rigs working by the end of 2022. The Company should generate positive
cash from operations after paying cash interest cost at the current level of 13
rigs operating at contracted rates for a full quarter. This provides us with a
solid foundation going forward.
Following improved collections in our Mexican joint ventures and the sale of our
stake in the integrated well services joint ventures (“IWS JVs”), we have
received $42.4 million from our Mexico operations year to date. The transaction
has allowed us to release working capital while simultaneously securing
additional work for our five rigs in the country until the end of 2022. Due to a
substantial improvement in collections from Pemex in Mexico during 2021,
combined with the new arrangement whereby we participate only in joint ventures
providing drilling services, we expect increased regularity of cash payments
from our Mexico JVs.
The resulting liquidity improvement from the release of cash in Mexico coupled
with cash from operations and encouraging market signals means that both
management and the board are focusing on further improving our capital structure
post 2023. Specific initiatives have been taken with the target of securing a
long-term capital structure solution. We expect these, in combination with
additional rig activations and rigs in operation, to further strengthen our
operating cash flows and financial position going forward."
Management Discussion and Analysis
The discussion below compares the results of the second quarter of 2021 to the
results of the first quarter of 2021.
In $ million Q2 - 2021 Q1 - 2021 Change ($) Change (%)
Total operating 54.8 48.4 6.4 13%
revenues
Rig operating and (47.4) (48.8) 1.4 (3)%
maintenance expenses
General and (7.8) (11.7) 3.9 (33)%
administrative expenses
Total operating (81.6) (88.9) 7.3 (8)%
expenses
Adjusted EBITDA 3.7 (10.7) 14.4 -
Income / (loss) from (5.7) 16.0 (21.7) -
equity method
investments
Net loss (59.9) (54.4) (5.5) 10%
Cash and cash 32.4 49.0 (16.6) (34)%
equivalents
Total equity 973.5 1,027.9 (54.4) (5)%
Three months ended June 30, 2021 compared to the three months ended March 31,
2021
Total operating revenues for the second quarter of 2021 were $54.8 million, an
increase of $6.4 million compared to the first quarter of 2021, consisting of
$49.4 million in dayrate revenues and $5.4 million in related party revenues.
Dayrate revenues increased by $2.0 million quarter on quarter due to more rig
operating days for the rigs “Prospector 1”, “Norve” and “Idun” as a result of
commencing contracts, offset by less operating days for “Mist” as it ended its
contract in the second quarter, as well as a lower dayrate for “Gunnlod” and
less operating days for “Natt”. Related party revenues from the Company’s JVs in
Mexico increased by $4.4 million quarter on quarter as the amendment of the
joint venture agreements in the first quarter of 2021 did not impact the second
quarter, with the increase partly offset by an increase in standby time on two
rigs during the second quarter.
Rig operating and maintenance expenses were $47.4 million for the second quarter
of 2021, a decrease of $1.4 million compared to $48.8 million for the first
quarter of 2021.
General and administrative expenses were $7.8 million for the second quarter of
2021, a decrease of $3.9 million compared to the first quarter of 2021. The
decrease is mainly due to lower corporate overhead costs as well as lower legal
costs, which in the first quarter of 2021 were related to amendments to our
credit agreements.
Adjusted EBITDA for the second quarter 2021 was $3.7 million, an increase of
$14.4 million compared to the first quarter of 2021.
The full report and financial statements are available in the files enclosed to
this release.
August 31, 2021
Hamilton, Bermuda
Questions should be directed to:
Magnus Vaaler, Chief Financial Officer, +47 22 48 30 00
This information is subject to disclosure requirements pursuant to section 5-12
of the Norwegian Securities Trading Act.
Kilde
