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Dubai, UAE, November 10, 2022 – Shelf Drilling, Ltd. (“Shelf Drilling” and, together with its subsidiaries, the “Company”, OSE: SHLF) announces results for the third quarter of 2022 ending September 30. The results highlights will be presented by audio conference call on November 10, 2022 at 5:00 pm Dubai time / 2:00 pm Oslo time. Dial-in details for the call are included in the press release posted on November 7, 2022 and on page 3 of this release.
David Mullen, Chief Executive Officer, commented: “Our results in the third quarter of 2022 reflected a significant sequential improvement in revenue and EBITDA following a quarter with a high concentration of out-of-service projects.”
Mullen added: “The acquisitions of the Shelf Drilling Victory in July and the five premium, harsh environment jack-ups in October represent a transformational and strategic development for Shelf Drilling. We have enhanced our fleet composition through the addition of six highly capable rigs, strengthened our leading position in the Middle East and established a major presence in the North Sea. Oil and gas prices remain elevated over prior years and provide a very constructive backdrop for jack-up activity. The Middle East is driving demand in the jack-up sector, and I expect market fundamentals to remain strong and drive further dayrate momentum in 2023 and beyond. We remain focused on delivering efficient and incident free operations to our customers and believe we are very well positioned to maximize future earnings and cash generation.”
Third Quarter Highlights
• Q3 2022 Revenues of $166.3 million, a 10.4% sequential increase compared to Q2 2022.
• Q3 2022 Adjusted EBITDA of $65.8 million, representing an adjusted EBITDA margin of 40%.
• Q3 2022 Net loss of $6.0 million.
• Q3 2022 Capital expenditures and deferred costs totaled $59.9 million, including $34.7 million associated with rig acquisitions, primarily relating to the purchase of the Shelf Drilling Victory in July 2022.
• The Company’s cash and cash equivalents balance at September 30, 2022 was $156.9 million.
• The Company’s total debt at September 30, 2022 was $1.4 billion.
• Contract backlog was $1.7 billion at September 30, 2022 across 28 contracted rigs.
• On October 5, 2022, Shelf Drilling (North Sea), Ltd (“SDNS”) completed the acquisition of five premium, harsh environment jack-up rigs, related contracts, support and infrastructure from Noble Corporation for $375.0 million (the “Acquisition”).
• Subsequent to September 30, 2022, the Company has secured the following awards:
– Two-year contract extension for Noble Sam Turner (to be renamed Shelf Drilling Winner) jack-up rig in direct continuation of its current contract in Denmark.
– Five-year contract for the recently acquired premium jack-up rig Shelf Drilling Victory for operations in Arabian Gulf, which is expected to commence in late-March 2023.
Third Quarter Results
Revenues were $166.3 million in Q3 2022 compared to $150.7 million in Q2 2022. The $15.6 million (10.4%) sequential increase in revenues was primarily due to higher effective utilization. Effective utilization increased to 85% in Q3 2022 from 78% in Q2 2022 as one rig in India, one rig in Saudi Arabia and two rigs in Thailand started contracts in late June 2022 and July 2022. Average earned dayrate decreased modestly to $62.0 thousand in Q3 2022 from $62.6 thousand in Q2 2022.
Total operating and maintenance expenses of $88.8 million in Q3 2022 were substantially similar to $89.1 million in Q2 2022. Lower operating costs for the Shelf Drilling Scepter following completion of its contract in Vietnam, and lower shipyard and maintenance expenses primarily for the Shelf Drilling Chaophraya in Thailand and High Island V in Saudi Arabia following completion of out-of-service projects, were offset by increases across the rest of the fleet.
General and administrative expenses of $12.9 million in Q3 2022 decreased by $1.4 million as compared to $14.3 million in Q2 2022, primarily due to certain one-time costs incurred for the Acquisition in the prior period.
Adjusted EBITDA for Q3 2022 was $65.8 million compared to $49.0 million for Q2 2022. The adjusted EBITDA margin of 40% for Q3 2022 increased from 33% in Q2 2022.
Capital expenditures and deferred costs of $59.9 million in Q3 2022 increased by $26.8 million from $33.1 million in Q2 2022. This increase was related to rig acquisitions, primarily the purchase of the Shelf Drilling Victory in July 2022 and commencement of the reactivation project for the rig, and higher spending in fleet spares. This was partially offset by lower spending for one rig in India, which commenced a new contract in late June 2022, and two rigs in Saudi Arabia.
Q3 2022 ending cash and cash equivalents balance of $156.9 million decreased by $62.9 million from $219.9 million at the end of Q2 2022 primarily due to the acquisition of the premium jack-up rig Shelf Drilling Victory, higher interest payments and increase in working capital in Q3 2022 as compared to Q2 2022.
The Form 10-Q Equivalent, which includes the Condensed Consolidated Interim Financial Statements, and a corresponding slide presentation to address the results highlights for Q3 2022 are available on the Company’s website.
For further queries, please contact:
Greg O’Brien, Executive Vice President and Chief Financial Officer
Shelf Drilling, Ltd.
Tel.: +971 4567 3616
Email : greg.obrien@shelfdrilling.com
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