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Dubai, UAE, March 20, 2023 – Shelf Drilling, Ltd. (“Shelf Drilling” and, together with its subsidiaries, the “Company”, OSE: SHLF) announces results for the fourth quarter and full year of 2022 ending December 31. The results highlights will be presented by audio conference call on March 20, 2023 at 6:00 pm Dubai time / 3:00 pm Oslo time. Dial-in details for the call are included in the press release posted on March 13, 2023 and on page 3 of this release.
David Mullen, Chief Executive Officer, commented: “During the fourth quarter of 2022, our EBITDA increased 14% sequentially to $75 million, mainly due to the integration of the five premium harsh environment jack-ups acquired in October 2022. This acquisition, combined with continued strong operational performance across the fleet, allowed us to conclude a very positive year for the Company, and I would like to thank the entire Shelf Drilling team for their contributions.”
Mullen added: “Our tendering and marketing activity continued to build positive momentum in the fourth quarter with long-term contracts and contract extensions in the Arabian Gulf, Angola, Italy and India. Our backlog was $2.7 billion with 35 of our 36 rigs under contract as of December 31, 2022. The recent awards in West Africa will drive further growth in our backlog in the first quarter of 2023. After several challenging years, the industry has reached an inflection point. With a constructive backdrop for oil and gas and a shortage of rig capacity, I expect to see a multi-year upcycle in the jack-up market. The actions taken in 2022 to transform our fleet have positioned us well to take full advantage of the improving fundamentals. Our strong customer relations and unique operating platform, combined with the dedication and commitment of our people, are key factors that will enable us to deliver outstanding value to all of our stakeholders.”
Fourth Quarter Highlights
• Q4 2022 adjusted revenues of $214.6 million, a 29% sequential increase compared to Q3 2022, including $41.2 million adjusted revenues from Shelf Drilling (North Sea), Ltd. (“SDNS”).
• Q4 2022 adjusted EBITDA of $75.5 million, representing an adjusted EBITDA margin of 35%, including $17.0 million adjusted EBITDA from SDNS.
• Full year 2022 adjusted revenues of $687.6 million and adjusted EBITDA of $248.6 million. Adjusted EBITDA margin was 36%.
• Q4 2022 net loss attributable to controlling interest of $1.4 million.
• Capital expenditures and deferred costs totaled $471.3 million during Q4 2022, including $419.7 million at SDNS, which mainly consisted of the recorded acquisition cost of $417.7 million for five premium, harsh environment jack-up rigs in October 2022. The remaining balance of $51.6 million in Q4 2022 included $23.8 million associated with rig acquisitions.
• The Company’s cash and cash equivalents balance at December 31, 2022 was $140.8 million.
• The Company’s total debt at December 31, 2022 was $1.4 billion.
• Contract backlog was $2.7 billion at December 31, 2022 across 35 contracted rigs.
Subsequent Events Highlights
• In February 2023, the Company completed the issuance of 17.6 million common shares resulting in net proceeds of $43.8 million. The net proceeds will be used for general corporate purposes, including capex requirements associated with multiple recent long-term contract awards.
• Subsequent to December 31, 2022, the Company secured the following new awards:
– Five total rig years added across three standard jack-up rigs in India and Egypt (Trident II, Trident 16 and Rig 141) for a total backlog addition of $111 million.
– Shelf Drilling Scepter awarded a two-year contract in Nigeria expected to commence in May 2023 for total contract value of $118 million including mobilization revenue.
Fourth Quarter Results
Adjusted revenues were $214.6 million in Q4 2022 compared to $166.3 million in Q3 2022. The $48.3 million (29%) sequential increase in adjusted revenues was due to the SDNS acquired rigs, higher effective utilization and strengthening dayrates.
Effective utilization increased to 86% in Q4 2022 from 85% in Q3 2022, mainly due to the SDNS acquired rigs in the North Sea and Qatar and the return to operations for two rigs (one in Thailand and one in West Africa) in the latter part of 2022, partly offset by contract preparation for two rigs in India which started new three-year contracts in Q1 2023.
Average earned dayrate increased to $66.7 thousand in Q4 2022 from $62.0 thousand in Q3 2022.
Operating and maintenance expenses increased by $33.5 million (38%) in Q4 2022 to $122.3 million compared to $88.8 million in Q3 2022. The sequential increase primarily included higher operating and maintenance expenses of $19.7 million for the recently SDNS acquired rigs. The remaining increase of $13.7 million is mainly due to higher operating expenses for one rig in Ghana that started a new contract in October 2022, higher expenses for a rig expected to commence its new five year contract in April 2023 in the Arabian Gulf and higher maintenance and mobilization expenses across the fleet, including contract preparation expenses for two rigs in India and one rig mobilizing to Italy expected to commence a new contract in June 2023 .
General and administrative expenses of $17.5 million in Q4 2022 increased by $4.5 million as compared to $12.9 million in Q3 2022, primarily due to higher personnel costs and certain one-time costs incurred for the SDNS acquired rigs in Q4 2022 compared to Q3 2022.
Adjusted EBITDA for Q4 2022 was $75.5 million compared to $65.8 million for Q3 2022, including $17.0 million from SDNS. The Adjusted EBITDA margin of 35% for Q4 2022 decreased from 40% in Q3 2022.
Capital expenditures and deferred costs of $471.3 million in Q4 2022 increased by $411.5 million from $59.9 million in Q3 2022. This increase was primarily explained by $417.7 million for the acquisition of five jack-ups by SDNS, $4.4 million higher spending across the rest of the fleet mainly related to the commencement of a new contract preparation project for the Harvey H. Ward, partially offset by $10.4 million lower rig readiness expenditures for the Shelf Drilling Victory acquired in Q3 2022. Both Harvey H. Ward and Shelf Drilling Victory are expected to start new long-term contracts in the Arabian Gulf in April 2023.
Q4 2022 ending cash and cash equivalents balance of $140.8 million decreased by $16.1 million from $156.9 million at the end of Q3 2022 mainly due to the completion of the acquisition of the five high-specification jack-up rigs from Noble.
The Form 10-K Equivalent, which includes the Consolidated Financial Statements, and a corresponding slide presentation to address the results highlights for Q4 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
Dial in Details for the Audio Conference call:
Participants will receive conference access information only when they register for the conference via the link below:
Online Registration: Conference Registration
Participants must register for the call using online registration. Upon registering, each participant will be provided with call details.
About Shelf Drilling
Shelf Drilling is a leading international shallow water offshore drilling contractor with rig operations across Middle East, Southeast Asia, India, West Africa, Mediterranean and North Sea. Shelf Drilling was founded in 2012 and has established itself as a leader within its industry through its fit-for-purpose strategy and close working relationship with industry leading clients. The Company is incorporated under the laws of the Cayman Islands with corporate headquarters in Dubai, United Arab Emirates. The Company is listed on the Oslo Stock Exchange under the ticker “SHLF”.
Special Note Regarding Forward-Looking Statements
Matters discussed in this announcement may constitute forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as “believe”, “expect”, “anticipate”, “strategy”, “intends”, “estimate”, “will”, “may”, “continue”, “should” and similar expressions. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and may be beyond its control. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. Given these factors, users of this information should not place undue reliance on the forward-looking statements.
Additional information about Shelf Drilling can be found at www.shelfdrilling.com.
This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
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