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Dubai, UAE, May 15, 2023 – Shelf Drilling, Ltd. (“Shelf Drilling” and, together with its subsidiaries, the “Company”, OSE: SHLF) announces results for the first quarter of 2023 ending March 31. The results highlights will be presented by audio conference call on May 16, 2023 at 6:00 pm Dubai time / 4:00 pm Oslo time. Dial-in details for the call are included in the press release posted on May 9, 2023 and on page 3 of this release.
David Mullen, Chief Executive Officer, commented: “The high concentration of major projects in Q1 2023 led to a sequential decline in revenue and EBITDA in line with the guidance we provided on our prior call. Six of our rigs were preparing for long-term contracts in the Middle East, India, West Africa and Mediterranean that are scheduled to commence in Q2 and Q3 2023. As these projects are completed in the near-term, we anticipate significant growth in run-rate earnings and cash flow in the second half of the year.”
Mullen added: “Our backlog further increased from the prior quarter to $2.8 billion as of March 31, 2023 across 34 rigs, and we recently secured a contract for one of the two available rigs. Marketed utilization for the global jack-up fleet exceeds 90%, and we are seeing signs of further demand growth in India and Southeast Asia through the rest of 2023, which should drive continued improvements in leading edge dayrates. We remain committed to delivering safe and reliable services and providing best-in-class operations to our customers, and believe we are well positioned to leverage the robust jack-up market backdrop.”
First Quarter Highlights
• Q1 2023 adjusted revenues of $179.8 million, a 16% sequential decrease compared to Q4 2022, including $33.2 million adjusted revenues from Shelf Drilling (North Sea), Ltd. (“SDNS”).
• Q1 2023 adjusted EBITDA of $36.0 million, representing an adjusted EBITDA margin of 20%, including $6.7 million adjusted EBITDA from SDNS.
• Q1 2023 net loss attributable to controlling interest of $33.4 million.
• Q1 2023 capital expenditures and deferred costs totaled $82.5 million, including $62.5 million for five rigs preparing for long-term contracts scheduled to commence in Q2 and Q3 2023.
• The Company’s cash and cash equivalents balance at March 31, 2023 was $143.6 million, including $62.9 million at SDNS.
• The Company’s total debt at March 31, 2023 was $1.4 billion.
• Contract backlog increased to $2.8 billion at March 31, 2023 across 34 contracted rigs.
• Subsequent to March 31, 2023, the Company secured the following new contract awards:
– Short term contract for Adriatic 1 in Nigeria expected to commence in May 2023.
– New contract for the Shelf Drilling Barsk in Norway with total contract value of $61 million and planned commencement in May 2024.
• Financial guidance for full year 2023 maintained; details are included on page 12 of the Q1 2023 results highlights presentation on our website.
First Quarter Results
Adjusted revenues were $179.8 million in Q1 2023 compared to $214.6 million in Q4 2022. The $34.8 million (16%) sequential decrease in revenues was primarily due to a lower effective utilization across the fleet, as four fewer rigs were operating, and lower mobilization and other revenue, partially offset by higher average earned dayrates.
Effective utilization decreased to 75% in Q1 2023 from 86% in Q4 2022, as four rigs were being prepared for new contracts or contract extensions and one rig completed its last contract in Q1 2023. Average earned dayrate increased to $69.7 thousand in Q1 2023 from $66.7 thousand in Q4 2022.
Total operating and maintenance expenses increased by $6.9 million (6%) in Q1 2023 to $129.2 million compared to $122.3 million in Q4 2022. The sequential increase primarily included higher planned shipyard and maintenance expenses mainly due to three rigs preparing for new contracts, one each in the Middle East, India and West Africa.
General and administrative expenses of $15.5 million in Q1 2023 decreased by $2.0 million as compared to $17.5 million in Q4 2022, primarily due to lower compensation and benefit expenses as compared to the prior period.
Adjusted EBITDA for Q1 2023 was $36.0 million compared to $75.6 million for Q4 2022. The adjusted EBITDA margin of 20% for Q1 2023 decreased from 35% in Q4 2022.
Capital expenditures and deferred costs of $82.5 million in Q1 2023 decreased by $388.8 million from $471.3 million in Q4 2022. This decrease was primarily related to $417.7 million for the acquisition of five jack-ups by SDNS in Q4 2022. Spending in Q1 2023 included $22.9 million for acquisitions associated with the ongoing rig readiness project for the Shelf Drilling Victory, which commenced its new long-term contract in April 2023. Spending across the rest of the fleet increased by $28.9 million compared to Q4 2022 mainly due to out-of service projects for four rigs being prepared for new contracts, one each in the Middle East, India, West Africa and Italy.
Q1 2023 ending cash and cash equivalents balance of $143.6 million increased by $2.8 million from $140.8 million at the end of Q4 2022 primarily due to the $44.4 million net proceeds from the issuance of common shares in Q1 2023 mostly offset by the sequential reduction in EBITDA and high level of capital spending during the quarter.
The Form 10-Q Equivalent, which includes the Condensed Consolidated Interim Financial Statements, and a corresponding slide presentation to address the results highlights for Q1 2023 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.
Kilde
