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Dubai, UAE, November 10, 2021 – Shelf Drilling, Ltd. (“Shelf Drilling” and, together with its subsidiaries, the “Company”, OSE: SHLF) announces results for the third quarter of 2021 ending September 30. The results highlights will be presented by audio conference call on November 10, 2021 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 November 3, 2021 and on page 3 of this release.
David Mullen, Chief Executive Officer, commented: “Our results in the third quarter of 2021 were in line with the prior quarter, as we near the end of a period with a high concentration of contract preparation activity. Five of our rigs returned to operations after completing suspension periods or out of service projects in recent months, and three additional contracts are scheduled to commence in the first quarter of 2022, which we anticipate will drive sequential improvements in revenue over the next two quarters. As of November 2021, 27 of our 30 marketable rigs are under contract.”
Mullen added: “Based on the current strength in oil and gas prices and the recent increase in tendering activity in our areas of operations, we expect to see an improvement in global jack-up demand and pricing in the near term. With our contract backlog and liquidity position, we believe we are well positioned to capitalize on new opportunities in our sector.”
Third Quarter Highlights
• Q3 2021 Revenues of $130.3 million, a 0.2% sequential decrease compared to Q2 2021.
• Q3 2021 Adjusted EBITDA of $33.9 million, representing an Adjusted EBITDA Margin of 26%.
• Q3 2021 Net Loss of $22.4 million.
• Q3 2021 Capital Expenditures and Deferred Costs totaled $36.3 million, primarily impacted by the contract preparation project on the Shelf Drilling Tenacious.
• The Company’s cash and cash equivalents balance at September 30, 2021 was $251.3 million.
• The Company’s total debt at September 30, 2021 was $1.2 billion.
• Contract backlog of $1.5 billion at September 30, 2021 across 26 contracted rigs.
• In August 2021, the Company completed the sale of the High Island VII for net proceeds of $3.9 million.
• In September 2021, the Company received an award for a three-year contract for the Parameswara in India with planned start-up of operations in the first quarter of 2022.
Third Quarter Results
Revenues were $130.3 million in Q3 2021 compared to $130.5 million in Q2 2021. The $0.2 million (0.2%) sequential decrease in revenues was primarily due to a lower effective utilization partially offset by an increase in average earned dayrate. Effective utilization decreased to 68% in Q3 2021 from 71% in Q2 2021, mostly due to the completion of two contracts in the UAE and one contract in India combined with planned out of service time for one rig in Saudi Arabia, partially offset by the completion of an out of service project for one rig in Saudi Arabia and the start of a new contract for one rig in India. Average earned dayrate increased to $63 thousand in Q3 2021 from $60 thousand in Q2 2021, mainly due to increased activity for higher dayrate generating rigs.
Total operating and maintenance expenses increased by $2.8 million (3.4%) in Q3 2021 to $84.5 million compared to $81.7 million in Q2 2021. The sequential increase was primarily due to higher maintenance and shipyard expenses for three rigs which were preparing for new contracts in India and West Africa, partially offset by a reduction due to the sale of a rig in August 2021.
General and administrative expenses of $12.0 million in Q3 2021 decreased by $2.6 million as compared to Q2 2021 of $14.6 million mainly explained by a lower provision for doubtful accounts. General and administrative expenses in Q3 2021 and Q2 2021 included $0.8 million and $1.1 million of non-cash share-based compensation expense, respectively.
Adjusted EBITDA for Q3 2021 was $33.9 million compared to $34.4 million for Q2 2021. The Adjusted EBITDA margin for Q3 2021 and Q2 2021 was 26%.
Capital expenditures and deferred costs of $36.3 million in Q3 2021 increased by $9.8 million from $26.5 million in Q2 2021. This increase was primarily due to higher contract preparation expenditures on the Shelf Drilling Tenacious for a contract in Angola expected to start in Q1 2022. In addition, equipment recertification projects were completed on two rigs in Saudi Arabia between Q2 and Q3 2021.
Q3 2021 ending cash and cash equivalents balance of $251.3 million decreased by $34.3 million from $285.6 million at the end of Q2 2021 primarily due to the semi-annual cash interest payment in Q3 2021 on the 8.25% Senior Unsecured Notes due February 2025 and cash payments for capital expenditures and deferred costs during the quarter.
The Quarterly Report, which includes the Condensed Consolidated Interim Financial Statements, and a corresponding slide presentation to address the results highlights for Q3 2021 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: http://emea.directeventreg.com/registration/3852428
Participants must register for the call using online registration. Upon registering, each participant will be provided with call details and a Registrant ID. Call reminder will also be sent to registered participants via email the day prior to the event.
Conference ID number: 3852428
About Shelf Drilling
Shelf Drilling is a leading international shallow water offshore drilling contractor with rig operations across the Middle East, Southeast Asia, India, West Africa and the Mediterranean. 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 its 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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