Dolphin Drilling anticipates further contract awards in niche moored semi-sub market

Offshore drilling contractor Dolphin Drilling has presented its fourth quarter and interim full-year 2022 financial results, revealing its expectations of reaping the benefits in the future, thanks to improvements in the offshore drilling market with a particular emphasis on the niche moored semi-submersible market, where the firm hopes to win more contracts.

The offshore drilling market picked up speed during 2022, thanks to higher rig demand and day rates, as the global energy crisis pushed countries to strengthen their energy security, which enabled oil and gas firms to rake in all-time high profits. The increase in day rates is illustrated by 4Q and full-year 2022 results announced by Dolphin’s rivals: Noble, Valaris and Transocean.

Dolphin Drilling owns a fleet of three high-technical standard fourth and fifth-generation enhanced Aker H3 rigs: Borgland Dolphin, Blackford Dolphin, and Bideford Dolphin. The company was successfully listed on Euronext growth in 2022, following a capital raise of $45 million. Based on the firm’s statement, it ended 2022 with “a strong balance sheet” with $35.8 million of cash and cash equivalents and a contract backlog of $85 million.

During 4Q 2022, the offshore drilling contractor was awarded a 12-month contract for the Blackford Dolphin rig with General Hydrocarbons Limited in Nigeria, with a total value of $96 million, including the mobilisation fee. Following a delayed departure from Mexico and reduced transit speed, the Blackford Dolphin rig arrived in Las Palmas, Canary Islands, and was moored quayside on 24 November 2022. The rig underwent a special periodic survey (SPS) at the shipyard in Las Palmas, allowing for continuous work until 2028.

Bjørnar Iversen, CEO of Dolphin Drilling, remarked: “The fourth quarter of 2022 was a busy period for Dolphin Drilling with the finalisation of the preparation of the Blackford Dolphin to commence its 12-month drilling contract for GHL in Nigeria in mid-March 2023. Our preparations in the fourth quarter provided a good platform for 2023 when we will return to revenue-generating operations.”

At the start of January 2023, Dolphin Drilling revealed a letter of award for additional work in Nigeria in direct continuation with the previously announced contract with GHL, which contains the potential to extend the backlog by a minimum of 120 days and up to 485 days, in addition to the existing GHL backlog. The effective day rate associated with the minimum firm period is $325,000 including a mobilisation fee.

At the end of January 2023, the Blackford Dolphin rig completed its recertification for a new five-year period in Las Palmas and started its journey to Nigeria on 9 February 2023. The rig is expected to kick off its 12-month drilling contract with General Hydrocarbons Limited in early March 2023.

Furthermore, the company reported total revenues of $0.4 million in the fourth quarter of 2022, compared to $0.1 million in the previous quarter, reflecting the utilisation of the fleet in the transition phase toward the mobilisation of the Blackford Dolphin rig. The firm’s reported net loss for 4Q 2022 was $18.2 million. The Borgland Dolphin and Bideford Dolphin rigs remain stacked in Norway.

Moreover, Dolphin Drilling had around $35.8 million of cash and cash equivalents on 31 December 2022, including restricted cash amounts of about $7.8 million. The company explains that $6.0 million of restricted cash relates to an advance payment guarantee, which is to be released upon the arrival of the Blackford Dolphin rig in Nigerian waters.

During the fourth quarter of 2022, the firm recorded capital expenditures of approximately $12.5 million, with almost all being specifically related to the recertification of the Blackford Dolphin rig.

According to Dolphin Drilling, it is “well-positioned to secure additional contracts at attractive levels, benefitting from current market improvements and an attractive positioning in the niche moored semi-submersible market.”

The firm points out that the opportunity to acquire and/or manage two latest generation harsh environment semi-submersibles as well as to manage and operate non-owned rigs provide attractive additional growth opportunities.

“The most recent LOA to extend Blackford’s backlog underlines the potential of our assets. We currently see increased tender activity for standard moored rigs in all global markets underlining these expectations,” concluded Iversen.