Fred. Olsen Energy reports revenue decrease in offshore drilling division

Fred. Olsen Energy has announced financial results for Q1 2014. The company has reported an operating profit before depreciation (EBITDA) of $102 mln in Q1 2014.

Financial Information (4th quarter 2013 in brackets)

Operating revenues in the quarter were 277.8 million (298.0 million), a decrease of 20.2 million compared with the previous quarter. Revenues from the offshore drilling division were 267.1 million (281.3 million), a decrease of 14.2 million. The decrease in revenues within the offshore drilling division is mainly due to yardstay for Borgholm Dolphin and downtime for Bredford Dolphin, partly offset by mobilisation fee for Bolette Dolphin and increased charter rate for Bideford Dolphin. Revenues within the engineering and fabrication division were 48.4 million (25.1 million), of which 37.7 million (8.4 million) were related to intra-group activities.

Operating costs were 175.8 million (181.3 million), a decrease of 5.5 million compared with previous quarter. Operating costs within the offshore drilling division increased by 5.0 million. Operating costs within the engineering and fabrication division increased with 12.9 million, including eliminations of 23.4 million.

Operating profit before depreciation (EBITDA) was 102.0 million (116.7 million). EBITDA within the offshore drilling division decreased by 19.2 million to 103.8 million (123.0 million), and EBITDA within engineering and fabrication division was negative 1.8 million (6.3 million) including elimination of internal profit.

Depreciation and amortisation amounted to 62.6 million (60.1 million).

Operating profit after depreciation (EBIT) was 39.4 million (56.6 million).

Net financial expenses were 14.9 million (4.5 million). Capitalized interest expenses related to the newbuilds in the quarter amounted to 3.2 million (4.8 million).

Profit before tax was 24.5 million (52.1 million).

Net profit, including an estimated tax charge of 1.0 million (6.4 million), was 23.5 million (45.7 million).

Earnings per share were 0.35 (0.70).

Operations 

Drilling Division 

The offshore fleet of Fred. Olsen Energy ASA with subsidiaries (the Group) consists of three deepwater units, five mid-water semi-submersible drilling rigs, one tender support vessel and one accommodation unit. Three of the semi-submersible drilling rigs are operating on the Norwegian Continental Shelf. The Group has one ultra-deepwater harsh environment semi-submersible under construction, with expected delivery in 3Q 2015.

Norway

Bideford Dolphin continued operations under a three-year drilling contract for Statoil ASA in the quarter. The operator has an option for a two year contract extension. The rig arrived the Coast Center Base yard 21st April to undertake its Class Renewal Survey. The Class Renewal Survey is estimated to cost USD 100 million and take 65 days including mobilization.

Borgland Dolphin completed a four-year drilling contract with a consortium of oil companies in April and started a 18 well drilling contract, estimated to 3.5 years, with a Rig Management Norway AS managed consortium of four oil companies. The unit will undertake its five-year CRS in 4Q 2014.

Bradford Dolphin continued operations under a drilling program for an AGRcoordinated group of four oil companies at the Norwegian Continental Shelf. The unit will undertake its five-year CRS in 2017. In January 2014 the rig had a breach in one of the riser joints under operations which led to 25 days off-hire for the unit.

International

Belford Dolphin continued operations under the four-year drilling contract with Anadarko Petroleum Corporation. The contract will expire end 2015. The unit is currently operating offshore Mozambique. The unit will undertake its five-year CRS 1Q 2015.

Blackford Dolphin is currently at Harland & Wolff in Belfast, Northern Ireland, for its five-year CRS and upgrades. The CRS and upgrades are estimated to be completed in June to a cost of USD 195 million, the increase since last quarter is due to additional structural work. Upon completion of the CRS the unit will drill one well for MPX North Sea Ltd in the UK sector and one well offshore Ireland for Capricorn Ireland Ltd (a wholly owned subsidiary of Cairn Energy PLC). In July 2013 a new nine-month contract was entered into with Nexen for operations in UK. In December 2013 a new 572 days contract was entered into with Chevron for UK operations. Chevron has an option to extend the contract for a further period of between 300 and 700 days.

Borgny Dolphin continued operations under a five-year drilling contract with Petrobras in the quarter. An early completion of the contract was agreed with Petrobras, and the rig will be de-mobilised in May/June followed by exportation from Brasil.

Byford Dolphin continued under a three year contract with BP Exploration Operating Co. Ltd. The contract is estimated to expire 2Q 2016. The unit will undertake its five-year CRS in 1Q 2015. Option exists for a three-year contract extension.

Borgsten Dolphin continued under a 40 months contract as Tender Support Vessel (TSV) at the Dunbar platform with Total E&P UK Ltd. Options exist for a contract extension of two six month periods. The unit completed its five-year CRS and upgrades to a TSV in February 2013.

Borgholm Dolphin completed a yard-stay of nine weeks at the end of April. Upon re-start of the contract with Shell U.K. Limited additional issues with the anchoring system were discovered. The rig has now demobilized to Invergordon to undertake repairs. In December 2012 a new 9 months accommodation contract was entered into with BG with estimated start in August 2014. Borgholm is scheduled to undertake a planned yard stay of one month to increase the height of the pedestal before the BG contract. The unit completed its five-year CRS in March 2013.

The ultra-deepwater drillship Bolette Dolphin was delivered from Hyundai Heavy Industries in Korea in February 2014. The unit is currently in Port Elizabeth in South Africa to load onboard the second BOP. The unit will continue mobilization to Liberia second week in May and start drilling under a four-year drilling contract with Anadarko Petroleum Corporation.

The harsh environment ultra-deepwater semi-submersible drilling rig Bollsta Dolphin, currently under construction at Hyundai Heavy Industries in Korea, is scheduled to be delivered in 3Q 2015 and start a five year drilling contract with Chevron North Sea Limited.

Engineering and Fabrication

The Harland & Wolff shipyard continued its core activities within engineering, ship repair and shipbuilding. In the quarter H&W continued the E.ON contract for fabrication substation foundation jacket and the CRS and upgrade of Blackford Dolphin.