Songa Offshore returns to profit in 2Q

Offshore driller Songa Offshore, soon to be acquired by rival driller Transocean, returned to profit in the second quarter of 2017 despite decrease in revenues due to three stacked rigs. 

Earlier this month, one of the world’s largest offshore drillers, Transocean, announced its plan to acquire 100 percent of the issued and outstanding shares of Songa Offshore, including shares issued before expiry of the offer period as a result of the exercise of warrants, convertible loans and other subscription rights.

The combined company will operate a fleet of 51 mobile offshore drilling units with backlog of $14.3 billion consisting of 30 ultra-deepwater floaters, 11 harsh environment floaters, three deepwater floaters and seven midwater floaters. Additionally, Transocean has four ultra-deepwater drillships under construction, including two contracted with Shell for ten years each.

For the second quarter 2017, Songa Offshore on Friday posted a profit of $15.4 million, compared to a loss of $86.8 million in the second quarter 2016. The loss in the last year’s second quarter included the impairment charge of $118 million.

Operating revenue for the second quarter 2017 was $163.7 million, compared to $184.1 million for the second quarter 2016.

The driller said that the decrease of $20.4 million is primarily due to the absence of revenue contribution from Songa Delta and Songa Dee of $32.9 million and $33.1 million respectively.

This is partly offset by the increased revenue contribution from Songa Endurance and Songa Encourage of $1.3 million and $3.7 million respectively, as well as revenue from Songa Enabler of $40.6 million that started its drilling contract in July 2016.

Total revenue for the second quarter 2017 was $174 million, compared to $200.2 million for the second quarter 2016. The main reason for the decrease of $26.2 million is the change in the company’s operating fleet.

All Songa Offshore’s operating rigs are working for Statoil on long-term contracts on the Norwegian Continental Shelf. The Cat D rigs had an average operating efficiency of 98% and an average earnings efficiency of 95.9% in the second quarter 2017.

The aggregate contract backlog for the four Cat D rigs is estimated at $4.1 billion as of July 1, 2017, with another $7.8 billion worth of options.

Songa’s other three rigs, Songa Trym, Songa Dee and Songa Delta, are stacked and marketed.

According to Songa, as a result of increased tender activities and contract awards, the North Sea markets are beginning to tighten with operators preferring newer rigs. The driller sees an increased number of rigs being scrapped, a trend that is likely to continue through 2017 and 2018.

Offshore Energy Today Staff