Seadrill Partners LLC : Announces First Quarter 2015 Results
(Thomson Reuters ONE) -
Highlights
* Seadrill Partners reports net income attributable to Seadrill Partners LLC
Members for the first quarter 2015 of $38.2 million and operating income of
$190.7 million.
* Generated distributable cash flow of $82.0 million with a coverage ratio of
1.48x for the first quarter 2015.
* Declared a $0.5675 per unit distribution for the first quarter, in line with
the fourth quarter distribution.
* Economic utilization for the first quarter of 93%.
* Seadrill Partners swaps the contracts for the West Capricorn and West
Sirius, both contracted with BP Exploration & Production Inc., and thereby
extends the contract term on the West Capricorn for an additional two years
until July 2019 with BP Exploration & Production Inc.
* Seadrill Partners receives a notice of termination for the West Sirius from
BP Exploration & Production Inc. In accordance with the cancellation
provisions in the West Sirius contract, Seadrill Partners will receive
payments over the remaining contract term, now expiring in July 2017.
Subsequent Events
* The Board is pleased to announce that John T. Roche will replace Rune Magnus
Lundetrae as Chief Financial Officer of Seadrill Partners with effect from
June 1, 2015. Mr. Roche is currently Vice President of Investor Relations
for Seadrill and will continue with this responsibility on a part time
basis. Prior to joining Seadrill in May 2013 Mr. Roche spent 12 years at
Morgan Stanley most recently as an Executive Director in its Investment
Banking Division.
Financial Results Overview
Seadrill Partners LLC reports:
Total contract revenues were $385.9 million for the first quarter 2015 (the
"first quarter") compared to $369.1 million in the fourth quarter of 2014 (the
"fourth quarter"). The increase in revenues is primarily driven by a full
quarter of operations on the West Vela and improved uptime on the West Aquarius.
Operating income for the quarter was $190.7 million compared to $168.9 million
in the preceding quarter. The increase is largely as a result of operational
improvements described above and a full quarter of operation of the West Vela.
Net income for the quarter was $70.9 million compared to $70.1 million in the
previous quarter. This is after the recognition of the loss on derivative
instruments of $51.9 million in the first quarter as compared to a loss of $48.4
million for the fourth quarter as a result of a decrease in long term interest
rates in the first quarter. The unrealized non-cash element of these amounts is
a $38.9 million loss in the first quarter and a $36.6 million loss for the
fourth quarter.
As a result, net income attributable to Seadrill Partners LLC Members was $38.2
million for the first quarter compared to $33.1 million for the previous
quarter.
Distributable cash flow was $82.0 million for Seadrill Partners' first quarter
as compared to $80.1 million for the previous quartergiving a coverage ratio of
1.48x for the first quarter. The increase in distributable cash flow is mainly
as a result of a full quarter of operations for the West Vela and improved
operational performance offset in part by higher cash taxes paid. The coverage
ratio has also been positively impacted by the decision to maintain
distributions at the fourth quarter level.
Distribution for the period was $0.5675 per unit, equivalent to an annual
distribution of $2.27, representing a 46% increase from the Company's minimum
quarterly distribution set at its IPO.
Operations
Overall economic utilization for the fleet was 93% for the first quarter. With
the exception of downtime on the West Aquarius, the fleet generally performed
well during the first quarter, achieving an economic utilization rate of 96.3%
excluding the West Aquarius.
During the first quarter, Seadrill Partners received a notice of termination
from BP Exploration & Production Inc. for the contract for the West Sirius which
became effective after completing a well in progress and demobilization on April
24, 2015.
Prior to the cancellation notice, the dayrate and term for the West Sirius and
West Capricorn contracts were swapped. The West Sirius dayrate was decreased by
$40,000 per day and the term was decreased by two years to expire in July 2017
while the dayrate for the West Capricorn was increased by $40,000 per day and
the term was extended by two years to expire in July 2019. Amortized payments
for the West Capricorn such as mobilization and upgrades will continue on the
original schedule ending in July 2017. In accordance with the cancellation
provisions in the West Sirius contract, Seadrill Partners will receive payments
over the remaining contract term, now expiring in July 2017.
As a result of the termination, Seadrill Partners' backlog decreased by
approximately $160 million. After taking into consideration the expected
decrease in operational expense while the unit is cold stacked, and the fact
that termination fee payments will not be impacted by downtime, Seadrill
Partners does not expect a material impact on its cash flow position over the
contract period through July 2017.
The Semi-tender rig West Vencedor will complete its current contract during the
second week of June and is expected to complete its demobilisation and
relocation to Southeast Asia, for which it receives a fee of $8.5 million, by
the second week in July. The Company expects this fee to cover all expenses
related to the demobilization and relocation. Follow on employment opportunities
continue to be pursued for the West Vencedor and the Company will focus on
reducing costs during its idle period.
Total operating expenses for the first quarter were $210.0 million, compared to
$211.7 million in the previous quarter. Despite the inclusion of the West Vela
for a full quarter of operations, operating expenses were approximately in line
with the prior quarter. Significant progress has been made to drive efficiencies
in operating expenditures across the fleet and in corporate overhead.
Financing and Liquidity
As of March 31, 2015, the Company had cash and cash equivalents, on a
consolidated basis, of $242.0 million and two undrawn revolving credit
facilities totaling $200 million. One $100 million facility is provided by
Seadrill as the lender and the second $100 million facility is provided by a
syndicate of banks and secured in connection with the $2.9 billion term loan B
facility. Total debt was $3,617.5 million as of March 31, 2015; $571.7 million
of this debt was originally incurred by Seadrill, as borrower, in connection
with its acquisition of the drilling rigs.
Net debt as at March 31, 2015 was therefore $3,375.5 million giving a ratio of
net debt to annualized adjusted EBITDA (4) of 3.2:1.
As of March 31, 2015 the Company had two secured credit facilities, in addition
to the term loan B. These facilities expire in 2017 and 2025. Additionally the
Company has a $109.5 million vendor loan from Seadrill maturing in 2016 relating
to the acquisition of the T-15 and a $69.9 million intercompany loan from
Seadrill relating to the West Vencedor maturing in June 2018.
Seadrill Partners will continue to explore refinancing alternatives for the
remaining related party debt on the West Vencedor, T-15, T-16, and West Vela.
As of March 31, 2015, Seadrill Partners had interest rate swaps outstanding on
principal debt of $3,560.7 million. All of the interest rate swap agreements
were entered into subsequent to the IPO Closing Date and represent approximately
98% of debt obligations as of March 31, 2015. The average swapped rate,
excluding bank margins, is approximately 2.25%. The Company has a policy of
hedging the significant majority of its long-term interest rate exposure in
order to reduce the risk of a rising interest rate environment.
Market
Despite the recovery in the oil price during the first quarter, oil companies
are continuing to take a cautious approach to capital expenditure and other cost
commitments given the severity of the overall oil price decline. We anticipate
this cautious approach to continue throughout 2015 and indications are that
2016 is likely to be a challenging year as well.
During the quarter, the market has seen very little new fixture activity and the
new contracts that have materialized are at significantly lower dayrates.
Customer conversations have focused on renegotiation of existing contracts,
often in exchange for additional duration.
The downturn in the offshore drilling market has continued during the first
quarter and all signs point to 2015 demand being significantly lower than in
2014. The outlook for activity beyond 2015 is difficult to judge but most oil
companies are not looking towards adding rig capacity at this point. It is
likely that capacity utilization will drift lower as the year progresses and a
significant number of ultra-deepwater rigs are likely to be stacked by the end
of 2015.
Although the near term outlook remains challenging, there is visibility of an
expected rebalancing of market supply in the next few years when considering the
newbuild orderbook and the degree of scrapping that can be expected. Currently
the orderbook stands at approximately 89 units, of which 29 are Sete new
builds. At the same time roughly 70 units are rolling off contracts many of
which must undergo a 15 or 20 year classing between now and the end of 2017.
There is a high likelihood that a number of these units will be scrapped,
potentially leading to little or no fleet growth between now and 2018. Thus far,
the market has seen 14 rigs scrapped in 2014 and 12 already in 2015. This
represents the highest degree of scrapping activity seen since the early 1990's
and is likely to accelerate over the next two years.
On the demand side, it is difficult to foresee a market that does not require
ultra-deepwater production to satisfy world hydrocarbon demand. In the
meantime, rig owners will continue to face a challenging market where the
decision to stack or scrap is being continually evaluated against the limited
work available.
With a line of sight to a stable supply picture and the requirement for offshore
production to meet global hydrocarbon demand needs, Seadrill Partners is well
positioned for the eventual recovery. Seadrill Partners believes it is well
positioned with long term contracts, a modern fleet and high quality customers.
Outlook
Operating earnings moving forward will be negatively impacted by the
unemployment of the West Vencedor as well as, to a lesser extent, the
termination of the West Sirius contract.
The Semi-tender rig West Vencedor will complete its current contract, which has
not been renewed, during the second week of June, at which time it will begin
the process of demobilisation and relocation for which it will receive a fee of
approximately $8.5 million. It is expected that the rig will be relocated to
Southeast Asia. Seadrill Partners is exploring all alternative employment
opportunities for the West Vencedor but the loss of the rig's revenue of
$212,000 per day will negatively impact earnings until alternative employment
can be found. In the event the rig is cold stacked however, operating costs
would be significantly reduced. Seadrill Partners owns a 58% interest in the
West Vencedor.
Following the termination of the West Sirius contract by BP Exploration &
Production Inc. the rig completed operations on April 24, 2015. After taking
into consideration the expected decrease in operational expense while the unit
is cold stacked, and the fact that termination fee payments receivable under the
contract will not be impacted by downtime, Seadrill Partners does not expect a
material impact on its cash flow position over the contract period through July
2017.
In light of the current environment, Seadrill Partners is encountering and may
in the future encounter situations where counterparties request relief to
contracted dayrates or seek early contract termination. In the event of early
termination for the customer's convenience, an early termination amount is
typically payable to Seadrill Partners, in accordance with the terms of the
drilling agreement. While the Company is confident that its contract terms are
enforceable, it may be willing to engage in discussions to modify such contracts
if there is a commercial agreement that is beneficial to both parties.
Seadrill Partners has revenue backlog of $5.0 billion, an average remaining
contract term of 3.4 years, net debt to annualized adjusted EBITDA ratio of
3.2:1, cash and undrawn revolvers totalling $442 million and 91% of its debt
does not mature until 2021 or later.
Although Seadrill Partners' longer term strategy is to grow distributions, the
Company will continue to evaluate acquisitions, distributions and distribution
coverage to manage through the near term challenges in the offshore drilling
industry. Given the current near term market outlook, Seadrill Partners will
specifically evaluate acquisitions with a view to supporting the current
dividend by building distribution coverage and mitigating contract rollover
risk.
May 28, 2015
The Board of Directors
Seadrill Partners LLC
London, UK.
Questions should be directed to:
Graham Robjohns: Chief Executive Officer
John T. Roche: Chief Financial Officer
FORWARD LOOKING STATEMENTS
This news release includes forward looking statements. Such statements are
generally not historical in nature, and specifically include statements about
the Company's plans, strategies, business prospects, changes and trends in its
business and the markets in which it operates. In particular, statements
regarding the Company's ability to make cash distributions, the expected
performance of the drilling units in the Company's fleet, estimated duration of
customer contracts, contract dayrate amounts and the Company's ability to
purchase drilling rigs from Seadrill Limited in the future are considered
forward-looking statements. These statements are made based upon management's
current plans, expectations, assumptions and beliefs concerning future events
impacting the Company and therefore involve a number of risks, uncertainties and
assumptions that could cause actual results to differ materially from those
expressed or implied in the forward-looking statements, which speak only as of
the date of this news release. Important factors that could cause actual results
to differ materially from those in the forward-looking statements include, but
are not limited to offshore drilling market conditions including supply and
demand, dayrates, customer dilling programs and effects new rigs on the market,
contract awards and rig mobilizations, contract backlog, the performance of the
drilling units in the Company's fleet, delay in payment or disputes with
customers, our ability to successfully employ our drilling units, procure or
have access to financing, ability to comply with loan covenants, liquidity and
adequacy of cash flow from operations, fluctuations in the international price
of oil, changes in governmental regulations that affect the Company or the
operations of the Company's fleet, increased competition in the offshore
drilling industry, and general economic, political and business conditions
globally. Consequently, no forward-looking statement can be guaranteed. When
considering these forward-looking statements, you should keep in mind the risks
described from time to time in the Company's filings with the SEC. The Company
undertakes no obligation to update any forward looking statements to reflect
events or circumstances after the date on which such statement is made or to
reflect the occurrence of unanticipated events. New factors emerge from time to
time, and it is not possible for us to predict all of these factors. Further,
the Company cannot assess the impact of each such factor on its business or the
extent to which any factor, or combination of factors, may cause actual results
to be materially different from those contained in any forward looking
statement.
Seadrill Partners 1Q 2015:
http://hugin.info/155503/R/1924558/690374.pdf
Seadrill Partners Fleet Status Q1 2015:
http://hugin.info/155503/R/1924558/690376.pdf
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Seadrill Partners LLC via GlobeNewswire
[HUG#1924558]
Datum: 28.05.2015 - 12:34 Uhr
Sprache: Deutsch
News-ID 396516
Anzahl Zeichen: 19347
contact information:
Town:
London
Kategorie:
Business News
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