Awilco Swings to Loss in Q1 But Sees Market Improving
Oslo-listed North Sea drilling contractor Awilco Drilling sank to a loss in the first quarter of the year amid lower revenues but the driller sees an improvement in the offshore drilling market.
WilPhoenix rig; Author: Ronnie Robertson – under the CC BY-SA 2.0 license
Awilco Drilling on Wednesday reported contract revenues of $9.1 million for the first quarter 2019, down from $34.1 million revenues in the same period of 2018.
Revenue efficiency was 85.6% during the quarter primarily due to high waiting on weather time at reduced rate.
Awilco recorded a net loss of $2.4 million in 1Q 2019 compared to a profit of $19.1 million in the prior-year first quarter.
In the first quarter 2019, Awilco Drilling had rig operating expenses of $6.3 million.
Contract utilization was 50% during the quarter and contract backlog at the end of the first quarter 2019 was approximately $20.2 million.
Two old rigs
Awilco owns and operates two 3rd generation mid-water semi-submersible drilling rigs, WilPhoenix and WilHunter.
During the first quarter of the year, WilPhoenix was in continued operations for Shell UK at the Kingfisher location while WilHunter was cold stacked in Invergordon where it has been for a while now.
Earlier in May, Shell exercised two options under the WilPhoenix decommissioning contract covering the abandonment of five further wells. Following Shell’s latest extension, the rig’s contract was extended to 24 firm wells with the firm duration now estimated to run to late 1Q 2020.
Two newbuilds
The company has also ordered two new build rigs of Moss CS60 ECO MW design equipped for drilling in harsh environments, including the Barents Sea. The first rig was ordered in March 2018 and the second one a year later, in March 2019. Both rigs will be built by Keppel FELS.
Awilco said on Wednesday that the construction of the first rig continues in accordance with the contract and scheduled delivery in March 2021. Steel-cutting for the rig number two will be done later this year and scheduled delivery is in March 2022.
Awilco also has remaining options to build up to two additional rigs of similar design, such options to be independent of each other.
According to Awilco, the offshore drilling market is improving.
The company stated: “The Norwegian market for modern high end semi-submersibles remains strong and we anticipate further fixture activity in this space tightening availability further as we look towards 2020 and beyond.”
“In the UK, the anticipated brisk level of inquiries and tenders for 2020 has materialized and as a result, we expect to see fixture activity flowing into Q3 2019.”
