NORTH ATLANTIC DRILLING - US LISTING North Atlantic Drilling achieved fourth quarter economic utilization of 98 percent
North Atlantic Drilling generated fourth quarter 2015 EBITDA* of $76.6 million
North Atlantic Drilling reports fourth quarter 2015 net loss of $112.9 million and a net loss attributable to shareholders of $116.9 million. The loss per share was $4.85. Excluding the loss on disposal recognized on reclassification of the West Rigel to an asset held for sale, the fourth quarter 2015 net loss was $30.9 million
North Atlantic Drilling signed an amendment with Jurong Shipyard for the delivery of the semi-submersible drilling unit, the West Rigel. The deferral period lasts until June 2016, during which time the Company will continue to market the unit for an acceptable drilling contract, and the unit will remain at the Jurong Shipyard in Singapore. The Company and Jurong may also consider other commercial opportunities for the Unit during this period. The unit has been classified as an asset held for sale, and consequently a non-cash loss on disposal of $82.0 million has been recognized.
* EBITDA is defined as 'Earnings Before Interest, Tax, Depreciation and Amortization' and has been calculated by taking operating loss plus depreciation, loss on disposal and impairment charges.
Fourth quarter 2015 results
Consolidated revenues for the fourth quarter 2015 were $150.4 million compared to $194.6 million for the third quarter. The primary reasons for the decrease are the contract completions of the West Venture and the West Phoenix entering its idle period under contract through the winter season.
Operating loss for the fourth quarter was $61.1 million, a decrease of $118.3 million compared to the third quarter operating income of $57.2 million. The decrease is primarily due to the non-cash loss on disposal of $82.0 million relating to the West Rigel, which as been reclassified as an asset held for sale. Operating loss is also due to the West Phoenix and West Venture as stated above.
Net financial items for the fourth quarter of 2015 amounted to a charge of $17.7 million. The charge included
$23.9 million in interest expenses, gain on financial derivatives of $0.7 million, and foreign exchange gain of $8.6 million mainly related to the NOK1,500 million bond loan. The third quarter of 2015 incurred a net financial charge of $47.9 million, including interest expenses of $24.1 million, loss on financial derivatives of $32.6 million, and gain on foreign exchange of $8.7 million mainly related to the NOK1,500 million bond loan.
Income taxes for the fourth quarter was a $34.1 million expense, compared to a $7.9 million expense in the third quarter primarily due to additional deferred tax liability recorded on unremitted earnings.
Net loss for the fourth quarter was $112.9 million and the net loss attributable to shareholders was $116.9 million, resulting in a basic loss per share of $4.85. This is compared to net income of $1.4 million and a net loss attributable to shareholders of $2.6 million for the third quarter.
The Company reports operating revenues of $747.7 million, operating income of $97.5 million and a net loss of
$78.6 million for the twelve months ended December 31, 2015. This compares to operating revenues of $1,263.7 million, operating loss of $116.4 million and a net loss of $320.5 million for the twelve months ended December 31, 2014.
Balance sheet as at December 31, 2015
As at December 31, 2015, total assets decreased to $3,255.1 million from $3,440.6 million compared to the previous quarter.
Total non-current assets decreased to $2,968.6 million from $3,104.0 million compared to the previous quarter. The decrease was mainly due to depreciation on drilling units, and also the loss on disposal on the West Rigel asset held for sale.
Total current liabilities decreased to $494.6 million from $514.1 million compared to the previous quarter. The decrease is largely due to the decrease in related party payables.
Long-term interest bearing debt, including related party debt, decreased to $2,224.5 million from $2,282.9 million during the quarter. Net interest bearing debt decreased to $2,277.5 million from $2,333.1 million. During the fourth quarter the Company repaid net $42 million on the $2 billion credit facility and repaid net $12 million on the $475 million credit facility. As at December 31, 2015, the Company had undrawn amounts of $50 million available on its credit facilities.
Total equity decreased to $418.7 million from $519.7 million compared to the previous quarter. The decrease is primarily due to the net loss for the quarter.
Cash flow
As at December 31, 2015, cash and cash equivalents decreased to $150.9 million from $155.4 million compared to the previous quarter.
For the twelve-month period ending December 31, 2015, net cash provided by operating activities was $339.9 million, net cash used in investing activities amounted to $39.0 million, and net cash used in financing activities was $264.1 million.
Outstanding shares, reverse stock split and capital reduction
In December 2015 the shareholders in a special general meeting approved a capital reorganization, including a 1-for-10 reverse stock split of the Company's issued and outstanding common shares and reducing the par value from $5.00 to $0.10. In addition the total authorized share capital was reduced from $2,000 million to $10 million.
As a result of the capital restructuring the number of shares outstanding has fallen from 241,142,651 to 24,114,232. The Company held 237,386 treasury shares as at December 31, 2015.
The Company has received notification from the New York Stock Exchange ("NYSE") on February 1, 2016, that the Company is now in compliance with the continued listing criterion of share price of at least $1.00 per share over a consecutive 30 trading-day period.
OperationsDuring the fourth quarter, North Atlantic Drilling had four offshore drilling rigs in operation offshore Norway, one rig idle in the UK sector of the North Sea, and two idle rigs in Norway: the West Navigator and the West Venture. The West Phoenix is currently idle in the UK, but being paid a portion of the total contract revenue until it resumes its operations with Total E&P UK Limited, commencing mid-March 2016. Economic utilization* for the fourth quarter was 98 percent, compared to 95 percent in the third quarter.
* Economic utilization is calculated as total revenue, excluding bonuses, for the period as a proportion of the full operating dayrate multiplied by the number of days in the period for the rigs that are on contract.
The West Phoenix completed drilling activities in October 2015 and entered an idle phase through the winter season under the contract extension with Total E&P UK Limited. The unit will be reactivated to recommence drilling activities in mid-March 2016 through the end of August 2016.
Currently, the Company's revenue backlog is $0.7 billion. Average remaining contract length is approximately 14 months excluding clients' options for extensions.
North Atlantic Drilling reached a deferral agreement effective until June 2016 with Jurong Shipyard for the delivery of the sixth generation harsh environment semi-submersible drilling rig, the West Rigel. During the standstill period until June 2016, NADL will continue to market the Unit for an acceptable drilling contract and the Unit will remain at the Jurong Shipyard in Singapore. Jurong and NADL can also consider other commercial opportunities for the Unit during this period.
In the event no employment is secured and no alternative transaction is completed when the standstill period concludes, NADL and Jurong have agreed to form a Joint Asset Holding Company for joint ownership of the Unit to be owned 23% by NADL and 77% by Jurong. NADL will continue to market the Unit for the Joint Asset Holding Company. Based on current market conditions, management deems the most probable outcome to be that the Unit will be contributed to the Joint Asset Holding Company.
As a result the West Rigel has been removed from our newbuildings with no future capex and is now classified as an asset held for sale.
During the fourth quarter, Brent oil prices remained in the low $40-$50 per barrel range and the market for oilfield service companies continues to be very challenging. The beginning of 2016 has brought little relief to this downward price trajectory, and oil prices extended their decline ultimately settling into the low-30's today. The oil market remains oversupplied, while the demand side has limited visibility due to concerns in global economic growth. The overall result of this backdrop has become a consensus view that oil prices will be lower for even longer and the challenging drilling market will continue into the next couple years.
The Harsh Environment drilling market continues to be oversupplied as contracts ends, resulting in numerous drilling rigs chasing the opportunities that are available. Oil companies continue to reduce capital expenditure budgets, following two consecutive years of decline. These conservative budgets have a focus on short cycle projects, while large scale drilling projects continue to be delayed. In the last month, we have however, seen an increased interest from oil companies for combined drilling and production activities and plug and abandonment of wells to decommission fields.
Overall marketed utilization in Norway and the UK is at approximately 70%, and it is likely that this will trend downwards for the remainder of the year. We continue to expect further scrapping of units as the significant investment to maintain the classing outweighs potential returns in the current market. The North Atlantic Drilling's jackups and semi submersibles are well positioned in this regard, as limited class work is required over the next several years.
The Company's longer term outlook remains that a rebalancing in the markets will occur in the next couple years, but timing and the extent of a potential recovery remains uncertain. The Company continues its focus on best in
class safety and operating performance, realizing benefits from our costs savings programs and active marketing efforts.
The Company is evaluating refinancing alternatives in light of industry and capital market conditions, and aim to communicate refinancing plans during the first half of this year.
Technical utilization for the first quarter to date was 98%.
This report 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. 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, contract backlog, dry-docking and other costs of maintenance of the drilling rigs in the Company's fleet, the cost and timing of shipyard and other capital projects, the performance of the drilling rigs in the Company's fleet, delay in payment or disputes with customers, fluctuations in the international price of oil, international financial market conditions including the international financial crisis, 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, including its Registration Statement on Form 20-F.
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 factors 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.
February 25, 2016 The Board of Directors
North Atlantic Drilling Ltd. Hamilton, Bermuda
Questions should be directed to North Atlantic Management AS represented by: Scott McReaken: Chief Financial Officer
North Atlantic Drilling Ltd. issued this content on 25 February 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 25 February 2016 13:49:31 UTC
Original Document: http://www.nadlcorp.com/stream_file.asp?iEntityId=1447
