Earnings Release • May 9, 2018
Earnings Release
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In USD million, except EPS
| USD million | Q1 2018 | Q4 2017 | Q3 2017 | 2017 |
|---|---|---|---|---|
| Contract revenue | 34.1 | 33.9 | 32.4 | 131.7 |
| Operating expenses | 7.2 | 7.2 | 8.1 | 27.8 |
| EBITDA | 24.0 | 24.5 | 20.9 | 94.8 |
| Net profit/(loss) | 19.1 | (16.9) | 14.2 | 28.2 |
| EPS | 0.62 | (0.56) | 0.47 | 0.94 |
| Total assets | 409.6 | 331.9 | 368.8 | 331.9 |
| Total equity | 308.2 | 231.2 | 254.1 | 231.2 |
| Interest bearing debt | 90.0 | 90.0 | 95.0 | 90.0 |
| Gearing ratio | -0.8% | -14.5% | -8.9% | -14.5% |
At the end of Q1 2018, the WilPhoenix was in operations for Apache North Sea Ltd at the Garten location and the WilHunter was cold stacked in Invergordon.
Awilco Drilling reports total comprehensive profit for the first quarter 2018 of USD 19.1 million.
Revenue earned in the first quarter was USD 34.1 million.
In the first quarter Awilco Drilling had rig operating expenses of USD 7.2 million. General and administration expenses were USD 2.8 million. This includes USD 0.6 million in respect of the stock award of synthetic stock options. The stock award provision is restated each quarter based on the valuation of the Company's shares.
EBITDA for the first quarter was USD 24.0 million while the operating profit was USD 20.6 million.
Interest expense amounted to USD 1.6 million, which relates to accrued interest on the secured bond.
Profit before tax was USD 19.8 million. The tax expense for the quarter was USD 0.7 million resulting in a net profit of USD 19.1 million. Earnings per share (EPS) for the first quarter were USD 0.62.
In late March 2018, a private placement of 17,600,000 shares was carried out. After the issue, the total share capital of Awilco Drilling is GBP 309,604.75 divided into 47,631,500 shares, up from GBP 195,204.75 divided into 30,031,500 shares as at the end of 2017.
In addition, a subsequent offering of up to 1,400,000 shares will be carried out once a prospectus is approved by the Norwegian Financial Supervisory Authority, expected to be around late May 2018. The purpose of the share issue was to fund the deposit on the new build rig.
As of 31 March 2018, total assets amounted to USD 409.6 million. At the same date, Awilco Drilling had USD 92.5 million in cash and cash equivalents.
In Q1 2018 the WilPhoenix was in continued operations for Apache North Sea Ltd at the Val D'Isere location before moving to the Garten location where it remained through the end of the quarter. On 5 April 2018 the rig moved to the N11A abandonment well and finished operations with the Apache contract on 25 April 2018.
Revenue efficiency for the quarter was 98.0%. Contract utilisation was 100%.
At the end of March, WilPhoenix had a total remaining contract backlog of approximately USD 7.6 million.
During Q1 2018 the WilHunter was cold stacked in Invergordon.
The Company's intention is to pay a quarterly dividend in support of its main objective to maximise returns to shareholders. All of the Company's free cash flow is intended to be distributed subject to maintaining a robust cash buffer to support working capital requirements, planned capital expenditure and uncertain future market prospects. In view of the Company's new building programme, the Board intends to review the future dividend policy.
At the end of Q1 2018, Awilco Drilling's Aberdeen based employees numbered 26 permanent personnel supported by 2 contractors. Awilco Drilling Pte. Ltd. offshore personnel numbered 116 permanent personnel. The Awilhelmsen Group continues to supply some support personnel via the management agreement.
AWDR sees limited further opportunities in the UK in 2018 but enquiries suggest that demand in 2019 will be incrementally higher than this year. Lower levels of winter utilisation are however likely to persist into 2020. Attrition in the harsh environment mid-water space continues and this coupled with stable commodity pricing and forecast decommissioning demand is expected to underpin higher future levels of utilization. In the NCS Ultra Harsh Environment space, fixture activity, rate development and asset transaction values are supportive of AWDR's long term view of this market.
We confirm that, to the best of our knowledge, the condensed set of financial statements for the first quarter of 2018, which has been prepared in accordance with IAS 34 Interim Financial Statements, gives a true and fair view of the Company's consolidated assets, liabilities, financial position and results of operations, and that the interim management report includes a fair review of the information required under the Norwegian Securities Trading Act section 5-6 fourth paragraph.
Aberdeen, 8 May, 2018
The Board of Directors of Awilco Drilling PLC
CEO: Jon Oliver Bryce Mobile: +44 1224 737900 E-mail: [email protected]
Investor Relations: Cathrine Haavind Mobile: +47 93 42 84 64 E-mail: [email protected]
Awilco Drilling was incorporated in December 2009. Awilco Drilling owns two semi submersible drilling rigs; WilPhoenix built in 1982 and upgraded in 2011 and WilHunter built in 1983 and upgraded in 1999 and 2011.
Awilco Drilling was listed on the Oslo Stock Exchange (Oslo Axess) in June 2011 under ticker code AWDR. Awilco Drilling's headquarters are located in Aberdeen, UK.
The total number of outstanding shares of Awilco Drilling at the date of this report is 47 631 500.
This Operating and Financial Review contains certain forward-looking statements that involve risks and uncertainties. Forward-looking statements are sometimes, but not always, identified by such phrases as "will", "expects", "is expected to", "should", "may", "is likely to", "intends" and "believes". These forward-looking statements reflect current views with respect to future events and are, by their nature, subject to significant risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. These statements are based on various assumptions, many of which are based, in turn, upon further assumptions, including Awilco Drilling's examination of historical operating trends. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including the competitive nature of the offshore drilling industry, oil and gas prices, technological developments, government regulations, changes in economical conditions or political events, inability of the Company to obtain financing on favourable terms, changes of the spending plan of our customers, changes in the Company's operating expenses including crew wages, insurance, dry-docking, repairs and maintenance, failure of shipyards to comply with delivery schedules on a timely basis and other important factors mentioned from time to time in our report.
in USD thousands, except earnings per share
| Q1 2018 | Q1 2017 | |
|---|---|---|
| (unaudited) | (unaudited) | |
| Contract revenue | 33,759 | 31,647 |
| Reimbursables | 343 | 296 |
| Other revenue | 1 | 6 |
| 34,103 | 31,949 | |
| Rig operating expenses | 7,223 | 6,122 |
| Reimbursables | 141 | 42 |
| General and administrative expenses | 2,782 | 1,013 |
| Depreciation | 3,402 | 3,848 |
| 13,548 | 11,025 | |
| Operating profit | 20,555 | 20,924 |
| Interest income | 550 | 32 |
| Interest expense | (1,642) | (1,817) |
| Other financial items | 358 | 185 |
| Net financial items | (734) | (1,600) |
| Profit before tax | 19,821 | 19,324 |
| Tax expense | (706) | (3,523) |
| Net profit | 19,115 | 15,801 |
| Total comprehensive income | 19,115 | 15,801 |
| Attributable to shareholders of the parent | 19,115 | 15,801 |
| Basic and diluted earnings per share | 0.62 | 0.53 |
in USD thousands
| 31.03.2018 | 31.12.2017 | |
|---|---|---|
| (unaudited) | (audited) | |
| Rigs, machinery and equipment | 217,935 | 178,808 |
| Deferred tax asset | 1,483 | 1,372 |
| 219,418 | 180,180 | |
| Trade and other receivables | 73,837 | 17,168 |
| Prepayments and accrued revenue | 13,173 | 6,905 |
| Inventory | 4,809 | 4,809 |
| Cash and cash equivalents | 92,472 | 119,286 |
| Current tax | 5,903 | 3,551 |
| 190,194 | 151,719 | |
| Total assets | 409,612 | 331,899 |
| Paid in capital | 194,060 | 130,142 |
| Retained earnings | 114,177 | 101,068 |
| 308,237 | 231,210 | |
| Long-term interest-bearing debt | 80,000 | 80,000 |
| 80,000 | 80,000 | |
| Current portion of long-term debt | 10,000 | 10,000 |
| Trade and other creditors | 926 | 1,170 |
| Accruals and provisions | 10,449 | 9,519 |
| 21,375 | 20,689 | |
| Total equity and liabilities | 409,612 | 331,899 |
These unaudited interim condensed financial statements have been prepared in accordance with IAS 34 "Interim financial reporting".
The accounting policies used in the preparation of the interim financial statements are consistent with those used in the annual audited financial statements for the year ended December 31, 2016. This interim report should be read in conjunction with the audited 2016 financial statements, which include a full description of the Group's significant accounting policies.
in USD thousands, except per share data
| Semi submersible Other fixtures and |
|||
|---|---|---|---|
| drilling rigs/SPS | equipment | Total | |
| Cost | |||
| Opening balance 1 Jan 2018 | 381,213 | 1,898 | 383,111 |
| Additions | 42,529 | - | 42,529 |
| Closing balance | 423,742 | 1,898 | 425,640 |
| Depreciation | |||
| Opening balance 1 Jan 2018 | (202,939) | (1,364) | (204,303) |
| Depreciation charge | (3,386) | (17) | (3,403) |
| Accumulated depreciation per ending balance | (206,325) | (1,381) | (207,706) |
| Net carrying amount at end of period | 217,417 | 517 | 217,934 |
| Expected useful life | 5-20 years | 3-10 years | |
| Depreciation rates | 5% - 20% | 10% - 33% | |
| Depreciation method | Straight line | Straight line |
Residual value per rig is USD 15 million.
The Company completed a USD 125 million secured bond in the Norwegian bond market in April 2014. The bond was issued with an interest rate of 7% with maturity in April 2019. Repayment terms are USD 5 million six monthly and commenced in October 2014
YTD Q1 2018
| Total | ||
|---|---|---|
| Secured Bond | 125,000 | |
| Repayment of debt | (35,000) | |
| Total debt per end of accounting period | 90,000 | |
| Current portion of long term debt | 10,000 | |
| Long term debt per end of period | 80,000 | |
| 90,000 | ||
in USD thousands except per share data
Transactions with Awilhelmsen are specified as follows:
| Purchases | (351) |
|---|---|
| Payables | (370) |
The company owns the semi submersible rigs WilHunter and WilPhoenix. Currently, the company is only operating in the mid water segment in the UK sector of the North Sea. The potential market for the rigs will be the international drilling market. As the rigs are managed as one business segment, the Company has only one reportable segment.
The company has restricted cash of USD 1.0 million which has been deposited in relation to the forward hedge agreements.
Corporation tax provision is based on the tax laws and rates in the countries the rigs are operated and where the rigs are owned. During Q1 the average tax rates have been applied consistent with the prevailing average tax rate for the year.
Outstanding Capital Commitments as at the end of Quarter 1 were USD 1.8 million.
As of 31 March 2018 total outstanding shares in the Company was 47,631,500 with a nominal value per share of GBP 0.0065. The share capital and share premium reserve below are expressed in USD at the exchange rate at time of conversion from USD to GBP. The total project cost for the WilPhoenix reactivation project is USD 70M. Awilco Drilling Limited and the wholly owned subsidiaries, Awilco Arctic II Ltd and Awilco Arctic IV Ltd, were incorporated late
| Par value | Share | Share premium | ||
|---|---|---|---|---|
| Shares | per share | capital | reserve | |
| Share capital per 31 March 2018 | 47,631,500 | £0.0065 | 464,588 | 193,595,465 |
| Basic/diluted average number of shares, | ||||
| 1 January - 31 March | 30,813,722 | |||
| Basic/diluted average number of shares, YTD | 30,813,722 | |||
| Ranking | Shares | Ownership | ||
| AWILHELMSEN OFFSHORE | 17,919,938 | 37.62% | ||
| UBS SECURITIES LLC | 4,799,747 | 10.08% | ||
| AKASTOR AS | 2,700,000 | 5.67% | ||
| UBS SECURITIES LLC | 2,205,455 | 4.63% | ||
| CITIBANK, N.A. | 1,896,416 | 3.98% | ||
| EUROCLEAR BANK S.A./ | 1,721,619 | 3.61% | ||
| DEUTSCHE BANK AKTIEN | 1,265,000 | 2.66% | ||
| CITIGROUP GLOBAL MAR | 1,129,000 | 2.37% | ||
| VERDIPAPIRFONDET DNB | 1,113,917 | 2.34% | ||
| SEB PRIME SOLUTIONS | 1,000,000 | 2.10% | ||
| BANK OF AMERICA, N.A | 983,158 | 2.06% | ||
| STRAWBERRY CAPITAL A | 825,000 | 1.73% | ||
| CITIBANK, N.A. | 727,064 | 1.53% | ||
| AVANZA BANK AB | 654,290 | 1.37% | ||
| CLEARSTREAM BANKING | 586,025 | 1.23% | ||
| KLP ALFA GLOBAL ENER | 520,000 | 1.09% | ||
| FIRST GENERATOR | 466,270 | 0.98% | ||
| SUNDT AS | 375,000 | 0.79% | ||
| MSIP EQUITY | 358,940 | 0.75% | ||
| TVENGE TORSTEIN INGV | 350,000 | 0.73% | ||
| OTHER | 6,034,661 | 12.67% | ||
| 47,631,500 | 100.00% |
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