Earnings Release • Nov 17, 2016
Earnings Release
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In USD million, except per day operating expenses and EPS
| USD million | Q3 2016 | Q2 2016 | Q1 2016 | Q4 2015 | 2015 |
|---|---|---|---|---|---|
| Contract revenue | 35.7 | 24.4 | 0.0 | 19.1 | 247.0 |
| Operating expenses | 8.1 | 9.8 | 11.6 | 12.8 | 57.6 |
| EBITDA | 25.3 | 12.2 | (13.4) | (26.3) | 150.2 |
| Net profit/(loss) | 17.9 | 6.9 | (18.7) | (21.3) | 111.0 |
| EPS | 0.59 | 0.23 | (0.62) | (0.71) | 3.70 |
| Total assets | 381.2 | 363.2 | 426.2 | 455.5 | 426.2 |
| Total equity | 236.9 | 222.0 | 218.1 | 244.3 | 218.1 |
| Interest bearing debt | 105.0 | 105.0 | 110.0 | 110.0 | 110.0 |
| Gearing ratio | 15.8% | 23.2% | 3.9% | -11.5% | 3.9% |
At the end of Q3 2016, the WilPhoenix was in continued operations for Apache North Sea Ltd at the Storr location and the WilHunter remained stacked in Invergordon.
Awilco Drilling reports total comprehensive profit for the third quarter 2016 of USD 17.9 million.
Revenue earned in the third quarter was USD 35.7 million.
In the third quarter Awilco Drilling had rig operating expenses of USD 8.1 million. General and administration expenses were USD 2.1 million. This includes USD 0.3 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 third quarter was USD 25.3 million while the operating profit was USD 21.8 million.
Interest expense amounted to USD 1.9 million, which relates to accrued interest on the secured bond.
Profit before tax was USD 19.3 million. The tax charge for the quarter was USD 1.4 million resulting in a net profit of USD 17.9 million. Earnings per share (EPS) for the third quarter were USD 0.59.
As of 30 September 2016, total assets amounted to USD 381.2 million. At the same date, Awilco Drilling had USD 60.7 million in cash and cash equivalents.
In Q3 2016 the WilPhoenix continued operations for Apache North Sea Ltd. at the Storr location.
Revenue efficiency for the quarter was 99.1%. Contract utilisation was 100%.
At the end of September, WilPhoenix had a total remaining contract backlog of approximately USD 195 million.
The standby revenue billing of USD 22.8 million booked in Q2 in respect of the period that Awilco Drilling was awaiting client instructions remains unresolved. Awilco Drilling and Apache North Sea Ltd. are in discussions to resolve this matter.
In Q3 2016 the WilHunter remained warm stacked in Invergordon and commenced cold stacking preparations late in the quarter.
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.
At the end of Q3 2016, Awilco Drilling's Aberdeen based employees numbered 28 permanent personnel supported by 2 contractors. Awilco Drilling Pte. Ltd. offshore personnel numbered 125 permanent personnel. The Awilhelmsen Group continues to supply some support personnel via the management agreement.
While Q3 2016 saw an upturn in semi-submersibles departing the northwest European market for scrapping, the continued oversupply has resulted in day rates at close to break-even levels. Higher levels of seasonal utilisation are materialising as fixtures in the market are announced. Decommissioning demand is crystalising but commencement windows are moving towards the spring of 2018.
We confirm that, to the best of our knowledge, the condensed set of financial statements for the third quarter of 2016, 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, 16 November, 2016
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 30 031 500.
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 | YTD | YTD | ||
|---|---|---|---|---|
| Q3 2016 | 30.09.16 | Q3 2015 | 30.09.15 | |
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
| Contract revenue | 35,324 | 59,759 | 38,797 | 175,002 |
| Reimbursables | 356 | 406 | 316 | 1,530 |
| Other revenue | - | 10 | 51,308 | 51,370 |
| 35,680 | 60,175 | 90,421 | 227,902 | |
| Rig operating expenses | 8,131 | 29,435 | 14,483 | 44,835 |
| Reimbursables | 113 | 113 | 107 | 581 |
| General and administrative expenses | 2,149 | 6,529 | 1,817 | 5,981 |
| Depreciation | 3,485 | 11,850 | 4,535 | 13,581 |
| 13,878 | 47,927 | 20,942 | 64,978 | |
| Operating profit/(loss) | 21,802 | 12,248 | 69,479 | 162,924 |
| Interest income | 143 | 610 | 19 | 110 |
| Interest expense | (1,947) | (5,853) | (2,126) | (6,370) |
| Other financial items | (654) | (1,354) | (152) | (210) |
| Net financial items | (2,458) | (6,597) | (2,259) | (6,470) |
| Profit/(loss) before tax | 19,344 | 5,651 | 67,220 | 156,454 |
| Tax benefit/(expense) | (1,481) | 459 | (546) | (24,197) |
| Net profit/(loss) | 17,863 | 6,110 | 57,674 | 132,257 |
| Total comprehensive income/(loss) | 17,863 | 6,110 | 57,674 | 132,257 |
| Attributable to shareholders of the parent | 17,863 | 6,110 | 57,674 | 132,257 |
| Basic and diluted earnings per share | 0.59 | 0.20 | 1.92 | 4.40 |
in USD thousands
| 30.09.2016 | 31.12.2015 | |
|---|---|---|
| (unaudited) | (audited) | |
| Rigs, machinery and equipment | 242,846 | 234,336 |
| Deferred tax asset | 2,578 | 2,002 |
| 245,424 | 236,338 | |
| Trade and other receivables | 11,943 | 7,352 |
| Prepayments and accrued revenue | 36,225 | 2,682 |
| Inventory | 4,865 | 5,015 |
| Cash and cash equivalents | 60,672 | 135,257 |
| Current tax | 22,079 | 68,899 |
| 135,784 | 219,205 | |
| Total assets | 381,208 | 455,543 |
| Paid in capital | 130,142 | 130,142 |
| Retained earnings | 106,731 | 114,135 |
| 236,873 | 244,277 | |
| Deferred tax liability | 0 | 0 |
| Long-term interest-bearing debt | 95,000 | 100,000 |
| 95,000 | 100,000 | |
| Current portion of long-term debt | 10,000 | 10,000 |
| Trade and other creditors | 1,811 | 5,990 |
| Accruals and provisions | 12,665 | 17,702 |
| Current tax payable | 24,859 | 77,574 |
| 49,335 | 111,266 | |
| Total equity and liabilities | 381,208 | 455,543 |
in USD thousands
| Other equity (retained |
|||
|---|---|---|---|
| Paid-in-equity | earnings) | Total equity | |
| Equity at 1 January 2015 | 130,142 | 78,211 | 208,353 |
| Total comprehensive profit to 31 December 2015 | - | 111,003 | 111,003 |
| Dividends paid | (75,079) | (75,079) | |
| Balance as at 31 December 2015 | 130,142 | 114,135 | 244,277 |
| Total comprehensive loss to 30 September 2016 | - | 6,110 | 6,110 |
| Dividends paid | - | (13,514) | (13,514) |
| Balance as at 30 September 2016 | 130,142 | 106,731 | 236,873 |
| Condensed statement of cash flow for the period | YTD | YTD |
|---|---|---|
| Q3 2016 | Q3 2015 | |
| (unaudited) | (unaudited) | |
| Cash flow from operating activities | ||
| Profit before tax | 5,651 | 156,454 |
| Depreciation | 11,850 | 13,581 |
| Interest cost | 5,243 | 6,260 |
| Sharebased payment | (692) | (906) |
| (Increase)/decrease in trade and other receivables | (4,590) | (6,287) |
| (Increase)/decrease in stock | 150 | (114) |
| (Increase)/decrease in prepayments and accrued revenue | (33,544) | 21,104 |
| Increase/(decrease) in trade and other payables | (10,322) | 1,825 |
| Interests paid | (4,055) | (6,515) |
| Interests received | 610 | 110 |
| Taxation paid | (6,012) | (27,465) |
| Net cash flow from operating activities | (35,711) | 158,047 |
| Cash flow from investing activities | ||
| Purchase of property, plant and equipment | (20,360) | (17,386) |
| Net cash flow from investing activities | (20,360) | (17,386) |
| Cash flow from financing activities | ||
| Dividends paid | (13,514) | (60,063) |
| Repayment of loans | (5,000) | (5,000) |
| Net cash flow from financing activities | (18,514) | (65,063) |
| Net increase/(decrease) in cash and cash equivalents | (74,585) | 75,598 |
| Cash and cash equivalents at beginning of the period | 135,257 | 75,951 |
| Cash and cash equivalents at the end of the period | 60,672 | 151,549 |
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, 2015. This interim report should be read in conjunction with the audited 2015 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 2016 | 360,475 | 1,898 | 362,373 |
| Additions | 20,360 | - | 20,360 |
| Closing balance | 380,835 | 1,898 | 382,733 |
| Depreciation | |||
| Opening balance 1 Jan 2016 | (126,821) | (1,216) | (128,037) |
| Depreciation charge | (11,785) | (65) | (11,850) |
| Accumulated depreciation per ending balance | (138,606) | (1,281) | (139,887) |
| Net carrying amount at end of period | 242,229 | 617 | 242,846 |
| 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
| Total | ||
|---|---|---|
| Secured Bond | 125,000 | |
| Repayment of debt | (20,000) | |
| Total debt per end of accounting period | 105,000 | |
| Current portion of long term debt | 10,000 | |
| Long term debt per end of period | 95,000 | |
| 105,000 |
In the normal course of its business, Awilco Drilling enters into a number of transactions with Awilhelmsen which is a major shareholder through its wholly owned subsidiary Awilco Drilling AS.
Transactions with Awilhelmsen are specified as follows:
Purchases (319) Payables (41)
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 1.7 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 Q3 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 3 were USD 4.4 million.
As of 30 September 2016 total outstanding shares in the Company was 30,031,500 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.
| Par value | Share | Share premium | ||
|---|---|---|---|---|
| Shares | per share | capital | reserve | |
| Share capital per 30 September 2016 | 30,031,500 | £0.0065 | 304,173 | 129,837,405 |
| Basic/diluted average number of shares, | ||||
| 1 January - 30 September | 30,031,500 | |||
| Basic/diluted average number of shares, YTD | 30,031,500 | |||
| Ranking | Shares | Ownership | ||
| AWILHELMSEN OFFSHORE | 12,998,938 | 43.28% | ||
| UBS SECURITIES LLC | 4,490,445 | 14.95% | ||
| EUROCLEAR BANK N.V. | 2,033,062 | 6.77% | ||
| CITIBANK, N.A. | 1,651,942 | 5.50% | ||
| CITIBANK, N.A. | 1,138,819 | 3.79% | ||
| CITIGROUP GLOBAL MAR | 1,129,000 | 3.76% | ||
| BANK OF AMERICA N.A. | 902,206 | 3.00% | ||
| AVANZA BANK AB | 633,660 | 2.11% | ||
| MERRILL LYNCH,PIERCE | 598,691 | 1.99% | ||
| CLEARSTREAM BANKING | 488,534 | 1.63% | ||
| NORDNET BANK AB | 339,967 | 1.13% | ||
| BNP PARIBAS, NEW YOR | 335,348 | 1.12% | ||
| JP MORGAN CLEARING C | 204,067 | 0.68% | ||
| UBS SWITZERLAND AG | 176,551 | 0.59% | ||
| FIRST CLEARING LLC | 147,190 | 0.49% | ||
| JPMORGAN CHASE BANK, | 144,236 | 0.48% | ||
| INTERACTIVE BROKERS | 131,982 | 0.44% | ||
| PERSHING LLC | 128,084 | 0.43% | ||
| CITIBANK, N.A. | 127,301 | 0.42% | ||
| DZ PRIVATBANK S.A. | 109,448 | 0.36% | ||
| OTHER | 2,122,029 | 7.07% | ||
| 30,031,500 | 100.00% |
in USD thousands
30.09.2016 (unaudited)
Fair value of foreign currency forward contracts \$(618)k
The foreign currency forward contracts were entered into in order to minimise the Group's exposure to losses resulting from adverse fluctuations in foreign currency exchange rates on monthly operating expenses. The fair value of the forward exchange contracts, as shown above, is recorded as other financial items in the Statement of Comprehensive Income and classified as accruals in the Statement of Financial Position.
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