Earnings Release • Feb 11, 2016
Earnings Release
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FOURTH QUARTER 2015 PRELIMINARY FULL YEAR 2015 RESULTS
Awilco Drilling PLC is a UK based offshore drilling company owning and operating two semi submersible drilling rigs. The Company is listed at the Oslo Stock Exchange (Oslo Axess) under the ticker code AWDR.
In USD million, except per day operating expenses and EPS
| USD million | Q4 2015 | Q3 2015 | 2015 | 2014 |
|---|---|---|---|---|
| Contract revenue | 19.1 | 90.4 | 247.0 | 276.1 |
| Operating expenses | 12.8 | 14.5 | 57.6 | 64.2 |
| EBITDA | 3.7 | 74.0 | 180.2 | 197.4 |
| Net (loss)/profit | (32.9) | 57.7 | 129.2 | 137.5 |
| EPS | (1.10) | 1.92 | 4.30 | 4.58 |
| Total assets | 454.4 | 507.1 | 454.4 | 458.1 |
| Total equity | 232.6 | 280.5 | 232.6 | 208.4 |
| Interest bearing debt | 110.0 | 115.0 | 110.0 | 120.0 |
| Gearing ratio | -12.2% | -15.0% | -12.2% | 17.5% |
| Per day operating expenses | 69,549 | 78,710 | 78,947 | 87,915 |
Awilco Drilling reports total comprehensive loss for the fourth quarter 2015 of USD 32.9 million.
Revenue earned in the fourth quarter was USD 19.1 million.
In the fourth quarter Awilco Drilling had rig operating expenses of USD 12.8 million. General and administration expenses were USD 2.6 million. This includes USD 0.1 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 fourth quarter was USD 3.7 million while the operating loss was USD 30.7 million.
In the fourth quarter Awilco Drilling incurred an impairment charge of USD 30 million, primarily due to the negative developments in both the UKCS and global drilling markets.
Interest expense amounted to USD 2.0 million, which relates to accrued interest on the secured bond.
Loss before tax was USD 32.9 million and with minimal tax impact the resulting net profit was also USD 32.9 million. Earnings per share (EPS) for the second quarter were USD (1.10).
As of 31 December 2015, total assets amounted to USD 454.4 million. At the same date, Awilco Drilling had USD 135.3 million in cash and cash equivalents.
Awilco Drilling reports total comprehensive income for 2015 of USD 99.3 million. Total full year revenues were USD 247.0 million. Rig operating expenses were USD 57.6 million and general and administration expenses were USD 8.6 million. EBITDA for the year was USD 180.2 million with an impairment charge of USD 30 million while the operating profit was USD 132.2 million. Profit before tax was USD 123.5 million. The tax charge for the year was USD 24.2 million. The resulting net profit was USD 99.3 million. Earnings per share (EPS) for the year were USD 3.31.
In Q4 2015 the WilPhoenix was in continued operations for Apache North Sea Ltd until 17 November when the rig proceeded to the Able Shipyard in Hartlepool to commence the five yearly renewal survey, where it remained through the end of the quarter. As of the date of this report, the SPS and capital work on the WilPhoenix is substantially complete. The rig is currently undergoing final project acceptance, which is delaying the rig's return to operations. The total cost of the yard stay project is expected to be less than the budget of USD 42.5 million.
Revenue efficiency for the quarter was 97.7%. Contract utilisation was 52.2% excluding 44 days of shipyard time.
At the end of December and as of the date of this report, WilPhoenix had a total remaining contract backlog of approximately USD 258 million.
In Q4 2015 the WilHunter remained hot 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 future market prospects.
At the end of Q4 2015, Awilco Drilling's Aberdeen based employees numbered 29 permanent personnel supported by 3 contractors. Awilco Drilling Pte. Ltd. offshore personnel numbered 203 permanent personnel. The Awilhelmsen Group continues to supply some support personnel via the management agreement.
The current low oil prices are likely to push new drilling programmes further out in time and few new requirements are emerging. This indicates that the fleet of available units is likely to increase in 2016/17.
We confirm that, to the best of our knowledge, the condensed set of financial statements for the fourth quarter of 2015, 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, 10 February, 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 | Full Year | Full Year | ||
|---|---|---|---|---|
| Q4 2015 | 2015 | Q4 2014 | 2014 | |
| (unaudited) | (unaudited) | (unaudited) | (audited) | |
| Contract revenue | 18,946 | 193,949 | 70,116 | 271,971 |
| Reimbursables | 181 | 1,711 | 699 | 3,969 |
| Other revenue | 15 | 51,385 | 55 | 198 |
| 19,142 | 247,045 | 70,870 | 276,138 | |
| Rig operating expenses | 12,797 | 57,632 | 15,687 | 64,178 |
| Reimbursables | 64 | 645 | 283 | 1,157 |
| General and administrative expenses | 2,597 | 8,578 | 2,134 | 15,706 |
| Other (income) | - | - | (2,485) | (2,485) |
| Other expense | - | - | 382 | 180 |
| Depreciation | 4,427 | 18,008 | 4,542 | 17,912 |
| Impairment | 30,000 | 30,000 | - | - |
| 49,885 | 114,863 | 20,543 | 96,648 | |
| Operating (loss)/profit | (30,743) | 132,182 | 50,326 | 179,490 |
| Interest income | 20 | 130 | 46 | 161 |
| Interest expense | (1,979) | (8,349) | (2,221) | (11,861) |
| Other financial items | (235) | (445) | - | |
| Net financial items | (2,194) | (8,664) | (2,175) | (11,700) |
| (Loss)/profit before tax | (32,937) | 123,518 | 48,151 | 167,790 |
| Tax benefit/(expense) | 26 | (24,171) | (9,215) | (30,306) |
| Net (loss)/profit | (32,911) | 99,347 | 38,935 | 137,484 |
| Total comprehensive (loss)/income | (32,911) | 99,347 | 38,935 | 137,484 |
| Attributable to shareholders of the parent | (32,911) | 99,347 | 38,935 | 137,484 |
| Basic and diluted earnings per share | (1.10) | 3.31 | 1.30 | 4.58 |
in USD thousands
| 31.12.2015 | 31.12.2014 | |
|---|---|---|
| (unaudited) | (audited) | |
| Rigs, machinery and equipment | 234,336 | 251,165 |
| Deferred tax asset | 903 | 2,486 |
| 235,239 | 253,651 | |
| Trade and other receivables | 7,352 | 12,116 |
| Prepayments and accrued revenue | 2,682 | 28,938 |
| Inventory | 5,015 | 4,800 |
| Cash and cash equivalents | 135,257 | 75,951 |
| Current tax | 68,899 | 82,594 |
| 219,205 | 204,399 | |
| Total assets | 454,444 | 458,050 |
| Paid in capital | 130,142 | 130,142 |
| Retained earnings | 102,479 | 78,211 |
| 232,621 | 208,353 | |
| Deferred tax liability | 7,517 | 0 |
| Long-term interest-bearing debt | 100,000 | 110,000 |
| 107,517 | 110,000 | |
| Current portion of long-term debt | 10,000 | 10,000 |
| Trade and other creditors | 5,990 | 3,233 |
| Accruals and provisions | 17,702 | 17,942 |
| Current tax payable | 80,614 | 108,522 |
| 114,306 | 139,697 | |
| Total equity and liabilities | 454,444 | 458,050 |
in USD thousands
| Other equity (retained |
||||
|---|---|---|---|---|
| Paid-in-equity | earnings) | Total equity | ||
| Equity at 1 January 2014 | 130,142 | 77,370 | 207,512 | |
| Total comprehensive profit to 31 December 2014 | - | 137,484 | 137,484 | |
| Dividends paid | (136,643) | (136,643) | ||
| Balance as at 31 December 2014 | 130,142 | 78,211 | 208,353 | |
| Total comprehensive profit to 31 December 2015 | - | 99,347 | 99,347 | |
| Dividends paid | - | (75,079) | (75,079) | |
| Balance as at 31 December 2015 | 130,142 | 102,479 | 232,621 | |
| 2015 2014 (unaudited) (audited) Cash flow from operating activities Profit before tax 123,518 167,790 Depreciation 18,008 17,912 Impairment 30,000 - Interest cost 8,219 11,695 Sharebased payment (844) (7,149) (Increase)/decrease in trade and other receivables 4,764 2,301 (Increase)/decrease in stock (215) - (Increase)/decrease in prepayments and accrued revenue 25,963 (6,375) Increase/(decrease) in trade and other payables 3,814 3,347 Interests paid (8,509) (11,929) Interests received 130 161 Taxation paid (29,283) (15,610) Net cash flow from operating activities 175,565 162,144 Cash flow from investing activities Purchase of property, plant and equipment (31,180) (23,797) Net cash flow from investing activities (31,180) (23,797) Cash flow from financing activities Dividends paid (75,079) (136,643) Issue of loans - 125,000 Repayment of loans (10,000) (103,098) Net cash flow from financing activities (85,079) (114,741) Net increase/(decrease) in cash and cash equivalents 59,306 23,604 Cash and cash equivalents at beginning of the period 75,951 52,347 Cash and cash equivalents at the end of the period 135,257 75,951 |
Condensed statement of cash flow for the period | Full Year | Full Year |
|---|---|---|---|
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, 2014. This interim report should be read in conjunction with the audited 2014 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 | |
| Opening balance 1 Jan 2015 | 329,321 | 1,872 | 331,194 |
| Additions | 31,154 | 26 | 31,180 |
| Closing balance | 360,475 | 1,898 | 362,373 |
| Opening balance 1 Jan 2015 | (78,994) | (1,035) | (80,029) |
| Depreciation | (17,827) | (180) | (18,008) |
| Impairment | (30,000) | - | (30,000) |
| Accumulated depreciation per ending balance | (126,821) | (1,215) | (128,037) |
| Net carrying amount at end of period | 233,654 | 683 | 234,336 |
| 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 has performed an impairment test which resulted in an impairment of USD 30 million. The impairment test was based on future industry conditions and operations, future expected utilisation, contract rates, opex and capital requirments of the rigs. A discount rate of 10.5% has been applied.
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 | (15,000) | |
| Total debt per end of accounting period | 110,000 | |
| Current portion of long term debt Long term debt per end of period |
10,000 100,000 |
|
| 110,000 |
in USD thousands except per share data
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 | (531) |
|---|---|
| Payables | (189) |
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 1.45 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 Q4 the rigs were operational and 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 4 were USD 15.1 million.
As of 31 December 2015 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.
| Shares | Par value per share |
Share capital |
Share premium reserve |
|
|---|---|---|---|---|
| Share capital per 31 December 2015 | 30,031,500 | £0.0065 | 304,173 | 129,837,405 |
| Basic/diluted average number of shares, | ||||
| 1 January - 31 December | 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 | 3,323,016 | 11.07% | ||
| EUROCLEAR BANK S.A./ | 1,888,652 | 6.29% | ||
| CITIBANK, N.A. | 1,394,724 | 4.64% | ||
| CITIBANK, N.A. | 1,169,839 | 3.90% | ||
| CITIGROUP GLOBAL MAR | 1,131,100 | 3.77% | ||
| JPMORGAN CHASE BANK | 1,045,260 | 3.48% | ||
| AVANZA BANK AB | 676,067 | 2.25% | ||
| MERRILL LYNCH,PIERCE | 635,561 | 2.12% | ||
| CLEARSTREAM BANKING | 418,183 | 1.39% | ||
| JPMORGAN CHASE BANK | 371,521 | 1.24% | ||
| NORDNET BANK AB | 362,435 | 1.21% | ||
| DEUTSCHE BANK AG | 293,185 | 0.98% | ||
| UBS SECURITIES LLC | 260,877 | 0.87% | ||
| PERSHING LLC | 201,966 | 0.67% | ||
| FIRST CLEARING A/C L | 172,417 | 0.57% | ||
| SIX SIS AG | 170,628 | 0.57% | ||
| GOLDMAN SACHS INTERN | 161,668 | 0.54% | ||
| JPMORGAN CHASE BANK | 152,809 | 0.51% | ||
| JP MORGAN CLEARING C | 136,056 | 0.45% | ||
| OTHER | 3,066,598 | 10.21% | ||
| 30,031,500 | 100.00% |
in USD thousands
| 31.12.2015 | |
|---|---|
| (unaudited) |
Fair value of foreign currency forward contracts \$443k
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 income in the Statement of Comprehensive Income and classified as accruals in the Statement of Financial Position.
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