Earnings Release • Aug 15, 2018
Earnings Release
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In USD million, except EPS
| USD million | Q2 2018 | Q1 2018 | Q4 2017 | 2017 |
|---|---|---|---|---|
| Contract revenue | 9.0 | 34.1 | 33.9 | 131.7 |
| Operating expenses | 7.4 | 7.2 | 7.2 | 27.8 |
| EBITDA | (1.9) | 24.0 | 24.5 | 94.8 |
| Net (loss)/profit | (7.6) | 19.1 | (16.9) | 28.2 |
| EPS | (0.16) | 0.62 | (0.56) | 0.94 |
| Total assets | 304.4 | 409.6 | 331.9 | 331.9 |
| Total equity | 295.8 | 308.2 | 231.2 | 231.2 |
| Interest bearing debt | - | 90.0 | 90.0 | 90.0 |
| Gearing ratio | - | -0.8% | -14.5% | -14.5% |
Awilco Drilling reports total comprehensive loss for the second quarter 2018 of USD 7.6 million.
Revenue earned in the second quarter was USD 9.0 million.
In the second quarter Awilco Drilling had rig operating expenses of USD 7.4 million. General and administration expenses were USD 3.4 million. This includes USD 1.0 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 second quarter was a loss of USD 1.9 million while the operating loss was USD 5.1 million.
Interest expense amounted to USD 3.0 million, which relates to the final interest payment and call option expense on repayment of the secured bond.
Loss before tax was USD 7.6 million. The tax expense for the quarter was less than USD 0.1 million resulting in a net loss of USD 7.6 million. Earnings per share (EPS) for the second quarter were USD (0.16).
During May, Awilco Drilling exercised the call option of the secured bond at the rate of 101.5% of par value, with the settlement date being 28 June 2018 for final payment of USD 86.3 million plus interest.
As of 30 June 2018, total assets amounted to USD 304.4 million. At the same date, Awilco Drilling had USD 75.8 million in cash and cash equivalents.
On the 22 June, as a result of the subsequent offering a further 1,400,000 shares were issued with a subscription price of NOK 27.35 per share, raising approximately USD 4.7 million in gross proceeds
In Q2 2018 the WilPhoenix was hot stacked in Invergordon after completing the contract for Apache North Sea Ltd.
Revenue efficiency for the quarter was 98.5%. Contract utilisation was 27.5%.
During May, Awilco Drilling signed a contract with Shell UK Limited for the provision of the WilPhoenix for a decommissioning program of 18 firm wells plus options totalling a further 8 wells. The firm 18 well program has an estimated duration of 330 days and is scheduled to commence around 1 September 2018. Later in May, Shell UK Limited also gave notice of its intention to exercise a one well option under the decommissioning contract, therefore extending the contract to 19 firm wells with an estimated duration of 380 days and options for 7 further wells remaining
At the end of June, WilPhoenix had a total contract backlog of approximately USD 44.2 million.
During Q2 2018 the WilHunter was cold stacked in Invergordon.
The Company's dividend policy has been to pay a quarterly dividend in support of its main objective to maximise returns to shareholders. All of the Company's free cash flow was distributed subject to maintaining a robust cash buffer to support working capital requirements, planned capital expenditure and uncertain future market prospects.
Since June 2013 Awilco Drilling has consistently paid a quarterly dividend and during this time has distributed USD 12.00 (NOK 83.22) per share in this respect. With the ordering of one new-build high-end semi submersible rig in March this year, plus an agreement for a further three independent rig options, the Company is now in a growth and investment phase. The Board of Directors has, therefore, decided to suspend the dividend and will resume same when the Company again reaches an appropriate free cash flow situation.
At the end of Q2 2018, Awilco Drilling's Aberdeen based employees numbered 26 permanent personnel supported by 3 contractors. Awilco Drilling Pte. Ltd. offshore personnel numbered 114 permanent personnel. The Awilhelmsen Group continues to supply some support personnel via the management agreement.
In the Norwegian market for modern high-end semi submersibles additional new fixtures have materialized with leading edge dayrates now above USD 300,000 per day. Further long term demand development is anticipated, underpinning the current positive impact seen on contract utilization and dayrates in that segment.
The UK market remains active with focus shifting towards 2019 and 2020. We see some increased activity on the back of a robust oil price and in combination with expected attrition, utilisation is expected to improve but remain seasonal also going into 2020.
We confirm that, to the best of our knowledge, the condensed set of financial statements for the second 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.
On 1 August, the Company submitted an application to the Oslo Stock Exchange for transfer of its listing of shares from the Oslo Axess list to the Oslo Stock Exchange main list. The application is expected to be reviewed by the Oslo Stock Exchange Board on the 29 August, and the first day of listing is expected to be early September.
Oslo, 14 August, 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 has also ordered one new high-end mid-water semisubmersible drilling rig, with a planned delivery in Q1 2021. In addition, three independent options for rigs of the same design have been agreed with the construction shipyard. The rig design is a Moss CS60 ECO MW, equipped for drilling in harsh environments.
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 49 031 500.
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 | |||
|---|---|---|---|---|
| Q2 2018 | 30.06.18 | Q2 2017 | 30.06.17 | |
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
| Contract revenue | 8,927 | 42,686 | 33,149 | 64,796 |
| Reimbursables | 67 | 411 | 336 | 632 |
| Other revenue | 2 | 2 | 6 | 12 |
| 8,996 | 43,099 | 33,491 | 65,440 | |
| Rig operating expenses | 7,440 | 14,663 | 6,319 | 12,440 |
| Reimbursables | 30 | 172 | 86 | 128 |
| General and administrative expenses | 3,445 | 6,228 | 2,484 | 3,496 |
| Depreciation | 3,146 | 6,548 | 3,913 | 7,762 |
| 14,061 | 27,611 | 12,802 | 23,826 | |
| Operating (loss)/profit | (5,065) | 15,488 | 20,689 | 41,614 |
| Interest income | 506 | 1,056 | 66 | 98 |
| Interest expense | (3,025) | (4,667) | (1,687) | (3,504) |
| Other financial items | 19 | 378 | (191) | (5) |
| Net financial items | (2,500) | (3,233) | (1,812) | (3,411) |
| (Loss)/profit before tax | (7,565) | 12,255 | 18,877 | 38,203 |
| Tax expense | (50) | (756) | (3,807) | (7,331) |
| Net (loss)/profit | (7,615) | 11,499 | 15,070 | 30,872 |
| Total comprehensive (loss)/income | (7,615) | 11,499 | 15,070 | 30,872 |
| Attributable to shareholders of the parent | (7,615) | 11,499 | 15,070 | 30,872 |
| Basic and diluted earnings per share | (0.16) | 0.29 | 0.50 | 1.03 |
in USD thousands
| 30.06.2018 | 31.12.2017 | |
|---|---|---|
| (unaudited) | (audited) | |
| Rigs, machinery and equipment | 215,182 | 178,808 |
| Deferred tax asset | 1,435 | 1,372 |
| 216,617 | 180,180 | |
| Trade and other receivables | - | 17,168 |
| Prepayments and accrued revenue | 1,021 | 6,905 |
| Inventory | 4,958 | 4,809 |
| Cash and cash equivalents | 75,787 | 119,286 |
| Current tax | 5,995 | 3,551 |
| 87,761 | 151,719 | |
| Total assets | 304,378 | 331,899 |
| Paid in capital | 198,719 | 130,142 |
| Retained earnings | 97,035 | 101,068 |
| 295,754 | 231,210 | |
| Long-term interest-bearing debt | - | 80,000 |
| - | 80,000 | |
| Current portion of long-term debt | - | 10,000 |
| Trade and other creditors | 1,068 | 1,170 |
| Accruals and provisions | 7,556 | 9,519 |
| 8,624 | 20,689 | |
| Total equity and liabilities | 304,378 | 331,899 |
in USD thousands
| Other equity (retained |
|||
|---|---|---|---|
| Paid-in-equity | earnings) | Total equity | |
| Equity at 1 January 2017 | 130,142 | 96,926 | 227,068 |
| Total comprehensive profit to 31 December 2017 | - | 28,167 | 28,167 |
| Dividends paid | (24,025) | (24,025) | |
| Balance as at 31 December 2017 | 130,142 | 101,068 | 231,210 |
| Equity issue at 27 March 2018 | 64,937 | 64,937 | |
| Equity issue costs at 27 March 2018 | (1,018) | (1,018) | |
| Equity issue at 22 June 2018 | 4,658 | 4,658 | |
| Total comprehensive profit to 30 June 2018 | - | 11,499 | 11,499 |
| Dividends paid | - | (15,533) | (15,533) |
| Balance as at 30 June 2018 | 198,719 | 97,035 | 295,754 |
| Q2 2018 | Q2 2017 | |
|---|---|---|
| (unaudited) | (unaudited) | |
| Cash flow from operating activities | ||
| Profit before tax | 12,255 | 38,203 |
| Depreciation | 6,548 | 7,762 |
| Interest cost | 3,611 | 3,406 |
| Sharebased payment | 1,772 | 438 |
| (Increase)/decrease in trade and other receivables | 17,169 | 5,924 |
| (Increase)/decrease in stock | (149) | 35 |
| (Increase)/decrease in prepayments and accrued revenue | 5,884 | (6,083) |
| Increase/(decrease) in trade and other payables | (5,413) | (1,937) |
| Interests paid | (3,092) | (3,603) |
| Interests received | 1,056 | 98 |
| Taxation paid | (3,262) | (2,935) |
| Net cash flow from operating activities | 36,379 | 41,308 |
| Cash flow from investing activities | ||
| Purchase of property, plant and equipment | (42,922) | (439) |
| Net cash flow from investing activities | (42,922) | (439) |
| Cash flow from financing activities | ||
| Proceeds from issue of share capital | 69,595 | - |
| Equity issue costs | (1,018) | - |
| Dividends paid | (15,533) | (12,013) |
| Repayment of loans | (90,000) | (5,000) |
| Net cash flow from financing activities | (36,956) | (17,013) |
| Net increase/(decrease) in cash and cash equivalents | (43,499) | 23,856 |
| Cash and cash equivalents at beginning of the period | 119,286 | 70,070 |
| Cash and cash equivalents at the end of the period | 75,787 | 93,926 |
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, 2017. This interim report should be read in conjunction with the audited 2017 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 | 42,922 | - | 42,922 |
| Closing balance | 424,135 | 1,898 | 426,033 |
| Depreciation | |||
| Opening balance 1 Jan 2018 | (202,939) | (1,364) | (204,303) |
| Depreciation charge | (6,521) | (27) | (6,548) |
| Accumulated depreciation per ending balance | (209,460) | (1,391) | (210,851) |
| Net carrying amount at end of period | 214,675 | 507 | 215,182 |
| 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 The Bond was fully repaid on 28th June 2018.
| Total | |
|---|---|
| Secured Bond | 125,000 |
| Repayment of debt | (125,000) |
| Total debt per end of accounting period | - |
| Current portion of long term debt | - |
| Long term debt per end of period | - |
| - |
in USD thousands except per share data
Transactions with Awilhelmsen are specified as follows:
| YTD Q2 2018 | |
|---|---|
| Purchases | (597) |
| Payables | (282) |
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 Q2 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 2 were USD 2.0 million.
As of 30 June 2018 total outstanding shares in the Company was 49,031,500 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. 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 30 June 2018 | 49,031,500 | £0.0065 | 476,766 | 198,241,821 |
| Basic/diluted average number of shares, | ||||
| 1 April - 30 June | 47,754,577 | |||
| Basic/diluted average number of shares, YTD | 39,330,948 | |||
| Ranking | Shares | Ownership | ||
| AWILHELMSEN OFFSHORE | 17,919,938 | 36.55% | ||
| UBS SECURITIES LLC | 7,319,962 | 14.93% | ||
| AKASTOR AS | 2,700,000 | 5.51% | ||
| CITIBANK, N.A. | 1,864,133 | 3.80% | ||
| EUROCLEAR BANK S.A./ | 1,778,371 | 3.63% | ||
| CITIGROUP GLOBAL MAR | 1,129,000 | 2.30% | ||
| VERDIPAPIRFONDET DNB | 1,068,681 | 2.18% | ||
| SEB PRIME SOLUTIONS | 1,000,000 | 2.04% | ||
| BANK OF AMERICA, N.A | 931,156 | 1.90% | ||
| CLEARSTREAM BANKING | 924,129 | 1.88% | ||
| STRAWBERRY CAPITAL A | 825,000 | 1.68% | ||
| AVANZA BANK AB | 725,688 | 1.48% | ||
| CITIBANK, N.A. | 697,945 | 1.42% | ||
| SVENSKA HANDELSBANKE | 689,482 | 1.41% | ||
| DEUTSCHE BANK AG | 688,364 | 1.40% | ||
| DEUTSCHE BANK AKTIEN | 573,952 | 1.17% | ||
| STATE STREET BANK AN | 505,752 | 1.03% | ||
| NORDNET BANK AB | 394,729 | 0.81% | ||
| SUNDT AS | 375,000 | 0.76% | ||
| TVENGE TORSTEIN INGV | 350,000 | 0.71% | ||
| OTHER | 6,570,218 | 13.40% | ||
| 49,031,500 | 100.00% |
in USD thousands
| 30.06.2018 (unaudited) |
|
|---|---|
| Fair value of foreign currency forward contracts | nil |
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.
On 1 August, the Company submitted an application to the Oslo Stock Exchange for transfer of its listing of shares from the Oslo Axess list to the Oslo Stock Exchange main list. The application is expected to be reviewed by the Oslo Stock Exchange Board on the 29 August, and the first day of listing is expected to be early September.
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