Interim / Quarterly Report • Aug 13, 2014
Interim / Quarterly Report
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SECOND QUARTER 2014
In USD million, except per day operating expenses
| USD million | Q2 2014 | Q1 2014 | Q4 2013 | 2013 |
|---|---|---|---|---|
| Contract revenue | 66.3 | 62.7 | 61.4 | 236.5 |
| Operating expenses | 17.2 | 14.4 | 16.3 | 56.6 |
| EBITDA | 42.4 | 44.1 | 40.5 | 159.5 |
| Net profit | 25.9 | 34.5 | 31.6 | 122.3 |
| Total assets | 420.9 | 399.2 | 387.8 | 387.8 |
| Total equity | 200.3 | 209.0 | 207.5 | 207.5 |
| Interest bearing debt | 125.0 | 95.3 | 98.1 | 98.1 |
| Gearing ratio | 28.6% | 19.4% | 18.1% | 18.1% |
| Per day operating expenses | 94,572 | 80,120 | 88,657 | 78,567 |
At the end of Q2 2014, both of Awilco Drilling's rigs were in continued drilling operations for their respective clients.
Awilco Drilling reports total comprehensive income for the second quarter 2014 of USD 25.9 million.
Revenue earned in the second quarter was USD 66.3 million.
In the second quarter Awilco Drilling had rig operating expenses of USD 17.2 million. The increase in rig operating expense compared to prior quarter is primarily due to an increase in UK national insurance contributions for offshore personnel due to a change in legislation effective 1st April and to an increase in the level of spend on budgeted maintenance projects. General and administration expenses were USD 6.0 million. This includes costs of USD 2.7 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 USD 42.4 million while the operating profit was USD 38.0 million.
Interest expenses amounted to USD 4.8 million, which includes accrued interest on the secured bond and USD 2.9 million of additional interest due to early repayment of the Transocean loan.
Profit before tax was USD 33.1 million. The tax charge for the quarter was USD 7.2 million on profits in the quarter. This reflects a higher tax charge in Q2 compared to previous quarters due to the change in UK bareboat charter legislation effective 1 st April 2014. The resulting net profit was USD 25.9 million. Earnings per share (EPS) for the second quarter were USD 0.86.
As of 30 June 2014, total assets amounted to USD 420.9 million. At the same date, Awilco Drilling had USD 44.7 million in cash and cash equivalents.
There was a payment of USD 100.4 million during the quarter in respect of full settlement of the Transocean seller's credit loan of which USD 95.3 million was capital repayment and USD 5.0 million of interest, including USD 2.9 million of additional interest on the early repayment amount.
In Q2 2014 the WilPhoenix was in continued operations on Premier Oil UK's Solan location where it remained through the end of the quarter.
Revenue efficiency for the quarter was 99.7%.
At the end of June, WilPhoenix had a total remaining contract backlog of approximately USD 442 million.
In Q2 2014 the WilHunter was in continued operations for Hess UK Ltd at the Ivanhoe location.
Revenue efficiency for the quarter was 99.8%.
At the end of June, WilHunter had a total remaining contract backlog of approximately USD 200 million.
The Company's intention is to pay a regular dividend in support of its main objective to maximise returns to shareholders. The fifth dividend payment was paid during the quarter and payments are expected to continue on a quarterly basis. In the case of attractive growth opportunities the company will endeavor to maintain a meaningful dividend distribution.
At the end of Q2 2014, Awilco Drilling's Aberdeen based employees numbered 32 permanent personnel supported by 2 contractors. Awilco Drilling Pte Ltd offshore personnel numbered 209 permanent personnel. The Awilhelmsen Group continues to supply some support personnel via the management agreement.
The UK market currently operates at full capacity, however as present contracts come to an end and with limited new requirements for start-up late 2014, it is likely that the UK market will see some seasonal availability from Q4 2014 onwards. The Company's firm contract coverage however, positions us well for any near term weaker market conditions.
We confirm that, to the best of our knowledge, the condensed set of financial statements for the second quarter of 2014, 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.
Oslo, 12 August, 2014
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 | |||
|---|---|---|---|---|
| Q2 2014 | 30.06.14 | Q2 2013 | 30.06.13 | |
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
| Contract revenue | 65,075 | 127,286 | 58,698 | 110,990 |
| Reimbursables | 1,189 | 1,692 | 794 | 1,854 |
| Other revenue | 41 | 74 | 19 | 24 |
| 66,305 | 129,052 | 59,511 | 112,868 | |
| Rig operating expenses | 17,212 | 31,634 | 13,190 | 26,740 |
| Reimbursables | 373 | 568 | 263 | 763 |
| General and administrative expenses | 6,010 | 10,045 | 5,533 | 10,913 |
| Other expense | 269 | 281 | 1,900 | 1,900 |
| Depreciation | 4,462 | 8,862 | 4,398 | 8,789 |
| 28,326 | 51,390 | 25,284 | 49,105 | |
| Operating profit | 37,979 | 77,662 | 34,227 | 63,764 |
| Interest income | 17 | 56 | 46 | 62 |
| Interest expense | (4,847) | (7,336) | (2,365) | (4,788) |
| Other financial items | - | - | 57 | (59) |
| Net financial items | (4,830) | (7,280) | (2,262) | (4,785) |
| Profit before tax | 33,149 | 70,382 | 31,965 | 58,979 |
| Tax (expense) | (7,224) | (9,976) | (2,596) | (4,896) |
| Net profit | 25,925 | 60,406 | 29,369 | 54,083 |
| Other comprehensive income | - | - | - | |
| Total comprehensive income | 25,925 | 60,406 | 29,369 | 54,083 |
| Attributable to minority interests | - | - | - | |
| Attributable to shareholders of the parent | 25,926 | 60,406 | 29,369 | 54,083 |
| Basic and diluted earnings per share | 0.86 | 2.01 | 0.98 | 1.80 |
in USD thousands
| 30.06.2014 | 31.12.2013 | |
|---|---|---|
| (unaudited) | (audited) | |
| Rigs, machinery and equipment | 252,796 | 245,279 |
| Deferred tax asset | 3,363 | 2,763 |
| 256,159 | 248,042 | |
| Trade and other receivables | 35,852 | 14,417 |
| Prepayments and accrued revenue | 24,047 | 25,835 |
| Inventory | 4,800 | 4,800 |
| Cash and cash equivalents | 44,684 | 52,347 |
| Current tax | 55,368 | 42,317 |
| 164,751 | 139,716 | |
| Total assets | 420,910 | 387,758 |
| Paid in capital | 130,142 | 130,142 |
| Retained earnings | 70,205 | 77,370 |
| 200,347 | 207,512 | |
| Deferred tax liability | 554 | 554 |
| Long-term interest-bearing debt | 115,000 | 87,098 |
| 115,554 | 87,652 | |
| Current portion of long-term debt | 10,000 | 11,000 |
| Trade and other creditors | 3,159 | 3,140 |
| Accruals and provisions | 26,867 | 25,182 |
| Current tax payable | 64,983 | 53,272 |
| 105,009 | 92,594 | |
| Total equity and liabilities | 420,910 | 387,758 |
in USD thousands
| Other equity (retained |
|||
|---|---|---|---|
| Paid-in-equity | earnings) | Total equity | |
| Equity at 1 January 2013 | 130,142 | 48,205 | 178,347 |
| Total comprehensive profit to 31 December 2013 | - | 122,263 | 122,263 |
| Dividends paid | (93,098) | (93,098) | |
| Balance as at 31 December 2013 | 130,142 | 77,370 | 207,512 |
| Total comprehensive profit to 30 June 2014 | - | 60,406 | 60,406 |
| Dividends paid | - | (67,571) | (67,571) |
| Balance as at 30 June 2014 | 130,142 | 70,205 | 200,347 |
| Condensed statement of cash flow for the period | YTD | YTD |
|---|---|---|
| Q2 2014 | Q2 2013 | |
| (unaudited) | (unaudited) | |
| Cash flow from operating activities | ||
| Profit before tax | 70,382 | 58,979 |
| Depreciation | 8,862 | 8,789 |
| Interest cost | 7,275 | 4,725 |
| Sharebased payment | 4,106 | |
| (Increase)/decrease in trade and other receivables | (21,435) | 3,967 |
| (Increase)/decrease in prepayments and accrued revenue | (1,484) | (7,478) |
| Increase/(decrease) in trade and other payables | 960 | 7,914 |
| Interests paid | (7,421) | (4,956) |
| Interests received | 56 | 62 |
| Taxation paid | (11,916) | (4,231) |
| Net cash flow from operating activities | 49,385 | 67,771 |
| Cash flow from investing activities | ||
| Purchase of property, plant and equipment | (16,379) | (5,132) |
| Net cash flow from investing activities | (16,379) | (5,132) |
| Cash flow from financing activities | ||
| Dividends paid | (67,571) | (30,032) |
| Issue of loans | 125,000 | - |
| Repayment of loans | (98,098) | (11,000) |
| Net cash flow from financing activities | (40,669) | (41,032) |
| Net increase/(decrease) in cash and cash equivalents | (7,663) | 21,608 |
| Cash and cash equivalents at beginning of the period | 52,347 | 16,927 |
| Cash and cash equivalents at the end of the period | 44,684 | 38,535 |
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, 2013. This interim report should be read in conjunction with the audited 2013 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 2014 | 306,189 | 1,207 | 307,396 |
| Additions | 16,368 | 11 | 16,379 |
| Closing balance | 322,557 | 1,218 | 323,775 |
| Opening balance 1 Jan 2014 | (61,393) | (724) | (62,117) |
| Depreciation | (8,738) | (124) | (8,862) |
| Accumulated depreciation per ending balance | (70,131) | (848) | (70,979) |
| Net carrying amount at end of period | 252,426 | 370 | 252,796 |
| 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. The bond was issued with an interest rate of 7% with maturity in April 2019. Repayment terms are USD 5 million six monthly commencing in October 2014
| Total | ||
|---|---|---|
| Secured Bond | 125,000 | |
| Repayment of debt | - | |
| Total debt per end of accounting period | 125,000 | |
| Current portion of long term debt | 10,000 | |
| Long term debt per end of period | 115,000 | |
| 125,000 | ||
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:
| YTD Q2 2014 | |
|---|---|
| Purchases | (514) |
| Payables | (332) |
The company owns the semi submersible rigs WilHunter and WilPhoenix. 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 million which has been deposited in relation to the forward hedge agreements.
If the operation of the rigs change among foreign jurisdictions, and the methods of taxation in these jurisdictions varies, the effective tax rate may be subject to change.
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 rigs were operational and average tax rates have been applied consistent with the prevailing average tax rate for the remainder of the year.
Outstanding Capital Commitments as at the end of Quarter 2 were USD 19.9 million.
As of 30 June 2014 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 30 June 2014 | 30,031,500 | £0.0065 | 304,173 | 129,837,405 |
| Basic/diluted average number of shares, | ||||
| 1 January - 30 June | 30,031,500 | |||
| Basic/diluted average number of shares, YTD | 30,031,500 | |||
| Ranking | Shares | Ownership | ||
| AWILCO DRILLING AS | 14,633,100 | 48.73% | ||
| EUROCLEAR BANK S.A./ | 1,841,267 | 6.13% | ||
| DEUTSCHE BANK AG | 1,637,950 | 5.45% | ||
| CITIBANK, N.A. | 1,320,282 | 4.40% | ||
| UBS SECURITIES LLC | 1,049,614 | 3.50% | ||
| MERRILL LYNCH PROF. | 970,713 | 3.23% | ||
| JPMORGAN CHASE BANK | 936,429 | 3.12% | ||
| CITIBANK, N.A. | 723,519 | 2.41% | ||
| GOLDMAN SACHS & CO E | 644,552 | 2.15% | ||
| MERRILL LYNCH,PIERCE | 524,169 | 1.75% | ||
| AVANZA BANK AB MEGLE | 477,614 | 1.59% | ||
| JPMORGAN CHASE BANK | 380,907 | 1.27% | ||
| J.P. MORGAN CHASE BA | 276,765 | 0.92% | ||
| NORDNET BANK AB | 253,913 | 0.85% | ||
| FIRST CLEARING A/C L | 196,588 | 0.65% | ||
| ML PROFFESSIONAL CLE | 158,287 | 0.53% | ||
| BNP PARIBAS PRIME BR | 151,477 | 0.50% | ||
| SIX SIS AG | 148,187 | 0.49% | ||
| JPMORGAN CHASE BANK | 143,704 | 0.48% | ||
| SKANDINAVISKA ENSKIL | 126,058 | 0.42% | ||
| OTHER | 3,436,405 | 11.44% | ||
| 30,031,500 | 100.00% |
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