Quarterly Report • May 11, 2016
Quarterly Report
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In USD million, except per day operating expenses and EPS
| USD million | Q1 2016 | Q4 2015 | Q3 2015 | 2015 |
|---|---|---|---|---|
| Contract revenue | 0.0 | 19.1 | 90.4 | 247.0 |
| Operating expenses | 11.6 | 12.8 | 14.5 | 57.6 |
| EBITDA | (13.4) | (26.3) | 74.0 | 150.2 |
| Net (loss)/profit | (18.7) | (21.3) | 57.7 | 111.0 |
| EPS | (0.62) | (0.71) | 1.92 | 3.70 |
| Total assets | 426.2 | 455.5 | 507.1 | 455.5 |
| Total equity | 218.1 | 244.3 | 280.5 | 244.3 |
| Interest bearing debt | 110.0 | 110.0 | 115.0 | 110.0 |
| Gearing ratio | 3.9% | -11.5% | -15.0% | -11.5% |
| Per day operating expenses | 63,465 | 69,549 | 78,710 | 78,948 |
At the end of Q1 2016, the WilPhoenix was in Able Shipyard in Hartlepool and the WilHunter remained hot stacked in Invergordon.
Comprehensive Income Statement
Awilco Drilling reports total comprehensive loss for the first quarter 2016 of USD 18.7 million.
Revenue earned in the first quarter was nil.
In the first quarter Awilco Drilling had rig operating expenses of USD 11.6 million. General and administration expenses were USD 1.9 million. This includes USD 0.4 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 13.4 million loss while the operating loss was USD 18.3 million.
Interest expense amounted to USD 2.0 million, which relates to accrued interest on the secured bond.
Loss before tax was USD 20.5 million. The tax benefit for the quarter was USD 1.8 million. The resulting net profit was USD 18.7 million. Earnings per share (EPS) for the second quarter were USD (0.62).
As of 31 March 2016, total assets amounted to USD 426.2 million. At the same date, Awilco Drilling had USD 101.1 million in cash and cash equivalents.
In Q1 2016 the WilPhoenix was in the Able Shipyard in Hartlepool where it remained through the end of the quarter. As of 21 April, AWDR consider the rig is ready to drill and on standby rate awaiting further instruction from Apache North Sea Ltd.
The special periodic survey (SPS) was completed during the quarter at a total cost of USD 16 million compared with budget of USD 20 million and the installation of the new BOP was completed at a cost consistent with budget of USD 22.5 million.
Revenue efficiency for the quarter was nil. Contract utilisation was 50%.
At the end of March, WilPhoenix had a total remaining contract backlog of approximately USD 258 million.
In Q1 2016 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 Q1 2016, Awilco Drilling's Aberdeen based employees numbered 28 permanent personnel supported by 2 contractors. Awilco Drilling Pte. Ltd. offshore personnel numbered 174 permanent personnel. The Awilhelmsen Group continues to supply some support personnel via the management agreement.
The UK market remains quiet. The availability of rigs is expected to further increase throughout 2016 as rigs continue to roll off contract and few new requirements are emerging. Additionally, anticipated 2016 decommissioning programs continue to be deferred, however, the recent positive development in the oil price and attrition of rigs has led to enquiry and tendering activity for 2017 and 2018 to increase.
In April, the yardstay for WilPhoenix was completed and Awilco Drilling considers the rig to be, in all aspects, ready to drill awaiting Apache North Sea Ltd.'s instructions to resume operations. In accordance with the contract, Awilco Drilling considers that the WilPhoenix is on standby rate from the completion of the yardstay. Apache North Sea Ltd. does not agree that the rig is ready to drill nor that Awilco Drilling is entitled to standby rate at this point.
We confirm that, to the best of our knowledge, the condensed set of financial statements for the first 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, 10 May, 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
| Q1 2016 | Q1 2015 | |
|---|---|---|
| (unaudited) | (unaudited) | |
| Contract revenue | - | 67,840 |
| Reimbursables | 33 | 629 |
| Other revenue | 13 | 28 |
| 46 | 68,497 | |
| Rig operating expenses | 11,550 | 14,353 |
| Reimbursables | - | 268 |
| General and administrative expenses | 1,876 | 1,690 |
| Depreciation | 4,921 | 4,519 |
| 18,347 | 20,830 | |
| Operating (loss)/profit | (18,301) | 47,667 |
| Interest income | 287 | 71 |
| Interest expense | (2,014) | (2,178) |
| Other financial items | (514) | (443) |
| Net financial items | (2,241) | (2,550) |
| (Loss)/profit before tax | (20,542) | 45,117 |
| Tax benefit/(expense) | 1,860 | (5,880) |
| Net (loss)/profit | (18,682) | 39,237 |
| Total comprehensive (loss)/income | (18,682) | 39,237 |
| Attributable to shareholders of the parent | (18,682) | 39,237 |
| Basic and diluted earnings per share | (0.62) | 1.31 |
in USD thousands
| 31.03.2016 | 31.12.2015 | |
|---|---|---|
| (unaudited) | (audited) | |
| Rigs, machinery and equipment | 243,782 | 234,336 |
| Deferred tax asset | 3,862 | 2,002 |
| 247,644 | 236,338 | |
| Trade and other receivables | 104 | 7,352 |
| Prepayments and accrued revenue | 3,545 | 2,682 |
| Inventory | 4,882 | 5,015 |
| Cash and cash equivalents | 101,110 | 135,257 |
| Current tax | 68,899 | 68,899 |
| 178,540 | 219,205 | |
| Total assets | 426,184 | 455,543 |
| Paid in capital | 130,142 | 130,142 |
| Retained earnings | 87,946 | 114,135 |
| 218,088 | 244,277 | |
| Deferred tax liability | 0 | 0 |
| Long-term interest-bearing debt | 100,000 | 100,000 |
| 100,000 | 100,000 | |
| Current portion of long-term debt | 10,000 | 10,000 |
| Trade and other creditors | 3,959 | 5,990 |
| Accruals and provisions | 16,563 | 17,702 |
| Current tax payable | 77,574 | 77,574 |
| 108,096 | 111,266 | |
| Total equity and liabilities | 426,184 | 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 profit to 31 March 2016 | - | (18,682) | (18,682) |
| Dividends paid | - | (7,508) | (7,508) |
| Balance as at 31 March 2016 | 130,142 | 87,946 | 218,088 |
| Q1 2016 | Q1 2015 | |
|---|---|---|
| (unaudited) | (unaudited) | |
| Cash flow from operating activities | ||
| (Loss)/Profit before tax | (20,542) | 45,117 |
| Depreciation | 4,921 | 4,519 |
| Interest cost | 1,727 | 2,107 |
| Sharebased payment | 387 | 0 |
| (Increase)/decrease in trade and other receivables | 7,248 | 1,264 |
| (Increase)/decrease in stock | 134 | 102.00 |
| (Increase)/decrease in prepayments and accrued revenue | (864) | 270 |
| Increase/(decrease) in trade and other payables | (5,503) | 2,856 |
| Interests paid | (68) | (2,178) |
| Interests received | 287 | 71 |
| Taxation paid | - | (10,601) |
| Net cash flow from operating activities | (12,273) | 43,527 |
| Cash flow from investing activities | ||
| Purchase of property, plant and equipment | (14,367) | (4,189) |
| Net cash flow from investing activities | (14,367) | (4,189) |
| Cash flow from financing activities | ||
| Dividends paid | (7,508) | (30,031) |
| Net cash flow from financing activities | (7,508) | (30,031) |
| Net increase/(decrease) in cash and cash equivalents | (34,147) | 9,307 |
| Cash and cash equivalents at beginning of the period | 135,257 | 75,951 |
| Cash and cash equivalents at the end of the period | 101,110 | 85,258 |
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 | ||
|---|---|---|---|
| Cost | drilling rigs/SPS | equipment | Total |
| Opening balance 1 Jan 2016 | 360,475 | 1,898 | 362,373 |
| Additions | 14,367 | - | 14,367 |
| Closing balance | 374,842 | 1,898 | 376,740 |
| Depreciation | |||
| Opening balance 1 Jan 2016 | (126,821) | (1,216) | (128,037) |
| Depreciation charge | (4,892) | (29) | (4,921) |
| Accumulated depreciation per ending balance | (131,713) | (1,245) | (132,958) |
| Net carrying amount at end of period | 243,129 | 653 | 243,782 |
| 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 | (15,000) | |
| Total debt per end of accounting period | 110,000 | |
| Current portion of long term debt | 10,000 | |
| Long term debt per end of period | 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 (185) Payables (185)
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 1.8 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 10.5 million.
As of 31 March 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.
| Shares | Par value per share |
Share capital |
Share premium reserve |
|
|---|---|---|---|---|
| Share capital per 31 March 2016 | 30,031,500 | £0.0065 | 304,173 | 129,837,405 |
| Basic/diluted average number of shares, | ||||
| 1 January - 31 March | 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 | 3,528,371 | 11.75% | ||
| EUROCLEAR BANK S.A./ | 2,100,890 | 7.00% | ||
| CITIBANK, N.A. | 1,496,516 | 4.98% | ||
| CITIBANK, N.A. | 1,133,288 | 3.77% | ||
| CITIGROUP GLOBAL MAR | 1,129,000 | 3.76% | ||
| JPMORGAN CHASE BANK | 1,025,049 | 3.41% | ||
| AVANZA BANK AB | 666,046 | 2.22% | ||
| MERRILL LYNCH,PIERCE | 609,487 | 2.03% | ||
| CLEARSTREAM BANKING | 450,151 | 1.50% | ||
| UBS SECURITIES LLC | 430,449 | 1.43% | ||
| NORDNET BANK AB | 397,426 | 1.32% | ||
| JPMORGAN CHASE BANK | 382,234 | 1.27% | ||
| PERSHING LLC | 217,296 | 0.72% | ||
| SIX SIS AG | 169,448 | 0.56% | ||
| FIRST CLEARING A/C L | 164,452 | 0.55% | ||
| JP MORGAN CLEARING C | 145,952 | 0.49% | ||
| JPMORGAN CHASE BANK | 143,186 | 0.48% | ||
| CITIBANK, N.A. | 115,350 | 0.38% | ||
| DZ PRIVATBANK S.A. | 109,448 | 0.36% | ||
| OTHER | 2,618,523 | 8.72% | ||
| 30,031,500 | 100.00% |
in USD thousands
| 31.03.2016 (unaudited) |
|
|---|---|
| Fair value of foreign currency forward contracts | \$605k |
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.
In April, the yardstay for WilPhoenix was completed and Awilco Drilling considers the rig to be, in all aspects, ready to drill awaiting Apache North Sea Ltd.'s instructions to resume operations. In accordance with the contract, Awilco Drilling considers that the WilPhoenix is on standby rate from completion of the yardstay. Apache North Sea Ltd does not agree that the rig is ready to drill nor that Awilco Drilling is entitled to standby rate at this point.
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