Seadrill, the London-based listed drill ship and rig owner in John Fredriksen’s business empire, has reported a fall in profits for the first quarter of 2015 (1Q15).
Seadrill estimates the weak cycle to extend to next year, but it may create opportunities for the company.
Net profit fell to USD448 million in the first of quarter 1Q15 from USD3.07 billion in the same period last year, when a USD2.24 billion one-off sales gain lifted the figure. EBITDA fell to USD703 million from USD890 million, but revenues increased to USD1.14 billion from USD1.09 billion.
Per Wulff, chief executive of Seadrill Management, said in a statement, “The industry continues to face challenging times and while the first quarter performance has been solid, we are not immune from the wider industry challenges. Indications suggest the remainder of 2015 will see subdued market conditions and the challenging market continuing into 2016.”
The pre-emptive actions the company has taken early in the cycle to balance its commitments and financing requirements have greatly strengthened its position, underpinning the company and providing it with flexibility to attempt to make the right commercial and strategic decisions for the long-term success of the group.
“The first quarter of 2015 is a prime example of what Seadrill has accomplished from an operational and cost management perspective. The key driver of the outperformance in the period was uptime on our fleet and the implementation of cost efficiencies across the business. These factors are part of a continuing effort and the company will continue to have an intense focus on further improving its performance in these key action areas,” Wulff continued.
“Prudent decisions have been made to preserve Seadrill’s long-term viability, while allowing for flexibility, should either the downturn proves longer than expected or potential growth opportunities emerge. We have also positioned our balance sheet to have a more manageable debt maturity profile that can predominately be addressed with cash flow generated over the next two years,” he said.
Looking further into the future, Seadrill said it expects to have adequate leverage capacity and options to address obligations even in the event the capital markets remain an unattractive funding source. “As we progress through the downturn, further efforts may be made to exploit opportunities as they arise. A clear focus on return on invested capital will be the consistent driving force behind strategic decisions as the company believes this is the primary driver of shareholder value,” said the company that operates a fleet of 69 units and employs about 9,000 staff.
“Second-quarter EBITDA for Seadrill Limited is expected to be approximately USD70 million less than the first quarter, driven primarily by idle time on West Taurus and West Eclipse, and downtime expected on West Gemini for a five-year special periodic survey,” the company said.