-
Seadrill Partners reports net
income attributable to Seadrill Partners Members for the first
quarter 2013 of US$20.6 million and net operating income for the
first quarter of US$75.5 million.
-
Generated distributable cash flow
of US$18.0 million for the first quarter 2013, which represents the
first full quarter since the Company's IPO in October 2012, with a
coverage ratio of 1.13x.
-
Declared distribution for the
first quarter of US$0.3875 per unit.
Subsequent
Events
-
On May 7, 2013, Seadrill Partners
announced the acquisition of the T-15 tender rig from Seadrill for
a purchase price of US$210 million. The transaction closed on
May 17, 2013.
-
Management recommendation to
increase the quarterly distribution by between US$0.0275 and
US$0.0325, an approximate 8% increase.
-
On May 15, 2013 the Company paid a
distribution for the first quarter of US$0.3875 per unit.
Financial
Results Overview
Seadrill Partners LLC
reports:
Total contract revenues of US$161.5 million for the first quarter
2013 (the "first quarter") compared to US$157.6 million in the
fourth quarter of 2012 (the "fourth quarter").
Net operating income for the
quarter of US$75.5 million compared to US$72.2 million in the
preceding quarter.
Net Income of US$62.1 million
compared to US$50.8 million in the fourth quarter. This is after
the recognition of non-cash market valuations of derivatives
instruments. Financial items reflect a gain of US$6.2 million for
such items in the first quarter as compared to a loss of US$5.1
million for the fourth quarter.
Net income attributable to
Seadrill Partners Members was US$20.6 million for the first quarter
compared to $20.9 million for the fourth quarter.
Distributable cash flow was
US$18.0 million for Seadrill Partners' first full quarter since its
initial public offering. This represents a coverage ratio of 1.13
times the minimum quarterly distribution.
Distribution for the period of
US$0.3875 per unit, equivalent to an annual distribution of
US$1.55, which is the minimum quarterly distribution as set forth
in the Company's IPO prospectus.
Operations
During the first quarter, Seadrill
Partners had an interest in four rigs in operation. The fleet
is comprised of two semi-submersible rigs, one drillship, and one
tender rig operating in Canada, the US Gulf of Mexico, Nigeria, and
Angola respectively. During the quarter the West Aquarius
commenced drilling operations following its transit to Eastern
Canada. Subsequent to the close of the first quarter the T-15
Tender Rig was added to the fleet as discussed further below.
The Company's rigs performed well
during the first full quarter following the IPO, achieving economic
utilization rates of 96% on average. Additionally, as of
March 31, 2013, all rigs were operating at full dayrate. The
additional contract revenues in the first quarter compared to the
prior quarter is partly due to the West Aquarius rig commencing
operations, as it was mobilizing to Eastern Canada during the
fourth quarter.
Operating expenses for the first
quarter were US$95.3 million, compared to US$108.9 million in the
fourth quarter. The decline in operating expenses can be
attributed to a decrease in reimbursable mobilization expenses
relating to the West Aquarius rig.
Acquisitions
On May 17, 2013 Seadrill Partners
completed the acquisition of the companies that own and operate the
tender rig T-15 from Seadrill Limited ("Seadrill") for a total
purchase price of US$210 million.
The T-15 is contracted for a
five-year period with Chevron in Thailand at an initial contract
dayrate of US$115,000, which is subject to escalation to cover cost
increases. The rig is currently undergoing acceptance testing in
Singapore prior to mobilizing to its drilling location, which is
expected to occur by mid-June. The rig is currently earning a
standby dayrate until it arrives in Thailand and commences
operations.
Seadrill Partners management
believes that the acquisition is accretive to unitholders and has
recommended that the Board consider an increase in the quarterly
cash distribution of between US$0.0275 and US$0.0325, an
approximate 8% increase (annualized increase of between $0.11 and
$0.13 from the current annualized distribution rate of $1.55 per
common unit), which would become effective for the distribution
with respect to the quarter ending June 30, 2013. Any such increase
would be conditioned upon, among other things, the approval of such
increase by the Board and the absence of any material adverse
developments that would make such an increase inadvisable.
Financing
and Liquidity
As of March 31, 2013, the Company
had cash and cash equivalents, on a consolidated basis, of US$20.0
million and a revolving credit facility of US$300 million provided
by Seadrill as the lender. As of March 31, 2013, US$90.3
million was drawn on this facility to finance short-term working
capital needs and to help manage the Company's debt amortization
requirements. Total debt excluding the drawn revolver balance
was US$1,102.2 million as of March 31, 2013. This debt was
originally incurred by Seadrill, as borrower, in connection with
its acquisition of the drilling rigs. In connection with the
Company's IPO, subsidiaries within the Seadrill Partners group that
own the drilling rigs entered into agreements with Seadrill,
pursuant to which each rig owning subsidiary will make payments of
principal and interest directly to Seadrill. These loan
agreements with Seadrill Limited are classified as related party
transactions.
Prior to the acquisition of the
T-15, the Company had three secured credit facilities, one of which
matures in June 2014. The Company expects to refinance this
facility ahead of its expiration either in the secured rig finance
market or with a bond issuance in order to achieve the most
effective capital structure. The remaining two facilities
expire in 2015 and 2016 respectively and a similar refinancing
strategy should be expected. The Board is confident that the
facilities can be refinanced at attractive terms with improved
repayment profiles.
In conjunction with the
acquisition of the T-15, the Company assumed US$210 million in
additional debt. US$110 million of which is a vendor loan
from Seadrill Limited with a three year term at an interest rate of
Libor plus 5%. The Company expects to refinance this loan
prior to maturity. The remaining US$100 million of debt was
assumed by the Company under a secured credit facility expiring in
2017, this facility is also provided by Seadrill in connection with
a loan agreement originally entered into by Seadrill with a
syndicate of banks, and will be classified as a related party
balance.
As of March 31, 2013, Seadrill
Partners had interest rate swaps outstanding on principal debt of
US$1,095.1 million. All of the interest rate swap agreements were
entered into subsequent to the IPO Closing Date and represent
approximately 92% of debt obligations as of March 31, 2013. The
average swapped rate, excluding bank margins, is approximately
1.16%. Subsequent to the quarter end Seadrill Partners entered into
a further US$100 million interest rate swap in connection with the
acquisition of T-15.
Market
The fundamental outlook for the
oil and gas industry remains positive. Continued exploration
successes and a backlog of development drilling programs continue
to provide a line of sight to continued strength in the contract
drilling industry for the foreseeable future.
On the demand side, customers
continue to have active drilling plans in a constructive commodity
price environment. Most newbuild floaters with 2013 delivery
dates have been contracted. Dayrates have stabilized at fourth
quarter 2012 levels with the most recent contracted dayrates
ranging from US$550,000-US$650,000. Seadrill Partner's
ultra-deepwater rigs current dayrates range from US$487,000 per day
to US$552,000 per day. As of March 31, 2013 Seadrill Partners
total fleet's average remaining contract term was 3.7 years and as
of the end of May, having acquired the T-15, the average term is
3.8 years. Given the Company's expectation of continued
strength in dayrates, it is possible that the Company's below
market contracts will be re-contracted at higher rates as their
contracts expire. This may create the potential for increased
distribution from existing assets.
Outlook
The Board is pleased to have
completed Seadrill Partners first acquisition, the tender barge
T-15.
This is one of the two rigs that the Company had an option to
acquire under the terms of the omnibus agreement entered into with
Seadrill at the IPO. The second rig is also a tender barge (T-16)
contracted to Chevron for a five year period. The T-16 is
expected to be delivered from the yard in June 2013 and to complete
its acceptance testing by the end of July 2013.
Pursuant to the omnibus agreement
with Seadrill, Seadrill Partners has the right to acquire from
Seadrill Limited any drilling rig that enters into a contract with
a firm term of five years or more. Following the closing of the
IPO, Seadrill has entered into two contracts with a firm term of
five years or more for the West Mira and the West Leo. Seadrill
also has a significant fleet of existing ultra-deepwater rigs, some
of them on long-term contracts, as well as a new build program with
four ultra-deepwater rigs on order that have yet to secure a
contract. There is therefore a unique opportunity for high growth
via further asset dropdowns. The Board is confident about Seadrill
Partners ability to be able to grow its future earnings and
distributions and be one of the fastest growing MLP's in the years
to come.
Seadrill Partners' rigs operated
well during the first quarter with an average economic utilization
of 96%. The second quarter will be positively impacted by the cash
contribution of T-15. However, the West Capricorn is expected to
have a total of 20 days downtime during the quarter which will
reduce consolidated operating result by approximately US$9.7
million, of which US$4.8 million is attributable to non-controlling
interests. Results for the second quarter are otherwise
expected to confirm good operational performance, supporting
distributable cash flow. The orderbacklog for the Company is
currently US$2.5 billion which may grow further as a function of
specific discussions relating to the extension of existing
contracts.
May 28, 2013
The Board of Directors
Seadrill Partners LLC
London, UK.
Questions should be directed
to:
Graham Robjohns: Chief Executive Officer
Rune Magnus Lundetrae: Chief Financial Officer
SEADRILL PARTNERS LLC FIRST QUARTER
2013 RESULTS
This
announcement is distributed by Thomson Reuters on behalf of Thomson
Reuters clients.
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the
information contained therein.
Source: Seadrill Partners LLC via Thomson Reuters ONE
HUG#1705204
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