· Seadrill Partners
reports net income attributable to Seadrill Partners Members for
the second quarter 2013 of US$22.1 million and net operating income
for the second quarter of US$71.6 million.
· Generated distributable
cash flow of US$15.8 million for the second quarter 2013.
· Completed the
acquisition of the companies that own and operate the tender rig
T-15 from Seadrill Limited for $210 million on May 17,
2013
· Declared an increased
distribution for the second quarter of US$0.4175 per unit.
Financial
Results Overview
Seadrill Partners LLC
reports:
Total contract revenues of US$158.6 million for the second quarter
2013 (the "second quarter") compared to US$161.5 million in the
first quarter of 2013 (the "first quarter"). The decline is
primarily driven by 23 days downtime for the West Capricorn as a
result of required equipment repairs. This has partly been
offset by improvements in the West Capella's uptime relative to the
first quarter. The tender rig T-15 had little impact on
operating income due to the fact that revenues and the majority of
operating expenses prior to drilling operations commencement are
capitalized and amortized over the contract period.
Net operating income for the
quarter of US$71.6 million compared to US$74.7 million in the
preceding quarter, the reduction as a result of the West Capricorn
downtime.
Net Income for the quarter of
US$77.2 million compared to US$61.3 million in the first quarter.
This is after the recognition of non-cash gains on derivative
instruments. Such items reflect a gain of US$27.0 million in the
second quarter as compared to a gain of US$6.2 million for the
first quarter as a result of an increase in long term interest
rates.
Net income attributable to
Seadrill Partners LLC Members was US$22.1 million for the second
quarter compared to $19.8 million for the first quarter.
Distributable cash flow was
US$15.8 million for Seadrill Partners' second quarter as compared
to US$18.0 for the first quarter. The reduction is a result
of the West Capricorn downtime.
Distribution for the period of
US$0.4175 per unit, equivalent to an annual distribution of
US$1.67, representing an approximate 8% increase from the Company's
minimum quarterly distribution.
Operations
During the second quarter,
Seadrill Partners had an interest in five rigs in operation.
The fleet is comprised of two semi-submersible rigs, one drillship
and two tender rigs operating in Canada, the US Gulf of Mexico,
Nigeria, Angola and Thailand respectively. During the quarter
the T-15, which was acquired on May 17, 2013, underwent acceptance
testing, during which time it received a slightly reduced dayrate,
mobilized and then commenced operations on full rate in July
2013.
Other than the West Capricorn, the
Company's rigs performed well during the second quarter, achieving
an overall economic utilization rate of 92% on average. The
decline from the first quarter utilization of 96% is due to 23 days
downtime for the West Capricorn as a result of required repairs and
equipment change-outs.
Operating expenses for the second
quarter were US$90.6 million, compared to US$96.1 million in the
first quarter. The decrease in operating expenses is partly
explained by lower operating costs for the West Aquarius rig after
completing the start-up phase in Canada in the first quarter.
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 $210 million. The T-15 is contracted with Chevron
in Thailand at an initial contract dayrate of $115,500, which is
subject to escalation to cover cost increases.
Financing
and Liquidity
As of June 30, 2013, the Company
had cash and cash equivalents, on a consolidated basis, of US$50.0
million and a revolving credit facility of US$300 million provided
by Seadrill as the lender. As of June 30, 2013, US$69.6
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$1,262.2 million as of June 30, 2013; US$1,152.2 million of
this debt was originally incurred by Seadrill, as borrower, in
connection with its acquisition of the drilling rigs.
Subsidiaries within the Seadrill Partners group that now 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.
The Company has four 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 in the debt capital
markets in order to achieve the most effective capital
structure. The remaining three facilities expire in 2015,
2016, and 2017 respectively and a similar refinancing strategy
should be expected at maturity debt levels or higher.
Additionally the Company has a US$110 million vendor loan from
Seadrill Limited maturing in 2016 relating to the acquisition of
the T-15. The Board is confident that the facilities can be
refinanced at attractive terms with improved repayment
profiles. The Company's goal is to achieve a capital
structure independent of Seadrill Limited which will allow it to
appropriately manage debt terms and debt amortization.
As of June 30, 2013, Seadrill
Partners had interest rate swaps outstanding on principal debt of
US$1,158.4 million. All of the interest rate swap agreements were
entered into subsequent to the IPO Closing Date and represent
approximately 87% of debt obligations as of June 30, 2013. The
average swapped rate, excluding bank margins, is approximately
1.16%.
Market
The fundamental outlook for the
oil and gas industry remains positive. Although overall
E&P spending trends appear to be slowing it is apparent that
the slowdown is primarily driven by onshore spending, especially in
North American shale activity. The activity offshore is
expected to continue to grow at a healthy pace with an emerging
trend for deepwater development projects.
The number of deep and
ultra-deepwater discoveries has increased materially since 2010 and
the Company expects this trend to continue. Importantly, as
these trends migrate from discoveries to development projects
average contract terms are expected to increase as development
plans typically have longer duration than exploration
activities. Seadrill Partners' tender rig fleet is also
ideally positioned to take advantage of development spending trends
as these assets are primarily used in development activities.
The market is also experiencing a
distinct bifurcation trend. Sixth generation rigs are increasingly
preferred by operators given their ability to perform dual activity
drilling, greater BOP capability, higher variable deckloads, and
higher hookload capacities. These technological developments
make the rig better suited to drill a wide range of well designs
and provide greater efficiency and safety than older
generations. Seadrill Partners' current ultra-deepwater rigs
and potential dropdowns from Seadrill Limited are well positioned
as premium units.
There is very limited ultra-deepwater availability
and the Company believes the current orderbook will to a large
extent be absorbed by increasing deep water demand and by
replacement of the older mid and deepwater fleet. Utilization
of modern higher specification rigs is therefore expected to remain
at current levels.
During the third quarter leading
edge dayrates continue to be in-line with first half 2013 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 June 30, 2013 Seadrill Partners' total fleet's
average remaining contract term was 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
Having acquired the T-15 tender
barge the Company is focused on completing its second acquisition,
the tender barge T-16, soon. The T-16 is contracted for a five-year
period with Chevron in Thailand at an initial contract dayrate of
US$115,500, which is subject to escalation to cover cost
increases. The rig underwent acceptance testing in Singapore
prior to mobilizing to its drilling location and recently commenced
its drilling contract.
The Company is also preparing for
further acquisitions from Seadrill Limited. Pursuant to the
omnibus agreement with Seadrill Limited, 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.
Seadrill Limited has an existing fleet of 11 ultra-deepwater
rigs, as well as a newbuild program with 10 ultra-deepwater rigs on
order. There is therefore a unique opportunity for high growth via
further asset dropdowns. The company has also entered into
discussions with customers to extend some of its existing operating
agreements. The Board is hopeful that at least one of the
units can be contracted for an extended period within the next
quarter. The extended rate is likely to be higher than
current rates. 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.
Average economic utilization of
the Company's rigs at 92% was adversely impacted by West
Capricorn's downtime. The third quarter will be positively impacted
by the cash contribution of the T-15 tender barge. The West
Aquarius has incurred a total of 13 days downtime during the third
quarter which will negatively impact consolidated operating
results. The rig is now operating well and results for the
third quarter are otherwise expected to confirm good operational
performance.
The Board is confident about the
Company's ability to grow its distributions in the future and is
fully focused on the acquisition of new rigs in order to achieve
this.
August 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 2Q 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#1725406
Seadrill Partners (NYSE:SDLP)
Historical Stock Chart
From Jun 2024 to Jul 2024
Seadrill Partners (NYSE:SDLP)
Historical Stock Chart
From Jul 2023 to Jul 2024