Rig issues hit Odfjell earnings

 

Odfjell Drilling saw its operating profit cut in the first quarter as revenue was hit by lower fleet utilisation but its bottom line was salvaged by reduced financial losses.

The Oslo-listed rig contractor suffered from technical issues with a blowout preventer on its deep-water drillship Deepsea Metro II – currently working for Petrobras off Brazil at a dayrate of $432,600 – that left the vessel out of action on zero rate for four weeks during the period.

The company was also hit by slightly lower utilisation for semi-submersible Deepsea Atlantic due to a yard stay for a class survey, leaving it with operating profit of $37 million, versus $51 million a year earlier, as reduced rig activity chopped operating revenue by 8% year on year to $274 million.

Odfjell also saw lower revenue from both its drilling & technology and well services units, with the latter affected by the divestment of its mooring business line although it also gained a four-extension with BP on a platform drilling services contract off the UK worth $165 million.

However, quarterly net profit was up $1.4 million at $23 million compared with the same period of 2013 as losses from financial items were more than halved to $9.8 million.

Chief executive Simen Lieungh said reduced demand for engineering services in the Norwegian market had negatively affected the company’s results and it is now looking to cut costs within its drilling & technology business, having recently shed 43 staff at its Stjordal office.

The company was left with a total firm contract backlog of $2.8 billion at the end of the quarter – including just over $2 billion for the rig business - with another $2 billion work of optional work.

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