Oslo-listed floating rig contractors Odfjell Drilling and Awilco Drilling saw mixed financial fortunes in the first quarter as Odfjell lifted profits on longer-term contracts that have insulated it from the market impact of the Covid-19 crisis, while loss-making Awilco failed to earn any revenue.

Odfjell reported a higher quarterly net profit of $23 million, compared with $10 million a year ago, as revenue remained stable at $197 million versus $201 million in the same period of 2019.

Earnings before interest, tax, depreciation and amortisation of $82 million were also up from $73 million a year earlier.

Chief executive Simen Lieungh said in a results presentation that the Covid-19 pandemic had “limited impact” on the company’s operations and financial performance in the latest quarter.

This is due to the fact that it has largely been protected by a solid backlog for its fleet of five modern sixth-generation semi-submersible rigs, of which one is managed, that have contracts stretching into 2021 and 2022.

Decent dayrates

Odfjell currently has a firm contract backlog for its rig fleet of $800 million, plus another $100 million in options excluding management revenue from the non-owned Deepsea Yantai that is working for Neptune Energy off Norway, though Odfjell has an option to buy the rig.

Its remaining owned modern rigs — Deepsea Atlantic, Deepsea Stavanger, Deepsea Aberdeen and Deepsea Nordkapp — are all earning decent dayrates ranging from around $300,000 to as much as $440,000 under their contracts with operators Equinor, Aker BP, Total and BP.

However, the 1983-built Deepsea Bergen is now warm-stacked after coming off its recent contract with MOL off Norway in late March, according to Bassoe Analytics.

The veteran rig now has limited job prospects amid the current negative market climate that could mean it will be scrapped as it is due for a costly special periodic survey this summer.

Lieungh said the pandemic and drop in oil prices has led to “large uncertainties” that will lead to a decrease in exploration and production activity and he expects lower demand and dayrates in the future for Odfjell’s fleet.

“The present dayrate level does not support any newbuild activity based on expected capital return for the short to medium term,” he said, amid a “significant oversupply” in the global rig market.

However, the company stated the oil price drop will have a limited effect on its earnings in the short to medium term due to its strong backlog.

“We early implemented required routines to limit the contagion of the virus and our operations have only been marginally affected within the drilling & technology segment,” it stated.

Odfjell’s total backlog, also including work for its platform drilling & technology and well services divisions, currently stands at $2.2 billion, of which $1.2 billion is firm, with the remaining $1 billion tied to options.

Different story

It is, however, a different story for peer player Awilco, which suffered a wider net loss of $9.4 million in the last quarter, versus a year-earlier loss of $2.3 million, as it recorded zero contract revenue during the period compared with $9 million in the same period of 2019.

This was due to the fact its sole operating rig, WilPhoenix, was hot-stacked in Invergordon, Scotland throughout the quarter awaiting start-up of a contract with Petrofac on plug-and-abandonment work at a pair of Hess-operated fields off the UK, though this has been postponed to 25 May.

Awilco’s other semisub, WilHunter, remains cold-stacked at the same location.

The company has a remaining contract backlog of $13.8 million for WilPhoenix, which has also been lined up to work for Serica Energy off the UK later this year.

Awilco is also sweating on securing employment for a pair of newbuild harsh-environment rigs ordered on speculation at Singapore yard Keppel Fels for $425 million apiece and now due for delivery in April 2021 and March 2022, respectively.

The contractor had outstanding capital commitments of $757.6 million for the two Moss Maritime CS60 Eco MW-design newbuilds at the end of the last quarter.

Awilco, with a cash balance at the end of the quarter of $27.7 million, is seeking to secure further funding to meet the second installment of $31.9 million to the yard for the first rig that is due next month, as well as ongoing costs related to the newbuild project.

A further installment of $42 million is due for the second rig in March next year, plus the final installment of 80% of the cost of the first rig on delivery in April 2021.

“Funding for this and the earlier payments will be required, by a combination of additional equity and debt. There is also the option to defer the delivery of the rig, and related payment, by up to one year,” the company said.

It added: “Construction contracts with the shipyard are structured such that there is no recourse to the rest of the group in the event of default by the contracting subsidiaries.”

Rigs And Vessels

Mixed financial fortunes for floating rig players