KCA Deutag Alpha Limited ( KCA Deutag or the Group ) Results for the three months ended 30 June 2018

Transcription

1 Fr immediate release KCA Deutag Alpha Limited ( KCA Deutag r the Grup ) Results fr the three mnths ended 30 June 2018 KCA Deutag, ne f the wrld s leading drilling and engineering cntractrs, is pleased t annunce its results fr the three mnths ended 30 June 2018, reprting EBITDA f $45.9m. Highlights Secnd quarter revenues f $292.8m (2017: $287.5m) Grup Q EBITDA f $45.9m (2017: $50.9m) Onging integratin f the Omani and Saudi Arabian businesses f Dalma Energy LLC fllwing the acquisitin cmpleted n 30 April 2018 Expansin int the Kuwait market fllwing multi-millin dllar cntract award Agreement signed with Scar AQS t frm a jint venture in Azerbaijan t further develp and grw ur peratins in the Caspian Cntract backlg f $6.3bn acrss a blue chip custmer base Available liquidity f $177.6m at 30 June 2018 Cmmenting n the results Nrrie McKay, KCA Deutag s Chief Executive Officer said: The secnd quarter EBITDA was lwer than in the first quarter which benefited frm a number f ne ff upsides. Overall perfrmance was slightly disappinting, particularly in ur Land Drilling business where utilisatin was lwer than Q1, The integratin f the Dalma business int KCA Deutag is prgressing t plan, with synergies already being recgnised and secured. We are pleased t annunce that KCA Deutag will be entering the Kuwait market, having been awarded a multi-millin dllar cntract. Wrking with ur Kuwaiti partner and representative, the Actin Grup, KCAD will supply and perate tw drilling rigs fr an initial term f five years, cmmencing in Q with a ne year extensin ptin. The expansin int Kuwait is an imprtant develpment fr the grup, further increasing ur presence in the Middle East regin. In July, ur Offshre Services business unit signed a jint venture agreement with Scar AQS that will target existing and future pprtunities in the ffshre and nshre Caspian drilling and engineering market 1

2 Our cntract backlg has remained steady at $6.3bn at 1 August 2018, having benefitted frm cntract wins acrss mst f ur business units. We had strng liquidity at the end f the quarter, with $177.6m available under undrawn facilities, after cmpletin f the Dalma acquisitin. Whilst Brent il prices remain abve $70 per barrel, they have fallen back ver the last three mnths, leading t sme suffering f market sentiment. As a result f this, the recvery cntinues t lack mmentum and as we reprted in Q1, 2018, whilst tendering activity remains high, cnversin int cntracts remains challenging. Overall perfrmance in the secnd quarter was lwer than the prir quarter hwever as a business we believe that the lnger term fundamentals remain rbust. Our acquisitin f the Dalma business in Oman and Saudi Arabia gives us a key strategic psitining in the cre Middle East markets, further strengthened by ur entry int Kuwait. The signing f the jint venture agreement in Azerbaijan secures ur lnger term psitin in the Caspian Regin market, and shuld allw us t grw and develp this further in the future. Business Review Revenue and EBITDA Revenue frm business units Cnslidatin adjustments (3) (3) (3) (7) (5) Ttal Revenue EBITDA frm business units Cnslidatin adjustments Exchange 0 0 (1) 0 (1) Crprate csts (5) (5) (5) (10) (10) Ttal EBITDA Land Drilling The Land Drilling business unit reprted EBITDA f $33.6m cmpared t $43.5m in Q2, 2017 and $45.7m in Q1, Land Drilling Revenue EBITDA Land Drilling EBITDA in the secnd quarter was lwer than in bth Q2, 2017 and Q1, In Q2, 2018 we cmpleted the acquisitin f the Dalma businesses in Oman and Saudi Arabia with these rigs cntributing $11.7m f EBITDA in the quarter. This lwer figure represents nly tw mnths f Dalma EBITDA which was impacted by ne rig underging its five-year maintenance verhaul, sme peratinal dwntime, as well as ne rig cming ff cntract at the start f Q2, In Oman we benefited frm a $7.5m early terminatin fee in the first quarter, and subsequent t the end f the secnd quarter we have been infrmed by ur custmer that, due t the 2

3 success f the wells drilled, 2 further Khazzan rigs will be terminated early which we expect t be during the third quarter. We will receive an early terminatin fee fr these cancelled rigs and are already actively bidding these rigs fr ther pprtunities. We have already recntracted the rig which was terminated in the first quarter with a new client and it will start up in Q3, In Saudi Arabia, as a result f the Dalma acquisitin, we nw have 8 perating rigs. We are already wrking n a number f tendering pprtunities and are hpeful that we can grw ur presence in this market. In Russia we had a small number f rigs which were ff cntract during Q2, 2018 resulting in lwer results in this regin. We are tendering fr sme pprtunities t put these rigs back t wrk, hwever this is likely t be later in the year nce the winter rads re-pen. In Algeria ur utilisatin levels have reduced ver the past 12 mnths with Q2, 2018 EBITDA lwer than bth Q1, 2018 and Q2, One f the rigs perating in Q2, 2017 has nw been mved t Russia where it began drilling in August. We have als recently been awarded a new 2 year cntract with additinal ptin perids fr ne f ur rigs which will cmmence peratins in September. There are a number f ther tendering pprtunities which are nging. In Nigeria activity levels remain lw althugh we are currently mbilising a secnd rig t start peratins in the third quarter. Q1, 2018 benefited frm sums received frm a client which had previusly been prvided against. Bentec The Bentec business unit reprted an EBITDA f ($0.7m) cmpared t EBITDA f $0.2m in Q2, 2017 and ($1.6m) in Q1, Bentec Revenue EBITDA (net f eliminatins n cnslidatin) (1) (2) 0 (2) 1 Bentec is currently in the prcess f manufacturing its rig rders fr 5 rigs fr a custmer in the Ukraine and a single rig fr a custmer in Pland. Under the new revenue recgnitin standard IFRS 15 revenue and prfits n these rders will be recgnised n delivery rather than n a percentage f cmpletin basis used previusly. We expect t see an imprvement in prfitability as we start t deliver the rigs. After sales tendering activity has imprved ver the last few mnths with cmpnent sales cntinuing at a cnsistent level. Bentec currently has a reasnable backlg f tp drive rders with additinal ptential rders in the pipeline. 3

4 Offshre Services The Offshre Services business unit reprted EBITDA f $17.0m cmpared t $12.9m in Q2, 2017 and $26.6m in Q1, Offshre Services Revenue EBITDA Offshre Services, adjusting fr a ne ff psitive $12.0m impact in Q1, 2018 as a result f the settlement fr lng verdue amunts in ur frmer MODU business, had higher EBITDA than bth Q1, 2018 and Q2, This imprvement was nt the result f a single cuntry peratin with mst lcatins delivering steady r imprved levels f perfrmance. Our Nrwegian peratins had higher EBITDA than in Q2, 2017 and in line with that experienced in the first quarter. The year n year imprvement was as a result f the start up f peratins n the 2 new CAT J jack-up rigs. Bth f these rigs are nw fully peratinal and perfrming well fr ur client. In June we were re-awarded the drilling cntract n 2 platfrms fr Ttal E&P UK Limited fr an initial term f 3 years. Perfrmance in Azerbaijan has remained strng. In July we annunced that we had reached an agreement t frm a jint venture with Scar AQS in Azerbaijan t be knwn as Turan Drilling & Engineering Cmpany LLC. We believe that this will allw us t maintain and grw ur business in the Caspian as well as ther parts f the Central Asia regin. In Sakhalin activity levels have remained cnsistent quarter n quarter. RDS The RDS business unit reprted EBITDA f $1.2m cmpared t ($0.1m) in Q2, 2017 and $0.4m in Q1, RDS Revenue EBITDA RDS activity has cntinued at relatively lw levels with limited pprtunities t secure new wrk, particularly new greenfield prjects. EBITDA was higher than in the first quarter with imprved results in Nrway which benefited frm the reassessment f a prvisin. During the quarter we cntinued t wrk n sme frnt end evaluatin and design wrk fr a greenfield platfrm drilling rig. Brwnfield wrk in the UK and the Caspian was at similar levels t the prir quarters but we did see lwer activity in Canada. 4

5 Crprate Csts/Other Crprate csts fr the three mnths ended 30 June 2018 were slightly lwer than in Q1, 2018 largely due t incentive pay accruals. There was an exchange lss f $0.2m in Q2, 2018 cmpared t a gain f $0.3m in Q1, 2018 and a lss f $0.8m in Q2, Cashflw Cash flw frm perating activities Cash flw frm investing activities (447) (3) (29) (450) (30) Interest paid (63) (14) (50) (77) (65) Freign exchange (4) (4) (5) (8) (7) Net cash flw befre debt (draw dwn)/repayment (513) 33 (79) (480) (84) Draw dwn (repayment) f debt - incl arrangement fees paid 431 (6) (4) Net cash flw (82) 27 (76) (55) (88) Cashflw frm perating activities in Q2, 2018 was $0.8m cmpared t $54.4m in Q1, 2018 and $4.8m in Q2, The variances during the quarter are largely driven by the wrking capital utflw f $34.5m. This was mainly attributable t an increase in inventry and wrk in prgress as Bentec cntinued t build the current 6 rig rders, as well as a reductin in payables as a result f incentive payments being made, the unwind f deferred incme and the phasing f payrll in Nrway with annual hliday payments made in the secnd quarter. This was partially ffset by a reductin in receivables and the unwind f prepayments. When cmparing t Q1 2018, the wrking capital mvement was psitively impacted by the cllectin f the $41.9m aged receivable in Angla in February. Cashflw frm investing activities was an utflw f $447.0m in Q2, 2018 cmpared t $2.6m in Q1, 2018 and $28.7m in Q2, During the secnd quarter we cmpleted the acquisitin f the Omani and Saudi Arabian businesses f Dalma Energy LLC therefre the majrity f this utflw relates t the payment f the cash cnsideratin and the repayment f Dalma debt. Capital expenditure was $12.2m in Q2, 2018 cmpared t $8.5m in Q1, 2018 and $34.6m in Q2, The capital expenditure in Q2, 2017 included the acquisitin f a rig fr $25m which was previusly wned abve KCA Deutag Alpha Limited. Interest paid in Q2, 2018 was $62.8m cmpared with $13.9m in Q1, 2018 and $50.0m in Q2, Cash interest csts were higher in Q2, 2018 than the first quarter due t the 6 mnthly phasing f interest n ur lan ntes, and higher than the prir year quarter due t cnsent fees assciated with the issuance f new debt in the quarter, and phasing f Term Lan B interest. 5

6 Draw dwn f debt in the quarter includes $400m f prceeds frm the issuance f new senir secured ntes due 2023, tgether with an upsizing in ur Term lan B and is net f transactin fees. 6