Seawell Limited (SEAW) - Second quarter 2008 results

Transcription

1 Seawell Limited (SEAW) - Second quarter 2008 results Highlights EBITDA increases with 53% from Q1. Seawell reports EBITDA of NOK101.7 million, net income of NOK44.0 million and earnings per share of NOK0.40 for the second quarter of 2008 Successful private placement of 10 mill new shares Purchase of Peak Well Solutions AS for NOK410 million Purchase of Tecwel AS for NOK168 million Awarded a five year extension by BP for drilling and maintenance services on the Valhall and Ula platforms on the Norwegian continental shelf until April 2013 and two times three years options with estimated contract value of NOK2,600 million Awarded a two year extension by Talisman Energy for drilling and maintenance services on the Gyda platform on the Norwegian continental shelf until Dec with estimated contract vaule of NOK300 million Financial statements Second quarter results Consolidated revenues for the second quarter 2008 amounted to NOK885 million as compared to NOK643 million for the second quarter EBITDA for the second quarter was NOK101.7 million as compared to NOK80.7 million in the second quarter Operating profit for the second quarter was NOK83.3 million as compared to NOK67.9 million for the second quarter Balance sheet Total assets increased from NOK million in the balance as per March 31, 2008 to NOK3,000.8 million as of June 30, The increase was due to the company s acquisition activities in the first half of Cash flow At June , cash and cash equivalents amounted to NOK million, an increase of NOK174 million compared to the balance as of March 31, The increase in cash is related to proceeds from operating activities in the second quarter Page 1

2 and financing activities in relation to closing of the purchase of Tecwel AS in the beginning of the third quarter of Private placement At April 10, 2008, 10 million new shares were placed at a subscription price per share of NOK The proceeds will be used as part finance of the Company's recent acquisitions, strengthening of the working capital and positioning for further growth.the total number of shares outstanding after the placements is 110 million. Debt financing Seawell has completed an NOK400 increase in the bank facility from NOK1,100 million to NOK 1,500 through a syndicate of three banks. The facility is secured by the operating cash flow and has a maturity of five years. The interest rate conditions are Nibor plus 125 basis points for the first twelve months, thereafter possibility of lower margin depending on the Net debt/ebitda ratio. Operations Drilling Services The operating revenues in the second quarter was NOK599.9 million compared to NOK million in the previous quarter. The operating margin (EBIT) excluding reimbursables was 7,7% in the second quarter compared to 7,3% in the previous quarter. Platform drilling. Seawell performed drilling operations on 15 fixed platforms and maintenance activities on 16 fixed platforms in the North Sea during the second quarter, as compared to 10 drilling operations and 11 platforms in maintenance mode in the first quarter. The increase was due to the successful integration of Noble Corporation UK platform drilling division including approximately 450 employees in the second quarter. The operational performance was in line with previous quarters, technical uptime on the drilling facilities operated by Seawell remained high and client feedback is solid. Drilling facility engineering The drilling facility engineering group continued work primarily related to fixed platforms where Seawell also perform drilling and maintenance operations. The market demand for engineering services remained sound. In the first half of 2008 Seawell opened an engineering office in Houston, performing commercial jobs for US clients with currently over twenty highly skilled engineers and growing. Modular rigs Based on the increased demand for drilling from existing fixed platforms Seawell established a modular work over and drilling rig division in the first quarter of The progress of the first ordered rig under construction in Germany is in accordance with plans and the rig will be available for offshore operations in the fourth quarter of The rig is on a stand alone basis able to perform infill drilling, sidetracking, well intervention of any kind and plug and abandonment work. Seawell has in addition to the rig contarcted received several fixed priced options for contacting of similar Page 2

3 units.great interest from the market has already been recorded and the Board sees significant room for growth within this new division. Well Services The operating revenues in the second quarter was NOK123.2 million compared to NOK 69.5 million in the previous quarter. The operating margin (EBIT) excluding reimbursables was 25,3% in the second quarter compared to 16,5% in the previous quarter. Well intervention services The well intervention group continued to perform wireline operations and special services on several fields in the North Sea. The success rate in operations and client feedback remained excellent. The activity level and utilisation of personnel and equipment in the second quarter was significantly higher compared to the first quarter. Oilfield technology Peak Well Solutions AS was integrated into Seawell after closing in May and contribute positive in the Well Service division in the later part of the second quarter. At May 27, 2008 Seawell announced the purchase of Tecwel AS. Tecwel AS develops and manufactures proprietary high frequency ultrasound investigation tools and provides cased-hole services within production optimization and well integrity to the oil and gas industry world wide. The purchase price was NOK 168 million. Our geographic presence and operations has in 2008 through organic growth and acquisitions been extended to Africa, Middle East, Far East and USA. Subsequent events In August, Seawell was awarded a new platform drilling contract by BP Norge AS for platform drilling and rig maintenance services on all BP's platform facilities on the Norwegian continental shelf. The contract include drilling facility engineering and rig ready for operations refurbishment work on Ula.The drilling assignment has a firm duration of five years with options for two times three years. Commencement on the Ula drilling assignment is scheduled for Total value of the contract is estimated to approximately NOK 2,600 million. In August, Seawell was awarded a two year contract extension for the years 2009 and 2010 by Talisman Energy for platform drilling and rig maintenance services on the Gyda platform facilities on the Norwegian continental shelf. Total value of the contract is estimated to approximately NOK 300 million. Strategy The strategy is to build a global drilling and well services company focusing on platform drilling, drilling facility engineering, modular rigs, oilfield technology and well intervention services. Page 3

4 We will further expand our geographical operations. Based on executed and planned acquisitions, the company expects to build a true global footprint and thereby fuel our growth into new markets like the Gulf of Mexico, the Middle East, West Africa, North Africa, Brazil and the South East Asia region. Seawell will continue acquiring carefully selected oilfield technology companies to further strengthen the technology content of our services. The board is very pleased with the effort of our employees and the results in the second quarter as well as the development of Seawell over the first 9 months Outlook Integration activities and strengthening of the organization of acquired companies will continue to be a priority in the second half of 2008 in order to achieve expected growth. The demand for drilling and well services is expected to remain high going forward and the Company anticipates increases in revenue and operating margins in the second half of the year. The third quarter results and the full year operating profit are likely to reflect this development. The Board is pleased with the development which has taken place since the Company was spun off from Seadrill last year, and looks optimistic on the possibility to deliver high profitable long term growth to the shareholders. Forward-looking statements This press release contains forward-looking statements. These statements are based on various assumptions, many of which are based, in turn, upon further assumptions, including Seawell management s examination of historical operating trends. Including among other factors that in the Company s view could cause actual results to differ materially from the forward-looking statements contained in this press release are the following: the competitive nature of the offshore drilling industry, oil and gas prices, technological developments, government regulations, changes in economical conditions or political events, inability of the Company to obtain financing for the newbuild on favorable terms, changes of the spending plan of our customers, changes in the Company s operating expenses including crew wages, insurance, repairs and maintenance, failure of yards to comply with delivery schedules on a timely basis and other important factors mentioned from time to time in our reports filed with the Norwegian Securities Dealers Association. August 28, 2008 The Board of Directors Seawell Limited Hamilton, Bermuda Page 4

5 Questions should be directed to Seawell Management AS represented by: Alf Ragnar Løvdal, Chief Executive Officer Lars Bethuelsen, Chief Financial Officer Notes to combined and consolidated results Seawell was established at the end of the third quarter of 2007, as a spin-off of Seadrill s Well Service division. Seawell Ltd (Bermuda) together with its wholly owned subsidiary, Seawell Holding UK acquired the shares in the Seadrill Well Service division entities on October 1, This report represents the consolidated financial statements of the Seawell Ltd group as of June 30, For historical comparison, the report represents the combined financial statements of Seadrill s Well Service division, Seawell combined. The financial accounts for Seawell combined and the consolidated financial statements of the Seawell Ltd group are based on group carrying values for group consolidation purposes. As such Seawell combined and the consolidated financial statements of the Seawell Ltd group include goodwill and surplus values related to fixed assets recorded in the Seadrill group consolidated financial statement for the entities included in Seawell combined. Page 5

6 Condensed, Combined and Consolidated Income Statements Combined and Consolidated Consolidated Combined Consolidated Combined consolidated Unaudited accounts in NOK millions 1Q08 2Q08 2Q07 6M2008 6M Revenues Operating revenues 548,9 723,1 534, , , ,4 Reimbursables 98,1 161,6 109,2 259,7 228,6 451,7 Total revenues 647,0 884,7 643, , , ,1 Operating expenses Operating expenses 486,5 627,3 456, ,8 916, ,9 Reimbursables 94,2 155,7 105,9 249,9 222,9 439,0 Depreciation and amortization 15,8 18,4 12,8 34,2 24,6 53,6 Total operating expenses 596,5 801,4 575, , , ,5 Operating profit 50,5 83,3 67,9 133,8 116,4 250,6 Interest income 2,6 9,2 4,8 11,8 9,0 22,1 Interest expense (29,3) (35,6) (3,7) (64,9) (5,2) (33,7) Other financial items (4,7) (0,7) 0,6 (5,4) (0,6) 3,3 Net financial items (31,4) (27,1) 1,7 (58,5) 3,2 (8,3) Income before income taxes and minority interest 19,1 56,2 69,6 75,3 119,6 242,3 Income taxes 0,4 (14,7) (20,3) (14,3) (36,7) (67,8) Minority interest 1,1 2,5 0,0 3,6 0,0 1,4 Net income 20,6 44,0 57,5 64,6 91,1 175,9 Earnings (loss) per share 0,21 0,40 0,61 1,76 Diluted earnings (loss) per share 0,20 0,40 0,60 1,73 Page 6

7 Condensed Combined and Consolidated Segment Information Consolidated Consolidated Consolidated Combined and consolidated Drilling Services Division Unaudited accounts in NOK millions 1Q08 2Q08 6M Operating revenues 479,4 599, , ,5 Reimbursables 75,2 122,4 197,6 316,7 Total revenues 554,6 722, , ,2 Operating expenses 436,1 547,0 983, ,7 Reimbursables expenses 73,3 118,8 192,1 309,2 Depreciation and amortization 8,2 6,7 14,9 25,9 Total operating expenses 517,6 672, , ,8 Operating profit 37,0 49,8 86,8 190,4 Well Services Division Unaudited accounts in NOK millions 1Q08 2Q08 6M Operating revenues 69,5 123,2 192,7 283,9 Reimbursables 22,9 39,2 62,1 135,0 Total revenues 92,4 162,4 254,8 418,9 Operating expenses 50,4 80,3 130,7 201,2 Reimbursable expenses 20,9 36,9 57,8 129,8 Depreciation and amortization 7,6 11,7 19,3 27,7 Total operating expenses 78,9 128,9 207,8 358,7 Operating profit 13,5 33,5 47,0 60,2 Page 7

8 Condensed Consolidated Balance Sheets Unaudited accounts in NOK millions Current assets Cash and cash equivalents 393,5 219,1 182,5 Receivables 491,5 443,4 396,7 Other current asset 198,7 269,1 91,8 Total current assets 1 083,7 931,6 671,0 Non-current assets Asset under construction 34,8 32,0 0,0 Drilling equipment and other fixed assets 302,8 265,3 237,5 Deferred tax assets 0,0 32,3 30,5 Other intangible assets 123,0 6,7 6,7 Goodwill 1 456, , ,1 Total non-current assets 1 917, , ,8 Total assets 3 000, , ,8 Current liabilities Other current liabilities 492,2 440,0 400,0 Total current liabilities 492,2 440,0 400,0 Non-current liabilities Subordinated loan 576,3 557,0 543,8 Long-term interest bearing debt 1 381, ,9 763,1 Deferred tax 4,6 Other non-current liabilities 207,6 178,2 167,6 Total non-current liabilities 2 169, , ,5 Minority interest 0,8 3,3 4,4 Shareholders' equity Paid-in capital 1 198, , ,4 Share premium fund 141,3 49,7 49,7 Retained earnings , , ,2 Total shareholders' equity 338,3 96,6 86,9 Total shareholders' equity and liabilities 3 000, , ,8 Page 8