SEVAN DRILLING ASA INTERIM FINANCIAL REPORT FIRST QUARTER 2011

Transcription

1 SEVAN DRILLING ASA INTERIM FINANCIAL REPORT FIRST QUARTER 2011

2 INTERIM FINANCIAL REPORT - FIRST QUARTER 2011 Main figures, first quarter 2011 The numbers below assume that Sevan Drilling ASA ( the Company ) is the owner of Sevan Drilling Invest AS during the whole quarter. Sevan Drilling Invest AS is the sole owner of the Sevan Driller Ultradeep Water drilling rig currently under contract to Petrobras S.A. Sevan Drilling Invest AS was transfred to Sevan Drilling by Sevan Marine as a contribution in kind in April, Operating revenue for the quarter amounted to USD 34 million EBITDAFX was USD 15.8 million. Operating profit was USD 4.8 million, and net loss was USD 16.3 million. Operating revenue includes the revenues of the charter contract for Sevan Driller with Petrobras S.A. which commenced operations in June Sevan Driller had a technical uptime of 90 % in Q and a commercial uptime of 91 %. In April, Sevan Driller had a technical uptime of 86 % and 98 % in May. Of operating expense of USD 18.2 million, USD 1.2 million is related to pre-operational expenses related to Sevan Brasil. The cash operational expenses per day on the Sevan Driller was USD and the remaning operating expenses are overhead. We expect the cash operational expenses to be lower on average during second quarter Financial expense of USD 17.0 million consist of three main cost areas. First, interest expenses of USD 7 million under the Senior Secured Term Loan Facility, the Bond Loan Facility and the Vendor Credit. Second is an USD 2.9 million amortization of upfront fee under the Bond Loan Facility. And the last costs area is associated with the call premium on the Bond Loan facility which was called on March 26, This call premium amounted to USD 7.1million. The foreign exchange loss of USD 7.1 million is related to the NOK 1.0 billion Bond Loan Facility and caused by the depreciation of US dollars against Norwegian Kroner. The Bond Loan Facility was called on March 26, 2011, and fully repaid May 6, In addition the financial expenses includes a call premium of USD 7.1 mill under the Bond Loan Facility.. As of March 31, 2011, total assets amounted to USD 1,298.2 million, of which USD 999 million was capitalized as drilling rigs. Cash and cash equivalents amounted to USD million USD 191 mill was deposited on escrow account March 26, 2011, and used to fully repay the Bond Loan Facility May 6, As of March 31, 2011, the Group has an undrawn long term vendor credit facility relating to Sevan Brasil of approximately USD 80 million. In addition, the Group has undrawn USD 343 million on a bank facility to fund the construction of Sevan Brasil which is not reflected on the balance sheet as per March 31, Construction projects Construction of the ultra deep water Sevan Brasil drilling rig is progressing according to plan. Module fabrication from 24.5 to 36.5 meters has been completed and integrated with the main hull. Living quarter, derrick and drill floor fabrication was integrated with the main hull during the first quarter of Sevan Brasil is p.t. 75 % completed. The Sevan Brasil is based on the same design and major equipment items as Sevan Driller and is scheduled for delivery from the shipyard during the first quarter of The rig will be transported from China to Brasil on a Heavy Lift Vessel. The Company has entered into turnkey construction contracts with Cosco Shipyard for the construction of two newbuilds Sevan design ultradeepwater drilling rigs for delivery in Q and Q The all-in turnkey price for these two rigs is USD 526 mill. According to the construction contracts, the Company paid 20 % of the all-in turnkey contract price upon signing of the construction contracts and the remaning 80 % is payable upon delivery of the rigs.

3 Financing activities The Senior Secured Term Loan Facility of USD 480 million for refinancing of Sevan Driller was fully drawn by March 26, 2011 and the proceeds were used to repay the previuos USD 250 million Senior Secured Term Loan Facility and the NOK 1.0 billion Bond Loan Facility. In May 2011, Sevan Drilling raised approximately USD 364 million in new capital and was listed on Oslo Axess May 3, The proceeds of USD 364 mill is allocated to equity installments under construction contracts with Cosco (USD 210 million) and to working capital (USD 154 mill).. Outlook In March 2011, the Board resolved to transfer ownership in the Sevan Drilling Invest AS from Sevan Marine ASA to the Company by the means of a contribution in kind. The contribution in kind was performed in April, 2011 at continuity book values.l. The market outlook for deep water drilling continues to strengthen. The Company is in dialog with oil companies for marketing of the two newbuilds with the target of obtaining charter contract for the two rigs in due course before delivery of the rigs. Stavanger, May 30, 2011 The Board of Directors Sevan Drilling ASA

4 Interim financial statements Condensed Consolidated Income Statement Unaudited figures in USD million Q1 11 pro Q1 11 Q4 10 Q forma Operating income 34,0 8,1 3,6 0,0 7,8 Operating expense -18,2-9,4-7,2-1,0-14,3 EBITDAFX 15,8-1,3-3,5-1,0-6,5 Foreign exchange gain/(loss) relating to operation -1,8-0,6 0,5 0,4-0,7 EBITDA 14,0-1,9-3,0-0,6-7,2 Depreciation, amortization and impairment -9,2 0,0-6,8 0,0-6,9 Operating profit/(loss) 4,8-1,9-9,9-0,6-14,1 Financial income/(expense) -17,0-1,9-0,6-0,7-2,0 Foreign exchange gain/(loss) relating to financing -7,1 1,3 0,0-1,2-1,2 Net financial items -24,1-0,6-0,6-1,9-3,1 Profit/(loss) before tax -19,3-2,5-10,5-2,5-17,3 Tax income/(expense) 3,0-1,0-0,2 0,0-1,0 Net profit/(loss) -16,3-3,5-10,7-2,5-18,3 Statement of Comprehensive Income Unaudited figures in USD million Q1 11 pro Q1 11 Q4 10 Q forma Net profit/(loss) -16,3-3,5-10,7-2,5-18,3 Foreign currency transaltion 0,0 0,0 0,0 0,0 0,0 Total comprehensive income -16,3-3,5-10,7-2,5-18,3

5 Condensed Consolidated Balance Sheet Unaudited figures in USD million pro forma Sevan Capital Assets 999,0 330,7 165,9 318,3 Other fixed assets 6,0 0,3 0,3 0,3 Intangible assets 0,1 0,1 0,0 0,1 Deferred income tax assets 26,0 0,0 0,0 0,0 Other non-current assets 22,7 3,8 6,2 37,7 Total non-current assets 1 053,9 334,9 172,5 356,5 Inventories 9,4 1,5 0,0 1,4 Trade and other receivables 21,8 10,2 26,4 3,3 Cash and cash equivalents 215,1 6,9 10,9 1,8 Total current assets 246,4 18,6 37,2 6,5 Total assets 1 300,3 353,5 209,7 362,9 Share capital 6,5 6,5 0,5 0,5 Other equity 351,3 162,9-15,2-29,5 Total equity 357,8 169,4-14,7-29,0 Interest-bearing debt 0,0 0,0 0,0 0,0 Other non-current liabilities/provisions 4,8 3,7 80,2 168,0 Total non-current liabilities 4,8 3,7 80,2 168,0 Interest-bearing debt 833,0 150,1 0,0 0,0 Current liabilities 104,8 30,3 144,2 223,7 Total current liabilities 937,7 180,4 144,2 223,7 Total liabilities 942,5 184,1 224,4 391,7 Total equity and liabilities 1 300,3 353,5 209,7 362,7

6 Condensed Consolidated Cash Flow Statement Unaudited figures in USD million Cash flows from operation activities Cash from operations 39,0-4,2-10,3 Net cash generated from operating activities 39,0-4,2-10,3 Cash flows from investment activities Purchases of property, plant and equipment (PPE) -187,3-15,7-73,7 Purchases of intangible assets 0,0 0,0 0,0 Net cash flow from investment activities -187,3-15,7-73,7 Cash flows from financing activities Net proceeds from interest-bearing debt 150,1 0,0 0,0 Loan from ultimate parent company Sevan Marine ASA 3,3-21,4 33,6 Net cash flow from financing activities 153,4-21,4 33,6 Net cash flow for the period 5,1-41,3-50,4 Cash balance at beginning of period 1,8 52,2 52,2 Cash balance at end of period 6,9 10,9 1,8 Condesed Consolidated Statement of Changes in Equity Unaudited figures in USD million Share Share Retained Capital Premium Earnings Total Equity Equity as of December 31, ,5 0,0-29,4-29,0 Conversion of debt 6,0 183,0 189,0 Sale of subsidiaries to Sevan Marine ASA 12,8 12,8 Total comprehensive income for the period -3,5-3,5 Equity as of March 31, ,5 183,0-20,1 169,4 Equity as of December 31, ,5 0,0-2,0-1,5 Total comprehensive income for the period -2,5-2,5 Equity as of March 31, ,5 0,0-4,5-4,1.

7 NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS Note 1 General accounting principles Sevan Drilling ASA (the Company ) and its subsidiaries (together with the Company the Group ) is an international offshore drilling contractor specializing in the ultra deepwater segment. The Group owns one ultra deepwater drilling rig (under construction) with a six year charter contract in Brazil. In addition, the Group serves the service element of the charter contract on one deepwater drilling rig currently operating under a six year fixed term contract in Brazil. Sevan Drilling ASA is a public limited liability company, incorporated and domiciled in Norway. The Group prepares its financial statements in accordance with International Financial Reporting Standards (IFRS) and these financial statements have been prepared in accordance with the International Accounting Standard for Interim Financial Reporting (IAS 34). As the interim financial statements do not include the full information and disclosures as required in the annual financial statements, it should be read in connection with the Annual Financial Statements for The accounting policies adopted in the preparation of the interim financial statements are consistent with those followed in the preparation of the Annual Financial Statements for the year ended December 31, Note 2 Property, plant and equipment The Group s main group of non-current assets relate to those classified as Drilling rigs on the balance sheet. The table below summarizes changes to the balance sheet values of such assets for 2010 and as of March 31, 2011.

8 Property, Plant and Equipment Unaudited figures in USD million Year ended December 31, 2010: Drilling Rigs Drilling Rigs pro forma Book value January 1, 107,6 753,8 Additions 217,6 278,0 Depreciation charge 0,0-34,0 Write-down -6,9-7,8 Book value December 31, 318,3 990,0 At December 31, 2010: Cost 326, ,4 Accumulated depreciation and write-down -8,5-43,4 Book value December 31, 318,3 990,0 Period ended March 31, 2011: Book value January 1, 318,3 990,0 Additions 12,4 18,0 Depreciation charge 0,0-9,0 Write-down 0,0 0,0 Book value March 31, 330,7 999,0 At March 31, 2011: Cost 339, ,4 Accumulated depreciation and write-down -8,5-52,4 Book value March 31, 330,7 999,0 Note 3 Related party transactions The Group has the following transactions and balances relating to the Sevan Marine ASA Group and the Sevan Drilling Invest AS Group in 2010 and Q1 2011: Purchase from associates Q Purchases from the Sevan Marine ASA Group Financial expenses from the Sevan Marine ASA Group Receivable from associate parties Q Receivable from the Sevan Marine ASA Group Receivable from the Sevan Drilling Invest AS Group Payable to associate parties Q Payable to the Sevan Marine ASA Group Payable to the Sevan Drilling Invest AS Group Note 4 Shareholder structure At March 31, 2010, the Company was owned 100% by Sevan Marine ASA.

9 Note 5 Pro forma income statement The Q pro forma income statement reflects the Sevan Drilling ASA Group financial result as if Sevan Drilling Invest AS had been owned by Sevan Drilling ASA during the whole quarter. The proforma adjustments in the table below is a combination of the financial result of Sevan Drilling Invest AS Group and elimination of intercompany transactions between the two drilling Group s. Condensed Consolidated Pro forma Income Statement Unaudited figures in USD million Pro forma Q1 11 adjustments Q1 11 Pro forma Operating income 8,1 25,9 34,0 Operating expense -9,4-8,8-18,2 EBITDAFX -1,3 17,1 15,8 Foreign exchange gain/(loss) relating to operation -0,6-1,2-1,8 EBITDA -1,9 15,9 14,0 Depreciation, amortization and impairment 0,0-9,2-9,2 Operating profit/(loss) -1,9 6,7 4,8 Financial income/(expense) -1,9-15,1-17,0 Foreign exchange gain/(loss) relating to financing 1,3-8,4-7,1 Net financial items -0,6-23,5-24,1 Profit/(loss) before tax -2,5-16,8-19,4 Tax income/(expense) -1,0 4,0 3,0 Net profit/(loss) -3,5-12,8-16,4 Note 6 Pro forma balance sheet The Q pro forma balance sheet statement reflects the Sevan Drilling ASA Group financial position as if Sevan Drilling Invest AS had been owned by Sevan Drilling ASA during the whole quarter. The proforma adjustments in the table below is a combination of the financial position of Sevan Drilling Invest AS Group and elimination of intercompany balances between the two drilling Group s. Interest bearing debt of USD 833 million is classified as current liabilities due to a cross default to a Sevan Marine loan which was in default at This default situation was remedied in April

10 2011. Condensed Consolidated Pro forma Balance Sheet Unaudited figures in USD million Pro forma adjustments pro forma Sevan Capital Assets 330,7 668,3 999,0 Other fixed assets 0,3 5,7 6,0 Intangible assets 0,1 0,0 0,1 Deferred income tax assets 0,0 26,0 26,0 Other non-current assets 3,8 18,9 22,7 Total non-current assets 334,9 719, ,9 Inventories 1,5 7,9 9,4 Trade and other receivables 10,2 11,6 21,8 Cash and cash equivalents 6,9 208,2 215,1 Total current assets 18,6 227,8 246,4 Total assets 353,5 946, ,3 Share capital 6,5 0,0 6,5 Other equity 162,9 188,4 351,3 Total equity 169,4 188,4 357,8 Interest-bearing debt 0,0 0,0 0,0 Other non-current liabilities/provisions 3,7 1,1 4,8 Total non-current liabilities 3,7 1,1 4,8 Interest-bearing debt 150,1 682,9 833,0 Current liabilities 30,3 74,5 104,8 Total current liabilities 180,4 757,3 937,7 Total liabilities 184,1 758,4 942,5 Total equity and liabilities 353,5 946, ,3 Note 7 Events after balance sheet date Following a resolution made by the Board of Directors in Sevan Marine ASA in March 2011 to transfer ownership in Sevan Drilling Invest AS from Sevan Marine ASA to the Company by the means of a contribution in kind, the Group will serve the charter contracts for both of the ultra deepwater rigs; Sevan Driller and Sevan Brasil. The contribution in kind was executed in April The Company has entered into turnkey construction contracts with Cosco Shipyard for the construction of two newbuilds Sevan design ultradeepwater drilling rigs for delivery in Q and Q The all-in turnkey price for these two rigs is USD 526 mill. According to the construction contracts, the Company has paid 20 % of the all-in turnkey contract price upon signing of the construction contracts and the remaning 80 % is payable upon delivery of the rigs