KCA Deutag Alpha Limited ( KCA Deutag or the Group ) Results for the three months ended 31 March 2018

Transcription

1 Fr immediate release KCA Deutag Alpha Limited ( KCA Deutag r the Grup ) Results fr the three mnths ended 31 March 2018 KCA Deutag, ne f the wrld s leading drilling and engineering cntractrs, is pleased t annunce its results fr the three mnths ended 31 March 2018, reprting EBITDA f $65.8m. Highlights First quarter revenues f $291.1m (2017: $269.1m) Grup Q EBITDA f $65.8m (2017: $50.1m) Acquisitin f the Omani and Saudi Arabian businesses f Dalma Energy LLC cmpleted n 30 April 2018, bringing 29 additinal land rigs int the fleet Successful re-award f platfrm drilling cntract n five f Equinr s (frmerly Statil) platfrms in the Nrwegian Nrth Sea wrth up t $800m Bentec awarded cntract in Pland t supply a new build 2,000 HP drilling rig Cmbined cntract backlg at 1 May 2018 f $6.3bn acrss a blue chip custmer base Available liquidity f $259.7m at 31 March 2018 Cmmenting n the results Nrrie McKay, KCA Deutag s Chief Executive Officer said: The first quarter EBITDA was in line with the furth quarter f 2017 but ahead f Q1, Q1, 2018 EBITDA benefited frm sme ne-ff items, including $12.0m as a result f a settlement with a custmer fr a significant verdue receivable, and a $7.5m early terminatin fee in Oman has been a very active perid fr the grup, and n 30 April 2018, we annunced the cmpletin f the acquisitin f the Omani and Saudi Arabian businesses f Dalma Energy LLC. As a result f the acquisitin KCA Deutag is nw ne f the largest Internatinal wners and peratrs f drilling rigs in the Middle East. The acquisitin was partly financed by the issue f a new bnd fr $400m due 2023 and an increase and extensin f ur Term Lan B facility. In April, ur Offshre Services business unit was successfully re-awarded a cntract fr the prvisin f drilling peratins, maintenance services and engineering supprt by Equinr fr five platfrms perating in the Nrwegian Nrth Sea in the Oseberg and Kvitebjørn fields. 1

2 Bentec als had a gd cntract win in the quarter, as we were successful in securing a rig rder frm a custmer in Pland t supply a new build 2,000 HP drilling rig. Cmbined cntract backlg f $6.3bn at 1 May 2018 benefitted frm these cntract wins, as well as the additin f the backlg related t the Dalma acquisitin. We had strng liquidity at the end f the quarter, with $259.7m available under undrawn facilities. Our liquidity psitin was bsted by the $41.9m verdue receivable cllectin in February. Oil prices have cntinued t steadily imprve s far in This has helped t maintain general market sentiment with mst analysts frecasting a mre balanced supply and demand psitin in glbal markets with reducing inventry levels. Hwever, in spite f these signs f a tightening il market, there has been little upward revisin in E&P spending, with cntinued peratr hesitancy arund increasing investment. Given this utlk, we anticipate recvery will be slw, and while we cntinue t experience high levels f tendering activity in many markets, it is taking lnger than expected fr tenders t cnvert int cntract awards. Overall perfrmance in the first quarter was satisfactry, albeit assisted by sme ne-ff items that benefited bth the bttm line as well prviding a welcme bst t liquidity. The fundamentals f ur business remain strng and the cmpletin f the acquisitin f the Omani and Saudi Arabian businesses f Dalma Energy LLC is a significant strategic step frward fr the cmpany. Business Review Revenue and EBITDA Revenue frm business units Cnslidatin adjustments (3) (3) (2) (3) (2) Ttal Revenue EBITDA frm business units Cnslidatin adjustments Exchange Crprate csts (5) (4) (5) (5) (5) Ttal EBITDA Land Drilling The Land Drilling business unit reprted EBITDA f $45.7m cmpared t $43.0m in Q1, 2017 and $42.4m in Q4, Land Drilling Revenue EBITDA Land Drilling EBITDA in the first quarter was higher than in bth Q1, 2017 and Q4, Perfrmance in Oman in the quarter was psitively impacted by early terminatin fees in respect f a rig in Oman, which ended its cntract early. Utilisatin in Russia reduced slightly 2

3 in the first quarter, and we anticipate sme additinal gaps in utilisatin during the secnd and third quarters. Our last tw rigs wrking n CDS cntracts in Russia transferred nt day rate cntracts during Q1, 2018, allwing us t release a prvisin related t these cntracts in February. In Algeria utilisatin remained steady during the first quarter with three rigs wrking, hwever since the end f the quarter ne f these rigs has cmpleted its cntract. We d cntinue t see a rbust level f tendering pprtunities, but the final decisins cntinue t be pstpned and it is taking lnger than anticipated fr these tenders t be cnverted int cntracts. In Nigeria activity remains very lw, hwever in April ne f ur rigs cmmenced wrk n a shrt term cntract. In additin, during Q1, 2018 we cllected an verdue receivable which allwed us t release a $2.7m prvisin. Fllwing cmpletin f the acquisitin f the Omani and Saudi Arabian businesses f Dalma Energy LLC in April, ur Land business unit has cmmenced wrk n the integratin and cnslidatin f these peratins int the enlarged KCA Deutag grup. Bentec The Bentec business unit reprted an EBITDA f ($1.6m) cmpared t EBITDA f $0.3m in Q1, 2017 and ($0.5m) in Q4, Bentec Revenue EBITDA (net f eliminatins n cnslidatin) (2) (1) 0 (2) 0 Bentec experienced a small reductin in activity frm the furth quarter with lwer levels f cmpnent sales impacted by the timing f deliveries. During the quarter Bentec started the manufacture f the five rig rder fr a custmer in the Ukraine with deliveries scheduled t start frm Q until Q Under the new revenue recgnitin standard IFRS 15, which became effective fr accunting perids beginning n r after 1 January 2018, revenues under this cntract will be recgnised n delivery f the rigs and assciated equipment rather than recgnising revenue and EBITDA based n the percentage f cmpletin. During the quarter Bentec was successful in securing an additinal rig rder frm a custmer in Pland t supply a new build 2,000 HP drilling rig. This brings the ttal number f rigs currently in the rder bk t six. This gives us cnfidence that earnings frm Bentec will imprve in the secnd half f the year as rig deliveries cmmence. Offshre Services The Offshre Services business unit reprted EBITDA f $26.6m cmpared t $11.3m in Q1, 2017 and $26.5m in Q4, Offshre Services Revenue EBITDA

4 Offshre Services activity shwed a small increase in EBITDA frm Q4, 2017 and a significant increase frm the first quarter f During the quarter, we reached a settlement in respect f amunts significantly verdue under a drilling cntract ffshre Angla, which resulted in the receipt f $41.9m in February. This allwed us t release a prvisin during the first quarter, resulting in an EBITDA upside f $12.0m. During Q4, 2017 we had high earnings in Nrway assciated with the delivery f the tw new Cat J jack-up rigs, which bth mved int the peratinal phase f the cntract during the first quarter f Withut the impact f these ne-ff items, ur underlying activity in Offshre Services in the first quarter was slightly lwer than the prir quarter due t seasnal activity reductins, particularly in the Nrth Sea. In Nrway we were successfully re-awarded a cntract n five f Equinr s platfrms fr the prvisin f drilling peratins, maintenance services and engineering supprt fr the Oseberg and Kvitebjørn fields. The new cntract will cmmence n 1 Octber 2018, fr fur years with ptins t extend by up t anther six years. In additin, we were als granted an extensin t ur current drilling cntract n the Ringhrne platfrm by peratr Pint Resurces AS als in the Nrwegian Nrth Sea. The cntract extensin is fr fur years with ptins t extend fr up t anther fur years. RDS The RDS business unit reprted EBITDA f $0.4m cmpared t $0.6m in Q1, 2017 and $1.6m in Q4, RDS Revenue EBITDA RDS activity has cntinued at lw levels with limited pprtunities t secure new wrk, particularly new greenfield prjects. EBITDA reduced slightly frm the furth quarter, which benefitted frm the release f certain prvisins. Our expectatin remains that a significant rebund in RDS activity will depend n the strength f the recvery and the rate at which lnger-term cnfidence returns t ur custmers. We cntinue t fcus n securing what limited prjects are available whilst als cntinuing t manage ur csts and seek diversificatin pprtunities ut with the il and gas sectr. Crprate Csts/Other Crprate csts fr the three mnths ended 31 March 2018 were slightly higher than in Q4, 2017 due t incentive pay accruals and the phasing f certain csts. There was an exchange gain f $0.3m in Q1, 2018 cmpared t a gain f $0.2m in Q4, 2017 and an exchange lss f $0.3m in Q1, Cashflw 4

5 Cash flw frm perating activities Cash flw frm investing activities (3) (4) (1) (3) (1) Interest paid (14) (53) (15) (14) (15) Freign exchange (4) 3 (3) (4) (3) Net cash flw befre debt repayment (6) 33 (6) Draw dwn (repayment) f debt - incl arrangement fees paid (6) (6) (7) (6) (7) Net cash flw (13) 27 (13) Cashflw frm perating activities in Q1, 2018 was $54.4m cmpared t $88.2m in Q4, 2017 and $12.9m in Q1, The variances are largely driven by wrking capital, as during Q1, 2018 we had a reductin in receivables assciated with the receipt f the $41.9m verdue receivable already referenced. This drives mst f the imprvement frm Q1, 2017 ffset by increased inventry and wrk in prgress assciated with the cnstructin f rigs in Bentec and lwer levels f accrued liabilities due t reduced CDS activities in Russia. Cashflw frm perating activities in Q4, 2017 benefitted frm early custmer cllectins, and a significant advanced payment received by Bentec relating t a rig cntract. Cashflw frm investing activities was an utflw f $2.6m in Q1, 2018 cmpared t $4.3m in Q4, 2017 and $1.2m in Q1, Capital expenditure was $9.4m in Q1, 2018 cmpared t $10.9m in Q4, 2017 and $6.8m in Q1, Interest paid in the quarter f $13.9m was lwer than the $14.9m in Q1, 2017 and the $53.3m in Q4, 2017 due t timing differences f the six mnthly interest payments. Overall net cashflw befre draw dwn r repayment f debt was an inflw f $33m cmpared t an inflw f $34m in Q4, 2017 and an utflw f $6m in Q1,