Ensco has swallowed a bitter pill with confirmation it has taken fourth-quarter 2014 non-cash goodwill and asset impairments totalling US $3.9 billion, as the offshore driller continues to trim its sails along with every other rig contractor during the current industry slowdown.
But the company also went firmly onto the front foot in terms of outlining its ongoing plans for its deepwater floater fleet, and highlighting the issues being experienced by several of its peers.
In its results presentation Ensco pointed out a number of newbuild deferrals and cancellations being made elsewhere, including:
- Atwood – delivery dates for two drillships with expected delivery dates in 2015 being delayed by six months each
- Transocean – delivery dates for five jackups with 2016 and 2017 expected delivery dates delayed by an average of 10 months
- Others – flagged up reports suggesting up to 12 floaters under construction for SETE Brasil in its build program for Petrobras may be cancelled.
- 6 jackups ordered by non-established drillers were cancelled in second-half 2014.
On the high-grading of its own fleet, Ensco pointed out that it has seven newbuild rigs with differentiated designs under construction, and that mooring capability is also to be added to several of its ENSCO 8500 Series rigs. It also has seven "held-for-sale" rigs as of fourth-quarter 2014, with 19 rigs already sold since the start of 2010.
Ensco added that that its 2015 results would benefit from these newbuilds and prior upgrades to other units.
CEO Carl Trowell said that, given “the severe downturn in the offshore drilling markets”, it was reducing its quarterly dividend (to $0.15 per share), cutting its offshore employee base as it cold stacks rigs, reducing offshore discretionary compensation and onshore support costs, and negotiating with vendors and suppliers to lower costs.
Striking a more optimistic note, however, he continued: “In spite of challenging market conditions during 2014, we further improved rig uptime performance and had our best ever total recordable incident rate.”
Fourth-quarter revenues grew 2% to $1.160 billion, up from $1.138 billion a year earlier, mostly due to the addition of three ENSCO 120 Series jackups to the active fleet and a full quarter of operations for the ENSCO DS-7 drillship in the quarter. The average day rate for the fleet increased to $243,000 from $235,000 a year ago.
Specifically on the floater segment, revenues declined 5% to $663 million in fourth-quarter 2014 as lower reported utilisation and average dayrates more than offset a full quarter of operations for the ENSCO DS-7 and the return of the ENSCO 5004 and ENSCO 5005 to the active fleet.
The average day rate decreased 6% to $429,000 in the quarter, while reported utilisation dropped slightly to 81% from 82% a year earlier.
The fourth-quarter 2014 floater results included the $2.998 billion goodwill impairment.
Recommended Reading
TotalEnergies Starts Production at Akpo West Offshore Nigeria
2024-02-07 - Subsea tieback expected to add 14,000 bbl/d of condensate by mid-year, and up to 4 MMcm/d of gas by 2028.
Vår Energi Hits Oil with Ringhorne North
2024-04-17 - Vår Energi’s North Sea discovery de-risks drilling prospects in the area and could be tied back to Balder area infrastructure.
Equinor Receives Significant Discovery License from C-NLOPB
2024-02-02 - C-NLOPB estimates recoverable reserves from Equinor’s Cambriol discovery at 340 MMbbl.
US Raises Crude Production Growth Forecast for 2024
2024-03-12 - U.S. crude oil production will rise by 260,000 bbl/d to 13.19 MMbbl/d this year, the EIA said in its Short-Term Energy Outlook.
Sinopec Brings West Sichuan Gas Field Onstream
2024-03-14 - The 100 Bcm sour gas onshore field, West Sichuan Gas Field, is expected to produce 2 Bcm per year.