SDLP - Seadrill Partners LLC Announces Half Year 2020 Results
- Economic utilization of 99%.
- Operating revenue of $314.0 million.
- Non-cash impairment of $922.9 million related to certain idle drilling units
- Operating loss of $923.6 million.
- Net loss of $1.1 billion.
- Adjusted EBITDA of $143.8 million.
- Total cash of $559.0 million as at June 30, 2020.
- Order backlog of $122.1 million as of August 25, 2020.
- An agreement with Term Loan B lenders was entered into that created a super senior loan in lieu of a cash interest payment due on June 30, 2020. As a result, a $63.7 million super senior loan, maturing in February 2021 was created carrying PIK interest of Libor+1000 bps and a 10% exit premium. The agreement provides for certain cash restrictions and milestones, including that the Company completes a recapitalization reasonably acceptable to the required lenders on or prior to December 15, 2020.
- The Company retired c.$230 million in secured bank debt and the vessels securing such bank debt will become part of the collateral securing the Term Loan B and super senior loan.
- The West Capella secured a two well contract plus one optional well in Malaysia. Total firm contract value is expected to be approximately $20 million with commencement expected in October 2020 and running to early January 2021.
Financial Results Overview
Total operating revenues for 1H20 were $314.0 million (2H19: $367.8 million). The decrease was primarily due to idle time on the West Capricorn and T-15, completion of the West Aquarius contract, an early termination fee for the West Vencedor during 2H19 not being repeated and fewer days in operation for the West Polaris. These were partially offset by improved uptime and more operating days for the West Capella.
Total operating expenses for 1H20 were $314.7 million (2H19: $357.1 million). The decrease was primarily due to fewer operating days across the fleet, partially offset by higher costs on the West Capella due to more days in operation.
As a result of the deteriorating market due to COVID-19 and oil price declines, the Company recognized a non-cash impairment of $922.9 million in respect of certain idle drilling units.
Operating loss was $923.6 million (2H19: income of $10.7 million). The decrease was primarily due to the non-cash impairment recognized in the period.
Net financial items resulted in an expense of $119.4 million (2H19: expense of $120.7 million). There were offsetting movements related to interest income, interest expense and foreign currency exchange losses. Losses related to derivative financial instruments include a realized loss of $9.6 million and an unrealized mark to market gain of $3.8 million, inclusive of credit risk adjustments.
Loss before taxes was $1.0 billion (2H19: loss of $110.0 million).
Income tax expense was $23.7 million (2H19: credit of $12.9 million) reflecting taxes payable and provisions taken for the expected tax expense for the year. The Company is subject to taxes while reporting a net operating loss in the quarter as losses in one jurisdiction cannot be offset against net income in another.
Net loss was $1.1 billion (2H19: net loss of $97.1 million). Seadrill Partners LLC Members had an attributable net loss for the quarter of $590.8 million (2H19: net loss of $52.8 million).