SDLP - Seadrill Partners LLC Announces Second Quarter 2018 Results
- Operating revenue of $418.1 million.
- Operating income of $239.2 million.
- Net income of $217.2 million.
- Adjusted EBITDA of $320.1 million.
- Cash and cash equivalents of $805.9 million.
- Economic utilization of 96%. Excluding downtime for planned maintenance, utilization was 98%.
- Order backlog of $1.2 billion as of August 21, 2018.
- 10 cent per common unit distribution for the second quarter of 2018.
Financial Results Overview
Total operating revenues for the second quarter were $418.1 million (1Q18: $194.3 million). The increase was primarily due to the West Leo litigation judgment, which was in our favor. We received approximately $250 million in litigation proceeds in July which will not be appealed, of which approximately $204 million was recognized as revenue in the second quarter.
Excluding the impact of the litigation proceeds, underlying revenue improved by approximately $20 million primarily due to the West Aquarius commencing operations during the quarter and contractual dayrate increases on the West Vela, West Auriga and West Capricorn. These were partially offset by fewer operating days for the West Capella and the West Vencedor being off contract for a full quarter.
Total operating expenses for the second quarter were $178.9 million (1Q18: $176.1 million), reflecting small quarterly variations in costs.
Operating income was $239.2 million (1Q18: $18.2 million). The increase was primarily related to revenue recognized from the successful outcome of the West Leo litigation. Underlying operating income improved by approximately $17 million due mainly to the West Aquarius commencement referred to above.
Net financial items resulted in an expense of $31.3 million (1Q18: expense of $25.9 million). The increase in the expense was primarily due to the higher interest rate on our Term Loan B ("TLB") agreed to as part of the amendments completed in February 2018 and a lower gain on the mark to market valuation of derivatives of $10.8 million (1Q18: gain of $29.0 million). This was partially offset by $24 million of interest income recognized as part of the West Leo judgment and advisory fees related to the amendments on our TLB incurred in the first quarter not being repeated in the second quarter.
Income before tax was $207.9 million (1Q18: loss of $7.7 million). Income tax for the second quarter was a credit of $9.3 million (1Q18: expense of $8.6 million). The tax credit in the quarter was primarily due to changes in uncertain tax positions after reassessing several provisions taken.
Net income was $217.2 million (1Q18: net loss of $16.3 million). Seadrill Partners LLC Members had net income for the quarter of $127.7 million (1Q18: net loss of $3.2 million).