SDLP - Seadrill Partners LLC Announces Fourth Quarter 2017 Results

  • Operating revenue of $256.3 million.
  • Operating income of $60.1 million.
  • Net income of $33.1 million.
  • Adjusted EBITDA  of $137.9 million.
  • Cash and cash equivalents of $848.6 million.
  • Economic utilization  of 95%.
  • Order backlog of $1.5 billion and average contract duration of 1.5 years as of February 22, 2018. 
  • The Company has received all required lender consents for a waiver of the Term Loan B ("TLB") leverage covenant until the maturity of the TLB in February 2021, subject to customary closing conditions.
  • A distribution has been declared with respect to the fourth quarter ended December 31, 2017 of $0.10 per unit, in line with the third quarter distribution. This cash distribution will be paid on or about March 12, 2018 to all unitholders of record as of the close of business on March 5, 2018.

Financial Results Overview

Total operating revenues for the fourth quarter were $256.3 million (3Q17: $276.8 million). The decrease was primarily due to the West Sirius termination payments having concluded in the third quarter, the West Capella commencing a new contract at a lower dayrate, a full quarter of idle time for the West Aquarius and slightly lower utilization of 95% for our rigs in operation (3Q17: 98%).

Total operating expenses for the fourth quarter were $200.8 million (3Q17: $193.0 million). The increase was primarily due to the reclassification of debt issuance costs from G&A to other financial items in the third quarter not being repeated in the fourth quarter and higher favorable contract amortization related to the West Polaris completing its contract sooner than expected.  These movements were partially offset by lower costs for idle units.

Operating income was $60.1 million (3Q17: $148.5 million). The decrease was due to a smaller gain in the fourth quarter related to the reduction of West Polaris contingent liabilities than what was recognized in the third quarter and the movements referred to above.

Net financial items resulted in an expense of $27.6 million (3Q17: expense of $56.8 million).  The decrease was primarily due to a gain on the mark to market valuation of derivatives of $12.8 million (3Q17: loss of $3.8 million) and lower expenses in other financial items related to debt issuance costs and reclassifications in the third quarter not being repeated in the fourth quarter.

Income before tax was $32.5 million (3Q17: $91.7 million). Income tax for the fourth quarter was a credit of $0.6 million (3Q17: expense of $12.9 million). The tax credit in the quarter was primarily due to lower provisions after filing certain tax returns, partially offset by a write down of deferred tax assets following changes in US tax legislation.

Net income attributable to Seadrill Partners LLC Members was $26.5 million for the fourth quarter (3Q17: $46.3 million) and distributable cash flow  was $25.0 million (3Q17: $31.4 million).