SDLP - Seadrill Partners LLC Announces First Quarter 2016 Results
- Operating revenue of $444.0 million
- Adjusted EBITDA of $305.4 million
- Cash and cash equivalents of $401.2 million
- Distribution per unit of $0.25 with a coverage ratio of 5.27x
- Economic utilization2 of 99%.
- Order backlog of $3.6 billion and average contract duration of 2.2 years as of May 25th.
Financial Results Overview
Total operating revenues for the first quarter were $444.0 million, compared to $467.2 million in the fourth quarter of 2015. The decrease is primarily related to the dayrate reduction on the West Polaris and a decrease in performance related bonuses achieved relative to the fourth quarter, partially offset by a full quarter of operations for the West Vencedor. The West Polaris dayrate reduction from $653,000 to $490,000 has no impact on Adjusted EBITDA or backlog since Seadrill Partners acquired the unit based on a $450,000 dayrate and pays anything above this rate, net of commissions, to Seadrill Limited in the form of deferred consideration.
Total operating expenses for the first quarter were $220.5 million, compared to $229.1 million in the previous quarter. The decrease is primarily due to efficiencies achieved in vessel and rig operating expenses and a reduction in overhead costs.
Operating income was lower for the quarter at $223.5 million ($238.1 million in Q4 2015) due to lower revenue, partially offset by reduced costs.
Financial and other items resulted in an expense of $112.7 million for the first quarter compared to an expense of $43.7 million in the fourth quarter primarily due to a loss on mark-to-market valuation of derivatives of $69.7 million compared to a gain of $19.2 million in the fourth quarter. This loss is related to our interest rate hedge book and was due to a decrease in interest rates in the period. The non-cash element of this expense was $57.5 million in the period.
Income before tax was $110.8 million for the first quarter compared to $194.4 million in the fourth quarter.
Income taxes for the first quarter were $37.6 million compared to $4.8 million in the fourth quarter. The increase is primarily due to tax law changes and additional provisions for uncertain tax positions. Cash tax paid in the quarter was $15.6 million compared to $14.7 million in the fourth quarter.
Net income attributable to Seadrill Partners LLC Members was $36.1 million for the first quarter compared to $96.2 million for the previous quarter.
Distributable cash flow was $99.2 million for Seadrill Partners' first quarter as compared to $98.9 million for the fourth quarter giving a coverage ratio of 5.27x for the first quarter.
Distribution declared for the period was $0.25 per unit, equivalent to an annual distribution of $1.00.