Fourth Quarter 2014 - Highlights
- EBITDA in Q4 was USD 48.6 million (2014 - USD 124.8 million).
- Operating revenue in Q4 was USD 102.5 million (2014 - USD 321.0 million).
- Sevan Driller achieved technical utilization of 94.5 percent and economic utilization of 90.4 percent in Q4 (2014 - 89.9 percent and 87.0 percent, respectively).
- Sevan Brasil achieved technical utilisation of 95.2 percent and economic utilisation of 89.7 percent in Q4 (2014 - 91.7 percent and 89.9 percent, respectively).
- Sevan Louisiana achieved technical utilisation of 91.7 percent and economic utilisation of 89.8 percent in Q4 (2014 - 65.6 percent and 63.4 percent, respectively).
- Agreement was reached with Cosco Qidong Shipyard ("Cosco") on amended delivery terms for the Sevan Developer.
- Agreement was reached with LLOG on amended terms for Sevan Louisiana's operating contract.
- Agreement was reached with Seadrill Limited ("Seadrill") on amended terms for the revolving credit facility provided to the Company (the "RCF").
- Tranche B of the Company's USD 1.75 billion bank facility was cancelled.
- A non-cash impairment in the amount of USD 101.6 million was taken in relation to Sevan Driller and Sevan Brazil
Financial performance summary
For the three months ended 31 December 2014
Operating revenue
Operating revenue was USD 102.5 million compared to USD 65.7 million in Q4 2013. The revenue increase is explained by improved revenue efficiencies for Sevan Driller and Sevan Brazil and Sevan Louisiana commencing operations in 2014.
Operating expenses
Operating expense was USD 50.2 million compared to USD 38.9 million in Q4 2013. The increase is explained by the effect of Sevan Louisiana commencing operations in 2014 offset by improved operating expenses on Sevan Driller and Sevan Brazil.
General and administrative expenses were USD 14.1 million lower than in Q4 2013 as a consequence of savings following the integration of the Company into Seadrill's management systems and related one-time costs in Q4 2013.
Sevan recognized a non-cash asset impairment of USD 101.6 million in Q4. The impairment was a result of lower "value- in-use" estimates for Sevan Driller and Sevan Brazil compared to their carrying values following the recent decline in the rate levels in the ultra deepwater market, cfr. Note 4 to the accounts for further details.
Net financial items
Net financial items amounted to USD 25.1 million compared to USD 16.6 million in Q4 2013. The increase is mainly a result of the drawdown of further debt to finance the last instalment under the construction contract for Sevan Louisiana in late 2013.
Amortisation of deferred finance costs was USD 8.7 million compared to USD 1.2 million in Q4 2013. This is mainly due to a USD 6.9 million write-off of deferred costs from cancelling tranche B of the bank facility. Interest expense was USD 3.9 million higher than in Q4 2013 due to higher total debt offset by a lower interest rate.
Tax expense
Tax expense was USD 5.0 million compared to zero in Q4 2013. The tax expense consisted of a settlement of income tax liability related to the Group's operations in China and taxes related to Sevan Louisiana operating in US Gulf of Mexico.
For the twelve months ended 31 December 2014 (preliminary)
Operating revenue
Operating revenue was USD 321.0 million compared to USD 249.7 million in 2013. The increase reflects the commencement of Sevan Louisiana's operations in 2014.
Operating expenses
Operating expense was USD 174.3 million compared to USD 152.9 million in 2013. The increase is the result of Sevan Louisiana commencing operations in 2014 offset by improved operating expenses on Sevan Driller and Sevan Brazil.
General and administrative expenses were reduced by USD 18.8 million compared to 2013 due to workforce reductions offset by one-time costs from completing the Company's integration into Seadrill's management systems and the cost of a non-recurring consulting project for an Arctic design rig.
Restructuring expenses related to employee severance costs amounted to USD 2.3 million compared to USD 6.9 million in 2013
Net financial items
Net financial items amounted to USD 70.2 million compared to USD 89.1 million for 2013.
Amortisation of deferred finance cost was USD 34.1 million less than 2013 due to a USD 36.7 million onetime write-off of fees associated with the debt restructuring in 2013. Interest expenses increased by USD 2.3 million from 2013 as a consequence of a higher debt level in 2014. Net financial items in 2013 included a non-recurring gain of USD 10.1 million on interest rate swaps. No swaps have been held in 2014.
Tax expense
Total tax expense in 2014 was USD 6.5 million represented by a USD 2.7 million settlement of an income tax liability in China in Q4 and taxes as a consequence of Sevan Louisiana operating in US Gulf of Mexico.
Balance sheet
Cash and cash equivalents amounted to USD 30.2 million as of 31 December 2014 compared to USD 128.7 million as of 31 December 2013.
Sevan paid interest and made repayments of principal under debt facilities of USD 53.2 million and USD 175.0 million, respectively, in 2014. The corresponding amounts in 2013 were USD 38.8 million and USD 892 million, the latter amount reflecting the refinancing of existing debt which took place in 2013.
USD 40.0 million was drawn under the RCF resulting in an outstanding balance thereunder of USD 115.0 million as of 31 December 2014.
Financing
On 29 December, the RCF was increased to USD 300 million at LIBOR + 6% with expiry in December 2016. Amounts outstanding thereunder are secured by pledges and mortgages over the Group's assets with priority after the lenders providing the bank debt.
Tranche B of the bank facility, which provided USD 350 million to finance the delivery instalment of Sevan Developer, was cancelled as a consequence of the deferral agreement made with Cosco .
General
Sevan is preparing its accounts on the assumption that the company is a going concern. Liquidity is sensitive to the performance of the rigs under their contracts and the continued availability of the RCF. The amendments in Q4 to the RCF provide relief to the previously disclosed liquidity concerns.
For further information, please contact:
Scott McReaken, CEO, Sevan Drilling ASA
+47 91194651 mobile
About Sevan Drilling:
Sevan Drilling ASA is an international offshore drilling contractor specializing in the ultra deepwater segment. Sevan Drilling ASA is listed on Oslo Børs.
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
