Highlights
- Operating revenue of $418.5 million.
- Operating income of $225.9 million.
- Net income of $112.2 million.
- Adjusted EBITDA of $284.5 million against the previously issued guidance of $320.0 million, which included $62.5 million early termination payment on the West Capella, received in the third quarter.
- Cash and cash equivalents of $450.1 million.
- Distribution per unit of $0.10 with a coverage ratio of 13.12x.
- Economic utilization of 99%.
- Order backlog of $3.2 billion and average contract duration of 2 years as of August 24.
Financial Results Overview
Total operating revenues for the second quarter were $418.5 million (Q1: $444.0 million). The decrease is primarily related to the dayrate reduction on the West Capricorn and the termination of the West Capella.
Total operating expenses for the second quarter were $192.6 million (Q1: $220.5 million). The decrease is primarily due to reduced operating costs on the West Capricorn and West Capella while the rigs are idle, efficiencies achieved on operating expenses for vessels in operation and a reduction in overhead costs.
Operating income was $225.9 million (Q1: $223.5 million). Lower revenues were offset by reduced costs resulting in a small improvement in our operating margin of approximately 4%.
Financial and other items resulted in an expense of $70.1 million for the second quarter (Q1: expense of $112.7 million), the decline in the expense is primarily due to a lower loss on mark-to-market valuation of derivatives of $28.3 million (Q1: loss of $69.7 million). The cash element of this expense was $11.7 million in the period.
Income before tax was $155.8 million for the second quarter (Q1: $110.8 million).
Income taxes for the second quarter were $43.6 million (Q1: $37.6 million). The increase is primarily due to tax law changes and additional provisions for uncertain tax positions. Cash tax paid in the quarter was $12.1 million compared to $15.6 million in the first quarter.
Net income attributable to Seadrill Partners LLC Members was $59.8 million for the second quarter (Q1: $36.1 million).
Distributable cash flow was $98.8 million for Seadrill Partners' second quarter (Q1: $99.2 million) giving a coverage ratio of 13.12x for the second quarter.
Distribution declared for the period was $0.10 per unit, equivalent to an annual distribution of $0.40
