Rig Downtime Costs Seadrill Millions in 2012

By Balazs Koranyi

OSLO (Reuters) – Offshore oil driller Seadrill expects to resolve operational problems this year, it said on Thursday, and predicted rapid profit growth in the years ahead as new drilling vessels it has on order come into service.

Seadrill, part of Norwegian-born shipping tycoon John Fredriksen’s sprawling business empire, expects 10 new rigs this year and another eight over the following two years as it seeks to capitalise on a booming offshore drilling market after a difficult last few months.

The company reported a 5 percent rise to $604 million in earnings before interest, tax, depreciation and amortisation for the final three months of 2012, missing analysts’ recently lowered expectations for $619 million.

Profits were hit by operational problems including difficulties with blowout preventers on several rigs, it said, which sharply increased their downtime and prompted the launch of a complete review of its deepwater drilling business.

Total downtime for the deepwater fleet was around 100 days in the three months, robbing Seadrill of roughly $60 million in revenue as dayrates have stabilised at around $580,000-$620,000.

And the first quarter also started poorly as its drillships and semi-submersible rigs have already amassed 117 days of downtime, it said.

But a key vessel has been fixed and delivered to Statoil, ending much of the firms difficulties, it added.

It now hopes to lift the deepwater fleet’s utilisation rate to 95 percent from 86 percent in the fourth quarter and 82 percent in the third quarter.

As new rigs come into service the world’s second biggest rig operator by market value expects profits to rise sharply as it has amassed a $21 billion order backlog.

By the fourth quarter of 2013 it said it expects its earnings before interest, taxes, depreciation and amortisation to be running at an annualised rate of $3 billion, up from the $2.4 billion full-year figure in 2012, and to go on rising to $4 billion during the first half of 2015.

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