Songa Eclipse, Image courtesy Songa Offshore

Investors in Songa Offshore (SONG:OSLO) reacted positively today to comments made by interim CEO and Chairman of the Board, Jens A Wilhelmsen.  Share prices were up over 5.5% to 6.32 NOK.

“The results show that we have now definitely put a challenging period behind us,” commented Mr. Wilhelmsen.  “I am proud and happy to hand Songa over to a new CEO in a state of profit. All rigs are operational with a very high utilisation, and we have good control of all business processes, including the Category D new build programme.”

In Songa’s Q1 earnings report released today, the Oslo-based offshore drilling contractor notes their strategy going forward “will be the continuous improvement of rig operations and to finance the new build program.”

The past 12 months has been pretty tough for Songa and their stock price has taken a beating from a high of nearly 18 NOK, to today’s price of around 6 NOK.

“With the upgrade projects on the rigs behind us, we are now in a position where we should generate a good cash flow from our existing rigs going forward.  This is very important with regards to the financing of our new build programme,” added Songa’s CFO, Geir Karlsen.

Songa Offshore reported a first quarterly profit of USD 9.4 million. EBITDA was USD 50.4 million.

Earnings per share (EPS) and diluted earnings per share (DEPS) for the first quarter were USD 0.05. Average number of shares for the quarter was 202,912,544 and as per period end the outstanding number of shares was 202,912,544.

During the first quarter, there were a number of significant events for Songa, including the sale of the Songa Eclipse to Seadrill, and the appointment of two new directors, Transocean’s EVP for Assets – Mr. Arnaud Bobillier and Mr Steven James McTiernan.

On 18 February, the Songa Trym completed its yard stay and entered into a 3+2 year contract with Statoil. On that same day, Bjørnar Iversen was recruited from Odfjell Drilling AS to eventually take over the reigns as Songa’s CEO on the 1st of June.

On 1 March it Songa announced that their F&G L-900 design semisubmersible drilling rig, Songa Venus entered into a contract extension and farm out agreement with Mubadala Petroleum from the current contract with Petronas. The extension will cover a total of four firm wells in Vietnam and Malaysia under the current contract terms and conditions. This extension will see Songa Venus occupied until October 2013 with an aggregated revenue value of approximately USD 21 million.

Contract revenue backlog at 31 March is USD 6.5 billion firm, with another USD 8.2 billion worth of options.

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Market Outlook

In their earnings report, Songa notes that the short term outlook for the midwater market is largely unchanged from the previous quarter. “Our optimism for increased demand is tempered only by the potential movement of rigs between regions in search of better markets. We will continue to closely monitor this evolving situation. The level of interest from clients remains robust and we are confident that several
of these projects will move forward to the tender phase in the coming quarter, providing an
environment for increased dayrates.”

“During the 8 years Trond Christensen has been with Songa, he has made significant and important contributions to the development of the company. For this, we are grateful. We wish him all the best for the future,” says interim CEO, Jens A Wilhelmsen.

Mr. Christensen will remain at the company’s disposal as a consultant for a further 2 months, until the end of May 2013.

Songa Trym, image: Odfjell

Songa Offshore SE advanced the most in three months in Oslo after the Cyprus-based offshore drilling company said work on its delayed Trym rig is completed and costs won’t be more than it previously estimated.

The Limassol-based company climbed 24 percent, the biggest intraday gain since Nov. 16, to 7.065 kroner by 1:30 p.m. About 3.2 million shares have traded, more than the three-month average for daily volumes. The Trym rig received a compliance certificate and client testing is completed, Songa said today in a statement. The unit will earn a stand-by fee from Statoil ASA while the oil producer makes final modifications, it said.

Songa, with five rigs and four on order, has struggled with higher-than-anticipated spending as it expands to meet rising demand from oil and gas producers. It fell to a record low of 4.1 kroner on Nov. 15 on operational setbacks and amid investor concerns about the strength of the company’s balance sheet.

Completing work on Trym is “good news for the company,” Pareto Securities ASA said in a note to clients. The total cost of the so-called yard stay is expected to be about $205 million, in line with the company’s guidance on Jan. 15, the broker said.

Songa has declined 67 percent in the past year, giving it a market valuation of 1.4 billion kroner ($252 million). While its valuation is now “attractive,” the focus remains on “covenant issues and future refinancing needs,” Pareto said.

- Alastair Reed, Copyright 2013 Bloomberg.

As previously reported, Songa’s net proceeds from the sale is USD 590 million. After repayment of debt, the net cash effect from the sale proceeds will be approximately USD 285 million.

Songa Eclipse, image courtesy Sembcorp Marine

Songa Offshore officially announced the sale of the ultra deepwater semi-submersible drilling rig Songa Eclipse to Seadrill for a net price of USD $590 million.

On Oct 22nd, Songa announced they had reached a “Heads of Agreement” for the potential sale of this rig and today the plan has been finalized between the two drilling contractors.  This rig has had a fairly colorful history over the past year suffering a fair bit of down time due to “labor issues“.  Songa’s latest rig status report mentioned an utterly dreadful operating efficiency of 68% for the month of October, but continued by saying that, “these issues were solved by the end of the month and this far in November the rig has had an operation efficiency of 100% continuing its contract with Total E&P Angola.”

After repayment of debt, the net cash effect from the sale proceeds will be approximately USD 280 million, delivery is expected to take place during December 2012.

The rig is currently operating for Total offshore Angola on a fixed contract ending in December 2013. Total has three one-year options to further extend the contract which will be assumed by Seadrill upon delivery.

Fredrik Halvorsen, Chief Executive Officer of Seadrill Management AS says, “This investment is in line with our strategy of building a modern fleet through selective acquisitions and organic growth. The ultra-deepwater market is in a strong cycle, something we expect to prevail over the coming years and the acquisition increases our exposure to this segment. Furthermore, we are pleased to strengthen our relationship with Total in Angola, and increase our presence in the region, which adds scale to our operations and could further reduce our relative cost base in the region.”

Songa Eclipse is of the same design, Friede & Goldman ExD millenium, as four of Seadrill’s existing rigs in operation, West Sirius, West Taurus, West Orion and West Capricorn. The rig is dynamically positioned (DP 2 class certification) and equipped with Aker Solutions drilling equipment and have water depth capability up to 10,000ft and drilling depth capacity of up to 37,500ft. The subsea well control system includes a six-ram 15K psi BOP stack.

Amid foggy circumstances, the CEO of offshore drilling contractor Songa Offshore, Asbjørn Vavik, has resigned.  Effective immediately, Jens A Wilhelmsen, Chairman of the Board of Directors, has now assumed the additional role as interim CEO.

This announcement comes two days after an unusual decision was announced by drilling contractor to sell the Songa Eclipse, one of their high spec semi-submersible drilling rigs operating for Total off Angola, to Seadrill.

This was the same rig which allegedly experienced an axe fight between one of the Angolan nationals and an expat rig worker this past summer.

For Songa Offshore however, their future as a company looks bright.  They have 4 new drillships under construction at DSME in Korea and solid long term contracts off Norway with Statoil.

Songa Eclipse, image courtesy Sembcorp Marine

Seadrill announced today that they have entered into a Heads of Agreement (HoA) with Songa Offshore for the potential purchase of the ultra deepwater semi-submersible rig Songa Eclipse.

The Songa Eclipse is currently on an 18 month contract with Total E&P Angola which comes with an option for three, one-year extensions.  Its 18-month contract expires at the end of 2013.

This is interesting news considering day rates in that part of the world, especially for ultra-deepwater rigs like the Eclipse are at an all-time high.  This should be a cash cow for Songa however, other factors may be at play.

Looking at Songa Offshore’s worldwide fleet, the Songa Eclipse is fairly unique.  7 out of Songa’s 10 rigs are on long-term contracts for Statoil in the Norwegian North Sea, and the four currently under construction at DSME in Korea will be working for Statoil once built.

The Eclipse isn’t one of them.  In fact, this rig is the only one working in the Southern Hemisphere for Songa.

Being geographically flexible is a rather important fact of life in the drilling biz, so on paper, having a lone asset operating off Angola may not be such a big factor however, we’re also hearing though the gCaptain grapevine that this rig is having personnel issues involving the expats and the local Angolans on the rig.

Dealing with personnel issues would likely not be a significant problem off Norway, however the 3300 miles of geographic separation between Songa’s HQ in Cyprus and Angola may in the end be the biggest factor.  We’ve reached out to Songa for comment, but due to the time difference we have not yet received a response.

UPDATE: The discussion on the gCaptain Forum is beginning to clarify the picture a bit… read more HERE: http://gcaptain.com/forum/drilling-talk/10079-songa-sell-udw-rig-seadrill.html#post86318

Songa Eclipse, image courtesy Songa Offshore

OSLO -(Dow Jones)- Norwegian offshore drilling operator Songa Offshore SE (SONG.OS) Friday said it has been awarded a rig contract from Statoil ASA (STO) worth $2.66 billion for two newbuild cat D semi-submersible rigs, a type of rig which is specially designed to get more out of mature fields.

The contract follows a similar deal signed last July with Statoil that is also for the provision of two newbuild cat D rigs.

The rigs will be built by Daewoo Shipbuilding & Marine Engineering Co. (042660.SE) in South Korea at a fixed price of $570 million per unit, with the first rig due for delivery in February 2014 and the last unit to be delivered in May 2015.

The contract period is for eight years, with an option to extend for 12 years per rig.

With the delivery of four new cat D rigs in 2014-2015, Songa Offshore “will take a lead role in the region” with a total of seven rigs carrying out exploration and production drilling for Statoil and its partners, Songa Offshore Chief Executive Asbjoern Vavik said in a statement.

Songa Offshore said that Statoil has granted bridge financing for the 20% down payment to Daewoo, while further construction costs will be financed by ongoing cash flows and bank loans.

Songa will also operate three semi-submersible rigs for Statoil from the second half of 2012.

Shares closed Thursday at NOK20.70, valuing the company at NOK3.47 billion.

-By Kjetil Malkenes Hovland, Dow Jones Newswires

Wärtsilä and Kongsberg Maritime have been contracted to supply the power, positioning, and automation systems for two new drilling rigs ordered by Songa Offshore AS, the Norwegian arm of the Cyprus-based offshore drilling company. These so called cat D semi-submersible rigs are tailor designed for use by Statoil in mid-water segments, and are being built at the Daewoo Shipbuilding and Marine Engineering Co.Ltd (DSME) shipyard in South Korea.

“The proven reliability and superior efficiency of the Wärtsilä propulsion solutions were the major factors in the award of this contract. Calculating the average load profile for deepwater drilling rigs, the efficiency is approximately three per cent better than those offered by competitors. The high efficiency enables fuel cost savings and has also clear benefits in terms of reducing carbon dioxide emissions (CO2). Furthermore, the local Wärtsilä service network in Norway will provide full support for the equipment,” says Magnus Miemois, Vice President at Wärtsilä Ship Power, Offshore.