Highlights for the third quarter
- Economic Utilization 1 of 98%.
- Revenues of $136.7 million.
- Operating income of $28.7 million.
- EBITDA 2 of $83.7 million.
- Net loss of $12.8 million and net loss attributable to shareholders of $16.2 million. The loss per share was $0.67.
Financial highlights
Third quarter 2016 results
Revenues for the third quarter 2016 were $136.7 million compared to $164.6 million for the second quarter of 2016. The primary reason for the decrease is the West Phoenix and the West Alpha coming to an end of their contracts in August 2016, partly offset by demobilization revenue for the West Alpha .
Operating income for the third quarter was $28.7 million, a decrease of $25.3 million compared to the second quarter of 2016 operating income of $54.0 million. The decrease in operating income is primarily due to the West Phoenix and West Alpha concluding contracts.
Net financial items for the third quarter of 2016 amounted to a charge of $22.4 million. The charge included $26.6 million in interest expenses and a gain on financial derivatives of $12.9 million, partly offset by a foreign exchange loss of $5.6 million related to the NOK1,500 million bond loan. The second quarter of 2016 incurred a net financial charge of $35.8 million, including interest expenses of $26.8 million, and a loss on derivatives of $8.5 million.
Income tax expense for the third quarter was $19.1 million, compared to $1.6 million in the second quarter of 2016. The increase is mainly attributable to a change estimate of the deferred tax liabilities recognized on long term maintenance.
Net loss for the third quarter was $12.8 million and net loss attributable to shareholders was $16.2 million, resulting in a basic loss per share of $0.67. This is compared to net income of $16.6 million and a net income attributable to shareholders of $12.9 million for the second quarter of 2016.
The Company reports operating revenues of $452.9 million, operating income of $115.7 million and a net loss of $2.3 million for the nine months ended September 30, 2016. This compares to operating revenues of $597.3 million, operating income of $158.6 million and a net income of $34.3 million for the nine months ended September 30, 2015.
Balance sheet as at September 30, 2016
As at September 30, 2016, total assets decreased to $3,038.3 million from $3,119.1 million compared to the previous quarter.
Total current assets decreased to $230.4 million from $258.0 million compared to the previous quarter. The decrease was mainly due to a decrease in accounts receivables on the completion of the West Alpha and West Phoenix drilling contracts.
Total non-current assets decreased to $2,807.9 million from $2,861.1 million compared to the previous quarter. The decrease was mainly due to depreciation on drilling units.
Total current liabilities decreased to $1,332.6 million from $1,400.1 million compared to the previous quarter. The decrease is primarily due to repayments of debt of $53.5 million and also a fall in the mark-to-market interest rate swap liabilities, which fell by $25.8 million to $98.7 million.
Total interest bearing debt, including related party debt and the current portion, decreased to $2,343.0 million from $2,384.8 million during the quarter. During the third quarter the Company repaid $41.7 million on the $2 billion credit facility and $11.9 million on the SFL Linus $475 million credit facility.
Total equity decreased to $391.4 million from $402.6 million compared to the previous quarter. The decrease is primarily due to the net loss for the quarter of $12.8 million.
Cash flow
As at September 30, 2016, cash and cash equivalents increased to $86.1 million from $80.0 million compared to the previous quarter.
For the nine-month period ending September 30, 2016, net cash provided by operating activities was $91.8 million, net cash provided by investing activities amounted to $2.5 million, and net cash used in financing activities was $164.7 million. For the nine-month period ending September 30, 2015, net cash provided by operating activities was $281.1 million, net cash used in investing activities amounted to $29.9 million, and net cash used in financing activities was $210.6 million. The fall in net cash from operating activities compared to the prior year is due to the fall in operating income and the increase in outflows of working capital balances.
-------------------------------------- 1 Economic utilization is calculated as total revenue, excluding bonuses, for the period as a proportion of the full operating dayrate multiplied by the number of days on contract in the period.
2 EBITDA is defined as 'Earnings Before Interest, Tax, Depreciation and Amortization' and has been calculated by taking operating income of $28.7 million, plus depreciation of $55.0 million, but excluding gains or losses on disposals and impairment charges of nil.
This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
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