Offshore drilling contractor Songa Offshore, soon to be acquired by Transocean, booked a loss for the third quarter of 2017 as its revenues dropped due to lack of contribution from two stacked rigs.
According to Songa's quarterly report on Wednesday, its loss for the third quarter 2017 amounted to $24.9 million compared to a profit of $65 million in the prior-year quarter.
Operating revenue for the third quarter 2017 was $171.6 million, compared to $210.6 million for the third quarter 2016. The decrease of $39 million was primarily due to the absence of revenue contribution from Songa Delta and Songa Dee of $31.8 million and $25.7 million, respectively. This was partly offset primarily by the increased revenue contribution Songa Enabler of $13.5 million that started its drilling contract July 29, 2016.
Total revenues dropped to $180.8 million for the third quarter 2017 from $229 million in the same period last year due to the change in the company's operating fleet.
During the third quarter, the company incurred an impairment charge of $6.7 million, primarily related to Songa Trym rig.
All Songa Offshore's four operating rigs are working for Statoil on long-term contracts on the Norwegian Continental Shelf. The Cat D rigs had an average operating efficiency of 98.0% and an average earnings efficiency of 98.3% in the third quarter 2017.
The aggregate contract backlog for the four Cat D rigs was estimated at $3.9 billion at the end of the quarter, with another $7.8 billion worth of options.
Improved market conditions compared to 2016
According to Songa, the North Sea rig market continued to decline throughout 2016 with clear sign of bottoming out in 2017. In 2016, a total of 12 drilling contracts were awarded on the Norwegian Continental Shelf (NCS) and in the UK, while in January to October 2017 there have been 30 contract awards, mostly with dayrates somewhat above opex breakeven levels, but also some contracts with signs of improved dayrates.
The market is expected to have the activity and utilization low-point in 2017, with increased utilization and dayrates thereafter, also driven by continued rig scrapping, Songa concluded.
As previously reported, Songa will soon become a part of Transocean, as the two companies announced in mid-August that Transocean would buy its rival Norwegian-Cypriot offshore driller in a $3.4 billion worth deal.
The combined company will operate a fleet of 51 mobile offshore drilling units with backlog of $14.3 billion consisting of 30 ultra-deepwater floaters, 11 harsh environment floaters, three deepwater floaters and seven midwater floaters.