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Challenging times for offshore drilling company

Bermuda-based Seadrill Limited, the offshore drilling company involved in Chapter 11 bankruptcy proceedings, has reported a net loss of $605 million for the first half of 2021.

That compares with a net loss of $2.915 billion in the second half of 2020.

Seadrill reported that its operating loss decreased to $252 million, which includes non-cash impairment of $152 million against the West Hercules rig.

The company had an operating loss of $3.11 billion in the second half of 2020.

Total operating revenue for the half-year was $452 million compared to $461 million in the second half of last year.

The company had cash and cash equivalents at June 30 of $644 million of which $428 million was unrestricted.

Seadrill reported technical utilisation of 92 per cent and economic utilisation of 88 per cent due to downtime incidents on West Saturn and West Tellus.

Excluding these units, technical utilisation and economic utilisation stood at 98 per cent and 94 per cent respectively, the company said.

Thirteen owned units were operating as of June 30, with three additional units returning to operations in the second half of 2021. In addition, ten non-owned units remain under Seadrill's management.

Seadrill has a total backlog of $2.1 billion with approximately $0.5 billion added during the first half of the year.

The company said major milestones were reached towards emergence from Chapter 11 bankruptcy by entering restructuring agreements with certain senior secured lenders and senior note holders, representing 58 per cent and 79 per cent of debt outstanding, respectively.

Seadrill said the proposed plan leaves current shareholders with approximately 0.25 per cent of the go forward equity and as a consequence they face a significant deterioration in value.

The company said separate agreements were reached with SFL Corporation, to reduce its commitments on the lease agreement for the West Hercules, and with Northern Ocean Ltd, to close out all outstanding balances and claims.

Approximately $120 million of backlog was added after the period end, including contracts secured for the West Hercules in Canada and the West Gemini in Angola.

Stuart Jackson, chief executive officer, said: "Seadrill has continued to operate effectively and safely throughout H1 2021, despite ongoing disruptions caused by Covid-19 challenging the industry's logistical capabilities. We are delighted to have increased our order backlog during the period after signing agreements with a number of customers, and we continue to execute on our plan to positively streamline our operations, taking out assets that will not go back to work and addressing the broader leverage issues through the Chapter 11 process.

“Looking forward, we will continue to leverage our technical and functional excellence to maintain our leading position in the offshore drilling industry, evident by our West Saturn drillship where the introduction of hydrogen fuel is set to significantly reduce fuel consumption and our carbon footprint.

“Addressing the leverage of offshore drilling entities and progressing on the journey on asset rationalisation are the first important steps prior to looking to the next stage of industry rationalisation through consolidation, where I expect we will play an active part. The filing of our Plan Support Agreement with strong creditor support marked the next step in this journey for Seadrill."

Seadrill commenced Chapter 11 cases in Texas on February 10 under the section of the US Bankruptcy Code that covers court-supervised restructurings of businesses.

The company is an offshore drilling contractor utilising advanced technology to unlock oil and gas resources for clients across harsh and benign locations across the globe.

Seadrill said its high-quality, technologically advanced fleet spans all asset classes allowing its experienced crews to conduct its operations from shallow to ultra-deep-water environments. It operates 42 rigs, which includes drillships, jack-ups and semi-submersibles.

Challenging times: Seadrill recorded a net loss of $605 million for the first half of the year (File photograph)

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Published August 23, 2021 at 7:46 am (Updated August 23, 2021 at 7:46 am)

Challenging times for offshore drilling company

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