Seadrill Expects Stronger Second Quarter after Robust 1Q 2012

by Jon Mainwaring

Press Release

Monday, May 14, 2012

Norwegian deepwater drilling company Seadrill said Monday that it expects earnings for the second quarter of 2012 to be favorably affected by the starting up of operations in April and June of its ultra-deepwater semisubmersible rigs West Leo (UDW semisub) and West Capricorn (DW semisub).

Reporting its first quarter results, the firm said that it also expects to receive a full quarter of earnings from its harsh environment jackup West Elara (490' ILC) – which began operations for Statoil in March.

West Leo began its contract with Tullow Oil offshore Ghana in April, while West Capricorn is due to begin operations for BP in the United States next month.

For 1Q 2012 Seadrill reported operating profits of $456 million, compared with $430 million for 1Q 2011. However, net income was lower than for 1Q 2011, at $480 million compared with $934 million, on account of a one-off $477 million gain last year in connection to the deconsolidation of Seadrill's subsidiary Well Services.

Total revenues for the three month period to March 31 were broadly in line with last year at $1.05 billion (1Q 2011: $1.10 billion).

"We are pleased to report another solid quarter for Seadrill reflecting a strong underlying operational performance," said Seadrill Chief Executive Officer Alf Thorkildsen in a statement.

"Furthermore, the outlook and fundamentals for the oil and gas industry remain strong. Encouraging exploration successes in established as well as frontier basins are leading to an increasing backlog of appraisal and development drilling projects. These strong fundamentals support the expectation of continued strength in all sectors of the contract drilling industry for the foreseeable future. As a consequence we have ordered six newbuilds in the last three months and the Company now has 18 drilling units under construction."

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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