Seadrill Reports 4Q Financial Results

Seadrill reports fourth quarter and preliminary 2010 results:

Highlights

  • Seadrill generates fourth quarter 2010 EBITDA of US $618 million
  • Seadrill reports fourth quarter 2010 net income of US $268 million and earnings per share of US $0.61 after adverse accounting impact of US $145 million (US $0.35 per share) linked to the successful early conversion of the Company's convertible loans
  • Seadrill increases quarterly regular cash dividend to US $0.675 per share and distributes an extraordinary dividend payment of US $0.20 per share
  • Seadrill orders two ultra-deepwater drillships for a total consideration of less than US $1,200 million and four new jack-up rigs for a total consideration of US $790 million
  • Seadrill finalizes disposal of 1984-built jack-up rig West Larissa for US $55 million
  • Seadrill acquires the 2008-build 375ft jack-up rig Petrojack IV (renamed West Cressida) for US $180 million
  • Seadrill takes delivery of the new 375ft jack-up newbuild rig West Juno
  • Seadrill issues a new convertible debt of US $650 million and a fixed rate bond of US $350 million
  • Seadrill completes induced offer to accelerate conversion of US $750 million of convertible debt into equity
  • Seadrill agrees to purchase two ultra-deepwater semi-submersible units for US $1.200 million and simultaneously secures nearly 100 percent debt financing for the investment

Subsequent events

  • Seadrill establishes new harsh environment focused drilling company named North Atlantic Drilling Limited and raises US $425 million in a Private Placement
  • Majority owned Seawell Limited completes the merger with Allis-Chalmers

Preliminary results 2010

Seadrill today reports preliminary consolidated revenues for 2010 of US $4,041 million as compared to revenues of US $3,254 million in 2009. The increase in revenues mainly reflects delivery of several newbuilds during 2010, as well as consolidation of the acquired Scorpion Offshore units, effective from June 1, adding seven jack-ups to the Company's fleet.

Operating profit for the full year was US $1,625 million as compared to US $1,372 million in 2009. Net financial items showed a loss of US $295 million. Net income for the year was US $1,172 million, compared to US $1,353 million in the 2009 accounts.

Fourth quarter 2010 results

Consolidated revenues for the fourth quarter 2010 were US $1,169 million compared to US $1,086 million for the preceding quarter. Operating profit for the fourth quarter was US $479 million, as compared to US $431 million in the third quarter. The fourth quarter operating profit included a gain of US $26 million from the sale of West Larissa.

Operating profit from the Mobile units, excluding the gain on West Larissa, was US $361 million, as compared to US $359 in the preceding quarter. The improvement was mainly related to a full quarter in operations for the new drillship West Gemini in Angola offset by idle time on some of the jack-up rigs.

Operating profit from the Tender rigs amounted to US $75 million as compared to US $58 million in the third quarter. The improvement was related to reduction in operating expenses and several non-recurring items.

Operating profit from Well services amounted to US $18 million, up from US $15 million in the third quarter due to increased activity.

Net financial items for the fourth quarter resulted in an expense of US $176 million as compared to an expense of US $33 million in the third quarter.

Income before income taxes was US $303 million. Income taxes were US $35 million.

Net income for the quarter amounted to US $268 million, equivalent to earnings per share of US $0.61. This was impacted by the successful early conversion of the convertible loans (US $145 million, or US $0.35 per share).

Chief Executive Officer in Seadrill Management AS Alf C Thorkildsen commented, "The fourth quarter marked a solid closing of the financial year 2010 that saw strong growth in earnings for the Company. During the year, we commenced operations for six new drilling units, acquired 11 existing units and ordered six new drilling units. Furthermore, we secured US $3.4 billion worth of new contracts, which will provide for a solid cash generation over the next years. In response to our solid operations, strong contract backlog and favorable market outlook, we are pleased to announce to our shareholders a further increase in our quarterly cash dividend, this time combined with an extraordinary dividend."

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