Songa Sees Early Signs of Improving Market for Mid-Water Rigs

Norwegian drilling company Songa Offshore said Monday that it is seeing "early signs" of a tightening market for mid-water rigs after several quarters of bidding activity that mainly consisted of short-term jobs.

Reporting its second quarter results, Songa said that it had seen several projects that were bid in 2012 delayed to 2013 especially in South East Asia, raising the prospects for both the Songa Mercur (mid-water semisub) and Songa Venus (mid-water semisub) as they roll off their contracts in mid-2013.
Songa said that it was now seeing requests for quotation that contain longer terms, and that these were being sent up to one year in advance of commencement.
"We continue to expect day rates in the shallow end of the mid-water segment to remain flat until operators begin to issue awards on their already released tenders, at which point we look to a healthier mid-water market," said the firm in its results statement.
Songa reported a profit for 2Q 2012 of $10.6 million. This was significantly down on the $24.9 million profit in made in 2Q 2011 in spite of revenues that were greater by $32.8 million at $161.1 million.
Operating expenses during the quarter were around $13 million greater than those for 2Q 2011, while general and administrative expenses accounted for around $5.5 million of the increase in Songa's costs. Meanwhile, the firm's financing costs increased by $10.2 million.
All but one of Songa's rigs achieved operational efficiency of more than 90 percent during the quarter. The best performers were Songa Venus and Songa Mercur, which achieved 97.7 percent and 100 percent operational efficiencies, respectively.
Songa Eclipse (mid-water semisub) only managed an efficiency of 79.2 percent for the operational part of the quarter. The rig is now continuing its contract with Total E&P in Angola.
Since then, Songa reported in July that it saw four rigs achieve 100 percent, or near 100 percent, efficiency.


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