Seadrill profit declines 32% as crude slump forces rig delays
MIKAEL HOLTER
HAMILTON, Bermuda (Bloomberg) -- Seadrill, the offshore driller controlled by billionaire John Fredriksen, said fourth-quarter profit fell by a third as low oil prices weaken demand for rigs, forcing it to delay the delivery of new units and consider lowering rates on existing contracts.
Net income dropped to $157 million from $231 million a year earlier after a $232 million impairment of goodwill, said the Hamilton, Bermuda-based company. Sales fell 14% to $1.26 billion.
Seadrill has reached agreements with builders to delay delivery of one semi-submersible unit by 12 months and eight jackup rigs by a total of 44 months, it said. A 60% plunge in oil prices from June to January led oil companies to cut spending on services such as drilling, weakening the market for offshore rigs already confronting a glut of new units.
鈥淲e are facing challenging times,鈥 CEO Per Wullf said in the statement. 鈥淲e have taken prudent and positive action during 2014, and will continue to do so in 2015, to position ourselves to have the flexibility, from an operational and financial perspective, to manage through this downturn.鈥
Seadrill rose as much as 3.4% and was 2.5% higher at 90.45 kroner as of 9:46 a.m. in Oslo.
Seadrill earlier this month said it was striking off $1.1 billion of Petroleo Brasileiro contracts from its order backlog, before Diamond Offshore Drilling this week outlined potential cancellations from Mexico to Brazil.
Contract Adjustments
Seadrill expects to get more requests from clients to amend contracted day rates or terminate deals early, it said. The company may be willing to engage in talks on adjustments if a mutually beneficial agreement can be reached, it said.
Rivals Transocean and Ensco this week booked billions of dollars in one-time charges, and both companies slashed dividends by 80%. Seadrill suspended dividends indefinitely three months ago, ending a five-year streak of either maintained or rising quarterly payouts.
Seadrill also said its 70%-owned subsidiary North Atlantic Drilling believes it will be 鈥渧ery challenging鈥 to close a deal with Rosneft on agreed terms and time, meaning there is 鈥渟ignificant risk鈥 related to $4.1 billion of offshore-rig contracts. International sanctions against Russia forced the parties to delay the agreement last year, and Seadrill no longer includes the contracts in its order backlog.
Rosneft鈥檚 press service didn鈥檛 immediately comment.
Seadrill CFO Rune Magnus Lundetrae, will step down from June 30 after spending seven years at the company, the company said. Lundetrae, who was CFO for three years, will join the investment-banking division of DNB, Norway鈥檚 biggest lender, the bank said separately.