Jack-up drilling rig contractor Shelf Drilling has reported a sequential drop in quarterly revenue, citing rig utilization levels fall, and decreased day rates due to the COVID-19 pandemic.
Revenue was $155.0 million in Q2 2020 compared to $181.4 million in the first quarter 2020.
The $26.4 million (14.5%) sequential decrease in revenue was due to a combination of lower dayrates and effective utilization. Net income in the second quarter was $8.1 million.
Adjusted EBITDA was $61.5 million, representing an Adjusted EBITDA margin of 40%.
“The average dayrate decreased to $57.8 thousand in Q2 2020 from $64.2 thousand in Q1 2020 primarily explained by lower pricing where customers renegotiated dayrates as a result of the COVID-19 pandemic. Effective utilization decreased to 84% in Q2 2020 from 92% in Q1 2020, mostly due to the completion of two contracts in early Q2 2020 in Nigeria and India,” the offshore drilling company said.
Providing his take on the outlook for the jack-up rig market, David Mullen, Shelf Drilling CEO said: "The offshore jack-up rig market outlook has substantially deteriorated since the beginning of the year, with a number of contract terminations and suspensions with limited new fixture activity since the onset of the COVID19 pandemic.
"I expect to see continued pressure on dayrates and lower rig utilization for the near to medium term. However, I remain confident that our customer relationships, our efficient operating platform and the quality and dedication of our people will continue to make Shelf Drilling the international jack-up contractor of choice.”
Shelf Drilling's total debt at June 30, 2020, was $1.0 billion, including $55.0 million drawn on the company’s revolving credit facility. The company's backlog at June 30 was $1.6 billion across 30 contracted offshore drilling rigs.