Ocean Rig UDW, an offshore drilling contractor, has reported a rise in quarterly profit, and revealed it may be entering the distressed M&A game.
The company Thursday reported net income of $74.9 million for the second quarter of 2015, as compared to a net income of $69.6 million, for the same period a year ago.
Revenues from drilling contracts fell by $8.2 million to $433.2 million for the quarter, as compared to $441.4 million for the same period in 2014.
Also, citing a challenging situation in the drilling market, on July 30, 2015, the company’s Board of Directors decided to suspend its quarterly dividend until market conditions improve.
George Economou , Chairman and Chief Executive Officer of the Company said: “We still believe in the long-term market recovery and in the solid fundamentals of our industry but currently the market remains challenging and we are in the midst of a significant downturn in offshore drilling. The recent volatility in the price of oil and increased availability of drilling units, do not allow for a short-term market improvement. As such, our Board has decided to suspend our quarterly dividend until market conditions improve.”
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Ocean Rig owns a relatively young fleet 13 offshore ultra deepwater drilling units, comprising of 2 ultra deepwater semisubmersible drilling rigs and 8 deepwater drillships. The company has yet to secure contracts for three drillships it has under construction in South Korea.
Furthermore, the company might be looking at the fleet expansion, and not through ordering newbuilds, as Economou hinted Ocean Rig would be interested in buying assets from its peers distressed by the industry downturn.
He said: “Our $4.3 billion of contracted backlog (best in class 93% and 69% of our calendar days under contract in 2015 and 2016 respectively) and approximately $821 million of free cash enables us to not only weather this storm but also to pursue distressed asset opportunities as they arise.”
Offshore Energy Today Staff