North Atlantic Drilling Limited (NADL), a provider of harsh environment offshore drilling units, and a subsidiary of Seadrill, sees the near-term demand for its services as “extremely challenging.”
The company posted a revenue of $136.7 million , down from $194.4 million in the third quarter of 2015, as the contract of its West Phoenix and the West Alpha rigs came to an end in August 2016, partly offset by demobilization revenue for the West Alpha.
The harsh-environment driller posted a net loss for the third quarter of $12.8 million, compared to a net profit of $1.4 million a year.
During the third quarter, North Atlantic Drilling had three offshore drilling rigs in operation offshore Norway for the full quarter, and at the end of the quarter four rigs were idle: the West Navigator, the West Venture and the West Alpha and West Phoenix went idle in August.
“While our long-term view of the market for harsh environment drilling rigs remains positive, in the near term it remains extremely challenging. Oil prices remained in the $40-50 range during the third quarter, a level that is not sufficient to reverse the declines in oil company upstream spending. It is expected that upstream spending will again decline in 2017, albeit less than previous reductions of approximately 27% in 2016 and 24% in 2015.”
“While the forecasted decline in spending sets the stage for another challenging year in the offshore drilling business it is important to recognize the resetting of costs across the value chain. This may facilitate increased activity on a year over year basis with only a marginal increase in commodity prices if accompanied by pricing stability,” NADL said.