SDLP - Seadrill Partners LLC Announces Fourth Quarter 2018 Results

Highlights
  • Operating revenue of $219.6 million.
  • Operating income of $49.1 million.
  • Net loss of $108.0 million, reflecting a tax expense of c.$73 million which includes uncertain tax positions.
  • Adjusted EBITDA of $130.2 million.
  • Cash and cash equivalents of $841.6 million.
  • Economic utilization of 98%.
  • Order backlog of $920 million as of February 26, 2019.
  • 1 cent per common unit distribution for the fourth quarter of 2018.
 
Financial Results Overview
Total operating revenues for the fourth quarter were $219.6 million (3Q18: $206.2 million). The increase was primarily due to higher uptime on the West Vela after completing its SPS in the third quarter and the West Capella commencing its contract with Shell in Malaysia, partially offset by the completion of West Aquarius contract.

Total operating expenses for the fourth quarter were $167.3 million (3Q18: $155.7 million). The increase was primarily related to commencement costs for the West Capella, reactivation costs for the West Vencedor and general and administrative expenses reverting to the normal run rate after the release of certain accruals in the prior quarter.

Operating income was $49.1 million (3Q18: $50.5 million) as higher revenues were offset by higher costs and the write off of $3.2 million of goodwill due to the early adoption of an accounting standard update which changes the method used to determine impairments to goodwill.

Net financial items resulted in an expense of $83.8 million (3Q18: expense of $55.3 million). The increase in the expense was primarily due to a loss on the mark to market valuation of derivatives of $21.4 million (3Q18: gain of $6.5 million).

Loss before taxes was $34.7 million (3Q18: loss of $4.8 million).

Income tax expense was $73.3 million (3Q18: expense of $14.1 million). This increase primarily relates to a provision for an uncertain tax position we have taken in respect of recent changes in US tax legislation. We continue to assess this issue and are seeking clarification from the relevant authorities.

Net loss was $108.0 million (3Q18: net loss of $18.9 million). Seadrill Partners LLC Members had a net loss for the quarter of $59.1 million (3Q18: net loss of $9.3 million).

Distributable cash flow for the fourth quarter was $13.2 million and our quarterly distribution was reduced to 1 cent per common from 10 cents. The reduction reflects the slower than anticipated recovery in dayrates and our desire to preserve liquidity ahead of debt maturities in the second half of 2020 and first quarter of 2021.

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