Income Statement – Key Figures
(USD mill) 1Q 2017 4Q 2016 Change
Operating revenues 95,5 152,5 (57,0)Recharged income 2,9 4,3 (1,4)Total revenues 98,4 156,8 (58,4)
Operating costs (54,7) (55,5) 0,8 Recharged expenses (2,9) (4,1) 1,2 Total operating expenses (57,6) (59,6) 2,0
Oper. result before depr. (EBITDA) 40,8 97,2 (56,4)
Depreciation (55,0) (65,2) 10,2 Impairment - (10,5) 10,5 Operating result (EBIT) (14,2) 21,5 (35,7)
Net financial items (6,6) (2,9) (3,7)Result before tax (20,8) 18,6 (39,4)
Estimated tax (5,6) (8,9) 3,3 Net result (26,4) 9,7 (36,1)
EBITDA comparison 1Q 2017 vs. 4Q 2016
41
15
13
13
10
597
0
20
40
60
80
100
120
4Q EBITDA Borgsten Bideford Overhead Blackford Other 1Q EBITDA
MU
SD
Financial Items Breakdown
(USD mill) 1Q 2017 4Q 2016 Change
Interest income 4,6 0,8 3,8 Gains on financial instruments 0,5 1,2 (0,7)Financial income 5,1 2,0 3,1
Interest expenses (8,3) (8,8) 0,5 Losses on financial instruments (0,3) (1,9) 1,6 Other financial expenses (2,8) (4,0) 1,2 Financial expenses (11,4) (14,7) 3,3
Net foreign currency gain (0,3) 9,8 (10,1)
Net financial items (6,6) (2,9) (3,7)
Offshore Drilling Segment
(USD mill) 1Q 2017 4Q 2016 Change
Operating revenues 90,2 149,9 (59,7)Recharged income 2,9 4,3 (1,4)Total revenues 93,1 154,2 (61,1)
Operating costs (48,6) (51,9) 3,3 Recharged expenses (2,9) (4,1) 1,2 Total operating expenses (51,5) (56,0) 4,5
Oper. result before depr. (EBITDA) 41,6 98,2 (56,6)
Depreciation (54,5) (64,8) 10,3 Impairment - (10,5) 10,5
Operating result (EBIT) (12,9) 22,9 (35,8)
Engineering & Fabrication Segment
(USD mill) 1Q 2017 4Q 2016 Change
Operating revenues (external) 5,3 2,6 2,7 Inter-segment revenues 0,2 0,2 - Total operating revenues 5,5 2,8 2,7
Operating costs (6,3) (3,8) (2,5)Oper. result before depr. (EBITDA) (0,8) (1,0) 0,2
Depreciation (0,5) (0,4) (0,1)
Operating result (EBIT) (1,3) (1,4) 0,1
Consolidated Balance Sheet
(USD mill) 31 Mar 2017 31 Dec 2016 Change
Property, plant & equipment 1 307,3 1 361,0 (53,7)Other non-current assets 17,4 17,3 0,1 Total non-current assets 1 324,7 1 378,3 (53,6)
Other current assets 189,4 221,3 (31,9)Cash and cash equivalents 333,3 290,4 42,9 Total current assets 522,7 511,7 11,0 Total assets 1 847,4 1 890,0 (42,6)
Equity 826,8 853,2 (26,4)
Non-current interest bearing debt 776,9 879,6 (102,7)Other non-current liabilities 92,7 90,9 1,8 Total non-current liabilities 869,6 970,5 (100,9)
Current interest bearing debt 95,5 - 95,5 Other current liabilities 55,5 66,3 (10,8)Total current liabilities 151,0 66,3 84,7 Total equity and liabilities 1 847,4 1 890,0 (42,6)
Consolidated Cash Flow
(USD mill) 1Q 2017 4Q 2016 Change
Profit before income taxes (20,8) 18,6 (39,4)Depreciation and impairment 55,0 75,7 (20,7)Interest expense 9,2 10,4 (1,2)Changes in working capital 29,2 18,2 11,0 Unrealized loss/(gain) financial instruments 0,5 (10,2) 10,7 Cash generated from operations 73,1 112,7 (39,6)
Interest paid (8,9) (8,5) (0,4)Taxes paid (3,9) (6,7) 2,8 Net cash flow from operating activities 60,3 97,5 (37,2)
Net investment in fixed assets (8,8) (3,3) (5,5)Cash flow used in investment activities (8,8) (3,3) (5,5)
Repayments of interest bearing loans (9,1) (190,9) 181,8 Cash flow used in financing activities (9,1) (190,9) 181,8
Foreign currency 0,5 (3,9) 4,4 Net change in cash and cash equivalents 42,4 (96,7) 139,1 Cash at beginning of period 290,4 391,0 (100,6)Cash at end of period 333,3 290,4 42,9
Fleet status
Bolette Dolphin DS/ Gusto P10' 12 000 Colombia Anadarko May 2014 - July 2018 419 000/ 488 000 1Q 2019
Blackford Dolphin SS / Aker H-3 7 000 Norway (UK compliant) Smart stacked 2Q 2019*
Belford Dolphin DS / LMG Marin 10 000 Malaysia Preserved and maintained
Bideford Dolphin SS / Aker H-3 1 500 Norway Statoil August-September 2017 172 000 2Q 2019
Borgland Dolphin SS / Aker H-3 1 500 Norway Smart stacked 1Q 2020*
Bredford Dolphin SS / Aker H-3 1 500 Norway Preserved and maintained 2Q 2017
Byford Dolphin SS / Aker H-3 1 500 Norway (UK compliant) Smart stacked 2Q 2020*
Borgsten Dolphin Tender support / AH-3 UK Cold stacked 1Q 2018
Borgholm Dolphin Accomodation / AH-3 UK Cold stacked 4Q 2017
* Subject to smart stacking period
MID WATER FLOATERS NORWAY
MID WATER FLOATERS UK
ULTRA- / DEEPWATER UNITS
Global market – floating units
The market is bottoming out in 2017, longer term indicators are positive
The increase in requests and tender activity has continued during the quarter
The contract activity has strengthened with a number of new contracts awarded
The North Sea market is expected to balance earlier than the global ultra deepwater market
Cold stacking and some scrapping due to overcapacity is expected to continue
The decrease in offshore E&P spending seems to be levelling off with E&P companies also directing spending to short cycle and higher return activity offshore
Source: DNB
NameWest NavigatorCOSLPioneerTransocean SearcherSonga TrymBredford DolphinPolar PioneerCOSLInnovatorWest VentureWest HerculesWest AlphaDeepsea Metro IISonga DeeBorgland DolphinSonga DeltaStena DonIsland InnovatorBideford DolphinTransocean ArcticScarabeo 5Leiv EirikssonDeepsea BergenTransocean SpitsbergenDeepsea StavangerScarabeo 8COSLPromoterDeepsea AtlanticSonga EquinoxSonga EnduranceSonga EncourageSonga Enabler
Contract Option Yard/under construction
2017 2018 2019Q4Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Norwegian floater market
As per May 2017
Source: DNB and the Company
The utilization of the rig fleet in Norway is expected to continue to drop during 2017
However, the number of requests and tenders for 2018 has increased, predominantly for shorter term work
For 2019 and beyond, the number of requests and tenders has also increased with several longer term prospects
Some new contracts have been awarded through the quarter
NameOcean VanguardOcean NomadOcean PrincessTransocean ProspectWilHunterSertaoSedco 711Sedco 714Byford DolphinParagon MSS1Ocean GuardianBlackford DolphinPaul B. Loyd, Jr.West PhoenixStena SpeyStena IceMAXWilPhoenixSedco 712Ocean ValiantOcean PatriotTransocean LeaderDeepsea Aberdeen
Contract Option Yard/under construction
2017 2018 2019Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
UK floater market
As May 2017
Source: DNB and the Company
The development in the UK market is similar to Norway, with rig utilization continuing to drop during 2017
However, requests and tender activity is at a higher level, with new contracts recently being announced – including a new 2 year contract
A moderate improvement in drilling activity is expected in 2017, however a stronger demand for 2018 is expected
The accommodation segment remains weak
Main priorities
Deliver consistent performance and efficient operations
Focus on continued cost discipline and low opex
Prioritize capital expenditures to support high regularity
Operational excellence
Keeping the right competence
Two dedicated teams for inspection and maintenance of the smart stacked units
Common management team for operating subsidiaries and FOE
Maintaining units ready for
operations
Smart Stacked rigs are preserved and maintained with regular system integrated testing
Under the DNV GL regime of prolonged survey intervals the validity of Class and Statutory certificates are extended equal to the smart stacking period
Delayed capex and renewal of the class certificate
New contractsPursue new contracts opportunities for rigs in operations
Secure contracts for the units in lay up at acceptable dayrates and commercial value
RussiaRussia
New ZealandNew Zealand
PapuaPapua ‐‐New GuineaNew Guinea
AustraliaAustralia
PhilippinesPhilippines
JapanJapan
BruneiBrunei
TaiwanTaiwan
South KoreaSouth Korea
North KoreaNorth Korea
IndonesiaIndonesia
MalaysiaMalaysia
VietnamVietnam
CambodiaCambodia
LaosLaosMyanmarMyanmar
Sri LankaSri Lanka
MadagascarMadagascar
IndiaIndia
MongoliaMongolia
ChinaChina
MozambiqueMozambique
South AfricaSouth Africa
MalawiMalawi
PakistanPakistan
ZimbabweZimbabwe
BotswanaBotswana
KirgistanKirgistan
TadschikistanTadschikistan
SomaliaSomalia
AfghanistanAfghanistan
TanzaniaTanzania
NamibiaNamibia
SambiaSambia
KenyaKenya
DschibutiDschibuti
QatarQatar
YemenYemen
UgandaUganda
EthiopiaEthiopia
UsbekistanUsbekistan
AngolaAngola
TurkmenistanTurkmenistan
EritreaEritrea
IranIran
ZaireZaire
SaudiSaudi‐‐ArabiaArabia
SudanSudan
IraqIraq
KazakhstanKazakhstan
AzerbaijanAzerbaijan
CongoCongo
ArgentinaArgentina
JordanJordan
Central AfricaCentral Africa
ChileChile
GabunGabun
IsraelIsrael
SyriaSyria
LebanonLebanon
GeorgiaGeorgia
CameroonCameroon
ChadChad
EgyptEgypt
CyprusCyprus
NigeriaNigeria
TurkeyTurkey
BeninBenin
TogoTogo
GhanaGhana
LibyaLibya
GreeceGreece
NigerNiger
BulgariaBulgaria
Ivory CoastIvory Coast
Burkina FasoBurkina Faso
LiberiaLiberia
UkraineUkraine
SerbiaSerbia
RomaniaRomania
TunesiaTunesia
Sierra LeoneSierra Leone
BelarusBelarus
MaliMali
GuineaGuinea
BrazilBrazil
HungariaHungaria
AlgeriaAlgeria
LithuaniaLithuania
ItalyItaly
GuineaGuinea‐‐ BissauBissau
EstoniaEstonia
LatviaLatvia
SenegalSenegal
GambiaGambia
PolandPoland
MauretaniaMauretania
FinnlandFinnland
BoliviaBolivia
West SaharaWest Sahara
GermanyGermany
MaroccoMarocco
SwedenSweden
DenmarkDenmark
SpainSpain
FranceFrance
BelgiumBelgium
NetherlandsNetherlands
PortugalPortugal
PeruPeru
NorwayNorway
FrenchFrench‐‐ GuayanaGuayana
United KingdomUnited Kingdom
GuyanaGuyana
IrelandIreland
ColumbiaColumbia
EcuadorEcuador
VenezuelaVenezuela
TrinidadTrinidad
PanamaPanama
Puerto RicoPuerto Rico
Costa RicaCosta Rica
Dominican RepublicDominican RepublicHaitiHaiti
NicaraguaNicaragua
JamaicaJamaica
HondurasHonduras
El SalvadorEl Salvador
IcelandIceland
BelizeBelize
CubaCuba
MexicoMexico
USAUSA
GreenlandGreenland
CanadaCanada
NepalNepalBhutanBhutan
BangladeshBangladesh
ThailandThailand
UruguayUruguay
GuatemalaGuatemala
KuwaitKuwait
OmanOman
United Arab EmiratesUnited Arab Emirates
LesothoLesotho
SwazilandSwaziland
BurundiBurundi
RwandaRwanda
CroatiaCroatia BosniaBosnia‐‐ HerzegovinaHerzegovina
AustriaAustria
SwitzerlandSwitzerland
LuxemburgLuxemburg
MoldawiaMoldawia
AlbaniaAlbania
MacedoniaMacedonia
MontenegroMontenegro
SloveniaSlovenia
Czech RepublicCzech Republic
SlovakiaSlovakia
ArmeniaArmenia
ParaguayParaguay
SurinamSurinam
Russia
New Zealand
Papua ‐New Guinea
Australia
Philippines
Japan
Brunei
Taiwan
South Korea
North Korea
Indonesia
Malaysia
Vietnam
Cambodia
LaosMyanmar
Sri Lanka
Madagascar
India
Mongolia
China
Mozambique
South Africa
Malawi
Pakistan
Zimbabwe
Botswana
Kirgistan
Tadschikistan
Somalia
Afghanistan
Tanzania
Namibia
Sambia
Kenya
Dschibuti
Qatar
Yemen
Uganda
Ethiopia
Usbekistan
Angola
Turkmenistan
Eritrea
Iran
Zaire
Saudi‐Arabia
Sudan
Iraq
Kazakhstan
Azerbaijan
Congo
Argentina
Jordan
Central Africa
Chile
Gabun
Israel
Syria
Lebanon
Georgia
Cameroon
Chad
Egypt
Cyprus
Nigeria
Turkey
Benin
Togo
Ghana
Libya
Greece
Niger
Bulgaria
Ivory Coast
Burkina Faso
Liberia
Ukraine
Serbia
Romania
Tunesia
Sierra Leone
Belarus
Mali
Guinea
Brazil
Hungaria
Algeria
Lithuania
Italy
Guinea‐ Bissau
Estonia
Latvia
Senegal
Gambia
Poland
Mauretania
Finnland
Bolivia
West Sahara
Germany
Marocco
Sweden
Denmark
Spain
France
Belgium
Netherlands
Portugal
Peru
Norway
French‐ Guayana
United Kingdom
Guyana
Ireland
Columbia
Ecuador
Venezuela
Trinidad
Panama
Puerto Rico
Costa Rica
Dominican RepublicHaiti
Nicaragua
Jamaica
Honduras
El Salvador
Iceland
Belize
Cuba
Mexico
USA
Greenland
Canada
NepalBhutan
Bangladesh
Thailand
Uruguay
Guatemala
Kuwait
Oman
United Arab Emirates
Lesotho
Swaziland
Burundi
Rwanda
Croatia Bosnia‐ Herzegovina
Austria
Switzerland
Luxemburg
Moldawia
Albania
Macedonia
Montenegro
Slovenia
Czech Republic
Slovakia
Armenia
Paraguay
Surinam
ByfordDolphin
BorgstenDolphin
BorgholmDolphin
BlackfordDolphin
BidefordDolphin
BorglandDolphin
BredfordDolphin
BoletteDolphin
BelfordDolphin
Fred. Olsen Energy – Operating worldwide
Contract overview
Total backlog approx. USD 220 million
Unit
Bolette Anadarko
Belford Preserved and maintained
Blackford Chevron Smart stacked
Bideford Statoil Statoil
Borgland Smart stacked
Bredford Preserved and maintained
Byford Smart stacked
Borgsten Cold stacked
Borgholm Cold stacked
Firm contract Option
2017 2018
Ultra deepwater
Belford Dolphin
Bolette Dolphin
Ultra deepwater drillship delivered in 2014
Operates under a four-year contract with Anadarko estimated to expire in July 2018
Has operated offshore Colombia during the quarter, and is now en route to the Ivory Coast
Belford Dolphin
The unit is preserved and maintained, located outside Labuan, Malaysia
Marketed for contract possibilities worldwide
Completed the five-year class renewal survey at the Keppel yard in October 2015
Deepwater / midwater- UK
Blackford Dolphin
Continued the extended contract with Chevron during the quarter, operating offshore UK
The contract was concluded end of April 2017
Is now preparing for smart stacking in Flekkefjord, Norway, ready for operations
Completed its class renewal survey in June 2014
Byford Dolphin
The unit is smart stacked in Lyngdal, Norway, ready for operations
The unit completed its class renewal survey July 2015
Midwater - Norway
Belford Dolphin
Bideford Dolphin
Completed the contract extension end of March
A new contract extension with Statoil was entered into for a one well drilling program of approximately 50 days with commencement by end of July 2017. The contract includes one optional well
Completed its class renewal survey July 2014
Borgland Dolphin
The unit is smart stacked in Lyngdal, Norway, ready for operations
The unit completed its class renewal survey February 2015
Midwater – Norway / UK
Borgholm Dolphin
The accommodation unit will be sold for decommissioning
The transaction is estimated to take place during 2Q or 3Q 2017
Bredford DolphinThe unit is cold stacked at Kvinesdal, Norway
The class renewal survey was completed August 2012
A renewal of the class certificates will not be carried out in 2017 in the current market conditions
Borgsten DolphinThe unit was converted to Tender Support Vessel in 2013
The unit is cold stacked outside Invergordon, Scotland
Harland & Wolff
The activity has been low during the quarter with only smaller ship repairs
Secured a jacket contract as subcontractor to Lamprellfor deliveries in 2017/2018
Has also entered into a contract with ST3 Offshore, for supply of suction buckets for Dong Energy’s BorkumRiffgrund 2
Summary
Market
Contract backlog amounting to approximately USD 220 million
New one well contract extension for Bideford Dolphin with Statoil, including one optional well
Financial
Revenues were USD 98 million
EBITDA was USD 41 million
Profit after tax was negative USD 26 million
Operational
Blackford Dolphin to be smart stacked in Flekkefjord, Norway, from end of April
Bideford Dolphin in temporary lay up until commencement of the new contract
Borgholm Dolphin to be sold for decommissioning
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