Shelf Drilling (North Sea) (SDNS) Q2 2024 earnings summary

Executive summary

• Q2 2024 results were impacted by rig suspensions in Saudi Arabia and delayed contract starts in Norway, leading to lower revenue and EBITDA.

• Leadership changes included Greg O’Brien becoming CEO and Douglas Stewart appointed as CFO.

• Safety performance improved, with a year-to-date TRIR of 0.10 and fleet uptime at 99.4%.

• Significant cost reduction and deferment measures were implemented across the rig fleet.

• Net losses were driven by underutilization of rigs ahead of new contracts, expected to continue into Q3 2024.

Financial highlights

• Q2 2024 adjusted revenues were $231 million, down from $252 million in Q1 2024.

• Adjusted EBITDA was $71–72 million (31% margin), down from $80 million (32%) in Q1.

• Net loss attributable to controlling interest was $15 million in Q2 2024.

• Consolidated cash balance as of June 30, 2024 was $138 million, up $37 million from March.

• Capex and deferred costs totaled $38 million in Q2 2024, down from $48.5 million in Q1 2024.

Outlook and guidance

• Full-year 2024 adjusted EBITDA guidance revised to $290–$335 million; SDNS contribution now estimated between -$5 million and -$10 million.

• Capital spending guidance for 2024 reduced to $135–$160 million.

• Q3 2024 revenues expected to decline 10–15% sequentially, with improvement in Q4 as redeployed rigs start new contracts.

• Underutilization of rigs expected to persist into Q3 2024 as rigs prepare for new contracts.

• Guidance excludes potential insurance recovery from Trident VIII and gain on Baltic rig sale.