SDRL - Seadrill announces third quarter 2013 results

Highlights

• Seadrill reports third quarter 2013 EBITDA* of US$663 million
• Seadrill reports  third quarter 2013 net income of US$315 million and earnings per share of $0.61
• Seadrill increases the ordinary quarterly cash dividend by 4 cents to 95 cents per share
• Economic utilization for floaters was 94% in Q3 2013 in-line 94% in Q2 2013
• Economic utilization for the jack-up fleet in Q3 2013 was 97%, down from 98% in Q2 2013
• Seadrill ordered four ultra-deepwater drillships for an estimated project price below US$600 million per rig, with deliveries scheduled for the second half of 2015
• Seadrill ordered two jack-ups for an estimated project price of US$230 million per rig, with deliveries in the second and third quarters of 2016, respectively
• Seadrill reached 50.1% ownership in Sevan Drilling and launched a mandatory offer for all outstanding shares which closed on August 22, 2013
• Seadrill secured a 180 day contract for the newbuild ultra-deepwater drillship West Tellus with a total estimated revenue potential of US$150 million
• Seadrill secured a 2.5 year contract for the jack-up rig West Freedom with a total estimated revenue potential of US$222 million
• Seadrill secured a one year contract extension with Talisman in Malaysia for the jack-up rig West Vigilant with a total estimated revenue potential of US$61 million
• North Atlantic Drilling awarded an extension of the current drilling contract, in addition to a new drilling contract for West Navigator, securing employment to December 2014 with a total estimated revenue potential of US$98 million
• Seadrill completes placement of US$500 million unsecured senior notes maturing in 2020

Subsequent events

• Seadrill Partners announces settlement agreement and 18 month contract extension for the West Aquarius with a total estimated revenue potential of US$337 million
• Total S.A. exercised their option with Seadrill Partners to convert the contract extension for the West Capella from 5 years to 3 years.  As a result of this change in contract terms the dayrate has increased from US$580,000 per day to US$627,500 per day
• Seadrill executes a one year contract extension for the West Leda with ExxonMobil in Malaysia with a total estimated revenue potential of US$60 million
• North Atlantic Drilling suspends partnership discussions and proceeds with NYSE listing process
• Seadrill Limited sells the tender rig T-16 to Seadrill Partners for US$200 million
• North Atlantic Drilling completes placement of NOK1.5 billion unsecured bond issue maturing in 2018
• Seadrill acquires high specification jack-up rig, Prospector 3, for US$235 million
• Seadrill enters into a Heads of Agreement with PEMEX for 5 potential jack-up contracts beginning in the first half of 2014.  Cumulative duration of the contract is more than 30 rig years with a total revenue potential in excess of US$1.8 billion
• Orderbacklog currently at US$19.5 billion excluding PEMEX Heads of Agreement and West Aquarius extension

Consolidated financial information

Third quarter 2013 results
Consolidated revenues for the third quarter of 2013 were US$1,280 million compared to $1,268 million in the second quarter of 2013.  The increase is primarily due to the inclusion of Sevan Drilling and jack-up rigs AOD II and West Tucana, and tender rigs T-15 and T-16 entering the fleet, offset by the disposal of the tender rig fleet.

Operating profit for the quarter was US$471 million compared to US$507 million in the preceding quarter. The decrease is a result of higher operating expenses due to new rigs entering the fleet and higher general and administrative expenses due to the consolidation of Sevan Drilling.

Net financial and other items for the quarter showed a loss of US$96 million compared to a gain of US$1,292 million in the previous quarter. The loss is primarily related to negative impacts from interest rate swap movements (a non-cash effect) and the exclusion of the gain on sale of the tender rig business.

Income taxes for the third quarter were US$60 million, an increase of US$11 million from the previous quarter.

Net income for the quarter was US$315 million representing basic and diluted earnings per share of $0.61 and $0.60, respectively.

Balance sheet
As of September 30, 2013, total assets were US$24,979 million, an increase of US$3,178 million compared to June 30, 2013.

Total current assets decreased to US$2,562 million from US$2,978 million over the course of the quarter, primarily driven by a decrease in short term marketable securities, offset by an increase in cash and cash equivalents and other current assets.

Total non-current assets increased to US$22,417 million from US$18,823 million primarily due to the inclusion of the Sevan Louisiana and rig no. 4 into newbuildings and the inclusion of the Sevan Driller, Sevan Brasil into drilling units, and the inclusion of certain marketable securities classified as long term.

Total current liabilities increased to US$5,639 million from US$4,397 million largely due to an increase in other current liabilities associated with the consolidation of Sevan Drilling.

Long-term interest bearing debt increased to US$10,087 million from US$8,521 million over the course of the quarter and total net interest bearing debt increased to US$13,613 million from US$12,024 million.  The increase is primarily due to the US$500 million bond issuance, drawdown on credit facilities for rig deliveries and the consolidation of US$795 million of Sevan debt.

Total equity decreased to US$7,766 million from US$7,840 million as of September 30, 2013, primarily driven by net income for the quarter and dividends paid.

Cash flow
As of September 30, 2013, cash and cash equivalents were US$551 million, an increase of US$114 million compared to the previous quarter.

Net cash from operating activities for the nine month period ended September 30, 2013 was US$1,204 million and net cash used in investing activities for the same period was US$1,497 million.  Net cash provided by financing activities was US$526 million.

Media contact
Rune Magnus Lundetræ
Chief Financial Officer
Seadrill Management Ltd.
+44 (0) 7766 071010