Offshore drilling company Valaris on Thursday posted a net loss of $216 million for the fourth quarter of 2019, compared to a loss of $197 million in the third quarter of 2019. According to its CEO, more losses are to be expected in 2020.
Valaris' fourth-quarter revenues fell to $512 million, from $551 million recorded in the third quarter. The drilling company said the revenue declined primarily due to the sale of the Valaris 5006 rig which operated during the third quarter.
VesselsValue website shows the 1999-built rig was sold for demolition in India in October 2019.
"Fewer rig operating days across the broader fleet also contributed to lower revenues and a three percentage point decline in utilization to 61% from 64% in the prior quarter," Valaris said.
Floater revenues declined to $216 million in the fourth quarter of 2019 from $270 million in the prior quarter.
Jack-up rig revenues increased to $231 million in fourth-quarter 2019 from $218 million in the prior quarter primarily due to contract startups for three rigs offshore Norway during the fourth quarter as well as a full quarter of revenue for VALARIS JU-107 and VALARIE JU-123, which started new contracts during the third quarter.
More losses expected
The company CEO Tom Burke said the company had during 2019 signed new contracts that added $1.8 billion to Valaris’ contracted revenue backlog during the year, and has continued adding new contracts after the reporting period, but has warned of more losses to come in 2020.
"We have carried this contracting momentum into 2020 with the addition of incremental backlog and we are in advanced discussions with customers for several new contracts.
"While our diverse, high-quality modern rig fleet and technical expertise position us well to continue adding future backlog, we expect to report losses and have negative cash flows during 2020 despite gradual improvement in utilization and average day rates for Valaris' fleet," he said.
At the end of the year, Valaris had $2.5 billion of contracted revenue backlog and $6.5 billion of total debt.
The company said it was evaluating opportunities to enhance its capital structure and address maturities of existing debt, including by capturing debt discount and extending maturities.
"Given the significant flexibility under its existing debt agreements, the Company has access to a range of potential transactions, including exchange offers and other debt repurchases, to address its capital structure,” Valaris said.