Shelf Drilling has announced results for the first quarter of 2025 ended March 31.
Greg O’Brien, Chief Executive Officer, commented: 'During the first quarter of 2025, Shelf Drilling delivered excellent operating and financial results. With total fleet uptime of 99.4% for the quarter, we continued our strong level of operational efficiency from 2024 demonstrating the execution capabilities of our offshore and onshore teams. Adjusted EBITDA increased sequentially to $96 million, representing a 40% margin, primarily due to the Shelf Drilling Barsk and the Main Pass IV operating for a full quarter in Norway and Nigeria, respectively, following the rig contract commencements in the prior quarter. Our quarterly capital spend was reduced to $16 million, which also contributed to strong cash flow generation.
Following the recent announcement of the early contract termination for the Shelf Drilling Winner in Denmark, we have revised our financial guidance for full year 2025. Adjusted EBITDA is now estimated to be between $310 and $360 million, down $20 million compared to our initial guidance provided earlier this year. However, we have identified savings across the fleet and lowered our 2025 capital spending guidance range by $25 million. Therefore, we expect to be in a better cash position at the end of the year than originally anticipated and maintain strong liquidity through 2026.”
O’Brien added: 'The recent macroeconomic developments have contributed to reduced commodity price levels and created some market uncertainty. The contract suspensions in the Middle East during 2024 continue to impact the global jack-up market with further dayrate pressure seen in recent months. We have a solid pipeline of near-term contract opportunities for our rigs with availability in 2025 and 2026 and are also focused on identifying ways to further optimize our cost structure. We remain committed to delivering safe and reliable services and providing best-in-class operations to our customers, leveraging our unique operating platform. We believe we are very well positioned to navigate the current market challenges and capitalize on the positive longterm outlook in our sector.'
First Quarter Highlights
- Q1 2025 adjusted revenues of $242.7 million.
- Q1 2025 adjusted EBITDA of $96.2 million, representing an adjusted EBITDA margin of 40%, including $28.0 million adjusted EBITDA from Shelf Drilling (North Sea), Ltd. ('SDNS') and $68.2 million from the rest of the business.
- Q1 2025 net income of $13.7 million.
- Q1 2025 capital expenditures and deferred costs totaled $15.5 million.
- The Company’s cash and cash equivalents balance at March 31, 2025 was $206.6 million.
- Key rig updates include:
- High Island II was redeployed to West Africa with expected contract commencement in Q2 2025.
- Shelf Drilling Victory was redeployed to West Africa for new contract opportunities.
- Trident 16 contract in Egypt was extended until August 2025.
- Main Pass I was divested in Q1 2025 for non-drilling applications.
- Financial guidance for the full year 2025 has been revised and is included in the '2025 Financial Guidance' section of the Q1 2025 results highlights presentation on our website.
First Quarter Results
Adjusted revenues were $242.7 million in Q1 2025 compared to $225.4 million in Q4 2024. The $17.3 million (8%) sequential increase in adjusted revenues was primarily driven by higher revenues for three rigs that commenced new contracts in late Q4 2024 and Q1 2025, partially offset by two suspended rigs in Saudi Arabia earning no revenue in Q1 2025.
Effective utilization marginally decreased to 79% in Q1 2025 from 80% in Q4 2024, mainly due to the suspension of operations for two rigs in Saudi Arabia and completion of contracts for two rigs in India between late Q4 2024 and Q1 2025. This was partially offset by three rigs that commenced new contracts in Nigeria, Egypt and Norway during the same period. Average earned dayrate increased to $94.2 thousand in Q1 2025 from $87.5 thousand in Q4 2024 primarily due to higher revenues for two rigs in Norway and Nigeria that commenced operations in late Q4 2024.
Total operating and maintenance expenses were relatively unchanged at $129.4 million in Q1 2025 compared to prior quarter. Lower operating costs for two suspended rigs in Saudi Arabia were partially offset by higher operating costs for one rig in Nigeria that started a new long-term contract in late Q4 2024 and higher mobilization cost for one suspended rig which was redeployed to West Africa in Q1 2025.
General and administrative expenses increased by $1.0 million in Q1 2025 to $16.8 million as compared to $15.8 million in Q4 2024. The sequential increase was primarily due to an increase in compensation and benefit expenses partially offset by a decrease in provision for credit losses.
Adjusted EBITDA for Q1 2025 was $96.2 million compared to $85.0 million for Q4 2024. The adjusted EBITDA margin of 40% for Q1 2025 increased as compared to 38% in Q4 2024. The adjusted EBITDA for SDNS increased sequentially to $28.0 million from $16.7 million primarily due to the commencement of a new long-term contract in Norway in November 2024.
Capital expenditures and deferred costs decreased to $15.5 million from $31.0 million in Q4 2024. This sequential decrease was primarily due to reduced spending on fleet spares and increased utilization of existing fleet spares across the fleet along with lower contract preparation expenditures for two rigs, one in Norway and one in Nigeria, that commenced new long-term contracts in late Q4 2024.
Q1 2025 ending cash and cash equivalents balance was $206.6 million. The increase of $54.3 million from $152.3 million at the end of Q4 2024 was primarily due to lower debt service payments, as well as the sale of the Main Pass I and decreased capital spending in Q1 2025. This was partially offset by an increase in working capital in Q1 2025.
The Form 10-Q Equivalent, which includes the condensed consolidated financial statements, and a corresponding slide presentation to address the results highlights for Q1 2025 are available on the Company’s website.
Source: Shelf Drilling
