Awilco Drilling Posts $4,6M Loss. Eyes Funding Options for Newbuild Rig

Oslo-listed offshore drilling contractor Awilco Drilling posted a loss of $4,6 million in the second quarter of 2020, on contract revenue of $6,1 million.

The offshore drilling company currently has two drilling rigs, of which one rig in operation - the semi-submersible drilling rig WilPhoenix. The rig, built in 1982, has recently started P&A work for Petrofac in the UK North Sea. 

The company's other rig, the 1983-built semi-sub WilHunter, has been cold-stacked since 2016.

To remind, in the first quarter of 2020, Awilco's revenue, and contract utilization were 'nil.' 

Awilco's contract backlog at the end of Q2 was approximately USD 19.4 million, with the WilPhoenix scheduled to drill for Serica Energy in the UK North Sea in September.

Keppel case

As previously reported, Awilco had in June terminated a newbuild rig order with Keppel for Nordic Winter rig ordered in 2018, citing Keppel’s alleged breach of contract, and seeking a full refund of paid installments of $54,7 million.

The company terminated the contract just days ahead of its next installment of $31.9 million for the rig was due.

Following Awilco’s action, and subsequent non-payment of the $31.9 million installment, Keppel refused the drilling contractor’s allegations, said Awilco was in default, terminated the contract itself, and started arbitration proceedings. The rig was scheduled for delivery in April 2021.

Awilco in turn said it didn't accept Keppel FELS’ grounds for termination. The arbitration process is currently ongoing on this matter.

As for Awilco's second rig on order with Keppel, the Nordic Spring, the rig is scheduled for delivery in March 2022. Awilco's remaining capital commitments at the end of the second quarter in respect of the rig were $382.3 million. The next installment for the rig of $42 million to be paid by Awilco is scheduled for March 2021.

Awilco's cash balance at the end of the second quarter was $16.7 million, and the company is looking at ways to secure funding to pay for the newbuild unit.

"Funding for the second installment and the remaining balance at delivery will be required, by a combination of additional equity and debt. There is also the option to defer the delivery of the rig, and the related payment, by up to one year. This decision will be taken at a later date," Awilco said.

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