Ensco Scraps 12 Drilling Rigs As Losses Continue

Published at 11:48AM - 25/02/16

Ensco scraps 12 drilling rigs as losses continue, forcing the offshore drilling company’s hand to take drastic measures.

In the company’s end of year results for 2015 Ensco, gave details of further losses running into billions and, stated that it had scrapped a total of 12 offshore drilling rigs including one drillship.

Ensco CEO and President, Carl Trowell, said: “By scrapping rigs, we eliminate costs and contribute to reducing global rig supply.”

Ensco Losses Continue

Ensco posted heavily reduced revenues for the fourth quarter of 2015 over the same period in 2014, in total a 29% reduction, bringing income to US$828.3 million down from US$1.16 billion.

Looking over the wider 12 months, the company’s revenues were still down by 11% at US$4.06 billion in 2015 from US$4.56 billion in 2014.

Ensco continues to struggle with costs related to running its offshore drilling business in an industry which continues on the downward spiral.

On top of attempts to bring down operating costs, Ensco has also incurred heavy costs due to the disputed cancellation of its DS-5 drillship by Petrobras.

On the issue Ensco said: “As disclosed in 6 January 2016 SEC Form 8-K, Petrobras has asserted that the ENSCO DS-5 drilling services contract is void.”

“We disagree with Petrobras’ position and we intend to assert our legal rights under the contract.”

Overall the results continue to keep Ensco in a precarious position, posting a loss of US$1.24 billion for 2015, although this was reduced from US$2.4 billion in 2014.

Ensco Scraps 12 Drilling Rigs

As part of Ensco’s move to reduce its losses, the board has decided to take the unprecedented move of scrapping a total of 12 offshore drilling rigs, including one drillship.

The rigs have been confirmed as six that are currently classed as operational and a further six that are currently classed as held for sale.

Clarifying the move, Trowell stated, “We are also taking additional steps to restructure our fleet and intend to scrap or permanently retire five more jackups and one more floater not currently held for sale.”

“These six rigs in continuing operations — ENSCO 56, ENSCO 81, ENSCO 82, ENSCO 86, ENSCO 99 and ENSCO DS-1 — are no longer part of Ensco’s go-forward fleet.”

“Three floaters and three jackups previously classified as held for sale will also be scrapped. All 12 of these rigs have been cold stacked to significantly reduce expenses.”

Trowell concluded: “By scrapping rigs, we eliminate costs and contribute to reducing global rig supply.”

The move looks to be drastic from almost every angle but, with all other operators within the offshore drilling industry in the same boat, the days of selling on assets looks to be gone for now; which poses the question of, not if, but when will other operators follow suit.

Last updated on 04:17PM - 17/05/16