Shelf Drilling Reports Fourth Quarter 2022 Results

20 Mar 2023 05:47 CET

PRESS RELEASE

SHELF DRILLING REPORTS FOURTH QUARTER 2022 RESULTS

Dubai, UAE, March 20, 2023 – Shelf Drilling, Ltd. (“Shelf Drilling” and,
together with its subsidiaries, the “Company”, OSE: SHLF) announces results for
the fourth quarter and full year of 2022 ending December 31. The results
highlights will be presented by audio conference call on March 20, 2023 at 6:00
pm Dubai time / 3:00 pm Oslo time. Dial-in details for the call are included in
the press release posted on March 13, 2023 and on page 3 of this release.

David Mullen, Chief Executive Officer, commented: “During the fourth quarter of
2022, our EBITDA increased 14% sequentially to $75 million, mainly due to the
integration of the five premium harsh environment jack-ups acquired in October
2022. This acquisition, combined with continued strong operational performance
across the fleet, allowed us to conclude a very positive year for the Company,
and I would like to thank the entire Shelf Drilling team for their
contributions.”

Mullen added: “Our tendering and marketing activity continued to build positive
momentum in the fourth quarter with long-term contracts and contract extensions
in the Arabian Gulf, Angola, Italy and India. Our backlog was $2.7 billion with
35 of our 36 rigs under contract as of December 31, 2022. The recent awards in
West Africa will drive further growth in our backlog in the first quarter of
2023. After several challenging years, the industry has reached an inflection
point. With a constructive backdrop for oil and gas and a shortage of rig
capacity, I expect to see a multi-year upcycle in the jack-up market. The
actions taken in 2022 to transform our fleet have positioned us well to take
full advantage of the improving fundamentals. Our strong customer relations and
unique operating platform, combined with the dedication and commitment of our
people, are key factors that will enable us to deliver outstanding value to all
of our stakeholders.”

Fourth Quarter Highlights
• Q4 2022 adjusted revenues of $214.6 million, a 29% sequential increase
compared to Q3 2022, including $41.2 million adjusted revenues from Shelf
Drilling (North Sea), Ltd. (“SDNS”).
• Q4 2022 adjusted EBITDA of $75.5 million, representing an adjusted EBITDA
margin of 35%, including $17.0 million adjusted EBITDA from SDNS.
• Full year 2022 adjusted revenues of $687.6 million and adjusted EBITDA of
$248.6 million. Adjusted EBITDA margin was 36%.
• Q4 2022 net loss attributable to controlling interest of $1.4 million.
• Capital expenditures and deferred costs totaled $471.3 million during Q4 2022,
including $419.7 million at SDNS, which mainly consisted of the recorded
acquisition cost of $417.7 million for five premium, harsh environment jack-up
rigs in October 2022. The remaining balance of $51.6 million in Q4 2022 included
$23.8 million associated with rig acquisitions.
• The Company’s cash and cash equivalents balance at December 31, 2022 was
$140.8 million.
• The Company’s total debt at December 31, 2022 was $1.4 billion.
• Contract backlog was $2.7 billion at December 31, 2022 across 35 contracted
rigs.

Subsequent Events Highlights
• In February 2023, the Company completed the issuance of 17.6 million common
shares resulting in net proceeds of $43.8 million. The net proceeds will be used
for general corporate purposes, including capex requirements associated with
multiple recent long-term contract awards.
• Subsequent to December 31, 2022, the Company secured the following new awards:
– Five total rig years added across three standard jack-up rigs in India and
Egypt (Trident II, Trident 16 and Rig 141) for a total backlog addition of $111
million.
– Shelf Drilling Scepter awarded a two-year contract in Nigeria expected to
commence in May 2023 for total contract value of $118 million including
mobilization revenue.

Fourth Quarter Results

Adjusted revenues were $214.6 million in Q4 2022 compared to $166.3 million in
Q3 2022. The $48.3 million (29%) sequential increase in adjusted revenues was
due to the SDNS acquired rigs, higher effective utilization and strengthening
dayrates.

Effective utilization increased to 86% in Q4 2022 from 85% in Q3 2022, mainly
due to the SDNS acquired rigs in the North Sea and Qatar and the return to
operations for two rigs (one in Thailand and one in West Africa) in the latter
part of 2022, partly offset by contract preparation for two rigs in India which
started new three-year contracts in Q1 2023.

Average earned dayrate increased to $66.7 thousand in Q4 2022 from $62.0
thousand in Q3 2022.

Operating and maintenance expenses increased by $33.5 million (38%) in Q4 2022
to $122.3 million compared to $88.8 million in Q3 2022. The sequential increase
primarily included higher operating and maintenance expenses of $19.7 million
for the recently SDNS acquired rigs. The remaining increase of $13.7 million is
mainly due to higher operating expenses for one rig in Ghana that started a new
contract in October 2022, higher expenses for a rig expected to commence its new
five year contract in April 2023 in the Arabian Gulf and higher maintenance and
mobilization expenses across the fleet, including contract preparation expenses
for two rigs in India and one rig mobilizing to Italy expected to commence a new
contract in June 2023 .

General and administrative expenses of $17.5 million in Q4 2022 increased by
$4.5 million as compared to $12.9 million in Q3 2022, primarily due to higher
personnel costs and certain one-time costs incurred for the SDNS acquired rigs
in Q4 2022 compared to Q3 2022.

Adjusted EBITDA for Q4 2022 was $75.5 million compared to $65.8 million for Q3
2022, including $17.0 million from SDNS. The Adjusted EBITDA margin of 35% for
Q4 2022 decreased from 40% in Q3 2022.

Capital expenditures and deferred costs of $471.3 million in Q4 2022 increased
by $411.5 million from $59.9 million in Q3 2022. This increase was primarily
explained by $417.7 million for the acquisition of five jack-ups by SDNS, $4.4
million higher spending across the rest of the fleet mainly related to the
commencement of a new contract preparation project for the Harvey H. Ward,
partially offset by $10.4 million lower rig readiness expenditures for the Shelf
Drilling Victory acquired in Q3 2022. Both Harvey H. Ward and Shelf Drilling
Victory are expected to start new long-term contracts in the Arabian Gulf in
April 2023.

Q4 2022 ending cash and cash equivalents balance of $140.8 million decreased by
$16.1 million from $156.9 million at the end of Q3 2022 mainly due to the
completion of the acquisition of the five high-specification jack-up rigs from
Noble.

The Form 10-K Equivalent, which includes the Consolidated Financial Statements,
and a corresponding slide presentation to address the results highlights for Q4
2022 are available on the Company’s website.

For further queries, please contact:
Greg O'Brien, Executive Vice President and Chief Financial Officer
Shelf Drilling, Ltd.
Tel.: +971 4567 3616
Email : greg.obrien@shelfdrilling.com

Dial in Details for the Audio Conference call:

Participants will receive conference access information only when they register
for the conference via the link below:

Online Registration:
https://register.vevent.com/register/BI5df08307e8384c8490919022747e7af2

Participants must register for the call using online registration. Upon
registering, each participant will be provided with call details.

About Shelf Drilling
Shelf Drilling is a leading international shallow water offshore drilling
contractor with rig operations across Middle East, Southeast Asia, India, West
Africa, Mediterranean and North Sea. Shelf Drilling was founded in 2012 and has
established itself as a leader within its industry through its fit-for-purpose
strategy and close working relationship with industry leading clients. The
Company is incorporated under the laws of the Cayman Islands with corporate
headquarters in Dubai, United Arab Emirates. The Company is listed on the Oslo
Stock Exchange under the ticker “SHLF”.

Special Note Regarding Forward-Looking Statements
Matters discussed in this announcement may constitute forward-looking
statements. Forward-looking statements are statements that are not historical
facts and may be identified by words such as "believe", "expect", "anticipate",
“strategy”, "intends", "estimate", "will", "may", "continue", "should" and
similar expressions. The forward-looking statements in this release are based
upon various assumptions, many of which are based, in turn, upon further
assumptions. Although the Company believes that these assumptions were
reasonable when made, these assumptions are inherently subject to significant
known and unknown risks, uncertainties, contingencies and other important
factors which are difficult or impossible to predict and may be beyond its
control. Such risks, uncertainties, contingencies and other important factors
could cause actual events to differ materially from the expectations expressed
or implied in this release by such forward-looking statements. Given these
factors, users of this information should not place undue reliance on the
forward-looking statements.

Additional information about Shelf Drilling can be found at
www.shelfdrilling.com.

This information is subject to the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.

More information:
Access the news on Oslo Bors NewsWeb site

585618_Shelf Drilling Q4 2022 Results Highlights.pdf
585618_Shelf Drilling Ltd. 2022 Form 10K Equivalent.pdf
585618_Shelf Drilling Reports Fourth Quarter 2022 Results.pdf