Top line surges
In 2Q16, Ocean Rig’s (ORIG) revenue decreased by $56 million to $452 million, as compared to $508 million in 1Q16. Compared to the same period last year, its 2Q16 revenue is higher by $19 million, or by 4%.
Ocean Rig’s revenue depends on two ultra-deepwater drilling rigs and eight drillships. The company doesn’t operate any jack-ups, in contrast to many other offshore drillers. The company’s rigs are contracted with Petrobras, Eni, Repsol, Total, and ConocoPhilips. Currently, its rigs are also working in Brazil, Norway, Angola, and Nigeria.
In October 2015, Ocean Rig Skyros began its six-year contract with Total. These contracts boosted ORIG’s revenue in 1Q16, as compared to the same quarter in 2015.
In July 2016, Ocean Rig’s contract on Leiv Eiriksson commenced in Norway. This will boost the company’s 3Q16 revenues, though the contract is for a short time period and will end at the end of 2016.
The company will likely enter 2017 with only five rigs operating, as compared to seven rigs currently operating. After a rise in third quarter revenue, a declining trend in revenue is expected from the fourth quarter onward.
As we’ve already mentioned, Ocean Rig’s revenue fell by 11% in 2Q16 over the previous quarter. By comparison, Noble’s (NE) revenues declined by 18% over the previous quarter, and Transocean’s (RIG) fell by 17%. Ensco’s (ESV) revenue, however, rose by 12%, while Rowan Companies (RDC) climbed 22%.
Continue to the next part for a discussion of backlog and contracts.