A strong fourth quarter helped KCA Deutag (KCAD) beat its earnings forecast for 2017 as the market showed signs of picking up.
The Aberdeen-based drilling and engineering contractor said tendering activity improved in several regions and a “degree of optimism” had returned.
KCAD reported earnings before interest, taxes, depreciation and amortisation (ebitda) of £47.7million for the final three months of 2017, up 10% year-on-year, as oil prices continued to strengthen. Despite a stronger fourth quarter, 2017 was still a tough year for the group.
Full-year ebitda dropped 15% to £160million, though KCAD said the total was “slightly higher” than expected at the start of 2017.
KCAD chalked up revenue of £846million in 2017, down 7% on the previous year, while pre-tax losses widened to £98million from £45million.
The company said the decline in revenue was caused by “on-going market conditions” and “continued pressure on day rates”.
KCAD’s biggest business unit, land drilling, suffered from a drop-off in utilisation in Algeria and the completion of a contract there.
The firm’s offshore services division performed well in Norway but was dented by a contract loss in the UK – Odfjell Drilling took over from KCAD as the provider of drilling and maintenance services on five of Taqa’s North Sea platforms last year.
Bentec, KCAD’s drilling rig and oil-field equipment division, experienced “major success a very competitive market”.
It was awarded a contract for five new drilling rigs by a client in Ukraine, with delivery slated for 2018 and 2019.
The average number of people employed by KCAD around the world last year was 6,117, a reduction of 415 from 2016.
Chief executive Norrie McKay said he was confident 2018 would be a better year for the company if energy prices remained stable.
Mr McKay added: “The fundamentals of our business are robust with an improving market, a strong liquidity position and excellent operational and safety performance.
“We are well-positioned as a business to benefit from any further improvement in market conditions as we move through 2018.”
Earlier this week the group struck a deal to acquire the Omani and Saudi businesses of rival drilling contractor Dalma Energy in a deal worth £480million.