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Companies’ spending delays are only ‘momentary pause’

Companies’ spending delays are only ‘momentary pause’

Seadrill, the world’s biggest offshore drilling company, said a recent spate of spending delays by oil firms was temporary after it hit a lull in its most recent quarter.

Profits at international drilling giant Seadrill rose 14% for the third quarter.

The firm, controlled by billionaire shipping tycoon John Fredriksen, posted operating profits of £290million, up 14% year on year but down from the £313million made during the second quarter.

Higher operating expenses following the consolidation of Sevan Drilling and its rigs contributed to the quarterly drop.

But the company said it was looking to a strong future with five potential contracts lined up in Mexico for early 2014.

It also raised its quarterly dividend by four cents to 0.95 dollars per share, which was higher than analyst expectations

Seadrill said its order backlog had now reached more than £12billion, not including those deals, which would have a cumulative duration of more than 30 years.

The company, which is listed in Oslo and New York, said: “The pace of contract additions has undoubtedly slowed from the pace seen in 2012 as customers re-evaluate spending plans.

“The Board is confident this is a momentary pause before oil companies restart their spending.”

Deepwater firms such as Seadrill have been mostly immune from the slowdown until recently, but rival Transocean last week said that 39 deepwater units would be off contract across the industry in 2014, an unusually high number, indicating a near-term slowdown.

Recently two major North Sea players put exploration projects on hold citing high levels if investment risk.

Last week Chevron announced it will be delaying the Rosebank development west of Shetland.

The American oil major said the £6billion plans – which would have created 300 jobs in Aberdeen alone – were not worth the current level of investment required.

The announcement came just days after Statoil said that another huge new field, Bressay, to the south-east of Shetland, was being postponed.

Earlier this month Seadrill announced plans to begin listing extreme conditions arm North Atlantic Drilling on the New York Stock Exchange.