- Operating revenue of $184.8 million
- Operating income of $13.0 million
- Net loss of $54.2 million
- Adjusted EBITDA of $91.9 million
- Cash and cash equivalents of $653.6 million
- Economic utilization of 95%
- Order backlog of $512 million as of November 21, 2019
- 1 cent per common unit distribution for the third quarter of 2019
Financial Results Overview
Total operating revenues for the third quarter were $184.8 million (2Q19: $178.5 million). The increase was primarily due to a full quarter of operations for the West Aquarius and West Capricorn, the West Auriga returning to normal operations, the West Polaris commencing its contract in Gabon and the early termination fee received for the West Vencedor. These were partially offset by early termination fees for the West Capricorn received in the second quarter not being repeated, idle time on the West Capella prior to the commencement of a new contract in September and a full quarter of idle time on the T-16 tender barge.
Total operating expenses for the third quarter were $171.8 million (2Q19: $173.5 million). The decrease was primarily related to lower costs while the West Capella was between contracts and lower stacking costs for the West Leo and T-16. These were partially offset by the West Aquarius working for a full quarter and the West Polaris commencing operations.
Operating income was $13.0 million (2Q19: $5.0 million). The increase was primarily due to the revenue and cost movements highlighted above.
Net financial items resulted in an expense of $60.7 million (2Q19: expense of $78.7 million). The decrease in the expense was primarily due to a gain on the mark to market valuation of derivatives of $0.9 million (2Q19: loss of $15.9 million).
Loss before taxes was $47.7 million (2Q19: loss of $73.7 million).
Income tax expense for the third quarter was $6.5 million (2Q19: credit of $34.9 million). The Company is subject to taxes while reporting a net operating loss in the quarter as losses in one jurisdiction cannot be offset against net income in another.
We continue to recognize income tax expense related to a separate provision of the 2017 US tax reform, commonly referred to as BEAT. In the third quarter we recognized an income tax expense of approximately $3.9 million (2Q19: expense of $4 million) related to BEAT. Our US drilling contracts include a change in tax law provision, which we believe makes the BEAT liability reimbursable and arbitration proceedings have commenced.
After the end of the third quarter, the US Department of Treasury provided guidance relating to an uncertain tax position recorded in the fourth quarter of 2018 in respect of changes in US tax legislation. Based on the guidance provided, we expect to release in our fourth quarter results approximately $27 million of a prior provision in respect of this uncertain position.
Net loss was $54.2 million (2Q19: net loss of $38.8 million). Seadrill Partners LLC Members had an attributable net loss for the quarter of $23.7 million (2Q19: net loss of $15.0 million).
There was no Distributable Cash Flow for the third quarter and the quarterly distribution was maintained at 1 cent per common unit.