The London-based offshore oil drilling company Valaris reported Thursday a net loss attributable to the company of $3.01 billion for the first quarter of 2020 compared to a net loss of $216 million in the fourth quarter on 2019.
The company also reported adjusted EBITDA of $40 million in the first quarter of 2020 compared to $22 million for the fourth quarter of 2019.
"In the COVID-19 pandemic and corresponding economic crisis, the energy sector is facing a severe industry downturn caused by lower energy demand and a simultaneous increase in hydrocarbon supply," said Chief Executive Officer and President Tom Burke.
He said that in response to these market conditions including lower oil prices, customers for offshore drilling services have significantly reduced their planned capital expenditures and are seeking to cancel or defer projects, which has led to terminations or renegotiations of existing contracts.
"The combination of these factors negatively impacted our first quarter 2020 financial results, and we expect to continue to report losses and negative cash flows throughout the remainder of the year," he noted.
Burke said that Valaris is taking further steps to manage its cost base and preserve liquidity.
"We expect to stack certain uncontracted rigs and remove others from our fleet, including three drillships and four semisubmersibles. We are executing plans that will lower operating costs for contracted rigs, rightsize our onshore organization for anticipated lower levels of fleet utilization, and improve our working capital management," he explained.
By Murat Temizer