Offshore Rig Firm Fred. Olsen Energy Disappoints

Norwegian oil rig operator Fred. Olsen Energy said it saw lower contracting activities in all market segments as it reported first-quarter earnings below market expectations on Wednesday.

Fred.Olsen Energy, which operates floating rigs in the North Sea, Brazil and East Africa, said it had seen a decline in day rates in most markets due to an oversupply of vessels available, a situation it expected to worsen.

Rates in the offshore rig market have weakened over the past quarters from a 2013 high as oil companies cut spending to boost profitability, just as newly built rigs have entered the market.

"In general, operators are revisiting development and exploration programs and the low contracting activity continued in all market segments", the firm said in a statement.
The firm, which reported in late April that an upgrade on one of its most important rigs would be more expensive and would take longer than earlier thought, said lower revenues in its offshore drilling division were mainly caused by yard stays and downtime for two of its units during the quarter.

Its earnings before interest and tax fell to $39 million, below market expectations of $47.2 million and down from $79.4 million a year earlier.

Shares in Fred. Olsen Energy have fallen 22 percent this year, lagging an Oslo benchmark index up 5.95 percent.

(By Henrik Stolen; editing by Jason Neely)