- PVD announced Q4 2022 results with recurring NPAT-MI jumping 6x YoY to USD4.2mn as a 6% YoY higher jack-up day rate (per our estimates) drove the drilling segment’s gross margin to 17.1% in Q4 2022 vs 4.5% in Q4 2021. We note that PVD booked USD1.3mn of bad debt provision (under GA expenses) in Q4 2022, implying that PVD booked nearly the full amount of provision for its bad debts.

- For 2022, PVD recorded revenue of USD233mn (+33% YoY) and a minimal recurring net loss of USD0.1mn vs recurring NPAT-MI of USD1.8mn in 2021. We attribute this revenue growth to 1) a 15% YoY jack-up day rate recovery (per our estimates), 2) the drilling fleet operating at 85% capacity in 2022 vs 80% capacity in 2021 (per our estimates), and 3) a revenue contribution from the resumption of TAD, which was leased at the highest day rate among PVD’s drilling rigs. Meanwhile, the recurring net loss was due to PVD’s shared profit from JVs declining 55% YoY, in addition to lower interest income and surging interest expenses.

- 2022 revenue completed 105% of our full-year forecast, and the reported net loss was USD4.2mn vs our forecast net loss of USD3.6mn. As such, we foresee insignificant risks to our 2023F NPAT forecast, pending a fuller review.

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