- Operating revenue of $178.5 million.
- Operating income of $5.0 million.
- Net loss of $38.8 million
- Adjusted EBITDA of $79.8 million.
- Cash and cash equivalents of $712.1 million.
- Economic utilization of 84%, below our historical performance standards due to West Auriga downtime
- Order backlog of $692 million as of August 20, 2019.
- 1 cent per common unit distribution for the second quarter of 2019.
On July 2, 2019, a one-for-ten reverse unit split was completed. Split-adjusted SDLP common units continue to trade on the New York Stock Exchange under the same ticker symbol "SDLP" and the outstanding amount was reduced from 75,278,250 to approximately 7,527,830. The number of outstanding subordinated units was reduced from 16,543,350 to approximately 1,654,335.
Financial Results Overview
Total operating revenues for the second quarter were $178.5 million (1Q19: $203.7 million). The decrease was primarily due to downtime on the West Auriga, idle time on the T-16 after the transfer of its remaining contract term to the T-15 and idle time on the West Capella prior to commencing a new contract in Q3. These were partially offset by the commencement of the West Aquarius and West Capricorn. Early termination payments for the West Capricorn, while received over the remaining contract term through late July 2019, have been recognized as other revenues in Q2.
Total operating expenses for the second quarter were $173.5 million (1Q19: $169.5 million). The increase was primarily related to the West Aquarius commencement, T-16 demobilization costs, costs associated with moving the West Leo to a lower cost stacking location and startup costs for the West Polaris in preparation for commencing a new contract in Q3. These were partially offset by lower costs on the West Capella while idle.
Operating income was $5.0 million (1Q19: $34.9 million). The decrease was primarily due to the revenue and cost movements mentioned above.
Net financial items resulted in an expense of $78.7 million (1Q19: expense of $74.5 million). The increase in the expense was primarily due to a higher loss on the mark to market valuation of derivatives of $15.9 million (1Q19: loss of $11.7 million).
Loss before taxes was $73.7 million (1Q19: loss of $39.6 million).
Income tax for the second quarter was a credit of $34.9 million (1Q19: expense of $11.7 million) primarily related to the uncertain tax position recorded in the fourth quarter of 2018 in respect of changes in US tax legislation. The tax credit reflects mitigation steps taken ahead of the US Department of Treasury providing additional guidance. The remainder of this uncertain position continues to be evaluated and we continue to expect no cash payments to be made at this stage.
We continue to recognize income tax expense related to a separate provision of the US tax reform, commonly referred to as BEAT. In the second quarter we recognized an income tax expense of approximately $4 million (1Q19: expense of $7 million) related to BEAT. Based on the current legislation in effect, we expect the full year 2019 BEAT impact to be approximately $20 million. Our US drilling contracts include a change in tax law provision, which we believe makes the BEAT liability reimbursable.
Net loss was $38.8 million (1Q19: net loss of $51.3 million). Seadrill Partners LLC Members had a net loss for the quarter of $15.0 million (1Q19: net loss of $25.1 million).
There was no Distributable Cash Flow for the first quarter and the quarterly distribution was reduced to 1 cent per common unit from 10 cents on reverse split adjusted basis. While we continue to see improvements in tendering activity and dayrates, the reduced distribution level reflects the Company's desire to preserve liquidity ahead of debt maturities in the second half of 2020 and first quarter of 2021.