Maersk Drilling Posts Record Profit
Maersk Drilling delivered the best result ever with a profit of USD 751m (USD 478m) in 2015 generating a ROIC of 9.3% (7.1%). The result was positively impacted by continued strong operational performance, fleet growth and general cost savings. However, increased idle time negatively affected the results. The underlying profit was USD 732m (USD 471m).
“Maersk Drilling delivered a satisfactory result given the adverse market conditions. We continue to focus on operational performance and a competitive cost level, which are key factors in order to secure contracts for our rigs in this market,” says Claus V. Hemmingsen, CEO in Maersk Drilling and member of the Executive Board in the Maersk Group.
In 2015, Maersk Drilling signed 12 contracts, which added USD 2.0bn to Maersk Drilling’s backlog. However, the contracts signed are at significantly lower day rate than previously. The lower day rates underpin the need for a different cost level in the offshore drilling industry.
"Given the new oil reality, we have to conduct our operation at a completely different cost level. We have to focus on not only being operational excellent, but also efficient. However, the new oil reality is also an opportunity to solve our customer’s needs and pain points. We have to prepare for the future by recalibrating to the new oil reality by differentiating from our competitors and focusing on value creation for our customers in order to bring down the total system costs,” says Claus V. Hemmingsen.
At the end of 2015, Maersk Drilling’s forward contract coverage was 77% for 2016 and 52% for 2017 and 43% for 2018. The total revenue backlog by end 2015 amounted to USD 5.4bn (USD 6.0bn).
Maersk Drilling expects a significantly lower underlying result in 2016 than in 2015 mainly due to lower day rates on new contracts and more idle days.