Maersk Drilling profits down to USD 116m Q1 2014

By Joseph R. Fonseca
Thursday, May 22, 2014
Maersk Drilling - Jack Up Rig

 

Maersk Drilling delivered a profit (NOPAT) of USD 116m (USD 146m) in the first quarter of 2014. The result was negatively impacted with USD 30m compared to the first quarter result last year mainly due to planned yard stays and the intake of two new rigs.

“2014 is a year of execution in progressing on Maersk Drilling’s ambitious growth strategy. As expected our first quarter result is negatively impacted by planned yard stays and the intake of two new rigs in our fleet. However, it is positive to see that we still deliver a stellar operational performance with 97% uptime for the fifth consecutive quarter in a row, which proves the strength of our business and our ability to deliver on our long-term goal of USD 1bn by 2018,” says Claus V. Hemmingsen, CEO of Maersk Drilling and member of the Executive Board in the A.P. Moller - Maersk Group.

Maersk Drilling’s ambitious growth strategy includes investments of USD 5.2bn in eight new rigs being delivered between 2014 and 2016. In the first quarter in 2014, Maersk Drilling took delivery of its first drillship, the Maersk Viking, and the first ultra harsh environment jack-up rig, the Maersk Intrepid. Contracts have been secured for six of the eight newbuilds.

Maersk Drilling is in discussions with oil companies for employment on both short and longer term contracts for the last two drillships, which have not yet achieved a contract.

“We are currently seeing a slowdown in the deepwater market due to oil companies postponing several drilling programmes. We expect intensified competition in especially 2014 and 2015 for longer term jobs. However, there are still many short-term jobs, which will help absorb the supply. Despite the short term challenges, we maintain our positive long term view on the deepwater market, and our strong contract coverage shows that we are in the right markets, and that our services offered resonate well with our customers,” says Claus V. Hemmingsen.

Maersk Drilling’s forward contract coverage is 93% for the remaining part of 2014, 70% for 2015 and 50% for 2016. The total revenue backlog for Maersk Drilling at the end of Q1 2014 amounted to USD 7.4bn (USD 6.5bn). Maersk Drilling expects a result for 2014 below the result for 2013 (USD 528m) due to an extensive yard stay programme, one-time costs associated with training and start-up of operation of six new rigs and delays in the delivery of newbuilds due to interruptions in the delivery of certain equipment and services from sub-suppliers.

Facts about the first quarter 2014 performance:
Profit of USD 116m (USD 146m)
ROIC was 8.1% (13.0 %)
Operational uptime averaged 97% (96%)

Maersk Drilling


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