Maersk Drilling Navigates Low Market Visibility
Maersk Drilling delivered a profit of USD 218m (USD 117m) in the second quarter of 2015. The result was positively impacted by continued strong operational performance, fleet growth, general cost savings and a USD 29m payment related to the divestment of the Venezuelan activities in 2014. The result was negatively impacted by three rigs being idle. The underlying profit for the quarter was USD 189m (USD 117m) generating a ROIC of 10.6% (7.2%).
“We are very pleased with the result given the adverse market conditions. Our focus on operational performance and cost savings continue to pay off and it enhanced our strong foundation for our future competitiveness. Meanwhile, we continue to improve our safety performance,” says Claus V. Hemmingsen, CEO in Maersk Drilling and member of the Executive Board in the Maersk Group.
The running 12 months lost time incidents frequency (LTIf) was 0.26 (1.02) per million working hours.
At the end of Q2 2015, Maersk Drilling’s forward contract coverage was 83% for the rest of 2015, 61% for 2016 and 32% for 2017. The total revenue backlog by the end Q2 2015 amounted to USD 5.3bn (USD 7.0bn). In addition, Maersk Drilling has in July and August secured additional contracts adding more than USD 660m to the backlog.
“We are proud that we are able to continue to strengthen our backlog in the challenging market,” says Claus V. Hemmingsen.
Maersk Drilling reiterates its strategic direction of targeting profitable growth through business optimization, cost reduction and a strong customer focus to maintain top-quartile performance with a ROIC above 10% over the cycle. The turbulence in the oil price has had a negative influence in the oil and offshore markets and countries dependent on oil. This has changed the outlook for Maersk Drilling and previously announced profit and growth targets will be replaced by plans adapting to the current environment.
Maersk Drilling expects a significantly higher underlying result for 2015 than in 2014 (USD 471m) due to more rigs in operation, solid forward contract coverage for the rest of the year as well as the initiated cost reduction and efficiency enhancement programme, which delivered a saving of 5% excluding positive rate of exchange effects on the operating cost level compared to Q2 2014.
Facts about the second quarter 2015 performance:
Profit of USD 218m (USD 117m)
ROIC was 10.6% (7.2 %)
Operational uptime averaged 97% (97%)
