Maersk Drilling reported a loss of USD 694m (profit of USD 751m) and a ROIC of negative 9.0% (positive 9.3%). The result was negatively impacted by impairments of USD 1.5bn (USD 27m), primarily related to the deepwater segment due to significant oversupply and reduced long-term demand expectations as a consequence of lower offshore spending. However, the underlying profit of USD 743m (USD 732m) was positively impacted by termination fees of approximately USD 150m moved from 2017 to 2016, savings on operating costs and high operational uptime offset by ten rigs being idle or partly idle versus three rigs last year.
“Despite an underlying result of USD 743m, Maersk Drilling has adjusted the expectations for the offshore rig market going-forward. As a result, this means that we have had to write down the value of our assets, which has negatively impacted our profitability. However, I am very pleased that we are once again able to deliver excellent operational uptime as well as additional savings on operating cost. I want to emphasize that Maersk Drilling will continue to focus on doing what we do best, and that is providing high-quality drilling services and superior operational performance to our customers, at a competitive cost level,” says Jørn Madsen, CEO of Maersk Drilling.
In 2016, Maersk Drilling acquired the contracted newbuild harsh environment jack-up, the Maersk Highlander. Furthermore, Maersk Drilling has taken delivery of its fourth and final newbuild ultra harsh environment jack-up rig on order, the Maersk Invincible. Both jack-up rigs have long-term contracts in the North Sea. Maersk Drilling was also awarded new contracts for the jack-ups Mærsk Gallant and Maersk Guardian, of which the latter has been converted to an accommodation rig.
“As the offshore drilling industry continues to be extremely challenged, we remain committed to securing new contracts by working closely with our customers to understand their needs and problems. By leveraging our strong history of technical problem solving and operational excellence, Maersk Drilling remains an attractive partner in today’s industry,” says Jørn Madsen.
At the end of 2016, Maersk Drilling’s forward coverage was 56% for 2017, 45% for 2018 and 25% for 2019. The total revenue backlog by the end of the year amounted to USD 3.7bn (USD 5.4bn).
Facts about the 2016 performance:
• Loss of USD 694m (profit of USD 751m)
• ROIC was negative 9.0% (positive 9.3%)
• Operational uptime averaged 98% (97%)
About Maersk Drilling
Maersk Drilling’s modern fleet counts 24 drilling rigs including drillships, deepwater semi-submersibles and high-end jack-up rigs. Maersk Drilling employs an international staff of 3,200 people and generated an underlying profit of USD 743m in 2016. For further information, see www.maerskdrilling.com