Maersk Drilling posts higher profits

Silhouette of oil platform in sea against moody sky at sunset28 February 2014, News Wires – Denmark’s Maersk Drilling posted a rise in profits for 2013 on the back of increased revenue driven by better day rates and full utilisation.

The company posted a profit of $528 million for the year, up from 2012’s profit of $347 million.

The increased profits came as revenue rose from just under $1.7 billion in 2012 to nearly $2 billion last year.

Maersk said its 2013 results were boosted by a strong operational performance across the entire rig fleet, full utilisation of all rigs, higher dayrates and effective cost management for the rigs in operation.

The company enjoyed an operational uptime of 97% last year, compared to 92% over the previous 12-month period.

Despite the strong results, Maersk warned that 2014 would not be as strong of year as it expected additional costs associated with training and start-up of operations at a cost of between $20 million and $30 million per rig.

“2014 is the year where we take delivery of six new rigs and at the same time have six yard stays,” Maersk Drilling chief executive Claus V Hemmingsen said.

“In industry terms, these are extraordinary challenges, which will affect our financial performance negatively compared to 2013.”

He did add that, despite the challenging environment in 2014, the company would still deliver on its long term goal of delivering a $1 billion profit by 2018.

Of the eight rigs the company currently has under construction, all four jack-ups have already secured long-term contracts, as have the two first drillships.

Maersk said that it was currently in discussions with oil companies on both short and long term contracts for the remaining two drillships under construction.

The company’s forward contract coverage for the current year is 94%, while the forward contract coverage for 2015 and 2016 is 70% and 53% respectively.

Hemmingsen said that the contract coverage showed the company was targeting the right markets, however he also identified a slow down in the deep-water market in the near-term, with oil companies already postponing several drilling programmes.

“We expect intensified competition in 2014 for longer term jobs, however, there are still many short-term jobs, which will help absorb the supply,” he said.

“Despite the short term challenges, we maintain our positive long term view on the deep-water market.”

Also while dayrates peaked at about $600,000 per day last year, they are expected to be slightly lower this year.


– Upstream


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