Maersk Drilling delivered a historically high profit for the full year 2013 of USD 528m. The result – up by 52 per cent compared to last year - is positively impacted by a strong operational performance across the entire rig fleet, full utilization of all rigs, higher day rates and effective cost management for the rigs in operation.
“The 2013 performance demonstrates the underlying strength of our business, which gives me the confidence that Maersk Drilling in despite of the challenges ahead in 2014 can deliver on our long term goal of delivering a profit of USD 1bn by 2018,” says Claus V. Hemmingsen, CEO of Maersk Drilling and member of the Executive Board of the A.P. Moller – Maersk Group and continues:
“2014 is the year where we take delivery of six new rigs and at the same time have six yard stays. In industry terms, these are extraordinary challenges, which will affect our financial performance negatively compared to 2013.”
As a consequence of the significant growth and taking many new rigs into operation, Maersk Drilling expects additional costs associated with training and start-up of operations, to the tune of USD 20-30m per rig, which will negatively impact the result in 2014 and 2015. Furthermore, two yard stays planned for 2013 were postponed and will not be completed until beginning of 2014. For 2014, Maersk Drilling has an extensive yard stay program where further six rigs will have survey and upgrades.
Of the eight rigs Maersk Drilling has under construction, long-term contracts have been secured for all four jack-up rigs and the first two drillships. For the remaining two drillships, Maersk Drilling are in discussions with oil companies for employment on both short and longer term contracts. Maersk Drilling’s forward contract coverage is 94 per cent for 2014, 70 per cent for 2015 and 53 per cent for 2016.
“Our contract coverage shows that we are in the right markets, and that our services offered resonate well with our customers. However, we are currently seeing a slowdown in the deepwater market due to oil companies postponing several drilling programs. We expect intensified competition in 2014 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,” says Hemmingsen.
Maersk Drilling expects a result for 2014 below the result for 2013 (USD 528m) due to an extensive yard stay program, 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 full year 2013 performance:
Profit of USD 528m (USD 347m)
ROIC was 10.8 per cent (8.8 per cent)
Operational uptime averaged 97 per cent (92 per cent)
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