Maersk Drilling CEO pleased with 2Q results “given the adverse market conditions”

Danish drilling contractor Maersk Drilling reported its 2Q 2015 profit of $218 million, up from $117 million in the second quarter of 2014.

The driller which owns a fleet of 22 offshore drilling rigs said the result was positively impacted by continued strong operational performance, fleet growth, general cost savings and a $29 million payment related to the divestment of the Venezuelan activities in 2014. Also, Maersk Drilling said, the result was negatively impacted by three rigs being idle.

“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.

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 $5.3 billion ($7.0 billion). In addition, Maersk Drilling has in July and August secured additional contracts adding more than $660 million to the backlog.

“We are proud that we are able to continue to strengthen our backlog in the challenging market,” says Claus V. Hemmingsen.

The increased cash flow from operating activities of $ 248 million ($173 million in 2Q 2014) was mainly related to six additional rigs in operation and no yard stay/upgrade projects in Q2. Cash flow used for capital expenditures declined to $45 million ($478 million) mainly due to fewer instalments paid for the newbuild projects.

“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,” said the company in a statement.

The company also said it expected a significantly higher underlying result for the full year 2015 than in 2014 ($471 million) due to more rigs in operation, high forward contract coverage as well as impact from the initiated profit optimisation programme.