Maersk Drilling profit slips on ten idle rigs

Danish offshore driller Maersk Drilling saw a significant decrease in profit and revenues during the second quarter 2017 impacted by ten idle rigs in the period. 

Maersk Drilling’s profit for the second quarter 2017 tumbled to $28 million from $164 million in the prior-year second quarter.

According to the company, the result reflected the fact that ten of its rigs were fully or partly idle during the quarter, and that old contracts at higher day rates have expired. The result was furthermore impacted negatively by temporary downtime on two rigs during the quarter. The result was positively impacted by cost reductions.

During the second quarter 2017, the driller’s revenues also dropped totaling $349 million versus $566 million in the year-before period.

The economic utilization of the fleet was 64%, which was adversely affected by the ten idle rigs, compared to 83% in 2Q 2016.

The operational performance across the fleet resulted in an average operational uptime of 97% for the jack-up rigs and 90%for the deepwater rigs. This compares to 98% for jack-ups and 99% for deepwater rigs in the prior-year second quarter. The operational uptime was negatively affected by temporary equipment issues on the drillship Maersk Viking and on the jack-up Maersk Invincible.

By the end of the quarter, Maersk Drillings’ forward contract coverage was 61% for 2017, 46% for 2018 and 25% for 2019. The total revenue backlog by the end of the second quarter amounted to $3.1bn, compared to $4.7bn in the same period last year.

In order to optimize profitability and cash flows, Maersk Drilling said it continues to identify and drive cost savings and improve efficiency. Namely, the driller said it reduced costs further by 3% compared to 2Q 2016, and more than 20% compared to the baseline in 2014, excluding exchange rate effects and savings from stacked rigs. By the end of 2Q, a total of nine rigs were idle of which one, Maersk Resolve, was being prepared for contract start in 3Q. Maersk Drilling continues to evaluate stacking on a case-by-case and to date, all idle rigs have been warm stacked providing a better potential for market re-entry.

Offshore Energy Today Staff

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