Maersk Drilling and Awilco Drilling reported operational updates for 1Q 2015.
Maersk Drilling realized a profit of US$116 million during 1Q 2015 due to fleet growth and operational performance, despite two idle rigs. The result is attributed to new rigs that were added to Maersk’s fleet in 2014, all of which have shown good operational performance since commencing their contracts, reports Maersk. However, tendering activity for offshore drilling rigs was low during 1Q for the company. To compensate, Maersk launched a cost reduction and efficiency enhancement program last year that delivered a 5% savings on the operating cost level in 1Q 2015, compared to 1Q 2014.
At the end of 1Q 2015, Maersk Drilling’s forward contract coverage was 86% for the remainder of 2015, 61% for 2016 and 32% for 2017. The total revenue backlog by the end 1Q 2015 amounted to $5.9 billion. The company expects better results, year-on-year, of $471 million due to more rigs in operation, solid forward contract coverage, cost reductions and an efficiency-enhancement program.
In 1Q, Maersk took delivery of an ultra-harsh environment jackup rig and an ultra-deepwater drillship that are secured with long-term contracts. An additional ultra-harsh environment jackup rig is now under construction and is expected to be delivered in 2016.
Meanwhile, Awilco Drilling reported 1Q 2015 operating profit of $47.7 million, compared to $39.6 million in 1Q 2014, with a current backlog $410 million. The company credits its results to low 1Q opex, favorable exchange rates and its continued focus on reducing cost discipline.
Currently, Awilco’s WilHunter platform is contracted to Hess and its WilPhoenix is contracted to Apache, but the company continues to monitor the low contracting activity in the UK market. According to its recent 1Q financial update, overall UK market uncertainty continues as offshore operators continue to reduce current and planned E&P expenditures. In fact, recent UK tax incentives aimed at operators have had little impact to date, and Awilco expects to see an increased number of available rigs through 2015 and beyond as the lack of new contract opportunities lead to rig cold-stacking and attrition.
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