Maersk Drilling has again warned about a slowdown in the deepwater market, but says it still has a positive long term view on the deepwater market.
The company is investing $US5.2 billion in eight new rigs, which are being delivered between 2014 and 2016. In Q1 this year, its first drillship, Maersk Viking (pictured), and the first ultra harsh environment jackup, Maersk Intrepid, were delivered. Read more: Maersk Viking launched
Maersk Drilling's CEO Claus V. Hemmingsen, said: “We are currently seeing a slowdown in the deepwater market due to oil companies postponing several drilling programmes. We expect intensified competition in especially 2014 and 2015 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, and our strong contract coverage shows that we are in the right markets, and that our services offered resonate well with our customers."
Read more: Deepwater slowdown warnings (February 2014) Deepwater drilling markets coming to an end? (April 2014)
Maersk Drilling's Q1 profit was $116 million, which was impacted by planned yard stays and the intake of the two new rigs, said the firm.
“2014 is a year of execution in progressing on Maersk Drilling’s ambitious growth strategy," Hemmingsen says. "As expected our first quarter result is negatively impacted by planned yard stays and the intake of two new rigs in our fleet. However, it is positive to see that we still deliver a stellar operational performance with 97% uptime for the fifth consecutive quarter in a row, which proves the strength of our business and our ability to deliver on our long-term goal of $1 billion by 2018."
Contracts have been secured for six of the eight newbuilds. Maersk Drilling said it is in discussions with oil companies for employment on both short and longer term contracts for the last two drillships.
Maersk Drilling’s forward contract coverage is 93% for the remaining part of 2014, 70% for 2015 and 50% for 2016. The total revenue backlog for Maersk Drilling at the end of Q1 2014 amounted to $7.4 billion.
Maersk Drilling expects a result for 2014 below the result for 2013 ($528 million) 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.
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