Agile Maersk Drilling pens new deals

Despite adverse market conditions, Maersk Drilling has signed five new contracts in 2015. The company’s priority is to keep the rigs and employees at work, cutting costs to match the new oil environment.

Maersk Innovator
One Maersk Drilling’s five 2015 contracts is an extension for the jack-up rig Mærsk Innovator with ConocoPhillips Norway, offshore Norway. The duration of the extension is 16 months, estimated value is USD 142m.

The lower oil price is changing the industry at a rapid pace.

Daily news coverage is a clear indication and the overall direction was confirmed in May when Rystad Energy, an independent oil and gas consulting firm, published a report showing that the value of postponed and abandoned projects by oil companies have hit USD 100 billion.

This is having a trickle effect throughout the supply chain, and Maersk Drilling has long ago begun tuning the organisation for the new industry environment.

Five contracts signed

Thus, in 2015, Maersk Drilling has signed several contracts: a long term contract for the ultra deepwater drillship Maersk Voyager, a short term contract for ultra deepwater drillship Maersk Venturer, a five-year contract extension for semi-submersible Heydar Aliyev and a 16-month contract extension for the ultra-harsh jack-up rig Mærsk Innovator and latest a new contract for the Mærsk Giant.

It is important for us to have our rigs and our employees working for the customers, delivering results and building the long-term relationships that we depend on.

Ana Zambelli

ANA ZAMBELLI, CCO AT MAERSK DRILLING

The contracts come at a time of intensified competition and they demonstrate how Maersk Drilling’s track record, expertise and relationships with key clients can help to navigate tough trading conditions.

“These contracts enable us to build our contract backlog providing further revenue visibility. It is very encouraging that we are able to continue to build backlog in this very challenging market,” says Ana Zambelli, CCO at Maersk Drilling.

Responding to lower rates

Drilling companies across the board are seeing downward pressure on rates, in certain cases falling to cost level, far away from the heyday before the oil price plunged. Therefore, while higher rates would have been preferable, the important thing is to keep the rigs and employees at work:

“We cannot wait around for the industry outlook to improve. It is important for us to have our rigs and our employees working for the customers, delivering results and building the long-term relationships that we depend on,” Zambelli says, before pointing to the short-term solution:

“When lower rates impacts our top line, we of course have to look at our own cost structure and find ways to do things more efficiently and find better agreements with our sub vendors and we are well underway.”

Maersk Drilling’s initiated cost reduction and efficiency enhancement programme, excluding positive rate of exchange effects, delivered a saving of 5% on the operating cost level compared to Q2 2014.

During this time, Maersk Drilling has also successfully implemented seven of eight rigs in its newbuild programme with high uptime and a good safety performance.