Maersk Drilling Posts Record Profit

Maersk Group has announced a sharp drop in profit for 2015, down 85 percent from 2014, with losses in the billions at its Maersk Oil subsidiary.

But its rig operator, Maersk Drilling, bucked a weak offshore market to post a profit of $750 million, its best ever, up from $480 million in 2014.

The fourth quarter yielded especially positive results, with profits of $180 million.

Given the state of the offshore market, the announcement is unusual. As of January 2016, Baker Hughes' worldwide offshore rig count was at 242, down by more than one fifth from a year ago, and analysts at Fitch suggest that recovery could be as far off as the second half of 2018.

Maersk Drilling's success reflects high rig uptime, high utilization and a successful cost reduction program, the firm says. Additionally, in 2015 it won 12 contracts worth a combined $2 billion. These are at lower day rates than in prior years, but they bring total backlog to $5.4 billion, with high contract coverage through 2018.

Among these was a $44 million contract with Total's consortium for Block 14 offshore Uruguay, which, at 3,400 meters, may be the deepest-water offshore drilling project in history.

The recycling of the Maersk Endurer and increased idle time had a negative impact on profitability, however, and the firm expects that more rigs will come off contract next year. “Maersk Drilling expects a significantly lower underlying result in 2016 than in 2015 mainly due to lower day rates on new contracts and more idle days,” the firm said.