Maersk Drilling Bullish Despite 1Q Revenue Fall

Denmark’s Maersk Drilling reported May 16 that revenue dropped by 8% quarter on quarter in the first quarter of 2019 to $308mn. However, the company said it expects market fundamentals to recover, and maintained its full-year guidance.

The fall in turnover was driven by lower day rates and expiry of legacy contracts, said Maersk Drilling, which was spun off by the Danish shipping giant and listed in Copenhagen earlier this year.

Utilisation of the fleet in January-March was largely in line with Q4 2018, the company noted. However, the average day rate fell to $208k per day from $225k. The Brent crude oil price averaged $64/bbl, down from $69/bbl, it added.

Still, Maersk Drilling is confident that current oil prices are “supportive” of a recovery in the offshore market. Years of underinvestment and low discovery volumes will push upstream companies to increase exploration and development efforts, the firm said in a statement.

With that in mind, Maersk Drilling maintained its full-year guidance for 2019. EBITDA is expected to be around $400mn; capital expenditures $300-350mn.

“Our performance in the first quarter was in line with expectations,” said CEO Jorn Madsen. “We have secured several contracts providing a continued high degree of earnings visibility. Longer term we continue to expect improved market fundamentals with increased utilisation and higher day rates.”