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Maersk Drilling reports fall in revenue in 1Q20

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Oilfield Technology,

Maersk Drilling has released its results for 1Q20.

The company recorded a revenue of US$279 million in 1Q20, compared to US$305 million in 4Q19.

The number of contracted days for its rigs amounted to 1555, corresponding to utilisation of 78% (compared to 1523 contracted days, corresponding to utilisation of 76%, in 4Q19).

The average day rate of US$179 000 in 1Q20 (compared to US$200 000 in 4Q19) was impacted by extended mobilisations for new contracts in the International floater segment.

The company's revenue backlog as of 31 March 2020 was US$1.7 billion (US$2.1 billion in 4Q19) impacted by limited new contract activity as well as termination of the drilling contract for Maersk Venturer. As of 31 March 2020, the forward contract coverage for the remainder of 2020 was 64%.

Subsequent to the end of the quarter, notices of early termination for convenience of the drilling contracts for Mærsk Developer, Maersk Reacher, Mærsk Innovator and Maersk Guardian were received. The terminations are expected to have immaterial financial impact given early termination fees.

On 30 April 2020, a four-well extension for the low-emission jack-up rig Maersk Intrepid was announced with expected commencement in September 2020 and an estimated duration of 339 days. The contract value is approximately US$100 million, including rig modifications and upgrades, but excluding the integrated services provided and potential performance bonuses.

Profit before depreciation and amortisation, impairment losses/reversals and special items (EBITDA before special items) in 2020 is expected to be in the range of US$250 – 300 million. CAPEX for the year is expected to be around US$150 million.

Jorn Madsen, CEO, said: “With the combination of Covid-19 and lower oil prices we are facing unprecedented times in the offshore drilling industry. Maersk Drilling succeeded in maintaining a strong operational performance during 1Q20, and we are well positioned to respond to the changed business environment due to a combination of operational, commercial and financial strengths. In addition, we are taking immediate steps to adapt our cost structure to the updated market outlook.”

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