Maersk Drilling releases Annual Report for 2020

Safeguarding performance in a challenging environment

Today, the Board of Directors of The Drilling Company of 1972 A/S (“Maersk Drilling”) has adopted the Annual Report for 2020:

Financial performance for 2020 (2019 in brackets)

• Revenue of USD 1,096m (USD 1,222m)
• EBITDA before special items of USD 289m (USD 415m)
• Cash flow from operating activities of USD 267m (USD 420m)
• Capital expenditures of USD 162m (USD 309m)
• Free cash flow of USD 17m (USD 32m)
• Net debt of USD 1,059m at 31 December 2020 (USD 1,099m at 31 December 2019)
• Leverage of 3.7x at 31 December 2020 (2.6x at 31 December 2019)
• Liquidity reserves of USD 626m at 31 December 2020 (USD 710m at 31 December 2019)

Performance highlights for Q4 2020 (Q3 2020 in brackets)

• Revenue of USD 286m (USD 226m)
• Contracted days of 1,204 (1,146)
• Utilisation of 59% (58%)
• Average day rate of USD 238k (USD 197k)
• Financial uptime of 98.9% (99.8%)
• Secured contracts with a total contract value of USD 70m (USD 132m)
• Revenue backlog of USD 1.3bn at 31 December 2020 (USD 1.5bn at 30 September 2020)

CEO Jorn Madsen quote
“I am proud that we weathered the storm, in particular due to our employees’ unwavering dedication and a strong operational performance under very difficult circumstances. Thanks to our good customer relationships, we are seeing increasing commercial activity, as witnessed by the significant increase in our contracting activity in the beginning of 2021. We continue to take measures to optimise our business and remain well-positioned to win in the market with good earnings visibility and with an industry-leading climate ambition and continued focus on value creation for our customers.”

Financial and operational development
In 2020, EBITDA before special items amounted to USD 289m in line with the most recent guidance of USD 275-300m. The decrease in EBITDA before special items in 2020 was primarily driven by lower utilisation due to contract terminations and lower market activity. This was partly offset by higher average day rates in 2020 compared to 2019 positively impacted by early termination fees.

Capital expenditures amounted to USD 162m (USD 309m) in line with the most recent guidance of around USD 150m. The decrease in capital expenditures in 2020 was driven by fewer rig upgrades and yards stays in connection with Special Periodic Surveys compared to 2019.

In 2020, Maersk Drilling managed to safeguard the safety and the quality of its operation during the extraordinary operating environment. In 2020, the Lost Time Incidents frequency improved to 0.44 (0.75), the financial uptime remained high at 98.9% (98.9%), and the customer satisfaction score increased to 6.7 (6.5) measured on a 1-7 scale.