Maersk Drilling

Maersk Drilling will be separately listed on 4 April 2019 following demerger from A.P. Moller-Maersk.

Maersk Drilling, established in 1972 as part of A.P. Moller - Maersk, obtained a stand-alone public listing in April 2019 with A.P. Moller Holding as the largest shareholder holding 41.6% of the shares.

Since the inception, Maersk Drilling has been on the forefront of developing high-end rigs and providing high-efficiency drilling services to oil and gas companies around the world.

Maersk Drilling owns and operates 23 mobile offshore drilling units specialising in the harsh environment and deep-water operations.

In 2016, A.P. Moller – Maersk announced it would focus its business operations and set out to define new structural solutions for the energy related businesses including Maersk Drilling.

THE YEAR IN BRIEF In August 2018, A.P. Moller – Maersk announced the intention to demerge Maersk Drilling via a separate listing on the Copenhagen Stock Exchange. Hereby shareholders in A.P. Moller - Maersk would receive shares in the separately listed drilling company.

At the same time A.P. Moller Holding announced its intention to remain a significant shareholder in Maersk Drilling post the demerger.

In December 2018, Maersk Drilling announced that they had concluded a separate debt financing package with a group of financial institutions. In January 2019, they announced a strengthening of their Board of Directors. Following these events Maersk Drilling is well prepared to operate as a standalone company both from a financial as well as an organisation perspective. Maersk Drilling will be listed on Copenhagen Stock Exchange on 4 April 2019.

STRATEGY REVIEW Maersk Drilling is well positioned in the most attractive segments of the offshore drilling industry with its modern and high spec drilling units. Maersk Drilling owns and operates 23 units.

Safe operation is the foundation of Maersk Drilling’s business both seen in terms of “licence to operate” as well as the company’s ability to attract new business and convert it into profits.

Maersk Drilling’s service delivery model looks to differentiate from the mainstream drilling companies through building alliances with oil and gas companies through long-term customer relationships and partnerships with the aim of improving efficiencies by reducing waste and increasing predictability in the drilling process for the customers.

One example of the strong customer relationships is the 5 year alliance agreement entered into in 2017 with AkerBP, with the aim of reducing cost per barrel and increasing profitability for all alliance partners (including Halliburton) through implementation of digital solutions, increased collaboration, standardizing and simplifying processes.

Maersk Drilling intends to continue to distinguish itself from the competition by providing a leading operational performance on safety, efficiency and reliability through a combination of its highspecification assets, operational excellence and innovation with partners across the value chain. FINANCIALS The result for 2018 was a profit of USD 941m (loss of USD 1.5bn) positively impacted by impairment reversals of USD 810m. The reversal reflected the increased activity levels and improved longterm projections. Maersk Drilling saw an increase in tender activity leading to the number of contracted days increasing compared with 2017 with 8.5% to 6,024 days (5,553 days) which lead to a utilisation of the assets of 69% (66%).

Maersk Drilling benefited from a solid contract backlog and delivered an EBITDA before special items of USD 611m (USD 683m) - an industry leading margin of 43% (47%) based on a revenue of USD 1.4bn (USD 1.4bn).

Maersk Drilling delivered a free cash flow (adjusted for newbuild cash flow) of USD 457m (USD 653m) after a cash flow from investments of USD 136m (USD 448m). Net interest-bearing debt ended at USD 1.1bn and the liquidity reserves amounted to USD 772m, comprising of USD 372m cash and USD 400m in committed longterm credit lines.

Maersk Drilling left 2018 with a committed contract backlog of USD 2.5bn (excluding value of options) (USD 3.3bn), which includes USD 503m added to the contract backlog during 2018. Maersk Drilling started 2019 with contract coverage of 63% and 37% for 2020.

Maersk Drilling has been reported as discontinued operations in A.P. Moller – Maersk.

EXECUTIVE LEADERSHIP • Jørn Madsen (CEO) • Jesper Ridder Olsen (CFO)

BOARD OF DIRECTORS • Claus V. Hemmingsen (Chairman) • Robert M. Uggla (Vice Chairman) • Alastair Maxwell (elected April 2019) • Kathleen McAllister • Martin N. Larsen • Robert Routs REVENUE (USDm)

1,429 1,439 2,297 2,518

1,998

2018 2017 2016 2015 2014

ADJUSTED FREE CASH FLOW (USDm)

1,267 1,186

457 653

292

2018 2017 2016 2015 2014

EBITDA BEFORE SPECIAL ITEMS (USDm)

1,381 1,393

611 683 903

2018 2017 2016 2015 2014

REVENUE BACKLOG (USDm)

1,022

658

474

312

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