Moeller Maersk Drilling DRLCOupdate Feb. 12, 2020
This is not a recommendation or proposal to do anything. The data written in this article is not guarranteed. It is my private personal opinion. I`m not independing as I own a position of Moeller Maersk Drilling shares.
The oil&gas market is very much fluctuating from a high with an oil price above 100$/bl in 2015 to 0 in 2020. When oil prices fall one of the first action steps oil companies does is to reduce its capex. Thus the market for oil rigs is extremly fluctuating. Thus DRLCO is since 2016 in a negative situation. On the other hand if oil prices recover oil/gas companies increase their capex overproportional and thus the business of drilling companies increases overproportional.
It seems that DRLCO will survive this downturn. DRLCO is a turbo on oil&gas prices
Chances & Risks
The oil market is depressed due to a low demand in the course of the political corona panic. There are plenty of production capacities in KSA, OPEC and Russia not used to controll the price. There are further oil capacities in Iran, Lybia, Nigeria and Venezuela not used due to political issues. That means it seems unlikely that oil prices will recover to a level that the demand for drilling ships will rise soon.
The collapse of the oil price even before the corona panic reduced the demand for drilling ships significantly. The utilization of the fleet reduced to 58%. The cash flow is slightly negative the loss is a horror but mostly caused by impairment charges.
At the moment it looks like many oil companies renegotiate contracts with service companies to improve their conditions. Which means it is not becoming better for the drilling companies. The order baglog is getting shorter and shorter.
It would require a significant increase of the oil/gas prices to improve the situation of drilling companies like MMD. It might take a couple of years untill the situation will turn and an increased demand will meet with strongly decreased capacities.
Data & Information
Share
The Company’s share capital remained unchanged in 2020. 41,532,112 shares of a nominal value of DKK 10 each. At 30 June 2020, the Company holds 243,164 treasury shares (dec. 31. 2020) for incentives. Maersk Drilling has one share class. Each share carries one vote and no restrictions on ownership or voting rights. Maersk Drilling is listed on Nasdaq Copenhagen (XCSE), trading under the ticker symbol DRLCO.
Shareholders
Major shareholders were APMH Invest A/S, a subsidiary of A.P. Møller Holding A/S (41.6%) and A.P. Møller og Hustru Chastine Mc-Kinney Møllers Familiefond (8.9%)
The company is controlled by the Moellers
A few references
1. https://www.seanews.co.uk/container-shipping-market-an-outlook-for-2018/
2. https://seekingalpha.com/news/3387060-maersk-tests-wind-power-cut-shipping-fuel-costs?ifp=0&v=1535715900
3. https://www.offshore-energy.biz/tullow-extends-maersk-drillship-charter-despite-cancellation-notice/