Declining oil prices and the coronavirus outbreak now cause Maersk Drilling to lower its 2020 guidance.
The operating result (EBITDA) is now expected to land somewhere in the USD 325-375 million range against the previously announced USD 400-450 million, informs the company in a notice to the stock exchange.
Up until now, the company’s results have been in line with its guidance, but the virus outbreak could have an impact on this:
“While the restrictions and guidelines imposed by governments and customers in respect of COVID-19 have not yet materially impacted operations, there is an increased risk that this will be the case, if the restrictions remain in place for an extended period of time,” informs Maersk Drilling.
“Maersk Drilling is maintaining a close and constructive dialogue with its customers and other relevant stakeholders in order to handle the COVID-19 situation and minimise the adverse impact on operations.”
The new guidance is based on the company’s current contract backlog, which has yet to see any major impact, but Maersk Drilling cannot rule out that it might be adversely affected with time.
“The severity and duration of the COVID-19 situation and the lower oil price environment are currently difficult to predict, but given the strong balance sheet, high liquidity reserve, and long debt maturity profile, Maersk Drilling has the financial strength and flexibility to withstand and navigate in this challenging business environment, also in case of a prolonged period of uncertainty,” writes Maersk Drilling in the statement.
Friday, the company, which contracts drilling rigs and vessels to the oil industry, increased 11 percent on the Copenhagen Stock Exchange.
Right after the announcement, Maersk Drilling’s stock fell from an 11.8-percent increase but later managed to regain most of this.
Despite Friday’s increase, the Maersk Drilling stock has seen significant headwinds in 2020, in which the overall loss comes to almost 70 percent.
The decline has been almost in tandem with the oil price collapse, which happened when Saudi Arabia lowered the price significantly while preparing for a significant production boost in April.
This was a direct counter move against Russia, which blocked the way for proposed production cuts in the Organization of the Oil Exporting Countries, OPEC. In addition to the oil dispute, the corona pandemic has also dampened demand.
English Edit: Ida Jacobsen
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