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Maersk Drilling waiting for the right acquisition opportunity

The company is only interested in new and expensive rigs, and these are not even up for sale yet, says CEO Claus Hemmingsen.

Although A.P Moeller-Maersk's acquisition talk was strengthened at the company's Capital Markets Day on Wednesday, the Drilling unit will likely not be first in line to throw money on the table to expand its asset portfolio.

Maersk Drilling CEO Claus Hemmingsen tells EnergiWatch that the interesting acquisition candidates have yet to be be put up for sale.

"There are many more rigs out there that we are not interested in than there are rigs we actually want to purchase. And the particular segment we are going after has not been put up for sale yet," he says.

The company will focus its efforts on strengthening the current portfolio of new deepwater rigs and equipment for resource extraction in harsh environments. As such, the price on proper acquisition targets remains high. 

The Maersk Group has been through a protracted divestment process, most recently increasing its cash holdings by selling off shares in Danske Bank, thus clearing the way for possible new acquisitions, particularly in the oil sector. The rationale is that the low oil prices will create cash shortages at competitors and peers, who will therefore be forced to divest assets.

"Many players are holding assets which are not actively employed, and this results in a financial strain. We – and many others- don’t expect the situation to improve much in the next 12-18 months, and many will not be solid enough to withstand this pressure," says Claus Hemmingsen.

Maersk Drilling expects that the contract coverage of rigs will fall to 67 percent in 2016 and to 41 percent in 2017. This year the coverage is at around 80 percent.

Will you buy up because it becomes cheaper, or because you are lacking in capacity?

"It is a combination of these two things. We will not perform acquisitions based on a speculation that there will be an recovery anytime soon, so we are only looking at activities that fit with our portfolio, namely new, sophisticated assets." 

But are there anyone out there right now who sees the sense in selling off equipment which is still new and valuable?

"No, there isn't. However, this will become a matter of whether they actually have a choice. If the current situation continues, we will get companies that have to sell. But I can't give you names at this point," says Claus Hemmingsen.

Read more about Maersk Drilling

Acquisition wave could be underway in rig market

Rig manager convicted of fraud against Maersk Drilling

This is the Maersk Group plan of attack

Three Capital Markets Days have hurt the Maersk share

 

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