Annual
Report
2021
The Drilling Company of 1972 A/S
Lyngby Hovedgade 85, 2800 Kgs. Lyngby Denmark / Registration no. 40404716
Table of
contents
03 Management review
Overview
Chairman foreword Towards a sustainable
drilling industry
CEO foreword Strong performance
in challenging times
Noble Corporation and Maersk Drilling
business combination
2021 highlights
Our approach to sustainability
Five-year summary
Segment overview
Outlook for 2022
Our Business
Maersk Drilling and the oil and gas industry
Market
Strategy
Delivering efficient wells by increasing
our product and service offering
From oil field to storage facility
Organisation and people
Financial policy and capital allocation
Financial review
Financial performance in 2021
Governance and risk
Corporate governance
Board of Directors
Executive Management
Remuneration
Risk management
Shareholder information
55 Financials
Consolidated financial statements
Parent company financial statements
Company overview
Definition of terms
Statement of the Board of Directors
and the Executive Management
Independent Auditor’s Reports
106 Additional information
Quarterly highlights
Fleet Status Report
Task Force on Climate-related
Financial Disclosures
Our Business, page 19
The Annual Report of The Drilling Company of 1972 A/S
(referred to as “Maersk Drilling” or the “Group” when
referring to the consolidated group of companies and
the “Company” when referring to the parent company)
comprises consolidated financial statements prepared
in accordance with International Financial Reporting
Standards (IFRS) as adopted by the EU and further
requirements in the Danish Financial Statements Act,
and parent company financial statements prepared in
accordance with the Danish Financial Statements Act.
Forward-looking statements
The Annual Report contains forward-looking statements
and certain third-party data and information. Reference
is made to the important notice in respect of forward-
looking statements and third-party data and information
included on page 110.
Comparative figures
Unless otherwise stated, all figures in parenthesis refer
to the corresponding figures for the previous year.
Maersk Drilling Annual Report 2021 02
Management
review
Overview
Our Business
Financial review
Governance and risk
03
Management’s reviewMaersk Drilling Annual Report 2021 Overview Our Business Financial review Governance and risk
Towards a
sustainable
drilling industry
This transaction will combine the business activities
of two leading offshore drilling companies with
a strong strategic rationale and significant value
creation to customers as well as shareholders.
The combined company has every opportunity
to lead the offshore drilling industry based on
a unique operating history, unparalleled brand
reputation, a global footprint including both
harsh and benign drilling environments, a first-
class fleet of assets, and a leading position within
sustainability. Our focus will be on deepwater and
harsh environment drilling with a current fleet
of 39 drilling rigs located in the North Sea, North
America, South America, West Africa, and the
Asia-Pacific.
With this proposed combination, we believe we are
creating the best opportunity for long-term growth
and shareholder value. The combination with Noble
is expected to provide through-cycle ability to
return cash to shareholders based on realisation of
estimated annual cost synergies of USD 125 million,
an even stronger balance sheet, and additional cash
flow potential as the market recovery continues.
The shareholders of the respective companies now
have the opportunity to approve the merger which
has been unanimously recommended by both
Boards of Directors. I sincerely believe that this
move will benefit Maersk Drilling’s shareholders
and set the scene for a new, stronger player to be
an innovative force in the drilling industry.
For yet another year, the COVID-19 pandemic
has brought substantial challenges. It required
massive efforts and great mobilisation across the
organisation. In some cases, the pandemic required
significant sacrifices amongst all the people of
Maersk Drilling to uphold our first class and safe
service delivery to our customers in order to
achieve excellent results in a challenging market.
I wish to start out by expressing my appreciation
and deepfelt gratitude for the good spirits shown
and the huge contributions that have been made.
With the strong rebound in the global economy
in 2021, the energy transition is once again at
center stage of political agendas. COP26 in
Glasgow confirmed the global determination to
address the issue with important pledges from
major countries to achieve net-zero emissions in
the future.
The will to transform our future is widespread,
however, there is also an increasing realisation that
many of modern society’s needs in the transition
require hydrocarbon-based solutions that have
been refined over decades. In sectors like shipping,
construction, air travel and agriculture, further
advances must be made on both performance
and costs before viable alternatives can be made
available on a global scale.
Companies that are able to provide the necessary
hydrocarbons in the most responsible and
sustainable way will play a crucial role in the
future of our energy systems. The energy
transition and increasing sustainability demands
on the oil and gas sector can offer a promising
platform for our offerings now and in the future.
In recent years, investment levels have been low
in the upstream sector but with the rebounding
world economy, drilling markets have begun to
recover. As the price of oil recently reached multi-
year highs, we have seen increasing day rates and
greater utilisation of rigs. With an improved cost
structure and a long-standing focus on operational
efficiency, Maersk Drilling is well-positioned to
benefit from a continuing market recovery.
The proposed plan to combine the business
activities of Maersk Drilling and Noble Corporation
was announced in November. We will be creating a
combined company with sufficient scale to serve
as a world class offshore drilling contractor for
energy companies worldwide.
“Companies that are able to provide the
necessary hydrocarbons in the most responsible
and sustainable way will play a crucial role
in the future of our energy systems.”
Claus V. Hemmingsen Chairman
Maersk Drilling Annual Report 2021 04
Management’s review Overview Our Business Financial review Governance and risk
Strong
performance
in challenging times
The second structural issue is the energy
transition. This societal transformation is
impacting all parts of our industry and many
of our customers have launched ambitious
decarbonisation plans. Maersk Drilling has done
the same with the launch of the most ambitious
and wide-reaching targets in the drilling industry.
I am proud that we have taken this bold move.
I am also sensing a growing understanding
from society that oil and gas have a vital role
to play in the energy transition. It is becoming
increasingly clear that there is a need for stable
and affordable energy supplied from our sector;
and that it is crucial to balance more intermittent
wind and solar energy sources and to provide
fuel for activities which have not yet developed
alternatives. There will be an ongoing need for
service providers like us for many years to come.
The third structural issue is efficiency and cost
levels. The gains that can be achieved in our
industry via optimised planning and execution
supported by better digital tools are staggering.
There are ample opportunities for increased value
creation. This core belief is behind our strategic
focus and our continued drive for Smarter Drilling
for Better Value which seeks to increase certainty
and reduce the time, cost and emissions involved
in well delivery. Our closest partners recognise
the strong outcomes as proven by our recently
announced five-year agreement with Aker BP to
continue our jack-up alliance in Norway.
2021 has been a year of strong progress and
tremendous change. I am certain that 2022
will be just as exciting and present many more
opportunities.
2021 was another year of strong performance by
our people despite the continued challenges posed
by the pandemic. Societies across the globe are
finding the remedies necessary to return to a more
normalised way of life and the global economy has
regained strength. Being a supplier to the global oil
and gas sector has led to a rebound in our activity
levels and an improved financial performance. Our
revenues grew by an impressive 16% for the full
year and our average fleet utilisation was 75%,
back at the pre-COVID levels.
I want to thank all our employees for their
considerable contributions, and especially those
of our colleagues who are still impacted by COVID
restrictions. Many of our offshore colleagues
are still facing challenging circumstances in
their efforts to deliver the quality of service that
we are proud to provide. Nevertheless, we have
continued to ensure safe, efficient and reliable
drilling services, quarter after quarter, to the full
satisfaction of our customers.
Even though society at large has successfully
fought the most devastating effects of the
pandemic, we are still in a situation where strong
forces are putting pressure on our industry. Three
structural issues in particular must be addressed.
The first main structural issue concerns the long-
term financial durability of the offshore drilling
industry. There continues to be too many rigs
and too many players. This must be addressed
through consolidation, which in turn should
lead to more rational choices and an overall
healthier industry with the ability to invest in
innovation and sustainability. Maersk Drilling is
certainly doing its part with the announced plan
to combine with Noble Corporation, but further
consolidation is desirable.
“We have continued to deliver safe, efficient
and reliable drilling services, quarter after
quarter, to the full satisfaction of our
customers.”
Jørn Madsen CEO
Maersk Drilling Annual Report 2021 05
Management’s review Overview Our Business Financial review Governance and risk
Noble Corporation
and Maersk Drilling
business
combination
As announced on 10 November 2021, Noble
Corporation and Maersk Drilling have entered
into a definitive business combination agreement
to combine in a primarily stock transaction. The
transaction is estimated to close in mid-2022
and is progressing as planned. Closing of the
transaction is subject to Noble shareholder
approval, acceptance of the exchange offer by
holders of at least 80% of Maersk Drilling shares,
merger clearance and other regulatory approvals,
listing on the New York Stock Exchange and Nasdaq
Copenhagen, and other customary conditions.
The combined company will be headquartered
in Houston, Texas, and will maintain a significant
operating presence in Stavanger, Norway, to retain
proximity to customers and support operations in
the Norwegian sector and the broader North Sea,
and to ensure continued access to talent.
Transaction terms and structure
The transaction will be implemented by way of (i)
a merger of Noble with and into a wholly owned
subsidiary of Noble Finco Limited, a private limited
company formed under the laws of England and
Wales and an indirect, wholly owned subsidiary
of Noble (“Topco”), and (ii) a Danish voluntary
tender exchange offer by Topco to Maersk Drilling
shareholders. In connection with the merger, each
outstanding Noble share and penny warrant will
be converted into the right to receive one share
of Topco, and each issued tranche 1, tranche 2 and
tranche 3 warrant will be converted into a warrant
to purchase one share of Topco.
Additionally, pursuant to the exchange offer,
Maersk Drilling shareholders may exchange each
Maersk Drilling share for 1.6137 Topco shares, and
will in lieu of their entitlement to certain Topco
shares have the ability to elect cash consideration
for up to USD 1,000 of their Maersk Drilling shares
(payable in DKK), subject to an aggregate cash
consideration cap of USD 50 million (excluding any
cash paid for fractional shares).
Enhancing the customer
experience: The combination
will bring together two
complementary cultures with
an unwavering commitment to
best-in-class safety performance
and customer satisfaction.
The combined company will
be a leader and first-mover in
innovation and sustainability.
Platform for strong cash flow
generation and distribution:
The balance sheet of the
combined company will be best-
in class with low net leverage
and strong liquidity including
a combined cash balance of
approximately USD 900 million,
providing resiliency through
the cycle and allowing the
combined company to focus
on implementing a sustainable
return of capital policy for
shareholders.
Creating a world class offshore
driller: The combined company
will benefit from a modern,
high-end fleet comprised of 20
floaters and 19 jack-up rigs across
benign and harsh environments,
which will serve a broad portfolio
of high quality, blue-chip
customers.
Accretive to all shareholders:
The combination comes with
potential annual cost synergies
of USD 125 million, which are
expected to be front-loaded and
realised within two years after
closing of the transaction. The
synergies are expected to be
accretive to free cash flow per
share. The combined company’s
scale will significantly enhance
its cost-competitiveness.
Strategic rationale
The decision to combine Noble and Maersk Drilling is predicated on a strong strategic rationale
that will create significant value for shareholders:
Maersk Drilling Annual Report 2021 06
Management’s review Overview Our Business Financial review Governance and risk
2021 Highlights
346
EBITDA before special items 2021 (USD million)
The financial performance in 2021 was positively
impacted by increased activity levels especially
in the International segment.
EBITDA before special items amounted to
USD 346m (USD 289m), in line with the latest
guidance of EBITDA before special items of around
USD 350m. EBITDA margin was 27% (26%).
1.3
Revenue 2021 (USD billion)
Revenue grew by 16% from last year (1.1 bn).
6.5
Customer satisfaction score 2021 on a scale
from one to seven (2020: 6.7).
97.6%
Financial uptime 2021
Financial uptime remained high but slightly lower
than in 2020 (98.9%) due to downtime on Mærsk
Deliverer during the first quarter.
0.53
Lost Time Injury frequency (based on man hours)
Safety performance continues to be strong but
the injury frequency was slightly above last year
(0.44).
19
Number of rigs
During the year, Maersk Drilling successfully
divested two of its oldest rigs, Mærsk Gallant and
Maersk Guardian, contributing to the rationalisation
of the global rig fleet. This is consistent with our
strategic priority of maintaining a modern and
high-quality fleet. Furthermore, Maersk Drilling
completed the divestment of the combined drilling
and production unit Mærsk Inspirer, a non-core
asset, significantly deleveraging its balance sheet.
157
Free cash flow (USD million)
Excluding proceeds of USD 405m from the sales
of Mærsk Gallant, Maersk Guardian and Mærsk
Inspirer, free cash flow after interest payments
amounted to USD 157m in 2021 (USD 17m).
1.9
Revenue backlog 2021 (USD billion)
Maersk Drilling had a strong commercial performance
in 2021 securing 35 new contracts and contract
extensions including the agreement to renew our
five year Aker BP frame agreement, adding more
than USD 2bn (USD 469m) to the contract backlog.
102
CAPEX (USD million)
Capital expenditures of USD 102m were in line with
the most recent guidance of around USD 100m and
a substantial reduction from last year (USD 162m).
Capital expenditures in 2021 comprised one Special
Periodic Survey, rig upgrades linked to contracts
and general maintenance of the fleet.
21%
Other revenue share of total revenue 2021
Other revenue share of total revenue increased to 21%
from 14% in 2020, mainly by delivery of additional
services and lump sum payments for rig mobilisation
and demobilisation. The increase in revenue from
additional services shows the progress of our Smarter
Drilling for Better Value strategic ambition.
North Sea
Africa
Asia Pacific
Americas
Rest of
the world
Geographical presence by revenue 2021
52%
17%
14%
14%
3%
Maersk Drilling Annual Report 2021 07
Management’s review Overview Our Business Financial review Governance and risk
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Maersk Drilling’s sustainability
approach is described in further
details on our website and in
our Sustainability Report which
also serves as our reporting
pursuant to section 99a of the
Danish Financial Statements
Act. It can be found online at
Our approach
to sustainability
ESG REPORTING AND DISCLOSURE AMBITION AND INITIATIVES
We aim to conduct transparent, standardised and impactful reporting and disclosure
In 2020, Maersk Drilling launched one of the industry’s
most ambitious sustainability strategies based on
three pillars: Sustainable Energy Future, Caring for
People, and Responsible Business. During 2021,
progress has been made with a special focus on the
two main components of the strategy: Climate Action
and Diversity & Inclusion.
We strive to minimise the carbon intensity of
our business as well as the activities of our
customers and our supply chain
TOPIC AREAS:
• Climate Action
• Preparedness for the Energy Transition
• Responsible Consumption
TARGET:
• Emissions Intensity Target (-50%) by 2030
We are committed to being a good corporate
citizen conducting our business in a way that
protects people and minimises adverse effects
on environment and society
TOPIC AREAS:
• Marine & Air Environment
• Business Ethics & Compliance
• End-of-Life – Oil & Gas Assets
We want to be a safe, diverse, inclusive,
and people-centric company
TOPIC AREAS:
• Safety
• Diversity & Inclusion
• Bringing Value to Local Communities
TARGET:
• Onshore Female Leadership Target (30%) by 2023
Leveraging partnerships
to reach our
sustainability goals
Maersk Drilling Annual Report 2021 08
Management’s review Overview Our Business Financial review Governance and risk
Five-year summary
USD Million 2021 2020 2019 2018 2017
Income statement
Revenue
Costs - - - - -
Profit before depreciation and amortisation,
impairment losses and special items
(EBITDA before special items)
Special items - - - -
EBITDA
Depreciation and amortisation - - - - -
Impairment losses/reversals, net - - -
Gain/loss on sale of non-current assets - - -
Share of results in joint ventures - - - - -
Profit/loss before financial items (EBIT) - - -
Financial items, net - - - - -
Profit/loss before tax - - -
Tax - - -
Profit/loss for the year - - -
Balance sheet
Total assets
Total equity
Net debt/(receivable) -
Investments in Property, Plant & Equipment
Cash flow statement
Cash flow from operating activities
Cash flow from investing activities - - - -
Free cash flow
USD Million 2021 2020 2019 2018 2017
Financial ratios
EBITDA margin before special items % % % % %
Return on equity % -% -% % -%
Cash conversion % % % % %
Asset turnover % % % % %
Equity ratio % % % % %
Leverage -
Performance drivers
No. of rigs at year end
Contracted days
Available days
Utilisation % % % % %
Average day rate (USDk)
Financial uptime % % % % %
ESG ratios
Carbon intensity:
Tonnes CO eq. per USDm revenue -
Tonnes CO eq. per contracted day -
Tonnes CO eq. per drilled meter -
Women in leadership (onshore) % % % % -
Lost-time incident frequency
Total recordable case frequency
1 See definitions of financial ratios, performance drivers and non-IFRS financial measures on page 100.
2 The 2017–2018 financial figures are prepared based on the consolidated financial statements for 2018 of
Maersk Drilling Holding A/S, adjusted to reflect the activities comparable with those in this Annual Report.
3 For definition of ESG ratios, reference is made to Maersk Drilling’s 2021 Sustainability report which can be found
online at https://www.maerskdrilling.com/who-we-are/sustainability
4 The carbon intensity ratios for 2018- 2020 from the 2020 Annual Report have been recalculated due to the addition
of fugitive emissions and more complete data.
5 The ratio was 2.48 in the 2020 Annual Report and has been recalculated to be 2.63 due to a reclassification of a safety case.
Maersk Drilling Annual Report 2021 09
Management’s review Overview Our Business Financial review Governance and risk
Five-year summary
0
200
400
600
800
561
441
157
2017
USDm
2018 2019 2020 2021
17
32
0
300
600
900
1,200
289
346
415
683
611
2017
USDm
2018 2019 2020 2021
43%
47%
34%
27%
26%
0
200
400
600
800
371
2022 2023 2024 2025+
30
29
203
201
159
201
586
116
604
360
615
317
USDm
EBITDA in USDm EBITDA in % of revenue
North Sea jack-ups International floaters Other
Free cash flowEBITDA
Revenue backlog
1 EBITDA before special items
2 Free Cash Flow defined as cash flow from operating activities less cash flow from investing activities, adjusted for
newbuild cash flow and proceeds from the divestment of assets or activities, and less net interest payments. 3 The ratio was 2.48 in the 2020 Annual Report and has been recalculated to be 2.63 due to a reclassification of a safety case.
0.00
1.00
2.00
3.00
4.00
1.45
0.53
2.63
0.44
2.49
0.75
2.75
2.66
0.92
0.53
2017 2018 2019 2020 2021
Lost Time Injury frequency Total recordable case frequency
Safety performance
Maersk Drilling Annual Report 2021 10
Management’s review Overview Our Business Financial review Governance and risk
Segment
overview
Jack-ups
Floaters
As per rigs’ location at year end 2021
1x Brunei
1x Australia
1x Namibia
1x Ghana
1x Gabon
1x Suriname
1x Trinidad and Tobago
1x Azerbaijan
2x United Kingdom
4x Norway
1x Netherlands
3x Denmark
Gabon Malaysia
1x Guyana
Maersk Drilling Annual Report 2021 11
Management’s review Overview Our Business Financial review Governance and risk
During 2021 the North
Sea division signed 18
contracts or contract
extensions, equivalent
to a backlog addition
of USD 1.2bn.
Segment overview:
North Sea Jack-ups
During 2021, the North Sea division added a total
of USD 1.2bn in backlog through the signing of
18 contracts and/or contract extensions.
Notably, in December Maersk Drilling and AkerBP
agreed to renew and extend our existing Framework
Agreement for an additional five years. This comes
with an expected contract value of approximately
USD 1bn covering two XLE-rigs. The agreement
is a milestone and proof of concept of the values
created by working as strategic partners, while along
the way producing remarkable efficiency gains and
adding significant value for all parties involved. This
long-term commitment will include the flexibility
to change operational modes depending on the
need. In extension, Aker BP and Maersk Drilling have
further committed to invest in hybrid, low-emission
upgrades on Maersk Invincible that are similar to
those previously installed on Maersk Intrepid and
Maersk Integrator.
In Norway, Mærsk Inspirer was moved to an
offshore standby location at the Yme oil field at
the end of 2020 after a three-year upgrade of the
rig. Subsequently, in May, the rig was agreed to
be divested to Havila Sirius in an all-cash based
transaction with pre-tax proceeds of USD 373m.
The transaction closed on 27 October, 2021, and
was in line with Maersk Drilling’s strategic priority
of aligning its fleet to its core business. The
sale significantly deleveraged Maersk Drilling’s
balance sheet, and triggered a simultaneous loan
repayment of USD 80m (per the terms of Maersk
Drilling’s loan agreement). Maersk Drilling will
continue supplying crew and drilling management
services to Inspirer throughout 2022 in exchange
for a management fee that is not included in the
proceeds of the sale.
In addition to Mærsk Inspirer, Maersk Guardian and
Mærsk Gallant were also divested in an all-cash
based transaction and delivered to their new owner,
New Fortress Energy ( “NFE”), in May and June 2021,
respectively. Pre-tax proceeds were USD 31m and –
per the terms of Maersk Drilling’s loan agreement
– the sale triggered a simultaneous loan repayment
of USD 13m. The rigs will be utilised for non-drilling
purposes as part of NFE’s groundbreaking Fast LNG
Maersk Drilling Annual Report 2021 12
Management’s review Overview Our Business Financial review Governance and risk
Fastest well ever on the Norwegian Continental Shelf
On 2 December 2021, Maersk Invincible completed
a record-breaking operation for Aker BP on the Hod
B field, setting a new speed record for development
wells drilled by a jack-up on the Norwegian Continental
Shelf. Maersk Invincible performed the B-8 drilling
operation at a drilling speed of 397 m per day
excluding logging, thereby surpassing a previous
dry hole record of 356 m per day, set by Maersk
Interceptor at the Ivar Aasen well D-12 in July 2017.
In fact, Maersk Invincible had already gone past
this historic benchmark earlier in the campaign at
Hod B.
“It does not get any better than this – literally and
practically speaking! Amazing performance by the
whole team!” says Mads Rødsjø, VP Drilling & Wells,
Aker BP.
The new Norwegian record is further proof of the
value of the focus on One Team performance and
improvements made through collaboration in the
Jack-up Alliance with Aker BP and Halliburton.
By collaborating closely on detailed planning,
identification of risks, and removal of inefficiencies,
Alliance partners have built the foundation for our
rigs to provide truly stellar performances.
USD Million 2021 2020 2019 2018 2017
Revenue
EBITDA before special items
EBITDA margin before special items % % % % %
Non-current assets
Asset turnover % % % % %
No. of rigs at year end
Utilisation % % % % %
Average day rates (USDk)
Financial uptime % % % % %
North Sea Jack-up rigs
solution, effectively contributing to the necessary
rationalisation of the global drilling rig fleet.
Fast LNG will produce low cost LNG in a record
development timeline, helping customers transition
to cleaner, more affordable and reliable energy.
Also in Norway, Maersk Intrepid spent the entire
year working for Equinor at the Martin Linge field,
delivering drilling and well intervention services
with a very high level of efficiency. Maersk Invincible
spent the entire year operating for AkerBP at
the Valhall field, offshore Norway, and Maersk
Integrator worked for MOL, OMV and Aker BP during
2021. The program for OMV was based on a fixed
price scheme and was a successful collaboration
resulting in the well being completed ahead of time.
Finally, Maersk Reacher was reactivated during the
second and third quarters to commence a nine-
month well intervention program with Aker BP.
In the southern part of the North Sea, Maersk
Highlander concluded its five-year contract with
TotalEnergies in the Danish sector in December
with a very high level of efficiency. While customer
dialogues for the rig are ongoing, the decision
was taken to warm-stack Maersk Highlander
and postpone its upcoming SPS until a positive
business case materialises.
Throughout the year, Maersk Drilling’s expertise
enabled numerous successful rig mobilisations.
Maersk Resolve and Maersk Resolute were
efficiently reactivated during the first quarter
to commence operations for Spirit Energy and
Petrogas, followed by contracts with INEOS and
Dana, respectively. Additionally, Mærsk Innovator
was reactivated during the fourth quarter for an
eleven month contract with Harbour Energy in the
United Kingdom.
“The synergies gained from working
closely together with Aker BP and
Halliburton over time are evident. Trust,
transparency, inclusion and common
goals – all of this makes everyone involved
go the extra mile to deliver value to our
fantastic customer and Alliance partner,
Aker BP. We call it the Alliance mindset.”
Helge Talleraas Alliance Performance Manager,
Maersk Drilling
Performance in the North Sea segment generated an increase in revenue of 8% from last year to USD 656m
(USD 608m) driven by a higher utilisation and average day rate. Despite a better coverage of our rigs in 2021,
EBITDA before special items of USD 254m (USD 264m) was slightly lower due to higher reactivation and
mobilisation costs, greater costs for providing more additional services and additional costs required to run
our fleet at a utilisation that was 6 percentage points higher than in 2020. Financial uptime remained high at
99.3% (99.8%).
Maersk Drilling Annual Report 2021 13
Management’s review Overview Our Business Financial review Governance and risk
The international floater division saw
a significant increase in utilisation
2021, made possible by the successful
reactivation of four deepwater units
with three new customers.
Segment overview:
International Floaters
on its campaign which includes three one-
well options that could see the rig occupied in
Suriname until the second half of 2022.
Also to commence the year, Maersk Venturer was
reactivated from warm stacking and was mobilised
to work for Tullow in Ghana on a contract that
carries an estimated duration of approximately
four years.
Additionally, Maersk Viking was reactivated
from warm stacking and mobilised to work for
Brunei Shell Petroleum (“BSP”) in Brunei. After
successfully completing two one-well contracts
for BSP, the rig was mobilised to Korea to work
for KNOOC on a one-well contract, followed by a
long mobilisation to Gabon to execute a one-well
contract for Petronas. To start 2022, Maersk Viking
will be mobilised to Malaysia, executing on a four-
well contract for Shell that includes five additional
one-well options.
Maersk Discoverer started 2021 working with BP
in Trinidad until the end of the second quarter
and afterwards was mobilised to Guyana to drill a
one-well campaign for CGX. Subsequently, the rig
was mobilised back to Trinidad and commenced a
one-well option that was exercised by Shell. This
campaign is expected to conclude in May 2022
and will be followed by another mobilisation back
Reactivating and mobilising a drilling rig to operate
in a new country for a new customer is a challenging
and complex project every single time. Countries have
different rules and regulations, including various
tax considerations, labour laws, corporate setups,
legal regimes, technical requirements, and HSE
safety cases. Our customers have different needs and
different ways of working on every campaign – no
two contracts are the same. Maersk Drilling’s core
competencies developed from nearly 50 years of
drilling – as well as our sound rig stacking philosophy
and commercial discipline – were the drivers behind
the segment’s year-over-year revenue and EBITDA
before special items increases of USD 123m (+27%)
and USD 64m (+10 percentage points), respectively.
From 10 February to 2 April 2021, four international
rigs – the Mærsk Developer, Maersk Valiant, Maersk
Venturer and Maersk Viking – all successfully
commenced new contracts.
To start 2021, Maersk Drilling was awarded two
Suriname floater contracts by TotalEnergies for
deepwater floaters Mærsk Developer and Maersk
Valiant. Prior to contract commencement both rigs
were mobilised and Maersk Valiant was reactivated
from warm stacking.
Mærsk Developer commenced operations in
February and successfully completed the campaign
in December. The rig has since been mobilised to
Trinidad to complete a Special Periodic Survey and
readiness work scopes prior to its voyage to Brazil
in the first quarter of 2022 for a campaign with
Karoon Energy.
Maersk Valiant commenced operations for
TotalEnergies in March and continues to deliver
The international floater division saw a significant
increase in utilisation in 2021 compared to 2020.
All seven of Maersk Drilling’s deepwater floaters
were contracted for the majority of the year – a
strong commercial achievement and a remarkable
operational milestone. This was made possible
by the successful reactivation of four deepwater
units with three new customers.
Maersk Drilling Annual Report 2021 14
Management’s review Overview Our Business Financial review Governance and risk
USD Million 2021 2020 2019 2018 2017
Revenue
EBITDA before special items
EBITDA margin before special items % % % % %
Non-current assets
Asset turnover % % % % %
No. of rigs at year end
Utilisation % % % % %
Average day rates (USDk)
Financial uptime % % % % %
International Floaters
to Guyana where Maersk Discoverer will deliver on
a one-well option that was exercised by CGX.
Mærsk Deliverer, operating for Inpex, and Maersk
Convincer, operating for BSP, are on long term
contracts in Australia and Brunei, respectively.
After being selected by TotalEnergies to drill a
three-well exploration campaign in Angola and
Namibia, Maersk Voyager spent the entire year on
contract. This included the Ondjaba-1 well which
was drilled at a new world record water depth of
3,628 m. After drilling the Ondjaba-1 well in Angola,
Maersk Voyager mobilised to Namibia at the end
of the year to complete the last firm well in the
campaign. The rig is expected to be contracted
until February 2022.
Lastly, the Mærsk Explorer successfully completed
its long-term contract with BP in Azerbaijan in
May and was subsequently warm stacked. We
are currently in customer dialogues for the rig
and continue to pursue different opportunities,
however since the rig is land locked in the Caspian
Sea, options remain limited.
Despite numerous mobilisations in 2021, Maersk
Drilling delivered a customer satisfaction score of
6.5, reflecting our commitment to the successful
completion of each individual campaign.
Furthermore, we were encouraged by the fact
that all contract commencement mobilisations
during 2021 were covered by our customers – a
sign that activity levels across the industry are
recovering from COVID-19 lows observed in 2020.
Maersk Voyager setting a new
world record on the Ondjaba well
Maersk Voyager successfully drilled the Ondjaba-1 well at a new world record water depth
of 3,628 m. The current world record is 3,400 m, set by Maersk Voyager’s sister drillship
Maersk Venturer when it drilled the Raya-1 well for TotalEnergies offshore Uruguay in 2016.
Maersk Voyager afterwards relocated to Namibia for Venus-1, another ultra-deepwater
well. Proving that it is feasible to drill at such depths has commercial potential, because of
the potential for our customers to increase yield from existing deepwater assets.
A considerable amount of ultra-deepwater oil and gas prospects are split by the 3,600 m
water depth frontier due to limitations in vessel and equipment design. But potentially,
even bigger discoveries lie just across the 3,600 m demarcation line, and operators
are interested in exploring how these resources can be unlocked without massive new
investments. To meet this demand, Maersk Drilling has performed a thorough analysis of
how to potentially use 7th generation floaters at even greater depths.
“The greatest risk factor in ultra-deepwater drilling is the risk of going outside equipment
limits. You need to control the dynamic loads when deploying the BOP, and to avoid
unnecessary BOP stack pulling which will set you back for a prolonged period of time.
We mitigate this by preparing properly, including thorough equipment assessment, riser
analysis, and an important focus on working together with the client as One Team,” says
Konstantin Puskarskij, Head of Technical in the International Division.
“In terms of technology, most
drillships can essentially do
the same, but without the
right experience and mindset,
something like this can clearly
go wrong. Having capable
people, useful experience, and
proper processes in place is
truly the key here.”
Konstantin Puskarskij Head of
Technical in the International Division
In 2021, our International segment generated an impressive increase in revenue of 27% improving to USD 583m
(USD 460m) driven mainly by a high utilisation of 83% for the year. Despite additional costs required to run our
fleet at a utilisation that was 17 percentage points higher than in 2020, EBITDA before special items increased
to USD 82m (USD 18m), significantly higher than the previous year. Our EBITDA margin increased from 4% in
2020 to 14% in 2021 and financial uptime remained high at 95.8% (97.9%), a slight decrease due to prolonged
downtime on Mærsk Deliverer in the beginning of the year.
Maersk Drilling Annual Report 2021 15
Management’s review Overview Our Business Financial review Governance and risk
Segment overview
0
2,000
4,000
6,000
8,000
2,920
1,624
2,916
1,808
2,786
1,797
2,927
2,920
1,922
2,409
2017 2018 2019 2020 2021
56%
62%
65%
66%
83%
0
2,000
4,000
6,000
8,000
4,959
3,564
5,049
3,851
4,688
4,148
4,725
4,208
2,920
2,841
2017 2018 2019 2020 2021
72%
76%
88%
62%
68%
Available days Contracted days Utilisation North Sea jack-ups International floaters Total
North Sea jack-ups International floaters Total
Available days Contracted days Utilisation
North Sea jack-ups Average day rate
Financial uptimeInternational floaters
0
100
200
300
400
233
333
258
218
293
237
193
220
194
208
239
231
242
226
210
2017
USDm
2018 2019 2020 2021
0
25
50
75
100
97.6
99.5
98.5
99.2 98.8 99.1
99.6
97.1
98.9
99.8
97.9
98.9 99.3
95.8
97.6
2017
%
2018 2019 2020 2021
Maersk Drilling Annual Report 2021 16
Management’s review Overview Our Business Financial review Governance and risk
Revenue
backlog
Maersk Drilling managed to secure 35 new
contracts and contract extensions during 2021,
adding more than USD 2bn (USD 469m) to our
contract backlog. This includes approximately
USD 1bn in backlog associated with the agreement
to renew our frame agreement with AkerBP which
was announced on 18 December 2021. The new
five-year commitment from AkerBP is for two XLE
rigs in the Norwegian North Sea.
At the end of 2021, our contract backlog amounted
to USD 1.9bn (USD 1.3bn), of which USD 604m is for
execution in 2022. In addition, since the beginning
of 2022 Maersk Drilling has secured additional
contracts and conditional letters of award with a
total value of more than USD xxm.
Supported by recovering oil and gas prices and
based on bilateral customer dialogues, Maersk
Drilling expects the demand pipeline in its key
markets to build further in 2022, especially in our
International floater segment.
For more details on the status of current and
future contracts across our fleet please see our
fleet status report dated 11 February 2022, which
can be found on page 108.
0
200
400
600
800
371
2022 2023 2024 2025+
30
203
201
159
201
586
116
604
360
615
29
317
USDm
North Sea jack-ups International floaters Other
Revenue backlog
Development of revenue backlog in 2021
Revenue
backlog
2020
Revenue
recognised
in 2021
Hereof other
services not
related to backlog
Addition
to backlog
in 2021
Sale of
Mærsk
Inspirer
Other
changes
Revenue
backlog
2021
1,327
1,896
1,267
2,045
420
199
12
USDm
Average backlog day rate
2022
0
150
300
450
150
243
275
281
275
315
275
326
2023 2024 2025
USDk
North Sea jack-ups International floaters
0
20
40
60
19%
19%
20%
20%
3%
13%
12%
20%
16%
52%
47%
37%
2022
2023
%
2024 2025
North Sea jack-ups International floaters Total
Contract coverage
Maersk Drilling Annual Report 2021 17
Management’s review Overview Our Business Financial review Governance and risk
Outlook
for 2022
In 2022, profit before depreciation and
amortisation, impairment losses/reversals and
special items (EBITDA before special items) is
expected to be in the range of USD 210m–250m
compared with USD 346m in 2021.
The profitability guidance for 2022 is partly
secured through the current contract backlog.
Achieving the 2022 guidance range requires that
additional contracts are secured within both the
North Sea and International divisions.
In 2022, capital expenditures are expected to be in
the range of USD 120m–140m compared to
USD 102m in 2021.
The capital expenditures guidance is linked to the
assumed commercial activity providing certain
flexibility in total spend and timing.
Sensitivity guidance
Our guidance for 2022 is subject to risks and
uncertainties as various factors, many of which
are beyond Maersk Drilling’s control, may cause
the actual development and results to differ
materially from expectations. EBITDA before
special items is primarily sensitive to the level
of contracting of additional days to the current
backlog, especially in the high margin North Sea
segment, and the day rates thereon. Capital
expenditures are sensitive to final scheduling and
scoping of rig upgrades and yard stays, which are
subject to commercial and operational planning.
The table below lists two additional sensitivities,
all else being equal.
Factors Change Impact on EBITDA
before special items
Financial uptime +/- percentage point +/- USD m
USD/DKK exchange rate +/- % +/- USD m
18Overview Our Business Financial review Governance and risk
Management’s reviewMaersk Drilling Annual Report 2021
Our
Business
Overview Our Business Financial review Governance and risk 19Management’s reviewMaersk Drilling Annual Report 2021
UPSTREAM
Drilling wells for exploration,
appraisal and production
Finding oil and gas Extracting oil and gas
DevelopmentExploration
Carbon Capture Storage
Production Transportation and storage,
moving oil and gas to shore
Decommissioning the well
Refining, marketing and distribution as
everyday products and for transportation
MIDSTREAM DOWNSTREAM
Seismic
exploration
vessel
Production
platform
Tanker
Depleted oil well
used for storage
Petrochemicals
Power
heating
RefineryStorage
Fuel
lubricants
Pipeline
Maersk Drilling and
the oil and gas industry
Maersk Drilling
Offshore drilling rig services
Reliability – Safety – Efficiency
20Maersk Drilling Annual Report 2021 Management’s review
Overview Our Business Financial review Governance and risk
USD million
2,500
5,000
7,500
10,000
12,500
15,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2019
2020 2021
000 boe/d
2,500
5,000
7,500
10,000
12,500
15,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2019
2020 2021
Market
The market landscape in 2021 was one of broad-based recovery after a
challenging 2020 saw unprecedented declines in demand for oil and gas
and significantly reduced demand for offshore drilling rigs. Peers emerged
from Chapter 11 bankruptcy protection with rationalised fleets and balance
sheets, and – amidst an improving outlook for global oil and gas demand
– utilisation and dayrates saw gradual increases from COVID-19 lows. Oil
and gas prices are supportive of exploration and development activities
fuelling rig demand growth in 2022, especially in the global floater segment,
however the pace of recovery remains constrained by continued capital
discipline by operators. In a time of industry turbulence, Maersk Drilling
continued to stand out from peers, preserving equity capital and generating
positive free cash flow for a sixth straight year.
Market development and
industry landscape in 2021
In 2020, measures to contain the spread of
COVID-19 led to an unprecedented decline
in demand for oil and gas. Simultaneously,
intervention by OPEC+ in the form of historic
production cuts were insufficient to offset the
decline in oil and gas demand. As a result, Brent
oil prices dropped from pre-COVID levels of
USD 50-70 to USD 20-40 per barrel.
Operators were quick to manage liquidity, reducing
capital expenditure budgets, and consequently,
many exploration and development projects were
postponed, offshore rig tenders were cancelled,
and existing drilling contracts were suspended
or terminated – resulting in reduced demand for
offshore drilling rigs. In response, rigs were stacked
and several providers of offshore drilling rig
services ultimately filed for Chapter 11 bankruptcy
protection to address capital structures that
included unsustainable levels of debt. Maersk
Drilling was one of the few who preserved equity
capital and strengthened its financial position,
generating positive free cash flow.
Following a challenging 2020, the beginning
of 2021 saw peers emerge from Chapter 11
bankruptcy protection with rationalised fleet sizes
and balance sheets. Since the beginning of 2020,
a total of 96 rigs have been scrapped and more
than USD 15bn of debt removed from the offshore
drilling industry. Amidst an improving outlook
for global oil and gas demand, Brent oil prices
recovered to between USD 70-85 per barrel, the
highest levels since 2014, spurring an increase in
the demand for, and the utilisation of, offshore
drilling rigs. This has provided support to day rates,
which gradually increased throughout 2021 from
COVID-19 lows. In the past, current oil prices would
have likely led to increased capital spending and
the emergence of longer duration contracts by
operators looking to replace current production
with new reserves.
However, while Brent oil prices have recovered,
capital spending and the production of oil and
natural gas have both lagged as major operators
now must fund four key strategic objectives. These
include: (1) returning capital to shareholders;
(2) reducing debt burdens incurred during the
pandemic; (3) funding development projects
with low break-even costs; and (4) allocating a
portion of capital expenditures towards building
renewable energy portfolios. The result: major
operators have reduced upstream capital
spending, which now sits below 2019 levels, and
their production of hydrocarbons has fallen over
10% since the beginning of 2019.
Super-major capital spending
1
Super-major hydrocarbon production
1
1 Source: Company filings. Charts reflect capital spending and hydrocarbon production for Exxon, Chevron, Royal Dutch Shell and TotalEnergies
Upstream spend Production
21Maersk Drilling Annual Report 2021 Management’s review
Overview Our Business Financial review Governance and risk
During 2021, the number of jackup rigs under
contract in the North Sea increased from 23 at
the beginning of the year to 29 at the end of the
year. During the same period, the total supply of
jack-up rigs in the North Sea decreased from 40 at
the beginning of the year to 38 at the end of the
year; while marketed supply remained unchanged
at 37 units. Marketed utilisation increased from
61% to 78% by the end of the year. As of the end
of 2021, the one-year forward coverage in the
North Sea Jack-up market was 39% (at the end
of 2020: 34%).
During 2021, the number of floaters under
contract globally increased from 102 at the
beginning of the year to 113 at the end of the year.
Over the same period, the total supply of floaters
was greatly reduced from 211 to 193 units; while
the marketed supply remained unchanged at 167
units. As of the end of 2021, the one-year forward
coverage in the global floater market was 47% (at
the end of 2020: 37%).
During the year, increases in utilisation and forward
coverage exerted positive pressure on dayrates,
especially in the global floater segment. Given
current oil and gas prices and rationalisations on
the supply side, this trend is expected to continue
throughout 2022.
Industry structure
and supply-side dynamics
The combination of supply-side rationalisations
and increased demand for offshore drilling rigs
had a positive impact on utilisation and dayrates,
leading to improvements in earnings and cash
flow in 2021 for most offshore drillers. Freshly
emerged from Chapter 11 bankruptcy protection
Brent and Natural gas front month prices
2
Brent Crude
Natural gas (TTF)
Jan 2020 Jan 2021Apr 2020 Jul 2020 Oct 2020 Apr 2021 Jul 2021 Oct 2021 Dec 2021
0
40
80
120
160
USD
2 Source: Bloomberg
Energy transition
The ongoing and accelerating energy
transition from hydrocarbons to renewables
poses a challenge to the oil and gas sector.
While the energy transition is likely to play
out over the course of decades, the push to
drastically reduce emissions – particularly
those resulting from the combustion
of hydrocarbons – is placing structural
pressures on the future availability of oil and
gas supplied by major operators who have
announced transition plans, implemented
company-wide reorganisations, and allocated
funds as they prepare for a shift to low-
carbon energy. Accelerating this transition are
mounting pressures from society – including
governments and institutional investors – to
reduce traditional hydrocarbon investments
and increase commitments to renewable
energy projects.
At the same time, there continues to be
a global dependence on the combustion
of hydrocarbons to provide reliable and
affordable energy. Oil and gas will continue
to play a critical role over the coming decades
to maintain and further develop the global
economy and meet the needs of a growing
global population.
Low-cost and low-emission barrels are still
necessary to meet energy needs – both
current and future – and to enable the
transition to renewable energy. Natural gas
will also play an important role as a transition
fuel, with record gas prices set to support
strong production and new investments.
Oil and gas operators will continue to
look towards service companies, including
offshore drillers, that truly embrace
technology and lean ways of working, and
which are open to exploring new operating
and partnering models; all in an effort to
reduce costs and emissions associated with
the extraction of hydrocarbons.
22Maersk Drilling Annual Report 2021 Management’s review
Overview Our Business Financial review Governance and risk
with resolved liquidity situations and new owners,
the offshore drilling industry is better positioned
to 1) capitalise on improving market conditions
and 2) create value for long term shareholders.
In 2021, industry consolidation began when Noble
Corporation (“Noble”) acquired Pacific Drilling in
April. This was followed by the announcement that
Maersk Drilling and Noble will combine businesses
to create a world class offshore driller with an
industry leading cost structure and a best-in-class
balance sheet. The proposed business combination
will create the largest offshore driller in terms
of market capitalisation, with the largest active
fleet in the industry, and a strong balance sheet
that will position the combined company to return
capital to shareholders.
Short-term and long-term
demand outlook
Supported by the recovery in oil and gas prices
and bilateral customer dialogues, Maersk Drilling
expects the demand pipeline in key markets,
particularly in the International floater segment,
to further build in 2022.
In the Norwegian jack-up market, there are limited
tender opportunities with commencement in
2022. Demand for jack-ups in Norway in 2022
is expected to be insufficient to maintain an
acceptable level of coverage across our ultra-
harsh environment fleet. Alternative deployment
options for our ultra-harsh environment
fleet outside of Norway are currently being
considered for 2022, including work in the UK
North Sea. From 2023 onwards, jack-up demand
in Norway is expected to normalise given the
significant pipeline of economically viable subsea
development projects in shallow waters.
In the North Sea jack-up market outside of
Norway, several new rig requirements have come
to the market with commencement in 2022 with
contract durations ranging from one-well to
multi-year.
In the International floater market, requirements
are building in Africa, Latin America and South
East Asia, with contract durations ranging from
one well to multi-year.
The future capital expenditures targeted for
offshore, and thereby the future actual demand
for offshore drilling rigs, are subject to several
factors, particularly developments in the global
oil and gas markets. The demand for oil and
gas continues to depend on policy responses to
COVID-19, while the supply side will be determined
by the associated policy responses of OPEC+ and
the influence of U.S. shale. The supply side of the
oil and gas markets will depend on the associated
policy responses of OPEC+ and the influence of
U.S. shale.
Given the recent years of underinvestment in new
oil and gas development projects, there remains
a potential for short-term dramatic moves, such
as price spikes in the oil and gas markets, which
may encourage additional investments and drive
demand for offshore drilling rigs.
North Sea jack-up
forward contract coverage
Global floater
forward contract coverage
1-year FCC 2-year FCC 3-year FCC 1-year FCC 2-year FCC 3-year FCC
North Sea jack-up
supply/demand and utilisation
Floater
supply/demand and utilisation
Total demand
1
Marketed oversupply
Non-marketed oversupply
Total utilisation
Marketed utilisation
2
Total demand
1
Marketed oversupply
Non-marketed oversupply
Total utilisation
Marketed utilisation
2
Source: IHS Rigpoint
1 ‘Total demand’ counts days actually on contract and does not include any future commitments.
2 Marketed utilisation is calculated using marketed supply, defined as rigs which are actively offered for work in the near team.
2015 2017 2019 2021
38.7%
26.4%
20.8%
%
0
25
50
75
100
47.2%
34.3%
26.3%
%
0
25
50
75
100
2015 2017 2019 2021
Utilisation %No of rigs
0
10
20
30
40
50
60
0
20
40
60
80
100
20172015 2019 2021
0
50
100
150
200
250
300
0
20
40
60
80
100
Utilisation %No of rigs
20172015 2019 2021
23Maersk Drilling Annual Report 2021 Management’s review
Overview Our Business Financial review Governance and risk
Strategy
Maersk Drilling’s strategy has three main
pillars: 1) Smarter Drilling for Better Value;
2) Responsible Drilling; and 3) Building
on our core capabilities to pursue select
business opportunities adjacent to our
technological and operational capabilities,
as well as our commercial portfolio.
Smarter Drilling for Better Value
The well delivery process – a set of activities
along a timeline set up to plan, execute, and close
out a well – is acknowledged by customers to
be inefficient in several areas. Maersk Drilling’s
response is Smarter Drilling for Better Value – a
flexible customer offering that enables efficient
well delivery through optimisation. Smarter
Drilling for Better Value does this through four
levers: Increasing Certainty; Reducing Time;
Reducing Waste and Reducing Emissions.
When assessing a given campaign, Maersk Drilling
aims to take on a role where we, together with
our customers, determine the range of products
and time frame needed to support efficient well
delivery. Additionally, we offer a wide range of
additional services (see page 27) that facilitate
24Maersk Drilling Annual Report 2021 Management’s review
Overview Our Business Financial review Governance and risk
ambition level. The emissions reduction target
is in line with many oil and gas companies’ 2030
targets and supports the ambitions of the Paris
Agreement.
The reduction target places Maersk Drilling as
a leader among drilling contractors, and the
ambition is consistent with our focus on reducing
time of drilling operations per well. Maersk
Drilling estimates that about half of the target
can be achieved via further efficiency gains and
known technical solutions and concepts, while
the other half will be facilitated by investments in
innovation in this space.
During 2021, a newly formed Emissions Reduction
Task Force started work establishing the optimal
roadmap to reach this target. The taskforce has
defined two main phases: first, energy efficiency
initiatives will be prioritised to reduce the total
energy intensity of our rigs. Second, opportunities
for alternative energy sources such as methanol
and ammonia will be explored.
A key project during 2021 was the roll out of the
Energy Efficiency Insight (EEI) platform, a digital
platform providing rig operators and onshore
functions with real-time data to optimise engine
operations from an energy efficiency perspective.
Other major initiatives included installing low-
emission upgrades on Maersk Intrepid and Maersk
Integrator, which were in full operation from Q1
2021.
Leveraging our core capabilities
for long term growth
There are numerous potential opportunities across
industries that are adjacent to Maersk Drilling’s
technological and operational capabilities
and commercial portfolio. We have dedicated
efficient well delivery while also ensuring that all
parties involved are working towards the same
shared goal. The result: Smarter Drilling for Better
Value drives better outcomes for our customers
by enabling them to maintain and build resilient,
future-proof portfolios of assets in a volatile
commodity price environment.
Our contracts with Aker BP and OMV in Norway
are examples of its successful implementation
over the past several years. The further we
demonstrate our ability to deliver on Smarter
Drilling for Better Value, the more additional
revenue we will generate, for our customers and
for Maersk Drilling.
From the implementation of a companywide
Customer Engagement Model – which acts as a
roadmap for attaching to the goal of servicing our
customers – to our Global Business Solutions hub
– a function supported by the establishment of an
office in Gdansk, Poland, that is designed to drive
performance – to our rapidly growing portfolio
of innovative digitalised products – designed
to drive efficiency and lower the cost of well
delivery – Maersk Drilling has been transformed to
support the strategic ambition of Smarter Drilling
for Better value. The recent establishment of a
subsidiary, Horizon56, and the roll-out of RigFlow
– a first-of-a-kind product designed to support the
digitalisation of offshore drilling processes – are
both examples of how we are pushing boundaries
across the offshore drilling industry.
Responsible Drilling
In addition to time and cost efficiency gains,
Maersk Drilling’s value proposition of providing
safe, reliable and efficient offshore drilling
services also addresses the greenhouse gas (GHG)
emissions related to drilling campaigns. Maersk
Drilling is at the forefront of working with oil and
gas companies in achieving their goal of improving
offshore project economics and lowering GHG
emissions. We have committed to reducing our
CO emissions intensity by 50% by 2030 – the first
offshore driller to set an emission target of such
In 2021, the Energy Efficiency
Insight (EEI) platform was
launched, a digital platform
providing rig operators and
onshore functions with real-
time data to optimise engine
operations from an energy
efficiency perspective.
The EEI platform is one of
the initiatives that has been
implemented to reach our
commitment of reducing our
CO emissions by 2030 by
50%
Customer satisfaction
score 2021
6.5
on a scale from one
to seven (2020: 6.7)
25Maersk Drilling Annual Report 2021 Management’s review
Overview Our Business Financial review Governance and risk
Working strategically
with climate scenarios
Maersk Drilling’s strategic work encompasses
the short-, mid- and long-term opportunities
and risks relating to current and potential
new markets. The climate-related aspects
are an inherent part of this work, setting
boundaries for the growth of our core drilling
activities. These activities are closely related
to the future prospects of the global oil
and gas markets which we analyse closely
using climate and energy scenarios from
the International Energy Agency and leading
private energy data providers.
resources within our innovation department that
are already exploring potential opportunities with
customers and partners.
Our participation in Project Greensand, Denmark’s
most mature carbon storage project, aiming for
an annual storage capacity of 4–8 million tonnes
of CO, is one concrete example of our support
to addressing the climate challenges which our
customers and the industry at large are seeking
to resolve. In 2021, the project entered phase 2
and Maersk Drilling signed a contract making us
the preferred contractor with a right to all drilling
work involved in Project Greensand on market rate
terms until the end of 2027.
Read more about Project Greensand on page 29.
The newly upgraded low-emission
rigs Maersk Intrepid and Maersk
Integrator were both in full
operation from the first quarter.
Upgrades include hybrid-battery
solutions that secure higher energy
efficiency of drilling operations.
26Maersk Drilling Annual Report 2021 Management’s review
Overview Our Business Financial review Governance and risk
Delivering efficient wells
by increasing our product
and service offering
Maersk Drilling is focused on increasing the
number of products and services it offers to its
customers as part of our strategic ambition to
deliver more efficient wells through Smarter
Drilling for Better Value. Our four drivers for
increasing the efficiency of well delivery form the
foundation of our products: Increase Certainty,
Reduce Time, Reduce Waste and Reduce
Emissions.
Since October 2020 Maersk Drilling has launched
nine formal products in addition to continuing to
respond to ad hoc customer requests to deliver
additional services. Maersk Drilling has several
products in its pipeline for 2022 to further
enhance our customer offering.
Customers receive an enhanced
service to meet their needs
Customers are increasingly requesting services
to be provided in addition to the core rig scope.
These services are within the expertise of
Maersk Drilling to coordinate, thereby increasing
customer resources to focus on overall well
efficiency. These offerings enhance the customer
experience, generally leading to a higher degree
Performance Optimisation
The Performance Optimisation package is
designed to help the client optimise their
entire drilling operation – not just Maersk
Drilling’s part in it. A team of Maersk
Drilling experts look closely at every detail
of the operation and bring their experience
and insight to bear by optimising all
aspects including logistics, timings,
contractors and equipment. It is a proven
methodology that consistently results in a
more efficient, more consistent and safer
operation across the board.
Key Benefits:
• Reduce cost
• Improve quality
• Improve safety
• Reduce burden on client’s
well delivery team
DWOP/eDWOP
Drill Well On Paper workshops
facilitated in person or
remotely (eDWOP).
Senior Drilling Advisor
Working for the customer
onshore, in their office,
helping plan and execute
the well.
AAR/eAAR
After Action Review
workshops facilitated in
person or remotely (eAAR).
Performance Lead
Working for the customer
offshore, finding and
advising on operational
efficiencies.
Savings could be as
much as
30%
on a longer campaign
Performance Optimisation Products
27Maersk Drilling Annual Report 2021 Management’s review
Overview Our Business Financial review Governance and risk
35% saving on customer’s well plan
On a 2021 deepwater drilling contract in Africa, we delivered the performance optimisation
package to our customer to optimise the overall well delivery. The customer’s entire well
delivery plan was analysed to include campaign planning, ‘drill well on paper’ exercises, pre-
phase meetings and daily performance updates. The end result was a 35% saving towards
our customer’s P50 budget and more than 45 lessons were captured for application to
other rigs and campaigns. As a result of this success, the Performance Optimisation
Package has also been adopted by the rig’s next customer, and already in the review phase
20 lessons have been deemed relevant with a 19 day potential reduction in drilling time for
that customer on the first well alone.
Delivering a well successfully
In the second quarter of 2021 Maersk Drilling
delivered a one well contract for a customer
in Norway. In line with our ambitions under
Smarter Drilling for Better Value, this
contract was provided using a ‘lump sum’
concept where Maersk Drilling assessed and
took risk for the time to deliver the well. In
order to increase certainty on well delivery
we delivered several additional products
and services: a Senior Drilling Advisor,
Performance Leads, ROV services, casing
and tubular running, slops treatment and
onboard cuttings handling. This ensured
that the performance dialogue and delivery
between all parties was constantly focused
on efficient delivery of the well. The project
was a success with the well delivered 11 days
ahead of the estimate, proving this business
model and the performance optimisation
delivery model.
of customer stickiness, and drive efficiencies that
our customers cannot unlock on their own as they
often rely on rig-specific knowledge.
Additional products and services
deliver significant revenue
In 2021, the share of other revenue increased to
USD 267m from USD 155m in 2020, equivalent
to an increase of 72 percent. Revenue from the
delivery of additional services – which is included
in other revenue – increased to approximately
USD 160m (13% of total revenue) in 2021 from
USD 86m (8% of total revenue) in 2020.
The year-over-year increase of approximately
USD 72m (85% year-over-year growth) in revenue
from additional services was the result of a
confluence of factors, including an uptick in
activity in 2021 compared to 2020. It was also
validation that our customers are willing to pay
for additional services that increase efficiencies
across the well delivery process and drive down
the cost per well. We are encouraged by the growth
exhibited by this segment and are optimistic that
more customers will be drawn to Maersk Drilling’s
unique service offerings as they are further
developed and standardised.
Integrated Services
Maersk Drilling manages
subcontractors on the clients’
behalf as one seamless unit,
as well as managing all Maersk
Drilling’s own services on the rig.
It’s a simpler, more integrated and
streamlined way of working that
delivers better resource utilisation
and frees up the client to focus on
their critical well activities.
Key Benefits:
• More certainty of costs
• Services work in an integrated
manner
• Increase efficiencies
ROV (underwater Remote
Operated Vehicle)
Cuttings Handling
Slops Treatment
Casing Running
Cement Unit Management
Integrated Service Products
28Maersk Drilling Annual Report 2021 Management’s review
Overview Our Business Financial review Governance and risk
CO
2020
Maersk Drilling entered the
Project Greensand consortium
2021
Demonstration of the conceptual
feasibility of developing a storage site at
the Nini West field offshore Denmark
2022
Phase 2, where first on-site
injection test is expected to
commence offshore
2025
Fully operational injection wells
with an annual injection capacity
of 0.5–1.5 million tonnes CO
2030
Capacity to permanently store up
to 8 million tonnes CO per year
From oil field
to storage facility
Project Greensand targets the development of
capacity to permanently store up to 8 million tonnes
of CO per year from 2030 in the discontinued
oil and gas reservoirs beneath the Danish North
Sea, thereby potentially accounting for all the CO
storage proposed in the Danish Climate Program
as presented by the Danish government in 2020.
Following the successful completion of Phase 1,
which included certification by DNV regarding
the conceptual feasibility of the project,
Greensand Phase 2 was announced in August
2021. The project now involves a consortium of
29 companies, research institutes and universities
that represent all parts of the prospective carbon
capture and storage value chain. During Phase 2,
the project will enter the pilot phase where
the first on-site injection test is expected to
commence offshore in the end of 2022. The goal
is to have the first fully operational injection wells
with an annual injection capacity of 0.5–1.5 million
tonnes of CO ready in 2025.
In December 2021, the Danish Energy Agency
announced the award of DKK 197m to Project
Greensand in support of Denmark’s ambition to
reach a 70% CO reduction in 2030. This is the biggest
project grant in the history of the EUDP program.
Maersk Drilling will contribute knowhow,
manpower and a cash investment to Project
Greensand Phase 2 as well as supplying a drilling
rig to assist with the pilot test. In extension of
this commitment, Maersk Drilling has entered
a framework agreement with the consortium
leaders that confirms Maersk Drilling as the
preferred contractor with a right to all drilling rig
work involved in Project Greensand on market-
rate terms until the end of 2027. The agreement is
subject to the final investment decision.
In 2020, Maersk Drilling entered the Project
Greensand consortium led by INEOS Oil & Gas
Denmark and Wintershall Dea, which is maturing
the most advanced carbon capture and storage
project inside Danish jurisdiction.
Supporting other carbon-
negative technologies
In 2020, Maersk Drilling began cooperation
with the California-based company Clean
Energy Systems to facilitate carbon-neutral
drilling. The technology is based on using
biomass waste as fuel to produce syngas,
from which renewable natural gas and
hydrogen are separated for sale. The net-
negative carbon emissions are sold as credits,
and Maersk Drilling will eventually be able
to offer these as part of a carbon-neutral
drilling proposal to customers.
29Maersk Drilling Annual Report 2021 Management’s review
Overview Our Business Financial review Governance and risk
Organisation
and people
Maersk Drilling has a global footprint with offices
on four continents supporting our 19 drilling rigs.
During 2021 Maersk Drilling’s offshore and
onshore organisations averaged 2,515 employees
of 62 different nationalities with 1,715 working
offshore and 800 working onshore. At the end of
the year, Maersk Drilling had 2,481 employees,
which is an increase of around 98 employees
since the end of 2020. The increase in headcount
reflects among others an increase in activity level
offshore and the transition to Virtual Rig Teams
and a Technical Hub setup in Gdansk.
Maersk Drilling aims to ensure that employees
can thrive and meaningfully contribute to the
company regardless of gender, nationality, religion,
sexual orientation, socioeconomic background
or disability. Not only is treating employees with
respect deeply aligned with Maersk Drilling’s values
and the way business is conducted, but our people
comprise the core of Maersk Drilling’s business.
Mobilising diverse skillsets and perspectives is
and continues to be a competitive advantage
and a critical driver of the company’s ongoing
transformation. Building an inclusive environment
is a crucial enabler of this, and therefore, Diversity
and Inclusion formed one of two key focus areas of
Maersk Drilling’s sustainability strategy, alongside
Climate Action, in 2020.
A dedicated D&I plan, comprising an ambitious
onshore female leadership target as well as four
intervention areas, was designed to be achieved
over a three-year period. These intervention
areas address structural barriers surrounding HR
processes and policies for attracting, recruiting,
developing, retaining, and appointing diverse talent.
Maersk Drilling is addressing the industry-specific
challenge of female underrepresentation through
a dedicated onshore female leadership target by
2023, which is broken down across leadership
levels. Additionally, to emphasise the focus on
this area and drive visible progress towards 30%
representation across all onshore leadership levels
by 2023, a specific target of minimum 27% female
representation has been integrated into Maersk
Drilling’s annual scorecard.
Maersk Drilling is currently seeing good progress
on our targets. In 2021, the share of female
employees stayed the same from 14% in 2020 to
14% in 2021. Onshore, women represent 40% of
the workforce. Female leaders made up 28% of
onshore leadership in 2021 compared to 25% in
2020. Offshore, women only make up 2% of the
workforce.
30%
across leadership
levels
25%
for senior leaders
20%
for the Executive
Leadership Team
Targets for female representation in onshore
leadership by end-year 2023
30Maersk Drilling Annual Report 2021 Management’s review
Overview Our Business Financial review Governance and risk
Europe (outside Scandinavia) Scandinavia
Southeast Asia Other
15.8%
onshore
turnover rate
6%
offshore
turnover rate
Employee turnover
Overall, there was a minor increase in attrition for offshore during 2021 compared
to 2020, but still at a healthy level of 6% throughout the year compared to 4.5% in
2020. This year’s onshore voluntary attrition rate has risen significantly to 15.8%
compared to 6.6% in 2020. These results are in line with global external trends for
this time-period. Furthermore, the onshore turnover rate has also been impacted by
an increase in resignations in November and December, following Maersk Drilling’s
recent announcement regarding a planned merger with Noble Corporation.
Please refer to our Sustainability Report for more
information around our approach towards diversity
and people development. The report can be found
online at https://www.maerskdrilling.com/
Maersk Drilling has a highly international
workforce with
62
different nationalities represented. Less than
half are Scandinavians, a share which has
been relatively stable in recent years.
Nationality distribution 2021 – total population
41%
42%
7%
10%
Lastly, Maersk Drilling successfully exceeded
the Executive Leadership Target of 20% two
years ahead of deadline, reaching 25% female
representation from 0% in 2020.
Organisational set-up
Following the appointment of Christine Morris
as Chief Financial Officer at the beginning of the
year, Maersk Drilling’s Executive Leadership Team
consists of Jørn Madsen (Chief Executive Officer),
Christine Morris (Chief Financial Officer), Morten
Kelstrup (Chief Operating Officer) and Nikolaj
Svane (Chief Strategy & People Officer).
Maersk Drilling is further organised in a divisional
structure with a North Sea division and an
international division, which is unchanged from
previous years. The head of each division reports
to the Chief Operating Officer.
Maersk Drilling is supported by its Global Business
Solutions function located in Gdansk, Poland,
which provides several services to the global
organisation.
Employee turnover
Maersk Drilling is carefully working to recalibrate
as pandemic regulations have begun to change and
lessen. Throughout previous and ongoing challenges,
Maersk Drilling has continued to work on improving
retention rates by engaging with employees and
taking action based on the feedback received. A
challenge that the onshore organisation has faced
in 2021, is tackling high turnover rates as the
pandemic eased down. This challenge mirrors that
of companies and industries across the world, and is
founded in the widespread global trend of a moving
workforce, which has been characteristic of the year.
Furthermore, the onshore turnover rate has also been
impacted by Maersk Drilling’s recent announcement
regarding a planned merger with Noble Corporation.
14%
(14%)
86%
(86%)
Gender distribution in 2021 (2020)
Female Male
Total
2%
(2%)
17%
(13%)
0.4%
(0%)
28%
(25%)
40%
(40%)
25%
(0%)
20%
25%
30%
98%
(98%)
83%
(87%)
99.6%
(100%)
72%
(75%)
60%
(60%)
75%
(100%)
Offshore
Senior onshore
leaders
Offshore
leaders
Onshore
leaders
Onshore
Executive
Leadership Team
2023 target Female FemaleMale Male
31Maersk Drilling Annual Report 2021 Management’s review
Overview Our Business Financial review Governance and risk
The Maersk Drilling office in Gdansk, Poland, was
established in May 2019 with the ambition to further
strengthen the Global Business Solutions function by
enabling consolidation and centralisation of service
deliverables and to support the successful execution
of Maersk Drilling’s global operations.
Initially, only operational HR and supply chain
management services were included in the Gdansk setup,
but during 2020 operational finance functions as well as
select IT services were also established at the location.
The Gdansk office quickly became a very well-
functioning Maersk Drilling location, and to leverage
this success, the Gdansk location was further expanded
in 2021 by adding operational and technical functions
as well as HSSE.
The Gdansk office has now grown into an integrated
Maersk Drilling location with more than 250 employees
which constitutes more than 30% of the onshore
Maersk Drilling employee population. The employee
population in Gdansk represent a diverse workforce
with an almost equal gender split (55% female, 45%
male) with 14 different nationalities represented. The
largest functions are HR, Finance and Supply Chain
Management, closely followed by operational functions.
Benefits of consolidation into
a central location in Gdansk
The consolidation of services and competencies into
a central office has enabled a number of benefits that
include:
• Significantly improved standardisation of business
processes
• Easier best practice sharing and continuous
improvement of processes and ways of working
• I mproved cross-functional knowledge sharing and
cross-functional collaboration
• Improved business acumen and end-to-end integration
All in all, the Gdansk setup enables an improved and
more standardised service delivery, which in turn
enables scalability and cost efficiency.
Enabling scalability through
the Virtual Rig Team setup
The current environment with a high number of
short-term contracts in the rig market requires agility
and flexibility from all Maersk Drilling departments.
To enable a more flexible and scalable setup, Maersk
Drilling has introduced the Virtual Rig Team concept.
The Virtual Rig Team concept was succesfully piloted
during 2020 and has during 2021 been formalised
further and implemented on a broader scale.
The main idea of the Virtual Rig Team is to improve
customer delivery by having a small core team co-
located on the customer side, supported by a team
working virtually out of one central location in Gdansk.
Beyond added flexibility and scalability, this centralised
support setup brings improved performance, stability
in the rig support and allows the teams to benefit
even more from lessons learnt in previous campaigns
and across the fleet. As an example, the setup makes
scaling up and down to support rig mobilisations to
new locations significantly easier and more efficient.
Instead of mobilising and onboarding a new team in
a new geographical location to handle a short-term
contract, rig mobilisations and continuous support can
be handled by the central team who already possesses
experience and knowledge and work in a standardised
manner well-known to the rig. This creates a much
more stable support for the rig throughout the contract
period and ultimately helps improve the overall
customer experience.
Gdansk establishment
and expansion over time
HR Financial Services
Supply Chain
Services
Operations
IT
Others
Job functions
22%
4%
6%
16%
27%
25%
113
males
14
nationalities
32%
of Maersk Drilling onshore
employees are in Gdansk
140
females
253
employees
Maersk Drilling Gdansk overview
32Maersk Drilling Annual Report 2021 Management’s review
Overview Our Business Financial review Governance and risk
Financial policy
and capital
allocation
The overall objective of the financial policy is
to enable Maersk Drilling to manage through
the cyclicality that characterises the offshore
drilling industry, with the aim to create long-term
shareholder value.
The financial policy ensures:
• Financial flexibility, including adequate
liquidity reserves;
• A long-term funding view to minimise
refinancing risk; and
• A robust capital structure through the
business cycle.
In order to meet these objectives, free cash
flow is to be allocated based on the following
prioritisation:
1. Maintain a robust capital structure with
sufficient funding available to support the
business through the cycle;
2. Pursue investment opportunities supporting
long-term shareholder value creation; and
3. Return surplus capital to shareholders.
Maersk Drilling will generally work towards a
leverage ratio (net debt divided by EBITDA before
special items) of around 2.5x.
This means that if the leverage ratio is below 2.5x
and capital is not committed towards investments,
Maersk Drilling will seek to return capital to
shareholders by means of dividends and/or share
buy-backs but may choose to retain capital in
order to have financial flexibility.
If value adding investment opportunities that
require additional funding arise, or if EBITDA is
reduced in a business down cycle, the leverage may
exceed the target level of around 2.5x for a period
of time. The focus here will be to reduce net debt
to reach the targeted leverage level of around 2.5x.
As of 31 December 2021, the leverage ratio was
1.5x. However, in light of the contemplated
business combination with Noble Corporation
and the overall industry seeking lower leverage,
Maersk Drilling will not propose any dividends
based on the 2021 financial results.
Until the Annual General Meeting in 2024, the
Board of Directors is authorised to acquire
treasury shares of up to 10% of the share capital
provided that the purchase price does not deviate
by more than 10% from the price quoted on
Nasdaq Copenhagen at the time of the acquisition.
33Overview Our Business Financial review Governance and risk
Management’s reviewMaersk Drilling Annual Report 2021
Financial
review
Maersk Drilling Annual Report 2021 Management’s review Overview Our Business Financial review Governance and risk 34
Financial
performance
in 2021
After a challenging 2020 with unprecedented
declines in demand for oil and gas and for offshore
drilling rigs, the market landscape showed positive
signs of recovery in 2021. Utilisation and dayrates
saw gradual increases from COVID-19 lows
especially in the global floater segment.
While 2020 performance was impacted by
several contract terminations and suspensions,
performance in 2021 has exceeded expectations
with EBITDA before special items guidance
revised upwards three times during the year.
Furthermore, in line with the strategic ambition
of aligning its fleet to the core business, Maersk
Drilling completed the divestment of three rigs,
significantly deleveraging its balance sheet.
Maersk Drilling managed to secure 35 contracts
and contract extensions, including the agreement
to renew our Aker BP framework agreement during
2021, adding an impressive USD 2bn (USD 469m)
to the contract backlog.
At the end of 2021, the contract backlog amounted
to USD 1.9bn (USD 1.3bn), of which USD 604m is
for execution in 2022. In addition, Maersk Drilling
has since the beginning of 2022 secured additional
contracts and conditional letters of award with a
total value of more than USD xxm.
Generally, the organisation continued to successfully
navigate the increased complexity related to crew
changes, supply chain and logistics and has thereby
limited the impact of COVID-19 on operations.
The number of contracted days increased to
5,615 (5,208) resulting in a utilisation of 75%
(65%) mainly driven by increased coverage in the
International segment.
Incremental costs continued to be incurred due to
COVID-19, and such costs are generally recharged
to customers. COVID-19 related costs not recharged
to customers amounted to USD 12m (USD 18m),
which are presented under special items due to
their one-off nature.
For 2021, EBITDA before special items amounted
to USD 346m (USD 289m), in line with the latest
guidance of EBITDA before special items of around
USD 350m. EBITDA came in well above initial
expectations from the beginning of the year.
Capital expenditures of USD 102m were in line with
the most recent guidance of around USD 100m
and below last year’s level (USD 162m) due to
postponed expenditures for rigs that were idle
or stacked during the year. Capital expenditures
in 2021 comprised one Special Periodic Survey
(SPS), rig upgrades linked to contracts and general
maintenance of the fleet.
Income statement
Revenue
Revenue for 2021 was USD 1,267m compared to
USD 1,096m in 2020, positively impacted by higher
utilisation and average day rates in both segments.
Other revenue had an impressive increase of 72%
to USD 267m from USD 155m in 2020, equal to 21%
(14%) of total revenues driven mainly by delivery
of additional services, additional mobilisation
fees for increased activity levels and increased
performance-based revenue.
The average day rate was USD 226k in 2021
compared to USD 210k in 2020. Excluding one-
offs such as additional other revenue for COVID-19
related costs, the average day rate was USD 221k
in 2021 (USD 200k excluding additional other
revenue for COVID-19 related costs and lump sum
termination fees in 2020).
Costs
Operating costs increased to USD 836m from
USD 725m in 2020 primarily due to additional
costs to support the increased rig activity in both
divisions, as well as for the delivery of additional
services and due to reactivation costs for
previously stacked rigs.
Incremental costs related to COVID-19 amounted
to USD 36m, of which USD 24m are to be
reimbursed. The residual costs of USD 12m are
presented under special items due to their non-
recurring nature and operating costs thus include
USD 24m of COVID-19 related costs.
Sales, general and administrative expenses (SG&A)
increased to USD 80m compared to USD 76m
in 2020 mainly due to higher short term incentive
costs related to the positive business performance
during 2021.
35Maersk Drilling Annual Report 2021 Management’s review Overview Our Business Financial review Governance and risk
Innovation costs of USD 5m in 2021 were slightly
below the level of USD 6m in 2020 due to
capitalising some of the costs.
EBITDA before special items
EBITDA before special items amounted to
USD 346m (USD 289m) resulting in an EBITDA
margin of 27% (26%).
Special items
Special items of USD 21m (USD 42m) comprised
redundancy and merger related costs of USD 9m
and COVID-19 related costs not recharged to
customers of USD 12m.
Impairment losses/reversals
In connection with the sale of Mærsk Gallant
in May 2021, Maersk Drilling recognised an
impairment reversal of USD 11m.
In 2020, an impairment write-down of USD 1,580m
was recognised following the revised market
outlook with lower expectations as to utilisation
and day rates for the coming years.
Gain/loss on sale of non-current assets
The sale of the jack-ups Maersk Guardian and
Mærsk Gallant during the second quarter, and of
the combined drilling and production unit Mærsk
Inspirer during the fourth quarter, generated a
gain of USD 256m with all three rigs being sold
at a price higher than the rigs’ carrying amount.
In 2020, a loss of USD 2m was reported from
disposal of other minor assets.
Financial income and expenses
The net financial expenses decreased to
USD 61m (USD 72m) due to lower interest costs
and currency exchange movements. Net interest
expenses decreased from USD 68m to USD 65m
mainly due to lower interest rates in 2021 as well
as a lower debt level. The average funding costs
including fees were around 5% in 2021.
Tax
Tax for the year was an expense of USD 26m
(income of USD 41m), impacted by an increase
in the taxable income in 2021 while 2020 was
impacted by a USD 42m deferred tax adjustment
from the impairment charge recognised.
Net cash tax received during the year of USD 7m
(USD 9m cash tax paid) primarily comprised
taxation contributions from jointly taxed entities
outside the Maersk Drilling Group, offset by
income and withholding taxes paid in the
countries in which Maersk Drilling operates.
Profit/loss for the year
The net profit for the year of USD 291m (loss of
USD 1,653m) is positively impacted by increased
commercial activity while the loss in 2020 was
primarily impacted by the impairment loss
recognised.
Cash flows
Cash flow from operating activities
Cash flow from operating activities was USD 315m
(USD 267m), equal to a cash conversion of 97%
(108%).
Cash flow from investing activities
In line with expectations, cash inflow from
investing activities increased in 2021 to USD 301m
(USD 150m cash outflow), impacted by the
proceeds from the disposal of rigs of USD 405m
and postponed SPS expenditure for idle or
stacked rigs with only one SPS performed in 2021
(three rigs in 2020).
Cash flow from financing activities
Cash flow from financing activities was an
outflow of USD 283m (USD 204m), comprising
amortisation of borrowings including lease
liabilities of USD 136m (USD 137m), extraordinary
loan repayment of USD 93m due to sale of rigs
and net interest payments of USD 54m (USD 62m).
In 2020, USD 5m were related to the purchase of
treasury shares.
Free cash flow
Excluding the USD 405m (USD 38m) proceeds
from the sale of Mærsk Gallant, Maersk Guardian
and Mærsk Inspirer (Maersk Completer in 2020),
the free cash flow after interest payments
amounted to USD 157m (USD 17m).
USD Million 2021 2020
Revenue
Costs
EBITDA before special items
Margin % %
EBITDA before special items
Free cash flow bridge
Cash flow from
operating
activities
Cash flow
from investing
activities
Sale of assets
or activities
Net interest
payments
Free cash flow
315
157
301 405
54
USDm
36Maersk Drilling Annual Report 2021 Management’s review Overview Our Business Financial review Governance and risk
Net debt
(31-12-2020)
Free cash
flow
Sale of assets
or activities
Other Net debt
(31-12-2021)
1,059 157
405
505
8
USDm
Cash balance
(31-12-2020)
Free cash
flow
Sale of
assets
Debt repayment
excluding leases
Other,
incl. FX
Cash balance
(31-12-2021)
226
157
405
223
557
8
USDm
Development in net debt
Development in cash and bank balances
Capital structure
and funding
Equity
At 31 December 2021, equity amounted to
USD 2,320m (USD 2,017m), as a result of the
profit generated for the year of USD 291m (loss of
1,653m), positive value adjustment of hedges of
USD 8m and share-based payments of USD 4m.
Net debt and capital structure
At 31 December 2021, the net debt amounted
to USD 505m (USD 1,059m), comprising gross
borrowings of USD 1,037m (USD 1,254m) and lease
liabilities of USD 25m (USD 31m), offset by total
cash and bank balances of USD 557m (USD 226m).
Maersk Drilling’s policy is to partly hedge interest
rate risk using a model under which a larger
proportion of risk is hedged in the short to
medium term and a smaller proportion is hedged
in the longer term. As of 31 December 2021, the
average fixed ratio of gross funding is 52% for the
whole term with 53% and 49% fixed for 2022 and
2023, respectively.
With the completion of several strategic
divestments in 2021, Maersk Drilling significantly
bolstered its balance sheet and enhanced financial
flexibility. At 31 December 2021, the leverage ratio
(net debt to EBITDA before special items) was
1.5 (3.7), the lowest level since the company was
listed, while the equity ratio was 61% (54%).
The liquidity reserves amounted to USD 957m
(USD 626m), comprising cash and bank balances
of USD 557m (USD 226m) and a committed but
undrawn revolving credit facility of USD 400m
(USD 400m).
Asset base
At 31 December 2021, total assets amounted to
USD 3,782m (USD 3,719m). The increase is primarily
due to the increase in cash from the sale of rigs
offset by the decrease in the asset base. For 2021,
capital expenditures comprised additions to
property, plant and equipment of USD 92m
(USD 158m) and additions to intangible assets of
USD 10m (USD 4m).
1 Includes USD 14m in restricted cash
37Maersk Drilling Annual Report 2021 Management’s review Overview Our Business Financial review Governance and risk
Governance
and risk
38Maersk Drilling Annual Report 2021 Management’s review Overview Our Business Financial review Governance and risk
Corporate
governance
on proposals submitted by the shareholders.
Except for resolutions to amend the articles
of association, resolutions can generally be
passed by a simple majority.
Board of Directors
Maersk Drilling has a two-tier management
structure consisting of the Board of Directors
and the Executive Management. The Board of
Directors supervises the work of the Executive
Management and is responsible for the overall
strategic management and proper organisation
of the Group’s business and operations. The
Executive Management handles the day-to-day
management of the Group. No person may serve
as a member of both corporate bodies.
Our five core values remain unchanged and
have been ingrained in Maersk Drilling’s way of
conducting business since its founding in 1972.
They remain guiding principles for the work of the
Board of Directors, the Executive Management and
all activities in Maersk Drilling and translate into
our approach to corporate governance.
Governance structure
Shareholders and General Meeting
The governing body of Maersk Drilling is the
General Meeting, at which the shareholders
exercise their rights in such matters as the election
of board members and the external auditor,
approval of the Annual Report and deciding
In 2021, the Board of Directors consisted of
six members elected by the General Meeting
and two members elected among the
employees. Members elected by the General
Meeting are elected for a term of one year,
whereas employee representatives are elected
for a term of four years. Re-election of board
members may take place.
The General Meeting elects a Chairman of the
Board of Directors, and the Board of Directors
elects a Vice Chairman among its members.
The Chairman and the Vice Chairman together
constitute the Chairmanship.
The Board of Directors held twelve meetings in
2021. All members attended all meetings, except
that Ann-Christin Andersen attended eleven
meetings.
Diversity, competencies
and board evaluation
Maersk Drilling strives towards diversity in the
composition of the Board of Directors, including
gender as well as nationality, international
experience, qualifications and competencies.
Our Values
Our five core values were far ahead of their time when
they were created by the founders of the Maersk Group.
Today they remain our guiding principles, calling upon
us to remain conscientious as we strive to do better.
Constant Care
Take care of today, actively
prepare for tomorrow.
Humbleness
Listen, learn, share and
give space to others.
Uprightness
Our word is our bond.
Our Employees
The right environment
for the right people.
Our Name
The sum of our values:
passionately striving higher.
73%
Male
27%
Female
Committee members:
2
females
4
males
Diversity of shareholder-elected
board members 2021
4
non-Danish
citizens
39Maersk Drilling Annual Report 2021 Management’s review Overview Our Business Financial review Governance and risk
Board of Directors
Executive Management
CEO & CFO
Executive Leadership Team
Shareholders
Safety & Sustainability
Committee
Chief Strategy and
People Officer
Remuneration Committee
Audit & Risk Committee
Chief Operating Officer
Nomination Committee
Our corporate governance structureIn terms of gender diversity, Maersk Drilling aims
to continue to have an equal gender distribution
among the board members elected by the General
Meeting. Additionally, it is Maersk Drilling’s
intention that at least 1/3 of its board members
are non-Danish citizens.
At 31 December 2021, two shareholder-elected
board members were female and four were male,
while four shareholder-elected board members
were non-Danish citizens and two were Danish
citizens.
Annually, the Board of Directors conducts an
evaluation of its composition considering the
competencies needed to perform its tasks,
and of the cooperation between the Board of
Directors and the Executive Management. The
key competencies and areas of experience and
expertise required by the Board of Directors are
currently defined as: Capital markets, offshore oil
& gas operations and industry, executive leadership
and financial acumen, corporate transformations
and ESG, including health & safety.
Every third year the evaluation is facilitated by
external consultants. In 2021, the evaluation
was facilitated internally and included, among
other things, the Board of Directors’ general
competencies and overall effectiveness and
value contribution, transparency and openness of
information and discussions, cooperation with the
Executive Management, the Chairman’s role, the
work and the structure of the Board committees
and a “time-spent analysis” of the Board meetings.
All members of the Board of Directors and
the Executive Management participated in the
evaluation and provided their detailed input
via a questionnaire and individual interviews
between the Chairman and each of the Directors
of the Board. The findings and conclusions were
discussed by the Board of Directors in December
2021.
The evaluation was generally positive and concluded
that the overall performance of the Board was
good and that the cooperation between the Board
and Executive Management worked well.
In 2022, the Board of Directors will focus on
supporting core operations and commercial
progress, overseeing and supporting integration
preparations for the expected business combination
with Noble Corporation, all the while aiming to
support industry consolidation and ensuring a
leading and highly investable company via the
expected combination.
Executive Management
During 2021, the Executive Management consisted
of Jørn Madsen as Chief Executive Officer (CEO) and
Christine Morris as Chief Financial Officer (CFO).
The Executive Management is responsible for
the day-to-day management and compliance
with the procedures, instructions, guidelines and
recommendations issued by the Board of Directors.
The Chairmanship and the Executive Management
regularly discuss the cooperation between the
Board of Directors and the Executive Management.
The Board of Directors also regularly and at least
annually evaluates the work and performance of
the Executive Management.
40Maersk Drilling Annual Report 2021 Management’s review Overview Our Business Financial review Governance and risk
Remuneration Committee
In 2021, the Remuneration Committee consisted of
Claus V. Hemmingsen as chair and Alastair Maxwell
and Robert M. Uggla as members.
The overall purpose and main activities of the
Remuneration Committee are to maintain and
oversee the Remuneration Policy and to evaluate
the actual remuneration for the members of the
Board of Directors and the Executive Management.
Additionally, the Remuneration Committee
annually reviews the compensation level for
Maersk Drilling’s Executive Leadership Team
and the general incentive framework for other
employees.
The Remuneration Committee held four meetings
in 2021. All members attended all meetings,
except that Robert M. Uggla attended three
meetings.
Board committees
In order to support the Board of Directors, Maersk
Drilling has established an Audit & Risk Committee, a
Remuneration Committee, a Nomination Committee
and a Safety & Sustainability Committee.
The purpose of the Board committees is to
report and make recommendations to the Board
of Directors on the matters assigned to each
committee. The committees are not authorised
to make independent decisions but to examine
all matters within the scope of their charters,
which are available on Maersk Drilling’s website at
https://investor.maerskdrilling.com/governance/
corporate-governance.
All members of the committees are elected by
the Board of Directors from among its members,
considering the optimal composition given the
individual members’ key competencies.
Nomination Committee
In 2021, the Nomination Committee consisted of
Robert M. Uggla as chair and Claus V. Hemmingsen
as member.
The overall purpose and main activities of the
Nomination Committee are to ensure that
appropriate plans and processes are in place for
nomination of candidates to the Board of Directors,
the Executive Management and the Board
committees. The Nomination Committee annually
evaluates the composition of the Executive
Management and, if requested, assists with the
annual evaluation of the Board of Directors.
The Nomination Committee held two meetings in
2021. Both members attended both meetings
Safety & Sustainability Committee
In 2021, the Safety and Sustainability Committee
consisted of Claus V. Hemmingsen as chair and
Ann-Christin Andersen and Kristin H. Holth as
members.
The overall purpose and main activities of
the Safety & Sustainability Committee are to
assist the Board of Directors with overseeing
Maersk Drilling’s identification, management
and mitigation of risks associated with matters
of health, safety, security, environment and
sustainability, including the annual Sustainability
Report.
The Safety and Sustainability Committee held
one meeting in 2021, while the second meeting
was deferred and held in January 2022. All
members attended both meetings.
Audit & Risk Committee
In 2021, the Audit & Risk Committee consisted of
Alastair Maxwell as chair and Martin Larsen and
Kristin H. Holth as members.
The overall purpose and main activities of the Audit
& Risk Committee are to monitor and review the
Group’s financial reporting and related procedures,
and to evaluate the accounting policies, estimates
and judgements as well as transactions with
related parties. Further, the Audit & Risk Committee
is to monitor the Group’s external audit, including
the provision of non-audit services. Moreover, the
Audit & Risk Committee oversees the Company’s
risk management systems that support financial
reporting and related activities, including the
ethics hotline, as well as the overall Enterprise Risk
Management framework.
The Audit & Risk Committee held five meetings in
2021. All members attended all meetings.
Chair of the committee Member of the committee
Board member Audit & Risk
Committee
member
Remuneration
Committee
member
Nomination
Committee
member
Safety&
Sustainability
Committee
member
Board
Meetings
Attended
Nationality Joined
the board
Election
Period
Claus V. Hemmingsen (Chairman)
Danish year
Robert M. Uggla (Vice Chairman)
Swedish year
Ann-Christin Andersen
Norwegian year
Kristin H. Holth
Norwegian year
Martin Larsen
Danish year
Alastair Maxwell
British year
Caroline Alting (employee elected) Danish years
Glenn Gormsen (employee elected) Danish years
Overview of committee members and attendance rate for 2021
41Maersk Drilling Annual Report 2021 Management’s review Overview Our Business Financial review Governance and risk
Statutory report on
corporate governance
Pursuant to section 107b of the Danish
Financial Statements Act and the Rules for
Issuers of Shares of Nasdaq Copenhagen
A/S, listed companies must provide an
annual statement on how they address the
recommendations on corporate governance
issued by the Danish Committee on Corporate
Governance.
Maersk Drilling’s adoption of the
recommendations, including descriptions
of internal controls and risk management
systems related to financial reporting, is set
out in Maersk Drilling’s Statement on Corporate
Governance for 2021, which is available at
Disclosure regarding
change of control
As part of the demerger of A.P. Møller - Mærsk
A/S, Maersk Drilling entered into a branding
agreement with A.P. Møller - Mærsk A/S and
A.P. Møller Holding A/S regarding Maersk
Drilling’s future use of a number of trademarks,
names, vessels and rig names and other
designations including “Maersk Drilling”, the
Maersk blue colour and the seven-pointed star.
In addition to the parties’ right to terminate
the branding agreement in case of breach
and insolvency proceedings, the branding
agreement is further subject to a number of
termination provisions allowing A.P. Møller -
Mærsk A/S and/ or A.P. Møller Holding A/S to
terminate (generally at 12 months’ notice) in
case of certain events constituting a change
of control under the branding agreement.
Upon termination, Maersk Drilling must cease
use of the Maersk trademarks and remove
any references thereto.
Maersk Drilling’s debt facilities include change
of control provisions, however the lenders
have agreed to waive their rights in respect of
the change of control provisions in relation to
the contemplated merger with Noble.
Authority to acquire
treasury shares
Until the Annual General Meeting in 2024, the
Board of Directors is authorised to acquire
treasury shares of up to 10% of the share
capital provided that the purchase price does
not deviate by more than 10% from the price
quoted on Nasdaq Copenhagen at the time of
the acquisition.
Authority to increase
share capital
Until the Annual General Meeting in 2026, the
Board of Directors is authorised to increase
the share capital without pre-emption rights
for existing shareholders by up to nominally
DKK 83,064,224 at or above market price
for general corporate purposes. Until the
Annual General Meeting in 2024, the Board
of Directors is authorised to increase the
share capital without pre-emption rights for
existing shareholders by up to nominally
DKK 12,490,000 for executives and employees
of Maersk Drilling at a subscription price
determined by the Board of Directors, which
may be below market price.
Statutory report on
gender and diversity
The Sustainability Report for 2021 serves as
the statutory reporting according to sections
99a, 99b and 107d of the Danish Financial
Statements Act. Read the full report at:
42Maersk Drilling Annual Report 2021 Management’s review Overview Our Business Financial review Governance and risk
Board of
Directors
Claus V. Hemmingsen
Chairman
Chair of Remuneration Committee and
Safety & Sustainability Committee;
member of Nomination Committee
Born 1962
Gender Male
Nationality Danish
Non-executive board member
Qualifications
Extensive international, commercial and managerial experience from the
offshore oil & gas and shipping industries, including HSSE & Sustainability,
M&A, capital markets and non-executive directorships.
Other management duties, etc.
DFDS A/S (Chairman; Chair of Nomination Committee and Remuneration
Committee); A.P. Møller og Hustru Chastine Mc-Kinney Møllers Fond til
Almene Formaal (The A.P. Moller Foundation) (board member);
A.P. Møller Holding A/S (board member); Den A.P. Møllerske Støttefond
(board member); Det Forenede Dampskibs- Selskabs Jubilæumsfond
(board member); Fonden Mærsk Mc-Kinney Møller Center for Zero Carbon
Shipping (board member); Global Maritime Forum Fonden (board member);
HusCompagniet A/S (Chairman); Committee on Corporate Governance
(board member); Work Wear Group A/S, Bacher Work Wear A/S and
Webmore Uniformer A/S (board member); Innargi Holding A/S, Innargi A/S
and Innargi Project I P/S (Chairman); CVH Consulting ApS (CEO).
Education
• A.P. Moller Maersk Certified Shipping Education (1983)
• Executive MBA (Hons) from International Institute for Management
Development (IMD) (2007)
• International Directors Programme (INSEAD) (2020)
Shareholding: 5,424 shares
Not considered independent
Robert M. Uggla
Vice Chairman
Chair of Nomination Committee;
member of Remuneration Committee
Born 1978
Gender Male
Nationality Swedish
CEO of A.P. Møller Holding A/S
Qualifications
International, commercial and managerial experience within investments,
incubation, shipping and marine services, including HSSE and other ESG
aspects, M&A, capital markets and non-executive directorships.
Other management duties, etc.
A.P. Møller - Mærsk A/S (board member; member of Nomination Committee
and Remuneration Committee); A.P. Møller Capital P/S (Chairman); Maersk
Tankers A/S (Chairman); Maersk Product Tankers A/S (Chairman); IMD
(Foundation Board member); ZeroNorth A/S (board member); Agata ApS
(CEO); Estemco XII ApS (CEO) and board positions in a number of controlled
subsidiaries of A.P. Møller Holding A/S.
Education
• MSc in Finance and Economics from Stockholm School of Economics,
including studies at Università Commerciale Luigi Bocconi
• Executive education at the Wharton School of the University of
Pennsylvania, Harvard Business School, Stanford Business School and IMD
Shareholding: 4,430 shares
Not considered independent
43Maersk Drilling Annual Report 2021 Management’s review Overview Our Business Financial review Governance and risk
Kristin H. Holth
Member of Safety & Sustainability
Committee and Audit & Risk Committee
Born 1956
Gender Female
Nationality Norwegian
Non-executive board member
Qualifications
Significant international, managerial and analytical insight in shipping,
offshore, oil & gas and oilfield services industries, with a strong focus
on ESG matters, as well as significant experience in capital markets and
funding.
Other management duties, etc.
GasLog Partners LP (board member; member of Audit & Risk Committee));
Maersk Tankers A/S (board member); HitecVision AS (board member); ABP
AS (board member); Equality Check AS (Chairman); BI International Advisory
Board (member).
Education
• Bachelor in Economics and Business Administration, BI Norwegian
Business School
• Scandinavian Executive Institute/INSEAD – Executive Management
programme, Lund University, IMD Business School
Shareholding: 900 shares
Considered independent
Ann-Christin Andersen
Member of Safety &
Sustainability Committee
Born 1966
Gender Female
Nationality Norwegian
Non-executive board member
Qualifications
More than 30 years’ international and managerial experience from the
oil & gas industry, with extensive experience in project execution and
orchestrating transformation in areas like HSE and technology, including
digital.
Other management duties, etc.
4ADA AS (strategic advisor and CEO); Quantafuel ASA (Chairman); Glitre
Energi AS (Chairman); Tidetec AS (Chairman); Rotork Plc (board member;
Chair of ESG Committee); Ferrexpo Plc (board member): Argeo AS (board
member); Gen2Energy AS (board member).
Education
• IMD Executive MBA (Hons), Lausanne, Switzerland
• IMD programme for Executive Development (PED)
• Bachelor degree with 1st Class Honours in Offshore Electrical Engineering,
Heriot Watt University, Edinburgh, UK
Shareholding: 760 shares
Considered independent
Martin Larsen
Member of Audit & Risk Committee
Born 1979
Gender Male
Nationality Danish
CFO of A.P. Møller Holding A/S
Qualifications
International, managerial and financial experience within offshore supply
services, shipping, energy and insurance, including M&A and capital markets
experience.
Other management duties, etc.
A.P. Møller Capital P/S (board member); Maersk Tankers A/S (board
member; Chair of Audit Committee); Maersk Product Tankers A/S (board
member; Chair of Audit Committee); Navigare Capital Partners A/S (board
member); Assuranceforeningen Skuld (Gjensidig) (Vice Chairman; Chair of
Audit Committee; member of Risk Committee); MVKH ApS (CEO) and board
positions in a number of controlled subsidiaries of A.P. Møller Holding A/S.
Education
• Executive MBA from London School of Economics/ Columbia University
• Master of Science, Economics and Finance from Warwick University
• Bachelor of Economics from University of Copenhagen
Shareholding: 1,169 shares
Not considered independent
44Maersk Drilling Annual Report 2021 Management’s review Overview Our Business Financial review Governance and risk
Caroline Alting
Employee representative
Born 1975
Gender Female
Nationality Danish
Head of Integrity & Projects at Maersk Drilling
Qualifications
Technical and operational experience within the offshore oil & gas industry,
including HSSE, sustainability and the competitive landscape and customer
relationships.
Other management duties, etc.
Advisory board member for MCEDD Deepwater Development conference.
Education
• MSc. Chemistry
• PMD IESE Business School
Shareholding: 325 shares
Not considered independent due to employment within the Group
Alastair Maxwell
Chair of Audit & Risk Committee;
member of Remuneration Committee
Born 1964
Gender Male
Nationality British
CFO of Signifier Medical Technologies Limited
Qualifications
Extensive international and financial experience within energy markets,
including M&A, privatisation, restructuring and equity and debt capital
markets.
Other management duties, etc.
None
Education
• BA (Hons) Modern Languages (Spanish and Portuguese) from
Oxford University
• London Business School Corporate Finance
Evening Programme (1988/89)
Shareholding: 1,337 shares
Considered independent
Glenn Gormsen
Employee representative
Born 1972
Gender Male
Nationality Danish
Programme Manager at Maersk Drilling
Qualifications
In-depth technical, operational and leadership experience within the
offshore oil & gas operations and industry, including compliance,
risk management and HSSE, as well as a deep cross-organisational
understanding of Maersk Drilling.
Other management duties, etc.
None
Education
• Master Mariner
• Officer of reserves, Royal Danish Navy
• Bachelor in leadership, financial management and asset management
(Blue Diploma)
Shareholding: 684 shares
Not considered independent due to employment within the Group
45Maersk Drilling Annual Report 2021 Management’s review Overview Our Business Financial review Governance and risk
Executive
Management
Jørn Madsen
Chief Executive Officer (CEO)
Born 1964
Gender Male
Nationality Danish
Year of first employment 1990
In current position since 2016
Jørn Madsen has been CEO of Maersk Drilling since November 2016.
Prior to his appointment as CEO, Jørn Madsen was CEO of Maersk
Supply Service A/S from 2015–2016. Prior thereto, he held various
positions in Maersk Drilling amongst others as COO and Managing
Director of Maersk Drilling in Norway. Jørn Madsen is currently
Chairman of the Board of Directors of Maersk Decom A/S. Jørn
Madsen holds an Executive MBA from IMD/University of Geneva,
and a Master of Science, Mechanical Engineering from the Technical
University of Denmark.
Christine Morris
Chief Financial Officer (CFO)
Born 1966
Gender Female
Nationality
Dual Belgian and
American citizenship
Year of first employment 2021
In current position since 2021
Christine Brennet (generally referred to as Christine Morris) has been
CFO of Maersk Drilling since January 2021. Prior to her appointment
as CFO, Christine Morris was CFO of BJ Services, a US based oilfield
services company. Prior to this, Christine Morris held executive
finance positions with Haliburton from 2010–2017. Christine Morris
holds an MBA from the Stanford Graduate School of Business, USA
and a Master in Actuarial Sciences from Université Catholique de
Louvain, Belgium.
46Maersk Drilling Annual Report 2021 Management’s review Overview Our Business Financial review Governance and risk
Remuneration
Remuneration Policy
The Remuneration Policy, approved in 2020,
includes the overall guidelines on incentive pay
for the Board of Directors and the Executive
Management in accordance with sections 139 and
139a of the Danish Companies Act and based on
the Corporate Governance Recommendations.
The Remuneration Policy promotes the objectives of:
• ensuring alignment of interests between the
Board of Directors, the Executive Management
and shareholders,
• attracting and retaining qualified members
of the Board of Directors and the Executive
Management, constantly maintaining the
motivation of both the Board of Directors and
the Executive Management for achieving the
Group’s strategic long- and short-term targets,
and
• promoting value creation for the benefit of
the shareholders.
Board of Directors
Each ordinary member of the Board of Directors
will receive a fixed annual base fee, while
the Chairman and the Vice Chairman receive
fixed multiples of the fixed annual base fee.
Participation in a board committee entitles a
board member to an additional fixed annual fee
based on a proportion of the fixed annual base fee.
Members of the Board of Directors and the board
committees do not receive any incentive or share-
based pay. Fee levels are reviewed periodically
taking into account independent advice (on
comparisons with other large companies of similar
size and complexity based in Denmark and Europe,
supplemented by a perspective based on global
drilling industry remuneration levels for industry
specific expertise) and the time commitment
required of the board members.
Executive Management
Remuneration of the Executive Management
will be decided by the Board of Directors based
on recommendations from the Remuneration
Committee. When determining the fixed pay of
the Executive Management, the Board of Directors
takes into consideration:
• Maersk Drilling’s policy generally to provide a
total reward opportunity at around the median
for similar positions with comparable status,
responsibility and skills, in organisations of
broadly similar size and complexity in Denmark
and in Europe;
• a perspective based on global drilling industry
remuneration levels for industry specific expertise.
The remuneration and benefits package for the
Executive Management will consist of:
• Fixed pay: A fixed annual cash salary.
• Other benefits: Telephone, insurance coverage,
annual health check, newspaper subscriptions,
training/education and similar benefits.
• Short-term incentive: A short-term cash
incentive based on the achievement of the
targets established for the current year.
• Long-term incentive: A share-based incentive
scheme is offered to incentivise long-term
performance, commitment and retention of the
Executive Management, as well as to promote
alignment of their interests with the shareholders.
All long-term incentives must have a vesting
or maturity period of at least three years
from the relevant date of grant. The Executive
Management will not be able to sell any vested
shares until five years after the grant date, i.e.
an additional “holding period” of two years in
addition to the three-year “vesting period”. The
Executive Management is also subject to a share
ownership requirement of twice the annual long-
term incentive grant level applicable.
47Maersk Drilling Annual Report 2021 Management’s review Overview Our Business Financial review Governance and risk
Fixed pay and cash bonus (USD 000s) Long-term incentive (no of restricted share units)
Fixed pay
including
benefits
Deal
Completion
Bonus
Annual
bonus
Total Unvested
RSUs beginning
of year
Shares
received in
RSUs
granted in
Unvested
RSUs end
of year
Jørn Madsen (CEO)
Christine Morris (CFO) - -
Executive Management Remuneration 2021
1 Effective 8 April 2021, Kathleen McAllister resigned from the Board of Directors.
2 Executive Management (amongst other employees) are eligible to receive a cash-based bonus (“Deal Completion Bonus”)
subject to the completion of the merger with Noble in 2022.
3 To be paid in April 2022 and reflects the achievement of business objectives in 2021.
4 Shares received on 30 April 2021 when the share price closed at DKK 261.00 per share.
5 Shares granted on 1 March 2021 at a share price of DKK 250.00 per share. The shares will vest after three years.
6 The former CFO, Jesper Ridder Olsen, received salary in January 2021 of USD 65k.
Board Member Base
fee
Committee
fees
Total
Claus V. Hemmingsen (Chairman)
Robert M. Uggla (Vice Chairman)
Ann-Christin Andersen
Kristin H. Holth
Martin Larsen
Alastair Maxwell
Kathleen McAllister
Caroline Alting (employee elected)
Glenn Gormsen (employee elected)
Total
Board Remuneration 2021 (USD 000s)
• Transition of long-term incentives: To ensure
the Executive Management had an equity
interest in the Company from the date of the
demerger, they were required to forfeit all
unvested A.P. Møller - Mærsk A/S shares and
share options as of 1 January 2019 and instead
received restricted share units in Maersk
Drilling.
• Termination benefits: The period of notice
applicable to the Executive Management is
12 months for the employer and 6 months for
the executive. In addition to company notice,
the Executive Management is entitled to a
severance payment of up to 6 months’ fixed pay
at the time of termination.
Remuneration Report
Maersk Drilling has published an Annual
Remuneration Report pursuant to section 139b
of the Danish Companies Act and based on the
recommendations published by the Danish
Committee on Corporate Governance and
implemented by Nasdaq Copenhagen A/S.
The report is available at
https://investor.maerskdrilling.com/
governance/corporate-governance.
Other remuneration disclosures
Further information on remuneration and share-
based incentives for 2021 is set out in notes 1.3
and 4.3 to the consolidated financial statements.
48Maersk Drilling Annual Report 2021 Management’s review Overview Our Business Financial review Governance and risk
Risk
management
The Executive Management assesses risks on
an ongoing basis to address mitigation and
contingency planning activities. Risks are reported
to and discussed with the Board of Directors on a
regular basis and top risks are reported annually to
external stakeholders through the Annual Report.
The 2021 risk management framework is generally
unchanged from last year where it was expanded
to also cover TCFD requirements. The merger
related risks are addressed separately.
The most significant risks and their potential
impact are listed on the following pages together
with the appropriate mitigation activities.
The objective of Maersk Drilling’s risk
management is to contribute to the fulfilment
of the Company’s strategy by ensuring that risks
are identified, assessed, reported, monitored
and addressed in a way that is aligned with the
business operations, objectives and risk appetite.
The processes are structured through an
Enterprise Risk Management (ERM) framework,
setting forth the necessary elements for having
coordinated actions and alignment among the
various stakeholders with regards to addressing
the key risks. Climate related risks are treated in
the same way as all other risks and in accordance
with the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD).
Maersk Drilling and climate-related risks
Climate-related risks are identified and managed
in accordance with procedures laid down in the
Enterprise Risk Management system, in the same way
as other risks affecting Maersk Drilling. In accordance
with the framework, major risks are reviewed on a bi-
annual basis. A distinction is made between risks with
expected impact in the near term (12–18 months) and
emerging risks with a longer-term impact.
This approach captures both physical risks – in the
case of Maersk Drilling, the increased risk of severe
weather impacting the future operations of its rigs
– but more importantly, transition risks e.g in the
form of emerging market developments, customers
and access to capital, changing policy and regulatory
conditions and reputational stigmatisation due to
environmental concerns including access to and
retention of human talent and capabilities.
Risk management structure
Maersk Drilling’s ERM framework is based on four elements;
Risk Principles, Risk Governance, Risk Communication and Risk Processes
Risk
principles
A
c
c
o
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Risk
identification
Risk
monitoring
Risk
prioritisation
Risk
mitigation
Contingency
planning
Risk
assessment
Risk governance
Risk communication
49Maersk Drilling Annual Report 2021 Management’s review Overview Our Business Financial review Governance and risk
Key risks in 2021
Merger with Noble Corporation
• On 10 November 2021, Maersk Drilling
and Noble Corporation announced
their agreement to combine the two
companies. It is expected that the
transaction will close in mid 2022,
provided that the relevant closing
conditions have been met.
• The transaction involves various risks
to Maersk Drilling, including but not
limited to, getting sufficient support
from shareholders, approval by
relevant authorities, market dynamics
impacting Maersk Drilling’s commercial
position, including changes in customer
behaviour, as a consequence as well as
potential impact on staff and resources.
• The risks presented in this annual
report are based on Maersk Drilling as
an independent, going concern and no
attempt has been made to quantify or
account for risks associated with the
transaction.
Market dynamics
Infectious diseases
Rig moves
Contractual risks
Funding risk
Agent/partner risks
Weather
Rig incidents
Tax risks
Complex
environmental laws
and regulations
Impact
Likelihood
Rig incidents
Risk Description Risk Mitigation
Offshore drilling requires use of heavy equipment
and exposure to hazardous conditions which carry
inherent health and safety risks. Maersk Drilling’s
operations are subject to hazards inherent in drilling
for oil and gas, such as blow-outs, reservoir damage,
loss of production, loss of well control, punch
through, lost or stuck drill strings, equipment defects,
craterings, fires, explosions and pollution.
Maersk Drilling’s operations are also subject to
hazards inherent in marine operations, such as
capsizing, grounding, navigation errors, collision,
oil and hazardous substance spills, extensive
uncontrolled fires and marine life infestations.
Such hazards present a potential risk to the safety of
people, to the environment, assets, liquidity position
and reputation.
The risks associated with operational accidents are
mitigated through safety and maintenance standards,
response preparedness, continuous training and
rigorous monitoring. In addition to operational activity
mitigations, Maersk Drilling’s contracts provide for
varying levels of indemnity and allocation of liabilities
between its customers and the company. Also, people,
assets and activities remain comprehensively insured
against personal injuries, physical damage and
liabilities.
Weather
Risk Description Risk Mitigation
Some of Maersk Drilling’s rigs are located in areas that
frequently experience hurricanes and other forms of
severe weather conditions which can cause damage or
destruction to the drilling rigs.
Further, high winds and turbulent seas could
cause suspension of operations on drilling rigs for
significant periods of time and thus impact revenue.
Any increasing severity and frequency of severe
weather and rising sea levels is considered a climate
related risk for Maersk Drilling which is likely to
exacerbate the weather-related risk longer term.
Maersk Drillings’ jack-up rigs can potentially be
operated with an increased safety height to cater for
higher waves. Furthermore, Maersk Drilling has shut-
down, moving and down-manning procedures in place
in case of severe weather conditions. Additionally,
in order for Maersk Drilling to ensure a high level of
safety, tests of processes are conducted at regular
intervals for rigs operating in risk areas.
50Maersk Drilling Annual Report 2021 Management’s review Overview Our Business Financial review Governance and risk
Contractual risks
Risk Description Risk Mitigation
Maersk Drilling may be subject to the risk of its
customers seeking to terminate or renegotiate
contracts generally or in the event of our non-
compliance with the terms and conditions of the
contract.
Contractual risks are addressed during the
negotiation of new contracts or re-negotiation of
existing contracts, where significant efforts are
undertaken to ensure that contracts leave minimal
opportunity for termination or that the impact from
termination will not result in a significant financial
loss.
Rig moves
Risk Description Risk Mitigation
The offshore drilling market is a global market as rigs
can relocate and operate in various environments.
However, mobilisation of rigs is expensive and time-
consuming and can be impacted by several factors,
including weather and currents. When mobilising a
rig, additional risks are introduced such as risk of
collision, loss of tow, loss of stability/water tight
integrity, mooring line failure and anchor dragging,
which can cause human fatalities, damage to the rig
or to other units.
Maersk Drilling mitigates the risks associated with rig
moves through timely preparation of the mobilisation,
which includes extensive planning and verification
processes.
Tax risks
Risk Description Risk Mitigation
Maersk Drilling operates worldwide, which entails
an inherent tax risk with respect to regulatory tax
compliance, including corporate taxes, value added
taxes and excise duties, as well as withholding taxes
and taxes regarding specific rig taxation.
As tax laws are complex and subject to interpretation,
there is a risk that these interpretations could affect
the taxes Maersk Drilling pays in various jurisdictions.
Maersk Drilling’s tax positions are also subject to
audit by relevant tax authorities who may disagree
with Maersk Drilling’s interpretations or assessments
of the effects of tax laws, treaties or regulations, or
their applicability to its corporate structure or specific
transactions that Maersk Drilling has undertaken.
Furthermore, the OECD project on Base Erosion and
Profit Shifting in general, and also with respect to
suggestions for taxation under Pillar I and Pillar
II, in particular the proposed implementation of a
global minimum tax rate of at least 15% for large
multinational corporations on a jurisdiction-by-
jurisdiction basis, may adversely affect the tax setup of
the Maersk Drilling and result in additional cash taxes.
As outlined in Maersk Drilling’s tax policy, tax-related
risks are mitigated through an upright approach,
cooperation with the authorities in respect of
investigations and enquiries, as well as ensuring
that an efficient organisation of specialists with
the necessary competencies is in place to best
meet the requirements and tax regulations relevant
to operations. Tax exposures are assessed before
entering new commercial contracts and monitored
systematically on an ongoing basis and presented to
the Audit & Risk Committee.
Maersk Drilling is continuously monitoring the tax
landscape and adapting to new legislative initiatives
in order to preserve our cash flow.
Environmental laws and regulations
Risk Description Risk Mitigation
Maersk Drilling’s operations are subject to a variety
of laws, regulations and requirements in multiple
jurisdictions controlling the discharge of various
materials into the environment, requiring removal and
clean-up of materials that may harm the environment,
controlling carbon dioxide emissions, or otherwise
relating to the protection of the environment such
as restrictions on exploration & production licensing
areas to protect sensitive marine geographies and/
or to limit new oil & gas exploration as society
transitions to a lower carbon economy.
In general, the laws and regulations protecting the
environment are becoming increasingly numerous,
stringent and complex. Failure to comply with applicable
environmental laws and regulations or to obtain or
maintain necessary environmental permits or approvals,
or even an accidental release of oil or other hazardous
substances in connection with operations, could subject
Maersk Drilling to significant administrative and civil
fines and penalties, criminal liability, remediation
costs for natural resource damages, third-party
damages and material adverse publicity, or may result
in the suspension or termination of its operations.
Maersk Drilling is committed to doing business in
accordance with applicable regulatory standards
and have adopted policies and procedures which are
designed to promote legal and regulatory compliance.
In accordance with industry practice, Maersk Drilling’s
customers typically take primary responsibility for
any environmental pollution resulting from the
customers’ use of the drilling rigs under the contracts,
and Maersk Drilling typically assumes liability for
pollution originating from its own equipment. Maersk
Drilling has generally been able to obtain a certain
degree of contractual indemnification pursuant
to which its customers agree to hold harmless
and indemnify Maersk Drilling against liability for
pollution, well and environmental damage.
51Maersk Drilling Annual Report 2021 Management’s review Overview Our Business Financial review Governance and risk
Infectious diseases
Risk Description Risk Mitigation
Maersk Drilling is an international offshore drilling
company with global operations and therefore
exposed to the risk that a global pandemic disease
will impact Maersk Drilling negatively, and with varied
levels of impact in different countries. Mobilising rigs,
changing crews and supplying rigs on an ongoing
basis exposes Maersk Drilling staff, subcontractors
and customers to the risk of infection in the event of
a global pandemic. If authorities worldwide respond
by implementing travel restrictions, lockdowns,
workplace hazard controls, and facility closures etc,
thereby causing disruption to the global economy,
demand for Maersk Drilling’s rigs and operations
could be significantly impacted.
Maersk Drilling mitigates the risk by implementing
official recommendations during a pandemic such
as social distancing, working from home, private
jet charter for crew changes, testing, isolation
and quarantine procedures etc. in combination
with contractual terms with customers and
subcontractors. In general, mitigations will put
further emphasis on the use of IT solutions and
additional safety focus. During peak infection periods,
suspension of operations may be necessary.
Agent / partner risks
Risk Description Risk Mitigation
Maersk Drilling relies on third-party suppliers to
provide parts, crew and equipment. The reliance on
third-party suppliers, manufacturers and service
providers used in the drilling operations exposes
Maersk Drilling to the risk of these partners not
adhering to company values and/or corporate policies
and exposes Maersk Drilling to volatility in the quality,
price and availability of such items, especially where
the number of suppliers is limited.
Maersk Drilling seeks to mitigate the risks associated
with partners not adhering to company values
and/or corporate policies through due diligence
procedures, including termination clauses in contracts
and assigning clear roles and responsibilities with
partners. Additionally, continuous monitoring of
partners and education in Maersk Drilling’s values
and corporate policies mitigate these risks. Maersk
Drilling also seeks to ensure that it has good working
relationships with multiple suppliers to reduce the
risks of over-reliance on single suppliers.
Market dynamics
Risk Description Risk Mitigation
The offshore drilling industry is highly competitive,
and profitability is strongly impacted by developments
in rig supply and drilling demands. In addition, the
industry is volatile and cyclical, which is largely the
result of changes in oil and gas prices and their impact
on exploration and production company expenditures.
In addition, the long-term transition to a lower carbon
economy is likely to impact long term offshore
exploration & production activity levels with the risk
of longer periods of rig over-supply.
Periods of low drilling demand and excess rig supply
intensify competition in the industry and may result in
rigs being idle or earning substantially lower day rates
than the historical average for long periods of time.
Additionally, general contractual terms and conditions
are under pressure during periods of low industry
activity, potentially further reducing the commercial
value of available rig contracts.
Maersk Drilling mitigates the risks associated with
low demand through a high focus on customers and
their requirements, a continuous strong operational
delivery and maintaining a fleet of modern and
technologically advanced drilling rigs. Maersk Drilling
is also focused on co-developing new compensation
and business models with customers, focusing on
reducing waste and costs related to drilling a well.
Further, Maersk Drilling has adopted a warm stacking
strategy for its fleet, enabling shorter time for
reactivation and lower risks in reactivation to meet
customer demands and keep utilisation high.
Funding
Risk Description Risk Mitigation
Maersk Drilling is funded through a combination of
shareholders’ equity and borrowings. Access to near-
term funding is not considered a major risk however,
as society transitions to a lower carbon economy,
funding for the oil and gas industry may become more
scarce reducing the overall debt financing available
for the offshore drilling industry.
By maintaining its position as a top tier contractor in
the industry known for reliable, safe and responsible
drilling with best-in-class financial results and
robustness, Maersk Drilling should be best possibly
positioned to retain its access to funding sources.
Maersk Drilling’s current funding arrangements
provide a solid capital structure and a high degree of
financial flexibility, with adequate funding in place,
including ample liquid funds after the divestment
of the Mærsk Inspirer rig. Through the strategic
sustainability agenda, putting Maersk Drilling at
the forefront of the industry with ambitious carbon
reduction targets and participation on carbon capture
and storage projects, Maersk Drilling may be able to
tap into funding sources which would otherwise not
be accessible to companies within our industry.
52Maersk Drilling Annual Report 2021 Management’s review Overview Our Business Financial review Governance and risk
Share price and volume
development after Noble
Corporation and Maersk
Drilling announced
agreement to combine
On 9 November 2021, Maersk Drilling
shares closed at a price of DKK 231. At
7:01am Central European Time (CET) on
10 November 2021, Noble Corporation
and Maersk Drilling announced the
agreement to combine entities. Upon
market open at 9:00am CET, Maersk
Drilling shares opened and closed at
DKK 250 and DKK 272, respectively. Daily
traded volumes were approximately
115,000 and 1,125,000 shares, for
each day respectively, compared to an
average daily traded volume for 2021
of 113,000 shares. Maersk Drilling
shares ended the year at a price of
DKK 256, equivalent to an increase
of approximately 11 percent since the
business combination was announced.
Shareholder
information
Share price development 2021
and A.P. Møller og Hustru Chastine Mc-Kinney
Møllers Familiefond (8.9%). When excluding
major shareholders and certain other related
shareholdings, the free float of Maersk Drilling’s
outstanding shares is estimated to be around 48%.
The majority (74%) of share capital is held by
Danish investors. The United States, the United
Kingdom and Spain are other key markets, with
8%, 8%, and 5% of the share capital, respectively.
Share price development
and trading volume
To begin the year, Maersk Drilling shares started
trading at a price of DKK 195.1 and closed the year
at DKK 256.2, equivalent to an increase of 31%.
The year’s highest price of DKK 293.6 was on
4 June. The year’s lowest price of DKK 161.8 was
on 28 January.
Over the same period, the Danish KAXCAP index, a
market capitalisation-weighted index of all of the
stocks traded on Nasdaq Copenhagen, increased
by 17%, while the Philadelphia Oil Service Sector
Index (“OSX”), a price-weighted index composed
of companies involved in the oil services sector,
increased by 17%.
In 2021, a total of 28 million of the Company’s
shares were traded on Nasdaq Copenhagen. The
average daily traded volume was approximately
113,000 shares corresponding to approximately
0.6% of the free float. The average daily traded
value of the Company’s shares was approximately
DKK 28 million, and the volume-weighted average
price for the full year 2021 was DKK 244.0.
Share capital
Maersk Drilling’s share capital of DKK 415,321,120
is divided into 41,532,112 shares with a nominal
value of DKK 10 each, enjoying the same voting
and representation rights. The Company’s share
capital remained unchanged in 2021.
Shareholder composition
As of 31 December 2021, Maersk Drilling had more
than 58,000 registered shareholders.
Major shareholders owning more than 5% of the
share capital and votes were APMH Invest A/S,
a subsidiary of A.P. Møller Holding A/S (41.6%),
1 DRLCO and KAXCAP rebased at index 100 on 1 January 2021.
2 KAXCAP is a capitalisation-weighted index of all the stocks traded on the Copenhagen Stock Exchange.
3 Philadelphia Oil Service Sector Index (“OSX”) is a price-weighted index composed of companies involved in the oil services sector.
Maersk Drilling KAXCAP OSX Index
The shares in The Drilling Company of 1972 A/S (“Maersk Drilling”)
have been listed on the Nasdaq Copenhagen stock exchange since
4 April 2019 and trade under the ticker symbol, DRLCO.
50
75
100
125
150
175
1 Dec1 Jan 1 Feb 1 Mar 1 Apr 1 May 1 Jun 1 Jul 1 Aug 1 Sep 1 Oct 1 Nov
Index
53Maersk Drilling Annual Report 2021 Management’s review Overview Our Business Financial review Governance and risk
Global institutional shareholders own approximately
25% of the share capital, of which the United
States, United Kingdom and Spain make up the
largest groups.
Approximately 13% of Maersk Drilling’s shares are
held by retail investors, nearly all of which reside
in Denmark.
Due to nominee shareholding structures and different
ownership disclosure rules across jurisdictions, there
is no complete record of all shareholders. This means
that the beneficial owners of approximately 1.2% of
the issued capital remain unidentified.
Treasury shares
On 31 December 2021, Maersk Drilling held a total
of 241,397 treasury shares, corresponding to 0.6%
of the share capital, which will be used to cover
long-term incentive awards.
Investor Relations
To ensure that capital market participants,
including current and prospective shareholders,
are able to make well-informed investment
decisions, the Company seeks to ensure a high
level of openness and stability in its financial
communication. The Executive Management team
and the Investor Relations team engage in regular
dialogues with investors and equity analysts. The
dialogues take the form of quarterly conference
calls, roadshows, conferences, capital markets
days and regular meetings with individuals or
groups of investors and analysts. The dialogues
are subject to certain restrictions prior to the
publication of Maersk Drilling’s financial reporting.
Maersk Drilling is currently covered by 14 sell-
side analysts, including analysts from large
international banks, who regularly publish equity
research reports about Maersk Drilling. A full
list of analysts covering Maersk Drilling and
their recommendations can be found at
Maersk Drilling’s Investor Relations website
https://investor.maerskdrilling.com. The site also
contains financial reports and presentations,
historical financials, and current and historical
share price data.
No. of shares
41,532,112
Share classes
1
Listing
Nasdaq Copenhagen
Trading symbol
DRLCO
6 April 2022
Annual General Meeting
12 May 2022
Q Trading Statement
19 August 2022
H Interim Financial Report
3 November 2022
Q Trading Statement
Maersk Drilling
share data
Financial calendar
for 2022
Investor type Geographical shareholder distribution
Maersk-related investors
Institutional investors
Retail investors
Other investor types
Total unidentified
Denmark
United States
United Kingdom
Spain
Norway
Other
Unidentified
At 1 January 2021
Delivered under long-term incentive
programmes
-
Treasury shares at 31 December 2021
Treasury shares
XX%
54%
74%
25%
8%
8%
13%
7%
3%
1%
1% 1%
5%
Shareholder Size of holding
APMH Invest A/S %
A.P. Møller og Hustru Chastine
Mc-Kinney Møllers Familiefond
%
Major shareholders
54Maersk Drilling Annual Report 2021 Management’s review Overview Our Business Financial review Governance and risk
Financials
Consolidated financial statements
Parent company financial statements
Company overview
Definitions
Statement of the Board of Directors
and the Executive Management
Independent Auditor’s Reports
55
Financials Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions StatementsMaersk Drilling Annual Report 2021
Consolidated
financial statements
2021
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 56
Financials
Consolidated income statement
Consolidated statement of comprehensive income
USD Million Note 2021 2020
Revenue 1.1, 1.2 1,267 1,096
Costs 1.3 -921 -807
Profit before depreciation and amortisation, impairment
losses/reversals and special items (EBITDA before special items) 346 289
Special items 1.4 -21 -42
Profit before depreciation and amortisation and
impairment losses/reversals (EBITDA) 325 247
Depreciation and amortisation 2.1, 2.2, 2.3 -213 -286
Impairment losses/reversals 2.4 11 -1,580
Gain/loss on sale of non-current assets 1.7 256 -2
Share of results in joint ventures -1 -1
Profit/loss before financial items 378 -1,622
Financial income 1.5 14 15
Financial expenses 1.5 -75 -87
Profit/loss before tax 317 -1,694
Tax 1.6 -26 41
Profit/loss for the year 291 -1,653
Earnings in USD per share of DKK 10 for the year 4.1 7.0 -39.9
Diluted earnings in USD per share of DKK 10 for the year 4.1 7.0 -39.9
USD Million Note 2021 2020
Profit/loss for the year 291 -1,653
Cash flow hedges:
Value adjustment of hedges for the year 3.5 -3 -20
Reclassified to income statement 11 13
Total items that have or will be reclassified to the income statement 8 -7
Other comprehensive income, net of tax 8 -7
Total comprehensive income for the year 299 -1,660
Consolidated cash flow statement
USD Million Note 2021 2020
Profit/loss before financial items 378 -1,622
Depreciation, amortisation and impairment 2.1, 2.2,
losses/reversals, net 2.3, 2.4 202 1,866
Gain/Loss on sale of non-current assets, etc., net 1.7 -256 2
Change in working capital 2.11 -8 27
Change in provisions, etc. -14 5
Other non-cash items 6 -2
Taxes paid, net 7 -9
Cash flow from operating activities 315 267
Purchase of intangible assets and property, plant and equipment 2.11 -101 -186
Sale of property, plant and equipment 1.7 405 38
Other financial investments, net -3 -2
Cash flow from investing activities 301 -150
Interest received - 2
Interest paid -54 -64
Repayment of borrowings 3.3 -229 -137
Purchase of treasury shares - -5
Cash flow from financing activities -283 -204
Net cash flow for the year 333 -87
Cash and bank balances 1 January 226 310
Currency translation effect on cash and bank balances -2 3
Cash and bank balances 31 December 557 226
Free cash flow
Cash flow from operating activities 315 267
Cash flow from investing activities 301 -150
Sale of assets or activities -405 -38
Net interest payments -54 -62
Free cash flow 157 17
Cash and bank balances comprise cash on hand and short-term deposits which are readily convertible to cash.
Cash and bank balances at 31 December 2021 include USD 13 m (2020: USD 14 m) that relates to cash and bank balances in
countries with exchange control or other restrictions. These funds are not readily available for general use by Maersk Drilling.
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 57
Financials
Consolidated balance sheet at 31 December
USD Million Note 2021 2020
Intangible assets 2.1 14 15
Property, plant and equipment 2.2, 2.4 2,813 3,053
Right-of-use assets 2.3 23 28
Financial non-current assets, etc. 6 6
Deferred tax 2.5 17 15
Total non-current assets 2,873 3,117
Trade receivables 3.4 238 210
Tax receivables 4 14
Other receivables 2.6 54 76
Prepayments 2.7 56 76
Receivables, etc. 352 376
Cash and bank balances 557 226
Total current assets 909 602
Total assets 3,782 3,719
USD Million Note 2021 2020
Share capital 63 63
Reserves and retained earnings 2,257 1,954
Total equity 2,320 2,017
Borrowings, non-current 2.3, 3.3 926 1,149
Provisions 2.8 9 5
Deferred tax 2.5 27 12
Derivatives 3.5 16 33
Other non-current liabilities 52 50
Total non-current liabilities 978 1,199
Borrowings, current 2.3, 3.3 136 136
Provisions 2.8 2 15
Trade payables 164 167
Tax payables 77 65
Other payables 2.9 65 58
Deferred income 2.10 40 62
Other current liabilities 348 367
Total current liabilities 484 503
Total liabilities 1,462 1,702
Total equity and liabilities 3,782 3,719
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 58
Financials
Consolidated statement of changes in equity
USD Million Share capital Reserve for
hedges
Retained
earnings
Total equity
Equity 1 January 2020 63 -23 3,640 3,680
Other comprehensive income, net of tax - -7 - -7
Profit/loss for the year - - -1,653 -1,653
Total comprehensive income for the year - -7 -1,653 -1,660
Value of share based payments - - 2 2
Purchase of own shares - - -5 -5
Total transactions with shareholders - - -3 -3
Equity 31 December 2020 63 -30 1,984 2,017
2021
Other comprehensive income, net of tax - 8 - 8
Profit/loss for the year - - 291 291
Total comprehensive income for the year - 8 291 299
Value of share based payments - - 4 4
Total transactions with shareholders - - 4 4
Equity 31 December 2021 63 -22 2,279 2,320
Equity
At 31 December 2021, equity amounted to
USD 2,320m (2020: USD 2,017m), impacted by
the profit for the year of USD 291m (2020: loss
of USD 1,653m) and positive value adjustment
of hedges of USD 8m (2020: USD -7m). In 2020
share buybacks of USD 5m were completed
during the year.
Reserves
The reserve for hedges is the only reserve
presented in the consolidated statement of
changes in equity. The reserve for hedges
represents the accumulated fair value of
hedging instruments qualifying for cash flow
hedge accounting, net of tax. The reserve is
transferred to the income statement when the
hedged transaction is settled.
The Group does not have a translation reserve
as all material subsidiaries have the United
States Dollar (USD) as their functional currency.
Other comprehensive income
Other comprehensive income consists of
income and costs not recognised in the income
statement as well as cash flow hedges, etc.
Other comprehensive income includes current
and deferred income tax to the extent that
the items recognised in other comprehensive
income are taxable or deductible.
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 59
Financials
Notes
78 Section 3 – Capital structure
Note Equity
Note Capital structure and capital allocation
Note Borrowings and net debt reconciliation
Note Financial risks
Note Derivatives
Note Financial instruments by category
85 Section 4 – Other notes
Note Earnings per share
Note Contingent liabilities and commitments
Note Share-based payments
Note Related parties
Note Subsequent events
61 Basis of preparation
62 Section 1 – Income statement
Note Segment information
Note Revenue
Note Costs
Note Special items
Note Financial income and expenses
Note Tax
Note Sale of non-current assets
70 Section 2 – Balance sheet
Note Intangible assets
Note Property plant and equipment
Note Leases
Note Impairment test
Note Deferred tax
Note Other receivables
Note Prepayments
Note Provisions
Note Other payables
Note Contract balances
Note Cash flow specifications
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 60
Financials
Basis of preparation
This Annual Report reflects the consolidated figures for The Drilling Company of 1972 A/S (the “Company”) and
its subsidiaries (the “Group” or “Maersk Drilling”). The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and further requirements
in the Danish Financial Statements Act.
All amounts in the Annual Report are stated in United States Dollars (USD) and rounded to the nearest million. The
accounting policies described have been applied consistently for the financial year and for the comparative figures.
Consolidation
Consolidation is performed by summarising the financial statements of the entities within the Group. Internal
income and expenses, shareholdings, dividends, balances and gains on internal transactions within the Group
are eliminated. Certain entities in which Maersk Drilling has an ownership share of less than 100% but holds the
full right to govern and receive dividends through shareholder agreements etc. are considered subsidiaries and
consolidated without any non-controlling interest.
Foreign currency translation
The consolidated financial statements are presented in USD, which is also the functional currency of most material
companies within the Group.
Transactions in currencies other than the functional currency are translated at the exchange rate prevailing at the
date of the transaction. Monetary items in foreign currencies not settled at the balance sheet date are translated
at the exchange rate as at the balance sheet date. Foreign exchange gains and losses are included in the income
statement as financial income or expenses.
Cash flow statement
Cash flow from operating activities includes all cash transactions other than cash flows arisen from investments
and divestments, principal payments of loans, instalments on finance lease liabilities, financial income received,
financial expenses paid and equity transactions. Capitalisation of borrowing costs are considered as non-cash items,
and the actual payments of those are included in cash flow from financing activities.
New reporting requirements
The accounting policies described have been applied consistently for the financial year and for the comparative
figures for 2020 and new standards and amendments effective for the financial year 2021 have not had any
material impact on the accounting policies applied. Maersk Drilling expects no material impact of endorsed but not
yet implemented amendments or interpretations of IFRS standards.
Basis of preparation
Management’s judgments and estimates
The preparation of consolidated financial statements requires management, on an ongoing basis, to make
judgements and estimates and form assumptions that affect the reported amounts. Management forms its
judgements and estimates based on historical experience, independent advisors and external data points as
well as in-house specialists and on other factors believed to be reasonable under the circumstances.
In certain areas, the outcome of business plans, including ongoing negotiations with external parties to
execute those plans or to settle claims that are raised against Maersk Drilling, is highly uncertain. Therefore,
assumptions may change or the outcome may differ in the coming years, which could require a material upward
or downward adjustment to the carrying amounts of assets and liabilities.
The most significant accounting judgments and estimates are described in the following notes to the
consolidated financial statements:
European Single Electronic Format (ESEF)
As a group with securities listed on a regulated market within the EU, Maersk Drilling is required to prepare
its official Annual Report in the XHTML format and to tag the main consolidated financial statements using
inline eXtensible Business Reporting Language (iXBRL) applying a specific ESEF taxonomy. As such, the Annual
Report is therefore both human- and machine-readable. A separate assurance report on the iXBRL tagging of
the consolidated financial statements is issued by Maersk Drilling's independent auditors and included on page
105. For general use, a PDF version of the Annual Report is published in line with previous years.
Significant judgement/estimate Note Potential impact from
estimates and judgments
on company value
Useful lives and residual values of drilling rigs
Property plant
and equipment
Valuation of non-current assets
(impairment testing)
Impairment test
Measurement of deferred tax assets
and uncertain tax positions
Deferred tax
Measurement of provisions Provisions
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 61
Financials
Note 1.1 Segment information
The allocation of business activities into segments is in line with the internal management reporting provided
to the chief operating decision maker. The reportable segments are as follows:
North Sea segment
Jack-up rigs operating in depths up to 500 ft and comprise the aggregated operating segments ultra-harsh
environment jack-up rigs and harsh environment jack-up rigs.
International segment
Semi-submersible rigs and drillships designed to operate in benign mid- and deepwater environments in
depths up to 12,000 ft.
The benign jack-up rig Maersk Convincer is not included in either segment and is reported under unallocated
activities based on its different nature and limited materiality.
Segment profit/loss (defined as profit/loss before depreciation and amortisation, impairment losses/reversals
and special items) comprise items directly related to or which can be allocated to segments. Costs in group
functions are allocated to reportable segments if they can be allocated to segments. Financial assets, liabilities,
income and expenses from these items, and tax are not attributed to reportable segments.
Total revenue, total EBITDA before special items, total depreciation and amortisation and total impairment
losses/reversals reconcile directly to the income statement and further reconciliations are therefore not
included.
Total investments in non-current assets and total non-current assets comprise intangible assets and property,
plant and equipment.
USD Million 2021
North Sea
Jack-up rigs
International
Floaters
Unallocated
activities
Total
Revenue
EBITDA before special items
EBITDA margin before special items % % % %
Depreciation and amortisation - - - -
Total impairment losses/reversals - -
Investments in non-current assets
Non-current assets
USD Million 2020
North Sea
Jack-up rigs
International
Floaters
Unallocated
activities
Total
Revenue
EBITDA before special items
EBITDA margin before special items % % % %
Depreciation and amortisation - - - -
Total impairment losses/reversals - - - -
Investments in non-current assets
Non-current assets
1 Comprise intangible assets and property, plant and equipment.
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 62
Financials
Note 1.1 Segment information – continued
USD Million Revenue Non-current assets
2021 2020 2021 2020
Geographical split
Denmark
Norway
United Kingdom
The Netherlands
Angola -
Australia
Egypt - - -
Azerbaijan
Ghana -
Suriname
Trinidad
Mexico - - -
Myanmar - - -
Brunei
Guyana - -
Other
Total
1 Comprise intangible assets and property, plant and equipment and right-of-use assets.
Geographical information
Information on revenue is based on geographical location. For non-current assets, such as drilling rigs, the
geographical location is where the assets are located as per 31 December. For all other assets, geographical location
is based on the legal ownership.
Significant customers
Revenue from three international oil companies that individually amount to more than 10% of revenue represents
57% of the Group’s revenue in 2021. The three international oil companies accounted for USD 293m, 281m and 145m,
respectively and approximately 25%, 100% and 100%, respectively of these revenues were in the North Sea jack-up
segment, with the remaining in the international floaters segment.
In 2020, the four international oil companies that individually amount to more than 10% of revenue represents
69% of the Group’s revenue. The four international oil companies accounted for USD 299m, 169m, 164m and 121m,
respectively and approximately 100%, 100%, 0% and 100%, respectively of these revenues were in the North Sea
jack-up segment, with the remaining in the international floaters segment.
North Sea
Africa
Asia Pacific
Americas
Rest of the world
TotalEnergies
AkerBP
Equinor
BP
Other
Geographical presence by revenue
Revenue by customer
Revenue and non-current assets
14%
3%
17%
14%
52%
13%
11%
11%
9%
56%
2021
12%
23%
43%
22%
2021
2020
15%
27%
31%
16%
2020
11%
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 63
Financials
Note 1.2 Revenue Revenue backlog
Revenue from drilling activities typically comprises fixed amounts for each day the rig is under contract
differentiated by the activities undertaken ( “day rate revenue”) and other revenue components such as lump
sum payments for rig mobilisation and demobilisation and payments for investments in equipment or rig
upgrades required to meet the operational needs of the drilling campaign, both of which are amortised over
the contract period; bonuses linked to performance in terms of time, efficiency or drilling outcome measures
such as reservoir targeting; or payments for third-party services to be delivered by Maersk Drilling.
Revenue from drilling activities was recognised in accordance with the agreed rates for the work performed to
date. The rates include both a lease component and a service component.
USD Million 2021 2020
North
Sea
Jack-ups
Interna-
tional
Floaters
Other Total North
Sea
Jack-ups
Interna-
tional
Floaters
Other Total
Composition of revenue
Day rate revenue
Other revenue
Total
Type of revenue
Service component
Lease component
Total
Maersk Drilling managed to secure 35 new contracts and contract extensions during 2021, adding more than
USD 2bn (2020: USD 469m) to our contract backlog. This includes approximately USD 1bn in backlog associated with
the renewal of our frame agreement with AkerBP which was announced on 18 December 2021. The new five-year
commitment from AkerBP is for two XLE rigs in the Norwegian North Sea.
At the end of 2021, the contract backlog amounted to USD 1.9bn (2020: USD 1.3bn), of which USD 604m is for
execution in 2022. In addition, since the beginning of 2022 Maersk Drilling has secured additional contracts and
conditional letters of award with a total value of more than USD xxm.
Aker BP Tullow Inpex
Karoon Habour Energy Shell
TotalEnergies Others
Backlog composition per customer
57%
18%
8%
5%
2%
5%
3%
2%
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 64
Financials
Revenue backlog – continued
Operating leases as lessor
Property, plant and equipment include jack-up rigs and floaters which are leased out as part of the Group’s
activities. Future minimum lease payments are set out below.
Performance obligations in contracts
Amounts allocated to performance obligations that are to be completed under existing customer contracts are set
out as service elements below.
Jointly the two elements amount to Maersk Drilling’s revenue backlog.
USD Million 2021
Future
minimum
lease
payments
Performance
obligations
Total
backlog
Within one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
After five years
Total
USD Million 2020
Future
minimum
lease
payments
Performance
obligations
Total
backlog
Within one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
After five years
Total
North Sea jack-ups International Floaters Other
Revenue backlog
Development of revenue backlog in 2021
Revenue
backlog
2020
Revenue
recognised
in 2021
Hereof other
services
not related
to backlog
Addition
to backlog
in 2021
Sale of
Mærsk
Inspirer
Other
changes
Revenue
backlog
2021
12
1,896
2,045
420
199
USDm
1,327
1,267
0
200
400
600
800
371
2022 2023 2024 2025+
30
203
201
159
201
586
116
604
360
615
29
317
USDm
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 65
Financials
Note 1.3 Costs
USD Million 2021 2020
Operating costs
Innovation
Sales, general and administrative costs
Total costs
Other external costs
Of which:
Included in Operating costs
Included in Innovation
Included in Sales, general and administrative costs
Included in Special items
Staff costs
Wages and salaries
Severance payments
Share based remuneration
Pension costs
Other social security costs
Total Staff costs
Of which:
Included in Operating costs
Included in Innovation
Included in Sales, general and administrative costs
Included in Special items
Recognised in the cost of assets
Average number of employees 2,515 2,678
Operating costs comprise costs incurred in generating revenue for the year, including costs for crew, repair and
maintenance but exclude Innovation costs and Sales, general and administrative costs, which are presented
separately.
Fees for other services than statutory audit of the financial statements provided by PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab amounted to USD 0.8m in 2021 (0.2m in 2020). The non-audit services
in 2021 mainly consisted of financial data review for merger purposes, general advisory services on a system
implementation, and payroll tax computation.
Remuneration of the Board of Directors, Executive Management and Key Employees
Board of Directors
The Board of Directors receives a fixed annual base fee, while the Chairman and Vice Chairman receive fixed
multiples of the fixed annual base fee. Participation in a Board Committee entitles a member of the Board of
Directors to an additional fixed annual fee based on a proportion of the fixed annual base fee.
Effective 8 April 2021, Kathleen McAllister resigned from the Board of Directors.
Executive Management
During 2021, the Executive Management consisted of Jørn Madsen as Chief Executive Officer (CEO) and Christine
Morris as Chief Financial Officer (CFO).
Under the short-term incentive plan, the target annual cash-based bonus payable can constitute an amount of up to
50% of the member of the Executive Management’s fixed pay at the end of the performance period of earning the
cash incentive. The maximum bonus is 200% of the individual target.
Under the long-term incentive programme, the Executive Management was awarded an annual grant of restricted
share units with a three year vesting period and a further two year holding period amounting to 100% (CEO) and 80%
(CFO) of fixed pay. In addition, a transition award in lieu of unvested A.P. Møller - Mærsk A/S' shares and options of
twice the annual grant level was awarded.
For additional information about share-based remuneration, reference is made to note 4.3.
USD Million 2021 2020
Fees to the statutory auditors
Statutory audit
Other assurance services -
Tax and VAT advisory services
Other services
Total fees
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 66
Financials
USD Million CEO CFO Total
Remuneration of Executive Management
2021
Fixed pay
Short-term incentive
Long-term share based incentive
Total remuneration
2020
Fixed pay
Short-term incentive
Long-term share based incentive -
Total remuneration
Note 1.3 Costs – continued
1 The former CFO, Jesper Ridder Olsen, received salary in January 2021 of USD 0.1m.
2 The cash bonus is composed of USD 0.2m (CEO) and USD 0.1m (CFO) for the expected completion of the merger
with Noble and USD 1.0m (CEO) and USD 0.5m (CFO) for the short-term incentive plan for Executive Management.
3 Executive Management is party to agreements that will provide for enhanced severance terms in the event of
termination following the merger. The enhanced severance terms provide that any unvested Maersk Drilling RSU
Awards outstanding under the LTI programme will vest at the end of employment, subject to completion of the
merger.
4 In July 2020, Maersk Drilling announced the resignation of former CFO, Jesper Ridder Olsen. As a consequence
thereof, the former CFO forfeited all unvested RSUs under the LTI programme (which includes the grants in 2019
and 2020), and as a result the cost for the LTI that was expensed in 2019 was reversed.
1 The cash bonus to Other Key Employees is composed of USD 0.2m for the expected completion of the merger
with Noble and USD 0.8m for the short-term incentive plan for Senior Leaders.
2 Executive Management and two other Key Employees are party to agreements that will provide for enhanced
severance terms in the event of termination following the merger. The enhanced severance terms provide
that any unvested Maersk Drilling RSU Awards outstanding under the LTI programme will vest at the end of
employment, subject to completion of the merger.
Remuneration of Key Management Personnel
For all of 2020 and 2021, the Group’s key management personnel included the Board of Directors, the Executive
Management (CEO and CFO) and two other Key Employees who together with the Executive Management have
the authority and responsibility for planning, directing and controlling the Group’s day-to-day activities. The
compensation of Other Key Employees is generally structured in a similar way as for the Executive Management.
USD Million Board of
Directors
Executive
Management
Other Key
Employees
Total
2021
Fixed pay
Short-term cash incentive
Long-term share based incentive
Total remuneration
2020
Fixed pay
Short-term cash incentive
Long-term share based incentive
Total remuneration
The termination notice period applicable to the Executive Management is twelve months for the Company and six
months for the members of the Executive Management. In addition to the Company's termination notice, Executive
Management are entitled to a severance payment of up to six months’ fixed pay. The members of the Executive
Management are subject to non-competition and non-solicitation clauses.
The termination notice period applicable to the Other Key Employees is twelve months for the Company and six
months for the employee. In addition to the Company's termination notice, the Key Employees are entitled to
statutory severance pay in accordance with the Danish Salaried Employees Act.
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 67
Financials
Note 1.4 Special items
USD Million 2021 2020
Merger related costs -
Transformation and restructuring costs
COVID-19 costs not recharged to customers
Special items, costs
Special items comprise non-recurring income and expenses that are not considered to be part of Maersk
Drilling’s ordinary operations such as merger related costs, major restructuring projects and COVID-19 related
costs.
COVID-19 related costs are defined as additional costs triggered by the COVID–19 pandemic in the form of costs
incurred to comply with local travel and quarantine rules and customer requirements, additional costs incurred
with procuring testing kits for crews operating rigs, additional crew change costs for quarantine hotels, charter
flights, per diems as well as additional costs to reimburse subcontractors in instances where they need to
comply with quarantine regulations.
Special items incurred in 2021 comprised USD 8m merger related costs ( primarily advisory costs), USD 1m
redundancy costs in connection with the establishment of virtual rig teams and a new technical hub in Gdansk
and USD 12m of COVID-19 related costs not recharged to customers.
Special items incurred in 2020 comprised redundancy costs from the reduction of the offshore and the
onshore organisations of USD 24m and COVID-19 related costs not recharged to customers of USD 18m.
Of total Special Items, costs, USD 6m related to staff costs (2020: USD 34m) and USD 15m to other external
costs (2020: USD 8m). If these costs had not been classified as Special Items, USD 13m would have been
classified as Operating costs (2020: USD 40m) and USD 8m as Sales, general and administrative costs (2020:
USD 2m).
In the classification of Special items, judgment is applied in ensuring that only exceptional items not associated
with the ordinary operations of Maersk Drilling are included.
Note 1.5 Financial income and expenses
USD Million 2021 2020
Interest expenses on liabilities - -
Of which borrowing costs capitalised on assets - -
Interest income on loans and receivables -
Realised loss on interest rate derivatives – transferred from equity - -
Net interest expenses - -
Exchange rate gains on bank balances, borrowings and working capital
Exchange rate losses on bank balances, borrowings and working capital - -
Net foreign exchange gains/losses -
Fair value gains from derivatives
Fair value losses from derivatives - -
Net fair value gains/losses -
Financial expenses, net - -
Of which:
Financial income
Financial expenses - -
1 No borrowing costs have been capitalised in 2021 or 2020.
Financial income and expenses comprise interest income and expenses including the interest element of lease
payments related to leases capitalised under IFRS 16, foreign exchange gains/losses, realised and unrealised
gains/losses on financial instruments, bank fees and amortisation of transaction costs related to borrowings.
Financial income and expenses are recognised in the income statement on an accrual basis.
For an analysis of gains and losses from derivatives reference is made to note 3.5.
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 68
Financials
Note 1.6 Tax
USD Million 2021 2020
Tax recognised in the income statement
Current tax on profit/loss for the year - -
Adjustment for current tax of prior periods
Total current tax - -
Temporary differences -
Adjustment for deferred tax of prior periods - -
Total deferred tax -
Total tax -
Tax reconciliation
Profit/loss before tax -
Tax using the Danish corporation tax rate (22%) -
Impairment losses/reversals with no tax impact - -
Tax rate deviations in foreign jurisdictions net of withholding tax -
Interest limitation tax rules in Denmark - -
Non-deductible expenses - -
Adjustment to previous years’ taxes
Unrecognised tax assets and change in tax assets not previously recognised -
Total tax -
Tax comprises an estimate of current and deferred income tax as well as adjustments to previous years for the
individual entities covered by the consolidated financial statements. Income tax is tax on taxable profits and
consists of corporate income tax and withholding tax paid in lieu of corporate income tax (revenue tax), etc. Tax
is recognised in the income statement to the extent it arises from items recognised in the income statement.
Current tax liabilities and receivables are recognised in the balance sheet at the amounts calculated on the
taxable income for the year adjusted for tax on taxable incomes for prior years and for taxes paid on account.
Of the USD 77m (2020:USD 65m) of current tax liabilities it is estimated that USD 29m (2020: USD 31m) may
only be settled after 12 months from the balance sheet date.
In line with the published Tax Policy, Maersk Drilling supports the development, growth and prosperity of the
countries in which we operate by paying taxes in accordance with local legislation. The Tax Policy is reviewed and
approved by the Board of Directors once a year.
Taxable profits are generally split between the countries of operation and the flag states of the drilling rigs, which
are Denmark, United Kingdom and Singapore. Under current market conditions with limited profitability, the
majority of taxes paid are paid in the countries of operation which for 2021 primarily was Angola, Norway, Gabon,
Ghana, Australia and Azerbaijan.
In Denmark, Maersk Drilling is subject to a mandatory joint taxation scheme with all other Danish entities under the
common control of A.P. Møller Holding A/S. To the extent Maersk Drilling incurs tax losses in Denmark or have tax
losses carried forward from previous years, such losses may be utilised by other jointly taxed entities. In such events,
Maersk Drilling is compensated through a joint taxation contribution.
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 69
Financials
Note 1.7 Sale of non-current assets
USD Million 2021 2020
Gains -
Losses -
Gain on sale of non-current assets, net -
Carrying amount of non-current assets
Gain/loss on sale of non-current asset -
Cashflow from sale of non-current assets
During the second quarter of 2021, Maersk Drilling completed the divestment of the jack-up rigs Maersk Guardian
(now named Guardian) and Mærsk Gallant (now named Gallant) to New Fortress Energy ("NFE") to be utilised as
part of NFE’s groundbreaking Fast LNG solution. The total sales price for the two rigs was USD 31m in an all-cash
transaction. Additionally, USD 2m were collected from the sale of spare parts owned by Mærsk Gallant. Total cost
related to the two sales was around USD 1m.
In May 2021, Maersk Drilling further announced that it entered into an agreement to divest the combined drilling
and production unit Mærsk Inspirer to Havila Sirius for a price of USD 373m in an all-cash transaction. In connection
with the sale announcement, Mærsk Inspirer was classified as held for sale and depreciation of the asset was
ceased. The sale was finalised on 27 October and Maersk Drilling recognised a gain from the sale of USD 239m. Costs
related to the sale of Mærsk Inspirer were less than USD 1m.
Note 2.1 Intangible assets
USD Million Customer
contracts
IT
software
Total
2020
Cost
1 January 2020
Additions -
31 December 2020
Amortisation and impairment losses
1 January 2020
Amortisation
31 December 2020
Carrying amount at 31 December 2020
2021
Cost
1 January 2021
Additions -
Disposals - - -
31 December 2021 -
Amortisation and impairment losses
1 January 2021
Amortisation
Disposals - - -
31 December 2021 -
Carrying amount at 31 December 2021 -
Useful life (years) Residual value
Customer contracts Contract term %
IT Software – years %
Intangible assets are measured at cost less accumulated amortisation and impairment losses. Amortisation
is calculated on a straight-line basis over the estimated useful lives of the assets. Customer contracts are
amortised over the contract term. Estimated useful lives and residual values are reassessed on a regular basis.
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 70
Financials
Note 2.2 Property, plant and equipment
USD Million Jack-up rigs Floaters Equipment
and other
Construction
work in
progress
Total
2020
Cost
1 January 2020
Additions - - -
Disposals - - - - -
Transfers -
31 December 2020
Depreciation and impairment losses
1 January 2020 -
Amortisation and depreciation -
Impairment losses - -
Disposals - - - - -
Transfers - - - - -
31 December 2020 -
Carrying amount 31 December 2020
2021
Cost
1 January 2021
Additions - -
Disposals - - - - -
Transfers -
Transfers to assets held for sale - - - - -
31 December 2021
Depreciation and impairment losses
1 January 2021 -
Amortisation and depreciation -
Impairment reversals - - - - -
Disposals - - - - -
Transfers - - -
Transfers to assets held for sale - - - - -
31 December 2021 -
Carrying amount 31 December 2021
Property, plant and equipment are valued at cost less accumulated depreciation and impairment losses.
Depreciation is charged to the income statement on a straight-line basis over the useful lives to an estimated
residual value. The cost of an asset is divided into separate components, which are depreciated separately if
the useful lives of the individual components differ:
Estimated useful lives and residual values are reassessed on a regular basis.
The five-year special periodic survey costs are recognised in the carrying amount of rigs when incurred
and depreciated over the period until the next five year special periodic survey. Costs of on-going routine
maintenance of the assets are expensed as incurred.
The cost of assets constructed by Maersk Drilling includes directly attributable expenses. For assets with a
long construction period, borrowing costs during the construction period from specific as well as general
borrowings are capitalised.
Grants received from governments or similar institutions are recognised when there is reasonable certainty
that they will be received. Grants for capital expenditures are offset against the cost of the assets to which
the grants relate. During 2021, no grants were received, while grants of USD 13m had been offset against
non-current assets in 2020.
Useful lives are estimated based on past experience. Management decides from time to time to revise the
estimates for individual assets or groups of assets with similar characteristics due to factors such as standard
of maintenance and repair, technical development and environmental requirements.
Residual values are difficult to estimate given the long lives of rigs, the uncertainty around future economic
conditions and the future price of steel, which are considered to be the main determinants of the residual price.
The long-term view is prioritised in order to alleviate, to the extent possible, temporary market fluctuations
which may be significant.
Useful life (years) Residual value
Rigs, Hull years –%
Rigs, Drilling Equipment/owner furnished equipment long years %
Rigs, Drilling Equipment/owner furnished equipment short years %
Rigs, Initial offshore inventory years %
Rigs, Other years %
Rigs, five-year Special Periodic Survey years %
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 71
Financials
Pledges
Property, plant and equipment with carrying amount of USD 2,673m (2020: USD 2,997m) has been pledged as
security for borrowings with a carrying amount of USD 1,037m (2020: USD 1,254m).
Asset held for sale
Assets held for sale comprise assets for which the carrying amount will be recovered principally through a sale
transaction rather than through continuing use. Assets are classified as held for sale when activities to carry
out a sale have been initiated, when the assets are available for immediate sale in their present condition and
when the assets are expected to be disposed of within 12 months. Liabilities directly associated with assets
held for sale, if any, are presented separately from other liabilities.
Assets held for sale are measured at the lower of their carrying amount immediately before classification as
held for sale and the fair value less costs to sell. Non-current assets are not depreciated while classified as held
for sale.
No assets are classified as held for sale as of 31 December 2021 nor 31 December 2020.
Note 2.2 Property, plant and equipment – continued Note 2.3 Leases
USD Million Land and
buildings
Right-of-use assets
1 January 2020
Additions
Disposals -
Depreciation -
31 December 2020
Additions
Disposals -
Depreciation -
31 December 2021
Lease contracts, under which the Group is the lessee, are capitalised using an incremental borrowing rate and
recognised in the balance sheet as right-of-use assets and corresponding lease liabilities. The right-of-use
assets are generally depreciated over the lease term on a straight-line basis. Lease payments made are split into
an interest element presented under financial expenses and amortisation of the lease liability. Both elements
are included under cash flow from financing activities in the cash flow statement.
Lease contracts with a term shorter than 12 months or for which the underlying assets are of low value are not
capitalised but expensed straight-line over the lease term. Service components included in lease costs are not
recognised as part of the lease liability. Such costs are recognised in the income statement as incurred.
The weighted average incremental borrowing rate applied was 3.9% (2020: 4.0%).
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 72
Financials
Note 2.3 Leases – continued
USD Million 2021 2020
Lease liabilities
1 January
Additions
Disposals - -
Interest expenses
Lease payments - -
Foreign exchange movements -
31 December
Lease liabilities are recognised in the balance sheet as follows:
Non-current liabilities, presented in ‘Borrowings, non-current’
Current liabilities, presented in ‘Borrowings, current’
Total lease liabilities
Recognised in the profit and loss statement as follows:
Interest expenses related to lease liabilities - -
Expenses relating to short term leases, not capitalised - -
Expenses relating to leases of low-value assets, not capitalised - -
Sublease income presented in ‘Other revenue’
Recognised in the cash flow statement as follows:
Interest elements of lease payments, presented in ‘Interest paid’ - -
Principal elements of lease payments, presented in ‘Repayment of borrowings’ - -
Total cash outflow in respect of leases in the year - -
There are no significant lease commitments for leases not commenced at year-end.
An impairment reversal of USD 11m was recognised in the first half of the year in connection with the sale of Mærsk
Gallant.
In connection with the announced business combination between Maersk Drilling and Noble Corporation, Maersk
Drilling’s net assets were assessed by Noble Corporation as part of this transaction at values below their carrying
amounts as of 30 September 2021 and Management concluded that an impairment test needed to be performed.
Outcome of impairment test
An impairment test based on a value in use calculation was therefore performed and the conclusion was that
the impairment test did not lead to an impairment or reversal of previously recognised impairments.
Impairment test in 2020
Following the revised market outlook with lower expectations as to utilisation and day rates for the coming years,
Maersk Drilling recognised a net impairment loss of USD 1,580m as of 31 December 2020. The impairment losses
related to both jack-ups and floaters.
Note 2.4 Impairment test
USD Million Impairment losses/reversals Recoverable amount
2020
Cash generating unit
North Sea jack-ups
International floaters
Benign jack-up
Total
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 73
Financials
Basis for impairment test
Maersk Drilling considers rigs with similar functionality and operating environment as cash generating units
due to largely interdependent cash flows. In 2020 there were five cash generating units (CGUs) operating in the
North Sea jack-up segment. One unit was forming a CGU on its own which had triggered an impairment reversal
of USD 16m. One additional unit, which formed a CGU on its own, had not been impaired and was excluded from
the overview. There were three CGUs operating in the International floaters segment.
The CGUs are defined as the smallest identifiable group of assets that generate cash inflows that are largely
independent of the cash inflows from other assets or groups of assets. The table above shows the impairment
losses recognised within the North Sea and International segments, as well as the benign jack-up.
Impairment testing is performed at the CGU level, but the information disclosed above is provided on a
segment basis, as the methodology and assumptions are similar across the CGUs.
The recoverable amount of each cash generating unit is determined based on the higher of its value in use
or fair value less cost to sell. The recoverable amounts are currently based on estimated value in use, as it is
considered that currently there is no basis for making a reliable estimate of the fair market value in an orderly
transaction between market participants. Given the continued illiquidity of the secondary market for offshore
rigs with no supportable price indications Maersk Drilling applies value in use calculations in the impairment
test, and no calculation of fair value less cost to sell has been applied.
The value in use is calculated based on cash flow projections in financial budgets and business plans for the
coming 5 years as approved by Management. For the period after the 5-year forecast period an expected
inflation rate of 2.5% p.a. is applied. In nature, these cash flow projections are subject to judgement and
estimates that are uncertain, though based on experience and external sources where available. In a separate
section below sensitivity analysis is set out for certain key assumptions applied in the expected future cash
flows.
The discount rate applied in the value in use calculation is 10.0% p.a. after tax which is unchanged from
previous impairment testing. The discount rate applied reflects the time value of money as well as the sector
specific risks related to the underlying cash flows. Any uncertainties reflecting past performance and possible
variations in the amount or timing of the projected cash flows are generally reflected in the discount rates,
except that specific assumptions relating to the future utilisation of the assets are applied. The useful lives and
residual value of the assets are aligned with the accounting policies applied as set out in note 2.2.
Note 2.4 Impairment test – continued
Sensitivity analysis
The value in use calculations for the individual cash generating units are particularly sensitive to the day rates
expected to apply when contracts expire and to the risks of idle periods in the forecasts. In addition, the discount
rate, growth rate and EBITDA margin after the budget period are critical variables.
The sensitivity analysis shows that the impairment losses in 2020 would have been:
• USD -1,181m and USD -1,932m with a -/+ 1 percentage point change in the discount rate, keeping all other
assumptions unchanged.
• USD -1,379m and USD -1,765m with a +/- 1 percentage point change in the growth rate after the 5-year forecast
period, keeping all other assumptions unchanged.
• USD -768m and USD -2,256m with a +/- 5 percentage point change in EBITDA margin after the 5-year forecast
period, keeping all other assumptions unchanged.
• USD -1,133m and USD -2,027m with a +/- 5 percentage point change in utilisation after the 5-year forecast,
keeping all other assumptions unchanged.
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 74
Financials
Recognised deferred tax assets and liabilities are attributable to the following:
Note 2.5 Deferred tax
USD Million 2021 2020
Assets Liabilities Net
Liabilities
Assets Liabilities Net
Liabilities
Property, plant and equipment -
Tax loss carry-forwards - - - - -
Other -
Total -
Offsets - - - - - -
Total -
USD Million 2021 2020
Change in deferred tax, net during the year
1 January -
Property, plant and equipment -
Tax loss carry-forwards -
Other -
Recognised in the income statement -
Recognised in other comprehensive income - -
31 December -
USD Million 2021 2020
Unrecognised deferred tax assets
Tax loss carry-forwards
Total
The unrecognised deferred tax assets have no significant time limitations.
Deferred tax is calculated on temporary differences between the carrying amounts and tax bases of assets and
liabilities. Deferred tax is not recognised for differences on the initial recognition of assets or liabilities where at
the time of the transaction neither accounting nor taxable profit/loss is affected, unless the differences arise
in a business combination. In addition, no deferred tax is recognised for undistributed earnings in subsidiaries,
when Maersk Drilling controls the timing of dividends, and no taxable dividends are currently expected. A
deferred tax asset is recognised to the extent that it is probable that it can be utilised within a foreseeable
future.
Maersk Drilling is engaged in a limited number of disputes with tax authorities of various scope. In evaluating
the accounting impact of uncertain tax positions, Maersk Drilling applies a two stage test in accordance with
IAS 12 and IFRIC 23. If it is probable (i.e. a probability of more than 50%) that a tax authority will accept a
particular uncertain tax position, then the tax position reported in these consolidated financial statements
is consistent with what is or will be used in the tax returns of the entity and no further liability is recognised.
However, if it is not probable that a tax authority will accept a particular uncertain tax position then the
income tax accounting is adjusted generally by recognising an additional liability. The adjustment could also
be a decrease in tax receivables or an adjustment to deferred tax balances, depending on the tax position. The
uncertain tax position is measured using either the most likely amount or the expected value, depending on
which is thought to give a better prediction of the resolution of each uncertain tax position.
The classification as deferred or current tax is often encumbered with uncertainty due to the nature of these
disputes and effects within joint taxation including calculated interest, and final assessments could impact the
classifications and estimates of the disputes.
Estimation has been applied in the measurement of deferred tax assets with respect to Maersk Drilling’s ability
to utilise the assets. Management considers the likelihood of utilisation based on the latest business plans and
recent financial performances of the individual entities.
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 75
Financials
Note 2.6 Other receivables
Note 2.7 Prepayments
USD Million 2021 2020
Derivatives -
Deposits
VAT and similar receivables
Costs to be reimbursed
Other
Total
USD Million 2021 2020
Mobilisation and start-up costs (costs to fulfil contracts)
Other
Total
Prepayments comprise consumables and prepaid costs including mobilisation and start-up costs that are
considered costs to fulfil contracts under IFRS 15 (contract assets). For contract assets, any need for loss
provisions are estimated using the simplified approach under IFRS 9.
Note 2.8 Provisions
USD Million Restructuring Legal
disputes, etc.
Total
1 January 2020
Provision made
Amount used - - -
Amount reversed - - -
31 December 2020
Of which:
Classified as non-current -
Classified as current
1 January 2021
Provision made
Amount used - - -
Amount reversed - - -
31 December 2021 -
Of which:
Classified as non-current -
Classified as current -
No provisions are expected to be realised after more than five years.
Provisions are recognised when Maersk Drilling has a present legal or constructive obligation from past
events. The item includes, among other, provisions for legal disputes, disputes over indirect taxes or duties and
provisions for decided and publicly announced restructuring. Provisions are recognised based on best estimates
and are discounted where the time element is significant and where the time of settlement is reasonably
determinable.
Reversals of provisions primarily relate to settlement of contractual disagreements, which are recognised in the
income statement under operating costs.
Management’s estimate of the provisions in connection with legal disputes, including disputes on indirect taxes
and duties, is based on the knowledge available on the actual substance of the cases and a legal assessment
of these. The resolution of legal disputes, through either negotiations or litigation, can take several years to
complete and the outcome is subject to considerable uncertainty.
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 76
Financials
Note 2.9 Other payables
USD Million 2021 2020
Derivatives -
Interest payable
VAT, duties and similar payables
Payables to staff and management
Other
Total
At 31 December 2021, payables to staff and management amount to USD 39m (2020: USD 38m) of which USD 10m
(2020: USD 10m) related to the transition period in connection with the change of Danish Holiday Act which may
only be settled after 12 months from the balance sheet date.
Note 2.10 Contract balances
USD Million Note 2021 2020
Contract assets
Mobilisation and start-up costs (costs to fulfil contracts)
Costs to be reimbursed
Total
Contract liabilities
Deferred income relating to mobilisation and start-up
Total
Revenue recognised in 2021 that was included in the contract liability at the beginning of each year relates to
mobilisation fees and income on rechargeable projects from customers that are deferred and recognised over the
contract term. The amount recognised in 2021 was USD 36m (2020: USD 14m).
Costs to fulfil contracts relate to mobilisation and start-up costs paid that are deferred and recognised over the
contract term. The amount recognised in 2021 was USD 34m (2020: USD 29m).
Amounts allocated to performance obligations that are to be completed under existing contracts (the service
element in contracts) are set out in note 1.2.
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 77
Financials
Note 2.11 Cash flow specifications
USD Million 2021 2020
Working capital
Trade receivables
Other receivables excluding derivatives and capex receivables
Prepayments
Trade payables excluding capex payables - -
Other payables excluding interest accruals and derivatives - -
Deferred income - -
Net working capital
Change in working capital in balance sheet -
Non-cash movements including exchange rate adjustment
Change in working capital in cash flow statement -
USD Million Note 2021 2020
Purchase of intangible assets and property, plant and equipment
Additions to Intangible assets - -
Additions to Property, plant and equipment - -
Change in payables/receivables relating to capital expenditures -
Total - -
Share capital
The share capital comprises 41,532,112 shares of DKK 10 each. The Company has only one share class, and all shares
hold one vote. No shares hold special rights, preferences or restrictions. All shares are fully paid up.
Note 3.1 Equity
2021 2020
No of shares at 1 January
No of shares at 31 December
Treasury shares at 1 January -
Acquired through share buy-backs
Delivered under long-term incentive programmes - -
Treasury shares at 31 December
Average number of shares in circulation
1 The number of shares issued upon incorporation of the Company on 2 April 2019.
Reserves
The reserve for hedges is the only reserve presented in the consolidated statement of changes in equity. The reserve
for hedges represents the accumulated fair value of hedging instruments qualifying for cash flow hedge accounting,
net of tax. The reserve is transferred to the income statement when the hedged transaction is settled.
The Group does not have a translation reserve as all material subsidiaries have the United States Dollar (USD) as
their functional currency.
Other comprehensive income
Other comprehensive income consists of income and costs not recognised in the income statement, cash flow
hedges as well as actuarial gains/losses on defined benefit plans, etc. Other comprehensive income includes current
and deferred income tax to the extent that the items recognised in other comprehensive income are taxable or
deductible.
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 78
Financials
The overall objective of the financial policy is to enable Maersk Drilling to manage through the cyclicality that
characterises the offshore drilling industry with an aim to create long-term shareholder value.
The financial policy ensures:
• Financial flexibility including adequate liquidity reserves;
• A long-term funding view to minimise refinancing risk; and
• A robust capital structure through the business cycle.
In order to meet these objectives, free cash flow is to be allocated based on the following prioritisation:
1. Maintain a robust capital structure with sufficient funding available to support the business through the cycle;
2. Pursue investment opportunities supporting long-term shareholder value creation; and
3. Return surplus capital to shareholders.
Maersk Drilling will generally work towards a leverage ratio (net debt divided by EBITDA before special items) of
around 2.5x.
This means that if the leverage ratio is below 2.5x and capital is not committed towards investments, Maersk
Drilling will seek to return capital to shareholders by means of dividends and/or share buy-backs but may choose to
retain capital in order to have financial flexibility.
If value adding investment opportunities that require additional funding arise, or if EBITDA is reduced in a business
down-cycle, the leverage may exceed the target level of around 2.5x for a period of time.
Note 3.2 Capital structure and capital allocation Note 3.3 Borrowings and net debt reconciliation
USD Million 2021 2020
Borrowings
Term loans
Lease liabilities
Total borrowings
Of which:
Classified as non-current
Classified as current
USD Million 2021 2020
Net debt reconciliation
Borrowings
Total financial liabilities and assets from financing activities
Cash and bank balances - -
Net debt
Financial liabilities are initially recognised at fair value less transaction costs. Subsequently, the financial
liabilities are measured at amortised cost using the effective interest method, whereby transaction costs and
any premium or discount are recognised as financial expenses over the term of the liabilities.
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 79
Financials
USD Million 2021 2020
Change in financial liabilities and assets from financing activities
1 January
Repayment of borrowings - -
Non-cash changes:
Foreign exchange adjustments -
Discounting/amortisation
New lease obligations
Disposal of lease obligations - -
31 December
In addition to the collateral rigs set out in note 2.2, certain bank accounts and shares in the subsidiaries being
owners of the collateral rigs and certain intra-group charterers in respect of the collateral rigs are pledged as
security for term loans and credit facilities with a carrying amount at 31 December 2021 of USD 1,037m (2020:
1,254m). In certain circumstances, earnings in respect of drilling contracts for the collateral rigs will be assigned in
favour of the lenders under the loan agreements.
Financial risk management
The Group's operating and financing activities expose it to a variety of financial risks, comprising:
• Liquidity risk
• Interest rate risk
• Currency risk
• Credit risk
Management of these financial risks is carried out by a central treasury department under policies approved by
the Board of Directors. The treasury department identifies, evaluates and hedges each financial risk if appropriate.
The Group’s overall financial risk management programme focuses on the unpredictability of financial markets and
seeks to minimise the potential adverse effects on the Group’s financial performance. The Group uses derivative
financial instruments to hedge certain risks.
Exposure from each of the financial risks, together with the Group's policies and mitigation procedures are further
described below.
Note 3.4 Financial risksNote 3.3 Borrowings and net debt reconciliation
– continued
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 80
Financials
USD Million Cash flows including interest
Carrying
amount
0-1 year 1-5 years 5- years Total
Maturities of liabilities
and commitments
2021
Term loans -
Lease liabilities
Trade and other payables - -
Derivatives -
Total recognised in balance sheet
Capital commitments -
Total
2020
Term loans -
Lease liabilities
Trade and other payables - -
Derivatives - -
Total recognised in balance sheet
Capital commitments -
Total
Liquidity risk is the risk that Maersk Drilling will encounter difficulty in meeting its obligations when they occur or
ceasing to have access to adequate funding to pursue its strategic ambitions.The overall objective is to maintain
adequate liquidity reserves to meet the Group's obligations and to withstand volatility in cash flow from operations.
The Group’s revenue backlog provides visibility into the Group’s future cash flow generation and is a key component
in the Group’s mitigation of the liquidity risk inherent in the Group's financial liabilities. At 31 December 2021, the
Group had a revenue backlog of USD 1,896m (31 December 2020: USD 1,327m) which provides clarity of the Group’s
ability to meet its obligations as they fall due.
The Group has a centralised and structured approach to liquidity, capital funding and cash management, focusing
on repatriating and concentrating cash. Short-term funding of subsidiaries is handled by the central treasury
department, primarily through a group wide cash pool structure.
The liquidity reserve, which consists of cash and bank balances, loans receivable plus the aggregate amount of
undrawn or unutilised committed credit facilities that remain committed for a period of not less than 365 days,
amounts to USD 957m (2020: USD 626m).
The Group’s USD 400m revolving credit facility remains undrawn. The Group's loan facilities including its revolving
credit facility contain customary representations, certain covenants and undertakings (including on minimum
requirements of the aggregate fair market value and insurance of the pledged rigs, customary restrictions on the
flag and classification society applicable to the pledged rigs and restrictions on creating liens on the pledged rigs)
and customary events of default (in each case, subject to customary agreed exceptions, materiality tests, carve-
outs and grace periods). In addition, the loan facilities contain minimum free liquidity, leverage ratio and equity ratio
financial covenants, with which the Group must comply throughout the tenor of the facilities. The covenants have all
been complied with in 2021.
The maturities of the Group's total loan facilities, comprising term loans drawn in full and the undrawn committed
revolving facility, are illustrated in the chart below.
Note 3.4 Financial risks – continued | Liquidity risk
0
300
600
900
1,200
USDm
130
130
400
684
212
24
RCF
2022 2023 2024 2025
Drawn facility amounts Undrawn RCF
Maturity of loan facilities
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 81
Financials
Interest rate risk is the risk that future cash flows from financial instruments will fluctuate because of changes in
market interest rates. The interest rate exposure arises from loans and other credit facilities carrying floating interest
rates. The exposure towards interest rates is mitigated by entering into fixed rate loans or interest rate swaps.
Maersk Drilling's policy is that a minimum of 50% of the gross debt is at fixed interest rates using a model under
which a larger proportion of risk is hedged in the short to medium term and a smaller proportion is hedged in the
longer term. As of 31 December 2021, the average fixed ratio of gross funding is 52% for the whole term with 53%
and 49% for 2022 and 2023, respectively. As of 31 December 2020, the average fixed ratio of gross funding was 54%
for the whole term with 62% and 49% for 2021 and 2022, respectively. At 31 December 2021, the weighted average
duration of term loans was 0.9 years ( 2020: 1.5 years).
Part of Maersk Drilling’s debt facilities apply the US LIBOR as reference rate. The US LIBOR reference rate will expire
in June 2023. However, as Maersk Drilling plans to refinance its debt either as part of the merger with Noble or by
itself before June 2023, no impact is expected from this change.
Currency risk is the risk that future cash flows will fluctuate because of changes in foreign exchange rates. The
currency exposure arises from Maersk Drilling operating in countries with different local currencies. Revenue is
primarily denominated in USD, the functional currency of all material entities in the Group, while related operating
expenses are incurred in both USD and local currencies. The Group’s net liability is also primarily denominated in
USD and only a minimum of the Group’s other net liability is in other currencies such as DKK.
The exposure to changes in foreign exchange rates is mitigiated by entering into customer contracts where an
element of the contract value is in local currency to create a natural hedge between the contracted revenue and
local operating costs. Subsequently, foreign exchange forwards are used to hedge any excess exposure.
Exposure to currency risk is generally low and does not significantly affect the Group’s profit or the value of financial
instruments. It is the Group's policy to hedge significant net cash flows in currencies other than USD using a layered
model with a 12-month horizon.
Cash kept in countries with limited access to repatriating surplus cash is subject to currency risks. As of 31 December,
the Group had the equivalent of USD 13m of restricted cash (2020: USD 14m).
Currency sensitivity
Depreciation of the most material currencies in which Maersk Drilling trades (DKK, NOK, EUR, GBP, EGP, SGD, AUD, GHS,
BRL and AOA) against USD by five percent is estimated to increase profit for the year by USD 0m and decrease other
comprehensive income (and thereby equity) by USD 3m (2020: increase profit for the year by USD 3m and decrease
other comprehensive income (and thereby equity) by USD 3m). This analysis is based on financial instruments at
31 December, and assumes that all other variables remain constant. A five percentage point appreciation would have
a corresponding inverse effect.
Interest rate sensitivity
An increase in interest rates by one percentage point is estimated to decrease profit for the year by USD 5m and
increase other comprehensive income (and thereby equity) by USD 9m (2020: decrease profit for the year by USD 5m
and increase other comprehensive income (and thereby equity) by USD 14m). This analysis is based on borrowings
and loans receivable at 31 December, and assumes that all other variables remain constant. A one percentage point
decrease would have a corresponding inverse effect.
Currency risk
USD Million Next interest rate fixing
Carrying
amount
0-1 year 1-5 years 5- years
Borrowings by interest rate levels
inclusive of interest rate swaps
2021
<3% -
3–6%
Total
2020
<3%
3–6%
Total
Note 3.4 Financial risks – continued | Interest rate risk
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 82
Financials
The Group has exposure to commercial and financial counterparties.
For drilling contracts, credit risk is minimised by undertaking a credit assessment of the counterparty prior to
entering into the contracts. Depending on the creditworthiness, the Group may seek protection, in form of parent
company guarantees, pre-payments or other type of security.
In 2021, revenue from three major international oil companies, which individually account for more than 10% of
revenue, represented 57% (2020: 69%) of the Group’s revenue. The credit risks associated with these significant
customers are considered limited.
For financial counterparties, the credit risk is minimised by applying credit limits and transacting with financial institutions
with a strong credit rating defined as a minimum credit rating of ‘A3’, ‘A-‘ and/or ‘A-‘ for Moody’s, S&P or Fitch, respectively.
For derivatives, counterparties with an investment rating grade may be used. A limited number of geographies are not
serviced by our relationship banks and have no operations by financial counterparties with a satisfactory credit rating.
Financial assets at amortised cost comprise loans receivable and other receivables. These are all considered to have
low credit risk and thus the impairment provision calculated on the basis of 12 month expected losses is considered
immaterial. The financial assets are considered to be low risk when they have low risk of default and the issuer has a
strong capacity to meet its contractual cash flow obligations in the near term.
Receivables are initially recognised at fair value, plus any direct transaction costs and subsequently measured
at amortised cost using the effective interest method. The Group applies the simplified approach to providing
the expected credit losses prescribed by IFRS 9, which permits the use of the lifetime expected loss provision
for all trade receivables. Customer contracts do not include unusual payment terms or material financing
components. To measure the expected credit losses, trade receivables have been grouped based on shared
credit risk characteristics and the days past due. In accordance with IFRS 9, non-due trade receivables have also
been considered for expected credit losses.
For loans receivable and other receivables than trade receivables, the initial impairment provision is calculated on the basis of
12 month expected credit losses. If a significant increase in credit risk occurs, lifetime expected credit losses are recognised.
The Group enters into derivative transactions in order to mitigate foreign exchange rate exposure related to costs
incurred in local currencies and interest rate exposure on term loans. The derivative transactions comprise foreign
exchange forward and swap contracts and interest rate swaps. Foreign exchange derivative contracts are used to
hedge the currency risk related to recognised and unrecognised transactions, of which the majority are designated
as cash flow hedges. Interest rate swaps are used to swap variable interest payments on term loans to fixed interest
payments. All interest rate swaps are designated as cash flow hedges.
Derivative financial instruments are recognised on the trading date and measured at fair value using generally
acknowledged valuation techniques based on relevant observable swap curves and exchange rates.
The effective portion of changes in the value of derivative financial instruments designated to hedge highly probable
future transactions is recognised in other comprehensive income until the hedged transactions are realised. At that
time, the cumulated gains/losses are transferred to the items under which the hedged transactions are recognised.
The ineffective portion of hedge transactions and changes in the fair values of derivative financial instruments,
which do not qualify for hedge accounting, are recognised in the income statement as financial income or expenses.
Currency derivatives designated as cash flow hedges are mainly realised within one year, whereas interest rate swaps
designated as cash flow hedges generally mature over two years.
The notional value of currency derivative contracts at 31 December amounts to:
The majority of currency derivative contracts hedge future cash outflows, hence the respective foreign currencies
are purchased and USD is sold.
The notional amount of interest rate swaps at 31 December 2021 amounts to USD 616m (2020: USD 652m) and all
swaps are denominated in USD.
The average fixed rate of the interest rate swaps is 2.1% (2020: 2.7%), which jointly with margins and fees paid
results in an average 2020 interest cost of around 4.8% (2020: 5%).
Fair value of derivative contracts are recognised as non-current derivatives at USD 16m (2020: USD 33m) and for the
current part in other payables at USD 3m (2020: USD 4m in other receivables).
Note 3.5 Derivatives
USD Million 2021 2020
Maturity analysis of trade receivables
Receivables not due
Less than 90 days overdue
More than 90 days overdue
Receivables, gross
Expected credit loss - -
Carrying amount
USD Million 2021 2020
Foreign
currency
USD Foreign
currency
USD
DKK/USD
AUD/USD - -
Note 3.4 Financial risks – continued | Credit risk
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 83
Financials
The gains/losses, including realised transactions, are recognised as follows:
Movement in reserve for hedges can be specified as follows:
Note 3.5 Derivatives – continued
USD Million 2021 2020
Hedging foreign exchange risk on operating costs -
Hedging interest rate risk - -
Total reclassified from equity reserve for hedges - -
Derivatives accounted for as held for trading
Currency derivatives recognised directly in financial income/expenses -
Net gains/losses recognised directly in the income statement -
Total - -
USD Million 2021
Foreign
exchange risk
Interest
rate risk
Total
Reserve for hedges 1 January - -
Value adjustment of hedges for the year - -
Reclassified to income statement -
Reserve for hedges 31 December - - -
USD Million 2020
Foreign
exchange risk
Interest
rate risk
Total
Reserve for hedges 1 January - - -
Value adjustment of hedges for the year - -
Reclassified to income statement -
Reserve for hedges 31 December - -
Note 3.6 Financial instruments by category
USD Million 2021 2020
Carrying
amount
Fair
value
Carrying
amount
Fair
value
Carried at amortised cost
Trade receivables
Other receivables (non-interest-bearing)
Cash and bank balances
Financial assets at amortised cost
Carried at fair value
Derivatives - -
Financial assets at fair value - -
Total financial assets
Carried at amortised cost
Term loans
Lease liabilities
Total borrowings
Trade payables
Other payables
Financial liabilities at amortised cost
Carried at fair value
Derivatives
Financial liabilities at fair value
Total financial liabilities
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 84
Financials
Note 4.1 Earnings per share
Financial instruments measured at fair value
Financial instruments carried at fair value can be divided into three levels:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 – Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices);
Level 3 – Inputs for the asset or liability that are not based on observable market data.
Fair value of derivatives fall within level 2 of the fair value hierarchy and is calculated on the basis of observable
market data as of the end of the reporting period. The Group has no financial instruments within level 3.
Financial instruments carried at amortised cost
Fair value of the short-term financial assets and other financial liabilities carried at amortised cost is not materially
different from the carrying amount. In general, fair value is determined primarily based on the present value of
expected future cash flows. Where a market price was available, however, this was deemed to be the fair value.
Fair value of the borrowing items falls within level 2 of the fair value hierarchy and is estimated on the basis of
discounted future cash flows.
The fair value of loans receivable and borrowings against related parties have a floating interest rate and the fair
value is assessed to be similar to the carrying amount.
Note 3.6 Financial instruments by category – continued
2021 2020
Total number of shares
Average number of treasury shares
Average number of shares in circulation
Average dilution effect from shares outstanding under the LTI programme -
Diluted average number of shares in circulation
Earnings per share amounted to USD 7.0 (2020: USD -39.9) and diluted earnings per share USD 7.0 (2020: USD -39.9).
Earnings per share is equal to profit/loss for the year divided by the average number of shares in circulation or the
average diluted number of shares in circulation.
At 31 December 2021, a potential dilution effect from 293,027 shares (31 December 2020: 176,793 shares)
outstanding under the long-term incentive programme (see note 4.3 below) are included in the calculation of
diluted earnings per share, while in 2020 it was excluded as the inclusion would have resulted in a reduction in the
loss per share.
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 85
Financials
The term loans and credit facilities set out in note 3.2 may become repayable in whole or in part on the occurrence
of certain events including a change of control over the Company. Except for these and for customary agreements
within the Group’s activities, no material agreements have been entered into that will take effect, change or expire
upon changes of the control over the Company.
The Group is also involved in legal and tax disputes in certain countries. Some of these are subject to considerable
uncertainty as described in notes 2.5 and 2.8.
Through participation in a joint taxation scheme with A.P. Møller Holding A/S, the Danish companies are jointly and
severally liable for taxes payable in Denmark.
Following the demerger from the A.P.Moller - Maersk group, Maersk Drilling is subject to a statutory demerger
liability. In the event that A.P. Møller - Mærsk A/S defaults on its obligations, The Drilling Company of 1972 A/S will
be liable for any obligations of A.P. Møller - Mærsk A/S existing at the date of publication of the demerger plan on
4 March 2019. Similarly, A.P. Møller - Mærsk A/S will be liable for any obligations assigned to The Drilling Company
of 1972 A/S existing at that date. The potential liability for Maersk Drilling is capped at a maximum amount equal
to the net value of the assets and liabilities contributed as part of the demerger. The risk of the statutory liability
materialising will generally persist for three years from the demerger date and potentially up to thirty years for
unknown claims.
Capital commitments
The Group has capital commitments relating to acquisition of non-current assets totalling USD 38m (2020:
USD 30m).
Note 4.2 Contingent liabilities and commitments
Restricted share units in the Drilling Company of 1972 A/S
Following the listing on 4 April 2019, Maersk Drilling implemented a long-term incentive programme (the “LTI”) and
a one-time transition grant was awarded to certain employees. Maersk Drilling believes that providing remuneration
in the form of shares to appropriate levels of management promotes sustainable long-term value creation and
ensures alignment of interests with its shareholders.
Under the LTI and transition grant the Executive Management, Key Employees and certain other employees received
a number of restricted share units (“RSUs”). The vesting period for the RSUs is three years from the date of grant.
Except for RSUs granted as part of the exchange grant, the Executive Management will not be able to sell any shares
vesting until the total period from grant (inclusive of the vesting period) is five years, i.e. a holding period of two
years in addition to the three-year vesting period. Executive Management and other Key Management Personnel are
also subject to a share ownership requirement of twice the annual LTI grant level applicable.
The transfer of restricted shares is contingent on the participants still being employed and not being under notice of
termination and generally takes place when three years have passed from the time of grant. The participants are not
entitled to any dividend during the vesting period. Special conditions apply regarding illness, death and resignation
as well as changes in capital structure.
In 2021, 130,576 RSUs have been granted under the LTI ( 2020: 90,120 RSUs).
Note 4.3 Share-based payments
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 86
Financials
The fair value of restricted shares granted to four Key Management Personnel (2020: four) and to 34 Other
employees (2020: 38) was USD 5m (2020: USD 2m) at the time of the grant. Total expense recognised in the income
statement in 2021 for granted restricted shares was a cost of USD 4m (2020: USD 2m).
The average fair value per restricted share at the time of grant was DKK 249 / USD 40 (DKK 134 / USD 20), which is
equal to the closing price of the day of the grant.
The average remaining contractual life for the restricted shares as per 31 December 2021 was 1.4 years (2020:
1.7 years).
Equity settled restricted shares allocated to employees as part of Maersk Drilling’s long-term incentive
programme are recognised as staff costs over the vesting period at estimated fair value at the grant date and a
corresponding adjustment in equity.
At the end of each reporting period, Maersk Drilling revises its estimates of the number of awards that are
expected to vest based on the non-market vesting conditions and service conditions. Any impact of the revision
is recognised in the income statement with a corresponding adjustment to equity.
The A.P. Moller - Maersk Group’s Restricted Shares Plan
In prior years, certain Executives and employees participated in the A.P. Moller - Maersk Group's incentive
programmes. The A.P. Moller - Maersk Group’s Restricted Shares Plan was introduced in 2013 and grants have
been awarded to employees on a yearly basis since then. The transfer of restricted shares was contingent on the
employee still being employed and not being under notice of termination and took place when three years have
passed from the time of granting.
To ensure that the Executive Management, other key executives and certain other employees in Maersk Drilling
had an equity interest in the Company from the date of the demerger, they were required to forfeit all unvested
A.P. Møller - Mærsk A/S shares and share options as of 1 January 2019. The individuals instead received restricted
share units in Maersk Drilling (the “exchange grant”). A total of 1,138 restricted share units (B-shares in A.P. Møller -
Mærsk A/S) were converted to restricted share units in The Drilling Company of 1972 A/S of a corresponding value.
981 of these related to Key Management Personnel and 157 related to other employees.
Note 4.3 Share-based payments – continued
Shares in The Drilling Company of 1972 A/S
Restricted
Shares Plan
Key Management
Personnel
Restricted
Shares Plan
Other
employees
Total
fair value
Outstanding awards under
equity-settled incentive plans
No No USD Million
1 January 2020
Granted
Vested - -
Forfeited/cancelled - -
Outstanding 31 December 2020
Granted
Vested -
Forfeited/cancelled - -
Outstanding 31 December 2021
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 87
Financials
No events have occurred after the balance sheet date which are expected to have a material impact on the
consolidated financial statements.
Note 4.5 Subsequent events
The following related parties have a controlling interest in The Drilling Company of 1972 A/S
The A.P. Møller og Hustru Chastine Mc-Kinney Møllers Fond til Almene Formaal (Copenhagen, Denmark) and its
subsidiary A.P. Møller Holding A/S (Copenhagen, Denmark) have control over APMH Invest A/S (Copenhagen,
Denmark). APMH Invest A/S is considered to hold a controlling interest in The Drilling Company of 1972 A/S.
There have been no material transactions with controlling parties.
Key Management Personnel
Related parties include the Group’s Key Management Personnel. There have been no transactions with Key
Management Personnel other than remuneration, which is disclosed in note 1.3 and 4.3.
Other related parties
The Board of Directors and the Executive Management of A.P. Møller og Hustru Chastine Mc-Kinney Møllers Fond til
Almene Formaal, A.P. Møller Holding A/S, APMH Invest A/S, and their close relatives including undertakings under
their significant influence are also considered related parties. This includes subsidiaries and affiliates to A.P. Møller
Holding A/S, including A.P. Møller - Mærsk A/S and its subsidiaries and affiliates and Danske Bank A/S.
1 Relates to on demand bank deposits on customary terms and borrowings with Danske Bank. Refer to note 3.3 in
relation to terms of the borrowings.
Note 4.4 Related parties
USD Million Other related parties
2021 2020
Income statement
Revenue
Costs
Financial income
Financial expenses
Assets
Trade receivables -
Derivatives -
Cash and bank balances
Liabilities
Borrowings
Trade payables
Derivatives
Other payables -
Dividends declared - -
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions Statements
Maersk Drilling Annual Report 2021 88
Financials
Parent company
financial statements
2021
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions StatementsMaersk Drilling Annual Report 2021 89Financials
Income statement
USD Million Note 2021 2020
Revenue - -
Costs - -
Gross result - -
Depreciation of property, plant and equipment
Impairment of investments in subsidiaries - -
Profit/loss before financial items - -
Financial income
Financial expenses - -
Profit/loss before tax - -
Tax
Profit/loss for the year - -
Appropration:
Retained earnings - -
- -
The Drilling Company of 1972 A/S
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions StatementsMaersk Drilling Annual Report 2021 90Financials
Balance sheet at 31 December
USD Million Note 2021 2020
Non-current assets
Property, plant and equipment
Investments in subsidiaries
Total non-current assets
Current assets
Receivables
Current tax receivables, joint taxations -
Current tax receivables -
Derivatives, current -
Receivables from subsidiaries and group enterprises
Prepayments, etc.
Receivables, etc.
Cash and bank balances
Total current assets
Total assets
USD Million Note 2021 2020
Share capital
Retained earnings
Total equity
Non-current liabilities
Borrowings, non-current
Derivatives, non-current
Other non-current liabilities
Total non-current liabilities
Current liabilities
Borrowings, current
Provisions, current -
Payables to subsidiaries and group enterprises
Current tax payables, joint taxations -
Current tax payables -
Derivatives, current -
Other payables, etc., current
Other current liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
The Drilling Company of 1972 A/S
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions StatementsMaersk Drilling Annual Report 2021 91Financials
Statement of changes in equity
USD Million Share capital Retained
earnings
Total equity
2020
Equity 1 January 2020
Profit/loss for the year - -
Purchase of own shares - - -
Equity 31 December 2020
2021
Profit/loss for the year - - -
Equity 31 December 2021
The share capital comprises 41,532,112 shares of DKK 10. The Drilling
Company of 1972 A/S was incorporated on 2 April 2019 in connection
with the separation of the Maersk Drilling activities from the
A.P. Moller - Maersk Group with financial effect from 1 January 2019.
During 2020, the Company bought back 245,000 (0.6%) of its own
shares at a total consideration of USD 5m and delivered 1,836
shares (0.004%) under its long-term incentive programme without
consideration.
During 2021, the Company delivered 1,767 shares (0.004%) under
its long-term incentive programme without consideration. On
31 December 2021, the Company held a total of 241,397 treasury
shares, corresponding to 0.6% of the share capital, which will be
used to cover obligations under the long-term incentive programme.
The Drilling Company of 1972 A/S
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions StatementsMaersk Drilling Annual Report 2021 92Financials
Notes
96 Note 7 – Related parties
97 Note 8 – Significant accounting policies
98 Note 9 – Significant accounting
estimates and judgements
98 Note 10 – Events after the balance sheet date
94 Note 1 – Costs
94 Note 2 – Financial income and expenses
94 Note 3 – Property, plant and equipment
95 Note 4 – Investments in subsidiaries
95 Note 5 – Borrowings
96 Note 6 – Contingent liabilities
The Drilling Company of 1972 A/S
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions StatementsMaersk Drilling Annual Report 2021 93Financials
The Drilling Company of 1972 A/S
Except for the Executive Management, The Drilling Company of 1972 A/S did not have other employees in 2021,
as all personnel are employed in affiliated companies. For remuneration of the Board of Directors and Executive
Management, reference is made to notes 1.3 and 4.3 in the consolidated financial statements.
2021 costs include USD 8m merger related costs, reference is made to note 1.4 in the consolidated financial
statement.
Note 1 Costs Note 2 Financial income and expenses
USD Million 2021 2020
Interest income -
Interest income from group enterprises
Exchange rate gains on bank balances, borrowings and working capital
Gains on currency derivatives -
Gain on interest rate derivatives -
Financial income
Interest expenses - -
Interest expenses to group enterprises - -
Loss on interest rate derivatives - -
Exchange rate losses on bank balances, borrowings and working capital - -
Financial expenses - -
Financial expenses, net - -
Note 3 Property, plant and equipment
USD Million Land &
Buildings
Total
Cost
1 January 2021
Additions - -
31 December 2021
Depreciation and impairment losses
1 January 2021
Depreciation
31 December 2021
Carrying amount
31 December 2021
USD Million 2021 2020
Fees to the statutory auditors
Statutory audit
Other assurance services -
Tax and VAT advisory services - -
Other services - -
Total fees
Fees for other services than statutory audit of the financial statements provided by PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab amounted to USD 0.8m in 2021 (nil in 2020). The other non-audit services
in 2021 mainly consisted of financial data review for merger purposes.
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions StatementsMaersk Drilling Annual Report 2021 94Financials
The Drilling Company of 1972 A/S
At 31 December 2021, notional borrowings amounting to USD 1,050m had a carrying amount of USD 1,037m, none of
which mature after more than five years.
Interest rate risk
Interest rate risk comprises the risk that future cash flows from financial instruments will fluctuate because of
changes in market interest rates. The interest rate exposure arises from loans and other credit facilities carrying
floating interest rates. The exposure towards interest rates is mitigated by entering into fixed rate loans or interest
rate swaps.
The Company enters into interest rate swaps in order to mitigate interest rate exposure on term loans. Interest
rate swaps are used to swap variable interest payments on term loans to fixed interest payments. The interest rate
swaps mature over up to five years. The Company does not apply hedge accounting and changes in the fair values of
derivative financial instruments are recognised in the income statement as financial income or expenses.
The notional amount of interest rate swaps at 31 December 2021 amounts to USD 616m (2020: USD 652m) and all
swaps are denominated in USD.
The average fixed rate of the interest rate swaps is 2.1% (2020: 2.7%), which jointly with margins and fees paid
results in an average 2021 interest cost of around 4.8% (2020: 5%).
Note 5 BorrowingsNote 4 Investments in subsidiaries
USD Million Investments in subsidiaries
Cost
1 January 2021
Additions -
31 December 2021
Impairment losses
1 January 2021
Impairment losses -
31 December 2021
Carrying amount
31 December 2021
Valuation of Investment in subsidiaries
At 31 December 2021, the carrying amount of the investment in subsidiaries was considered for impairment. No
impairment was recognised as the carrying amount of the investment does not exceed the carrying amounts in the
consolidated financial statements of the investee’s net assets.
At 30 December 2020, an impairment of USD 1,719m was recognised, primarily due to impairment of assets in
subsidiaries. The impairment was presented separately in the income statement and considered a special item due
to its nature.
Reference is made to note 2.4 in the consolidated financial statements for a description of the key assumptions
applied in the impairment test.
List of subsidiaries
Reference is made to page 99 for a list of subsidiaries. Maersk Drilling Holding A/S, which was the only direct
subsidiary of the Company, was merged in 2021 into Maersk Drilling A/S, which now became the only direct
subsidiary of the Company.
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions StatementsMaersk Drilling Annual Report 2021 95Financials
The A.P. Møller og Hustru Chastine Mc-Kinney Møllers Fond til Almene Formaal (Copenhagen, Denmark) and its
subsidiary A.P. Møller Holding A/S (Copenhagen, Denmark) have control over APMH Invest A/S (Copenhagen,
Denmark). APMH Invest A/S is considered to hold a controlling interest in The Drilling Company of 1972 A/S.
obtained by contacting this company or at its website www.apmoller.com.
Related parties include the Company's Board of Directors and Executive Management. Remuneration hereof is
disclosed in note 1.3 in the consolidated financial statements.
Other related parties
The Board of Directors and the Executive Management of A.P. Møller og Hustru Chastine Mc-Kinney Møllers Fond
til Almene Formaal, A.P. Møller Holding A/S, APMH Invest A/S and their close relatives including undertakings under
their significant influence are also considered related parties. This includes subsidiaries and affiliates to A.P. Møller
Holding A/S, including A.P. Møller - Mærsk A/S and its subsidiaries and affiliates and Danske Bank A/S.
All transactions with related parties have been conducted at arm’s length.
Note 7 Related parties
The Drilling Company of 1972 A/S
Shares in the subsidiary Maersk Drilling A/S are pledged as security for borrowings with a carrying amount at
31 December 2021 of USD 1,037m and undrawn credit facilities of USD 400m.
The Company is jointly taxed with all other Danish companies in the A.P. Møller Holding Group. As a fully owned
subsidiary, the Company has unlimited and joint liability together with the other companies under joint taxation for
Danish company tax, withholding taxes on dividends, interest and royalties within the jointly taxed companies.
Following the demerger from the A.P. Moller - Maersk Group, The Drilling Company of 1972 A/S is subject to a
statutory demerger liability. In the event that A.P. Møller - Mærsk A/S defaults on its obligations, The Drilling
Company of 1972 A/S will be liable for any obligations of A.P. Møller - Mærsk A/S existing at the date of publication
of the demerger plan on 4 March 2019. Similarly, A.P. Møller - Mærsk A/S will be liable for any obligations assigned
to The Drilling Company of 1972 A/S existing at that date. The potential liability for The Drilling Company of 1972 A/S
is capped at a maximum amount equal to the net value of the assets and liabilities contributed as part of the
demerger. The risk of the statutory liability materialising will persist for three years from the demerger date, and
potentially up to thirty years for unknown claims.
The company and its subsidiaries are involved in a number of legal disputes. The company and its subsidiaries are
also involved in tax disputes in certain countries. Some of these involve significant amounts and are subject to
considerable uncertainty.
Note 6 Contingent liabilities
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions StatementsMaersk Drilling Annual Report 2021 96Financials
Dividends from subsidiaries
Dividends from subsidiaries are recognised as income at the time of declaration.
Financial income and expenses
Financial income and expenses are recognised in the income statement at the amounts relating to the financial year.
Tax on result for the year
Tax for the year consists of current tax for the year and changes in deferred tax for the year. The tax attributable to
the result for the year is recognised in the income statement, whereas the tax attributable to equity transactions
is recognised directly in equity. The Company is part of A.P. Møller Holding A/S’ joint taxation. The current Danish
income tax is allocated among the jointly taxed companies proportionally to their taxable income (full allocation
with refund concerning tax losses).
Balance sheet
Property, plant and equipment
Property, plant and equipment comprise land and buildings contributed as part of the demerger. Land and buildings
are valued at cost less accumulated depreciation and impairment losses. Depreciation is charged to the income
statement on a straight-line basis over the useful lives to an estimated residual value. Useful lives are estimated at
25-40 years.
Investments in subsidiaries
Investments in subsidiaries are measured at cost or at lower recoverable amount.
If indications of impairments are identified, an impairment test as described in the accounting policies for the
consolidated financial statements is prepared. If the recoverable amount is lower than the carrying amount, the
asset is written down to its lower recoverable amount. Indicators of impairment could be if dividends declared from
the subsidiary exceed total comprehensive income for the year of the subsidiary, or if the carrying amount of the
subsidiary exceeds the carrying amount of the net assets in the subsidiary.
Receivables
Receivables are measured in the balance sheet at the lower of amortised cost and net realisable value, which
corresponds to nominal value less provisions for bad debts. Provisions for bad debts are determined on the basis of
an individual assessment of each receivable.
The Drilling Company of 1972 A/S
The Financial Statements of The Drilling Company of 1972 A/S for 2021 have been prepared in accordance with the
provisions of the Danish Financial Statements Act applying to reporting class D entities.
Basis of preparation
The Drilling Company of 1972 A/S was incorporated on 2 April 2019 in connection with the separation of the Maersk
Drilling activities from the A.P. Moller - Maersk Group with financial effect from 1 January 2019.
Cash flow statement
With reference to section 86(4) of the Danish Financial Statements Act, no cash flow statement has been prepared.
Recognition and measurement
Assets are recognised in the balance sheet when it is probable that future economic benefits attributable to the
asset will flow to the Company and the value of the asset can be measured reliably. Liabilities are recognised in the
balance sheet when it is probable that future economic benefits will flow out of the Company and the value of the
liability can be measured reliably.
Assets and liabilities are initially measured at cost. Subsequently, assets and liabilities are measured as described for
each item below.
Income statement
Revenue
Revenue comprises income earned during the year from the operation of the property recognised under property,
plant and equipment
Costs
Costs comprise expenses incurred during the year.
Derivatives
Derivative financial instruments are recognised on the trading date and measured at fair value using generally
acknowledged valuation techniques based on relevant observable swap curves and exchange rates. The Company
does not apply hedge accounting and changes in the fair values of derivative financial instruments are recognised in
the income statement as financial income or expenses.
Provisions
Provisions are recognised when the Company has a present legal or constructive obligation from past events.
The item includes, among other, provisions for legal disputes, disputes over indirect taxes or duties and provisions
for decided and publicly announced restructuring. Provisions are recognised based on best estimates and are
discounted where the time element is significant and where the time of settlement is reasonably determinable.
Note 8 Significant accounting policies
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions StatementsMaersk Drilling Annual Report 2021 97Financials
The Drilling Company of 1972 A/S
When preparing the financial statements of the Company, management undertakes a number of accounting
estimates and judgements to recognise, measure and classify the Company's assets and liabilities. The only
significant accounting estimate and judgement relates to the assessment of impairment of investments in
subsidiaries.
Management assesses impairment indicators for investments in subsidiaries and determines the recoverable
amount generally consistent with the assumptions described in note 2.4 of the Consolidated financial statements
to which reference is made.
Note 9 Significant accounting estimates
and judgements
No events have occurred after the balance sheet date which are expected to have a material impact on the parent
company financial statements.
Note 10 Subsequent events
Dividend
Dividend distribution proposed by Management for the year is disclosed as a separate equity item.
Current tax receivables and liabilities
Current tax liabilities and current tax receivables are recognised in the balance sheet as calculated tax on the
taxable income adjusted for tax on prior years’ taxable income and paid on account taxes.
Financial debt
Other debts are recognised at amortised cost, which, essentially corresponds to the nominal value.
Translation policies
Transactions in foreign currencies are translated at the exchange rates at the date of the transaction. Gains and
losses arising due to differences between the transaction date rates and the rates at the dates of payment are
recognised in financial income and expenses in the income statement.
Receivables, payables and other monetary items in foreign currencies that have not been settled at the balance
sheet date are translated at the exchange rates at the balance sheet date. Any differences between the exchange
rates at the balance sheet date and the transaction date rates are recognised in financial income and expenses in
the income statement.
Fixed assets acquired in foreign currencies are measured at the transaction date rates.
USD is used as presentation currency because the majority of transactions are in U.S. dollars. At 31 December 2021,
the exchange rate DKK/USD was 656.38.
Note 8 Significant accounting policies
– continued
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions StatementsMaersk Drilling Annual Report 2021 98Financials
Company overview
Maersk Drilling comprises the companies listed below.
Company Country of
incorporation
Ownership
share
The Drilling Company of 1972 A/S Denmark %
Maersk Drilling A/S Denmark %
Maersk Drilling Services A/S Denmark %
Maersk Drilling UK Limited UK %
Maersk Drilling do Brasil Serviços de Petróleo Ltda. Brazil %
Maersk Drilling International A/S Denmark %
Maersk Offshore Crew Management (Guernsey) Ltd. Guernsey %
Maersk Drilling Deepwater A/S Denmark %
Maersk Drilling Services LLC Azerbaijan %
Maersk Drilling Labuan Ltd Malaysia %
Maersk Inspirer Operations AS Norway %
Maersk Reacher Operations AS Norway %
Maersk Intrepid Operations AS Norway %
Maersk Integrator Operations AS Norway %
Maersk Drilling Norge AS Norway %
Maersk Invincible Norge A/S Denmark %
Maersk Intrepid Norge A/S Denmark %
Maersk Interceptor Norge A/S Denmark %
Maersk Integrator Norge A/S Denmark %
Mærsk Innovator Norge A/S Denmark %
Mærsk Inspirer Norge A/S Denmark %
Maersk Reacher Norge A/S Denmark %
Mærsk Gallant Norge A/S Denmark %
Maersk Drilling DS A/S Denmark %
Maersk Drilling Americas A/S Denmark %
Maersk Drilling USA Inc USA %
Maersk Drilling Brasil Serviços de Perfuração Marítimos Ltda. Brazil %
Maersk Drilling Mexico S.A. de C.V. Mexico %
Maersk Drilling Services S.A. de C.V. Mexico %
Company Country of
incorporation
Ownership
share
Maersk Drilling Australia Pty Ltd. Australia %
Maersk Drilling Holdings Singapore Pte Ltd. Singapore %
Maersk Highlander UK Ltd UK %
Maersk Drillship I Singapore Pte.Ltd. Singapore %
Maersk Drillship II Singapore Pte.Ltd. Singapore %
Maersk Drillship III Singapore Pte Ltd. Singapore %
Maersk Drillship IV Singapore Pte Ltd. Singapore %
Maersk Drilling Nigeria Holdings Pte. Ltd. Singapore %
Maersk Drilling Nigeria Operations Limited Nigeria %
Maersk Drilling Services Singapore Pte. Ltd. Singapore %
Maersk Drilling Deepwater Egypt LLC Egypt %
Maersk Drilling North Sea A/S Denmark %
Maersk Drilling Poland sp. z o.o (8 April 2019) Poland %
Maersk Drilling Netherlands BV Netherlands %
Maersk Drilling Ghana Ltd Ghana %
MD Viking Company Limited Myanmar %
Horizon56 A/S Denmark %
Maersk Drilling Abu Dhabi Ltd. (W.L.L.) Abu Dhabi %
Maersk Drilling JS-Services Lda Angola JV Angola %
Maersk Drilling Malaysia SDN Malaysia %
Maersk Rigworld Ghana Limited Ghana %
Maersk Drilling Nigeria JVCO Limited Nigeria %
Maersk Decom A/S Denmark %
PMD Viking Ghana Ltd Ghana %
1 Certain entities in which Maersk Drilling has an ownership share of less than 100% but holds the full right to
govern and receive dividends through shareholder agreements etc. are considered subsidiaries and consolidated
without any non-controlling interest
2 Joint venture
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions StatementsMaersk Drilling Annual Report 2021 99Financials
Definitions
Financial ratios and non-IFRS financial measures
Maersk Drilling uses certain financial ratios and measures
to provide management, investors and analysts with
additional measures to evaluate and analyse the Group’s
performance. These non-IFRS financial measures are
defined and calculated by the Group and may vary
significantly from financial measures applied by other
companies even if similar naming is applied.
Asset turnover
Revenue as a percentage of average non-current assets.
Available days
Available days are the aggregate number of calendar days
in the period less yard stays if not paid by customer. For
new rigs entering the fleet, available days is from when
the rig is ready to operate.
Average day rate
Average day rates equal average daily revenue and
are calculated by dividing revenue by the number of
contracted days. Revenue includes the contractual
rates for when the rig is in operation and other revenue
components such as lump sum payments for rig
mobilisation and demobilisation and payments for
investments in equipment or rig upgrades required to
meet the operational needs of the drilling campaign,
both of which amortised over the contract period;
bonuses linked to performance in terms of time,
efficiency or drilling outcome measures such as reservoir
targeting; or payments for third-party services to be
delivered by Maersk Drilling. Income and expenses
attributable to reimbursable expenses are generally
recognised net and therefore excluded in the calculation
of average day rates.
Average backlog day rate
Revenue backlog divided by the number of contracted
days in the contract period.
CAPEX
Investments in intangible assets and property, plant
and equipment, including additions from business
combinations.
CAPEX can be derived as additions to intangible assets and
property, plant and equipment as specified in notes 2.1 and
2.2 to the consolidated financial statements respectively.
Cash conversion
Cash flow from operating activities as a percentage of
EBITDA.
Contracted days
Contracted days are days covered by the contract with a
customer, including mobilisation or yard stays if paid by
customer.
Deepwater
Water depths greater than 5,000 ft.
Drillship
A vessel that has been fitted with drilling equipment,
mainly used for deepwater drilling.
EBIT
Profit/loss before financial items and income taxes.
EBIT can be derived directly from the consolidated income
statement.
EBITDA
Profit/loss before depreciation, amortisation and
impairment losses, financial items and income taxes.
EBITDA can be derived directly from the consolidated
income statement.
EBITDA before special items
Profit/loss before depreciation and amortisation,
impairment losses and special items, financial items and
income taxes.
EBITDA before special items can be derived directly from
the consolidated income statement.
EBITDA margin before special items
EBITDA before special items as a percentage of revenue.
Equity ratio
Equity as a percentage of total assets.
Financial uptime
Hours that can be invoiced for as a percentage of total
hours in the period under contract with the customer.
Forward contract coverage
Percentage indicating the part of rig days that are
contracted for a specific period.
Free cash flow
Cash flow from operating activities less cash flow from
investing activities, adjusted for newbuild cash flow and
proceeds from the divestment of assets or activities, and
less net interest payments.
Free cash flow is specified below the consolidated cash
flow statement.
Jack-up rig
A mobile drilling platform that stands on the seabed by
means of three steel legs and a self-elevating system
that adjusts the platform height to the water depth
during the drilling operation, typically used for shallow
water drilling.
Leverage
Net debt divided by EBITDA before special items.
Midwater
Water depths 401–5,000 ft.
Net debt
Equals interest-bearing debt less cash and bank balances
and other interest-bearing assets.
Net debt is specified in note 3.3 to the consolidated
financial statements.
Return on equity
Profit/loss for the year divided by the average equity.
Revenue backlog
Future contract commitments for a rig, for a particular
point in time at which revenues are expected to be
realised. Calculated by multiplying contract rates by the
contract period, excluding any optional extension periods.
Semi-submersible
A mobile vessel that is partially submerged in water
during the drilling operation and positioned by means of
a conventional mooring system and/or a computerised
dynamic positioning system, typically used for midwater
and deepwater drilling.
Shallow water
Water depths up to 400 ft.
Special items
Special items comprise non-recurring income and
expenses that are not considered to be part of Maersk
Drilling’s ordinary operations such as merger related costs,
major restructuring costs and COVID-19 related costs.
Special items are specified in note 1.4 to the consolidated
financial statements.
Ultra deepwater
Water depths greater than 7,500 ft.
Utilisation
Utilisation is the number of contracted days, divided by
the number of available days.
Working capital
Equals trade receivables and other current assets less
trade payables and other current payables.
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions StatementsMaersk Drilling Annual Report 2021 100Financials
Statement of
the Board of Directors
and the Executive
Management
The Board of Directors and the Executive
Management have today discussed and approved
the Annual Report of The Drilling Company of
1972 A/S for 2021.
The consolidated financial statements of The
Drilling Company of 1972 A/S have been prepared in
accordance with International Financial Reporting
Standards (IFRS) as adopted by the EU and further
requirements in the Danish Financial Statements
Act, and the parent company financial statements
has been prepared in accordance with the Danish
Financial Statements Act. The Management’s
review has been prepared in accordance with the
Danish Financial Statements Act.
In our opinion, the Annual Report gives a true and
fair view of the Group’s and the Company’s assets
and liabilities, financial position at 31 December
2021 and of the results of the Group’s and the
Company’s operations and the Group’s cash flows
for the financial year 2021.
Executive Management
Jørn Madsen
CEO
Christine Brennet (Morris)
CFO
Board of Directors
Claus V. Hemmingsen
Chairman
Robert M. Uggla
Vice Chairman
Martin Larsen
Alastair Maxwell
Ann-Christin Andersen
Kristin H. Holth
Caroline Alting
Glenn Gormsen
In our opinion, the Management review includes a
fair review of the development in the Group’s and
the Company’s operations and financial conditions,
the results for the year, financial position and the
Group’s cash flows as well as a description of the
most significant risks and uncertainty factors that
the Group and the Company face.
In our opinion, the annual report of The Drilling
Company of 1972 A/S for the financial year
1 January to 31 December 2021 identified as
with the file name DRLCO-2021-12-31-en.zip is
prepared, in all material respects, in compliance
with the ESEF Regulation.
We recommend that the Annual Report will be
approved at the Annual General Meeting.
Copenhagen, 11 February 2022
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions StatementsMaersk Drilling Annual Report 2021 101Financials
Report on the audit of the Financial Statements
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions StatementsMaersk Drilling Annual Report 2021 102Financials
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions StatementsMaersk Drilling Annual Report 2021 103Financials
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions StatementsMaersk Drilling Annual Report 2021 104Financials
CVR No 33771231
Consolidated financial statements 2021 Parent company financial statements 2021 Company overview Definitions StatementsMaersk Drilling Annual Report 2021 105Financials
Additional
information
106Maersk Drilling Annual Report 2021 Additional information Quarterly highlights Fleet Status Report TCFD Index
Quarterly highlights – segments
Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 FY 2020
Consolidated
No. of rigs at period end
Revenue
Contracted days
Available days
Utilisation % % % % % %
Average day rate (USDk)
Financial uptime % % % % % %
Revenue backlog at the end of the period (USDm)
Segment information – North Sea
No. of rigs at period end
Revenue
Contracted days
Available days
Utilisation % % % % % %
Average day rate (USDk)
Financial uptime % % % % % %
Revenue backlog at the end of the period (USDm)
Segment information – International
No. of rigs at period end
Revenue
Contracted days
Available days
Utilisation % % % % % %
Average day rate (USDk)
Financial uptime % % % % % %
Revenue backlog at the end of the period (USDm)
Maersk Drilling Annual Report 2021
Additional information Quarterly highlights Fleet Status Report TCFD Index
107
Fleet Status Report
2022 2023 2024 2025
Month Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Jack-ups
Maersk Innovator
Maersk Integrator
Maersk Interceptor
Maersk Intrepid
Maersk Invincible
Maersk Reacher
Maersk Resilient
Maersk Resolute
Maersk Resolve
Maersk Highlander
Maersk Convincer
Floaters
Maersk Deliverer
Maersk Developer
Maersk Discoverer
Maersk Explorer
Maersk Valiant
Maersk Venturer
Maersk Viking
Maersk Voyager
Aker BP – Norway
Aker BP – Norway Aker BP – Norway
OMV – NorwayEquinor – Norway
INEOS – United Kingdom
United Kingdom
Petrogas – United Kingdom
TotalEnergies – Denmark
TotalEnergies – Norway
Harbour Energy – United Kingdom
Aker BP – Norway
OneDyas – Netherlands
Brunei Shell Petroleum – Brunei
Inpex Australia – Australia
CGX - Guyana
Shell – Trinidad and Tobago CGX - Guyana
Karoon – Brazil
TotalEnergies – Suriname
Azerbaijan
Tullow – Ghana
Shell – Malaysia
TotalEnergies – Angola and Namibia
Contract(s) Options Available
(until Q1 2028)
(until Q1 2028)
Will be updated just before launch of Annual Report
Maersk Drilling Annual Report 2021
Additional information Quarterly highlights Fleet Status Report TCFD Index 108
TCFD Topic Area TCFD Recommendation Location of disclosure
Governance
– Disclose the organisation’s governance around
climate-related risks and opportunities
Describe the Board’s oversight of climate-related risks and opportunities. • Annual Report p. 39: Corporate Governance
• Sustainability Report p. 28: A solid governance framework for sustainability progress
Describe management’s role in assessing and managing climate-related risks
and opportunities.
• Annual Report p. 39: Corporate Governance
• Sustainability Report p. 28: A solid governance framework for sustainability progress
Strategy
– Disclose the actual and potential impacts of
climate-related risks and opportunities on the
organisation’s businesses, strategy, and financial
planning where such information is material
Describe the climate-related risks and opportunities the organization has
identified over the short, medium, and long term.
• Sustainability Report p. 9: Climate and Energy
• Sustainability Report p. 12: Managing climate risks
• Annual Report p. 21–26: Market and Strategy
• Annual Report p. 49: Risk management
Describe the impact of climate related risks and opportunities on the organisation’s
businesses, strategy, and financial planning.
• Sustainability Report p. 9: Climate and Energy
• Sustainability Report p. 12: Managing climate risks
• Annual Report p. 21–26: Market and Strategy
• Annual Report p. 49: Risk management
Describe the resilience of the organisation’s strategy, taking into consideration different
climate-related scenarios, including a 2°C or lower scenario.
• Sustainability Report p. 12: Managing climate risks
• Annual Report p. 21–26: Market and Strategy
• Annual Report p. 49: Risk management
Risk management
– Disclose how the organisation identifies, assesses,
and manages climate-related risks
Describe the organisation’s processes for identifying and assessing climate-related risks. • Annual Report p. 49: Risk Management
• Sustainability Report p. 28: A solid governance framework for sustainability progress
• Sustainability Report p. 12: Managing climate risks
Describe the organization’s processes for managing climate-related risks. As above
Describe how processes for identifying, assessing, and managing climate-related risks
are integrated into the organisation’s overall risk management.
As above
Metrics and targets
– Disclose the metrics and targets used to assess
and manage relevant climate-related risks and
opportunities where such information is material
Disclose the metrics used by the organisation to assess climate related risks and
opportunities in line with its strategy and risk management process.
• Annual Report p. 9: Five-year summary
• Sustainability Report p. 11: 2021 climate performance
• Sustainability Report p. 32: ESG performance data
Disclose Scope 1, Scope 2, and if appropriate, Scope 3 greenhouse gas (GHG) emissions,
and the related risks.
• Annual Report p. 21–26: Market and Strategy
• Annual Report p. 49: Risk Management
• Sustainability Report p. 11: 2021 climate performance
• Sustainability Report p. 32: ESG performance data
Describe the targets used by the organisation to manage climate-related risks and
opportunities and performance against targets
• Annual Report p. 21–26: Market and Strategy
• Annual Report p. 49: Risk Management
• Sustainability Report p. 10-11: Our climate plan; 2021 climate performance
Task Force on Climate-related Financial Disclosures
The following index provides links to Maersk Drilling’s disclosures on climate-related risks and
opportunities as recommended by the Task Force on Climate-related Financial Disclosure (TCFD).
Maersk Drilling Annual Report 2021
Additional information Quarterly highlights Fleet Status Report TCFD Index 109
Forward-looking statements
This Annual Report contains certain forward-
looking statements (being all statements
that are not entirely based on historical facts
including, but not limited to, statements as to
the expectations, beliefs and future business,
contract terms, including commencement dates,
contract durations and day rates, rig availability,
financial performance and prospects of The
Drilling Company of 1972 A/S and its subsidiaries
and affiliated companies. These forward-looking
statements are based on our current expectations
and are subject to certain risks, assumptions,
trends and uncertainties that could cause actual
results to differ materially from those indicated by
the forward-looking statements due to external
factors, including, but not limited to, oil and gas
prices and the impact of the economic climate;
changes in the offshore drilling market, including
fluctuations in supply and demand; variable levels
of drilling activity and expenditures in the energy
industry; changes in day rates; ability to secure
future contracts; cancellation, early termination
or renegotiation by our customers of drilling
contracts; customer credit and risk of customer
bankruptcy; risks associated with fixed cost
drilling operations; unplanned downtime; cost
overruns or delays in transportation of drilling
units; cost overruns or delays in maintenance,
repairs, or other rig projects; operating hazards
and equipment failure; risk of collision and
damage; casualty losses and limitations on
insurance coverage; weather conditions in the
Company’s operating areas; increasing costs
of compliance with regulations; changes in tax
laws and interpretations by taxing authorities,
hostilities, terrorism, and piracy; impairments;
cyber incidents; the outcomes of disputes,
including tax disputes and legal proceeding; and
other risks disclosed in Maersk Drilling’s Annual
Reports and company announcements. Each
forward-looking statement speaks only as of the
date hereof, and the Company expressly disclaims
any obligation to update or revise any forward-
looking statements, except as required by law.
Third-party data and information
The IHS Markit reports, data and information
referenced herein (the "IHS Markit Materials")
are the copyrighted property of IHS Markit Ltd.
and its subsidiaries (“IHS Markit”) and represent
data, research, opinions or viewpoints published
by IHS Markit, and are not representations of
fact. The IHS Markit Materials speak as of the
original publication date thereof and not as of
the date of this document. The information and
opinions expressed in the IHS Markit Materials
are subject to change without notice and IHS
Markit has no duty or responsibility to update
the IHS Markit Materials. Moreover, while the
IHS Markit Materials reproduced herein are from
sources considered reliable, the accuracy and
completeness thereof are not warranted, nor are
the opinions and analyses which are based upon
it. IHS Markit is a trademark of IHS Markit. Other
trademarks appearing in the IHS Markit Materials
are the property of IHS Markit or their respective
owners.
Important notice
Maersk Drilling Annual Report 2021
Additional information 110
The Drilling Company of 1972
Lyngby Hovedgade 85
DK-2800 Kgs. Lyngby
Registration no. 40404716
Board of Directors
Claus V. Hemmingsen, Chairman
Robert M. Uggla, Vice Chairman
Martin Larsen
Alastair Maxwell
Ann-Christin Andersen
Kristin H. Holth
Caroline Alting
Glenn Gormsen
Executive Management
Jørn Madsen (CEO)
Christine Morris (CFO)
Auditor
PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab
Editor
Petruta Stefanescu
Design and layout
Extrasmallagency
Print
Printed in Denmark in 2022 by Rosendahls, an
environmentally certified printing agency, on Arctic Matt
Domicile of entity Denmark
Description of nature of entity's operations and principal activities Offshore drilling services
Country of incorporation Denmark
Principal place of business Global
Legal form of entity A/S
Name of reporting entity or other meeans of identification The Drilling Company of 1972 A/S
Address of entity's registered office
Registration no. 40404716
ESEF data
The Drilling Company of 1972 A/S
Lyngby Hovedgade 85
2800 Kgs. Lyngby
Denmark
Registration no. 40404716
maerskdrilling.com