KCA Deutag reveals effect of ‘sophisticated ransomware’

Drilling contractor KCA Deutag has disclosed the impact of a “sophisticated attempted ransomware attack” on the company last year.

The Aberdeen-based firm said the December 2021 attack, which targeted servers and back office systems, had been “disruptive” to the company’s support functions.

However day-to-day operations across its land drilling and offshore services divisions were “largely unaffected.”

KCA “promptly engaged expert third party cybersecurity teams to respond quickly to the threat and took robust actions”, it stated in its 2021 annual report, published yesterday.

It said the majority of key business applications were now restored from secure back-ups and remaining applications were being brought back online in a “progressive manner”.

KCA said a forensic investigation of the incident was complete and it has liaised with regulators and intelligence services. It is now in the process of implementing IT security enhancements to reduce the potential impact of any further attacks.

In a statement to Energy Voice, KCA added: “Our priorities have been to ensure the safety of our staff, at all times, and to deliver the high standard of services our customers expect.

“We have continued to provide regular updates to all our customers, suppliers and colleagues and thank them for their patience and understanding throughout this recovery process.”

KCA Deutag chairman Tom Ehret noted operations “remained challenging” throughout the year across the company’s locations, owing to the continued impact of Covid-19.

However, he said the completion of financial restructuring in late 2020 had placed the business in a “much stronger position” despite the slower-thanexpected recovery.

KCA enjoyed a profitable 2021, with pre-tax profits of just under $30 million for the year, compared with $11.7m the year before.

It also saw a minor uptick in revenue, which rose to just under $1.2 billion in 2021, from $1.16bn in 2020.

Total backlog at the end of 2021 stood at $5bn, also up on the $4.7bn reported at the end of 2020.

The land drilling division saw the continuation of “decreased utilisation” through last year, with a number of land rigs remaining stacked and “the majority” of rigs which did continue in operation did so on lower day rates than before the pandemic.

It pointed to signs of improvement during the second half of the year, with notably higher utilisation in the Middle East, which it said would position the company well for this year.

Offshore services fared better, with KCA reporting an uptick in activity off Angola and steady operations in its core markets of Norway, UK, Canada and Sakhalin.

This year will also see results reported from a new technology-focused division, Kenera, following its launch last year.

Looking to the rest of this year, KCA said the Russian invasion of Ukraine had resulted in “increased uncertainty” in the wake of increasing EU, UK and US sanctions on Russia.

The company has a small service facility in Ukraine it has closed “for the time being”, and has worked with a small number of local employees to ensure their safety.

The impact on the company’s approximately 2,000 staff in Russia, across the land drilling, offshore services and Bentec divisions, is less clear.

“Our priority is on complying with all sanctions whilst ensuring the safety and welfare of our staff. At the onset, a dedicated committee was established to monitor the situation very closely in constant dialogue with our advisors to ensure we understand quickly any implications and take appropriate action,” KCA’s report said.

In March, the group said it had suspended all new investments in Russia and was “evaluating its options”.

Today’s report adds that although there has been “no material impact” on its operations in the first few months of 2022, the fourth package of European Union sanctions contains further restrictions, and may require the company to “suspend certain activities in order to stay compliant.”

KCA has been operating in Russia since 2002 and its Russian business generated over $241m in revenue in 2021.

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KCA enjoyed a profitable 2021, with pre-tax profits of just under $30m for the year