After selling its land-based drilling and equipment manufacturing divisions, and entering a new market with commitments to build four ultradeepwater (UDW) drillships, Rowan Companies Plc tapped U.K. native Thomas P. Burke, 46, to navigate the organization as it sailed into deeper waters.

On April 25, 2014, when Burke was elected CEO, drilling contractor investors were concerned. The stock prices for Rowan and its peers had fallen significantly over the previous eight months. Rowan’s debt amounted to $2.8 billion, half of Rowan’s enterprise value. What’s more, some 80 new high-tech jackup rigs were slated for delivery to competitors, so day rates for jackups, Rowan’s mainstay, were at risk.

Also, rates for UDW drillships, a market that Rowan entered in 2011, were softening. Rowan has committed $3 billion to construct four such ships for delivery between 2014 and mid-2015, with its first having arrived in January, working on a three-year contract with Repsol for $620,000 per day. The second and third ships garnered respectable market rates, although lower than the first, at $605,000 and $600,000, respectively. The fourth has been contracted by Freeport McMoRan for $580,000, solidifying Rowan’s UDW backlog for all four ships into 2017. Pushing the industry rates lower are 30 new drillships that have been built during the past 12 months, according to Barclays.

Thus, on his first day as CEO, Burke would need to prove that Rowan’s new UDW fleet could lead the oil and gas industry to unexplored depths of more than 40,000 feet in up to 12,000 feet of water.

He would also need to demonstrate that the company’s more sophisticated designs are worth the shareholder investment, earning higher day rates and longer contracts than competitors’. Moreover, he would need to navigate the risks of deploying these costly assets in waters of geopolitically unstable countries where maritime law is often nonexistent. A third of Rowan’s jackup fleet is now deployed in the Middle East and West Africa, while three of the four drillships will work in the U.S.

Lastly, he would need to perform these duties while the company’s 4,000 employees, along with the rest of the industry, undergo a massive crew change as his most experienced personnel retire.

Burke has already delivered by contracting the new drillships at respectable day rates and successfully staffing the ships as they are delivered in a competitive labor market.

At the time of his election, he was president and COO. He joined Rowan in December 2009 as CEO of LeTourneau Technologies, the manufacturing division that was later sold, in 2011. Before Rowan, Burke held positions at Complete Production Services, Schlumberger and McKinsey & Co. He holds a DPhil (PhD) in engineering science from Trinity College, Oxford, and an MBA with high distinction from the Harvard Business School.

As he addresses Rowan’s priorities, Oil and Gas Investor caught up with Burke in an interview six weeks after he took the helm.

Investor: What do you see as the key issues and opportunities for Rowan over the next 12 months?

Burke: At Rowan, we are focused on three objectives: We want the highest customer satisfaction, meaning safe and reliable operations. We must provide strong financial returns for our investors. And, we need to be the best place to work in our industry, which is a strategic imperative because we’ve got a great workforce that won’t stay at Rowan unless we deliver advancement opportunities and competitive compensation. If you concentrate on one of these but not the others, you’ll imperil performance. For example, if you focus solely on financial returns, customers and employees may leave you. You have to try and balance all three. I would say over the next 12 months, though, our primary emphasis is on execution.

First, we are in the middle of a $3 billion dollar UDW drillship construction program. All of those ships will go to work in the next 12 months. The first has already done so. Second, in the North Sea, we’re moving jackup rigs from the U.K. to the Norwegian sector. Third, many of the jackup contracts are rolling over in 2014; fortunately, fewer than we had at the beginning of the year. We are highly focused on securing extensions or new contracts for those rigs.

Rowan has changed greatly over the last decade. In 2005, 22 of 24 rigs were in the Gulf of Mexico, and that allowed us to perform efficiently with practically just one operational hub. With the advent of shale gas in the U.S., however, significant exploration capital left the U.S. Rowan had to move overseas. Today, just five of our 30 rigs operate in the Gulf of Mexico. So, we’ve set up larger shore bases in Norway, the U.K., Saudi Arabia and Malaysia, and we have smaller bases in countries with one or two rigs. In addition, our deepwater ships require different skills and support infrastructure.

As a result of this global and market expansion, our costs have necessarily increased over the past few years to support our worldwide and deepwater operations. We absolutely have had to maintain a strong cost focus. It’s not the most glamorous thing to do, but there is a “second order effect” that sets the tone for the rest of the company; so it starts at my level, making sure we’re efficient and thoughtful custodians of the investment our shareholders have made in Rowan.

Investor: Drilling contractors have a reputation for overbuilding capacity when times are good only to scramble to cover cash demands when the market turns. How do you intend to manage this?

Burke: Your comment is probably fair with respect to the industry’s reputation, but there has been significant underinvestment in jackup rigs for the 20 years before 2006, so the fleet renewal underway by many drilling contractors is necessary in order to meet operators’ technological and operational demands.

We will continue to look for opportunities to build against a customer contract. If a customer has a particular need, they may say, “Okay, I need you to build this type of rig,” sponsoring a newbuild, but that’s an exception in our industry. We must anticipate the market by talking to customers, understanding where demand is heading, and looking for opportunities to improve the technology and product offering.

We have also learned that when a market has sufficient capacity, only those rigs with the right designs, operated by established drilling contractors, are likely to remain under contract. In the past six or seven years, we have built four drillships and 11 jackups—this significant fleet renewal means we don’t have a compelling reason to build additional rigs on speculation at this time.

With respect to your comment regarding contractors’ behavior as the market inevitably turns, at Rowan, we are focused on maintaining a strong balance sheet and retaining our investment grade ratings. We believe our conservative financial approach is imperative in order to weather the cycles in this industry.

We are also focused on growing our shareholders’ equity. With every significant business decision, we ask ourselves, “Will the return exceed our cost of capital? Is it going to create shareholder value?” If not, we may elect to return the funds to the shareholders through stock buybacks or dividends. Every time we move a rig or enter a new contract, we conduct a detailed analysis comparing all possible courses of action and focus on the ones that will contribute most to our shareholders’ investment.

Investor: What do you see as the key opportunities for offshore drilling contractors for the next decade?

Burke: Three key opportunities: The first we’ve seen for the past few years is retooling the fleets, both jackups and deepwater ships. As an industry, we will improve safety and efficiency of operations by bringing in new assets fit for purpose to replace older rigs built in the late ‘70s and early ‘80s.

Investor: Is there sufficient construction capacity for this?

Burke: Yes. The challenges will be the quality of construction and the industry’s ability to absorb the new rigs into the marketplace.

The second opportunity is new markets, which are a function of changes in exploration and reservoir technology. New seismic technology, for example, has opened up subsalt plays that will be exploited over the next several years.

Likewise, advances in drilling and production technology will open up markets that were previously uneconomic to develop. Rowan drilled the Notus well for BG offshore Egypt, a very demanding well that used the latest managed pressure drilling technology. High-temperature, high-pressure wells are Rowan’s strong suit and a big opportunity for the industry over the next decade.

Investor: What challenges does the industry face?

Burke: One of the biggest is the “great crew change”—the industry has been discussing this for years, but the challenge is real and is upon us now. The industry has an aging workforce that is approaching retirement. We can find people to fill positions, but the challenge is readying them for the tasks.

Typically for entry positions, we’re looking to hire roustabouts or floor hands. In these lower level positions, in every country where we work, we have a line out the door of applicants. The challenge is training this new workforce effectively to take on higher positions and increased responsibility on the rig.

Today, we have to accelerate the learning for our lower level employees, focusing more on competency than years of experience. We’re pushing competent people, those who have been trained and tested on their ability to perform, through our organization, developing and using employee-development systems that did not exist a decade ago. Every country wants to develop its workforce, providing more opportunities for challenging and lucrative work. We want a loyal workforce, so we have to convey to them that they have a once-in-a-lifetime opportunity due to this massive crew change. Our strongest employees like it. They see the opportunity for advancement and a meaningful career.