Rowan Posts Lower 3Q Profit
For the three months ended September 30, 2010, Rowan generated net income of $67.2 million or $0.57 per share, compared to $78.4 million or $0.69 per share in the third quarter of 2009. Revenues were $437.9 million in the third quarter of 2010, compared to $393.4 million in the third quarter of 2009. Results for the prior-year period included a $17.0 million or $0.15 per share net tax benefit related to a third-party tax court ruling which provided that certain foreign-source income is not taxable in the United States.
Rowan's drilling operations generated revenues of $289.9 million in the third quarter of 2010, up by 12% over the prior-year quarter as the impact of offshore fleet additions and higher rig utilization more than offset lower average day rates. The Company's gross drilling margin was 51% of revenues in the third quarter of 2010, down from 53% in the prior-year quarter. Income from drilling operations was $82.9 million in the third quarter of 2010, up by 2% over the prior-year quarter.
Rowan's manufacturing operations generated external revenues of $148.0 million in the third quarter of 2010, up by 10% over the prior-year quarter. The Company's gross manufacturing margin was 15% of revenues in the third quarter of 2010, up from 13% in the prior-year quarter. Income from manufacturing operations was $5.3 million in the third quarter of 2010, down by 12% from the prior-year quarter.
Matt Ralls, President and Chief Executive Officer, commented, "During the third quarter, we took delivery of our second EXL class jack-up rig, which is now in Trinidad preparing to begin a three-year contract. We added significantly to our contract drilling backlog, obtaining two three-year contracts with Saudi Aramco and additional deep-well commitments from McMoRan in the Gulf of Mexico. We completed the acquisition of Skeie Drilling, adding three of the world's most capable jack-ups to the Rowan fleet, the first of which - the Rowan Viking - will soon mobilize for a 19-month assignment in the UK at a day rate in the low $200s. And, we raised $1 billion of new financing during the quarter to refinance the assumed Skeie debt, complete our newbuild program, and remain well-positioned for further growth opportunities.
"Our contract drilling operations provided solid results in the third quarter, tracking closely with consensus expectations. Similarly, our manufacturing results were in line with expectations, with the performance again led by the mining products group. LeTourneau expects continuing strong demand for new mining equipment and has recently seen a significant increase in requests for jack-up kit quotations. Our third quarter results also benefited from continuing progress in lowering our effective income tax rate, which we expect will improve further in 2011 and beyond as we expand our international operations."