For the year ended December 31, 2003, GlobalSantaFe reported net income of $129.4 million, or $0.55 per diluted share, on revenues of $1.9 billion. This compares to net income of $277.9 million, or $1.18 per diluted share, on revenues of $2.0 billion for the year ended December 31, 2002. The company's net income for the year 2003 included $22.3 million, or $0.09 per diluted share, from the settlement of claims filed in 1993 with the United Nations Compensation Committee for losses suffered as a result of the Iraqi invasion of Kuwait in 1990. Excluding the benefit of these settlements, the company's net income for 2003 would have been $107.1 million, or $0.46 per diluted share.
Fourth Quarter 2003 Results
The decline in the company's net income for the fourth quarter of 2003 can be attributed mainly to the decrease in contract drilling operating income to $24.6 million from $67.6 million in the same quarter of the previous year. The decrease in operating income from the contract drilling segment was primarily due to lower revenues resulting from lower dayrates from the company's deepwater assets, lower dayrates and utilization from its rigs in the North Sea, and lower utilization from its rigs in West Africa, partially offset by an increase in dayrates and utilization for its jackup rigs in the Gulf of Mexico. The impact of this decline in contract drilling revenues on the quarter's results was partially offset by lower contract drilling expenses related to repair and maintenance expense and lower than estimated costs incurred throughout 2003 for personal injury and health care claims.
For the fourth quarter of 2003, the drilling management services segment reported operating income of $20.3 million compared to operating income of $10.1 million in the same quarter of 2002. The higher operating income for this segment was the result of improved margins on turnkey projects and an increase in the number of projects performed during the fourth quarter of 2003.
Full Year 2003 Results
The $148.5 million decrease in the company's net income for the full year of 2003 compared to 2002 was due primarily to a $205.6 million decline in operating income from its contract drilling segment partially offset by the aforementioned U.N. settlement, lower income taxes and corporate expenses and higher oil and gas revenues. Contract drilling operating income declined due to lower revenues resulting from lower dayrates and utilization for the company's rigs in most of its major markets compared to 2002 levels, partially offset by higher dayrates and utilization for its jackup rigs in the Gulf of Mexico resulting from the upturn in that market in 2003. The drop in contract drilling revenues in 2003 was partially offset by decreased contract drilling expenses primarily due to lower repair and maintenance and reimbursable expenses.
For the full year of 2003, the drilling management services segment performed an additional 18 turnkey projects for a total of 116, compared to 98 in the prior year. The drilling management services segment reported operating income of $31.7 million for 2003, up from $28.6 million in 2002.
GlobalSantaFe's President and Chief Executive Officer, Jon Marshall said, "Looking at the jackup markets around the world, we find them to be stable to improving reflecting a tightening in the world wide supply and demand balance. In particular, we are seeing positive indications in 2004 for our heavy duty harsh environment jackup rigs in the North Sea, which experienced difficult market conditions in 2003. We are also encouraged that our customers are moving ahead with deepwater projects in the Gulf of Mexico, Brazil and West Africa, which could lead to more balanced market conditions for our deepwater assets in 2004 and beyond. We continue to focus on maintaining our high safety and operating standards and controlling costs, activities which will deliver shareholder value in any market condition."
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