Rowan: Rig Moves Negatively Impact 3Q Earnings
For the three months ended September 30, 2011, Rowan generated net income from continuing operations of $31.4 million or $0.25 per share, compared to $60.2 million or $0.51 per share in the third quarter of 2010.
Income from discontinued manufacturing and land drilling operations totaled $162.4 million in the third quarter of 2011 or $1.28 per share, including the after-tax gain on the sale of the Company's land division of approximately $155 million, compared to $7.0 million or $0.06 per share in the third quarter of 2010.
Net income totaled $193.8 million or $1.53 per share in the third quarter of 2011, compared to $67.2 million or $0.57 per share in the third quarter of 2010.
Rowan's offshore drilling revenues were $234.7 million in the third quarter of 2011, compared to $238.6 million in the third quarter of 2010, as overall activity levels and average day rates changed only slightly between periods despite additions to the Company's offshore fleet. Rowan's gross offshore drilling margin was 45% of revenues in the third quarter of 2011, down from 55% in the prior-year quarter, as increased rig shipyard and other downtime together with higher costs associated with rig start-ups and relocations this year offset the impact of fleet additions.
Matt Ralls, President and Chief Executive Officer, commented, "Our financial performance during the third quarter was negatively impacted by the effects of rig moves and upgrades as we prepared for several new contracts. During the quarter, we had nine rigs moving to or preparing for new contracts and several of those projects took longer than anticipated. The combined effect of being off day rate longer than expected and the higher repair and maintenance expense that accompanies most upgrade projects hurt our third quarter performance and will have an impact on the fourth quarter as well, after which all of those nine rigs are expected to be on contract.
"On a positive note, demand for high specification offshore rigs continues to strengthen, for both jack-ups and ultra-deepwater. We are optimistic about finding term opportunities at attractive day rates for our high-spec jack-ups with availability in 2012. Likewise, recent fixtures for ultra-deepwater rigs, along with very positive feedback from potential customers regarding the drillships we are building, has led us to exercise our option to build a third drillship at Hyundai Heavy Industries."
Rowan's board of directors has increased the previously announced share repurchase program from $100 million to $150 million in shares of its common stock. During the third quarter of 2011, the company repurchased 2.5 million shares of its common stock at an average cost of $32.26. With this increase, the Company has approximately $69 million of authorization remaining. This increased program is effective immediately. Repurchases under this program will be made through the open market or in privately negotiated transactions and may be commenced or suspended from time to time without notice.