Pride International Reports Fourth Quarter Results
|Friday, February 27, 2004
Pride International, Inc. reported a net loss for the fourth quarter 2003 of $38,452,000 ($.28 per share) on revenues of $434,850,000. For the same period in 2002, Pride reported net earnings of $1,143,000 ($.01 per share) on revenues of $348,983,000.
For the year ended December 31, 2003, Pride reported a net loss of $23,933,000 ($.18 per share) on revenues of $1,689,720,000. For the year ended December 31, 2002, the Company reported a net loss of $8,335,000 ($.06 per share) on revenues of $1,269,774,000.
As previously disclosed, the Company has encountered significant challenges in connection with the construction of four deepwater platform rigs on behalf of two customers in 2003. During the fourth quarter of 2003, the Company reported additional losses related to these construction projects of approximately $34 million, net of estimated taxes. For the year, the Company's Technical Services segment recognized approximately $64 million of losses, net of estimated taxes, in connection with these projects. The additional losses in the fourth quarter are principally attributable to: (1) financial relief to a shipyard that encountered significant financial difficulties, in order for it to complete a reduced scope of work; (2) costs associated with completion of tasks by newly contracted parties to finish the scope of work excluded from the previously mentioned shipyard; as well as transportation and other costs necessitated by the revised project completion plan; (3) additional provisions for the estimated costs of settling a number of commercial disputes with shipyards, equipment vendors, EPC contractors and others; (4) additional provisions for commissioning, training and warranties based on experience from the start-up of the first of the four rigs (now completed and operating); and (5) revised estimates for certain cost items. The Company is continuing to evaluate certain loss provisions at this time, and accordingly, the final amount of such provisions recorded in the fourth quarter could differ from the amounts included in these results.
Results for the fourth quarter of 2003 were also affected by certain other items, including: (1) charges relating to certain receivables and claims of $5,445,000, net of estimated taxes; and (2) cash and non-cash provisions relating to executive retirements of $3,474,000, net of estimated taxes. Results for the year ended December 31, 2003 include these amounts as well as the following items: (1) income of $18,695,000, net of estimated taxes, relating to the contractual upgrade of a land rig deployed to Kazakhstan, recognized in the third quarter of 2003; and (2) a charge of $3,992,000, net of estimated taxes, representing the call premium on the early extinguishment of $150 million principal amount of Pride's 9-3/8% Senior Notes due 2007 and related deferred financing costs, recognized in the third quarter of 2003.
In the Gulf of Mexico, results for the quarter improved sequentially over the third quarter of 2003, due primarily to contributions from two jackups and one semisubmersible rig that commenced operations in Mexico during the fourth quarter of 2003, and marginally higher dayrates for the U.S. Gulf of Mexico jackups. This was offset by decreased utilization in the Company's platform rig fleet and higher operating expenses associated with the shorebase in Mexico due to the ramp-up in activity in 2003. Average utilization of Pride's Gulf of Mexico jackup fleet during the fourth quarter of 2003 increased to 78% from 58% during the fourth quarter of 2002 and from 72% during the third quarter of 2003. Average daily revenues per rig during the fourth quarter of 2003 increased to $32,725, up from $28,533 during the prior year's quarter and $31,295 during the third quarter of 2003.
Results from international offshore operations decreased sequentially. Significantly impacting the quarter, the Pride South Atlantic completed its contract and was idle until late January 2004. Also, the Pride Venezuela had a full quarter of idle time following completion of its contract during the third quarter. In addition, the Company experienced downtime on several semisubmersibles and one tender-assisted rig due to unscheduled repair and maintenance work.
The Company's international land operations and E&P Services segments improved in the fourth quarter of 2003 over the same quarter of 2002 due to higher activity levels in Argentina and Venezuela and the operation of two large land rigs in Kazakhstan during the 2003 quarter. Results declined sequentially however, due primarily to temporarily reduced activity levels in the South American region late in the year and commencement of a reduced winter standby rate in Kazakhstan. The third quarter 2003 results also included income relating to the contractual upgrade of a land rig deployed to Kazakhstan, as mentioned previously.