The average day rate for ENSCO's operating jackup rig fleet was $50,200 for the first quarter of 2004, compared to $48,500 in the year earlier period. Utilization for the Company's jackup fleet decreased slightly to 85% in the most recent quarter, from 87% in the first quarter of 2003. Excluding rigs in a shipyard for contract preparation, regulatory inspection and enhancements, ENSCO's jackup utilization was 91% in the most recent quarter, compared to 95% in the year earlier period.
Carl Thorne, Chairman and Chief Executive Officer of ENSCO, commented on the Company's outlook and markets: "Activity levels in the Middle East and Pacific Rim are improving, while the North Sea, West Africa and the Gulf of Mexico remain sluggish. We continue to expect global activity to be stronger in the second half of 2004 than in the first half of the year.
"Given anticipated first half softness in some areas, we have elected to accelerate various undertakings. In May, we will relocate two 250' jackups from the Gulf of Mexico to the Middle East, where they will undergo enhancement until late third and early fourth quarter of 2004. ENSCO 67 will mobilize from the Gulf of Mexico to a shipyard in Singapore for major upgrade, including conversion from slot to cantilever configuration, with expected completion in late first quarter 2005. These actions will allow us to take advantage of strong international term-work opportunities, as well as to address enhancement cost efficiencies and fleet geographic balance. With the relocation of three jackups, and the exchange of ENSCO 55 in connection with the construction of ENSCO 107, domestic supply will be reduced, and international availability increased, by four ENSCO rigs.
"In addition to the three rigs mentioned above, ENSCO 68 and ENSCO 88 are currently in a U.S. shipyard with redelivery expected in November and August of 2004, respectively. Given accelerations and previously planned upgrade activity, we now expect to incur approximately 40 rig-months of downtime in connection with our overall jackup rig enhancement program during the remainder of this year. We have also elected to accelerate regulatory inspection and maintenance on ENSCO 7500, our deepwater semisubmersible rig, which will result in shipyard time through May 2004.
"Looking ahead, we expect second quarter 2004 results to be impacted by the factors mentioned above. While the actions we are taking will have short- term negative impact on earnings, we believe that these decisions will enhance intermediate and long-term positioning as the fundamentals of our industry continue to improve."
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