The Company did not sell any portfolio securities during the third quarter 2004, but $0.13 per share of gains from securities sales were included in net income for the first nine months of 2004. Net income for the three and nine months ended June 30, 2003 includes no material gain or loss from the sale of portfolio securities.
During this year's third quarter and nine month period ending June 30, 2004, increases in U.S. land rig operating profits were more than offset by reductions in the Company's offshore platform rig operating profits, resulting in lower total net income (excluding portfolio sales) compared with those same periods last year.
U.S. land rig utilization for this year's third quarter increased to 89%, from 86% the previous quarter and 82% for last year's third quarter. Revenue days for the current third quarter increased to 7,071 days, compared with 6,758 days the previous quarter and 5,912 days during last year's third quarter. The substantial increase in revenue days reflects not only improved rig utilization, but also the addition and full utilization of the Company's fleet of newly constructed FlexRigs(R). Average cash margins per rig day for the third quarter ($3,657 per day) were up from the previous quarter ($3,270 per day), and were virtually flat compared with last year's third quarter ($3,672 per day). (See accompanying segment data for complete statistics for all business segments.) Even with the increased depreciation as a result of the FlexRig3 construction, U.S. land rig operating profit for this year's third quarter of $9,579,000 was up 52% over the previous quarter and 25% over last year's third quarter.
U.S. Offshore Platform
Third quarter operating profit for the U.S. offshore platform rig segment fell slightly from the second quarter 2004, but was down substantially from last year's third quarter. Near the end of last year's third quarter, one rig was stacked after generating almost a full quarter of high margin dayrate. Additionally, $1.5 million of early termination income was recorded for that same rig during last year's third quarter. The Company also had two rigs that were on full dayrate during last year's third quarter that were on reduced standby rates during this year's third quarter. Utilization for the third quarter 2004 was 52%, compared with 42% during the previous quarter and 54% for last year's third quarter. At the present time, the Company has seven of its twelve available rigs working or receiving standby income.
International rig utilization for the third quarter (53%) was up compared to the previous quarter (51%), and compared to last year's third quarter (43%). Third quarter 2004 international operating profit improved from the previous quarter, but results were hampered by lower rig activity and cash margins in Ecuador, lower income associated with changing out a rig in Argentina and reduced income associated with the winding down of operations in Chad. Venezuela operating profit for this year's third quarter improved by approximately $1.5 million from the previous quarter, but results did not meet expectations due to increased operating costs and reduced income resulting from more days used for moving rigs than normally experienced during a quarter.
Company President and C.E.O., Hans Helmerich commented: "We are encouraged by the steady strengthening of U.S. land rig demand and the long anticipated up-tick in dayrates we saw toward the end of the reporting period. We are also seeing positive movement in our international markets as well. We would expect these positive trends to continue as customers respond to strong commodity pricing fundamentals."
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