Rowan Reports Improved Continuing Operating Results
|Wednesday, January 19, 2005
For the three months ended December 31, 2004, Rowan Companies, Inc. (NYSE:RDC) generated income from continuing operations of $17.3 million, or $.16 per share, on revenues of $210.2 million, compared to income of $7.6 million, or $.08 per share, on revenues of $170.3 million in the fourth quarter of 2003. Net income was $12.0 million, or $.11 per share, in the fourth quarter of 2004, compared to $4.4 million, or $.05 per share, in the fourth quarter of 2003.
For the year ended December 31, 2004, Rowan generated income from continuing operations of $27.2 million, or $.25 per share, on revenues of $709.9 million, compared to a loss of $3.9 million, or $.04 per share, on revenues of $554.6 million in 2003. Net income was $8.5 million, or $.08 per share, in 2004, compared to a net loss of $7.8 million, or $.08 per share, in 2003.
Continuing operations in each period include the Company's drilling and manufacturing divisions but exclude the aviation division which was sold on December 31, 2004. For the year ended December 31, 2004, Rowan incurred an after-tax loss from its discontinued aviation operations of $18.7 million, or $.18 per share, including the estimated loss on disposition recognized in the third quarter, compared to an after-tax loss of $3.8 million, or $.04 per share, in 2003.
Rowan's offshore rig utilization was 99% during the fourth quarter of 2004, versus 97% in the third quarter and 92% in the year-earlier period. Our average Gulf of Mexico day rate was $50,600 during the fourth quarter, up by $4,100, or 9%, from the third quarter and by $8,200, or 19%, from the year-earlier period. Land rig utilization was 83% during the fourth quarter of 2004, versus 80% in the year-earlier period. Our average land rig day rate was $13,800 during the fourth quarter, up by $1,400, or 12%, from the third quarter and by $2,700, or 24%, from the year-earlier period.
Danny McNease, Chairman and Chief Executive Officer, commented, "The year 2004 marked a return to profitability for our drilling operations, and the trend over the last half of the year was decidedly favorable. Fourth quarter drilling revenues were an all-time quarterly high for Rowan and our average Gulf of Mexico day rate in December was the highest it has been in more than four years. We believe that this momentum will continue in 2005, assuming that oil and natural gas prices remain firm.
"Gorilla V just began a nine-month drilling assignment in the Glenelg Field in the North Sea. Before the end of this month, the Scooter Yeargain will begin its one-year assignment to drill an ultra deep well in the Gulf of Mexico.
"Gorilla VII continues to produce two of the wells it has drilled in the North Sea's Ardmore Field while the third well is being re-completed. A fourth well is scheduled to spud during the first quarter. In late December, we extended the contract at the existing day rate through 2005 and collected $9.6 million toward our outstanding receivables, which paid in full all amounts that originated prior to the fourth quarter. However, the contract could terminate earlier if field production is inadequate and our collection of additional amounts remains dependent upon cash flows from the project. As a result, we have deferred recognizing further drilling revenues under the contract until they are collected. Accordingly, we did not record fourth quarter revenues totaling $10.4 million, which reduced net income during the period by approximately $.06 per share, and left the year-end balance of recorded receivables related to this contract at zero. Even after this reduction, the Company has realized almost $65 million in revenues under the contract since its mid-2003 inception, including more than $35 million during 2004. The contract was extended following new investment by the project's owners and provides for payment of our unrecorded revenues from project cash flows. Assuming that field production remains sufficient to sustain the project throughout the year, we believe the contract will continue to generate significant revenues for Rowan in 2005.
"The prospects for our manufacturing division remain solid. Fourth quarter revenues exceeded our previous quarterly high by 27%. Our manufacturing backlog of $79 million is at an all-time high, nearly doubling over the past year. Strong commodity prices should continue to generate demand for our front-end loaders. Our drilling products group recently organized an alliance with other drilling equipment manufacturers to market complete rig packages under the name SourceOne."