Included in first quarter 2005 results is other income (non-recurring) of $3.1 million ($2.2 million after tax, or $0.01 per diluted share) related to the resolution of insurance claims associated with two rigs (jackup rig ENSCO 64 and platform rig ENSCO 25) damaged by Hurricane Ivan. Additionally, as previously reported, the Company expects to recognize an after-tax gain of approximately $8 million during the second quarter of 2005 upon receipt of $65 million of insurance proceeds related to the ENSCO 64 loss.
The average day rate for ENSCO's operating jackup rig fleet was $60,000 in the first quarter of 2005, compared to $50,200 in the prior year quarter. Utilization of the Company's jackup fleet was 85% in the most recent quarter, unchanged from the prior year. Excluding rigs in a shipyard for contract preparation, regulatory inspection, and repair and enhancement, ENSCO's jackup utilization was 93% in the most recent quarter, compared to 91% in the year earlier period.
Carl Thorne, Chairman and Chief Executive Officer of ENSCO, commented on the Company's outlook and markets: "We continue to see improvement in all of our major markets. As we observed earlier this year, our markets were expected to be in balance by mid-year. That point of global equilibrium with regard to jackups appears to be materializing earlier than anticipated, and day rates have responded accordingly.
"Two of our Gulf of Mexico jackups, ENSCO 89 and ENSCO 99, are currently in shipyards undergoing enhancement and life extension work, with redelivery scheduled for late July and early May, respectively. One of our Asia Pacific jackups, ENSCO 67, remains in a Singapore shipyard for major enhancement, with redelivery anticipated in July 2005. ENSCO 76 is in a Gulf of Mexico shipyard undergoing minor modifications in preparation for its contract in Saudi Arabia, which is expected to commence in August 2005. Only one major rig enhancement project, ENSCO 87, and one life extension upgrade, ENSCO 86, remain on our agenda for this year. Upon completion of this activity, anticipated by the end of 2005, we will have substantially concluded our enhancement program, and consequently expect improvement in fleet utilization.
"Construction of ENSCO 107, a KFELS Mod V-B ultra-high specification jackup rig continues, with delivery anticipated by year-end. As previously announced, we have entered into an agreement to build the ENSCO 108, also a KFELS Mod V-B jackup, with completion of that rig expected during the first quarter of 2007. The ENSCO 108 will be a replacement for ENSCO 64.
"We remain positive relative to our prospects for the remainder of this year and beyond, particularly in light of the fact that we are nearing completion of our fleet renewal program, and the expanding opportunities we see for the enhanced fleet."
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