Jon Marshall, GlobalSantaFe President and Chief Executive Officer said, "Our first-quarter results reflect improving conditions in substantially every market we serve as well as a return to more normal operating income margins for our drilling management services segment. A highlight in the first quarter was the completion of our four-year newbuild program with the delivery of our two ultra-deepwater semisubmersible drilling rigs, the GSF Development Driller I and GSF Development Driller II, which will expand our ultra-deepwater capabilities and generate substantial income when they commence multi-year contracts in July. With the addition of these two rigs and increasing dayrates throughout our fleet, we expect to see earnings acceleration in the second half of the year, continuing into 2006."
First Quarter Analysis
The improvement in net income for the first quarter of 2005 primarily reflects an increase in contract drilling operating income to $55.2 million from $15.9 million in the same quarter of the previous year. In addition to the contributions of the recently constructed GSF Constellation I and II, operating income from the contract drilling segment benefited from higher rig utilization and dayrates, partially offset by higher repair and maintenance expenses. Average rig utilization and average revenues per day for the first quarter of 2005 increased to 91% and $68,400 respectively from 82% and $60,100 respectively in the same quarter of the previous year.
For the first quarter of 2005, our drilling management services and oil and gas segments reported combined operating income of $16.0 million, up from $7.9 million in the same period of 2004. The higher combined operating income primarily reflects improved average margins on 26 turnkey projects and higher oil production following the initiation of production from the Broom Field in the North Sea in August 2004.
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