At June 30, 2005, the Company's consolidated balance sheet reflected $2.56 billion in shareholders' equity, $223.5 million in cash, restricted cash and marketable debt securities, and $442.5 million in total debt. Net cash provided by operating activities for the six month period ended June 30, 2005 was $190.2 million. Debt as a percentage of total capitalization decreased from 18 percent as of December 31, 2004 to 15 percent as of June 30, 2005. During the first half of 2005, the Company repaid $65 million principal amount of the outstanding balance on its $300 million bank credit facility.
James C. Day, Chairman, Chief Executive Officer and President, said, "We continue to work closely with key clients with strong prospect inventories to assure their access to premium drilling units. One method of access is through longer term contracts. Further, inquiries for deepwater units, specifically our Bingo 3 and 4 hulls, remains strong."
Net income for the second quarter of 2005 increased 61 percent from the first quarter of 2005 as average dayrates for the units in the U.S. Gulf of Mexico and North Sea continued to improve and operating days increased with the completion of planned shipyard projects on the Noble Paul Romano, Noble Roger Eason, and Noble Lewis Dugger in the second quarter of 2005.
Compared to the second quarter of 2004, net income in the second quarter of 2005 more than doubled primarily due to an increase in worldwide utilization and higher average dayrates in the U.S. Gulf of Mexico, North Sea and Brazil. Worldwide rig utilization increased to 97 percent in the second quarter of 2005 from 84 percent in the second quarter of 2004. Operating days in Nigeria increased 182 days due to contracts for the Noble Ed Noble and the Noble Don Walker. Operating days in the Middle East increased by 220 days in the second quarter of 2005 over the second quarter of 2004 primarily due to the acquisitions of the Noble Cees van Diemen and Noble David Tinsley in the second half of 2004 and contributions from the Noble Dick Favor (which was in drydock in the second quarter of 2004).
The average dayrates for the jackup and deepwater rigs (capable of drilling in water depths of 4,000 feet or greater) in the U.S. Gulf of Mexico increased 33 and 13 percent, respectively, from the second quarter of 2004. Furthermore, in this region the Company has contract extensions through December 31, 2005 on the Noble Jim Thompson and Noble Paul Romano at dayrates of $175,000 and $170,000, respectively. The average dayrates in the North Sea increased $10,274 or 20 percent in the second quarter of 2005 from the second quarter of 2004. In Brazil, the Noble Paul Wolff commenced a two and one-half year contract for Petrobras in May 2005 at an initial dayrate of $154,000 to $156,000 plus a potential performance bonus of 20 percent. The average dayrate for the Noble Homer Ferrington, which was deployed to Nigeria in the fourth quarter of 2004, improved 53 percent over the average for the 2004 second quarter.
Offshore contract drilling services revenues from deepwater drilling units accounted for approximately 35 percent and 32 percent, respectively, of the Company's total contract drilling services revenues for the second quarter of 2005 and 2004, respectively. The Company currently operates six deepwater semisubmersibles in the Gulf of Mexico, one deepwater semisubmersible and three deepwater drillships offshore Brazil, and one deepwater semisubmersible in Nigeria. Contract drilling services revenues from international sources accounted for approximately 74 percent of the Company's total contract drilling services revenues for the second quarters of 2005 and 2004.
The average dayrate for the Company's international jackup rigs was $51,747 in the second quarter of 2005 compared to $50,277 in the second quarter of 2004. Utilization on these units increased from 85 percent in the second quarter of 2004 to 97 percent in the second quarter of 2005.
The increase in the Company's operating expenses in the second quarter of 2005 as compared to the same quarter of 2004 was mainly due to the increase in the number of operating days which was in part due to the addition of the Noble Cees van Diemen and Noble David Tinsley and in part due to higher rig utilization.
Day said, "We anticipate the speculative new build jackups entering the market can be absorbed; however, they may experience health, safety and environmental challenges as they attempt to man the new units in an extremely tight labor market."
A shipyard project on the Noble Paul Wolff is expected to commence during the fourth quarter of 2005. The Company also recently announced that five of their units currently operating in the Bay of Campeche, Mexico have received contract renewals from Pemex following the expiration of their respective initial contract terms. The Noble Leonard Jones (dayrate of $70,500) and the Noble John Sandifer, Noble Johnnie Hoffman and Noble Sam Noble (dayrate of $64,250) each received a two-year contract while the Noble Bill Jennings received a 669-day contract extension at a dayrate of $75,000. As previously announced, the Noble Lewis Dugger is currently operating in Mexico under a two-year contract from Pemex at a dayrate of $64,250.
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