Included in the quarter ended June 30, 2005 results is a $10.9 million ($0.07 per diluted share) after-tax gain from discontinued operations, comprised of $3.4 million ($0.02 per diluted share) of income related to the operation and sale of Venezuela barge drilling rigs and $7.5 million ($0.05 per diluted share) of income attributable to the operation and insurance settlement on ENSCO 64, the jackup rig that was declared a constructive total loss after sustaining damage by Hurricane Ivan last September. In addition, the Company elected to prepay $38.2 million of debt attributable to ENSCO 76 on June 15, 2005, and recognized other expense of $2.4 million ($1.6 million after tax, or $.01 per diluted share) associated with the prepayment.
Quarter ended June 30, 2005 income from continuing operations increased nearly fourfold from the prior year quarter, primarily due to higher day rates on the Company's Gulf of Mexico and North Sea jackup rigs, and increased utilization of the North Sea jackup fleet and the ENSCO 7500 deepwater semisubmersible rig. Income from continuing operations was $59.1 million ($0.39 per diluted share) for the quarter ended June 30, 2005, compared to $15.0 million ($0.10 per diluted share) for the quarter ended June 30, 2004.
ENSCO's net income was $111.8 million ($0.74 per diluted share) on revenues of $460.4 million for the six months ended June 30, 2005, compared to net income of $38.5 million ($0.26 per diluted share) on revenues of $349.0 million for the six months ended June 30, 2004. Income from continuing operations was $99.7 million ($0.66 per diluted share) for the six months ended June 30, 2005, compared to $34.8 million ($0.23 per diluted share) for the six months ended June 30, 2004.
The average day rate for ENSCO's operating jackup rig fleet for the quarter ended June 30, 2005, was $65,400 compared to $51,300 in the prior year quarter. Utilization of the Company's jackup fleet increased to 88% in the most recent quarter, up from 82% in the quarter ended June 30, 2004. Excluding rigs in a shipyard for contract preparation, regulatory inspection and enhancement, ENSCO's jackup utilization was 97% in the quarter ended June 30, 2005, compared to 87% in the prior year quarter.
Carl Thorne, Chairman and Chief Executive Officer of ENSCO, commented on the Company's outlook and markets: "We continue to see upward pressure on day rates, with all of our markets now in balance or undersupplied. Due to tight rig supply, our customers are addressing rig requirements for 2006 and beyond to ensure equipment availability.
"Two of our Gulf of Mexico jackup rigs (ENSCO 87 and ENSCO 89) are currently in shipyards for enhancement and life extension work, with redelivery scheduled for February 2006 and August 2005, respectively. A third rig (ENSCO 75) is undergoing spud can repair and is expected to return to service in August. ENSCO 86 remains to be addressed under our fleet enhancement program this year, with shipyard work expected to commence in September and continue until year-end.
"In Asia Pacific, ENSCO 67 remains in a shipyard for major enhancement with completion expected in late July. Two of our Middle East jackup rigs (ENSCO 94 and ENSCO 97) are currently in a shipyard undergoing preparatory work for contracts commencing in September. Three other jackup rigs in the region (ENSCO 88, ENSCO 95, and ENSCO 96) and one of our Southeast Asia jackups (ENSCO 56) will enter shipyards over the next several months to complete contractually required modifications prior to commencing work later this year or early in 2006.
"Construction of ENSCO 107 and ENSCO 108 continues, with delivery of these new high-specification jackup rigs scheduled for early 2006 and the first quarter of 2007, respectively. ENSCO 107 is committed for work in Vietnam commencing in May 2006 at a day rate in the range of $105,000 to $110,000.
"Our excellent second quarter results were achieved notwithstanding the aforementioned downtime associated with our fleet enhancement program and contract preparation activity, which impacted six jackups that were in shipyards part or all of the quarter. We expect continuing improvement in 2005 operating results with commencement of several term work commitments later this year and the visibility of continued day rate improvement. Additionally, with substantial completion of our rig enhancement program by early 2006 and delivery of ENSCO 107, we anticipate even stronger performance in 2006."
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