GlobalSantaFe Announces Second Quarter 2005 Earnings; Revenues Jump 50%

GlobalSantaFe Corporation (NYSE: GSF) reported net income for the quarter ended June 30, 2005, of $85.1 million, or $0.35 per diluted share, on revenues of $574.8 million, as compared to net income of $84.0 million, or $0.36 per diluted share, on revenues of $382.1 million for the same quarter in 2004.

Net income for the second quarter of 2004 included items totaling $86.3 million, or $0.37 per diluted share, comprised of an after tax gain of $113.1 million from the sale of the company's land drilling operations in May 2004, an after tax expense of $5.8 million to exit the land rig business and an after tax loss of $21.0 million related to the early retirement of debt. Excluding these items, the company incurred a net loss of $2.3 million, or $0.01 per diluted share, for the second quarter of 2004.

For the six months ended June 30, 2005, the company reported net income of $135.3 million, or $0.56 per diluted share, on revenues of $1.1 billion, as compared to net income of $92.7 million, or $0.40 per diluted share, on revenues of $762.1 million for the corresponding period in 2004. Net income for the first six months of 2004 included income from discontinued operations of $114.6 million, or $0.49 per diluted share, relating to the land drilling operations and the loss of $21.0 million, or $0.09 per diluted share, on the early retirement of debt.

"Our second quarter results were excellent, and as we enter the second half of the year, we see continued strengthening in every major offshore drilling market in the world," said Jon Marshall, GlobalSantaFe's President and Chief Executive Officer. "Dayrates that we've secured over the past few months have exceeded our historical highs for all rig classes. We're especially pleased with the very attractive dayrates we've recently secured on long-term commitments commencing around the end of 2006 for all three of our ultra-deepwater drillships. These term contracts give us increasing confidence in the strength and duration of this very robust market."

Second Quarter Analysis

Income from continuing operations for the second quarter of 2005 improved $111.1 million from the second quarter of 2004, or $90.1 million excluding the $21.0 million after tax loss on the early retirement of debt in the 2004 period. The improvement largely reflects an increase of $85.7 million in contract drilling operating income to $88.4 million from $2.7 million in the same quarter of the previous year. The improvement in the contract drilling segment primarily reflects the contributions of the GSF Constellation I and GSF Constellation II premium jackup rigs as well as higher average rig utilization and dayrates for the remainder of the fleet, partially offset by labor cost increases across the fleet, and repair and maintenance costs associated with the GSF Explorer drillship and the reactivation of the GSF Arctic II semisubmersible. In the second quarter of 2005, average rig utilization and average revenues per day rose to 95% and $74,900, respectively, from 82% and $61,000 in the same period of 2004.

For the second quarter of 2005, our drilling management services and oil and gas segments reported combined operating income of $21.1 million, up from $9.4 million in the same period of 2004. The increased combined operating income primarily reflects improved performance on 31 turnkey projects, higher oil and gas prices, and higher oil production, driven in large part by the North Sea's Broom Field, which began producing in August 2004.

About GlobalSantaFe

GlobalSantaFe is a leading worldwide offshore oil and gas drilling contractor offering a full range of equipment and drilling management services. The company's diverse and technologically advanced fleet of 59 offshore rigs includes premium and heavy-duty, harsh-environment jackups, semisubmersibles, and dynamically positioned ultra-deepwater drillships. The company also operates two semisubmersibles owned by others. GlobalSantaFe is the world's leading provider of turnkey drilling and drilling management services. More information can be found at http://www.globalsantafe.com .

Conference Call

GlobalSantaFe will hold a publicly accessible analyst conference call to discuss its second quarter 2005 financial results. The call will begin at 10 a.m. Central Daylight Time (CDT) (11 a.m. Eastern Daylight Time) on Thursday, August 4, 2005. Interested parties may listen to the call over the Internet or by telephone. To the extent not provided in the call, reconciliations of any non-GAAP measures discussed in the call will be available on the investor relations page of our website in the form of this earnings release or other materials. The investor relations page of the company's website may be accessed by going to the company's website (http://www.globalsantafe.com ) and clicking on "Investor Relations." (To participate on the live call, dial 719- 457-2679, or go to the GlobalSantaFe Web site (http://www.globalsantafe.com ) at least 15 minutes early to register and to download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available starting at 1:00 p.m. CDT by dialing 719-457-0820 (reference confirmation code 449084) or through GlobalSantaFe's Web site (http://www.globalsantafe.com ) until 12:00 a.m. CDT on August 11, 2005.

Forward-Looking Statements

Under the Private Securities Litigation Reform Act of 1995, companies are provided a "safe harbor" for discussing their expectations regarding future performance. We believe it is in the best interest of our shareholders and the investment community to use these provisions and provide such forward-looking information. We do so in this news release and in other communications. Our forward-looking statements in this news release include our statements that:

    (a) as we enter the second half of the year, we see continued
        strengthening in every major offshore drilling market in the world;
    (b) the work under contracts recently secured for our three
        ultra-deepwater drillships will commence around the end of 2006;
    (c) these term contracts give us increasing confidence in the strength
        and duration of this very robust market; and
    (d) other statements that are not historical facts.

Our forward-looking statements speak only as of the date of this news release and are based on available industry, financial and economic data and our operating and financing plans as of that date. They are also inherently uncertain, and investors must recognize that events could turn out to be materially different from what we expect.

Factors that could cause or contribute to such differences include, but are not limited to: (a) operating hazards and delays; (b) competition for skilled labor; (c) the amount of our contract backlog; (d) general economic and business conditions; and (e) such other risk factors as may be discussed in our latest annual report on Form 10-K and subsequent reports filed with the U.S. Securities and Exchange Commission.

We disclaim any obligation or undertaking to disseminate any updates or revisions to our statements, forward-looking or otherwise, to reflect changes in our expectations or any change in events, conditions or circumstances on which any such statements are based.



                          GlobalSantaFe Corporation
                  Condensed Consolidated Statement of Income
                   (In millions, except per share amounts)


                                         Three Months Ended  Six Months Ended
                                              June 30,           June 30,
                                           2005      2004     2005      2004
    Revenues:
       Contract drilling                 $ 403.8   $ 274.4  $ 738.3   $ 543.9
       Drilling management services        156.0     102.1    298.0     207.8
       Oil and gas                          15.0       5.6     27.1      10.4
         Total revenues                    574.8     382.1  1,063.4     762.1

    Expenses:
       Contract drilling                   250.8     211.3    466.0     402.7
       Drilling management services        145.1      95.6    277.3     196.0
       Oil and gas                           2.7       1.7      6.5       3.1
       Depreciation, depletion and
        amortization                        68.5      62.8    136.4     127.2
       Gain on sale of assets               (1.1)      ---     (1.1)     (2.7)
       Impairment loss on long-lived
        assets                               ---       ---      ---       1.2
       General and administrative           14.3      12.9     30.2      28.8
         Total operating expenses          480.3     384.3    915.3     756.3

         Operating income (loss)            94.5      (2.2)   148.1       5.8

    Other income (expense):
       Interest expense                    (11.9)    (16.6)   (24.2)    (33.1)
       Interest capitalized                 11.7      11.7     21.8      21.6
       Interest income                       5.6       2.7     10.8       5.7
       Loss on retirement of
        long-term debt                       ---     (32.4)     ---     (32.4)
       Other                                (0.9)      1.1      ---      (0.8)
         Total other income (expense)        4.5     (33.5)     8.4     (39.0)

         Income (loss) before
          income taxes                      99.0     (35.7)   156.5     (33.2)

    Provision for income taxes:
       Current tax provision                 8.7       2.5     13.2       3.2
       Deferred tax provision (benefit)      5.2     (12.2)     8.0     (14.5)
         Total provision (benefit) for
          income taxes                      13.9      (9.7)    21.2     (11.3)

         Income (loss) from continuing
          operations                        85.1     (26.0)   135.3     (21.9)

    Income from discontinued operations,
     net of tax effect                       ---     110.0      ---     114.6

    Net income                             $85.1    $ 84.0   $135.3    $ 92.7


    Earnings (loss) per ordinary share
     (Basic):
       Income (loss) from continuing
        operations                         $0.36    $(0.11)  $ 0.57    $(0.09)
       Income from discontinued
        operations                         $ ---    $ 0.47   $  ---    $ 0.49
         Net income                        $0.36    $ 0.36   $ 0.57    $ 0.40

    Earnings (loss) per ordinary share
     (Diluted):
       Income (loss) from continuing
        operations                         $0.35    $(0.11)  $ 0.56    $(0.09)
       Income from discontinued
        operations                         $ ---    $ 0.47   $  ---    $ 0.49
         Net income                        $0.35    $ 0.36   $ 0.56    $ 0.40

    Average ordinary shares:
       Basic                               239.7     234.5    238.9     234.4
       Diluted                             243.5     234.5    242.8     234.4



                          GlobalSantaFe Corporation
                     Condensed Consolidated Balance Sheet
                                (In millions)

                                                    June 30,      December 31,
                                                      2005            2004
    Current assets:
       Cash and cash equivalents                  $   274.7       $   606.7
       Marketable securities                          284.8           201.9
       Accounts receivable, net of allowances         389.8           360.8
       Prepaid expenses                                28.6            31.7
       Other current assets                            38.6            23.5

         Total current assets                       1,016.5         1,224.6

    Net properties                                  4,362.6         4,329.9
    Goodwill                                          340.1           338.1
    Deferred income tax assets                         32.4            32.8
    Other assets                                       74.1            72.8

         Total assets                             $ 5,825.7       $ 5,998.2



    Current liabilities:
       Accounts payable                           $   182.3       $   210.8
       Current maturities of long-term debt             0.5           350.7
       Accrued liabilities                            200.2           211.5

         Total current liabilities                    383.0           773.0

    Long-term debt                                    558.1           554.4
    Capital lease obligations                          24.4            31.6
    Deferred income tax liabilities                    46.7            39.0
    Other long-term liabilities                       150.3           133.8

    Shareholders' equity:
       Ordinary shares and additional
        paid-in capital                             3,123.2         3,006.7
       Retained earnings                            1,582.9         1,501.6
       Accumulated other comprehensive loss           (42.9)          (41.9)

         Total shareholders' equity                 4,663.2         4,466.4

         Total liabilities and
          shareholders' equity                    $ 5,825.7       $ 5,998.2



                          GlobalSantaFe Corporation
                Condensed Consolidated Statement of Cash Flows
                                (In millions)

                                                        Six Months Ended
                                                            June 30,
                                                      2005            2004

    Cash flows from operating activities:
       Net income                                   $ 135.3         $  92.7
       Adjustments to reconcile net income to
        net cash flow provided by operating
        activities:
        Depreciation, depletion and amortization      136.4           131.2
        Deferred income taxes                           8.0           (18.9)
        Gain on sale of assets                         (1.1)         (114.7)
        Impairment loss on long-lived assets            ---             1.2
        Loss on retirement of long-term debt            ---            32.4
        (Increase) decrease in accounts receivable    (28.2)           24.6
        (Increase) decrease in prepaid expenses
         and other current assets                     (10.5)           16.4
        Increase (decrease) in accounts payable        29.2           (13.4)
        Decrease in accrued liabilities               (30.2)          (36.9)
        Decrease in deferred revenues                  (0.8)          (19.9)
        Increase in other long-term liabilities        13.6            18.2
        Payment of imputed interest on the Zero
         Coupon Bond Debentures                       (56.3)            ---
        Other, net                                     10.9             0.4
         Net cash flow provided by operating
          activities                                  206.3           113.3

    Cash flows from investing activities:
       Capital expenditures                          (228.2)         (235.6)
       Proceeds from sale of land drilling fleet
        assets                                          ---           316.5
       Proceeds from sales of properties
        and equipment                                   1.4            10.8
       Purchases of held-to-maturity marketable
        securities                                      ---          (169.2)
       Proceeds from maturities of held-to-maturity
        marketable securities                           ---           254.0
       Purchases of available for sale marketable
        securities                                   (173.2)            ---
       Proceeds from sales of available-for-sale
        marketable securities                          90.5            10.2
        Net cash flow (used in) provided by
         investing activities                        (309.5)          186.7

    Cash flows from financing activities:
       Dividend payments                              (35.7)          (23.4)
       Payments on long-term debt                    (299.8)         (331.7)
       Payments on capitalized lease obligations       (8.1)           (8.0)
       Proceeds from issuance of ordinary shares      914.3            18.2
       Ordinary Shares repurchased and retired       (799.5)            ---
       Other                                            ---             6.1
        Net cash flow used in financing activities   (228.8)         (338.8)

    Decrease in cash and cash equivalents            (332.0)          (38.8)
    Cash and cash equivalents at beginning
     of period                                        606.7           711.8

    Cash and cash equivalents at end of period      $ 274.7         $ 673.0



                          GlobalSantaFe Corporation
                  Results of Operations by Business Segment
            (Dollars in millions, except average revenues per day)


                                         Three Months Ended  Six Months Ended
                                               June 30,          June 30,
                                            2005     2004      2005     2004
    Revenues:
       Contract drilling (A)              $ 403.8  $ 274.9  $  741.3  $ 547.1
       Drilling management services         160.2    105.4     304.5    212.6
       Oil and gas                           15.0      5.6      27.1     10.4
       Intersegment elimination              (4.2)    (3.8)     (9.5)    (8.0)
         Total revenues                   $ 574.8  $ 382.1  $1,063.4  $ 762.1

    Operating income (loss):
       Contract drilling                  $  88.4  $   2.7  $  143.6  $  18.6
       Drilling management services          10.9      6.5      20.7     11.8
       Oil and gas                           10.2      2.9      16.4      5.5
       Gain on sale of assets                 1.1      ---       1.1      2.7
       Impairment loss on long-lived
        assets                                ---      ---       ---     (1.2)
       Restructuring costs                    ---      ---       ---      ---
       Corporate operating expenses         (16.1)   (14.3)    (33.7)   (31.6)

         Total operating income (loss)       94.5     (2.2)    148.1      5.8

    Interest expense, net                     5.4     (2.2)      8.4     (5.8)
    Loss on retirement of long-term debt      ---    (32.4)      ---    (32.4)
    Other                                    (0.9)     1.1       ---     (0.8)
         Income (loss) before income
          taxes                           $  99.0  $ (35.7) $  156.5  $ (33.2)


    Depreciation, depletion and
     amortization included in operating
     income (loss):
       Contract drilling                  $  64.6  $  60.4  $  128.7  $ 122.6
       Drilling management                    ---      ---       ---      ---
       Oil and gas                            2.1      1.0       4.2      1.8
       Corporate                              1.8      1.4       3.5      2.8
         Total depreciation, depletion
          and amortization                $  68.5  $  62.8  $  136.4  $ 127.2



    Average rig utilization rate              95%      82%       93%      82%

    Average revenues per day (B)          $74,900  $61,000  $ 71,700  $60,600

    Turnkey wells drilled                      24       17        47       36
    Turnkey well completions                    7        5        10       13


     (A)  Expense reimbursements included in Contract drilling revenues and
          expenses totaled $23.9 million and $7.3 million for the three months
          ended June 30, 2005 and 2004, respectively, and $35.6 million and
          $16.8 million, respectively, for the six months ended June 30, 2005
          and 2004.  Operating income for these periods was not affected by
          these reimbursements.

     (B)  Average revenues per day is the ratio of rig-related contract
          drilling revenues divided by the aggregate contract days, adjusted
          to exclude days under contract at zero dayrate.  The calculation of
          average revenues per day excludes non-rig related revenues,
          consisting mainly of management fees and reimbursed expenses, of
          $27.5 million and  $9.4 million, respectively, for the three months
          ended June 30, 2005 and 2004, respectively, and $39.7 million and
          $21.0 million, respectively, for the six months ended June 30, 2005
          and 2004.

     Contact Information
     Investors:                    Media:
     Richard Hoffman               Julie Tushingham
     Tel: 281-925-6441             Tel: 281-925-6443
                                   Cell: 713-417-4763

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