Net income for the six months ended June 30, 2006 was $344.5 million ($2.24 per diluted share) on revenues of $863.9 million, compared to net income of $107.0 million ($0.71 per diluted share) on revenues of $456.9 million for the six months ended June 30, 2005.
The average day rate for ENSCO's operating jackup rig fleet for the quarter ended June 30, 2006, increased by 75% to $114,300 compared to $65,400 in the prior year quarter. Utilization of the Company's jackup fleet increased to 97% in the most recent quarter, up from 88% in the quarter ended June 30, 2005.
The Company repurchased 845,000 shares of its common stock during the second quarter of 2006 at an average price of approximately $48 per share as part of a $500 million share repurchase authorization approved by the Company's Board late in the first quarter of 2006. ENSCO has repurchased approximately 1.1 million shares at an average price of approximately $48 per share since commencement of the program.
Carl Thorne, Chairman and Chief Executive Officer of ENSCO, commented on the Company's current results and outlook: "We are pleased to announce our third consecutive record quarter in terms of both revenue and net income. The average day rate for our jackup fleet in the second quarter increased sequentially by 11% over the prior quarter consistent with our expectations, with a 12% improvement in the Gulf of Mexico being the most significant.
"ENSCO 107, a jackup rig that suffered minor damage while preparing to drill on a location in Vietnam, is now in a shipyard undergoing repairs. A thorough inspection of the rig confirmed no significant damage to the legs or jacking system as the result of the punch-through. Contract drilling expense for the second quarter includes a $3.0 million provision for the estimated cost of repairs. Repairs are expected to be completed by the end of July, after which the rig will mobilize back to Vietnam to resume its contract. ENSCO 107 will earn 75% of the full operating rate while out of service.
"As anticipated, with our fleet enhancement program now largely complete, we achieved higher average fleet utilization as evidenced by the 97% utilization rate realized during the second quarter. We do, however, expect to incur approximately five months of shipyard downtime starting in September 2006 on one of our 250' Gulf of Mexico jackup rigs, ENSCO 83, as we complete preparation of the rig for possible international assignment.
"Our rig construction projects remain on schedule and within budget. Our new ultra-high specification jackup rig, ENSCO 108, is scheduled for delivery in the second quarter of 2007. The rig is already committed for work in Southeast Asia following delivery. ENSCO 8500 and ENSCO 8501, our two new ultra-deepwater semisubmersible rigs, are scheduled for delivery in the second quarter of 2008 and first quarter of 2009, respectively. Both rigs are being built against firm multi-year contracts.
"We remain committed to our management transition plan announced early this year. Bill Chadwick has assumed his role as Executive Vice President and Chief Operating Officer, and is integrally involved in leading our worldwide operations. Dan Rabun has joined the Company as President and assumed a very active executive management role in ENSCO. Dan will succeed me as Chief Executive Officer effective January 1, 2007.
"We continue to remain confident with regard to our markets. Despite some recent moderation of jackup day rates in the Gulf of Mexico in anticipation of hurricane season, the average jackup day rate for rigs in our North and South America business unit reached an all-time high in the second quarter. International markets remain strong, and will likely continue to attract rigs from the Gulf of Mexico due to the term nature of these opportunities. We have, this year, already announced the mobilization of two of our Gulf of Mexico jackup rigs to Tunisia and the Middle East for term commitments. Two-thirds of our jackup fleet will be located internationally upon delivery of ENSCO 108 in 2007.
"We also remain positive with regard to our financial prospects. We currently expect to report sequentially improving quarters through the balance of this year and into 2007. Backlog continues to grow, and is now approaching $3 billion, up from $800 million early last year. We expect our cash generation to increase, enabling us to continue our efforts toward fleet expansion, and to accelerate stock repurchases as warranted."
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