Highlights for the Quarter
--Charter hire revenues of $59.9 million for the second quarter, representing a 19% increase over charter hire revenues of $50.5 million for the first quarter of 2006. --Operating income of $20.2 million compared with $19.6 million for the first quarter, despite a $4.4 million ($0.18 diluted earnings per share) sequential increase in maintenance and classification costs. --Expansion into international markets continued with the previously announced partnership with China Oilfield Services Limited ("COSL") for the development and provision of marine offshore support services primarily in Southeast Asia and the mobilization of two more vessels to West Africa.
(In thousands, except per share data and day rates) Three months Three months ended ended June 30, 2006 March 31, 2006 ------------- -------------- Charter hire revenues $59,897 $50,482 Operating income 20,249 19,553 Net income 12,139 12,378 Diluted EPS $0.80 $0.82 Day Rates: Supply / Anchor Handling (North Sea class) $19,245 $15,836 Supply Vessels (Gulf class) 11,665 10,202 Utilization: Supply / Anchor Handling (North Sea class) 93% 94% Supply Vessels (Gulf class) 65% 64%
Charter hire revenues for the quarter ended June 30, 2006, of $59.9 million increased $9.4 million compared to the first quarter of 2006 primarily due to the increased average day rates for our North Sea and Gulf class vessels. Although revenues increased significantly from the previous quarter, most of the increase was offset by increases in operating expenses due to the timing of maintenance & classification (M&C) work on North Sea class vessels and the mobilization of two vessels to West Africa.
In the Gulf of Mexico, we continue to be aggressive with regard to bidding vessels and our revenue this quarter is partially attributable to continued strength of day rates in the Gulf of Mexico. As of August 7, all of our active Gulf of Mexico vessels are working under term contracts.
In the North Sea, our financial performance was bolstered by two of our anchor handling vessels operating in the spot market during a quarter that experienced record-setting day rates. Currently we have 76% of days contracted for our North Sea class vessels for the balance of 2006.
In July 2006, North Sea day rates averaged $22,676 with utilization of 95% while day rates for our Gulf class supply vessels averaged $11,779 with utilization of 69%, or 92% for all actively marketed vessels.
During the quarter, the Company mobilized two vessels (compared to none in the first quarter) to West Africa at a cost of $1.1 million. In addition, M&C work was completed on 9 vessels, including 5 North Sea class vessels, at a total cost of $7.2 million. This resulted in a $4.4 million cost increase compared with the first quarter of 2006 during which M&C work was performed on only one of our larger North Sea class vessels. The total number and mix of planned drydockings for 2006 has not changed. Trevor Turbidy, President and Chief Executive Officer, commented, "Generally, M&C work on our larger North Sea class vessels is more costly than on our Gulf class vessels, so the impact of mix can be more significant than the number of vessels drydocked. Consequently, our policy to expense M&C costs as incurred can cause earnings to be uneven from quarter to quarter."
Trico's President and Chief Executive Officer, Trevor Turbidy, commented, "This quarter, we continued to deliver on our strategy of expanding our presence into growing international markets. Our partnership with COSL provides us with a well-positioned partner in one of the world's fastest growing markets for energy consumption. Also, since the shareholder agreement provides that the four North Sea vessels and a Gulf class vessel are bareboated by Trico until the later of December 31, 2007 or the conclusion of any existing contract for such vessel at such time, it also provides us with the option to work our vessels in markets with the highest return. In addition to our expansion into Southeast Asia, we mobilized two additional vessels to West Africa. With these two initiatives we have made significant progress towards our goal of reducing our stacked fleet to zero." Turbidy concluded, "Demand in all of our markets remains strong and we are actively bidding term contracts for upcoming projects."
Trico provides a broad range of marine support services to the oil and gas industry, primarily in the North Sea, Gulf of Mexico, West Africa, Mexico, and Brazil. The services provided by the company's diversified fleet of vessels include the transportation of drilling materials, supplies and crews to drilling rigs and other offshore facilities; towing drilling rigs and equipment from one location to another; and support for the construction, installation, repair and maintenance of offshore facilities. Trico has its principal office in Houston, Texas.
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