Pride International Reports Third Quarter Results
Pride International, Inc. reported net earnings for the third quarter 2006 of $89.3 million ($0.52 per diluted share) on record revenues of $642.8 million. For the same period in 2005, Pride reported net earnings of $68.9 million ($0.41 per diluted share) on revenues of $538.8 million. For the nine-month period ended September 30, 2006, Pride reported net earnings of $227.6 million ($1.32 per diluted share) on revenues of $1,826.2 million. For the corresponding nine- month period in 2005, Pride reported net earnings of $88.0 million ($0.55 per diluted share) on revenues of $1,482.3 million.
Results for the third quarter 2006 included gains on asset sales of $2.9 million, offset by expenses relating to the Audit Committee's ongoing investigation of $3.1 million, both net of tax. The third quarter 2005 included gains on sales of assets of $22.0 million, partially offset by a $0.9 million loss related to the early retirement of debt, which in total increased net earnings by $21.1 million ($0.12 per diluted share) during the period.
The Company reported record results in the third quarter, driven by improved pricing of the Company's international jackups, midwater semisubmersibles, and onshore operations. Rigs completing their shipyard projects during the third quarter returned to service at substantially higher dayrates, which more than offset the lower utilization related to an increase in shipyard days during the third quarter compared with the second quarter of this year. Consolidated earnings from operations for the third quarter 2006 were $155.6 million, as compared with $119.8 million in the third quarter 2005 and $125.2 million in the second quarter 2006. Earnings from operations during these periods included, on a pre-tax basis: gains on asset sales of $3.1 million and expenses relating to the Audit Committee's ongoing investigation of $5.1 million in the third quarter 2006; gains on asset sales of $22.1 million in the third quarter 2005; and gains on asset sales of $1.7 million and expenses relating to the Audit Committee's ongoing investigation of $8.7 million in the second quarter 2006. Excluding these items, operating results for the third quarter 2006 increased $59.9 million, or 60%, over the prior year and $25.4 million, or 19%, sequentially.
The Company recently changed the composition of its reporting segments to Offshore, Latin America Land and E&P Services. The Offshore segment includes all of the Company's deepwater, midwater, jackup and other offshore drilling fleet and operations. The Latin America Land segment includes all the Company's land-based drilling and workover rigs operating in Latin America, and the E&P Services segment includes the Company's exploration and production services in Latin America. Land-based operations outside of Latin America, labor contracts and engineering and management consulting services are reported under Other.
Earnings from operations for the Offshore segment for the third quarter 2006 totaled $135.1 million, an increase of $34.8 million, or 35%, compared with the third quarter 2005 and an increase of $20.2 million, or 18%, compared with the second quarter 2006. Operating income for the deepwater rigs totaled $39.2 million in the third quarter 2006, an increase of $7.6 million year-over-year and $9.3 million sequentially. The majority of the improvement during the third quarter 2006 was driven by the return to service of the semisubmersible Pride North America following completion of repairs during the second quarter 2006. Results for the midwater semisubmersible rigs also improved, as the return to service of the Pride North Sea during the third quarter was partially offset by shipyard time for the Pride South Atlantic and the Pride Venezuela.
The Company's jackup fleet benefited from the third quarter commencement of new contracts at significantly higher dayrates in international markets for the Pride Pennsylvania, the Pride California and the Pride Louisiana. Operating income for the jackups increased to $84.5 million, an increase of $36.0 million, or 74%, over the year-ago period and an increase of $5.1 million, or 6%, over the second quarter 2006 results, despite a 18% increase in jackup fleet shipyard time and a moderation in activity in the U.S. Gulf of Mexico. Average daily revenue per rig for the jackup fleet during the third quarter was $85,700 on 79% utilization compared with average daily revenue per rig of $47,800 on utilization of 97% for the third quarter 2005, and average daily revenue per rig of $78,600 on utilization of 88% for the second quarter 2006.
Earnings from operations for the Latin America Land segment for the third quarter 2006 rose to $33.0 million, an increase of $16.5 million, or double the year-ago period, and an increase of $4.6 million, or 16%, compared with the second quarter 2006. The increase in profitability for the land drilling and workover operations in Latin America were driven by improved pricing and operating efficiency, especially in Argentina and Colombia. Average daily revenue per rig for the land drilling fleet in Latin America increased to $15,600 as compared to $12,700 in the third quarter 2005, and $15,000 in the second quarter 2006. Average daily revenue per rig for the land workover fleet in Latin America was $6,200 as compared to $4,700 for the third quarter 2005, and $5,800 for the second quarter 2006.
Third quarter 2006 operating income for the Company's E&P Services segment of $8.3 million increased $2.7 million, or 48%, over the third quarter 2005 and $0.9 million, or 12%, sequentially. Increased activity and profitability for well completion projects in Argentina were the primary drivers for the improvement in the E&P Services segment.
At September 30, 2006, the Company's consolidated balance sheet reflected $1.07 billion in total debt and $94.8 million in cash and cash equivalents. During the nine-month period ended September 30, 2006, the Company reduced debt by $180 million and increased cash by $48 million.
The Company invested approximately $112 million in capital expenditures in the third quarter 2006 and approximately $279 million for the nine months ended September 30, 2006, as compared to $39 million and $123 million for the same periods in 2005. Capital expenditures increased year-over-year primarily due to shipyard projects, which have involved four semisubmersibles and eight jackups during 2006.
Louis A. Raspino, President and Chief Executive Officer, commented, "Our third quarter earnings, the highest in the Company's history, were the result of the continuing momentum of increasing dayrates more than offsetting ongoing shipyard projects during the quarter. While the U.S. Gulf of Mexico market is experiencing near-term softness, we expect increased drilling demand, coupled with decreased rig supply, to positively affect dayrates in 2007 in the region. Internationally, we continue to see evidence of an extended period of robust drilling demand, especially among our semisubmersible fleet, where opportunities to contract long term at attractive dayrates are available. During the quarter, we continued to invest in shipyard projects to prepare our rigs for contracts that we believe will provide significant investment returns."