For the nine months ended Sept. 30, 2006, GlobalSantaFe reported net income of $657.0 million, or $2.67 per diluted share, on revenues of $2.4 billion, compared with net income of $242.9 million, or 99 cents per diluted share, on revenues of $1.7 billion for the corresponding nine-month period of 2005.
"Reflecting the continued strength of international offshore drilling markets, our contract drilling segment improved significantly on a strong second quarter performance with record revenues and operating income in the third quarter," said GlobalSantaFe President and CEO Jon Marshall. "These positive results were diminished by an unusually large loss on one turnkey well in the U.S. Gulf of Mexico and by timing of oil sales in the North Sea."
GlobalSantaFe continued to repurchase its ordinary shares during the third quarter under a $2 billion buyback program authorized by its board of directors on March 3, 2006. The company repurchased $785 million of its shares through Sept. 30, 2006, including $270 million during the third quarter.
Third Quarter 2006 Analysis
The significant improvement in third quarter 2006 net income was primarily due to a 139 percent increase in operating income to $281.8 million from $118.1 million in the prior-year period. This improvement reflects higher contract drilling revenues from increased dayrates and continued high fleet utilization, which contributed to a 128 percent increase in contract drilling operating income to $307.2 million for the third quarter of 2006 from $134.8 million in the same quarter of 2005. Higher third quarter 2006 contract drilling revenues were partially offset by higher labor, insurance, repair and maintenance and other operating expenses, compared with the same period of 2005.
In the third quarter of 2006, average revenues per day from contract drilling increased 60 percent to $130,500 per rig from $81,600 in the third quarter of 2005. The company reported average fleet utilization of 97 percent in the third quarter of 2006, compared with 98 percent in the same period of 2005.
The combined drilling management services and oil and gas segments reported a net operating loss of $5.3 million on revenues of $210.0 million for the third quarter of 2006, compared with operating income of $9.0 million on revenues of $161.7 million in the third quarter of 2005. The operating loss reported in the third quarter of 2006 was primarily related to a $13.0 million estimated loss on a turnkey well in the U.S. Gulf of Mexico, $13.1 million of profit deferrals and lower oil sales. The drilling management services segment reported a total of 29 turnkey projects during the third quarter of 2006, compared with 20 in the third quarter of 2005. Oil revenues from the oil and gas segment were down $3.9 million from the same quarter of 2005, due to the timing of Broom Field production sales that were delayed until the fourth quarter.
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