"Our improved first quarter results reflect solid operating performance and ongoing strength across international offshore drilling markets," said GlobalSantaFe President and CEO Jon Marshall. "Continuing world GDP growth and the attendant growth in hydrocarbon demand, coupled with increasing depletion in a number of the world's major oilfields, all support a positive outlook of long-term demand for our industry."
GlobalSantaFe recognized pre-tax gains of $56.7 million during the first quarter of 2007 for insurance recoveries of $31.9 million related to 2005 hurricane damage and $24.8 million from the sale of the GSF High Island III jackup rig, which was severely damaged by Hurricane Rita. In addition, the company recorded a gain of $5.7 million in the first quarter of 2007 on the reversal of contingent tax liabilities following the conclusion of foreign tax audits covering a portion of its land rig operations that were discontinued in 2004. These three items resulted in after-tax gains totaling $48.2 million.
GlobalSantaFe continued to repurchase its stock during the first quarter under a $2 billion buyback program authorized by its board of directors in March 2006. The company has repurchased $1.3 billion of its ordinary shares through March 31, 2007, including $200 million purchased during the first quarter of this year. By the close of the first quarter, the company had retired 22.8 million shares, or 9.2 percent of the shares that were outstanding at the commencement of this share repurchase program.
First Quarter 2007 Analysis
During the first quarter of 2007, the company's contract drilling segment contributed operating income of $359.5 million, an increase of $179.3 million compared with the same period of 2006. This improvement was due primarily to a 58 percent increase in average revenues per day to $159,500 per rig during the first quarter of 2007 from $101,000 in the first quarter of 2006, partially offset by higher operating expenses during the period.
The combined drilling management services and oil and gas segments reported operating income of $2.8 million on revenues of $135.8 million for the first quarter of 2007, compared with operating income of $8.1 million on revenues of $161.3 million in the first quarter of 2006. While the segment reported a total of 16 turnkey projects during the first quarter of 2007, compared with 18 in the first quarter of 2006, the decline in operating income was primarily related to U.K. oil liftings that were deferred to the second quarter of 2007.
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