Third quarter 2007 results included after-tax income of $336 million, or $1.12 per diluted share, related to $276 million for the TODCO tax sharing agreement, $52 million for changes in estimated taxes, primarily foreign tax credits, and an $8 million gain resulting from the sale of the drilling barge Searex VI. For the quarter ended September 30, 2006, net income included $37 million, or $0.12 per diluted share, primarily from the sale of two tender-assist rigs.
For the nine months ended September 30, 2007, net income totaled $2,075 million, or $6.91 per diluted share, on revenues of $4,300 million. For the same period last year, net income totaled $764 million, or $2.31 per diluted share, on revenues of $2,696 million. Results for the first nine months of 2007 include $369 million, or $1.22 per diluted share, including $33 million recognized during the first half of 2007 from rig sales and discrete tax items plus the $336 million recognized during the third quarter as noted above. For the nine months ended September 30, 2006, net income included $191 million, or $0.57 per diluted share, primarily from the sale of six rigs.
Operations Quarterly Review
Revenues for the three months ended September 30, 2007 increased 7.3% to $1,538 million compared to revenues of $1,434 million during the three months ended June 30, 2007. The quarter-to-quarter increase in revenues was primarily due to a higher average dayrate, partially offset by a slight reduction in days in service. The third quarter 2007 average dayrate reached a record high of $219,700, up 8.5%, compared to $202,400 during the second quarter 2007. The increase in average dayrate was experienced across all rig categories, primarily as a result of rigs commencing new contracts at the higher prevailing current dayrates.
For the three months ended September 30, 2007, operating income before general and administrative expenses totaled $780 million, a 10.6% increase from $705 million reported for the second quarter 2007. The $75 million increase in operating income before general and administrative expense was due to higher revenues, driven by increased dayrates. Partially offsetting the higher third quarter 2007 revenues was $36 million in increased operating and maintenance expenses, primarily due to an increase in reimbursable costs and integrated service expenditures, as well as an increase in the number of maintenance projects.
Field operating income (1) (defined as revenues less operating and maintenance expenses) increased 8.4% to $875 million for the third quarter 2007, compared to $807 million for the prior three-month period. The increase in third quarter 2007 field operating income was due chiefly to strong revenue growth combined with stable operating margins.
Cash flow from operations totaled $897 million for the third quarter 2007 compared to $289 million for the third quarter 2006. For the nine months ended September 30, 2007, cash flow from operations increased to $2,158 million compared to $733 million for the same period last year. As of September 30, 2007, total debt was $2,593 million, down $471 million compared to $3,064 as of June 30, 2007. The $471 million of debt reduction during the third quarter 2007 reflects the repayment of the company's two-year term credit facility due August 2008.
Effective Tax Rate
The company's Annual Effective Tax Rate(2) for the three months ended September 30, 2007 was 14.0%, excluding various discrete items. The Effective Tax Rate(3) of 5.1% for the third quarter 2007 reflects a $52 million favorable impact resulting primarily from changes in estimated foreign tax credit. The company currently expects the Annual Effective Tax Rate for the remainder of 2007 to be 14.6%.
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