Rowan Cushions Net Loss with $367.4MM in Drilling Revenues
For the three months ended June 30, 2008, Rowan Companies, Inc. generated net income of $120.6 million or $1.06 per share, compared to $128.1 million or $1.14 per share in the second quarter of 2007 and $98.6 million or 88¢ per share in the first quarter of 2008. Revenues were $587.1 million in the second quarter of 2008, compared to $507.0 million in the second quarter of 2007 and $485.5 million in the first quarter of 2008.
The second quarter 2008 results included $1.5 million, or 1¢ per share, of gains on asset sales, compared to $14.6 million, or 8¢ per share, in the second quarter of 2007 and $5.4 million, or 4¢ per share, in the first quarter of 2008.
Rowan’s offshore rig utilization was 96% during the second quarter of 2008, up from 91% in the first quarter of 2008 but down from 97% in the prior year quarter, with much of the downtime in each period associated with rig relocations. The Company’s average offshore day rate was $161,600 during the second quarter of 2008, up by $1,900 or 1% over the first quarter of 2008 and by $4,500 or 3% over the second quarter of 2007. Rowan’s land rig utilization was 97% during the second quarter of 2008, up from 89% in the first quarter of 2008 and unchanged from the prior-year quarter. The Company’s average land rig day rate was $22,600 during the second quarter of 2008, down by $600 or 3% from the first quarter of 2008, but up by $200 or 1% over the second quarter of 2007.
Rowan’s drilling operations generated revenues of $367.4 million during the second quarter of 2008, up by 8% over the first quarter of 2008 and by 4% over the prior-year quarter. The Company’s income from drilling operations was $158.0 million or 43% of revenues during the second quarter of 2008, up by 10% over the first quarter of 2008, but down by 13% from the second quarter of 2007.
Rowan’s manufacturing operations generated external revenues of $219.7 million during the second quarter of 2008, up by 51% over the first quarter of 2008 and by 43% over the prior- year quarter. The Company’s income from manufacturing operations was $23.7 million during the second quarter of 2008, up by 478% over the first quarter of 2008 and by 82% over the second quarter of 2007.
Danny McNease, Chairman and Chief Executive Officer, commented, “We are pleased with the contributions from our drilling and manufacturing businesses, each of which achieved a sequential improvement in revenues and operating income during the second quarter. Our drilling results benefited from our continued excellent operating performance, including the timely redeployment of assets, which yielded improvements in fleet utilization and average day rates during the quarter.
“Onshore, several of our land rigs secured term commitments during the quarter, including two rigs that were each contracted for three years. We view this as a strong signal of operator confidence in the economics of the U. S. land drilling market, and Rowan is poised to benefit further should this trend continue. Offshore, we expect to see the rebound in Gulf of Mexico day rates continue.
The global jackup market remains strong and we are continuing to pursue international opportunities that are demanding premium equipment for deep gas or extended-reach drilling. Rowan remains a unique player in the offshore rig market, specializing in high specification jackup rigs ideally suited for the increasingly demanding drilling conditions of deep, high-temperature, high-pressure wells, and we believe we are well-positioned to meet the growing needs of the oil and gas industry.
“Our newbuild program for nine ultra-premium high-specification jack-up rigs is proceeding as planned. Our first 240-C class jackup, the Rowan Mississippi, and our fourth Tarzan Class jackup, the J.P. Bussell, are currently scheduled for delivery in the fourth quarter of 2008. We are aggressively pursuing long-term contracts for these rigs worldwide. Our second 240-C class jackup, the Ralph Coffman, is scheduled for delivery during the third quarter of 2009, followed by three additional jackup rigs in each of 2010 and 2011.
“We are continuing to move forward with our stated plan to monetize the investment in our manufacturing businesses. This process has generated interest from multiple parties, and we are actively working with a number of groups and considering several alternatives in order to maximize the return for our stockholders. We remain committed to completing a transaction by year-end 2008.”