Seahawk Focuses on Adding Backlog for Jackups - Report
Seahawk Drilling reported a loss of $16.6 million, or $1.42 per diluted share for the three months ended December 31, 2009, including the results from the discontinued operations platform business, which was sold in May of 2008. Continuing operations for the three months ended December 31, 2009, excluding the platform business, reported a loss of $16.3 million, or $1.40 per diluted share, compared to income of $18.7 million, or $1.62 per diluted share for the three months ended December 31, 2008. Revenues totaled $31.3 million during the three months ended December 31, 2009 compared with $152.1 million during the three months ended December 31, 2008.
Seahawk's fourth quarter results included the following non-recurring items:
- Goodwill impairment of $1.2 million and $0.10 per diluted share;
- Transition service costs paid to Pride International, Inc. ("Pride") of $1.2 million, or $0.8 million after tax, and $0.07 per diluted share; and
- Favorable settlements related to our separation from Pride of $0.7 million, or $0.5 million after tax, and $0.04 per diluted share.
For the twelve months ended December 31, 2009, Seahawk incurred a loss of $41.7 million, or $3.59 per diluted share, which includes the result from the discontinued operations of the platform business. The loss from continuing operations, which excludes the operations of the platform rig business, for the twelve months ended December 31, 2009, was $44.6 million, or $3.84 per diluted share, compared to income for the twelve months ended December 31, 2008 of $153.8 million, or $13.27 per diluted share. Revenues for the twelve months ended December 31, 2009 totaled $291.1 million compared to $681.8 million during the twelve months ended December 31, 2008.
Seahawk's consolidated balance sheet at December 31, 2009 included cash and cash equivalents of $78.3 million and net working capital of $58.5 million. The Company's net working capital includes approximately $18.1 million owed to Pride, which includes $4.7 million that is due to Pride upon collection from a customer. As of December 31, 2009, Seahawk had total assets of $625.3 million, stockholders' equity of $453.0 million, and no debt outstanding.
Randall D. Stilley, President and CEO of Seahawk, commented, "Demand for jackups in the U.S. Gulf of Mexico shelf continued to improve during the quarter, and bid activity has continued to increase over the last several weeks. There are currently 39 contracted jackups in the U.S. Gulf of Mexico, up from 23 at the time of our last conference call in mid November. As a result of this market improvement, we have reactivated two of our rigs in the first quarter and are seeking additional favorable opportunities for our marketed rigs. We are still focused on adding backlog for our eight working jackups in the U.S."
"In February 2010, we demobilized the Seahawk 3000 from Mexico to the United States following the completion of its contract with PEMEX to begin a contract that will start during March 2010. While we were in discussions for the rig to continue to work in Mexico, we determined that we could lower our overall costs by operating the rig in the United States. As of February 17, 2010, we have no rigs working in Mexico. Currently, we are scaling down our shore-based operations in Mexico to minimum staff levels required to manage the administration of completed contracts. We expect to record $1.0 -- $1.5 million of costs in the first quarter of 2010 for severance, elimination of excess facility and infrastructure costs, and other statutory charges. However, we are hopeful that we will have opportunities to bid our rigs for contracts in Mexico later in 2010 or 2011."
Based on current expectations for activity in the first quarter of 2010, which includes eight rigs working by the end of the quarter in the U.S., Seahawk anticipates that its cash and cash equivalents balance on March 31, 2010, after remittance of most amounts owed to Pride, will be in the range of $40-50 million.
During the fourth quarter of 2009, Seahawk's Gulf of Mexico business generated $13.5 million in drilling revenues in the U.S. This compares to drilling revenues of $62.6 million in the fourth quarter of 2008. Fourth quarter 2009 average revenue per day decreased to $36,300 from $83,600 in the fourth quarter of 2008 and operating days decreased to 332 days, or 21% utilization, from 744 days, or 81% utilization, over the same period. The U.S. segment recorded an operating loss of $16.9 million in the fourth quarter of 2009 compared to $24.1 million of operating income for the fourth quarter of 2008.
In Mexico, Seahawk's business generated $17.8 million of drilling revenues in the fourth quarter of 2009. Of the $17.8 million of drilling revenues, $4.5 million is attributable to rigs retained by Pride. This compares to drilling revenues of $89.5 million in the fourth quarter of 2008 of which $28.1 million is attributable to rigs retained by Pride. Fourth quarter 2009 average revenue per day decreased to $70,800 from $117,200 in the fourth quarter of 2008 and operating days decreased to 154, or 56% utilization, from 525 days, or 66% utilization over the same period. The Mexico segment recorded $1.2 million in operating income in the fourth quarter of 2009 compared with $26.8 million of operating income in the fourth quarter of 2008. The rigs retained by Pride contributed $1.1 million in operating income to the fourth quarter of 2009 and $20.3 million to the fourth quarter of 2008.
Departure of Chief Financial Officer
Steven A. Manz, Senior Vice President and Chief Financial Officer, has informed Seahawk of his intention to retire from the company. Mr. Manz and Seahawk have mutually determined that the retirement would be sometime during the second quarter of 2010. As a result, we have begun the search for a new Chief Financial Officer and Mr. Manz will continue to serve as Chief Financial Officer during the interim period and assist us in an orderly transition. Randall D. Stilley, President and CEO of Seahawk, commented, "All of us at Seahawk wish Steve success in his future endeavors and we sincerely appreciate his valuable contributions to Seahawk both before and after the spin-off of Seahawk from Pride."