Ensco reported diluted earnings per share from continuing operations of $1.24 for fourth quarter 2009, compared to $2.14 per share in fourth quarter 2008. Earnings from discontinued operations were $0.22 per share in the fourth quarter, compared to a loss of $0.03 per share a year ago. Diluted earnings per share were $1.46 in fourth quarter 2009, compared to $2.11 per share in fourth quarter 2008. Discontinued operations relate to rigs no longer in the Company’s fleet. The Company recognized $38 million of pre-tax income in fourth quarter 2009 related to ENSCO 69, which was reclassified as discontinued operations in second quarter 2009.
Full year 2009 diluted earnings per share from continuing operations were $5.45, compared to $8.04 per share in 2008. Earnings from discontinued operations were $0.03 per share in 2009, compared to a loss of $0.02 per share a year ago. Diluted earnings per share were $5.48 in 2009, compared to $8.02 per share in 2008.
Chairman, President and Chief Executive Officer Dan Rabun stated, "I am very pleased to report several major accomplishments in 2009. Shareholders approved our redomestication to the U.K., two new ENSCO 8500 Series® ultra-deepwater semisubmersibles were delivered from the shipyard and commenced drilling under long-term contracts, and we achieved our best safety record ever. In addition, Ensco recently was ranked #1 in an independent customer satisfaction survey for performance and reliability."
Mr. Rabun added, "In the fourth quarter, earnings grew significantly compared to the third quarter. The increase was driven by higher utilization across the fleet and our growing deepwater segment -- which equaled one-quarter of total revenues in the fourth quarter. Looking ahead, we project deepwater segment revenue will continue to grow significantly as more of our new ultra-deepwater semisubmersibles commence drilling for our customers. Growth in our deepwater segment is expected to lessen the impact of declining average day rates in our jackup business -- as rates from expiring jackup rig contracts are adjusted to today's lower market rates. Fortunately, market rates for premium jackup rigs have been stabilizing somewhat over the past several months."
Revenues in fourth quarter 2009 declined to $500 million from $605 million a year ago. Total jackup segment revenues decreased $229 million as a result of both lower average day rates and a decline in utilization. The decline was partially offset by a $124 million increase in deepwater segment revenue, which represented 25% of total revenue in fourth quarter 2009.
Total operating expenses in fourth quarter 2009 increased to $279 million from $244 million last year due to several factors. Contract drilling and depreciation expense increased, due to commencement of ENSCO 8500 and ENSCO 8501 operations in 2009, and general and administrative expense was higher, primarily resulting from $8 million of legal and professional fees in fourth quarter 2009 related to the previously announced redomestication to the U.K.
Deepwater segment revenues grew to $124 million in fourth quarter 2009, from $0.1 million a year ago. Two new ENSCO 8500 Series® rigs commenced operations in 2009: ENSCO 8500 in June and ENSCO 8501 in October. Additionally, ENSCO 7500, which operated during fourth quarter 2009, was mobilizing to Australia during fourth quarter 2008. Revenues related to the mobilization were deferred until drilling commenced in April 2009.
In fourth quarter 2009, the average day rate was $415,000 and utilization was 91%. Comparable figures for the prior year period are not applicable due to revenues being deferred during ENSCO 7500 mobilization. Contract drilling expense was $45 million in fourth quarter 2009, up from $5 million in fourth quarter 2008, primarily due to ENSCO 8500 and ENSCO 8501 commencing operations in 2009 and the deferral of certain expenses for ENSCO 7500 while it was mobilizing to Australia during fourth quarter 2008.
Total Jackup Segments
Revenues from Ensco's worldwide premium jackup fleet totaled $376 million in fourth quarter 2009, down from $605 million a year ago. The decline largely was due to a twenty-three percentage point decrease in utilization to 72% and a $31,000 decline in the average day rate to $128,000. Contract drilling expense was reduced by 14% year-over-year as personnel and other costs were lowered to address declining utilization.
Strong Financial Position -- December 31, 2009
Ensco continues to maintain a strong financial position:
Chief Financial Officer Jay Swent commented, "Cash increased to $1.1 billion at year end and our leverage ratio is just 4%. At the same time, our $3 billion ENSCO 8500 Series® newbuild program now has only $1.1 billion of remaining capital commitments, and we expect cash generation from operations will fund the remaining capital expenditures through 2012 when the final rig is delivered."
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