Rowan Sees Strong Recovery in U.S. Land Rig Market
For the three months ended December 31, 2009, Rowan generated net income of $60.8 million or $0.53 per share, compared to $94.3 million or $0.83 per share in the fourth quarter of 2008. Revenues were $399.8 million in the fourth quarter of 2009, compared to $613.0 million in the fourth quarter of 2008.
Results for the fourth quarter of 2009 included $1.4 million or $0.01 per share of gains on asset disposals, compared to $39.4 million or $0.23 per share in the fourth quarter of 2008. As previously reported, the fourth quarter 2008 results included $111.2 million, or $0.68 per share of material charges and other expenses. The current year included no material charges.
For the year ended December 31, 2009, the Company generated net income of $367.5 million or $3.24 per share on revenues of $1.8 billion, compared to net income of $427.6 million or $3.77 per share on revenues of $2.2 billion in 2008. The 2009 results included $5.7 million or $0.03 per share of gains in asset disposals in 2009, compared to $67.8 million or $0.39 per share in 2008.
The 2009 results also included $25.4 million or $0.22 per share of tax benefits related to a recent third-party tax court ruling, which provided that certain foreign-source income is not taxable in the United States. Excluding these tax benefits and the material charges and disposal gains described above, earnings were $338.3 million or $2.98 per share in 2009 and $460.7 million or $4.06 per share in 2008.
Rowan's drilling operations generated revenues of $255.3 million in the fourth quarter of 2009, down by 34% from the prior-year quarter due primarily to lower rig utilization. The Company's gross drilling margin was 52% of revenues in the fourth quarter of 2009, down from 62% in the prior-year quarter. Income from drilling operations was $76.0 million in the fourth quarter of 2009, down by 66% from the prior-year quarter (excluding material charges).
Rowan's manufacturing operations generated external revenues of $144.5 million in the fourth quarter of 2009, down by 36% from the prior-year quarter. The Company's gross manufacturing margin was 17% of revenues in the fourth quarter of 2009, down from 25% in the prior-year quarter. Income from manufacturing operations was $9.1 million in the fourth quarter of 2009, down by 78% from the prior-year quarter (excluding material charges).
Matt Ralls, President and Chief Executive Officer, commented, "During the last few months, we have seen increased activity and tendering in virtually every jack-up market segment worldwide, with the Middle East, North Sea and Gulf of Mexico regions being the most significant for our fleet. We continue to see good demand for higher-specification jackups, and have added backlog at attractive day rates for our Super Gorillas. We are especially pleased to have played a role in McMoRan's ultra-deep gas discovery, 'Davy Jones,' in the U. S. Gulf of Mexico, and we now have three high-spec jackups and the Rowan-Louisiana committed to or under contract with McMoRan. We are optimistic that this significant discovery will lead to future increases in ultra-deep gas drilling activity in the Gulf of Mexico requiring jackup rigs with the advanced operating capabilities that characterize the Rowan fleet.
"Additionally, we have seen a very strong recovery in the U.S. land rig market and have reactivated or obtained commitments for several land rigs in the fourth quarter of 2009 and so far in 2010. This pickup in activity for Rowan's high quality land rig fleet is all the more impressive considering that there remain nearly one thousand idle land rigs in North America. It demonstrates the increasing willingness by operators to pay higher rates for more efficient equipment, enabling them to reduce overall drilling costs. We believe there is a similar high-grading trend occurring in the global jackup market that will allow us to obtain attractive day rates for our premium and high-spec jackups despite the large number of idle rigs at the low end of the jackup market."