Rowan 2Q Earnings Jump on LeTourneau Sale
For the three months ended June 30, 2011, Rowan Companies, generated net income from continuing operations of $44.4 million or $0.35 per share, compared to $83.4 million or $0.73 per share in the second quarter of 2010.
Income from continuing operations during the second quarter of 2011 included a $6.1 million pre-tax charge related to litigation settlement and $1.4 million of gains on asset disposals, for a net reduction of $4.7 million or $0.03 per share after tax. The second quarter 2010 results included a $4.5 million pre-tax charge for the expected cost to terminate the Company's agency agreement in Mexico, or $0.02 per share after tax.
Income from discontinued manufacturing and land drilling operations totaled $421.5 million in the second quarter of 2011 or $3.30 per share, including the after-tax gain on the sale of LeTourneau of $424.5 million, compared to $7.5 million or $0.07 per share in the second quarter of 2010. The after-tax cash proceeds from the sale of LeTourneau are estimated to be approximately $865 million.
Net income totaled $465.9 million or $3.65 per share in the second quarter of 2011, compared to $90.9 million or $0.79 per share in the second quarter of 2010.
Rowan's offshore drilling revenues were $223.5 million in the second quarter of 2011, compared to $282.2 million in the second quarter of 2010, as the impact of lower average day rates more than offset higher activity resulting from rig fleet additions between periods. The Company's gross offshore drilling margin was 53% of revenues in the second quarter of 2011, down from 63% in the prior-year quarter.
Matt Ralls, President and Chief Executive Officer, commented, "Over the past three months, we made substantial progress on several strategic fronts. We completed the sale of our manufacturing business and reached an agreement to sell our land drilling division, enabling us to focus exclusively on our core offshore drilling business. We significantly expanded the future growth prospects of that business by ordering two ultra-deepwater drillships that we believe will be the most capable in the global fleet upon delivery. Our first two N-class jack-up rigs commenced operations in the North Sea in June and we achieved our objective of entering the important Southeast Asia market with commitments starting later this year in Malaysia and Vietnam – Rowan's first work in that area in almost two decades. Further, over the past three months we increased our backlog of drilling revenue commitments by 67% to $2.6 billion.
"Our financial performance during the second quarter was significantly impacted by the effects of rig start-ups, several of which have occurred or will occur later than we expected due largely to delays related to more rigorous customer acceptance tests and regulatory approval processes and civil unrest in the Middle East."