Pride Reports 2Q05 Earnings
Pride International, Inc. (NYSE: PDE) reported net earnings and income from continuing operations for the second quarter of 2005 of $2.1 million ($.01 per diluted share) on revenues of $477.4 million. For the same period in 2004, Pride reported net income of $3.0 million ($.02 per diluted share) and income from continuing operations of $8.2 million ($.06 per diluted share) on revenues of $424.0 million. For the six-month period ended June 30, 2005, Pride reported net earnings and income from continuing operations of $18.4 million ($.12 per diluted share) on revenues of $943.5 million. For the corresponding six-month period in 2004, Pride reported a net loss of $2.9 million ($.02 per diluted share) and income from continuing operations of $12.9 million ($.09 per diluted share) on revenues of $827.7 million.
Results for the second quarter of 2005 were affected by items totaling $17.1 million, net of tax, which reduced earnings per share by $.11. The items included, net of tax, a loss on sale of assets of $8.2 million, executive severance charges of $8.1 million, and $0.8 million related to the early retirement of debt. The severance charges relate to several executive management changes, including the Company's Chief Executive Officer, as previously announced.
As of June 30, 2005 total debt outstanding, including debt due within one year, was approximately $1.26 billion. The Company reduced debt during the second quarter of 2005 by approximately $390 million and by approximately $474 million during the six months ended June 30, 2005. The debt reduction includes the conversion to equity of the Company's $300 million 2.5% senior convertible notes in March and April 2005.
In the second quarter of 2005, the Company agreed to sell two tender- assisted rigs, the Piranha and Ile de Sein, and four idle land rigs for total proceeds of approximately $75 million. The Company has completed the sale of the two tender-assisted rigs and expects to close on the sale of the land rigs by the end of the third quarter of 2005. The Company received proceeds and deposits from these sales during the second quarter totaling approximately $48 million. In July 2005, the Company received additional proceeds of approximately $25 million related to these transactions.
Worldwide demand remained strong for the Company's drilling rigs during the second quarter of 2005. However, planned shipyard maintenance and mobilization of eight major assets, as well as unplanned downtime on two deepwater rigs, negatively impacted operating income during the quarter. In addition, the Company recorded pre-tax losses on asset sales and executive severance charges of $13.4 million, resulting in consolidated operating income of $49.3 million. Excluding losses on asset sales and executive severance charges, consolidated operating income of $62.7 million in the second quarter increased 7.7% over the first quarter of 2005, despite the operating factors during the quarter.
In the U.S. Gulf of Mexico segment, operating income for the quarter of $14.6 million improved $7.1 million, or 95%, over the first quarter of 2005 due primarily to improved dayrates. Average daily revenues per jackup during the second quarter of 2005 increased to $43,400, up from $38,200 during the first quarter of 2005 and $30,000 during the second quarter of 2004. All of the Company's 10 jackups located in the U.S. Gulf of Mexico are operating under contract, as the Company activated its remaining two jackups during the quarter.
For the Eastern Hemisphere segment, operating income in the second quarter was $31.9 million compared with $40.0 million in the first quarter. Excluding net gains and losses on asset sales in both quarters, operating income of $34.5 million in the second quarter increased $5.5 million, or 19%, from the first quarter of 2005 due to the start up of three previously idle rigs and increased dayrates, partially offset by the planned shipyard survey and maintenance of the ultra-deepwater drillship Pride Angola, the deepwater semisubmersible Pride South Pacific, and the accommodation jack-up Pride Rotterdam.
Operating income for the Western Hemisphere segment of $7.9 million declined $9.4 million from the first quarter, primarily due to the planned shipyard survey and maintenance of the semisubmersible Pride South America and approximately 55 days of combined unplanned downtime for maintenance and repairs for the semisubmersibles Pride Carlos Walter and Pride South Atlantic.
The Latin America Land segment's operating income of $13.2 million was flat sequentially, as strong demand continued throughout the region, and activity in Argentina maintained record levels. For the six month period ended June 30, 2005, the Latin America Land segment's operating income of $26.8 million increased $21.0 million, or 364%, over the year-ago period.
In the E&P Services segment, operating income of $7.1 million increased $1.3 million, or 23%, from the first quarter of 2005, reflecting continued strong market conditions and the completion of lower-margin projects. For the six months ended June 30, 2005, the E&P Services segment's operating income of $12.9 million increased $8.4 million, or 185%, over the corresponding six- month period in 2004.
Louis A. Raspino, President and Chief Executive Officer, commented, "We
are pleased with the improvement in results over the first quarter. However,
the results are not nearly as dramatic as market conditions suggest, due
primarily to significant planned shipyard time for several of our major assets
which continued into the second quarter. We have now reached the end of a
three-quarter period of planned maintenance on many our largest assets, and we
are looking forward to significant improvement in operating results in the
second half of the year."