Pride International Sees Positive Results for Third Quarter
Pride International, Inc. (NYSE: PDE) has net earnings and income from continuing operations for the third quarter of 2005 of $68.2 million ($.40 per diluted share) on revenues of $538.8 million. This compares to net earnings and income from continuing operations of $2.1 million ($.01 per diluted share) on revenues of $477.4 million in the second quarter of 2005. In the third quarter of 2004, Pride reported a net loss of $18.2 million ($.13 per diluted share) and loss from continuing operations of $14.9 million ($.11 per diluted share) on revenues of $436.4 million.
Results for the third quarter of 2005 were positively affected by items totaling $21.1 million, net of tax, which increased earnings per share by $.12. The items included, net of tax, a gain on sale of assets of $22.0 million, partially offset by a $.9 million loss related to the early retirement of debt.
For the nine-month period ended September 30, 2005, Pride reported net earnings and income from continuing operations of $86.6 million ($.55 per diluted share) on revenues of $1,482.3 million. For the corresponding nine-month period in 2004, Pride reported a net loss of $21.1 million ($.16 per diluted share) and loss from continuing operations of $2.0 million ($.02 per diluted share) on revenues of $1,264.1 million.
Worldwide demand increased for the Company's drilling rigs during the third quarter of 2005. The return to service of the deepwater drillship Pride Angola, the semisubmersible Pride South Pacific, the jackup Pride North Dakota and the accommodation unit Pride Rotterdam, combined with high utilization of the rest of the fleet, resulted in consolidated operating income of $119.8 million for the quarter. Consolidated operating income for the third quarter includes gains on asset sales of $22.1 million. Second quarter consolidated operating income included losses on asset sales of $2.6 million and executive severance expense of $10.8 million. Excluding these items, consolidated operating income of $98.7 million in the third quarter increased $36.0 million, or 57%, over the second quarter.
For the Eastern Hemisphere segment, operating income in the third quarter was $59 million compared with $32 million in the second quarter. Excluding net gains and losses on asset sales in both quarters, operating income of $39 million in the third quarter increased $5 million, or 13%, from the second quarter. Operating income for the Western Hemisphere segment of $33 million increased $25 million from the second quarter. Both segments include assets in the Company's floater fleet, composed of drillships and semisubmersibles, and in the shallow water fleet, comprising jackups, tender-assisted rigs, and barges.
The Company's floater fleet operated at approximately 90% utilization in the third quarter, up 18 percentage points from 72% in the second quarter, and recorded operating income of $40 million, a 100% increase over the previous period. The Pride Angola and the Pride South Pacific returned to service following downtime for planned inspections in the second quarter. Also, three semisubmersibles in Brazil, which had inspection and repair downtime in the second quarter, operated at near full utilization during the period.
Operating income for the Company's international shallow water rig fleet totaled $32 million in the third quarter as compared to $11 million in the second quarter. Results for the third quarter included gains on asset sales of $6 million, and results for the second quarter included losses on asset sales of $3 million. Excluding these items, operating income for the international shallow water rig fleet in the third quarter totaled $26 million, an increase of $12 million, or 80%, from the previous quarter. Fleet utilization increased from approximately 91% to 97% due to the return to service of the Pride North Dakota and Pride Rotterdam from planned upgrades and inspections. Also, the Pride Texas and three platform rigs commenced new higher-rate contracts in Mexico.
In the U.S. Gulf of Mexico, average daily revenues per jackup during the third quarter of 2005 increased to $53,100, up 22% from $43,400 during the second quarter of 2005 and up 67% from $31,900 during the third quarter of 2004. All of the Company's 10 jackups located in the U.S. Gulf of Mexico are operating under contract, and the Company is in the process of mobilizing the Pride Alaska and the Pride Oklahoma to the U.S. Gulf of Mexico from Mexico. Rig rates in the U.S. Gulf of Mexico have continued to rise post-hurricanes Katrina and Rita due to limited rig availability.
Results for the Latin America Land segment reflected continued strong demand throughout the region, and activity in Argentina maintained record levels. For the nine months ended September 30, 2005, the Latin America Land segment's operating income was $43 million, which included a $3 million gain on asset sales. Excluding this gain, segment operating income increased $29 million, or 240%, over the year-ago nine month period. Operating income for the third quarter was $16 million. Excluding gains on asset sales totaling $2 million in the third quarter, operating income for the segment increased $1 million, or 8%, over the previous quarter.
In the E&P Services segment, strong market conditions also continued, resulting in operating income for the nine months ended September 30, 2005 of $19 million, an increase of $9 million, or 90%, over the year-ago nine month period. Operating income in the third quarter of $6 million decreased $1 million, or 14%, from the second quarter of 2005, reflecting the costs to complete lower-margin projects during the quarter.
As of September 30, 2005, total debt outstanding, including debt due within one year, was approximately $1.18 billion. The Company reduced debt during the third quarter of 2005 by approximately $77 million and during the nine months ended September 30, 2005 by approximately $550 million. For the period from January 1, 2004 through September 30, 2005, debt reduction totaled approximately $850 million.
The Company completed the sale of the tender-assisted rig Ile de Sein and four land rigs during the third quarter. Of the total cash proceeds associated with these asset sales, approximately $29 million was received during the quarter, which was used to repay debt.
As previously reported, the Company's rig fleet sustained no major damage due to Hurricanes Rita and Katrina. Although a platform rig sustained minor damage, none of the jackups in the Gulf of Mexico fleet recorded hurricane-related contractual downtime. Results for the quarter were not materially affected by the hurricanes.
Louis A. Raspino, President and Chief Executive Officer, commented, "We are very pleased with our third quarter results. Increased rig demand worldwide, particularly in the Gulf of Mexico where we have sizable exposure, contributed to improved earnings and cash flow. We look forward to future
earnings growth as our contract backlog rolls over and worldwide rig demand remains strong." Mr. Raspino continued, "We are nearing completion of the initial stage in our transformation to the 'New Pride' by strengthening our balance sheet, management team and infrastructure. We are now moving ahead to focus our asset base and further grow shareholder value."