Rowan Reports Record Quarterly Revenues and Improved Operating Results
For the three months ended December 31, 2005, Rowan Companies, Inc. (NYSE: RDC) generated income from continuing operations of $69.5 million, or 63 cents per share, compared to $16.4 million, or 15 cents per share, in the same period of 2004. Revenues were a record $317.4 million in the fourth quarter of 2005, compared to $190.7 million in the fourth quarter of 2004. The current period results included gains on asset sales and insurance recoveries in excess of hurricane losses that together contributed approximately 14 cents per share, net of tax.
The Company generated income from continuing operations of $217.8 million, or $1.97 per share, on revenues of $1,068.8 million during the year ended December 31, 2005, compared to income from continuing operations of $27.5 million, or 26 cents per share, on revenues of $679.7 million during 2004. Net income was $229.8 million, or $2.08 per share, in 2005, compared to a net loss of $1.3 million, or 1 cent per share, in 2004.
Rowan's offshore rig utilization decreased to 93% during the fourth quarter of 2005, from 99% during the comparable 2004 period, as three rigs entered the shipyard in December in preparation for their relocation to Saudi Arabia. The Company's average Gulf of Mexico day rate was a record $92,100 during the fourth quarter of 2005, up $17,700, or 24%, from the third quarter of 2005 and up $41,400, or 82%, from the fourth quarter of 2004. Rowan's land rig utilization was 89% during the fourth quarter of 2005, up from 83% in the comparable 2004 period. The Company's average land rig day rate was $21,100 during the fourth quarter of 2005, up $2,300, or 12%, from the third quarter of 2005 and up $7,300, or 53%, from the fourth quarter of 2004.
As previously reported, during Hurricanes Katrina and Rita, Rowan lost four jack-up rigs and had one jack-up severely damaged. During the fourth quarter, the Company recognized the excess of insurance proceeds received over the carrying value of the lost equipment of approximately $23 million.
The Company experienced 71 fewer rig operating days in December as a result of shipyard modifications made to three rigs contracted to Saudi Aramco prior to their January 2006 departure for Saudi Arabia. Rowan will receive $44.7 million in fees for shipyard time, modifications and mobilization of the three rigs. Such fees will be recognized as revenues over the three-year contract period, beginning when the rigs commence drilling operations in March or April 2006. Labor and other routine operating costs related to these rigs are being expensed as incurred.
Danny McNease, Chairman and Chief Executive Officer, commented, "Our drilling and manufacturing businesses continue to reach new heights and our near-term outlook remains very favorable. Our drilling fleet is effectively fully utilized and our backlog of contracts continues to grow. Nine of our 20 offshore rigs currently have commitments that extend into 2007 or beyond, and we are aggressively pursuing additional long-term drilling assignments at favorable rates.
"Rowan's average offshore day rate worldwide is currently around $134,000 or more than 28% higher than our average during the fourth quarter. Absent a significant change in market fundamentals, we believe that the global competition for quality rigs will intensify in 2006 and that the upward pressure on day rates will continue.
"Expansion of our drilling fleet continues at a rapid pace. By the end of 2006, we should have completed construction of 12 additional 2000 horsepower land rigs, nine of which are committed under long-term contracts. The Hank Boswell, our third Tarzan Class jack-up, will also have been delivered. At that time, our fourth Tarzan Class rig should be approximately 50% complete and we will have made significant progress toward building the first of our newest jack-up design, the 240C.
"Of course, none of this would be possible without our
manufacturing division, which implements our construction program
while also developing innovative oilfield and other products and
generating record revenues. At year end, our external backlog of
orders was a record $388 million and included work remaining on one
jack-up rig and five rig kits that should provide approximately $225
million in additional revenues over the next two to three years. Also
included were orders for 19 mining loaders and log stackers and 63 mud
pumps that will be delivered in 2006."