ENSCO Reports Loss for 4Q02
ENSCO International Incorporated reported a net loss of $10.7 million ($0.07 per diluted share) on revenues of $206.8 million for the three months ended December 31, 2002, compared to net income of $29.9 million ($0.22 per diluted share) on revenues of $179.1 million for the three months ended December 31, 2001. Included in the fourth quarter results is a $46.1 million non-cash after tax charge ($0.31 per diluted share) for impairment of the Company's Venezuela assets and operations due to the ongoing political and economic uncertainty in Venezuela and the resulting virtual shutdown of industry activity. Excluding this impairment charge, the Company's net income for the quarter ended December 31, 2002, was $35.4 million ($0.24 per diluted share).
For the year ended December 31, 2002, ENSCO reported net income of $59.3 million ($0.42 per diluted share) on revenues of $698.1 million, compared to net income of $207.3 million ($1.50 per diluted share) on revenues of $817.4 million for the year ended December 31, 2001. Excluding the impairment charge discussed above, the Company's net income for 2002 was $105.4 million ($0.75 per diluted share). Included in the Company's full year 2002 results is a $5.8 million gain ($0.03 after tax per diluted share) in connection with an insurance claim relating to the ENSCO 51 jackup rig that sustained extensive damage from a natural gas fire in March of 2001 and has just returned to service after extensive shipyard work.
The average day rate for ENSCO's jackup rig fleet was $48,000 for the fourth quarter of 2002, compared to $45,500 in the year earlier period, with day rate improvement realized principally in Asia Pacific. Utilization for the Company's jackup fleet increased to 86% in the most recent quarter, up from 77% in the fourth quarter of 2001. Excluding rigs in the shipyard for regulatory inspection and enhancement, jackup utilization was 93% in the most recent quarter, compared to 84% in the year earlier period.
In the Company's marine transportation segment, average day rates for the Company's marine fleet decreased to $6,200 in the fourth quarter of 2002 from $7,500 in the year earlier period. Utilization for the marine fleet improved to 81% in the quarter ended December 31, 2002, up from 78% in the fourth quarter of 2001.
Carl Thorne, Chairman and Chief Executive Officer of ENSCO, commented on the Company's current markets and outlook: "The Pacific Rim and the Middle East continue to be our strongest markets, with all available rigs working and day rates stable. In the North Sea, all but one of ENSCO's rigs are working, with most committed well into 2003. Much of the work in the North Sea remains short-term and, in the absence of additional term work which may not occur until later in the year, there could be some near-term softening in the region. The Gulf of Mexico jackup market remains sluggish. Notwithstanding this current softness, eighteen of our twenty-two Gulf of Mexico jackup rigs are working and another rig is committed once its shipyard stay is complete.
"The impairment charge in Venezuela is directly related to the current nationwide strike and economic upheaval in Venezuela. The oil industry in Venezuela has been severely impacted by these events, and the timing of an expected and inevitable recovery of drilling activity is uncertain under the circumstances. The dismantling of PdVSA, and resulting management inefficiency, coupled with the recent announcement of currency controls, evidencing significant economic concerns, and issues relative to funding recovery efforts, are major considerations relative to timing.
"With regard to our continuing fleet enhancement and renewal program, two of our jackup rigs in Southeast Asia (ENSCO 52 and ENSCO 57) will have down time associated with scheduled maintenance and enhancement work during the first quarter of 2003, with ENSCO 57 extending into the second quarter. No major enhancement projects are scheduled for our rigs in the North Sea in 2003. In the Gulf of Mexico, one jackup rig (ENSCO 81) is in the shipyard undergoing a major upgrade and refurbishment and is due to return to service in February. ENSCO 82 will enter the shipyard next month for major enhancement, to be followed by the upgrade of at least one of our other large Gulf of Mexico jackup rigs (ENSCO 68) during the second half of the year. We also expect to have several of our smaller Gulf of Mexico jackup rigs down for regulatory and enhancement work over the course of 2003, but plan to have only one of these smaller rigs in a shipyard at any one time. We continue to evaluate the possibility of a single, new construction project, but only if it can be accomplished at an attractive cost, and structured to limit ENSCO's risk, as with the partial ownership and purchase option we currently enjoy relative to the ENSCO 102.
"As a result of the continued softness in the Gulf of Mexico market,
possible near term softness in the North Sea, and scheduled shipyard downtime,
we expect our first quarter 2003 earnings per share to be in the range of
$0.16 to $0.21."