Rowan Reports 1st Quarter Loss
For the three months ended March 31, 2003, Rowan incurred a net loss of $17.2 million, or $.18 per share, on revenues of $131.4 million, compared to net income of $87.7 million, or $.92 per share, on revenues of $137.8 million in the first quarter of 2002. First quarter 2002 results included net proceeds from the settlement of the Gorilla V contract dispute, which increased net income by approximately $102 million, or $1.07 per share. Excluding the effects of the settlement, the Company's first quarter 2002 results would have been a net loss of approximately $14 million, or $.15 per share.
Rowan's Gulf of Mexico rig utilization was 90% during the first quarter of 2003, versus 93% in the fourth quarter of 2002 and 83% in the year-earlier period, and our average Gulf of Mexico day rate of $34,700 decreased by $800, or 2%, from the fourth quarter of 2002, but was up by $5,400, or 18%, from the year-earlier period. Land rig utilization was 66% during the first quarter of 2003, versus 68% in the fourth quarter of 2002 and 58% in the year-earlier period, and our average land rig day rate of $9,800 increased by $300, or 3%, from the fourth quarter of 2002, but was down by $900, or 8%, from the year-earlier period.
Bob Palmer, Chairman and Chief Executive Officer, commented, "For the past year, as energy prices have gyrated, we have cautioned that our business outlook was uncertain. Industry rig utilization responded to this uncertainty, thus day rates have remained depressed. Rowan's financial results for the first quarter were our worst in eight years.
"In spite of $5.00 natural gas, the jack-up rig count in the Gulf of Mexico is languishing around 90. True, Rowan's jack-up utilization in the Gulf of Mexico held at 94% during the first quarter, and is at 100% at the moment, but our average jack-up rates declined by almost $1,000 per day from the fourth quarter. The principal reason for Rowan's poor financial results for the first quarter, however, was our inability to contract Gorillas V and VII, a problem that we now believe to be resolved.
"We now believe that more favorable business conditions are on the horizon. First, Rowan's rigs are concentrated offshore in the Gulf of Mexico or onshore along the Gulf Coast, and most are drilling for natural gas. Second, the Minerals Management Service's proposed rule granting royalty relief to existing offshore leases for shelf wells drilled below 15,000 feet should prove of benefit to Rowan. Third, Gorilla VII's minimum 18-month drilling/production assignment in the North Sea begins June 1st. In addition, after a long wait, we believe Gorilla V soon will commence an up to three well assignment offshore eastern Canada. These two events should increase our revenues by almost $300,000 per day, or around $9 million per month. "Thus, we are optimistic that second quarter 2003 will witness a dramatic turn in our efforts to return to profitability."