Ensco's 2Q Revenues Buoyed by Deepwater Revenue Growth
Ensco reported diluted earnings per common share from continuing operations of $1.59 for second quarter 2009, compared to $1.98 per share in second quarter 2008. The loss from discontinued operations was $0.18 per share versus earnings of $0.07 per share in the year ago quarter. Diluted earnings per share including discontinued operations was $1.41 in second quarter 2009, compared to $2.05 per share a year ago.
As previously reported, the loss from discontinued operations in second quarter 2009 is related to the ENSCO 69 drilling rig in Venezuela. The $0.18 per share loss from discontinued operations is less than the previous estimate of $0.26 per share noted in the Company's July 15, 2009 news release due to the subsequent receipt of $11.5 million from the customer that represents only a portion of its contractual obligation.
Second quarter 2009 revenues of $511.6 million declined from $609.4 million in the year ago quarter, due to lower revenues from the premium jackup fleet, partially offset by deepwater segment revenues that more than doubled year-over-year. Total second quarter operating expenses declined to $243.1 million from $263.5 million last year, primarily due to a decline in premium jackup utilization.
Chairman, President and Chief Executive Officer Dan Rabun stated, "During the quarter, we achieved two important milestones in our ultra-deepwater expansion program. ENSCO 8500, the first of seven ENSCO 8500 Series® rigs, commenced drilling operations in the U.S. Gulf of Mexico, and ENSCO 8501 was delivered and is now mobilizing to the U.S. Gulf. Combined with ENSCO 7500 in Australia, we now have three ultra-deepwater semisubmersibles in our fleet with two more to be delivered next year and three thereafter. Deepwater segment revenue growth is expected to continue into 2010 and 2011 from existing backlog."
Mr. Rabun added, "Deepwater revenue growth in the second quarter mitigated the decline in revenues caused by a significant decrease in utilization of our premium jackup fleet. To further address the weakness in the premium jackup market, we are taking additional actions to reduce costs and align our fleet with the challenging market conditions. Our financial position continues to remain strong with cash of $882 million at quarter end and long-term debt representing just 4.9% of total capital."
Deepwater segment revenues grew by 108% year-to-year to $67.7 million in second quarter 2009 driven by ENSCO 7500, which commenced drilling at a higher day rate of $550,000 in Australia in early April 2009, and commencement of drilling operations by ENSCO 8500 in the U.S. Gulf of Mexico in early June 2009. Revenues from Ensco’s worldwide premium jackup fleet totaled $443.9 million in second quarter 2009, down from $576.8 million a year ago. The decline was primarily due to a decrease in utilization to 72% from 95% last year. This was partially offset by an increase in the premium jackup average day rate to approximately $159,000 from $149,000 a year ago.
Chief Financial Officer Jay Swent commented, "Our strategy of maintaining a strong financial position has proven to be highly beneficial as we work through the current challenging period in the premium jackup market. In addition, it provides us financial flexibility to consider potential investment opportunities." Mr. Swent added, "We are financing our ENSCO 8500 Series® ultra-deepwater semisubmersible rig construction program from operating cash flows and have already funded over half of the more than $3 billion in capital expenditures planned for the seven rigs in the series. While we have already passed the half-way mark in terms of funding our deepwater rig expansion program, revenues from the deepwater segment are just beginning to ramp up. In addition to contributions from our deepwater expansion program, we anticipate that current weakness in the premium jackup market will be partially offset by disciplined expense management."
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