Oceaneering Sails Out of 2Q with Better Than Anticipated Performance
Oceaneering has reported second quarter earnings for the period ended June 30, 2009. On revenue of $451 million, Oceaneering generated net income of $48.1 million, or $0.87 per share. During the corresponding period in 2008, Oceaneering reported revenue of $500 million and net income of $52.1 million, or $0.93 per share as restated.
Sequentially, quarterly earnings increased on the strength of higher Subsea Projects operating income attributable to our deepwater vessel services. Year-over-year, quarterly earnings declined primarily due to lower Subsea Products operating income on softer market demand. Results for the second quarter of 2008 included a $2.0 million gain on the sale of the production barge San Jacinto in the MOPS segment.
T. Jay Collins, President and Chief Executive Officer, stated, "We are very pleased with our second quarter results. Our earnings were above the top of our guidance range due to better than anticipated performance by our Subsea Projects business, resulting from high demand for our deepwater installation and inspection, repair, and maintenance services.
"During the quarter we put six new ROVs into service and retired four. At the end of June 2009, we had 235 ROVs in our fleet, compared to 214 a year ago. On the strength of two large umbilical contracts, Subsea Products backlog increased by $68 million, or 24%, to $350 million at the end of June 2009. We commenced manufacturing product for one of these contracts in June and anticipate starting work on the other in 2010.
"We are narrowing our 2009 EPS guidance range to $3.25 to $3.45 from $3.10 to $3.60, which is unchanged at the midpoint. During the second half of this year, we expect continued ROV operating income growth, improved demand for our specialty Subsea Products, and a reduction in activity and rates for our Subsea Projects deepwater vessels. For the third quarter of 2009, we are forecasting EPS of $0.82 to $0.90.
"We anticipate generating $295 million to $310 million of cash flow, defined simply as net income plus depreciation and amortization expense, during 2009. This projected cash flow and our existing revolving debt availability provide us ample liquidity. We still expect our total 2009 capital expenditures to be approximately $175 million. During the quarter we generated $78 million of cash flow and our capital expenditures were $45 million, of which $41 million was in support of growing our ROV fleet. We sold the Ocean Pensador, an oil tanker we were holding for possible conversion into a MOPS unit, for $7.2 million. We also prepaid $60 million of our 2009 debt maturities, leaving $20 million to repay in the third quarter.
"Our earnings before interest, taxes, and depreciation and amortization expense (EBITDA) were $106 million for the quarter. For the year 2009, we expect to generate EBITDA in the range of $400 million to $420 million.
"As of June 30, 2009, we had $140 million of debt, $49 million of cash, and $200 million available under our credit facilities. With $1.1 billion of equity on our balance sheet, our debtto-capitalization percentage was 11%.
"Looking longer term, our belief remains unchanged that the oil and gas industry will continue to invest in deepwater to counteract high existing reservoir depletion rates. Deepwater is one of the best frontiers for adding large hydrocarbon reserves with high production flow rates at relatively low per barrel finding and development costs. Therefore, we anticipate demand for our deepwater services and products will remain promising for the next several years."
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