Scorpion Offshore Posts Financial Results for 1st Quarter 2010

The Board of Directors of Scorpion Offshore approved the Company's unaudited consolidated financial statements for the quarter ended September 30, 2009. These financial statements are reported in US dollars and have been prepared in accordance with US Generally Accepted Accounting Principles.


  • Revenues for the first quarter 2010 totaled $107.9 million, including $4.9 million mobilization revenue and $3.8 million revenue booked as a reversal of a credit memo issued last quarter. Excluding this credit memo reversal and mobilization revenue, revenues increased 118% from the same period last year and 31% from last quarter.
  • Day rates averaged $182,474 for the quarter as compared to $174,871last quarter.
  • Average daily rig operating costs were $67,186 for the quarter versus $63,393 for the previous quarter.
  • Revenue utilization averaged 97.9% for the first quarter, excluding the $3.8 million credit memo reversal, compared to 99.2% last quarter.
  • All six delivered jack ups worked the entire quarter. One jackup is under construction.
  • Three of six operating rigs achieved over 99% revenue utilization.
  • Petrobras has awarded a two year contract extension to the Offshore Defender for continued operations offshore Brazil. The existing contract has been extended through February 2012.
  • The Board of Directors approved changing the Company's year-end reporting structure from June 30 to December 31. The change will be effective January 1, 2010. The change results in a 6- month period ending December 31, 2009 (Transition Period) and the new 2010 fiscal year starting January 1, 2010.

Subsequent Events

  • On October 15, 2009, the Offshore Vigilant completed demobilization from Venezuela after completion of the first well for Urdanetagazprom-1 S.A. ("Gazprom"). Scorpion and Gazprom are now in mediation over unpaid invoices related to the first well contract. As of September 30, 2009, the Company had $33.1 million outstanding from Gazprom of which $12.7 million has been subsequently collected, resulting in $20.4 million outstanding and past due. Management expects the remaining amounts will be collected in full.
  • On November 18, 2009, Scorpion signed a contract with an independent US oil and gas company for a drilling program for the Offshore Vigilant offshore Trinidad. The program has an estimated duration between 95 and 135 days with an optional period of an additional 60 to 75 days. The contract is expected to begin December 1, 2009. This contract brings the Company's backlog to $784 million, which is a backlog average of $131 million per rig, an average contract length of over 2 years, and an average backlog dayrate of $168,438 per day.

Financial Results

Net income for the quarter ending September 30, 2009 totaled $26.4 million, compared to net income of $17.0 million for the previous year. Net income was positively impacted by the reversal of $3.8 million credit memo issued in the previous quarter. Contract drilling revenue, excluding mobilization revenue of $4.9 million and the $3.8 million credit memo reversal, totaled $99.2 million for the quarter which is an increase of 31% over the $75.7 million from the previous quarter and 118% over the $45.3 million for the same period last year. Operating costs, excluding mobilization, totaled $40.0 million for the quarter compared to $30.2 million for the previous quarter and $14.2 million for the same period last year. Interest expense totaled $15.4 million for the quarter, compared to $9.7 million for the previous quarter and $2.4 million for the same period last year. The increase in interest expense is primarily due to the addition of two short term debt facilities and
to the reduction in the amount of interest capitalized as the number of rigs under construction is now reduced to one.

As of September 30, 2009, total assets were $1,310.1 million. This primarily consists of $61.6 million in cash and cash equivalents, $83.6 million in accounts receivable, $126.2 million in assets held for sale, and $964.0 million in property and equipment.

As of September 30, 2009, debt totaled $742.2 million, which is a decrease of $43.7 million from $785.9 million for the prior quarter, but an increase of $216.0 million from $526.2 million for the same period last year. The $43.7 million decrease from the prior quarter was due to principal payments made during the quarter.

Shareholders' equity totaled $484.9 million, which is an increase of $28.4 million from the previous quarter.