Seahawk Swings to Loss in 2Q10
Seahawk Drilling reported a loss of $19.8 million from continuing operations, or $1.67 per diluted share, for the three months ended June 30, 2010, compared to a loss of $8.8 million, or $0.76 per diluted share, for the three months ended June 30, 2009. Revenues totaled $22.0 million during the three months ended June 30, 2010 compared with $76.5 million during the three months ended June 30, 2009.
Seahawk's consolidated balance sheet at June 30, 2010 included cash and cash equivalents of $47.9 million and net working capital of $17.6 million. Seahawk's net working capital includes a net balance of approximately $13.1 million owed to Pride International, Inc. ("Pride"). Capital expenditures during the second quarter of 2010 were $4.3 million. On June 30, 2010, Seahawk had total assets of $565.0 million, stockholders' equity of $416.0 million, and short-term debt of $6.4 million.
President and Chief Executive Officer Randy Stilley commented, "We continue to market eight jackups in the U.S. Gulf of Mexico, and although combined utilization levels for all marketed jackup rigs by all companies operating in the U.S. Gulf of Mexico has dropped below 70%, dayrates for our rigs have remained relatively stable. New drilling permit requirements announced in early June as a result of the Macondo blowout have caused delays for permit approvals, as our customers and regulators work to understand the new regulations. Seahawk took a leading position to make sure that our rigs meet all safety, environmental, and regulatory requirements and I am pleased to report that our blowout preventers and related well control equipment have been certified and are in full compliance with the recent Notices to Lessees - 05 safety requirements.
"We continue to work with our customers and the Bureau of Ocean Energy Management (BOEM) on improving the efficiency of the permitting process. I am optimistic that the BOEM will be able to more quickly process the backlog of drilling permit applications so that current applications will be reviewed and approved allowing us to put our idle rigs back to work, as well as enter into new contracts for our rigs that are currently working and keep our personnel employed.
"Unfortunately, we have continued to experience problems with the jacking system on the Seahawk 3000. The rig will enter a shipyard in Brownsville to better assess the problems and complete repairs. This rig is not marketed at the present time, but we expect to bring it back into service as quickly as possible. Despite this, the Seahawk 3000 remains contracted with permits and our customers have agreed to honor these commitments once the rig is repaired."
During the second quarter of 2010, Seahawk's U.S. business generated $22.0 million in revenues. This compares to revenues of $17.7 million in the second quarter of 2009. Second quarter 2010 average revenue per day decreased to $37,100 compared to $67,300 in the second quarter of 2009. Operating days increased to 593 days, or 33% utilization, in the second quarter 2010 from 263 days, or 21% utilization, over the same period in 2009 as Seahawk averaged a higher number of marketed rigs in the current period partially due to the relocation of rigs from Mexico to the U.S. The U.S. segment recorded an operating loss of $19.7 million in the second quarter of 2010 compared to an operating loss of $14.5 million for the second quarter of 2009. The second quarter 2010 operating loss includes the repair cost for the damage to the Seahawk 3000 of $3.3 million, or $2.1 million after tax, and $0.18 per diluted share.
Seahawk maintains a small shore-base in Mexico. Revenues were $58.8 million in the second quarter of 2009 of which $16.9 million was attributable to rigs retained by Pride after Seahawk spun-off from Pride in August 2009. Seahawk had zero rigs operating in Mexico during the second quarter of 2010 whereas average revenue per day for our Mexico owned rigs in the second quarter of 2009 was $102,300 with 372 operating days, or 68% utilization. The Mexico segment recorded operating income of $275,000 in the second quarter of 2010 compared with $7.8 million of operating income in the second quarter of 2009. The rigs retained by Pride accounted for $7.3 million of the operating income in the second quarter of 2009.