Record Deepwater Segment Revenues
UK Redomestication Completed
New Company Name Commemorates Opening of Global Headquarters in London
LONDON--(BUSINESS WIRE)--
Ensco plc (NYSE: ESV) reported diluted earnings per share from
continuing operations of $1.11 for first quarter 2010, compared to $1.59
per share in first quarter 2009. Earnings from discontinued operations
were $0.22 per share in the first quarter, compared to a loss of $0.03
per share a year ago. Discontinued operations in first quarter 2010
included a $34 million pre-tax gain from the sale of two jackup rigs and
$7 million of pre-tax income related to jackup rig ENSCO 69, which was
reclassified as discontinued operations in second quarter 2009. Diluted
earnings per share were $1.33 in first quarter 2010, compared to $1.56
per share in first quarter 2009.
Chairman, President and Chief Executive Officer
Dan Rabun
stated,
"Deepwater segment revenues grew to a record $130 million in the first
quarter, or nearly 30% of total revenues, highlighting the success of
our deepwater fleet expansion strategy initiated in 2005 and reinforcing
our hybrid drilling strategy. Only one-third, or $1 billion, of the ENSCO
8500 Series(R) newbuild capital commitments are remaining."
Mr. Rabun added, "Our move to the UK is now complete - a major milestone
in Ensco's history - and we are realizing the benefits of our
redomestication. During the first quarter, we changed our company name
to Ensco plc to commemorate the redomestication and the opening of our
new headquarters in London."
Chief Operating Officer
Bill Chadwick
commented, "We are very pleased
with the startup of our ENSCO 8500 Series(R) semisubmersibles
and the remaining rigs under construction are on schedule for their
delivery dates. In the first quarter, we achieved 99% utilization in our
deepwater segment. ENSCO 8502, our latest ultra-deepwater
semisubmersible drilling rig, was delivered during the first quarter and
is now mobilizing to the U.S. Gulf of Mexico to commence operations
under a multi-year contract."
Mr. Chadwick added, "Ensco has a long-established strategy of
high-grading our fleet by investing in new equipment and disposing of
selected assets. During the first quarter, we sold two jackup rigs at
attractive prices and we will continue to explore opportunities to
high-grade our fleet. Average day rates in our jackup business have
declined as expiring contracts adjusted to lower market rates.
Utilization for our premium jackup fleet has improved significantly over
the past two quarters and market rates appear to be stabilizing after a
sharp downturn last year."
Revenues in first quarter 2010 declined to $449 million from $500
million a year ago. Revenues from the jackup segments decreased $181
million and were partially offset by a $130 million increase in
deepwater segment revenues.
Total operating expenses in first quarter 2010 increased to $259 million
from $215 million last year. Contract drilling and depreciation expense
rose by 17% and 20%, respectively, driven by growth in the deepwater
segment. General and administrative expense increased to $21 million,
from $12 million in first quarter 2009, as a result of increases in
share-based compensation expense, professional fees incurred in
connection with the redomestication and costs related to opening the new
London headquarters.
The Company's effective tax rate improved to 17% in first quarter 2010
from 19% a year ago.
Segment Highlights
Deepwater
Deepwater segment revenues grew to $130 million in first quarter 2010,
from zero dollars a year ago. ENSCO 7500, which operated during first
quarter 2010, was mobilizing to Australia during first quarter 2009 when
it was the only rig in the deepwater segment. Revenues related to the
mobilization were deferred until drilling commenced in April 2009.
Additionally, two new ENSCO 8500 Series(R) rigs commenced
operations in 2009: ENSCO 8500 in June and ENSCO 8501 in October.
In first quarter 2010, the average day rate was $411,000 and utilization
was 99%. Comparable figures for the prior year period are not applicable
due to revenues being deferred while ENSCO 7500 was mobilizing.
Contract drilling expense was $45 million in first quarter 2010, up from
$5 million in first quarter 2009. The increase was primarily due to the
deferral of certain costs associated with the ENSCO 7500 mobilization to
Australia during first quarter 2009 and the commencement of ENSCO 8500
and ENSCO 8501 operations in mid- and late-2009, respectively.
Total Jackup Segments
Revenues from the jackup fleet totaled $319 million in first quarter
2010, down from $500 million a year ago. The decline primarily was due
to a six percentage point decrease in utilization to 76% and a $55,000
decline in average day rates to $113,000. Contract drilling expense was
reduced by nine percent year to year as personnel and other costs were
lowered to address declining utilization.
First Quarter
Deepwater Total Jackup Segments Reconciling Items Consolidated Total
($ in millions) 2010 2009 % 2010 2009 % Chng 2010 2009 2010 2009 %
Chng Chng
Revenues $ 130.4 $ ----- NM $ 319.0 $ 499.9 -36 % $ ----- $ ----- $ 449.4 $ 499.9 -10 %
Operating
expenses
Contract 45.0 4.8 NM 139.9 152.9 -9 % ----- ----- 184.9 157.7 17 %
drilling
Depreciation 9.8 2.3 NM 43.8 42.5 3 % 0.3 0.3 53.9 45.1 20 %
General and ----- ----- ----- ----- ----- ----- 20.6 12.0 20.6 12.0 72 %
administrative
Operating $ 75.6 $ (7.1 ) NM $ 135.3 $ 304.5 -56 % $ (20.9 ) $ (12.3 ) $ 190.0 $ 285.1 -33 %
income (loss)
Strong Financial Position - 31 March 2010
Ensco continues to maintain a strong financial position:
-- $1.2 billion of cash and cash equivalents
-- $350 million fully available revolving credit facility
-- Long-term debt of only $257 million
-- Long-term debt-to-capital ratio of 4%
-- Contract backlog totaling $2.8 billion
Chief Financial Officer
Jay Swent
commented, "Cash increased to $1.2
billion and our leverage ratio is just 4%. In addition to having a
strong balance sheet and liquidity position, our contract backlog is
$2.8 billion."
Ensco will conduct a conference call at 10:00 a.m. Central Time (16:00
GMT) on Thursday, 22 April 2010, to discuss first quarter 2010 results.
The call will be broadcast live at www.enscoplc.com.
Interested parties also may listen to the call by dialing (719) 325-4791
(access code 4758256). We recommend that participants call five to ten
minutes before the scheduled start time.
A replay of the conference call will be available by phone for 48 hours
after the call by dialing (719) 457-0820 (access code 4758256). A
transcript of the call and access to the replay or MP3 download may be
found at www.enscoplc.com
in the Investors Section.
As noted in Ensco's Notice of General Meeting of Shareholders, the
Company will now hold its General Meeting on Tuesday, 25 May 2010 at
9:00 (GMT) at the Intercontinental London Park Lane, One Hamilton Place,
Park Lane, London, W1J 7QY, United Kingdom. Holders of record of Ensco's
American depositary shares ("ADS") on 1 April 2010 are entitled to
instruct the depositary for the shares on how to vote the Ensco Class A
ordinary shares represented by their ADSs at the General Meeting.
Ensco plc (NYSE: ESV) brings energy to the world as a global provider of
offshore drilling services to the petroleum industry. With a fleet of
ultra-deepwater semisubmersible and premium jackup drilling rigs, Ensco
serves customers with high-quality equipment, a well-trained workforce
and a strong record of safety and reliability. To learn more about
Ensco, please visit our website at www.enscoplc.com.
Ensco plc is registered in England No. 7023598 with offices located at 6
Chesterfield Gardens, London, W1J 5BQ.
Statements contained in this press release that state the Company's
or management's intentions, plans, hopes, beliefs, expectations,
anticipations, projections, confidence, schedules, or predictions of the
future are forward-looking statements made pursuant to the Private
Securities Litigation Reform Act of 1995.
Forward-looking statements include words or phrases such as
"anticipate," "believe," "estimate," "expect," "intend," "plan,"
"project," "could," "may," "might," "should," "will" and words and
phrases of similar import. The forward-looking statements include, but
are not limited to, statements about the impact of the December 2009
reorganization of the Company's corporate structure (referred to
elsewhere herein as the "redomestication") and our plans, objectives,
expectations and intentions with respect thereto and with respect to
future operations, including the tax savings or other benefits that we
expect to achieve as a result of the redomestication, projected
deliveries, dates of rigs under construction, and apparent jackup rate
stabilization. Forward-looking statements also include statements
regarding future operations, market conditions, cash generation, the
impact of recently contracted premium jackups, contributions from our
ultra-deepwater semisubmersible rig fleet expansion program, expense
management, industry trends or conditions and the overall business
environment; statements regarding future levels of, or trends in,
utilization, day rates, revenues, operating expenses, contract term,
contract backlog, capital expenditures, insurance, financing and
funding; statements regarding future rig construction (including
construction in progress and completion thereof), enhancement, upgrade
or repair and timing thereof; statements regarding future delivery,
mobilization, contract commencement, relocation or other movement of
rigs and timing thereof; statements regarding future availability or
suitability of rigs and the timing thereof; and statements regarding the
likely outcome of litigation, legal proceedings, investigations or
insurance or other claims and the timing thereof.
Forward-looking statements are made pursuant to safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Numerous factors could cause actual results to differ materially from
those in the forward-looking statements, including: (i) changes in U.S.
or non-U.S. laws, including tax laws, that could effectively reduce or
eliminate the benefits we expect to achieve from the redomestication,
(ii) an inability to realize expected benefits from the redomestication,
(iii) costs related to the redomestication and ancillary matters, which
could be greater than expected, (iv) industry conditions and
competition, including changes in rig supply and demand or new
technology, (v) risks associated with the global economy and its impact
on capital markets and liquidity, (vi) prices of oil and natural gas and
their impact upon future levels of drilling activity and expenditures,
(vii) further declines in drilling activity, which may cause us to idle
or stack additional rigs, (viii) excess rig availability or supply
resulting from delivery of newbuild drilling rigs, (ix) concentration of
our fleet in premium jackup rigs, (x) cyclical nature of the industry,
(xi) worldwide expenditures for oil and natural gas drilling, (xii) the
ultimate resolution of the ENSCO 69 situation in general and the pending
litigation, potential return of the rig or package policy political risk
insurance recovery in particular, (xiii) changes in the timing of
revenue recognition resulting from the deferral of certain revenues for
mobilization of our drilling rigs, time waiting on weather or time in
shipyards, which are recognized over the contract term upon commencement
of drilling operations, (xiv) operational risks, including excessive
unplanned downtime due to rig or equipment failure, damage or repair in
general and hazards created by severe storms and hurricanes in
particular, (xv) changes in the dates our rigs will enter a shipyard, be
delivered, return to service or enter service, (xvi) risks inherent to
shipyard rig construction, repair or enhancement, including risks
associated with concentration of our ENSCO 8500 Series(R)
rig construction contracts in a single shipyard in Singapore, unexpected
delays in equipment delivery and engineering or design issues following
shipyard delivery, (xvii) changes in the dates new contracts actually
commence, (xviii) renegotiation, nullification, cancellation or breach
of contracts or letters of intent with customers or other parties,
including failure to negotiate definitive contracts following
announcements or receipt of letters of intent, (xix) risks associated
with offshore rig operations or rig relocations, (xx) inability to
collect receivables, (xxi) availability of transport vessels to relocate
rigs, (xxii) environmental or other liabilities, risks or losses,
whether related to hurricane damage, losses or liabilities (including
wreckage or debris removal) in the Gulf of Mexico or otherwise, that may
arise in the future which are not covered by insurance or indemnity in
whole or in part, (xxiii) limited availability or high cost of insurance
coverage for certain perils such as hurricanes in the Gulf of Mexico or
associated removal of wreckage or debris, (xxiv) self-imposed or
regulatory limitations on drilling locations in the Gulf of Mexico
during hurricane season, (xxv) impact of current and future government
laws and regulation affecting the oil and gas industry in general and
our operations in particular, including taxation, as well as repeal or
modification of same, (xxvi) our ability to attract and retain skilled
personnel, (xxvii) governmental action and political and economic
uncertainties, including expropriation, nationalization, confiscation or
deprivation of our assets, (xxviii) terrorism or military action
impacting our operations, assets or financial performance, (xxix)
outcome of litigation, legal proceedings, investigations or insurance or
other claims, (xxx) adverse changes in foreign currency exchange rates,
including their impact on the fair value measurement of our derivative
instruments, (xxxi) potential long-lived asset or goodwill impairments,
(xxxii) potential reduction in fair value of our auction rate securities
and the ultimate resolution of our pending arbitration proceedings, and
(xxxiii) other risks as described from time to time as Risk Factors in
the Company's SEC filings.
Copies of such SEC filings may be obtained at no charge by contacting
our Investor Relations Department at 214-397-3045 or by referring to our
website at www.enscoplc.com.
All information in this press release is as of today. The Company
undertakes no duty to update any forward-looking statement, to conform
the statement to actual results, or reflect changes in the Company's
expectations.
ENSCO PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
2010 2009
OPERATING REVENUES $ 449.4 $ 499.9
OPERATING EXPENSES
Contract drilling (exclusive of depreciation) 184.9 157.7
Depreciation 53.9 45.1
General and administrative 20.6 12.0
259.4 214.8
OPERATING INCOME 190.0 285.1
OTHER INCOME (EXPENSE), NET 3.1 (4.3 )
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 193.1 280.8
PROVISION FOR INCOME TAXES 33.2 54.6
INCOME FROM CONTINUING OPERATIONS 159.9 226.2
DISCONTINUED OPERATIONS, NET 31.7 (4.1 )
NET INCOME 191.6 222.1
NONCONTROLLING INTERESTS (1.8 ) (1.4 )
NET INCOME ATTRIBUTABLE TO ENSCO $ 189.8 $ 220.7
EARNINGS (LOSS) PER SHARE - BASIC
Continuing operations $ 1.11 $ 1.59
Discontinued operations 0.22 (0.03 )
$ 1.33 $ 1.56
EARNINGS (LOSS) PER SHARE - DILUTED
Continuing operations $ 1.11 $ 1.59
Discontinued operations 0.22 (0.03 )
$ 1.33 $ 1.56
NET INCOME ATTRIBUTABLE TO ENSCO
SHARES - BASIC AND DILUTED $ 187.4 $ 218.0
WEIGHTED-AVERAGE SHARES OUTSTANDING
Basic 140.7 140.1
Diluted 140.8 140.1
ENSCO PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
March 31, December 31,
2010 2009
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,229.4 $ 1,141.4
Accounts receivable, net 310.6 324.6
Other 160.8 186.8
Total current assets 1,700.8 1,652.8
PROPERTY AND EQUIPMENT, NET 4,482.6 4,477.3
GOODWILL 336.2 336.2
LONG-TERM INVESTMENTS 55.4 60.5
OTHER ASSETS, NET 207.7 220.4
$ 6,782.7 $ 6,747.2
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities and other $ 319.4 $ 467.7
Current maturities of long-term debt 17.2 17.2
Total current liabilities 336.6 484.9
LONG-TERM DEBT 257.2 257.2
DEFERRED INCOME TAXES 379.0 377.3
OTHER LIABILITIES 110.1 120.7
TOTAL EQUITY 5,699.8 5,507.1
$ 6,782.7 $ 6,747.2
ENSCO PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
Three Months Ended
March 31,
2010 2009
OPERATING ACTIVITIES
Net income $ 191.6 $ 222.1
Adjustments to reconcile net income to net cash
provided by
operating activities of continuing operations:
Depreciation expense 53.9 45.1
Gain on disposal of discontinued operations, net (29.2 ) -
Other 30.2 31.8
Changes in operating assets and liabilities (102.4 ) 28.7
Net cash provided by operating activities of continuing 144.1 327.7
operations
INVESTING ACTIVITIES
Additions to property and equipment (167.7 ) (183.9 )
Proceeds from disposal of discontinued operations 90.0 4.9
Other 0.2 0.8
Net cash used in investing activities (77.5 ) (178.2 )
FINANCING ACTIVITIES
Cash dividends paid (3.5 ) (3.5 )
Other (1.3 ) (1.1 )
Net cash used in financing activities (4.8 ) (4.6 )
Effect of exchange rate changes on cash and cash (0.5 ) (0.3 )
equivalents
Net cash provided by (used in) operating activities of 26.7 (6.9 )
discontinued operations
INCREASE IN CASH AND CASH EQUIVALENTS 88.0 137.7
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,141.4 789.6
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,229.4 $ 927.3
ENSCO PLC AND SUBSIDIARIES
OPERATING STATISTICS
(Unaudited)
Fourth
First Quarter Quarter
2010 2009 2009
Utilization(1)
Deepwater 99 % 100 % 91 %
Asia Pacific(3) 74 % 83 % 81 %
Europe and Africa 68 % 99 % 60 %
North and South America 86 % 67 % 73 %
Total Jackups 76 % 82 % 73 %
Total 78 % 82 % 74 %
Average day rates(2)
Deepwater $ 411,090 n/a $ 415,045
Asia Pacific(3) 119,009 $ 161,025 131,152
Europe and Africa 141,032 218,947 159,080
North and South America 88,098 119,057 111,248
Total Jackups 112,666 167,863 130,463
Total $ 139,138 $ 167,863 $ 154,145
(1) Rig utilization is derived by dividing the number of days
under contract by the number of days in the period. Days under contract
equals the total number of days that rigs have earned a day rate,
including days associated with compensated downtime and mobilizations.
For newly constructed or acquired rigs, the number of days in the period
begins upon commencement of drilling operations for rigs with a contract
or when the rig becomes available for drilling operations for rigs
without a contract.
(2) Average day rates are derived by dividing contract
drilling revenues, adjusted to exclude certain types of non-recurring
reimbursable revenues and lump sum revenues, by the aggregate number of
contract days, adjusted to exclude contract days associated with certain
mobilizations, demobilizations, shipyard contracts and standby contracts.
(3) Rig utilization and average day rates for the Asia
Pacific operating segment include our jackup rigs only. The ENSCO I
barge rig has been excluded.
Source: Ensco plc