Offshore drilling contractor Rowan Companies saw an increase in its profit and revenues for the second quarter 2016, when compared to the prior-year quarter, due to an early rig contract termination.
For the three months ended June 30, 2016, Rowan reported net income of $216.7 million, compared to $84.7 million in the second quarter of 2015.
Net income for the current quarter included a $120 million after-tax increase to net income for the Rowan Relentless contract termination and related items. Namely, Freeport-McMoRan Oil & Gas in May terminated a drilling contract it had with Rowan for the Rowan Relentless. The $120 million reflects the amount in excess of the drillship’s day rate for the three months ended June 30, 2016.
Additionally, net income for the current quarter included a $1.8 million after-tax gain on early extinguishment of debt. Excluding the impact of these items, net income as adjusted was $94.9 million.
Rowan’s revenues were $611.9 million in the second quarter of 2016, an increase of 20% from the prior-year quarter and revenues of $508.7 million due to the already mentioned contract termination and related items as well as contributions from the ultra-deepwater drillships Rowan Relentless, which started operations in June of 2015, and Rowan Reliance , which experienced lower levels of downtime in the second quarter of 2016.
The increase in drillship revenue was partially offset by a 22% decline in jack-up revenue due to lower utilization and lower day rates.
Tom Burke , President and Chief Executive Officer, commented, “I’m pleased that we secured over 700 contract days of new backlog between a blend and extend agreement on our ultra-deepwater drillship, the Rowan Resolute, and contract extensions in our jack-up fleet.”