Ensco books quarterly loss as revenues slip on fewer rig days

Offshore drilling contractor Ensco booked a loss in the third quarter of this year, after reporting a profit in the same period last year. The driller’s revenues were impacted by fewer rig days and lower dayrates. 

The UK-based driller, which recently completed its acquisition of Atwood Oceanics, on Wednesday reported a loss of $25.4 million for this year’s quarter compared to a profit of $85.3 million in the last year’s third quarter.

On a per share basis, Ensco reported a loss of $0.08 per share for third quarter 2017 compared to earnings of $0.28 per share a year ago.

As explained by the company, this result was influenced by $6 million of transaction costs related to the acquisition of Atwood Oceanics included in third quarter 2017 general and administrative expense; $3 million of discrete tax expense in third quarter 2017 tax provision; $18 million gain included in third quarter 2016 other income related to the repurchase of senior notes at a discount; $6 million of other discrete tax items that reduced the third quarter 2016 tax provision; and $4 million of severance and other restructuring costs in third quarter 2016 contract drilling expense.

Adjusted for these items, the loss from continuing operations was $0.05 per share in third quarter 2017 compared to earnings of $0.21 per share a year ago.

Revenues decline by 16 pct

Revenues were $460 million in third quarter 2017 compared to $548 million in third quarter 2016. Revenues declined 16% compared to the year-ago period primarily due to fewer rig operating days and a decline in the average dayrate for the fleet to $166,000 from $184,000 last year.

Divided by segments, Ensco’s floater rig revenues decreased to $292 million in third quarter 2017 compared to $319 million a year ago primarily due to a decline in reported utilization to 46% from 48% a year ago and a decline in the average day rate to $334,000 from $353,000 in third quarter 2016. Adjusted for uncontracted rigs and planned downtime, operational utilization was 99.6% up from 98.9% a year ago.

Jack-up revenues were $153 million in third quarter 2017 compared to $214 million a year ago due to fewer rig operating days and a decline in the average day rate to $88,000 from $109,000 in third quarter 2016. Reported utilization increased to 60% from 55% last year due to the retirement of several jack-ups. Adjusted for uncontracted rigs and planned downtime, operational utilization was 99.3% up from 98.9% a year ago.

No debt maturities till 2Q19 

Speaking about Ensco’s acquisition of Atwood, Chief Executive Officer and President, Carl Trowell, said: “Our efforts to integrate operations and systems are well underway and we remain on track to achieve annual run rate synergies of $80 million beginning in 2019.”

Trowell added, “By strengthening our rig fleet through the acquisition, we were able to extend our revolving credit facility into 2022 and increase our financial flexibility over the next five years.”

After completing the acquisition of Atwood and extending Ensco’s revolving credit facility, the company’s pro forma financial position as of September 30, 2017, reflected $3.2 billion of contracted revenue backlog excluding bonus opportunities; $2.9 billion of liquidity; no debt maturities until second quarter 2019 and less than $1 billion of debt maturing before 2024, and $4.7 billion of long-term debt.

Offshore Energy Today Staff