Ensco posts 2Q loss as rig utilization drops

Ensco, one of the world’s largest drilling contractors, posted a $45.6 million net loss for the second quarter 2017, a steep drop compared to the $590.6 million profit in the same quarter a year ago.

Revenues in the second quarter of 2017 were $458 million, compared to $910 million a year ago.

Excluding $205 million of early contract termination settlements received during second quarter 2016, revenues declined 35% compared to the year-ago period.

Fewer rig operating days due to a decline in reported utilization to 56% from 61% in second quarter 2016 as well as previously announced sales of rigs that operated a year ago also contributed to lower year-to-year revenues.

The average day rate for the fleet declined to $156,000 in second quarter 2017 from $195,000 in second quarter 2016, the driller, which recently announced the acquisition of it rival Atwood Oceanics, said.

Chief Executive Officer and President, Carl Trowell, said: “During the second quarter, we took additional steps to better position our rig fleet for the future. We announced our proposed acquisition of Atwood, which will significantly enhance our fleet through the addition of high-specification floaters and jack-ups at a compelling purchase price. Coupled with targeted synergies, we expect this transaction will create meaningful value for our shareholders.”

Trowel said he expected  to complete the transaction during third quarter 2017.

The CEO added added, “We also improved our prospects for future utilization by winning new contracts for several rigs. By securing work for drillships Ensco DS-4 and Ensco DS-10 with key strategic clients for major projects offshore Nigeria, we bridge these ultra-deepwater assets to better market conditions. We continue to see increased activity in the shallow-water jack-up segment as evidenced by three-year contracts for Ensco 110 in the Middle East and Ensco 120 in the North Sea, a 400-day contract for ENSCO 102 in the U.S. Gulf of Mexico and several other short-term contract awards and extensions.”

Trowell concluded, “Our recent contracting success across a range of water depths and geographies highlight the benefits of our diverse rig fleet and global footprint. As customers look to contract offshore drilling rigs from a select group of established service providers, we will continue to leverage our proven operating and safety track record as well as a strong financial position to capitalize on new contracting opportunities.”

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