Ensco sees weaker results over lower rig utilization

Ensco, an offshore drilling contractor headquartered in London, reported a lower net income and revenues for the first quarter of 2016 compared to a year ago, due to decline in rig utilization. 

Ensco’s net income for the first quarter of 2016 dropped to $175.3 million, compared to $324.7 million a year ago.

The company’s revenues were $814 million in the first quarter of 2016 compared to $1.164 billion a year ago primarily due to a decline in reported utilization to 65% from 86% in first quarter 2015. The average day rate for the fleet declined to $208,000 in first quarter 2016 from $244,000 a year ago.

Ensco also said that its contract drilling expense declined 30% to $364 million from $518 million last year, as lower compensation and repair and maintenance expenses, partially related to fewer rig operating days, more than offset newbuilds starting contracts and the reactivation of a semi-submersible following shipyard upgrades.

Floaters

Ensco’s floater revenues were $513 million in first quarter 2016, compared to $695 million last year primarily due to several floaters in the U.S. Gulf of Mexico completing contracts with above average day rates, which contributed to a decline in the average day rate to $365,000 from $425,000 a year ago for the Floaters segment. Reported utilization was 64% compared to 86% last year.

Jack-ups

Jackup revenues were $278 million compared to $428 million a year ago mostly due to a decline in average day rates to $118,000 from $144,000 last year and fewer operating days for several jackups, partially offset by the addition of newbuild jackup ENSCO 110 to the active fleet. Reported utilization was 66% compared to 87% in first quarter 2015.