Ensco plc reports first quarter 2017 results
Thursday, Apr 27, 2017
Ensco plc (NYSE: ESV) today reported a loss of $0.09 per share for first quarter 2017 compared to earnings per share of $0.74 a year ago. Results from discontinued operations were zero cents per share in both first quarter 2017 and first quarter 2016.

First quarter 2017 results included:

  • $8 million or $0.03 per share of discrete tax expense
  • $6 million or $0.02 per share of other expense to complete a previously announced debt exchange
Adjusted for the items noted above, the loss from continuing operations was $0.04 per share in first quarter 2017 compared to earnings per share of $0.74 a year ago.

Chief Executive Officer and President Carl Trowell said, "While market conditions remain challenging, we recently won several contracts and extensions including a four-year extension for jackup ENSCO 92 in the North Sea. This contracting success demonstrates our ability to leverage a proven operating and safety track record as well as a strong financial position to differentiate Ensco as the offshore driller of choice among customers."

Mr Trowell added, "We remain focused on what we can control — providing safe and efficient operations to our customers and proactively managing our capital structure. During the first quarter, our offshore crews and onshore employees achieved 99% operational utilization across our rig fleet and we took top honors in total customer satisfaction for a seventh consecutive year in the annual EnergyPoint survey. We also completed a transaction exchanging $650 million of our nearest-term maturities for cash and new senior notes giving us additional capital management flexibility."

Mr Trowell concluded, "As customer activity increases, we will continue targeting contracts with strategic clients in key growth markets to further improve utilization for our rig fleet. We are well positioned to capitalize on these new contracting opportunities by virtue of our financial strength, diverse rig fleet and global footprint."

First Quarter Results

Continuing Operations

Revenues were $471 million in first quarter 2017 compared to $814 million a year ago, primarily due to a decline in reported utilization to 58% from 65% in first quarter 2016 as well as previously announced sales of rigs that operated a year ago. The average day rate for the fleet declined to $156,000 in first quarter 2017 from $208,000 in first quarter 2016.

Contract drilling expense declined to $278 million in first quarter 2017 from $364 million a year ago as lower personnel expense and other activity-based costs due to fewer rig operating days more than offset rig reactivation and contract preparation costs.

Depreciation expense declined to $109 million from $113 million a year ago due to the extension of useful lives for certain contracted assets. General and administrative expense increased to $26 million in first quarter 2017 from $23 million a year ago due to higher accrued performance-based compensation, partially offset by lower personnel costs from organizational restructuring and other expense management actions.

Interest expense in first quarter 2017 was $59 million, net of $17 million of interest that was capitalized, compared to interest expense of $65 million in first quarter 2016, net of $12 million of interest that was capitalized. As noted above, first quarter 2017 other expense included a $6 million loss to complete a previously announced exchange offer for $650 million aggregate principal amount of senior notes.

Discontinued Operations

Results from discontinued operations include one floater and one jackup that are currently held for sale as well as rigs that were sold during 2016. The net loss from discontinued operations was $1 million for both first quarter 2017 and first quarter 2016.

Segment Highlights for Continuing Operations

Floaters

Floater revenues were $285 million in first quarter 2017 compared to $513 million a year ago. This year-to-year decline in revenues was mostly due to fewer rig operating days and a decline in the average day rate to $337,000 from $365,000 a year ago. The sale of ENSCO 6003 and ENSCO 6004, both of which operated during first quarter 2016, also contributed to lower year-to-year revenues. Reported utilization was 47% compared to 64% a year ago. Adjusted for uncontracted rigs and planned downtime, operational utilization was 99%, equal to a year ago.

Floater contract drilling expense declined to $146 million in first quarter 2017 from $211 million a year ago as fewer rig operating days resulted in lower personnel expense and other activity-based costs, which were partially offset by reactivation costs.

Jackups

Jackup revenues were $172 million in first quarter 2017 compared to $278 million a year ago, mostly due to a decline in average day rates to $86,000 from $118,000 last year and fewer rig operating days. Reported utilization was 64% compared to 66% in first quarter 2016. Adjusted for uncontracted rigs and planned downtime, operational utilization in first quarter 2017 was 99.2% compared to 99.8% a year ago.

Contract drilling expense declined to $119 million from $135 million a year ago. The decline in contract drilling expense was mostly due to lower activity-based costs from fewer rig operating days, which were partially offset by contract preparation costs.

Other

Other is composed of managed drilling rigs. Revenues declined to $15 million from $24 million in first quarter 2016. Contract drilling expense declined to $13 million from $18 million a year ago. These declines were due to the completion of a managed jackup contract in Mexico during second quarter 2016.

Ensco plc (NYSE: ESV) brings energy to the world as a global provider of offshore drilling services to the petroleum industry. For more than 29 years, the company has focused on operating safely and going beyond customer expectations. Ensco is ranked first in total customer satisfaction in the latest independent survey by EnergyPoint Research — the seventh consecutive year that Ensco has earned this distinction. Operating one of the newest ultra-deepwater rig fleets and a leading premium jackup fleet, Ensco has a major presence in the most strategic offshore basins across six continents. Ensco plc is an English limited company (England No. 7023598) with its corporate headquarters located at 6 Chesterfield Gardens, London W1J 5BQ.  

For more information, please visit: http://www.enscoplc.com

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