Ensco plc Reports 3Q, 2014 Results

Ensco plc  today reported earnings per share from continuing operations of $1.93 in third quarter 2014, up 16% from $1.66 in third quarter 2013. Adjusted for a $0.06 per share gain on the sale of four jackup rigs, third quarter 2014 diluted earnings per share from continuing operations were $1.87.

The loss from discontinued operations was $0.10 per share for third quarter 2014 compared to a loss of $0.04 per share a year ago. Third quarter 2014 earnings per diluted share increased to $1.83 from $1.62 in third quarter 2013.

Chief Executive Officer and President Carl Trowell said, “We achieved record revenues due to strong operational performance and new rigs joining our fleet. Future revenues will benefit from more than $1 billion of backlog that we added recently when we signed several multi-year contracts with repeat customers. As a result, total revenue backlog is $11 billion including record jackup backlog of more than $3 billion.”

Mr. Trowell added, “Strong operational performance by our offshore crews and onshore personnel is the primary driver of our contracting success with customers. While market conditions for floating rigs have become more challenging, we believe the fundamental drivers of long-term demand for newer, more technologically-advanced floaters remain favorable.”

Mr. Trowell concluded, “With the sale of four jackup rigs at a significant gain in the third quarter, we have continued our strategy of high-grading our fleet. Year to date, we have sold seven jackups and since the beginning of 2010, we have sold a total of 18 rigs. Five more rigs are currently held for sale.”

Third Quarter Results

Revenues grew 9% to $1.261 billion in third quarter 2014, up from $1.162 billion a year ago, due to the addition of ENSCO DS-7, ENSCO 120 and ENSCO 121 to the active fleet. The average day rate increased 5% to $237,000, more than offsetting a decline in reported utilization.

Reported utilization, which includes the impact of uncontracted rigs and planned downtime, declined to 88% from 90% in third quarter 2013. The decline was due to a year-over-year increase in uncontracted days. Adjusted for uncontracted rigs and planned downtime such as rig upgrades and surveys, operational utilization was 96% in third quarter 2014, equal to a year ago.

Contract drilling expense was $531 million in third quarter 2014, down from $534 million in third quarter 2013. The year-to-year comparisons were influenced by an $8 million gain on the sale of four jackups that reduced contract drilling expense in third quarter 2014 and an $11 million provision for doubtful accounts related to one customer in third quarter 2013. Adjusted for these items, contract drilling expense increased 3%.

Depreciation expense increased to $141 million from $133 million in third quarter 2013, as three rigs were added to the active fleet. General and administrative expense declined to $29 million in third quarter 2014 from $37 million last year.

Other expense was $38 million for third quarter 2014 compared to $2 million last year that included a $31 million favorable tax settlement. Interest expense in third quarter 2014 was $38 million, net of $18 million of interest that was capitalized, compared to interest expense of $40 million in third quarter 2013, net of $16 million of interest that was capitalized.