Three-Year Contracts Awarded for ENSCO 110 and
ENSCO 104Highgrading Continues with Delivery of Two Ultra-Deepwater
DrillshipsStrong Safety Performance
Ensco plc (NYSE: ESV) today reported earnings of $1.11 per share
for second quarter 2015 compared to a loss of $5.07 per share a
year ago. The loss from discontinued operations was $0.04 per share
compared to a loss of $3.54 per share in second quarter 2014.
Earnings from continuing operations were $1.15 per share in second
quarter 2015 compared to a loss of $1.53 per share a year ago.
Several items influenced these comparisons:
- Non-cash impairments of $1.5 billion or
$6.47 per share in second quarter 2014:
- $704 million or $3.02 per share in
continuing operations
- $797 million or $3.45 per share in
discontinued operations
- A loss of $7 million or $0.03 per share
included in second quarter 2015 other expense related to a
previously announced debt retirement
- A non-cash impairment in discontinued
operations of $7 million or $0.03 per share in second quarter
2015
- Gains in discontinued operations on rig
sales of $3 million or $0.01 per share in second quarter 2015 and
$2 million or $0.01 per share in second quarter 2014
Excluding these items, earnings per share from continuing
operations were $1.18 compared to $1.49 a year ago, and the loss
from discontinued operations improved to $0.02 per share from a
loss of $0.10 per share last year.
“Despite difficult market conditions, we achieved high levels of
operational and safety performance including 98% uptime for our
jackup rigs and a total recordable incident rate that remains on
track to set another record in 2015,” said Chief Executive Officer
and President Carl Trowell. “In terms of new business, we earned
three-year contracts for two premium jackups — ENSCO 110 and ENSCO
104 — in the Middle East, our largest jackup market. We also
recently signed letters of intent for multi-year terms for two
jackups in the North Sea, plus a six-month extension for another
rig in the region. Newbuild drillships, ENSCO DS-8 and ENSCO DS-9,
are also projected to contribute to earnings this year.”
Second Quarter Results
Continuing Operations
Revenues were $1.059 billion in second quarter 2015 compared to
$1.137 billion a year ago primarily due to a year-over-year decline
in reported utilization to 76% from 84% a year ago. Also, the
average day rate for the fleet declined to $237,000 in second
quarter 2015 from $247,000 a year ago.
Contract drilling expense improved to $503 million in second
quarter 2015 from $543 million a year ago, as lower compensation
and repair and maintenance expense more than offset the
reactivation of ENSCO 5004, ENSCO 5005 and ENSCO 5006 following
shipyard upgrades and newbuilds commencing contracts.
There was no loss on impairment in second quarter 2015. Second
quarter 2014 results included a loss on impairment of $704 million
related to three floaters.
Depreciation expense increased to $141 million from $132 million
in second quarter 2014 as several rigs were added to the operating
fleet. General and administrative expense declined to $30 million
in second quarter 2015, from $36 million last year, due to
disciplined expense management including lower personnel costs.
Other expense increased to $55 million from $31 million a year
ago. A $7 million loss to complete the previously announced
retirement of 3.25% senior notes and other debt maturities
contributed to this increase. Interest expense in second quarter
2015 was $51 million, net of $27 million of interest that was
capitalized, compared to interest expense of $36 million in second
quarter 2014, net of $19 million of interest that was capitalized.
Interest expense increased year to year due to previously reported
debt offerings of $1.25 billion in third quarter 2014 and $1.10
billion in first quarter 2015.
The effective tax rate was 17.5% in second quarter 2015 compared
to an adjusted 10.4% a year ago excluding a loss on impairment and
other discrete items in continuing operations. The year-to-year
comparison was influenced by the mix of earnings from various tax
jurisdictions and tax legislation enacted by the U.K.
government.
Discontinued Operations
Discontinued operations include four floaters and two jackups
held for sale, as well as rigs and other assets no longer on the
Company’s balance sheet. The net loss from discontinued operations
was $10 million for second quarter 2015 compared to $818 million a
year ago. Second quarter 2015 results included a $7 million loss on
impairment to adjust the fair value of a rig held for sale to scrap
value. Excluding impairments and rig sales, the net loss from
discontinued operations improved to $6 million in second quarter
2015 from $23 million a year ago due to disciplined expense
management through proactive cold stacking of rigs held for
sale.
Segment Highlights for Continuing Operations
Floaters
Floater revenues were $634 million in second quarter 2015
compared to $680 million in second quarter 2014 primarily due to
lower utilization for several floaters in the U.S. Gulf of Mexico
that contributed to a decline in the average day rate to $417,000
from $481,000 a year ago. Reported utilization was 76%, unchanged
from a year ago. Adjusted for uncontracted rigs and planned
downtime, operational utilization was 92%, equal to last year.
Floater contract drilling expense declined 10% to $278 million
in second quarter 2015 from $310 million in second quarter 2014.
Lower compensation and repair and maintenance expense more than
offset an increase in expenses from reactivating three rigs.
Jackups
Jackup revenues were $384 million compared to $441 million a
year ago. The decline was mostly due to fewer operating days for
several jackups and the classification of three rigs to the Other
segment that were previously sold and are now managed by Ensco on
behalf of the buyer. These factors were partially offset by the
addition of newbuild jackups ENSCO 121, ENSCO 122 and ENSCO 110 to
the active fleet. The average day rate increased to $140,000 from
$138,000 a year ago as newbuild, high-specification jackups
commenced initial contracts. Reported utilization was 77% compared
to 88% in second quarter 2014. Adjusted for uncontracted rigs and
planned downtime, operational utilization in second quarter 2015
was 98% compared to 99% a year ago.
Contract drilling expense decreased 13% to $193 million in
second quarter 2015. The decline was due in part to lower
compensation and repair and maintenance expense, as well as the
classification of three jackup rigs to the Other segment as noted
above. These items were partially offset by an increase in contract
drilling expense from three newbuild jackups.
Other
Other is composed of managed drilling rigs. As noted above,
three jackups classified to the Other segment increased both
revenues and contract drilling expense year to year. Revenues
increased to $41 million from $17 million in second quarter 2014.
Contract drilling expense increased to $32 million from $12 million
a year ago.
Second Quarter
(in millions of $,
Floaters
Jackups Other
ReconcilingItems
Consolidated Total except %)
2015 2014
Chg 2015 2014
Chg 2015 2014
Chg 2015 2014
2015 2014 Chg
Revenues
634.3 679.5 (7 )%
384.1 440.6 (13 )%
40.6 16.5 146 %
-
-
1,059.0 1,136.6 (7 )% Operating expenses Contract drilling
277.7 309.9 (10 )%
192.7 220.9 (13 )%
32.2
11.7 175 %
-
-
502.6 542.5 (7 )% Loss on impairment
-
703.5 nm
-
-
-
-
-
-
-
-
-
703.5 nm Depreciation
94.4 88.3 7 %
43.6 41.8 4 %
-
-
-
2.5 2.1
140.5 132.2 6 % General and admin.
-
-
-
-
-
-
-
-
-
29.7 36.2
29.7 36.2 (18 )%
Operating income (loss)
262.2 (422.2 )
nm
147.8 177.9 (17
)%
8.4 4.8 75 %
(32.2 ) (38.3 )
386.2 (277.8 ) nm
Financial Position — 30 June 2015
- $7.4 billion of contracted revenue
backlog excluding bonus opportunities
- No significant debt maturities until
second quarter 2019
- $1.3 billion of cash and short-term
investments
- Net debt-to-capital ratio of 32% (net
of $1.3 billion of cash and short-term investments)
- $2.25 billion available revolving
credit facility
Ensco will conduct a conference call at 10:00 a.m. Central Time
(4:00 p.m. London time) on Thursday, 30 July 2015, to discuss
second quarter 2015 results. The call will be webcast live at
www.enscoplc.com. Interested parties
may listen to the call by dialing 1-855-239-3215 from within the
United States and +1-412-542-4130 from outside the U.S. Please ask
for the Ensco conference call. It is recommended that participants
call 20 minutes before the scheduled start time.
A replay of the conference call will be available by phone
through 31 August 2015 by dialing 1-877-344-7529 within the United
States or +1-412-317-0088 from outside the U.S. (conference ID
10066953). A webcast replay, MP3 download and transcript of the
call will be available at www.enscoplc.com.
Ensco plc (NYSE: ESV) brings energy to the world as a global
provider of offshore drilling services to the petroleum industry.
For more than 27 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 fifth consecutive year that Ensco has
earned this distinction. Operating one of the newest
ultra-deepwater rig fleets and the largest 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 registered office and corporate
headquarters located at 6 Chesterfield Gardens, London W1J 5BQ. To
learn more, visit our website at www.enscoplc.com.
Statements contained in this press release that are not
historical facts are forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements include
words or phrases such as “anticipate,” “believe,” “estimate,”
“expect,” “intend,” “plan,” “project,” “could,” “may,” “might,”
“should,” “will” and similar words and specifically include
statements involving expected financial performance, effective tax
rate, day rates and backlog, estimated rig availability; rig
commitments and contracts; contract duration, status, terms and
other contract commitments; letters of intent; scheduled delivery
dates for rigs; the timing of delivery, mobilization, contract
commencement, relocation or other movement of rigs; and general
market, business and industry conditions, trends and outlook. Such
statements are subject to numerous risks, uncertainties and
assumptions that may cause actual results to vary materially from
those indicated, including commodity price fluctuations, customer
demand, new rig supply, downtime and other risks associated with
offshore rig operations, relocations, severe weather or hurricanes;
changes in worldwide rig supply and demand, competition and
technology; future levels of offshore drilling activity;
governmental action, civil unrest and political and economic
uncertainties; terrorism, piracy and military action; risks
inherent to shipyard rig construction, repair, maintenance or
enhancement; possible cancellation, suspension or termination of
drilling contracts as a result of mechanical difficulties,
performance, customer finances, the decline or the perceived risk
of a further decline in oil and/or natural gas prices, or other
reasons, including terminations for convenience (without cause);
the cancellation of letters of intent or any failure to execute
definitive contracts following announcements of letters of intent;
the outcome of litigation, legal proceedings, investigations or
other claims or contract disputes; governmental regulatory,
legislative and permitting requirements affecting drilling
operations; our ability to attract and retain skilled personnel on
commercially reasonable terms; environmental or other liabilities,
risks or losses; debt restrictions that may limit our liquidity and
flexibility; our ability to realize the expected benefits from our
redomestication and actual contract commencement dates;
cybersecurity risks and threats; and the occurrence or threat of
epidemic or pandemic diseases or any governmental response to such
occurrence or threat. In addition to the numerous factors described
above, you should also carefully read and consider “Item 1A. Risk
Factors” in Part I and “Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in Part
II of our most recent annual report on Form 10-K, as updated in our
subsequent quarterly reports on Form 10-Q, which are available on
the SEC’s website at www.sec.gov or on
the Investor Relations section of our website at www.enscoplc.com. Each forward-looking statement
speaks only as of the date of the particular statement, and we
undertake no obligation to publicly update or revise any
forward-looking statements, except as required by law.
ENSCO PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (in millions, except per share
amounts) (Unaudited)
Three Months EndedJune
30,
Six Months EndedJune 30,
2015
2014
2015
2014
OPERATING REVENUES $ 1,059.0 $ 1,136.6 $ 2,222.9 $ 2,203.3
OPERATING EXPENSES Contract drilling (exclusive of
depreciation) 502.6 542.5 1,020.9 1,062.7 Loss on impairment
-
703.5
-
703.5 Depreciation 140.5 132.2 277.6 263.3 General and
administrative 29.7 36.2
59.8 74.3 672.8
1,414.4 1,358.3 2,103.8
OPERATING INCOME (LOSS) 386.2 (277.8 ) 864.6 99.5
OTHER INCOME (EXPENSE) Interest income 3.4 3.5 5.8 7.1 Interest
expense, net (51.2 ) (36.4 ) (103.6 ) (71.0 ) Other, net
(7.6 ) 2.1 (30.2 ) 4.0
(55.4 ) (30.8 ) (128.0 )
(59.9 ) INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES 330.8 (308.6 ) 736.6 39.6 PROVISION FOR INCOME
TAXES 58.0 42.6 135.7
92.1 INCOME (LOSS) FROM CONTINUING
OPERATIONS 272.8 (351.2 ) 600.9 (52.5 ) LOSS FROM
DISCONTINUED OPERATIONS, NET (10.1 ) (818.4 )
(10.3 ) (820.4 ) NET INCOME (LOSS) 262.7
(1,169.6 ) 590.6 (872.9 ) NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTERESTS (2.4 ) (3.1 )
(5.6 ) (7.3 ) NET INCOME (LOSS) ATTRIBUTABLE TO ENSCO
$ 260.3 $ (1,172.7 ) $ 585.0
$ (880.2 ) EARNINGS (LOSS) PER SHARE - BASIC
AND DILUTED Continuing Operations $ 1.15 $ (1.53 ) $ 2.53 $ (0.27 )
Discontinued Operations (0.04 ) (3.54 )
(0.04 ) (3.55 ) $ 1.11 $ (5.07 )
$ 2.49 $ (3.82 ) NET INCOME
(LOSS) ATTRIBUTABLE TO ENSCO SHARES - BASIC AND DILUTED $ 256.7 $
(1,174.8 ) $ 577.7 $ (884.1 ) WEIGHTED-AVERAGE SHARES
OUTSTANDING Basic 232.1 231.5 232.0 231.4 Diluted 232.2 231.5 232.1
231.4
ENSCO PLC AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS (in millions)
June 30, 2015
December 31,2014
(Unaudited) ASSETS CURRENT ASSETS Cash and
cash equivalents $ 648.3 $ 664.8 Short-term investments 650.0 757.3
Accounts receivable, net 714.4 883.3 Other 627.9
629.4 Total current assets 2,640.6
2,934.8 PROPERTY AND EQUIPMENT, NET 13,169.9
12,534.8 GOODWILL 276.1 276.1 OTHER ASSETS, NET
251.5 314.2 $
16,338.1 $ 16,059.9
LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT
LIABILITIES Accounts payable and accrued liabilities and other $
913.9 $ 1,069.8 Current maturities of long-term debt 14.4
34.8 Total current liabilities 928.3
1,104.6 LONG-TERM DEBT 5,911.3 5,885.6
DEFERRED INCOME TAXES 210.0 179.5 OTHER LIABILITIES
526.6 667.3 TOTAL EQUITY 8,761.9
8,222.9 $ 16,338.1 $
16,059.9
ENSCO PLC AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions)
(Unaudited) Six Months Ended June 30,
2015
2014
OPERATING ACTIVITIES Net income (loss) $ 590.6 $ (872.9 )
Adjustments to reconcile net income (loss) to net cash provided by
operating activities of continuing operations: Discontinued
operations, net 10.3 820.4 Depreciation expense 277.6 263.3 Other
62.7 6.1 Loss on impairment
-
703.5 Changes in operating assets and liabilities (50.2 )
42.5 Net cash provided by operating activities
of continuing operations 891.0 962.9
INVESTING ACTIVITIES Additions to property and
equipment (913.9 ) (629.7 ) Maturities of short-term investments
757.3 50.0 Purchases of short-term investments (650.0 ) (33.3 )
Other 1.1 2.4 Net cash used in
investing activities of continuing operations (805.5 )
(610.6 ) FINANCING ACTIVITIES Proceeds from
issuance of senior notes 1,078.7
-
Reduction of long-term borrowings (1,058.0 ) (23.7 ) Cash dividends
paid (70.5 ) (351.2 ) Premium paid on redemption of debt (30.3 )
-
Debt financing costs (10.5 )
-
Other (6.8 ) (13.4 ) Net cash used in
financing activities (97.4 ) (388.3 )
DISCONTINUED OPERATIONS Operating activities (4.2 ) (41.5 )
Investing activities (.6 ) 56.7 Net
cash (used in) provided by discontinued operations (4.8 )
15.2 Effect of exchange rate changes on
cash and cash equivalents .2 .2 DECREASE IN CASH AND CASH
EQUIVALENTS (16.5 ) (20.6 ) CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 664.8 165.6
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 648.3
$ 145.0
ENSCO PLC AND
SUBSIDIARIES OPERATING STATISTICS (Unaudited)
Second Quarter
FirstQuarter
2015
2014
2015
Rig Utilization(1) Floaters 76 % 76 %
86 % Jackups 77 % 88 % 87 %
Total 76 % 84 % 86 %
Average Day Rates(2) Floaters $ 417,463 $
480,616 $ 425,278 Jackups 139,797 138,276 144,139
Total $ 237,263
$ 246,698 $ 243,902 (1) Rig
utilization is derived by dividing the number of days under
contract by the number of days in the period. Days under contract
equals the total number of days that rigs have earned and
recognized day rate revenue, including days associated with
compensated downtime and mobilizations. When revenue is earned but
is deferred and amortized over a future period, for example when a
rig earns revenue while mobilizing to commence a new contract or
while being upgraded in a shipyard, the related days are excluded
from days under contract. For newly-constructed or acquired
rigs, the number of days in the period begins upon commencement of
drilling operations for rigs with a contract or when the rig
becomes available for drilling operations for rigs without a
contract. (2) Average day rates are derived by dividing
contract drilling revenues, adjusted to exclude certain types of
non-recurring reimbursable revenues, lump sum revenues and revenues
attributable to amortization of drilling contract intangibles, by
the aggregate number of contract days, adjusted to exclude contract
days associated with certain mobilizations, demobilizations,
shipyard contracts and standby contracts.
The table below reconciles earnings per share amounts reported
in our statement of operations for the quarter ended June 30, 2014
to adjusted earnings per share amounts referenced in this earnings
release. Reported earnings per share amounts have been adjusted to
exclude impairment charges and the after-tax gain on sale of ENSCO
85, which is included in discontinued operations.
DILUTED EARNINGS PER SHARE RECONCILIATION: Three
Months Ended June 30, 2014 Earnings per share from
continuing operations
As
reported(1)
Loss
onimpairment
Gain on Sale
ofENSCO 85
Adjusted(1)
Net (loss) income from continuing operations attributable to
Ensco(2) $ (354.2 ) $ 703.5 $
-
$ 349.3 Net income allocated to non-vested share awards(3)
(2.1 ) (1.6 )
-
(3.7 ) Net (loss) income from continuing operations
attributable to Ensco shares $ (356.3 ) $ 701.9
$
-
$ 345.6
(Loss) earnings per share
from continuing operations $ (1.53
) $ 3.02 $
-
$ 1.49 Earnings per
share from discontinued operations Net (loss) income
from discontinued operations attributable to Ensco(2) $ (818.5 ) $
796.8 $ (2.3 ) $ (24.0 ) Net income allocated to non-vested share
awards(3)
-
-
-
-
Net (loss) income from discontinued operations attributable
to Ensco shares $ (818.5 ) $ 796.8 $
(2.3 ) $ (24.0 )
(Loss) earnings per share from
discontinued operations $ (3.54 )
$ 3.45 $ (0.01
) $ (0.10 )
(1)
Diluted weighted-average shares are 231.5 million for "as reported"
(loss) earnings per share and 231.7 million for all adjustments and
"adjusted" (loss) earnings per share. (2) Net (loss) income
from continuing operations attributable to Ensco and net (loss)
income from discontinued operations attributable to Ensco are
exclusive of income attributable to non-controlling interest of
$3.0 million and $100,000, respectively. (3) Represents
income allocable to non-vested share awards, which are considered
participating securities under the two-class method required by US
GAAP.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150729006802/en/
Ensco plcSean O'Neill, 713-430-4607Vice President - Investor
Relations and CommunicationsorNick Georgas, 713-430-4490Senior
Manager - Investor RelationsorThao Pham, 713-430-4658Manager -
Communications
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