Major drilling companies are approaching near full throttle on the earnings front, with 2005 first-quarter profits on average expected to rise a healthy 21 percent over the prior quarter and rocket some 230 percent compared to the same period last year. Moreover, 2005 second-quarter profits could come in around 30 percent higher than the first quarter.
First-quarter 2005 profits for other oil field service companies are expected to fall on average 14 percent from the 2004 fourth quarter but increase about 75 percent on average versus the year-ago quarter. Second quarter 2005 profits are expected to rise 7-8 percent from the first quarter.
Results were based on a Petroleum News survey of Thompson-First Call earnings estimates for sector leading companies. Individual estimates can be higher or lower than the consensus and tend to change as the reporting season approaches. Estimates also generally exclude one-time charges against earnings and other special items.
Drilling companies surveyed were Transocean, Diamond Offshore, GlobalSantaFe, Rowan, Ensco International, Pride International, Nabors Industries, Parker Drilling, Noble and Grey Wolf.
Other major service companies surveyed were Halliburton, Schlumberger, Baker Hughes, Smith International, Weatherford International, National Oilwell and McDermott International.
Improving day rates, rig utilization
Among the drilling companies, improving day rates and rig utilization are most often cited as the main drivers behind that industry’s steady recovery. A year ago, four of the companies surveyed reported negative earnings.
Transocean, the world’s largest offshore driller, is expected to report 17 cents per share in profit for the 2005 first quarter, up from just 1 cent a share in the 2004 fourth quarter and 15 cents a share a year earlier. Early estimates for the 2005 second quarter have the driller earnings around 32 cents per share.
Diamond Offshore’s earnings have undergone remarkable improvement over the past year. The driller should report about 18 cents per share in the 2005 first quarter compared to a loss of 8 cents per share in the year-ago period. Diamond earned 9 cents per share in the 2004 fourth quarter and is expected to report a profit of around 29 cents per share in the 2005 second quarter.
GlobalSantaFe, another large offshore drilling contractor, is expected to weigh in with earnings of around 21 cents per share in the 2005 first quarter. That compares to earnings of 15 cents per share in the previous quarter and 2 cents per share a year earlier. Earnings could jump to 30 cents per share in the 2005 second quarter, according to consensus estimates.
Rowan is another offshore driller that has dug itself out of a financial hole. The company is expected to post a profit of 22 cents per share in the 2005 first quarter, compared to a loss of 11 cents per share for the same period last year. Rowan earned 16 cents per share in the 2004 fourth quarter and is expected to earn a healthy 30 cents per share in the 2005 second quarter.
Ensco is expected to earn about 24 cents per share in the 2005 first quarter, down slightly from 26 cents per share in the previous quarter but up significantly from the 14 cents per share the company earned in the year-ago quarter. The company is expected to generate 34 cents per share in the 2005 second quarter, according to preliminary estimates.
Land drillers also up
Parker Drilling should just pull out of the red with 1 cent per share in the 2005 first quarter, compared to a loss of 9 cents per share for the year-ago period. The company made 2 cents per share in the 2004 fourth quarter and is expected to improve slightly to 3 cents per share in the 2005 second quarter.
Noble’s expected 2005 first-quarter performance of 34 cents per share would be below the 39 cents per share the company earned in the previous quarter. However, 2005 first quarter earnings were up considerably from the 21 cents per share Noble earned in the year ago period. The company also is expected to earn around 56 cents per share in the 2005 second quarter.
Pride International’s earnings for the 2005 first quarter were estimated at about 9 cents per share, up from 7 cents in the previous quarter and up from 3 cents per share in the year ago period. The company is expected to earn around 13 cents per share in the 2005 second quarter.
Land drilling contractor Nabors Industries is expected to earn 75 cents per share in the 2005 first quarter, up from 68 cents per share in the previous quarter and up from 46 cents per share in the year-ago quarter. Nabors could earn about 62 cents per share in the 2005 second quarter, according to industry analysts.
Grey Wolf, another land driller, also is expected to climb out of the red in the 2005 first quarter with a profit of about 7 cents per share, compared to a loss of 4 cents per share in the year-ago quarter. The company earned 5 cents per share in the 2004 fourth quarter and is expected to make 8 cents per share in the 2005 second quarter.
Oilfield service companies also up from a year ago
Among the big oilfield service companies, Schlumberger is expected to post a profit of about 61 cents per share in the 2005 first quarter, up from 59 cents per share reported in the previous quarter and up from the 43 cents per share recorded in the year-ago quarter. The company should make around 64 cents per share in the 2005 second quarter, according to the consensus estimate.
Halliburton’s profit for the 2005 first quarter should be around 45 cents per share, up slightly from 44 cents per share in the 2004 fourth quarter and up significantly from the 29 cents per share Halliburton earned in the year-ago period. The company is expected to earn about 46 cents per share in the 2005 second quarter.
Baker Hughes should make around 42 cents per share in the 2005 first quarter, down from 53 cents per share the company earned in the previous quarter but up significantly from the 29 cents per share earned in the year-ago period. The company could earn about 46 cents per share in the 2005 second quarter.
Smith International is expected to report a profit of about 61 cents per share in the 2005 first quarter, an increase from 57 cents per share in the previous quarter and an increase from 44 cents per share earned for the same period last year. The company is expected to make about 64 cents per share in the 2005 second quarter.
Weatherford International’s profit for the 2005 first quarter should come in around 59 cents per share. That would be an increase from 55 cents per share in the previous quarter and a significant increase from 38 cents per share earned in the year-ago quarter. The company is expected to report a profit of about 60 cents per share in the 2005 second quarter.
McDermott International should earn about 14 cents per share in the 2005 first quarter, down from 61 cents earned in the previous quarter but significantly up from the company’s 21 cents per share loss in the year-ago quarter. McDermott is expected to make about 24 cents per share in the 2005 second quarter.
