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Ensco accelerates plans to move drilling rigs out of Gulf of Mexico Company says activity levels in Middle East and Pacific Rim improving, while North Sea, West Africa and Gulf remain sluggish Ray Tyson Petroleum News Houston Correspondent
Contract driller Ensco International says that because of continuing market weakness it intends to act swiftly on plans to move some rigs out of the U.S. Gulf of Mexico.
“Given anticipated first half softness in some areas, we have elected to accelerate various undertakings,” Carl Thorne, the company’s chief executive officer, said April 20.
He said activity levels in the Middle East and Pacific Rim are improving, while the North Sea, West Africa and the Gulf of Mexico remain sluggish. Over the past year, companies have steadily moved rigs out of the Gulf. For the week ending April 16, the count stood at 89, down 12 compared to the same weekly period last year, according to rig monitor Baker Hughes.
In May, Ensco will relocate two 250-foot jack-ups from the Gulf to the Middle East, where they will undergo upgrades until late third and early fourth quarters, Thorne said.
In addition, he said, Ensco 67 will mobilize from the Gulf to a shipyard in Singapore for a major upgrade, including conversion from slot to cantilever configuration, with expected completion in late first quarter 2005.
“These actions will allow us to take advantage of strong international term-work opportunities, as well as to address enhancement cost efficiencies and fleet geographic balance,” Thorne said.
He said that with the relocation of three jack-ups, and the exchange of Ensco 55 in connection with the construction of Ensco 107, U.S. domestic supply would be reduced, and international availability increased, by four rigs. Average day rate up from year-ago quarter Ensco now expects to incur about 40 rig-months of downtime in connection with its overall jackup rig enhancement program during the remainder of the year. The company also has elected to accelerate regulatory inspection and maintenance on Ensco 7500, a deepwater semi-submersible rig, which will result in shipyard time through May.
“While the actions we are taking will have short-term negative impact on earnings, we believe that these decisions will enhance intermediate and long-term positioning as the fundamentals of our industry continue to improve,” Thorne said. “We continue to expect global activity to be stronger in the second half of 2004 than in the first half of the year.”
Ensco reported net income of $21.0 million or 14 cents per share on revenues of $186.5 million for the 2004 first quarter, a slight decline compared to net income of $22.9 million or 15 cents per share on revenues of $192.9 million for the same period last year. First-quarter 2004 results met analysts expectations based on Thompson-First Call consensus estimates.
Excluding results from discontinued operations, Ensco’s income from continuing operations actually was $21.3 million in the first quarter of 2004, compared to $26.7 million for the year-ago period. Discontinued operations include the company’s marine transportation vessels sold in April 2003 and three rigs to be exchanged in connection with construction of Ensco 107, a new high-specification jackup rig, announced in February 2004.
The average day rate for Ensco’s operating jackup rig fleet was $50,200 for the first quarter of 2004, compared to $48,500 in the year earlier period. Utilization for the company’s jackup fleet decreased slightly to 85 percent in the most recent quarter, from 87 percent in the first quarter of 2003. Diamond Offshore has first-quarter loss Meanwhile, Diamond Offshore weighed in with a loss for the first quarter of 2004 of $11.0 million or 8 cents per share, compared with a loss of $21.6 million or 17 per share in the same period a year earlier, missing analysts’ expectations by about 2 cents per share. However, revenues for the first quarter of 2004 were $184.2 million versus $146.1 million for the first quarter of 2003.
“Results for the (first) quarter were impacted by planned surveys as well as greater-than-anticipated idle time on several of the company’s mid-water and deepwater units,” said Larry Dickerson, Diamond’s chief operating officer.
However, he said market conditions appear to be improving and that Diamond is realizing benefits from continuing cost control programs initiated in 2003. Moreover, survey work is expected to be completed in the 2004 second quarter, “and our goal is to resume the sequential quarterly improvements achieved last year as we move forward in 2004,” he added.
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