Rowan says jack-up rigs to leave Gulf

Rowan, the first major contract driller to report 2003 third-quarter earnings, said as many as 25 jack-up rigs, including a few of Rowan’s, could be leaving the Gulf of Mexico because of increasing demand and attractive day rates abroad.

“There’s a tremendous amount of bids around the world where (rig) utilization is already 85 percent,” Bob Palmer, Rowan’s chief executive officer, told analysts in an Oct. 15 conference call.

He said demand for the roughly 100 remaining jack-ups in the gulf would cause a further market tightening, resulting in yet higher utilization and day rates down the road.

However, Palmer was clearly disappointed with Rowan’s financial performance in the 2003 third quarter, despite posting net income of $11.6 million or 12 cents per share versus a loss of $6.6 million or 7 cents a share in the previous quarter. He said Rowan had too much rig downtime, adding that the company’s manufacturing and aviation divisions also did not perform as well as had been expected.

“We were disappointed,” Palmer said. “Our longer-term outlook, however, remains highly favorable.”

Nonetheless, Houston-based Rowan said 94 percent of its drilling rigs were utilized during the 2003 third quarter, compared to 88 percent in the prior quarter and 93 percent in last year’s third quarter. Rates for offshore rigs averaged $49,100 per day in this year’s third quarter, up 25 percent from previous quarter and up 17 percent compared to the year-ago period, Rowan said. Rates for land rigs averaged $11,000 per day, up 3 percent from the prior quarter and up 15 percent from a year ago.

Rowan’s 2003 third-quarter revenues were $193.9 million, compared to $158.1 million in the second quarter and $184.2 million in last year’s third quarter.