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Contract drillers suffer lower profits, losses Nabors has higher income this quarter compared to ’03; Transocean and GlobalSantaFe report lower net income; Grey Wolf, Parker Drilling post losses Ray Tyson Petroleum News Houston Correspondent
Contract drillers, while generally upbeat about the future, continued to struggle during the 2004 first quarter with diminished profits and losses.
Among the drilling companies reporting during the week ending April 30, big offshore drillers Transocean and GlobalSantaFe reported lower net income compared to the same first-quarter period last year, while Grey Wolf and Parker Drilling posted losses.
Only Nabors Industries reported higher net income in the 2004 first quarter vs. the year-ago period.
“Our outlook for the full year and beyond remains quite bullish,” said Gene Isenberg, Nabors’ chief executive officer. “The totality of developments in our first quarter supports our conviction in the strong outlook for our business over the longer-term.”
He said that only in Alaska does Nabors expect lower financial results this year.
The company weighed in with 2004 first-quarter net income of $71.7 million or 46 cents per share on revenue of $596.8 million, compared to net income of $48.1 million or 31 cents per share on revenue of $455.7 million in the year-ago quarter and $64.9 million or 42 cents per share on revenue of $524.6 million in the prior quarter.
Isenberg said that compared to the 2003 fourth quarter, Canada’s seasonally strong 2004 first quarter had the greatest impact on the company’s performance, substantially surpassing its previous high quarter.
“Although Canada’s contribution in the second quarter will be seasonally reduced, the full year is all but certain to set a new record,” he said.
Nabors’ rig activity in the U.S. Lower 48 improved throughout the 2004 first quarter, with further increases anticipated in the near-term, the company said, adding that it also began to see the start of meaningful price improvement.
“We are optimistic that the … U.S. land rig count will surpass the peak levels of 2001 during the second half of this year,” Isenberg said.
Internationally, Nabors said favorable results in Ecuador, Trinidad and Yemen were offset by lower activity in Colombia and later than anticipated startups in Algeria. Parker, Grey Wolf lose money with increased rig utilization It was a different story for Parker Drilling and Grey Wolf, which managed to lose money despite reporting an increase in rig utilization during the 2004 first quarter.
Parker reported first-quarter revenues of $85.1 million and a net loss of $4.9 million, or 5 cents per share, compared to a net loss of $16.2 million or 17 cents per share on revenues of $78 million for the first quarter of 2003. The loss from continuing operations for the first quarter of 2004 was $8.7 million vs. a loss of $10.6 million for the first quarter of 2003.
However, average utilization of international land rigs for continuing operations during the 2004 first quarter increased to 55 percent from 48 percent during the fourth quarter of 2003 and was favorable to the 35 percent reported for the first quarter of 2003, Parker said.
Average utilization of the company’s Gulf of Mexico barge rigs also increased during the first quarter of 2004 to 56 percent, compared to an average utilization of 53 percent in the fourth quarter of 2003 and 52 percent for the first quarter of 2003, the company said.
Grey Wolf posted a loss of $6.4 million or 4 cents per share on revenue of $75.2 million during the 2004 first quarter, compared to a loss of $9.6 million or 5 cents per share on revenue of $62.4 million for the first quarter of 2003.
Tom Richards, Grey Wolf’s chief executive officer, said the company saw further strengthening in the demand for its services during the 2004 first quarter, adding that the U.S. land rig count has finally reached the point where improvements in day rates could materialize.
Grey Wolf said it averaged 65 rigs working in the first quarter of 2004 compared to 62 rigs working in the fourth quarter of 2003. Moreover, Grey Wolf increased its presence in the active Rocky Mountain market with the recent acquisition of New Patriot Drilling and its fleet of 10 rigs in Wyoming and Colorado.
“We expect our results in the remainder of 2004 to reflect these improved fundamentals,” Richards said. GlobalSantaFe has profitable first quarter Meanwhile, GlobalSantaFe had a profitable 2004 first quarter, but not nearly as profitable compared to the same period last year when the company netted $45.9 million or 20 cents per share on revenue of $424.4 million. The company netted just $8.7 million or 4 cents a share on revenue of $380 million in the recent quarter.
The decline in quarterly net income was attributed primarily to a decrease in contract drilling operating income to $15.9 million from $37.1 million in the same quarter of last year.
GlobalSantaFe said its lower operating income from the contract drilling segment was mainly due to decreased revenues resulting from lower day rates and utilization of rigs in the deepwater market, the North Sea and West Africa. That was partially offset by higher day rates and utilization for the company’s jack-up rigs in the Gulf of Mexico and improved utilization in the Middle East and South East Asia.
“We continue to see stable to improving conditions for the worldwide jack-up market and expect improving conditions for the higher specification deepwater market in the latter half of this year and into 2005,” said Jon Marshall, GlobalSantaFe’s chief executive officer. Transocean up on North Sea drilling program Transocean went the same way as fellow offshore driller GlobalSantaFe, reporting net income of $22.7 million or 7 cents per share on revenue of $652 million in the 2004 first quarter, down from year-ago net income of $47.2 million or 15 cents per share on revenue of $616 million in the 2003 first quarter. However, the company noted that revenue for the 2004 first quarter was 9 percent greater than revenue during the prior quarter, due mainly to a North Sea drilling program, increased activity in Asia and the buyout of its remaining interest in the Deepwater Drilling joint venture.
Fleet utilization during the 2004 first quarter improved slightly to 69 percent from 68 percent in the year-ago quarter, due principally to higher utilization of the company’s high-specification floaters, especially in Asia and the Gulf of Mexico.
Transocean said it also has seen improving demand for its high-specification floaters in the Norwegian North Sea market sector and expects to see improvement in other market sectors as the year progresses.
However, the company said its other floaters remain significantly underused, particularly in the United Kingdom sector of the North Sea and the Gulf of Mexico where approximately 40 percent of the industry’s capacity resides.
“Seasonal improvement in the … the North Sea has begun and should support higher utilization in the region into the third quarter of 2004, while utilization in the Gulf of Mexico continues to be hindered by competition from higher specification rigs,” Transocean said.
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