ENSCO 92 Earns Four-Year Contract Extension in
North SeaStrong Operational and Safety Performance#1 in Total
Customer Satisfaction for Seventh Consecutive YearCompleted
Exchange Offer for $650 Million Aggregate Principal Amount of
Senior Notes
Ensco plc (NYSE: ESV) today reported a loss of $0.09 per share
for first quarter 2017 compared to earnings per share of $0.74 a
year ago. Results from discontinued operations were zero cents per
share in both first quarter 2017 and first quarter 2016.
First quarter 2017 results included:
- $8 million or $0.03 per share of
discrete tax expense
- $6 million or $0.02 per share of other
expense to complete a previously announced debt exchange
Adjusted for the items noted above, the loss from continuing
operations was $0.04 per share in first quarter 2017 compared to
earnings per share of $0.74 a year ago.
Chief Executive Officer and President Carl Trowell said, "While
market conditions remain challenging, we recently won several
contracts and extensions including a four-year extension for jackup
ENSCO 92 in the North Sea. This contracting success demonstrates
our ability to leverage a proven operating and safety track record
as well as a strong financial position to differentiate Ensco as
the offshore driller of choice among customers."
Mr Trowell added, "We remain focused on what we can control —
providing safe and efficient operations to our customers and
proactively managing our capital structure. During the first
quarter, our offshore crews and onshore employees achieved 99%
operational utilization across our rig fleet and we took top honors
in total customer satisfaction for a seventh consecutive year in
the annual EnergyPoint survey. We also completed a transaction
exchanging $650 million of our nearest-term maturities for cash and
new senior notes giving us additional capital management
flexibility."
Mr Trowell concluded, "As customer activity increases, we will
continue targeting contracts with strategic clients in key growth
markets to further improve utilization for our rig fleet. We are
well positioned to capitalize on these new contracting
opportunities by virtue of our financial strength, diverse rig
fleet and global footprint."
First Quarter Results
Continuing OperationsRevenues were
$471 million in first quarter 2017 compared to $814 million a year
ago, primarily due to a decline in reported utilization to 58% from
65% in first quarter 2016 as well as previously announced sales of
rigs that operated a year ago. The average day rate for the fleet
declined to $156,000 in first quarter 2017 from $208,000 in first
quarter 2016.
Contract drilling expense declined to $278 million in first
quarter 2017 from $364 million a year ago as lower personnel
expense and other activity-based costs due to fewer rig operating
days more than offset rig reactivation and contract preparation
costs.
Depreciation expense declined to $109 million from $113 million
a year ago due to the extension of useful lives for certain
contracted assets. General and administrative expense increased to
$26 million in first quarter 2017 from $23 million a year ago due
to higher accrued performance-based compensation, partially offset
by lower personnel costs from organizational restructuring and
other expense management actions.
Interest expense in first quarter 2017 was $59 million, net of
$17 million of interest that was capitalized, compared to interest
expense of $65 million in first quarter 2016, net of $12 million of
interest that was capitalized. As noted above, first quarter 2017
other expense included a $6 million loss to complete a previously
announced exchange offer for $650 million aggregate principal
amount of senior notes.
Discontinued OperationsResults from
discontinued operations include one floater and one jackup that are
currently held for sale as well as rigs that were sold during 2016.
The net loss from discontinued operations was $1 million for both
first quarter 2017 and first quarter 2016.
Segment Highlights for Continuing Operations
FloatersFloater revenues were $285
million in first quarter 2017 compared to $513 million a year ago.
This year-to-year decline in revenues was mostly due to fewer rig
operating days and a decline in the average day rate to $337,000
from $365,000 a year ago. The sale of ENSCO 6003 and ENSCO 6004,
both of which operated during first quarter 2016, also contributed
to lower year-to-year revenues. Reported utilization was 47%
compared to 64% a year ago. Adjusted for uncontracted rigs and
planned downtime, operational utilization was 99%, equal to a year
ago.
Floater contract drilling expense declined to $146 million in
first quarter 2017 from $211 million a year ago as fewer rig
operating days resulted in lower personnel expense and other
activity-based costs, which were partially offset by reactivation
costs.
JackupsJackup revenues were $172
million in first quarter 2017 compared to $278 million a year ago,
mostly due to a decline in average day rates to $86,000 from
$118,000 last year and fewer rig operating days. Reported
utilization was 64% compared to 66% in first quarter 2016. Adjusted
for uncontracted rigs and planned downtime, operational utilization
in first quarter 2017 was 99.2% compared to 99.8% a year ago.
Contract drilling expense declined to $119 million from $135
million a year ago. The decline in contract drilling expense was
mostly due to lower activity-based costs from fewer rig operating
days, which were partially offset by contract preparation
costs.
OtherOther is composed of managed
drilling rigs. Revenues declined to $15 million from $24 million in
first quarter 2016. Contract drilling expense declined to $13
million from $18 million a year ago. These declines were due to the
completion of a managed jackup contract in Mexico during second
quarter 2016.
First Quarter (in
millions of $,
Floaters Jackups
Other
Reconciling
Items
Consolidated Total except %)
2017
2016 Chg 2017 2016
Chg 2017 2016
Chg 2017 2016 2017
2016 Chg
Revenues
284.8 512.6 (44
)%
171.8 277.9 (38 )%
14.5 23.5 (38 )%
— —
471.1 814.0 (42 )% Operating expenses Contract drilling
146.4 211.3 (31 )%
118.6 134.5 (12 )%
13.1
17.9 (27 )% —
278.1 363.7 (24 )% Depreciation
72.8
80.3 (9 )%
32.1 28.6 12 %
— — —
4.3 4.4
109.2 113.3 (4 )% General and admin.
—
— —
— —
—
— — —
26.0 23.4
26.0 23.4 11 % Operating income
(loss)
65.6 221.0 (70 )%
21.1 114.8 (82 )%
1.4 5.6 (75 )%
(30.3 ) (27.8 )
57.8
313.6 (82 )%
Financial Position — 31 March 2017
- $3.3 billion of contracted revenue
backlog excluding bonus opportunities
- $4.3 billion of liquidity
- $2.1 billion of cash and short-term
investments
- $2.25 billion available revolving
credit facility
- No major debt maturities until second
quarter 2019 and $1.15 billion of debt maturing before 2024
- $4.9 billion of long-term debt
- $8.2 billion of Ensco shareholder's
equity
- 26% net debt-to-capital ratio (net of
$2.1 billion of cash and short-term investments)
Ensco will conduct a conference call to discuss first quarter
2017 results at 10:00 a.m. CDT (11:00 a.m. EDT and 4:00 p.m.
London) on Thursday, 27 April 2017. The call will be webcast live
at www.enscoplc.com. Alternatively,
callers may dial 1-855-239-3215 within the United States or
+1-412-542-4130 from outside the U.S. Please ask for the Ensco
conference call. It is recommended that participants call 20
minutes ahead of the scheduled start time. Callers may avoid delays
by pre-registering to receive a dial-in number and PIN at
http://dpregister.com/10102906.
A webcast replay and transcript of the call will be available at
www.enscoplc.com. A replay will also
be available through 27 May 2017 by dialing 1-877-344-7529 within
the United States or +1-412-317-0088 from outside the U.S.
(conference ID 10102906).
Ensco plc (NYSE: ESV) brings energy to the world as a global
provider of offshore drilling services to the petroleum industry.
For more than 29 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 seventh consecutive year that Ensco has
earned this distinction. Operating one of the newest
ultra-deepwater rig fleets and a leading 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 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; our intent to
sell or scrap 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; and
cybersecurity risks and threats. 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 Ended March 31,
2017
2016
OPERATING REVENUES $ 471.1 $ 814.0 OPERATING EXPENSES
Contract drilling (exclusive of depreciation) 278.1 363.7
Depreciation 109.2 113.3 General and administrative
26.0 23.4
413.3 500.4
OPERATING INCOME 57.8 313.6 OTHER INCOME (EXPENSE) Interest
income 7.2 2.3 Interest expense, net (58.6 ) (65.1 ) Other, net
(6.3 ) (1.8 )
(57.7 )
(64.6 ) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
.1
249.0 PROVISION FOR INCOME TAXES 24.1
71.4 (LOSS) INCOME FROM
CONTINUING OPERATIONS (24.0 ) 177.6 LOSS FROM DISCONTINUED
OPERATIONS, NET
(.6
)
(.9
) NET (LOSS) INCOME (24.6 ) 176.7 NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTERESTS (1.1 )
(1.4 ) NET (LOSS) INCOME ATTRIBUTABLE TO ENSCO
$ (25.7 ) $ 175.3
(LOSS) EARNINGS PER SHARE - BASIC AND DILUTED Continuing operations
$ (0.09 ) $ 0.74 Discontinued operations
— —
$ (0.09 ) $ 0.74
NET (LOSS) INCOME ATTRIBUTABLE TO ENSCO SHARES - BASIC AND DILUTED
$ (25.8 ) $ 172.8 WEIGHTED-AVERAGE SHARES OUTSTANDING Basic 300.6
232.5 Diluted 300.6 232.5
ENSCO PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in millions)
(Unaudited)
March 31,
2017
December 31,
2016
ASSETS CURRENT ASSETS Cash and cash
equivalents $ 271.7 $ 1,159.7 Short-term investments 1,805.6
1,442.6 Accounts receivable, net 324.1 361.0 Other
312.2 316.0 Total current
assets 2,713.6
3,279.3 PROPERTY AND EQUIPMENT, NET 11,120.7 10,919.3
OTHER ASSETS, NET 138.0
175.9
$ 13,972.3 $ 14,374.5
LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT
LIABILITIES Accounts payable and accrued liabilities and other $
508.5 $ 522.5 Current maturities of long-term debt
37.6 331.9 Total current
liabilities 546.1
854.4 LONG-TERM DEBT 4,905.9 4,942.6 OTHER
LIABILITIES 294.5 322.5 TOTAL EQUITY
8,225.8 8,255.0
$ 13,972.3
$ 14,374.5
ENSCO PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in millions)
(Unaudited)
Three Months Ended
March 31,
2017
2016
OPERATING ACTIVITIES Net (loss) income $ (24.6 ) $ 176.7
Adjustments to reconcile net (loss) income
to net cash provided by
operating activities of
continuing operations:
Depreciation expense 109.2 113.3 Deferred income tax expense 19.8
33.3 Loss on debt extinguishment 3.4 — Other 8.3 3.4 Changes in
operating assets and liabilities
(11.5 ) (93.6 ) Net cash
provided by operating activities of continuing operations
104.6
233.1 INVESTING ACTIVITIES Purchases of
short-term investments (965.0 ) (80.0 ) Additions to property and
equipment (282.6 ) (158.1 ) Maturities of short-term investments
602.0 965.0 Other
.2
.1
Net cash (used in) provided by investing
activities of continuing operations
(645.4 )
727.0 FINANCING ACTIVITIES Reduction of
long-term borrowings (336.6 ) —
Debt financing costs
(4.5
)
—
Cash dividends paid (3.2 ) (2.4 ) Other
(2.4 )
(.5
) Net cash used in financing activities
(346.7 ) (2.9 )
Net cash (used in) provided by discontinued operations
(.6
) 5.6 Effect of exchange rate
changes on cash and cash equivalents
.1
(.1
) (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (888.0 ) 962.7
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
1,159.7
121.3 CASH AND CASH EQUIVALENTS, END OF YEAR
$
271.7
$
1,084.0
ENSCO PLC AND SUBSIDIARIES
OPERATING STATISTICS
(Unaudited)
First Quarter
Fourth
Quarter
2017
2016
2016
Rig Utilization(1) Floaters 47 % 64 % 44 %
Jackups 64 % 66 % 54 %
Total 58 % 65 % 51 %
Average
Day Rates(2) Floaters $ 336,636 $ 364,771 $ 358,405
Jackups 86,390 118,138 101,252
Total $ 156,441 $ 208,117
$ 176,709 (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 early contract terminations, 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.
Non-GAAP Financial Measures (Unaudited)
To supplement Ensco’s condensed consolidated financial
statements presented on a GAAP basis, this press release provides
investors with adjusted loss per share from continuing operations
and net debt, which are non-GAAP measures. Ensco’s management
believes that it provides meaningful supplemental information
regarding the company's performance by excluding certain charges
that may not be indicative of Ensco’s ongoing operating results.
This allows investors and others to better compare financial
results across accounting periods and to those of peer companies,
and to better understand the long-term performance of our business.
Net debt is defined as long-term debt less cash and short-term
investments. We review net debt as part of our overall liquidity,
financial flexibility, capital structure and leverage, and believe
that this measure is useful to investors as part of their
assessment of our business. Non-GAAP financial measures should be
considered as a supplement to, and not as a substitute for, or
superior to, financial measures prepared in accordance with
GAAP.
The table below reconciles loss per share, as calculated in
accordance with GAAP, to adjusted loss per share for the quarter
ended March 31, 2017. Adjusted loss per share for the quarter ended
March 31, 2017 excludes loss on debt exchange and discrete tax
items. There were no adjustments made to earnings per share during
the quarter ended March 31, 2016.
DILUTED EARNINGS PER SHARE
RECONCILIATION(1):
Three Months Ended March 31, 2017
Loss
on
Loss per share from continuing
As
debt
Discrete
operations
reported
exchange
tax
items
Adjusted
Net loss from continuing operations
attributable to Ensco(2)
$ (25.1 ) $ 6.2 $ 7.6 $ (11.3 ) Net income allocated to non-vested
share awards(3)
(.1
) — —
(.1
)
Net loss from continuing operations
attributable to Ensco shares
$ (25.2 ) $ 6.2 $ 7.6 $ (11.4 )
Loss per share from continuing
operations
$ (0.09 ) $ 0.02
$ 0.03 $ (0.04
) (1)
No adjustments have been made to loss per
share from discontinued operations.
(2) Net loss from continuing operations attributable to
Ensco excludes income attributable to noncontrolling interest of
$1.1 million. (3)
Represents income allocated to
participating securities under the two-class method.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170426006908/en/
Ensco plcInvestor & Media Contacts:Nick Georgas,
713-430-4607Director - Investor Relations and CommunicationsorTim
Richardson, 713-430-4490Manager - Investor Relations
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