Strong Operational and Safety
PerformanceDrillship ENSCO DS-10 Commences Maiden Contract Offshore
NigeriaJackups ENSCO 108, ENSCO 140 and ENSCO 141 Awarded
Three-Year Contracts in the Middle EastIssued $1.0 Billion
Aggregate Principal Amount of 2026 Senior NotesRepurchased $722
Million Aggregate Principal Amount of Nearest-Term Maturities
Ensco plc (NYSE: ESV) today reported a loss of $0.32 per share
for first quarter 2018 compared to a loss of $0.09 per share a year
ago.
Several items influenced these comparisons:
- $19 million or $0.04 per share loss
included in first quarter 2018 other income resulting from the
repurchase of $722 million aggregate principal amount of senior
notes
- $17 million or $0.04 per share of
additional bargain purchase gain related to the Atwood acquisition
included in first quarter 2018 other expense
- $9 million or $0.02 per share of
integration-related transaction costs in first quarter 2018, of
which $8 million is included in contract drilling expense and $1
million in general and administrative expense
- $9 million or $0.02 per share of
discrete tax benefit in first quarter 2018 tax provision compared
to $8 million or $0.03 per share of discrete tax expense a year
ago
- $6 million or $0.02 per share loss
included in first quarter 2017 other expense related to a debt
exchange
Adjusted for the items noted above, the loss was $0.32 per share
in first quarter 2018 compared to a loss of $0.04 per share a year
ago.
Chief Executive Officer and President Carl Trowell said, “During
the first quarter, we achieved 99% operational utilization across
our rig fleet and safety metrics in line with company records. In
addition, ultra-deepwater drillship ENSCO DS-10 commenced its
maiden contract offshore Nigeria, which places one of our
highest-specification assets into service on a major offshore
development in a key strategic market. Our track record of
providing safe and efficient operations, coupled with a
high-quality rig fleet, helped us win new work for several rigs
including recently finalized three-year contracts for jackups ENSCO
108, ENSCO 140 and ENSCO 141 offshore Saudi Arabia that are
expected to commence later this year.”
Mr. Trowell concluded, “We also improved our financial position
by refinancing our nearest-term debt maturities through a $1
billion senior notes offering and subsequently repurchased $722
million of aggregate principal amount due between 2019 and 2021.
With increased financial flexibility and just $236 million of debt
maturing over the next six years, we will continue to act
opportunistically to best position Ensco to capitalize on improving
market conditions and create meaningful long-term value for our
investors.”
First Quarter Results
Revenues were $417 million in first quarter 2018 compared to
$471 million a year ago due to a decline in reported utilization to
54% from 58% and a decline in the average day rate to $132,000 from
$156,000. The addition of $26 million of revenue from Atwood rigs
partially offset lower utilization and average day rates across the
fleet.
Contract drilling expense increased to $325 million in first
quarter 2018 from $278 million a year ago primarily due to the
addition of $39 million of costs associated with 11 Atwood rigs and
$8 million of integration-related transaction costs.
Depreciation expense increased to $115 million in first quarter
2018 from $109 million a year ago due to the addition of Atwood
rigs, partially offset by lower depreciation expense for assets
that incurred impairment charges during fourth quarter 2017.
General and administrative expense increased to $28 million from
$26 million a year ago mostly due to the integration-related
transaction costs noted above.
Other expense increased to $71 million in first quarter 2018
from $58 million a year ago mostly due to lower interest income as
well as foreign currency losses. As noted above, the year-to-year
comparison was also influenced by a loss on the repurchase of
senior notes and an additional bargain purchase gain during first
quarter 2018 along with a loss to complete a debt exchange in the
year-ago period. Interest expense in first quarter 2018 was $66
million, net of $18 million of interest that was capitalized,
compared to interest expense of $59 million in first quarter 2017,
net of $17 million of interest that was capitalized. The increase
in interest expense was due to the issuance of new senior notes
during first quarter 2018 and higher revolving credit facility
commitment fees, partially offset by interest savings from debt
repurchases.
Tax expense declined to $18 million in first quarter 2018 from
$24 million a year ago. As noted above, first quarter 2018 tax
provision included $9 million of discrete tax benefit compared to
$8 million of discrete tax expense in first quarter 2017.
Segment Highlights
Floaters
Floater revenues were $259 million in first quarter 2018
compared to $285 million a year ago. Revenues declined due to a
decrease in reported utilization to 44% from 47% in first quarter
2017 and a decline in average day rates to $263,000 from $337,000 a
year ago. First quarter 2018 floater revenues included $21 million
from acquired Atwood rigs. Adjusted for uncontracted rigs and
planned downtime, operational utilization of 99% was equal to a
year ago.
Contract drilling expense increased to $185 million in first
quarter 2018 compared to $146 million a year ago. The year-on-year
increase was due to the addition of $34 million of costs from six
legacy Atwood floaters as well as integration-related transaction
costs.
Jackups
Jackup revenues were $143 million in first quarter 2018 compared
to $172 million a year ago due to a decline in reported utilization
to 61% from 64% and a decline in average day rates to $74,000 from
$86,000. First quarter 2018 jackup revenues included $5 million
from acquired Atwood rigs. Adjusted for uncontracted rigs and
planned downtime, operational utilization of 99% was in line with
the year-ago period.
Contract drilling expense increased to $127 million in first
quarter 2018 from $119 million a year ago primarily due to the
addition of five legacy Atwood jackups.
Other
Other is composed of managed drilling rigs. Revenues of $15
million and contract drilling expense of $13 million were
consistent with the prior-year period.
First Quarter
(in millions of $,
Floaters
Jackups Other Reconciling Items
Consolidated Total except %)
2018
2017 Chg 2018
2017 Chg
2018 2017 Chg
2018 2017
2018 2017 Chg
Revenues
259.0 284.8 (9 )%
143.4 171.8 (17 )%
14.6 14.5 1 %
— —
417.0 471.1 (11 )% Operating
expenses Contract drilling
185.1 146.4 26 %
126.9
118.6 7 %
13.2 13.1 1 %
— —
325.2 278.1 17 %
Depreciation
75.3 72.8 3 %
36.5 32.1 14 %
— —
—
3.4 4.3
115.2 109.2 5 % General and admin.
—
— —
— — —
— — —
27.9 26.0
27.9 26.0 7 % Operating
income (loss)
(1.4 ) 65.6
nm
(20.0 ) 21.1
nm
1.4 1.4
— %
(31.3 ) (30.3 )
(51.3 ) 57.8
nm
Financial Position — 31 March 2018
- $2.7 billion of contracted revenue
backlog excluding bonus opportunities
- $2.9 billion of liquidity
- $0.9 billion of cash and short-term
investments
- $2.0 billion available revolving credit
facility
- No debt maturities until third quarter
2020 and only $236 million of debt maturing before 2024
- $5.0 billion of long-term debt
- $8.6 billion of Ensco shareholders'
equity
- 32% net debt-to-capital ratio (net of
$0.9 billion of cash and short-term investments)
Ensco will conduct a conference call to discuss first quarter
2018 results at 10:00 a.m. CDT (11:00 a.m. EDT and 4:00 p.m.
London) on Thursday, 26 April 2018. 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/10117912.
A webcast replay and transcript of the call will be available at
www.enscoplc.com. A replay will also
be available through 26 May 2018 by dialing 1-877-344-7529 within
the United States or +1-412-317-0088 from outside the U.S.
(conference ID 10117912).
Ensco plc (NYSE: ESV) brings energy to the world as a global
provider of offshore drilling services to the petroleum industry.
For more than 30 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 eighth 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.
Forward-Looking Statements
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, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
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 rates, 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. In addition,
statements included in this press release regarding the anticipated
benefits, opportunities, synergies and effects of the Atwood
acquisition are forward-looking statements. The forward-looking
statements contained in this press release are subject to numerous
risks, uncertainties and assumptions that may cause actual results
to vary materially from those indicated, including actions by
regulatory authorities, rating agencies or other third parties;
actions by our security holders; costs and difficulties related to
the integration of Atwood and the related impact on our financial
results and performance; our ability to repay debt and the timing
thereof; availability and terms of any financing; 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);
our ability to enter into, and the terms of, future drilling
contracts; any failure to execute definitive contracts following
announcements of letters of intent, letters of award or other
expected work commitments; 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,
2018 2017 OPERATING
REVENUES $ 417.0 $ 471.1 OPERATING EXPENSES Contract
drilling (exclusive of depreciation) 325.2 278.1 Depreciation 115.2
109.2 General and administrative 27.9
26.0 468.3
413.3 OPERATING INCOME (LOSS) (51.3 )
57.8 OTHER INCOME (EXPENSE) Interest income 3.0 7.2 Interest
expense, net (65.6 ) (58.6 ) Other, net (8.1 )
(6.3 ) (70.7 )
(57.7 ) INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (122.0 ) 0.1 PROVISION FOR INCOME TAXES
18.4 24.1
LOSS FROM CONTINUING OPERATIONS (140.4 ) (24.0 ) LOSS FROM
DISCONTINUED OPERATIONS, NET (.1 )
(.6 ) NET LOSS (140.5 ) (24.6 ) NET (INCOME)
LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS 0.4
(1.1 ) NET LOSS ATTRIBUTABLE TO
ENSCO $ (140.1 ) $ (25.7 )
LOSS PER SHARE - BASIC AND DILUTED Continuing operations $
(0.32 ) $ (0.09 ) Discontinued operations —
— $ (0.32 )
$ (0.09 ) NET LOSS ATTRIBUTABLE TO ENSCO SHARES -
BASIC AND DILUTED $ (140.2 ) $ (25.8 ) WEIGHTED-AVERAGE
SHARES OUTSTANDING - BASIC AND DILUTED 433.6 300.6
ENSCO PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In millions)
March 31, December 31, 2018
2017
(unaudited) ASSETS CURRENT ASSETS Cash and
cash equivalents $ 465.4 $ 445.4 Short-term investments 399.0 440.0
Accounts receivable, net 304.1 345.4 Other 410.2
381.2 Total current assets 1,578.7
1,612.0 PROPERTY AND EQUIPMENT, NET 12,834.8
12,873.7 OTHER ASSETS, NET 120.2
140.2 $ 14,533.7 $ 14,625.9
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES $ 573.3 $ 758.5 LONG-TERM DEBT 4,987.3
4,750.7 OTHER LIABILITIES 382.0 386.7 TOTAL EQUITY
8,591.1 8,730.0 $
14,533.7 $ 14,625.9
ENSCO PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended March 31, 2018
2017 OPERATING ACTIVITIES Net loss $
(140.5 ) $ (24.6 ) Adjustments to reconcile net loss to net cash
provided by operating activities of continuing operations:
Depreciation expense 115.2 109.2 Loss on debt extinguishment 18.8
3.4 Amortization, net (16.8 ) (19.0 ) Gain on bargain purchase
(16.6 ) — Deferred income tax expense 11.3 19.8 Share-based
compensation expense 8.4 11.3 Other (2.1 ) (6.1 ) Changes in
operating assets and liabilities 61.8
10.6 Net cash provided by operating activities of
continuing operations 39.5 104.6
INVESTING ACTIVITIES
Maturities of short-term investments
390.0
602.0
Purchases of short-term investments
(349.0
)
(965.0
)
Additions to property and equipment
(269.3
)
(282.6
)
Other .1 .2 Net cash used
in investing activities of continuing operations
(228.2 ) (645.4 ) FINANCING ACTIVITIES Proceeds from
issuance of senior notes 1,000.0 — Reduction of long-term
borrowings (771.0 ) (336.6 ) Debt financing costs (16.8 ) (4.5 )
Cash dividends paid (4.5 ) (3.2 ) Other (1.2 )
(2.4 ) Net cash provided by (used in) financing activities
206.5 (346.7 ) Net cash provided
by (used in) discontinued operations 2.5
(0.6 ) Effect of exchange rate changes on cash and
cash equivalents (.3 ) .1 INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 20.0 (888.0 ) CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 445.4 1,159.7 CASH
AND CASH EQUIVALENTS, END OF PERIOD $ 465.4
$ 271.7
ENSCO PLC AND SUBSIDIARIES
OPERATING STATISTICS
(Unaudited)
First Quarter Fourth Quarter 2018
2017 2017 Rig
Utilization(1) Floaters 44 % 47 % 44 % Jackups 61
% 64 % 54 %
Total 54 %
58 % 50 %
Average Day
Rates(2) Floaters $ 262,661 $ 336,636 $ 306,937
Jackups 73,529 86,390 76,037
Total $ 132,486
$ 156,441 $ 156,532
(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,
adjusted EBITDA and net debt, which are non-GAAP measures.
We believe that adjusted loss per share from continuing
operations 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.
Ensco defines "Adjusted EBITDA" as net income (loss) before
income (loss) from discontinued operations, other income (expense),
income tax expense (benefit), interest expense, depreciation,
amortization, loss on impairment, (gain) loss on asset disposals
and transaction costs. Adjusted EBITDA is a non-GAAP measure that
our management uses to facilitate period-to-period comparisons of
our core operating performance and to evaluate our long-term
financial performance against that of our peers. We believe that
this measure is useful to investors and analysts in allowing for
greater transparency of our core operating performance and makes it
easier to compare our results with those of other companies within
our industry. Adjusted EBITDA should not be considered (a) in
isolation of, or as a substitute for, net income (loss), (b) as an
indication of cash flows from operating activities or (c) as a
measure of liquidity. Adjusted EBITDA may not be comparable to
other similarly titled measures reported by other companies.
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.
Adjusted Loss Per Share
The table below reconciles loss per share, as calculated in
accordance with GAAP, to adjusted loss per share for the quarters
ended March 31, 2018 and 2017. Adjusted loss per share for the
quarter ended March 31, 2018 excludes loss on debt repurchases
and redemptions, gain on bargain purchase, transaction costs
related to the Atwood acquisition and discrete tax items. Adjusted
loss per share for the quarter ended March 31, 2017 excludes
the loss on debt exchange and discrete tax items.
DILUTED EARNINGS PER SHARE
RECONCILIATION(1): Three Months Ended March
31, 2018 Loss per share from continuing operations
As Reported
Loss on debt repurchases
Bargain purchase
gain
Atwood integration
costs
Discretetax items
Adjusted Net loss from continuing operations
attributable to Ensco(2) $ (140.0 ) $ 18.8 $ (16.6 ) $ 8.6 $ (8.9 )
$ (138.1 ) Net income allocated to non-vested share awards(3)
(.1 ) — — —
— (.1 ) Net loss from continuing operations
attributable to Ensco shares $ (140.1 ) $ 18.8
$ (16.6 ) $ 8.6 $ (8.9 ) $
(138.2 )
Loss per share from continuing operations
$ (0.32 ) $ 0.04
$ (0.04 ) $ 0.02
$ (0.02 ) $
(0.32 ) DILUTED EARNINGS PER SHARE
RECONCILIATION(1): Three Months Ended March
31, 2017 Loss per share from continuing operations
As Reported
Loss on debt
exchange
Discrete 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 for the
three-month periods ended March 31, 2018 and 2017. (2) Net
loss from continuing operations attributable to Ensco excludes loss
attributable to noncontrolling interest of $0.4 million and income
attributable to noncontrolling interest of $1.1 million for the
three-month periods ended March 31, 2018 and 2017, respectively.
(3) Represents income allocated to participating securities
under the two-class method.
Reconciliation of Net Loss to Adjusted EBITDA
A reconciliation of net loss as reported to Adjusted EBITDA for
the quarters ended March 31, 2018 and 2017 is included in the
tables below (in millions):
Three Months Ended March
31,
2018 2017 Net loss $ (140.5 ) $
(24.6 ) Less: Loss from discontinued operations, net
(0.1 ) (0.6 )
Loss from continuing operations
(140.4 ) (24.0 ) Add: Income tax
expense 18.4 24.1 Interest expense 65.6 58.6 Other (income) expense
5.1 (0.9 )
Operating income (loss)
(51.3 ) 57.8 Add: Depreciation expense 115.2
109.2 Amortization, net (1) (16.8 ) (19.0 ) (Gain) loss on asset
disposals (0.3 ) 0.2 Transaction costs 8.6
—
Adjusted EBITDA
$ 55.4 $ 148.2 (1) Amortization,
net, includes amortization during the indicated period for deferred
mobilization revenues and costs, deferred capital upgrade revenues,
deferred certification costs, intangible amortization and other
amortization.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180425006848/en/
Ensco plcInvestor & Media Contacts:Nick Georgas,
713-430-4607Director - Investor Relations and CommunicationsorTim
Richardson, 713-430-4490Manager - Investor Relations
Ensco (NYSE:ESV)
Historical Stock Chart
From Mar 2024 to Apr 2024
Ensco (NYSE:ESV)
Historical Stock Chart
From Apr 2023 to Apr 2024