Pride International, Inc. (NYSE: PDE) today reported income from
continuing operations, net of tax, for the three months ended March
31, 2011 of $30.9 million, or $0.17 per diluted share, on revenues
of $393.5 million. Results for the quarter included costs totaling
$7.7 million, or $0.04 per diluted share, relating to the proposed
merger of Pride and Ensco plc. The first quarter 2011 results
compared to income from continuing operations, net of tax, for the
fourth quarter of 2010 of $62.2 million, or $0.35 per diluted
share, on revenues of $400.8 million. Fourth quarter 2010 results
included costs associated with the reactivation, start-up and
repair of several rigs, as well as an impairment charge taken
against a receivable and severance costs relating to the closure of
certain regional offices that in the aggregate negatively impacted
results by $0.05 per diluted share. For the three months ended
March 31, 2010, income from continuing operations, net of tax, was
$80.7 million, or $0.45 per diluted share, on revenues of $362.8
million.
Net income for the three months ended March 31, 2011 was $30.1
million, or $0.17 per diluted share, including a loss from
discontinued operations, net of tax, of $0.8 million, with no
effect on earnings per diluted share. The results compared to net
income of $52.1 million, or $0.29 per diluted share, for the three
months ended December 31, 2010, including a loss from discontinued
operations, net of tax, of $10.1 million, or $0.06 per diluted
share. For the three months ended March 31, 2010, net income
reached $73.0 million, or $0.41 per diluted share, including a loss
from discontinued operations, net of tax, of $7.7 million, or $0.04
per diluted share.
Cash and cash equivalents at March 31, 2011 were $45.8 million
compared to $485.0 million at December 31, 2010. The decline was
primarily related to expenditures for the company's deepwater
expansion program, including a final payment to the shipyard made
in January 2011 with the delivery of the company's third deepwater
drillship, the Deep Ocean Mendocino. Also, a progress payment was
made on the fourth drillship in the expansion program, the Deep
Ocean Molokai. Total debt at March 31, 2011 was $1,856.7 million,
while total shareholder's equity was $4,579.0 million, resulting in
a debt-to-total-capital ratio of 29%, unchanged from the measure at
December 31, 2010.
Capital expenditures during the first quarter of 2011 totaled
$401 million, including $338 million toward the company's deepwater
expansion program. The company estimates that capital expenditures
for 2011 will total approximately $1.0 billion, including $763
million relating to the deepwater expansion program. These 2011
expenditures relating to the deepwater expansion program exclude
capitalized interest, mobilization costs, capital spares and other
start-up costs. At March 31, 2011, approximately $925 million of
capital expenditures remained to complete construction of the final
two units in the deepwater expansion program, the Deep Ocean
Molokai, with an expected shipyard delivery in December 2011, and
Deep Ocean Marquesas, with an expected shipyard delivery in June
2013. Also, the company reported that it has reached agreement with
Samsung Heavy Industries, Ltd. (SHI) to extend the option for the
construction of a sixth ultra-deepwater drillship to June 15, 2011.
The option extension does not impact the estimated unit cost or
delivery schedule determined in December 2010, upon the order by
Pride of a fifth ultra-deepwater drillship.
Deepwater Segment
For the three months ended March 31, 2011, revenues from the
company's Deepwater segment, consisting of four drillships and six
semisubmersible rigs, totaled $259.1 million compared to revenues
of $271.0 million for the three months ended December 31, 2010.
Earnings from operations were $78.3 million in the first quarter of
2011 compared to $107.4 million in the fourth quarter of 2010,
while earnings before interest, taxes, depreciation and
amortization (EBITDA) were $108.8 million compared to $137.0
million over the same comparative period. The decline in segment
financial performance was due primarily to lower revenues and
utilization, coupled with higher segment operating costs resulting,
in part, from the addition of new rig capacity. The semisubmersible
rig Pride North America completed a contract offshore Egypt in
January 2011 and subsequently commenced a new contract in February
following mobilization of the rig to Israel. With the commencement
of the new contract, daily revenues from the rig declined to
$275,000 from $495,000 under the previous contract. Also, the Pride
North America experienced out-of-service time of approximately 15
days due to an upgrade in the rig's water depth rating and certain
equipment repairs, as well as delays caused by civil unrest in
Egypt. First quarter financial performance was further impacted by
out-of-service time on the semisubmersible rigs Pride Brazil, to
complete a scheduled shipyard program, and Pride Portland, to
complete equipment repairs. Both rigs returned to service in April
2011. Segment operating costs, before client reimbursables, in the
first quarter of 2011 increased to $146.7 million compared to
$130.7 million in the fourth quarter of 2010 due primarily to the
start-up of the drillship Deep Ocean Clarion. The rig commenced a
special standby dayrate of $380,000 in March 2011. Also, a dayrate
increase to $305,000 from $141,000 was experienced for the
semisubmersible rig Pride Rio de Janeiro. Segment utilization
during the first quarter of 2011 was 91% compared to 96% in the
fourth quarter of 2010, while average daily revenues were $341,400
in the first quarter of 2011 compared to $339,800 in the fourth
quarter of 2010. At March 31, 2011, 85% of the company's available
rig days for the last three quarters of 2011 were under contract,
with 75% committed in 2012, 58% in 2013, 46% in 2014 and 39% in
2015.
The Deep Ocean Ascension remains in the U.S. Gulf of Mexico,
having completed integrated acceptance testing with the client BP
E&P (BP). Commencement of operations in the U.S. Gulf of
Mexico, per the client's original schedule, was delayed in 2010 by
the drilling moratorium, and, more recently, plans to relocate the
rig to an alternative drilling location offshore Libya were
cancelled due to political unrest in the region. The Deep Ocean
Ascension is currently finalizing client requested modifications
and waiting for BP to designate the first drilling location,
anticipated to be outside the United States. Subject to final
documentation, we have agreed with BP that the rig will remain on
the special standby dayrate of $360,000 until June 1, 2011, at
which time the applicable dayrate of $540,189 will begin, along
with commencement of the five-year term contract.
The Deep Ocean Clarion has completed integrated acceptance
testing with the client BP and is in the process of completing
client-requested modifications and upgrades in preparation for
relocation to the first drilling location, anticipated to be
outside the United States. The rig began a special standby dayrate
of $380,000 in early March 2011, in light of the drilling
moratorium and recent delays in permitting in the U.S. Gulf of
Mexico, where the rig was originally scheduled to commence
operations. The special standby dayrate will continue until the
earlier of July 1, 2011, or the commencement of mobilization, which
is expected to begin in late-May 2011. In either event, the rig
will begin earning the applicable dayrate of $596,000 per the terms
of the existing contract. The five-year term will begin when
operations commence at the first well location. The contract
dayrate has been adjusted to reflect actual operating costs and
client requested capital upgrades.
The Deep Ocean Mendocino completed construction activities and
was delivered from the SHI shipyard in January 2011. The rig is
currently in transit to the U.S. Gulf of Mexico with an expected
arrival during May 2011, when the rig will commence integrated
acceptance testing with the client, Petroleo Brasileiro S.A.
(Petrobras). Commencement in the U.S. Gulf of Mexico of the
five-year contract with Petrobras is expected early in the third
quarter of 2011 at a dayrate of $502,300.
Finally, construction of the Deep Ocean Molokai continues in the
SHI shipyard with a scheduled delivery of December 2011. The
drillship is presently without a contract; however, the company
currently has the unit bid on two client tenders with up to six
other opportunities under review. The company remains confident
that near-term client demand for ultra-deepwater units with
advanced technical capabilities and drilling efficiencies will
expand in the established and emerging deepwater basins, providing
attractive opportunities to contract the rig prior to its
delivery.
Midwater Segment
The company's Midwater segment, consisting of six
semisubmersible rigs, reported revenues for the first quarter of
2011 of $99.3 million compared to revenues of $97.8 million in the
fourth quarter of 2010. The slight revenue improvement was
primarily due to a full quarter of utilization on the Pride
Venezuela, partially offset by 52 days at zero dayrate on the Pride
South Atlantic to address unplanned regulatory inspections and
equipment repairs. The Pride South Atlantic has since returned to
work. Operating costs in the first quarter of 2011, excluding
client reimbursables, increased to $77.4 million compared to $74.8
million in the fourth quarter of 2010. The higher operating costs
were primarily driven by reactivation costs associated with the
Pride South Seas. The reactivation activities are expected to
conclude during the third quarter of 2011 when the rig is expected
to commence an initial four months of work offshore Congo at a
dayrate of $185,000. The rig has been idle since August 2009.
Segment earnings from operations were $8.9 million during the first
quarter of 2011 compared to $10.4 million in the fourth quarter of
2010. EBITDA contribution was $21.4 million compared to $21.9
million over the same comparative period. The Midwater segment has
contracted 82% of the available rig days over the remaining three
quarters in 2011, as of March 31, 2011, with 35% contracted in
2012, 14% in 2013 and none in 2014.
Independent Leg Jackup Segment
Revenues from the company's seven independent leg jackup rigs
improved to $17.1 million in the first quarter of 2011, up from
$12.8 million in the fourth quarter of 2010. The increase was
driven by higher utilization, which improved to 27% in the first
quarter of 2011 from 14% during the fourth quarter of 2010 due
primarily to increased activity on the Pride North Dakota,
following a shipyard program in the fourth quarter of 2010, and the
Pride Cabinda, which commenced a new, estimated six-month contract
in March 2011 following a period of inactivity. The segment's loss
from operations declined to $7.1 million in the first quarter of
2011 compared to a loss of $11.6 million in the fourth quarter of
2010. Segment EBITDA improved to $1.2 million compared to negative
EBITDA of $4.1 million over the same comparative period.
In light of the agreement and plan of merger with Ensco plc, the
company will not host a conference call to discuss the first
quarter financial results, but will post the earnings release and
supporting statements and schedules on its website at
www.prideinternational.com. Pride International will hold a special
shareholders meeting on May 31, 2011 to vote on the proposed
merger.
Pride International, Inc., headquartered in Houston, Texas,
operates a fleet of 26 mobile offshore drilling units, consisting
primarily of floating rigs (semisubmersibles and drillships) that
address deepwater drilling programs around the world. The company
has one of the youngest and most technologically advanced deepwater
drilling fleets in the offshore industry, with five drillships,
including three delivered since the beginning of 2010, six
semisubmersible rigs and two managed deepwater rigs. Two additional
deepwater drillships are currently under construction with expected
deliveries in 2011 and 2013. The company's fleet also includes six
other semisubmersible rigs and seven jackup rigs. Pride
International's floating rig fleet operates primarily offshore
Brazil and West Africa where the company has a long-standing
presence.
The information above includes forward-looking statements within
the meaning of the Securities Act of 1933 and the Securities
Exchange Act of 1934. These forward-looking statements are subject
to certain risks, uncertainties and assumptions identified above or
as disclosed from time to time in the company's filings with the
Securities and Exchange Commission. As a result of these factors,
actual results may differ materially from those indicated or
implied by such forward-looking statements.
Pride International, Inc.
Consolidated Statements of Operations
(Unaudited)
(In millions, except per share amounts)
Three Months Ended
March 31,
------------------------
2011 2010
----------- -----------
REVENUES
Revenues, excluding reimbursable revenues $ 386.1 $ 357.4
Reimbursable revenues 7.4 5.4
----------- -----------
393.5 362.8
----------- -----------
COSTS AND EXPENSES
Operating costs, excluding depreciation 256.7 200.9
Reimbursable costs 6.5 4.2
Depreciation 53.0 42.1
General and administrative, excluding
depreciation 35.5 29.5
Gain on sales of assets, net - (0.2)
----------- -----------
351.7 276.5
----------- -----------
EARNINGS FROM OPERATIONS 41.8 86.3
OTHER INCOME (EXPENSE), NET
Interest expense, net of amounts capitalized (4.7) -
Interest income 0.6 0.2
Other income (expense), net (3.8) 8.9
----------- -----------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES 33.9 95.4
INCOME TAXES (3.0) (14.7)
----------- -----------
INCOME FROM CONTINUING OPERATIONS, NET OF TAX 30.9 80.7
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX (0.8) (7.7)
----------- -----------
NET INCOME $ 30.1 $ 73.0
=========== ===========
BASIC EARNINGS PER SHARE:
Income from continuing operations attributable
to common shareholders $ 0.17 $ 0.45
Loss from discontinued operations - (0.04)
----------- -----------
Net income $ 0.17 $ 0.41
=========== ===========
DILUTED EARNINGS PER SHARE:
Income from continuing operations attributable
to common shareholders $ 0.17 $ 0.45
Loss from discontinued operations - (0.04)
----------- -----------
Net income $ 0.17 $ 0.41
=========== ===========
SHARES USED IN PER SHARE CALCULATIONS
Basic 177.1 175.4
Diluted 178.2 175.9
Pride International, Inc.
Consolidated Balance Sheets
(In millions)
March 31, December 31,
----------- ------------
2011 2010
----------- ------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 45.8 $ 485.0
Trade receivables, net 291.8 200.3
Deferred income taxes 15.5 10.1
Other current assets 111.1 127.3
----------- ------------
Total current assets 464.2 822.7
PROPERTY AND EQUIPMENT 7,796.4 7,337.0
Less: accumulated depreciation 1,423.3 1,375.8
----------- ------------
Property and equipment, net 6,373.1 5,961.2
OTHER ASSETS, NET 88.2 87.8
----------- ------------
Total assets $ 6,925.5 $ 6,871.7
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 30.3 $ 30.3
Accounts payable 111.1 112.3
Accrued expenses and other current
liabilities 211.8 217.0
----------- ------------
Total current liabilities 353.2 359.6
OTHER LONG-TERM LIABILITIES 101.3 101.5
LONG-TERM DEBT, NET OF CURRENT PORTION 1,826.4 1,833.4
DEFERRED INCOME TAXES 65.6 60.9
STOCKHOLDERS' EQUITY:
Preferred stock - -
Common stock 1.8 1.8
Paid-in capital 2,140.1 2,103.0
Treasury stock (27.2) (21.8)
Retained earnings 2,460.0 2,429.9
Accumulated other comprehensive income 4.3 3.4
----------- ------------
Total stockholders' equity 4,579.0 4,516.3
----------- ------------
Total liabilities and stockholders'
equity $ 6,925.5 $ 6,871.7
=========== ============
Pride International, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(In millions)
Three Months Ended
March 31,
------------------------
2011 2010
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 30.1 $ 73.0
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation 53.0 42.1
Amortization and write-offs of deferred
financing costs 1.0 0.6
Amortization of deferred contract liabilities (1.5) (13.4)
Gain on sales of assets, net - (0.2)
Deferred income taxes (0.8) 2.2
Excess tax benefits from stock-based
compensation - (2.6)
Stock-based compensation 9.6 8.1
Other, net 0.1 0.2
Net effect of changes in operating accounts (88.5) (11.3)
Increase (decrease) in deferred revenue 7.5 (0.9)
Increase in deferred expense 5.6 2.4
----------- -----------
NET CASH FLOWS FROM OPERATING ACTIVITIES 16.1 100.2
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchases of property and equipment (474.1) (516.7)
Proceeds from dispositions of property and
equipment - 0.4
----------- -----------
NET CASH FLOWS USED IN INVESTING ACTIVITIES (474.1) (516.3)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of borrowings (7.1) (7.1)
Net proceeds from employee stock transactions 25.9 4.3
Excess tax benefits from stock-based
compensation - 2.6
----------- -----------
NET CASH FLOWS FROM (USED IN) FINANCING
ACTIVITIES 18.8 (0.2)
Decrease in cash and cash equivalents (439.2) (416.3)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 485.0 763.1
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 45.8 $ 346.8
=========== ===========
Pride International, Inc.
Quarterly Continuing Operating Results by Segment
(Unaudited)
(In millions)
Three Months Ended
March 31, December 31, March 31,
-------------------------------------
2011 2010 2010
----------- ----------- -----------
Deepwater revenues:
Revenues, excluding reimbursables $ 254.9 $ 267.3 $ 217.9
Reimbursable revenues 4.2 3.7 2.9
----------- ----------- -----------
Total Deepwater revenues 259.1 271.0 220.8
Midwater revenues:
Revenues, excluding reimbursables 98.8 96.8 93.8
Reimbursable revenues 0.5 1.0 0.4
----------- ----------- -----------
Total Midwater revenues 99.3 97.8 94.2
Independent Leg Jackups revenues:
Revenues, excluding reimbursables 17.0 12.5 31.4
Reimbursable revenues 0.1 0.3 0.2
----------- ----------- -----------
Total Independent Leg Jackups
revenues 17.1 12.8 31.6
Other 18.0 19.0 16.2
Corporate - 0.2 -
----------- ----------- -----------
Total revenues $ 393.5 $ 400.8 $ 362.8
=========== =========== ===========
Earnings (loss) from continuing
operations:
Deepwater $ 78.3 $ 107.4 $ 87.5
Midwater 8.9 10.4 30.9
Independent Leg Jackups (7.1) (11.6) (1.2)
Other (0.7) 0.1 0.6
Corporate (37.6) (30.7) (31.5)
----------- ----------- -----------
Total $ 41.8 $ 75.6 $ 86.3
=========== =========== ===========
Pride International, Inc.
Quarterly Selected Segment Metrics
Q1 2011 Q4 2010 Q1 2010
------------------- ------------------- ------------------
Average Average Average
Daily Utiliza- Daily Utiliza- Daily Utiliza-
Revenues tion Revenues tion Revenues tion
(1) (2) (1) (2) (1) (2)
--------- -------- --------- -------- --------- --------
Deepwater $ 341,400 91% $ 339,800 96% $ 335,100 91%
Midwater $ 255,200 72% $ 243,300 73% $ 265,000 66%
Independent Leg
Jackups $ 98,800 27% $ 139,400 14% $ 110,100 45%
(1) Average daily revenues are based on total revenues for each type of rig
divided by actual days worked by all rigs of that type. Average daily
revenues will differ from average contract dayrate due to billing
adjustments for any non-productive time, mobilization fees, demobilization
fees, performance bonuses and charges to the customer for ancillary
services.
(2) Utilization is calculated as the total days worked divided by the total
days in the period.
Pride International, Inc.
Reconciliation of Earnings before Interest, Taxes and Depreciation and
Amortization (EBITDA)
(Unaudited)
(In millions)
We believe that this non-GAAP financial measure for EBITDA is meaningful
information that our management considers when making investment decisions.
We believe it also provides supplemental information regarding our
operating results with respect to both the performance of our fundamental
business activities and our ability to meet our future debt service,
capital expenditures and working capital requirements. We also believe
investors and analysts commonly use EBITDA as a widely accepted financial
indicator to analyze and compare companies on the basis of operating
performance that have different financing and capital structures and tax
rates. EBITDA is not a substitute for the U.S. GAAP measures of earnings or
of cash flow and is not necessarily a measure of the company's ability to
fund its cash needs.
-------------------------
Q1 2011 Q4 2010 Q1 2010
------- ------- -------
Deepwater
Income from continuing operations $ 78.3 $ 107.4 $ 87.5
Plus: Total interest expense, net - - -
Plus: Income tax provision - - -
Plus: Depreciation 30.5 29.6 20.7
------- ------- -------
EBITDA 108.8 137.0 108.2
Midwater
Income from continuing operations 8.9 10.4 30.9
Plus: Total interest expense, net - - -
Plus: Income tax provision - - -
Plus: Depreciation 12.5 11.5 12.0
------- ------- -------
EBITDA 21.4 21.9 42.9
Independent Leg Jackups
Income (loss) from continuing operations (7.1) (11.6) (1.2)
Plus: Total interest expense, net - - -
Plus: Income tax provision - - -
Plus: Depreciation 8.3 7.5 7.5
------- ------- -------
EBITDA 1.2 (4.1) 6.3
Other & Corporate
Loss from continuing operations (49.2) (44.0) (36.5)
Plus: Total interest expense, net 4.1 6.1 (0.2)
Plus: Income tax provision 3.0 5.7 14.7
Plus: Depreciation 1.7 2.0 1.9
------- ------- -------
EBITDA (40.4) (30.2) (20.1)
Total Pride International Inc.
Income (loss) from continuing operations 30.9 62.2 80.7
Plus: Total interest expense, net 4.1 6.1 (0.2)
Plus: Income tax provision 3.0 5.7 14.7
Plus: Depreciation 53.0 50.6 42.1
------- ------- -------
EBITDA $ 91.0 $ 124.6 $ 137.3
======= ======= =======
Analyst Contact: Jeffrey L. Chastain (713) 917-2020 Media
Contact: Kate Perez (713) 917-2343
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