ENSCO International Reports Record Second Quarter 2006 Results.DALLAS Dallas, city (1990 pop. 1,006,877), seat of Dallas co., N Tex., on the Trinity River near the junction of its three forks; inc. 1871. The second largest Texas city, after Houston, and the eighth largest U.S. -- ENSCO International ENSCO International is the largest offshore Jack-Up Oil and Gas well drilling corporation [1], with 50 offshore Jack-Up and 5 Semi-submersible drilling rig's servicing domestic US, international, and Scientific drilling markets. Incorporated (NYSE NYSE See: New York Stock Exchange :ESV ESV end-systolic volume. ) reported that net income nearly tripled in the quarter ended June June: see month. 30, 2006, to $194.7 million ($1.27 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share) on revenues of $478.8 million, when compared to net income of $67.7 million ($0.45 per diluted share) on revenues of $246.3 million for the quarter ended June 30, 2005. Net income for the six months ended June 30, 2006 was $344.5 million ($2.24 per diluted share) on revenues of $863.9 million, compared to net income of $107.0 million ($0.71 per diluted share) on revenues of $456.9 million for the six months ended June 30, 2005. The average day rate for ENSCO's operating jackup rig fleet for the quarter ended June 30, 2006, increased by 75% to $114,300 compared to $65,400 in the prior year quarter. Utilization of the Company's jackup fleet increased to 97% in the most recent quarter, up from 88% in the quarter ended June 30, 2005. The Company repurchased 845,000 shares of its common stock during the second quarter of 2006 at an average price of approximately $48 per share as part of a $500 million share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. authorization The right or permission to use a system resource; the process of granting access. See access control. approved by the Company's Board late in the first quarter of 2006. ENSCO The name ENSCO may mean:
Carl Thorne For people named Thorne, see . , Chairman and Chief Executive Officer of ENSCO, commented on the Company's current results and outlook: "We are pleased to announce our third consecutive record quarter in terms of both revenue and net income. The average day rate for our jackup fleet in the second quarter increased sequentially by 11% over the prior quarter consistent with our expectations, with a 12% improvement in the Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east being the most significant. "ENSCO 107, a jackup rig that suffered minor damage while preparing to drill on a location in Vietnam Vietnam (vēĕt`näm), officially Socialist Republic of Vietnam, republic (v), 128,400 sq mi (332,642 sq km), Southeast Asia. Occupying the eastern coastline of the Southeast Asian peninsula, Vietnam is bounded by China on the north, by Laos , is now in a shipyard undergoing repairs. A thorough inspection of the rig confirmed no significant damage to the legs or jacking system as the result of the punch-through. Contract drilling expense for the second quarter includes a $3.0 million provision for the estimated cost of repairs. Repairs are expected to be completed by the end of July July: see month. , after which the rig will mobilize mo·bi·lize v. 1. To make mobile or capable of movement. 2. To restore the power of motion to a joint. 3. To release into the body, as glycogen from the liver. back to Vietnam to resume its contract. ENSCO 107 will earn 75% of the full operating rate Operating rate The percentage of total production capacity of a company, industry, or country that is being used. operating rate The portion of capacity at which a business operates. while out of service. "As anticipated, with our fleet enhancement program now largely complete, we achieved higher average fleet utilization as evidenced by the 97% utilization rate realized during the second quarter. We do, however, expect to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. approximately five months of shipyard downtime The time during which a computer is not functioning due to hardware, operating system or application program failure. starting in September September: see month. 2006 on one of our 250' Gulf of Mexico jackup rigs, ENSCO 83, as we complete preparation of the rig for possible international assignment. "Our rig construction projects remain on schedule and within budget. Our new ultra-high specification jackup rig, ENSCO 108, is scheduled for delivery in the second quarter of 2007. The rig is already committed for work in Southeast Asia Southeast Asia, region of Asia (1990 est. pop. 442,500,000), c.1,740,000 sq mi (4,506,600 sq km), bounded roughly by the Indian subcontinent on the west, China on the north, and the Pacific Ocean on the east. following delivery. ENSCO 8500 and ENSCO 8501, our two new ultra-deepwater semisubmersible sem·i·sub·mers·i·ble n. A seagoing, self-propelled barge that rides at anchor, stands on partially submerged vertical legs on submerged pontoons, and serves as living quarters and a base of operations in offshore drilling. rigs, are scheduled for delivery in the second quarter of 2008 and first quarter of 2009, respectively. Both rigs are being built against firm multi-year contracts. "We remain committed to our management transition plan announced early this year. Bill Chadwick Bill "The Big Whistle" Chadwick (born October 10, 1915 in New York City) is a former referee for the National Hockey League whose career spanned the greater part of the 1940s and 1950s. He has been elected to both the Hockey Hall of Fame and the United States Hockey Hall of Fame. has assumed his role as Executive Vice President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , and is integrally involved in leading our worldwide operations. Dan Rabun has joined the Company as President and assumed a very active executive management role in ENSCO. Dan will succeed me as Chief Executive Officer effective January January: see month. 1, 2007. "We continue to remain confident with regard to our markets. Despite some recent moderation of jackup day rates in the Gulf of Mexico in anticipation of hurricane season Hurricane season refers to a period in a year when hurricanes usually form. For more information see: Tropical cyclone#Times of formation. For a lists of past seasons, see:
adj. Exceeding all others up to the present time: an all-time speed skating record. all-time Adjective Informal high in the second quarter. International markets remain strong, and will likely continue to attract rigs from the Gulf of Mexico due to the term nature of these opportunities. We have, this year, already announced the mobilization mobilization Organization of a nation's armed forces for active military service in time of war or other national emergency. It includes recruiting and training, building military bases and training camps, and procuring and distributing weapons, ammunition, uniforms, of two of our Gulf of Mexico jackup rigs to Tunisia and the Middle East for term commitments. Two-thirds of our jackup fleet will be located internationally upon delivery of ENSCO 108 in 2007. "We also remain positive with regard to our financial prospects. We currently expect to report sequentially improving quarters through the balance of this year and into 2007. Backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. continues to grow, and is now approaching $3 billion, up from $800 million early last year. We expect our cash generation to increase, enabling us to continue our efforts toward fleet expansion, and to accelerate stock repurchases Stock repurchase A firm's repurchase of outstanding shares of its common stock. as warranted." Statements contained in this news release that state the Company's or management's intentions, hopes, beliefs, expectations, anticipations or predictions of the future are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. made pursuant to the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such forward-looking statements include references to trends in day rates or utilization, future rig utilization, rig repair completion and contract commitments, the period of time and number of rigs that will be in a shipyard, scheduled delivery dates for new rigs, market trends, expectations, outlook or conditions for the balance of 2006 and into 2007, our expected increase in cash generation, and the possible acceleration of our stock repurchases. It is important to note that the Company's actual results could differ materially from those projected in such forward-looking statements. The factors that could cause actual results to differ materially from those in the forward-looking statements include the following: (i) industry conditions and competition, including changes in rig supply and demand, (ii) cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. nature of the industry, (iii) worldwide expenditures for oil and gas drilling, (iv) operational risks, including hazards created by severe storms and hurricanes, (v) risks associated with operating, rig building, rig repairing and rig enhancement in foreign jurisdictions, (vi) renegotiation, nullification nullification, in U.S. history, a doctrine expounded by the advocates of extreme states' rights. It held that states have the right to declare null and void any federal law that they deem unconstitutional. , or breach of contracts with customers or other parties, (vii) changes in the dates the Company's rigs undergoing shipyard construction work, repairs or enhancement will enter a shipyard or return to service, (viii) risks inherent to shipyard rig construction, rig repair or rig enhancement, (ix) availability of transport vessels to relocate re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. rigs, (x) environmental or other liabilities other liabilities Small and relatively insignificant liabilities. For financial reporting purposes, firms often combine small liabilities into this single category rather than listing each liability separately. , risks, or losses including hurricane related equipment damage or loss in the U.S. Gulf of Mexico, that may arise in the future which are not covered not covered Health care adjective Referring to a procedure, test or other health service to which a policy holder or insurance beneficiary is not entitled under the terms of the policy or payment system–eg, Medicare. Cf Covered. by insurance or indemnity Recompense for loss, damage, or injuries; restitution or reimbursement. An indemnity contract arises when one individual takes on the obligation to pay for any loss or damage that has been or might be incurred by another individual. in whole or in part, (xi) the impact of current and future laws and government regulation affecting the oil and gas industry in general and the Company's operations in particular, as well as repeal The Annulment or abrogation of a previously existing statute by the enactment of a later law that revokes the former law. The revocation of the law can either be done through an express repeal or modification of same, (xii) political and economic uncertainty, (xiii) limited availability When customers of the PSTN make telephone calls, they commonly make use of a telecommunications network called a switched-circuit network. In a switched-circuit network, devices known as switches are used to connect the caller to the callee. of economic insurance coverage for certain perils such as hurricanes in the Gulf of Mexico, (xiv) self-imposed or regulatory limitations on jackup rig drilling locations in the Gulf of Mexico during hurricane season, (xv) our availability to attract and retain skilled personnel, (xvi) excess rig availability resulting from the delivery of new drilling units, and (xvii) other risks described from time to time as Risk Factors and otherwise in the Company's SEC filings. Copies of such SEC filings may be obtained at no charge by contacting the Company's investor relations Investor relations The process by which the corporation communicates with its investors. department at 214-397-3045 or by referring to the investor relations section of the Company's website at http://www.enscous.com. All information in this press release is as of July 25, 2006. The Company undertakes no duty to update any forward-looking statement, to conform the statement to actual results, or reflect changes in the Company's expectations. ENSCO, headquartered in Dallas, Texas “Dallas” redirects here. For other uses, see Dallas (disambiguation). The City of Dallas (pronounced [ˈdæl.əs] or [ˈdæl. , provides contract drilling services to the global petroleum industry. ENSCO will conduct a conference call at 10:00 a.m. Central Daylight Time on Tuesday, July 25, 2006, to discuss its second quarter results. The call will be broadcast live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.enscous.com. Interested parties also may listen to the call by dialing (719) 457-2621. We recommend that participants call five to ten minutes before the scheduled start time. A replay of the conference call will be available on ENSCO's web site www.enscous.com, or by phone for 24 hours Adv. 1. for 24 hours - without stopping; "she worked around the clock" around the clock, round the clock after the call by dialing (719) 457-0820 (access code 4202026).
ENSCO INTERNATIONAL INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share data)
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
--------------- ---------------
2006 2005 2006 2005
------- ------- ------- -------
OPERATING REVENUES $478.8 $246.3 $863.9 $456.9
OPERATING EXPENSES
Contract drilling 148.5 110.6 278.5 219.2
Depreciation and amortization 44.4 38.1 86.8 74.7
General and administrative 10.5 7.8 20.9 15.8
------- ------- ------- -------
203.4 156.5 386.2 309.7
------- ------- ------- -------
OPERATING INCOME 275.4 89.8 477.7 147.2
OTHER INCOME (EXPENSE)
Interest income 2.7 1.8 5.0 2.9
Interest expense, net (4.9) (8.0) (9.1) (15.8)
Other, net (1.2) (2.0) (2.9) 1.8
------- ------- ------- -------
(3.4) (8.2) (7.0) (11.1)
------- ------- ------- -------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 272.0 81.6 470.7 136.1
PROVISION FOR INCOME TAXES 77.3 24.5 131.1 40.2
------- ------- ------- -------
INCOME FROM CONTINUING OPERATIONS 194.7 57.1 339.6 95.9
DISCONTINUED OPERATIONS, NET -- 10.6 4.3 11.1
CUMULATIVE EFFECT OF ACCOUNTING CHANGE,
NET -- -- 0.6 --
------- ------- ------- -------
NET INCOME $194.7 $67.7 $344.5 $107.0
======= ======= ======= =======
EARNINGS PER SHARE -- BASIC
Continuing operations $1.27 $0.38 $2.22 $0.63
Discontinued operations -- 0.07 0.03 0.07
Cumulative effect of accounting
change -- -- -- --
------- ------- ------- -------
$1.27 $0.45 $2.25 $0.71
======= ======= ======= =======
EARNINGS PER SHARE -- DILUTED
Continuing operations $1.27 $0.38 $2.21 $0.63
Discontinued operations -- 0.07 0.03 0.07
Cumulative effect of accounting
change -- -- -- --
------- ------- ------- -------
$1.27 $0.45 $2.24 $0.71
======= ======= ======= =======
AVERAGE COMMON SHARES OUTSTANDING
Basic 152.9 151.3 152.9 151.1
Diluted 153.6 151.6 153.6 151.5
ENSCO INTERNATIONAL INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions)
June 30, December 31,
2006 2005
------------ ------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $309.8 $268.5
Accounts receivable, net 370.1 269.0
Prepaid expenses and other 45.9 40.9
------------ ------------
Total current assets 725.8 578.4
PROPERTY AND EQUIPMENT, NET 2,823.2 2,663.6
GOODWILL 336.2 336.2
OTHER ASSETS, NET 37.0 39.7
------------ ------------
$3,922.2 $3,617.9
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $212.8 $214.2
Current maturities of long-term debt 17.2 17.2
------------ ------------
Total current liabilities 230.0 231.4
LONG-TERM DEBT 466.9 475.4
DEFERRED INCOME TAXES 333.9 338.3
OTHER LIABILITIES 33.4 32.8
STOCKHOLDERS' EQUITY 2,858.0 2,540.0
------------ ------------
$3,922.2 $3,617.9
============ ============
ENSCO INTERNATIONAL INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
(Unaudited)
Six Months
Ended
June 30,
---------------
2006 2005
------- -------
OPERATING ACTIVITIES
Net income $344.5 $107.0
Adjustments to reconcile net income to net cash
provided by operating activities of continuing
operations:
Depreciation and amortization 86.8 74.7
Changes in working capital and other (71.4) (10.9)
------- -------
Net cash provided by operating activities of
continuing operations 359.9 170.8
------- -------
INVESTING ACTIVITIES
Additions to property and equipment (283.8) (223.6)
Net proceeds from disposal of discontinued
operations 10.0 121.0
Other 1.9 0.8
------- -------
Net cash used in investing activities (271.9) (101.8)
------- -------
FINANCING ACTIVITIES
Reduction of long-term borrowings (8.6) (49.7)
Cash dividends paid (7.7) (7.6)
Proceeds from exercise of stock options 20.7 21.3
Repurchase of common stock (52.2) --
Other 1.1 (4.2)
------- -------
Net cash used in financing activities (46.7) (40.2)
------- -------
Effect of exchange rate fluctuations on cash and cash
equivalents (0.1) (1.0)
Net cash provided by discontinued operations 0.1 2.1
------- -------
INCREASE IN CASH AND CASH EQUIVALENTS 41.3 29.9
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 268.5 267.0
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $309.8 $296.9
======= =======
Effective January 1, 2006, the Company adopted Financial Accounting
Standards No. 123, (revised 2004) "Share-Based Payment," using the
modified-retrospective transition method. Accordingly, compensation
expense recognized in prior periods has been restated to include
share option compensation expense previously reported on a pro forma
basis in the Company's financial statement footnotes.
ENSCO INTERNATIONAL INCORPORATED
OPERATING STATISTICS
First
Second Quarter Quarter
------------------
2006 2005 2006
--------- -------- ----------
Contract drilling
-----------------------------------------
Average day rates
Jackup rigs
North and South America $129,664 $60,820 $115,960
Europe / Africa 144,510 75,667 134,061
Asia Pacific 88,351 65,737 80,383
--------- -------- ----------
Total jackup rigs 114,289 65,434 103,379
Semisubmersible rig -- N. America 187,296 141,788 189,191
Barge rig -- Asia Pacific 57,109 52,249 55,870
Platform rig -- North America 38,041 33,485 35,951
--------- -------- ----------
Total $114,912 $66,453 $103,184
========= ======== ==========
Utilization
Jackup rigs
North and South America 95% 86% 81%
Europe / Africa 100% 96% 100%
Asia Pacific 98% 87% 96%
--------- -------- ----------
Total jackup rigs 97% 88% 91%
Semisubmersible rig - N. America 98% 92% 59%
Barge rig -- Asia Pacific 96% 96% 100%
Platform rig -- North America 100% 100% 100%
--------- -------- ----------
Total 97% 89% 91%
========= ======== ==========
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