Ensco plc, a UK-based offshore drilling contractor, reported diluted earnings per share from continuing operations of $1.55 in second quarter 2013, compared to $1.45 per share in second quarter 2012. Discontinued operations primarily related to rigs and other assets no longer on the Company’s balance sheet resulted in a gain of $0.02 per share a year ago. Diluted earnings per share increased to $1.55 from $1.47 in second quarter 2012.
Chairman, President and Chief Executive Officer Dan Rabun stated, “We continue to see strong, broad-based customer demand given the steady pace of new discoveries that must be appraised and developed. Based on our positive outlook, we recently ordered our eighth Samsung DP3 drillship, ENSCO DS-10, and our seventh Keppel FELS B Class jack-up, ENSCO 110.”
Rabun added, “These new assets reinforce our fleet standardization strategy that provides customers consistently high levels of operational excellence.”
Revenues grew 17% to a record $1.248 billion in second quarter 2013 from $1.071 billion a year ago. Operating income grew 12% to $452 million and earnings increased $20 million to a record $361 million. The addition of ENSCO 8506 and ENSCO DS-6 to the active fleet as well as a full quarter of operations for ENSCO 8505 drove these increases. The average day rate for the fleet increased $36,000 year to year to $228,000.
Contract drilling expense was $607 million, up from $494 million in second quarter 2012. This increase was primarily due to adding new floaters to the active fleet as well as a previously anticipated increase in labor costs.
Depreciation expense was $153 million compared to $136 million a year ago. The $17 million increase was mostly due to a growing active fleet. General and administrative expense was $36 million in second quarter 2013, equal to second quarter 2012.
Interest expense in second quarter 2013 was $44 million, net of $13 million of interest that was capitalized, compared to interest expense of $30 million in second quarter 2012, net of $28 million of interest that was capitalized.
Floater revenues were $823 million in second quarter 2013, up 22% from $673 million a year ago, primarily due to the commencement of ENSCO 8506 and ENSCO DS-6 as well as a full quarter of operations for ENSCO 8505. The average day rate increased to $399,000 from $352,000 in second quarter 2012. Utilization declined to 86% from 92% a year ago mostly due to a planned shipyard project for ENSCO 5005 initiated during first quarter 2013 to significantly increase the capabilities of the rig. ENSCO 5005 operated during second quarter 2012.
Floater contract drilling expense was $377 million in second quarter 2013, up from $293 million in second quarter 2012. A growing active floater fleet contributed to this increase along with an increase in labor costs as expected. In second quarter 2012, $22 million of favorable settlements reduced contract drilling expense as previously reported.
Jack-up revenues grew 7% to $404 million, up from $377 million a year ago. The increase was mostly due to a $17,000 increase in the average day rate to $122,000, driven by strong customer demand around the world. Utilization was 83% compared to 90% a year ago. A total of nine jack-up rigs had planned shipyard time during second quarter 2013 compared to three in second quarter 2012. Contract drilling expense increased $29 million to $214 million, due in part to an increase in labor costs.
Other is composed of managed drilling rig operations. Revenues decreased to $20 million from $21 million in second quarter 2012. Contract drilling expense was $16 million, unchanged from a year ago.
Press Release, July 30, 2013