Ensco slips deeper into the red

One of Ensco’s jack-up rigs. Source: Flickr, Author: SP Mac (the image has been cropped)

UK driller Ensco saw its net loss for the second quarter of the year more than triple as its drilling expenses spiked due to costs associated with 11 Atwood rigs. 

According to the driller’s report on Wednesday, net loss attributable to Ensco was $151 million compared to a $45.5 million loss in the same period of 2017.

Revenues were $459 million in second quarter 2018 compared to $458 million a year ago. The addition of $55 million of revenue from Atwood rigs, Ensco DS-10 joining the active fleet and an increase in reported utilization to 61% from 56% were largely offset by a decline in the average day rate to $135,000 from $156,000 in second quarter 2017.

Contract drilling expense increased to $344 million in second quarter 2018 from $291 million a year ago primarily due to $47 million of costs associated with 11 Atwood rigs, the addition of Ensco DS-10 and $5 million of integration-related transaction costs.

Floaters & jack-ups

Looking at segments, Ensco’s floater revenues were $285 million in second quarter 2018 compared to $264 million a year ago. Reported utilization increased to 53% from 43% a year ago and was partially offset by a decline in average day rates to $238,000 from $339,000 in the prior-year period.

Second quarter 2018 revenues included $50 million from acquired Atwood rigs and also benefitted from a full quarter of operations for Ensco DS-10 following the commencement of its maiden contract during first quarter 2018. Adjusted for uncontracted rigs and planned downtime, operational utilization was 98% compared with 99% a year ago.

Jack-up revenues were $159 million in second quarter 2018 compared to $179 million a year ago primarily due to the sale of Ensco 52, which operated during the year-ago period, and revenue related to a contract termination in second quarter 2017.

A decline in average day rates to $78,000 from $89,000 a year ago was partially offset by an increase in reported utilization to 66% from 64% in second quarter 2017. Second quarter 2018 jack-up revenues included $5 million from acquired Atwood rigs. Adjusted for uncontracted rigs and planned downtime, operational utilization increased to 99% from 98% a year ago.

Ensco Chief Executive Officer and President, Carl Trowell said, “While we continue to expect a protracted recovery and competitive near-term market conditions for the offshore drilling sector, sustained higher commodity prices are helping customers generate excess cash that can be deployed toward investments in future production.

“Along with lower offshore project costs, this has led to an increasing number of tenders and inquiries from customers that we expect will provide a pipeline of future work in the years to come.”

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Posted on July 26, 2018 with tags .

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