Offshore drilling contractor Rowan Companies sank to a loss in the fourth quarter of 2018 from a profit in the year-before period. The driller says it is cautiously optimistic when it comes to improvements in overall offshore rig demand.
For the quarter ended December 31, 2018, Rowan Companies reported a net loss of $14.3 million compared to net income of $112 million in the fourth quarter of 2017.
The net loss for the current quarter included a $65.8 million (after tax) gain on the sale of rigs to ARO Drilling and a $68.4 million tax benefit related to the release of valuation allowance on the company’s net U.S. deferred tax assets.
The net income for the prior-year quarter included a $151.7 million (after tax) gain on the sale of rigs and related assets to ARO Drilling.
Rowan recorded revenues of $179.4 million for the fourth quarter 2018, which is a decrease when compared to the prior-year quarter and revenues of $296.7 million.
ARO Drilling, of which Rowan owns 50%, generated revenue and net income of $130.5 million and $13.6 million, respectively, for the quarter ended December 31, 2018, compared to $48.6 million and $1.7 million, respectively, for the period October 17, 2017 to December 31, 2017. ARO Drilling’s financial information is included in this release.
Tom Burke, President and Chief Executive Officer, commented, “The oil markets experienced a high level of volatility at the end of last year, but have since staged a moderate recovery so far in 2019.”
Burke added: “As we look forward to 2019, we are cautiously optimistic that oil market stability at current levels will be supportive of improvements in overall offshore rig demand.”
Talking about Rowan’s pending merger with offshore driller Ensco, Burke said, “We are excited about our pending combination with Ensco, which received shareholder approval last week. The new company will be ideally positioned to benefit from the anticipated long-term improvements in offshore rig demand, with many of the best assets in the industry and a global reach to customers, while also benefiting from the substantial cost synergies that are only available as a combined entity.”
Completion of the transaction between Rowan and Ensco is expected to occur in the first half of 2019.
Offshore Energy Today Staff