Offshore drilling contractor Rowan Companies saw an increase in its profit and revenues for the second quarter 2016, when compared to the prior-year quarter, due to an early rig contract termination.
For the three months ended June 30, 2016, Rowan reported net income of $216.7 million, compared to $84.7 million in the second quarter of 2015.
Net income for the current quarter included a $120 million after-tax increase to net income for the Rowan Relentless contract termination and related items. Namely, Freeport-McMoRan Oil & Gas in May terminated a drilling contract it had with Rowan for the Rowan Relentless. The $120 million reflects the amount in excess of the drillship’s day rate for the three months ended June 30, 2016.
Additionally, net income for the current quarter included a $1.8 million after-tax gain on early extinguishment of debt. Excluding the impact of these items, net income as adjusted was $94.9 million.
Rowan’s revenues were $611.9 million in the second quarter of 2016, an increase of 20% from the prior-year quarter and revenues of $508.7 million due to the already mentioned contract termination and related items as well as contributions from the ultra-deepwater drillships Rowan Relentless, which started operations in June of 2015, and Rowan Reliance, which experienced lower levels of downtime in the second quarter of 2016.
The increase in drillship revenue was partially offset by a 22% decline in jack-up revenue due to lower utilization and lower day rates.
Tom Burke, President and Chief Executive Officer, commented, “I’m pleased that we secured over 700 contract days of new backlog between a blend and extend agreement on our ultra-deepwater drillship, the Rowan Resolute, and contract extensions in our jack-up fleet.”