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Ensco International Reports Fourth Quarter and Full Year 2009 Results
A Record Year for Safety
U.K. Redomestication Approved by Shareholders
ENSCO 8500 Series® Ultra-deepwater Semisubmersibles Commence Drilling
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London, England, 24 February 2010 ... Ensco International plc (NYSE: ESV) reported diluted earnings per share from continuing operations of $1.24 for fourth quarter 2009, compared to $2.14 per share in fourth quarter 2008. Earnings from discontinued operations were $0.22 per share in the fourth quarter, compared to a loss of $0.03 per share a year ago. Diluted earnings per share were $1.46 in fourth quarter 2009, compared to $2.11 per share in fourth quarter 2008. Discontinued operations relate to rigs no longer in the Company's fleet. The Company recognized $38 million of pre-tax income in fourth quarter 2009 related to ENSCO 69, which was reclassified as discontinued operations in second quarter 2009. |
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| Full year 2009 diluted earnings per share from continuing operations were $5.45, compared to $8.04 per share in 2008. Earnings from discontinued operations were $0.03 per share in 2009, compared to a loss of $0.02 per share a year ago. Diluted earnings per share were $5.48 in 2009, compared to $8.02 per share in 2008. |
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| Chairman, President and Chief Executive Officer Dan Rabun stated, "I am very pleased to report several major accomplishments in 2009. Shareholders approved our redomestication to the U.K., two new ENSCO 8500 Series® ultra-deepwater semisubmersibles were delivered from the shipyard and commenced drilling under long-term contracts, and we achieved our best safety record ever. In addition, Ensco recently was ranked #1 in an independent customer satisfaction survey for performance and reliability." |
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| Mr. Rabun added, "In the fourth quarter, earnings grew significantly compared to the third quarter. The increase was driven by higher utilization across the fleet and our growing deepwater segment - which equaled one-quarter of total revenues in the fourth quarter. Looking ahead, we project deepwater segment revenue will continue to grow significantly as more of our new ultra-deepwater semisubmersibles commence drilling for our customers. Growth in our deepwater segment is expected to lessen the impact of declining average day rates in our jackup business - as rates from expiring jackup rig contracts are adjusted to today's lower market rates. Fortunately, market rates for premium jackup rigs have been stabilizing somewhat over the past several months." |
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| Revenues in fourth quarter 2009 declined to $500 million from $605 million a year ago. Total jackup segment revenues decreased $229 million as a result of both lower average day rates and a decline in utilization. The decline was partially offset by a $124 million increase in deepwater segment revenue, which represented 25% of total revenue in fourth quarter 2009. |
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| Total operating expenses in fourth quarter 2009 increased to $279 million from $244 million last year due to several factors. Contract drilling and depreciation expense increased, due to commencement of ENSCO 8500 and ENSCO 8501 operations in 2009, and general and administrative expense was higher, primarily resulting from $8 million of legal and professional fees in fourth quarter 2009 related to the previously announced redomestication to the U.K. |
| Ensco will hold its General Meeting of Shareholders on 25 May 2010 at 8:00 a.m. (GMT) in its global headquarters office: 6 Chesterfield Gardens, 3rd Floor, London, England W1J 5BQ. Holders of record of Ensco's American depositary shares on 1 April 2010 are entitled to instruct the depositary for the shares on how to vote Ensco's Class A ordinary shares at the General Meeting. |
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| Ensco International plc (NYSE: ESV) brings energy to the world as a global provider of offshore drilling services to the petroleum industry. With a fleet of ultra-deepwater semisubmersible and premium jackup drilling rigs, Ensco serves customers with high-quality equipment, a well-trained workforce and a strong record of safety and reliability. To learn more about Ensco, please visit our website at www.enscointernational.com. Ensco International plc is registered in England No. 7023598 with offices located at 6 Chesterfield Gardens, London, W1J 5BQ. |
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| Statements contained in this news release that state the Company's or management's intentions, plans, hopes, beliefs, expectations, anticipations, projections, confidence, schedules, or predictions of the future are forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. |
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| Forward-looking statements include words or phrases such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "project," "could," "may," "might," "should," "will" and words and phrases of similar import. The forward-looking statements include, but are not limited to, statements about the impact of the December 2009 reorganization of the Company's corporate structure (referred to elsewhere herein as the "redomestication") and our plans, objectives, expectations and intentions with respect thereto and with respect to future operations, including the tax savings or other benefits that we expect to achieve as a result of the redomestication. Forward-looking statements also include statements regarding future operations, growth in our deepwater segment, market conditions, cash generation, the impact of recently contracted premium jackups, contributions from the ultra-deepwater semisubmersible rig fleet expansion program and expense management, industry trends or conditions and the business environment; statements regarding future levels of, or trends in, utilization, day rates, revenues, operating expenses, contract term, contract backlog, capital expenditures, insurance, financing and funding; statements regarding future construction (including construction in progress, sources of funds for ENSCO 8500 Series® remaining capital expenditures, and completion thereof), enhancement, upgrade or repair of rigs and timing thereof; statements regarding future delivery, mobilization, contract commencement, relocation or other movement of rigs and timing thereof; statements regarding future availability or suitability of rigs and the timing thereof, and statements regarding the likely outcome of litigation, legal proceedings, investigations or insurance or other claims and timing thereof. |
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| Forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Numerous factors could cause actual results to differ materially from those in the forward-looking statements, including: (i) changes in U.S. or non-U.S. laws, including tax laws, that could effectively reduce or eliminate the benefits we expect to achieve from the redomestication, (ii) an ability to realize expected benefits from the redomestication, (iii) costs related to the redomestication and ancillary matters, which could be greater than expected, (iv) industry conditions and competition, including changes in rig supply and demand or new technology, (v) risks associated with the global economy and its impact on capital markets and liquidity, (vi) prices of oil and natural gas and their impact upon future levels of drilling activity and expenditures, (vii) further declines in rig activity, which may cause us to idle or stack additional rigs, (viii) excess rig availability or supply resulting from delivery of newbuild drilling rigs, (ix) concentration of our rig fleet in premium jackups, (x) cyclical nature of the industry, (xi) worldwide expenditures for oil and natural gas drilling, (xii) the ultimate resolution of the ENSCO 69 situation in general and the potential return of the rig or package policy political risk insurance recovery in particular, (xiii) changes in the timing of revenue recognition resulting from the deferral of certain revenues for mobilization of our drilling rigs, time waiting on weather or time in shipyards, which are recognized over the contract term upon commencement of drilling operations, (xiv) operational risks, including excessive unplanned downtime due to rig or equipment breakdown, damage or repair in general and hazards created by severe storms and hurricanes in particular, (xv) risks associated with offshore rig operations or rig relocations, (xvi) renegotiation, nullification, cancellation or breach of contracts or letters of intent with customers or other parties, including failure to negotiate definitive contracts following announcements or receipt of letters of intent, (xvii) inability to collect receivables, (xviii) changes in the dates new contracts actually commence, (xix) changes in the dates our rigs will enter a shipyard, be delivered, return to service or enter service, (xx) risks inherent to shipyard rig construction, repair or enhancement, including risks associated with concentration of our ENSCO 8500 Series® rig construction contracts in a single shipyard in Singapore, unexpected delays in equipment delivery and engineering or design issues following shipyard delivery, including the cost and time required to repair damage to ENSCO 8502 caused by an engine room fire on 11 February 2010, (xxi) availability of transport vessels to relocate rigs, (xxii) environmental or other liabilities, risks or losses, whether related to hurricane damage, losses or liabilities (including wreckage or debris removal) in the Gulf of Mexico or otherwise, that may arise in the future and are not covered by insurance or indemnity in whole or in part, (xxiii) limited availability or high cost of insurance coverage for certain perils such as hurricanes in the Gulf of Mexico or associated removal of wreckage or debris, (xxiv) self-imposed or regulatory limitations on drilling locations in the Gulf of Mexico during hurricane season, (xxv) impact of current and future government laws and regulation affecting the oil and gas industry in general and our operations in particular, including taxation, as well as repeal or modification of same, (xxvi) our ability to attract and retain skilled personnel, (xxvii) governmental action and political and economic uncertainties, including expropriation, nationalization, confiscation or deprivation of our assets, (xxviii) terrorism or military action impacting our operations, assets or financial performance, (xxix) outcome of litigation, legal proceedings, investigations, or insurance or other claims, (xxx) adverse changes in foreign currency exchange rates, including their impact on the fair value measurement of our derivative instruments, (xxxi) potential long-lived asset or goodwill impairments, (xxxii) potential reduction in fair value of our auction rate securities, and auction rate securities, and (xxxiii) other risks as described from time to time as Risk Factors and otherwise in the Company's SEC filings. |
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| Copies of such SEC filings may be obtained at no charge by contacting our Investor Relations Department at 214-397-3045 or by referring to our website at www.enscointernational.com. All information in this news release is as of today. 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. |
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Contact: Sean O'Neill
Vice President - Investor Relations
(214) 397-3011 |
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| | Twelve Months Ended |
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| December 31, |
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| 2009 | 2008 |
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| OPERATING ACTIVITIES | | | | | | | | |
| Net income | | | $ | 784.5 | | $ | 1,156.7 | |
| Adjustments to reconcile net income to net cash provided | | |
| by operating activities of continuing operations: | | |
| Depreciation expense | | | | 205.9 | | | 186.5 | |
| Other | | | | 83.5 | | | 73.6 | |
| Changes in operating assets and liabilities | | | | 147.8 | | | (291.4 | ) |
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| Net cash provided by operating activities of continuing operations | | | | 1,221.7 | | | 1,125.4 | |
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| INVESTING ACTIVITIES | | |
| Additions to property and equipment | | | | (861.3 | ) | | (771.9 | ) |
| Other | | | | 7.6 | | | 50.3 | |
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| Net cash used in investing activities | | | | (853.7 | ) | | (721.6 | ) |
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| FINANCING ACTIVITIES | | |
| Reduction of long-term borrowings | | | | (17.2 | ) | | (19.0 | ) |
| Cash dividends paid | | | | (14.2 | ) | | (14.3 | ) |
| Proceeds from exercise of share options | | | | 9.6 | | | 27.3 | |
| Repurchase of shares | | | | (6.5 | ) | | (259.7 | ) |
| Other | | | | (5.9 | ) | | 1.5 | |
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| Net cash used in financing activities | | | | (34.2 | ) | | (264.2 | ) |
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| Effect of exchange rate changes on cash and cash equivalents | | | | 0.5 | | | (15.0 | ) |
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| Net cash provided by operating activities of discontinued operations | | | | 17.5 | | | 35.5 | |
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| INCREASE IN CASH AND CASH EQUIVALENTS | | | | 351.8 | | | 160.1 | |
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| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | | | | 789.6 | | | 629.5 | |
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| CASH AND CASH EQUIVALENTS, END OF PERIOD | | | $ | 1,141.4 | | $ | 789.6 | |
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