Rowan Companies 8-K Rowan Reports Record Operating Results

EXHIBIT 99.1

News Release

Rowan Companies, Inc.

2800 Post Oak Boulevard, Suite 5450

   Houston, Texas 77056 (713) 621-7800

FOR IMMEDIATE RELEASE     & #160;  July 25, 2006

ROWAN REPORTS RECORD OPERATING RESULTS

HOUSTON, TEXAS -- For the three months ended June 30, 2006, Rowan Companies, Inc. (RDC-NYSE) generated record net income of $109.7 million, or 98¢ per share, compared to $42.3 million, or 39¢ per share, in the same period of 2005 and $59.1 million, or 53¢ per share, in the first quarter of 2006. Revenues were a record $382.9 million in the second quarter of 2006, compared to $244.6 million in the second quarter of 2005 and $299.8 million in the first quarter of 2006.

Current quarter results included $24.4 million, or 14¢ per share, of gains on asset sales, compared to $11.4 million, or 7¢ per share, in the second quarter of 2005 and $2.5 million, or 2¢ per share, in the first quarter of 2006. The second quarter 2005 results also included $0.9 million, or less than 1¢ per share, of after-tax loss from discontinued operations.

For the six months ended June 30, 2006, Rowan generated net income of $168.8 million, or $1.51 per share, compared to $85.7 million, or 78¢ per share, in the same period of 2005. Revenues were $682.7 million during the first half of 2006 compared to $467.0 million in the first half of 2005. The 2005 results included $12.0 million, or 11¢ per share, of after-tax income from discontinued operations.

Rowan’s offshore rig utilization was 93% during the second quarter of 2006, down from 96% in the comparable 2005 period, as the Company’s four rigs in Saudi Arabia did not commence operations until well into April. The utilization of Rowan’s other available 15 offshore rigs was 96% during the second quarter of 2006. The Company’s average offshore day rate was a record $143,900 during the second quarter of 2006, up $15,300, or 12%, from the first quarter of 2006 and up $74,100, or 106%, from the second quarter of 2005.

Rowan’s land rig utilization was 100% during the second quarter of 2006, up from 89% in the comparable 2005 period. The Company’s average land rig day rate was $22,400 during the second quarter of 2006, up $200, or 1%, from the first quarter of 2006 and up $5,300, or 31%, from the second quarter of 2005.

The Company’s external manufacturing backlog was a record $567 million at June 30, and included $330 million in the marine group, $139 million in the drilling products group and $53 million in the equipment group.

Danny McNease, Chairman and Chief Executive Officer, commented, “Our second quarter operating results were the best in the Company’s 83-year history. With half of our offshore fleet contracted well into 2007 or beyond, and a manufacturing backlog that stretches into 2008, our prospects for future revenues and earnings have never been brighter. Additions to capacity carried out during 2006 and planned over the next three years should enhance opportunities for further growth in our drilling and manufacturing businesses.

“We believe that worldwide demand for competitive jack-up rigs will continue to exceed the available supply, that the migration of rigs from the Gulf of Mexico to international markets will continue and, as a result, that overall drilling day rates will remain firm. Barring a collapse in oil, natural gas or other commodity prices, we expect worldwide demand for new rigs and rig kits, related drilling products and mining and timber equipment to remain strong.”

Rowan Companies, Inc. is a major provider of international and domestic contract drilling services. The Company also owns and operates a manufacturing division that produces equipment for the drilling, mining and timber industries. The Company’s stock is traded on the New York Stock Exchange and NYSE Arca. Common Stock trading symbol: RDC. Contact: William C. Provine, Vice-President - Investor Relations, 713-960-7575. Website: www.rowancompanies.com 

This report contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements as to the expectations, beliefs and future expected financial performance of the Company that are based on current expectations and are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected by the Company. Among the factors that could cause actual results to differ materially include oil and natural gas prices, the level of offshore expenditures by energy companies, energy demand, the general economy, including inflation, weather conditions in the Company’s principal operating areas and environmental and other laws and regulations. Other relevant factors have been disclosed in the Company’s filings with the U.S. Securities and Exchange Commission.

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ROWAN COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited (In Thousands)
		JUNE 30
		2006		2005
ASSETS
Cash and cash equivalents	$	488,331	$	487,821
Accounts receivable		375,489		169,962
Inventories		263,325		179,899
Other current assets		85,389		65,502
Total current assets		1,212,534		903,184
Property, plant and equipment - net		1,953,704		1,694,709
Other assets		36,177		15,565
Assets of discontinued operations		-		3,667
TOTAL	$	3,202,415	$	2,617,125
LIABILITIES AND STOCKHOLDERS' EQUITY
Current maturities of long-term debt	$	64,922	$	64,922
Other current liabilities		360,041		133,045
Total current liabilities		424,963		197,967
Long-term debt		517,865		573,180
Other liabilities		495,579		353,530
Stockholders' equity		1,764,008		1,492,448
TOTAL	$	3,202,415	$	2,617,125

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ROWAN COMPANIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited (In Thousands Except Per Share Amounts)
		THREE MONTHS						SIX MONTHS
		ENDED JUNE 30						ENDED JUNE 30
		2006			2005			2006			2005
REVENUES:
Drilling services	$	280,110		$	182,637		$	497,212		$	342,916
Manufacturing sales and services		102,776			61,923			185,461			124,036
Total		382,886			244,560			682,673			466,952
COSTS AND EXPENSES:
Drilling services		121,389			99,182			230,184			188,607
Manufacturing sales and services		81,125			51,687			146,512			108,361
Depreciation and amortization		21,951			20,106			42,062			39,960
Selling, general and administrative		16,895			16,086			35,404			29,346
Gain on sale of property and equipment		(24,432	)		(9,592	)		(26,976	)		(10,182	)
Total		216,928			177,469			427,186			356,092
INCOME FROM OPERATIONS		165,958			67,091			255,487			110,860
OTHER INCOME (EXPENSE):
Interest expense		(7,128	)		(6,318	)		(14,125	)		(12,174	)
Less: interest capitalized		2,261			1,088			3,620			1,859
Interest income		6,948			3,565			15,277			6,111
Gain on sale of investments		-			1,852			-			9,553
Other - net		(61	)		233			71			569
OTHER INCOME (EXPENSE) - NET		2,020			420			4,843			5,918
INCOME BEFORE INCOME TAXES		167,978			67,511			260,330			116,778
Provision for income taxes		58,287			24,325			91,534			43,053
INCOME FROM CONTINUING OPERATIONS		109,691			43,186			168,796			73,725
Income (loss) from discontinued operations, net of tax		-			(920	)		-			11,963
NET INCOME	$	109,691		$	42,266		$	168,796		$	85,688
PER SHARE AMOUNTS:
Income from continuing operations	$	0.98		$	0.39		$	1.51		$	0.67
Income from discontinued operations, net of tax	$	-		$	-		$	-		$	0.11
Net income	$	0.98		$	0.39		$	1.51		$	0.78
AVERAGE DILUTED SHARES		111,951			109,752			111,864			109,567

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ROWAN COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited (In Thousands)
		SIX MONTHS
		ENDED JUNE 30
		2006			2005
CASH PROVIDED BY (USED IN):
Operations:
Net income	$	168,796		$	85,688
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization		42,062			40,047
Deferred income taxes		57,176			44,847
Contributions to pension plans		(920	)		(66,052	)
Gain on sale of assets		(26,976	)		(40,471	)
Other - net		22,281			13,822
Net changes in current assets and liabilities		(178,763	)		(25,046	)
Net changes in other noncurrent assets and liabilities		15,043			65
Net cash provided by operations		98,699			52,900
Investing activities:
Property, plant and equipment additions		(258,091	)		(76,059	)
Proceeds from disposals of property, plant and equipment		34,305			23,900
Proceeds from sale of boat purchase options		-			20,866
Proceeds from sale of investments		-			9,553
Net cash used in investing activities		(223,786	)		(21,740	)
Financing activities:
Proceeds from borrowings		-			28,302
Repayments of borrowings		(32,461	)		(29,472	)
Payment of cash dividends		(38,462	)		(26,935	)
Proceeds from option and debenture plans and other		8,438			18,789
Net cash used in financing activities		(62,485	)		(9,316	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(187,572	)		21,844
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		675,903			465,977
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	488,331		$	487,821

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