HOUSTON, TEXAS -- For the three months ended September 30, 2007, Rowan Companies, Inc. (RDC-NYSE) generated record net income of $130.8 million, or $1.16 per share, compared to $87.0 million, or 78¢ per share, in the third quarter of 2006 and $128.1 million, or $1.14 per share, in the second quarter of 2007. Revenues were $502.2 million in the third quarter of 2007, compared to $417.1 million in the third quarter of 2006 and $507.0 million in the second quarter of 2007.
The third quarter 2007 results included $1.1 million, or 1¢ per share, of gains on asset sales, compared to $2.3 million, or 2¢ per share, in the third quarter of 2006 and $14.6 million, or 8¢ per share, in the second quarter of 2007. The prior-year results also included approximately $1.2 million, or 1¢ per share, of after-tax income from the Company’s discontinued aviation operations which were sold in 2004.
Rowan’s drilling operations generated record revenues of $368.8 million during the third quarter of 2007, up by $79.2 million, or 27%, from the third quarter of 2006 and by $15.7 million, or 4%, from the second quarter of 2007. The Company’s income from drilling operations improved to $183.5 million, or 50% of revenues, during the third quarter of 2007, up by 44% from the third quarter of 2006 and by 1% from the second quarter of 2007.
Rowan’s offshore rig utilization was 99% during the third quarter of 2007, up from 91% in the third quarter of 2006 and 97% in the second quarter of 2007. The Company’s average offshore day rate was $158,200 during the third quarter of 2007, up by $11,400, or 8%, from the third quarter of 2006 and by $1,100, or 1%, from the second quarter of 2007. Rowan’s land rig utilization was 96% during the third quarter of 2007, down from 98% in the third quarter of 2006 and 97% in the second quarter of 2007, though the number of rig operating days increased between periods. The Company’s average land rig day rate was $23,300 during the third quarter of 2007, up by $300, or 1%, from the third quarter of 2006 and by $900, or 4%, from the second quarter of 2007.
Rowan’s combined manufacturing operations generated revenues of $133.4 million during the third quarter of 2007, up by $5.9 million, or 5%, from the third quarter of 2006 and down by $20.5 million, or 13%, from the second quarter of 2007. The Company’s income from manufacturing operations improved to $14.6 million, or 11% of revenues, during the third quarter of 2007, up by 232% from the third quarter of 2006 and by 12% from the second quarter of 2007.
Danny McNease, Chairman and Chief Executive Officer, commented, “Rowan’s drilling operations have again contributed record results, and recent contract negotiations support our confidence that this upward trend will continue into 2008 and beyond. For example, we have received a letter of intent from a major integrated oil company for two years of work offshore Angola that the Gorilla VII should begin late in the first quarter of 2008, and from which we expect revenues of approximately $264 million. In the Gulf of Mexico, we are nearing finalization of a six-month commitment for the Gorilla II commencing in April 2008 at a day rate of $195,000, or an 11% increase over the rig’s current rate. In the North Sea, we are negotiating a six-month extension of the Gorilla VI and expect a day rate in excess of $300,000.
“We believe these fixtures reaffirm the Company’s strategy of building and operating a fleet of jack-up rigs that can efficiently drill high-pressure, high-temperature and extended- reach wells in challenging environments throughout the world. Even in the Gulf of Mexico, where volatile natural gas prices have recently weakened overall rig activity and day rates, we have experienced solid demand for our more capable rigs. Thus, as we have announced separately this morning, we intend to continue the process of upgrading and expanding our jack-up fleet by building six additional high-specification jack-ups over the next four years.
“Our manufacturing businesses are key to our strategy. Rowan receives continuing innovation in jack-up rig designs and related drilling equipment and access to a proven shipyard that offers us the flexibility to modify construction schedules as market conditions may warrant. Our manufacturing businesses are critical to keeping our rig fleet on the leading edge of capability.
“External market acceptance of our manufactured drilling products has continued growing as well. Our announced backlog includes an additional offshore rig kit ordered during the third quarter for completion in mid 2008, our tenth external rig kit ordered in the last two and a half years. We recently received an order from an Indian company for two complete land rigs that we expect to deliver this year, bringing the 2007 total to six land rigs. One of those six is performing very well in Australia and we have in-hand a letter of intent for a second land rig for delivery there in 2008. Just last week we signed a supply agreement with a Russian company under which we expect to ramp up to ten land rig packages per year by 2010.”
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. Common Stock trading symbol: RDC. Contact: William C. Provine, Vice-President - Investor Relations, 713-960-7575. Website: www.rowancompanies.com
