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Ensco Plc Reports Third Quarter 2012 Results

Revenues grew 23% to $1.124 billion in third quarter 2012 from $916 million a year ago. A growing active fleet, as well as improved utilization and average day rates across the deepwater and jackup segments, contributed to this increase.

Contract drilling expense was $523 million, up from $478 million in third quarter 2011. More rigs in the active fleet and significantly higher utilization in the deepwater and jackup segments drove this increase along with a rise in unit labor costs. Warranty claim settlements of $31 million related to lost revenues and costs incurred in prior periods reduced third quarter 2012 contract drilling expense, while an $11 million insurance claim settlement for ENSCO 69 reduced third quarter 2011 contract drilling expense. Adjusted for these items as well as the previously noted loss and impairments totaling $12 million in third quarter 2012, and acquisition-related costs equaling $3 million in third quarter 2011, contract drilling expense increased 12%.

Depreciation expense was $145 million, compared to $136 million a year ago. The $9 million increase was due to the addition of ENSCO 8504 and ENSCO 8505 to the active fleet.

General and administrative expense declined to $40 million from $41 million in third quarter 2011. In third quarter 2011, acquisition-related costs were $7 million as noted above.

Sequentially, general and administrative expense increased $4 million from $36 million in second quarter 2012, primarily due to additional compensation expense related to the previously announced retirement of a senior executive during third quarter 2012.

Interest expense in third quarter 2012 was $31 million, net of $26 million of interest that was capitalized, compared to interest expense of $31 million in third quarter 2011, net of $27 million of interest that was capitalized.

Segment Highlights

Deepwater

Deepwater segment revenues were $629 million in third quarter 2012, up 43% from $440 million a year ago. The commencement of ENSCO 8505, a full quarter of operations for ENSCO 8504, and increases in the average day rate and utilization contributed to this growth. The average day rate increased to $402,000 from $391,000 in third quarter 2011. Utilization improved sixteen percentage points to 90%. ENSCO 7500 operated during third quarter 2012 but was undergoing a shipyard enhancement project during third quarter 2011.

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