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TheStreet Open House

Ensco Plc Reports Third Quarter 2012 Results

Deepwater contract drilling expense was $246 million in third quarter 2012, up from $233 million in third quarter 2011. More operating days for ENSCO 8505, ENSCO 8504 and ENSCO 7500 as well as improved utilization contributed to this increase. Adjusted for warranty claim settlements of $31 million noted above, contract drilling expense increased 19%.

Midwater

Midwater segment revenues declined to $94 million from $121 million in third quarter 2011. This decrease is due to a decline in utilization and average day rate. Utilization was 74% and the average day rate was $221,000 in third quarter 2012, compared to 89% and $239,000, respectively, a year ago. Contract drilling expense in third quarter 2012 was $65 million, compared to $72 million in the prior year period.

Jackup

Jackup segment revenues grew 15% to $381 million, up from $330 million a year ago. The increase was mostly due to a $9,000 increase in the average day rate to $109,000 and a six percentage point increase in utilization to 83%. A broad-based pickup in customer demand around the world drove the increase in utilization and average day rate.

Contract drilling expense increased $35 million to $190 million, mostly due to an increase in utilization. Third quarter 2011 contract drilling expense benefited from an $11 million gain from a cash settlement of the ENSCO 69 insurance claim. Adjusting for this item, contract drilling expense increased $24 million, or 14%.

Other

Other is composed of managed drilling rig operations and ENSCO I, a barge rig that was sold during third quarter 2012. Revenues decreased to $20 million from $24 million in third quarter 2011. This revenue decrease reflects a decline in average day rates to $66,000 from $87,000 a year ago.

Contract drilling expense was $22 million, compared to $18 million a year ago. Excluding an $8 million loss on the sale of ENSCO I, contract drilling expense declined $4 million year to year.

                                         
Third Quarter
 
(in millions of $, Deepwater Midwater Jackup Other

Reconciling Items

Consolidated Total
except %) 2012   2011   Chg 2012   2011   Chg 2012   2011   Chg 2012   2011   Chg 2012   2011 2012   2011   Chg
 
Revenues 629.2 440.4 43 % 93.8 121.3 -23 % 380.9 330.1 15 % 19.7 23.8 -17 % - - 1,123.6 915.6 23 %
Operating expenses
Contract drilling 245.6 233.0 5 % 65.2 72.1 -10 % 189.9 154.7 23 % 22.4 17.7 27 % - - 523.1 477.5 10 %
Depreciation 83.4 73.5 13 % 16.8 15.7 7 % 42.7 44.2 -3 % 0.5 0.6 -17 % 1.8 1.8 145.2 135.8 7 %
General and admin. -   -   -   -   -   -   -   -   -   -     -   -   40.2     40.8   40.2   40.8   -1 %
Operating income (loss) 300.2 133.9 124 % 11.8 33.5 -65 % 148.3 131.2 13 % (3.2 ) 5.5 NM (42.0 ) (42.6 ) 415.1 261.5 59 %
 

Strong Financial Position – 30 September 2012

Ensco maintained a strong financial position:

  • $9 billion of contracted revenue backlog excluding bonus opportunities
  • Long-term debt-to-capital ratio of 29%
  • $1.9 billion of available revolving credit facilities
  • $160 million of cash and cash equivalents

EVP and Chief Financial Officer Jay Swent commented, “Capital expenditures for the first nine months of 2012 totaled $1.6 billion of which $1.2 billion, or 75%, was invested in new construction. These investments, coupled with $1.9 billion of remaining contractual commitments for rigs being constructed through 2014, will propel the future growth of our company.

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