Rowan Companies (RDC) Q1 2012 Earnings Call May 02, 2012 11:00 am ET Executives Suzanne M. McLeod - Director of Investor Relations W. Matt Ralls - Chief Executive Officer, President, Director and Chairman of Executive Committee Mark A. Keller - Executive Vice President of Business Development William H. Wells - Chief Financial Officer, Vice President of Finance, Senior Vice President and Treasurer Thomas P. Burke - Chief Operating Officer Analysts Douglas L. Becker - BofA Merrill Lynch, Research Division David Wilson - Howard Weil Incorporated, Research Division Ian Macpherson - Simmons & Company International, Research Division Robin E. Shoemaker - Citigroup Inc, Research Division Joe Hill - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division Matthew D. Conlan - Wells Fargo Securities, LLC, Research Division Andreas Stubsrud - Pareto Securities AS, Research Division Richard Haydon - Yield/Capital Appreciation Management Presentation Operator
Joining me on this call this morning are Matt Ralls, President and Chief Executive Officer; Tom Burke, Chief Operating Officer; Mark Keller, Executive Vice President, Business Development; and Bill Wells, Senior Vice President, Chief Financial Officer and Treasurer, who will have prepared comments. Also in the room to respond to questions is Kevin Bartol, Senior Vice President, Corporate Development.Before Matt begins his remarks, I'd like to remind you that during the course of this conference call, forward-looking statements may be made within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements about the change in corporate structure, as well as 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. Other relevant factors have been and will be disclosed in the company's filings with the SEC. With that, I'll turn the call over to Matt. W. Matt Ralls Thanks, Suzanne, and good morning, everyone. I'll be brief this morning. We're pleased with our results for the first quarter and believe that these results reflect an upward trend for the company. While over the past few years, we've often rolled from high day rate contracts signed during the last peak to new lower day rates, we're now in a position where virtually all rigs moving to new contracts will be getting higher day rates. We continue to have a few rigs in transition as we reposition our fleet into the markets where we believe they have the best longer-term opportunities, but we expect the pace of those relocations to reduce over the balance of this year. These moves have helped us add substantial contract backlog, bringing our total backlog to $3.5 billion, and we're hopeful and pretty confident that we'll be adding significant deepwater contract backlog over the coming months.
I believe that Rowan is in a great position with a growing fleet of very high quality rigs, the best people in the industry and a renewed strategic focus on excellence in both jack-up and deepwater drilling. Also, as disclosed in our filing earlier this week, we believe we're on track to complete our redomestication to the U.K. through a transaction utilizing Class A shares rather than depository receipts. I believe that if we're successful in staying in the S&P 500 Index as expected, it will have been worth the effort and expense of using the Class A structure, notwithstanding any market turbulence that may have been associated with the uncertainty around that issue.And finally, we had an incident this morning involving the EXL-I. As she was being towed toward the entrants of the Corpus Christi Ship Channel, a passing ship lost power and collided with the rig. All hands aboard the rig are safe and the situation is stable, but the port side of the rig was damaged and will require repairs prior to being able to be mobilized to Southeast Asia as planned. We will update our mobilization plan in the next fleet status report. With that, I'll turn it over to Mark. Mark A. Keller Thanks, Matt, and good morning, everyone. In the first 4 months of 2012, we are proud to have added more to our total backlog than the entire year of 2011. With recent commitments of additional jack-up contracts in Southeast Asia, the U.S. Gulf of Mexico and extensions in the North Sea and our previously announced ConocoPhilips and BG contacts, we have exceeded $1.5 billion in additional backlog. We are encouraged by these contracts and the positive market dynamics of the jack-up sector. Worldwide utilization is the highest it's been in over 2 years, average earned day rates worldwide were up approximately 10% among our peer group over the past 6 months, and tender activity for more capable jack-ups continues to remain strong. Read the rest of this transcript for free on seekingalpha.com