Rowan Reports Second Quarter 2011 Operating Results

Aug 02, 2011, 08:30 ET from Rowan Companies, Inc.

HOUSTON, Aug. 2, 2011 /PRNewswire/ -- For the three months ended June 30, 2011, Rowan Companies, Inc. ("Rowan" or the "Company") (NYSE: RDC) generated net income from continuing operations of $44.4 million or $0.35 per share, compared to $83.4 million or $0.73 per share in the second quarter of 2010.  

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Income from continuing operations during the second quarter of 2011 included a $6.1 million pre-tax charge related to litigation settlement and $1.4 million of gains on asset disposals, for a net reduction of $4.7 million or $0.03 per share after tax.  The second quarter 2010 results included a $4.5 million pre-tax charge for the expected cost to terminate the Company's agency agreement in Mexico, or $0.02 per share after tax.

Income from discontinued manufacturing and land drilling operations totaled $421.5 million in the second quarter of 2011 or $3.30 per share, including the after-tax gain on the sale of LeTourneau of $424.5 million, compared to $7.5 million or $0.07 per share in the second quarter of 2010.  The after-tax cash proceeds from the sale of LeTourneau are estimated to be approximately $865 million.

Net income totaled $465.9 million or $3.65 per share in the second quarter of 2011, compared to $90.9 million or $0.79 per share in the second quarter of 2010.

Rowan's offshore drilling revenues were $223.5 million in the second quarter of 2011, compared to $282.2 million in the second quarter of 2010, as the impact of lower average day rates more than offset higher activity resulting from rig fleet additions between periods.  The Company's gross offshore drilling margin was 53% of revenues in the second quarter of 2011, down from 63% in the prior-year quarter.

Matt Ralls, President and Chief Executive Officer, commented, "Over the past three months, we made substantial progress on several strategic fronts.  We completed the sale of our manufacturing business and reached an agreement to sell our land drilling division, enabling us to focus exclusively on our core offshore drilling business.  We significantly expanded the future growth prospects of that business by ordering two ultra-deepwater drillships that we believe will be the most capable in the global fleet upon delivery.  Our first two N-class jack-up rigs commenced operations in the North Sea in June and we achieved our objective of entering the important Southeast Asia market with commitments starting later this year in Malaysia and Vietnam – Rowan's first work in that area in almost two decades.  Further, over the past three months we increased our backlog of drilling revenue commitments by 67% to $2.6 billion.

"Our financial performance during the second quarter was significantly impacted by the effects of rig start-ups, several of which have occurred or will occur later than we expected due largely to delays related to more rigorous customer acceptance tests and regulatory approval processes and civil unrest in the Middle East."

Rowan will conduct its earnings conference call on Tuesday, August 2, 2011, at 10:00 a.m. Central Daylight Time.  Interested parties are invited to listen to the call by telephone or over the Internet.  Individuals who wish to participate on the conference call by telephone can dial (877) 869-3847, or internationally (201) 689-8261.  You should dial-in approximately five to 10 minutes prior to the scheduled start time.  Alternatively, to access the online simulcast and rebroadcast of the conference call, please visit Rowan's website at www.rowancompanies.com.  You should connect to our website at least 15 minutes prior to the conference call to register, download and install any necessary software.

Rowan Companies, Inc. is a major provider of international and domestic contract drilling services with a leading position in high-specification jack-up rigs.  The Company's fleet of 29 jack-up rigs is located worldwide, including the Middle East, the North Sea, Trinidad, and the Gulf of Mexico.  Rowan also has two additional high-specification jack-ups under construction to be delivered later this year and recently announced plans to enter the ultra-deepwater market with two high-specification drillships expected to be delivered in late 2013 and mid 2014.  Rowan's stock is traded on the New York Stock Exchange under the symbol "RDC". For more information on Rowan, please visit 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.

ROWAN  COMPANIES,  INC.

CONDENSED  CONSOLIDATED  BALANCE  SHEETS

Unaudited  (In  Millions)

JUNE  30,

DECEMBER 31,

2011

2010

ASSETS

Cash and cash equivalents

$      711.3

$      437.5

Restricted cash

-

15.3

Accounts receivable

254.7

269.9

Other current assets

46.3

68.6

Assets of discontinued operations

373.7

984.0

    Total current assets

1,386.0

1,775.3

Property, plant and equipment - net

5,162.3

4,344.5

Other assets

96.7

97.7

    TOTAL

$   6,645.0

$   6,217.5

LIABILITIES  AND  STOCKHOLDERS'  EQUITY

Current maturities of long-term debt

$        52.1

$        52.2

Accounts payable

69.8

66.8

Other current liabilities

234.0

132.3

Liabilities of discontinued operations

41.5

278.0

    Total current liabilities

397.4

529.3

Long-term debt

1,108.0

1,133.7

Other liabilities

860.9

802.2

Stockholders' equity

4,278.7

3,752.3

    TOTAL

$   6,645.0

$   6,217.5

ROWAN  COMPANIES,  INC.

CONDENSED  CONSOLIDATED  STATEMENTS  OF  OPERATIONS

Unaudited  (In  Millions  Except  Per  Share  Amounts)

THREE  MONTHS

SIX MONTHS

ENDED  JUNE  30

ENDED  JUNE  30

2011

2010

2011

2010

REVENUES

$   223.5

$   282.2

$   429.5

$   570.7

COSTS  AND  EXPENSES:

Operations

104.5

105.5

215.8

209.9

Depreciation and amortization

40.8

33.9

79.0

67.4

Selling, general and administrative

21.8

18.6

42.5

34.6

Gains on disposals of property and equipment

(1.4)

-

(1.4)

(0.3)

Charges for litigation settlements

6.1

4.5

6.1

4.5

Total

171.8

162.5

342.0

316.1

INCOME  FROM  OPERATIONS

51.7

119.7

87.5

254.6

Net interest and other income

(7.0)

(4.8)

(13.4)

(10.3)

INCOME  FROM  CONTINUING  OPERATIONS  BEFORE  INCOME  TAXES

44.7

114.9

74.1

244.3

Provision for income taxes

0.3

31.5

2.9

71.9

NET  INCOME  FROM  CONTINUING  OPERATIONS

$     44.4

$     83.4

$     71.2

$   172.4

Discontinued operations, net of tax

421.5

7.5

426.7

(16.9)

NET  INCOME

$   465.9

$     90.9

$   497.9

$   155.5

PER  SHARE  AMOUNTS:

Income from continuing operations

$     0.35

$     0.73

$     0.56

$     1.50

Discontinued operations, net of tax

$     3.30

$     0.07

$     3.35

$    (0.15)

Net income

$     3.65

$     0.79

$     3.91

$     1.36

AVERAGE  DILUTED  SHARES

127.6

115.0

127.3

114.8

NOTE:  See pages 4 and 5 for supplemental operating information.

ROWAN  COMPANIES,  INC.

CONDENSED  CONSOLIDATED   STATEMENTS  OF  CASH  FLOWS

Unaudited  (In  Millions)

SIX  MONTHS

ENDED  JUNE  30

2011

2010

CASH  PROVIDED  BY  (USED  IN):

  Operations:

     Net income

$   497.9

$   155.5

     Adjustments  to  reconcile  net  income  to  net

     cash  provided  by  operations:

        Depreciation  and  amortization

99.9

92.0

        Deferred  income  taxes

70.7

6.1

        Gain  on  disposals  of  assets

(664.8)

(0.1)

        Other -  net

(9.5)

(17.4)

     Net  changes  in  current  assets  and  liabilities

143.6

(24.4)

     Net  changes  in  other  noncurrent  assets  and  liabilities

8.1

(1.4)

  Net  cash  provided  by  operations

145.9

210.3

  Investing  activities:

     Property,  plant  and  equipment  additions

(931.0)

(210.4)

     Proceeds  from  disposals  of  property,  plant  and  equipment

4.1

0.9

     Proceeds  from  sale  of  manufacturing  operations - net

1,044.5

-

     Decrease  in  Restricted  cash

15.3

-

  Net  cash  used  in  investing  activities

132.9

(209.5)

  Financing  activities:

     Repayments  of  borrowings

(26.1)

(32.5)

     Proceeds  from  equity  compensation  plans  and  other

21.1

2.9

  Net  cash  used  in  financing  activities

(5.0)

(29.6)

DECREASE  IN  CASH  AND  CASH  EQUIVALENTS

273.8

(28.8)

CASH  AND  CASH  EQUIVALENTS,  BEGINNING  OF  PERIOD

437.5

639.7

CASH  AND  CASH  EQUIVALENTS,  END  OF  PERIOD

$   711.3

$   610.9

ROWAN  COMPANIES,  INC.

SUPPLEMENTAL  OPERATING  INFORMATION

Unaudited

THREE  MONTHS  ENDED

SIX  MONTHS  ENDED

June 30,

March 31,

June 30,

June 30,

June 30,

2011

2011

2010

2011

2010

OFFSHORE  RIG  DAYS:

Operating

1,668

1,477

1,589

3,145

3,145

Available

2,386

2,271

2,128

4,657

4,198

Utilization

70%

65%

75%

68%

75%

AVERAGE  DAY  RATES  (in  thousands):

Gulf of Mexico rigs

$  118.7

$  118.2

$   137.2

$   118.5

$   139.6

Middle East rigs

123.6

128.7

142.7

126.2

152.0

North Sea rigs

195.3

182.5

269.3

189.3

278.6

All offshore rigs

133.3

136.4

174.5

134.7

178.8

ROWAN  COMPANIES,  INC.

SUMMARY  OF  DISCONTINUED  OPERATIONS

Unaudited  (In  Millions)

Three Months

Six Months

Ended June 30,

Ended June 30,

2011

2010

2011

2010

MANUFACTURING:

Revenues

$110.2

$161.8

$224.5

$263.2

Operations costs

(95.9)

(138.1)

(194.5)

(222.7)

Depreciation and amortization

(3.3)

(4.6)

(6.8)

(8.6)

Selling, general and administrative

(11.3)

(12.7)

(22.7)

(22.1)

(Loss) gain on sale and other

658.1

(1.6)

659.4

(42.4)

Pre-tax income (loss)

$657.8

$     4.8

$659.9

$ (32.6)

LAND DRILLING:

Revenues

$  48.5

$  46.1

$  92.5

$  88.6

Operations costs

(38.7)

(33.6)

(70.8)

(65.6)

Depreciation and amortization

(6.4)

(8.0)

(14.2)

(16.0)

Selling, general and administrative

(0.2)

(0.3)

(0.3)

(0.7)

(Loss) gain on sale and other

0.6

-

2.4

-

Pre-tax income (loss)

$     3.8

$     4.2

$     9.6

$     6.3

COMBINED:

Pre-tax income (loss)

$661.6

$     9.0

$669.5

$ (26.3)

Income tax expense (credit)

(240.1)

(1.5)

(242.8)

9.4

Discontinued operations (net of tax)

$421.5

$     7.5

$426.7

$ (16.9)

SOURCE Rowan Companies, Inc.



RELATED LINKS

http://www.rowancompanies.com