Oil and natural gas driller
) reported improved third quarter 2013 results on the back of
increased utilization, rising customer demand as well as new rigs
joining the fleet.
ENERPLUS CORP (ERF): Free Stock Analysis
ENSCO PLC (ESV): Free Stock Analysis Report
LINN ENERGY LLC (LINE): Free Stock Analysis
STONE ENERGY CP (SGY): Free Stock Analysis
To read this article on Zacks.com click here.
Diluted third quarter earnings were $1.69 a share, which beat the
Zacks Consensus Estimate of $1.65. The earnings increased 9.5%
from $1.48 earned in the year-earlier quarter.
Total revenue grew 12.7% to $1,266.2 million from $1,123.5
million generated in the year-ago quarter. Total revenue missed
our expectation of $1,285.0 million.
Ensco attributed the deployment of new rigs over the past year
that increased utilization and average dayrate to the earnings
growth. Moreover, a full quarter of operations by ENSCO 8505 also
contributed to the growth.
Moreover, a full quarter of operations by ENSCO 8506 and ENSCO
DS-6 (the fourth Samsung DP3 drillship) for repeat customers
emphasized the benefits provided by fleet standardization. Ensco
ordered its eighth Samsung DP3 drillship, ENSCO DS-10 as well as
a premium jackup - ENSCO 110 - for delivery in early 2015, in
view of increased customer demand.
Third Quarter Segment Performance
In fourth quarter 2012, Ensco changed its reporting segments. The
Floaters segment now consists of all its drillships as well as
semisubmersibles. However, the Jackups and Other segments were
: Revenues jumped 9.0% to $787.9 million in the reported quarter
from the year-earlier level of $723.0 million. The improvement
was mainly backed by the addition of three newbuild floaters.
Rig utilization in this segment dropped to 79% from 90% in the
year-earlier quarter. Dayrate increased to $416,201 from the
year-earlier level of $362,197.
: Revenues from the Jackup fleet jumped to $459.6 million from
$380.8 million in the prior-year quarter, with average dayrate
climbing 15.6% to $125,434 from $108,540. Overall jackup
utilization increased to 90% from 87% in the year-earlier
: Revenues came in at $18.7 million, down 5.1% from $19.7 million
in the third quarter of 2012.
Costs and Expenses
On the cost front, depreciation expense increased 7.7%, contract
drilling expenses rose 22.1%, while general and administrative
expenses dropped 7.0% on a year-over-year basis.
Balance Sheet and Capex
At the end of the third quarter, Ensco had $325.4 million in
cash. Long-term debt (inclusive of current maturities) was
$4,731.1 million, with a debt-to-capitalization ratio of 27.5%
(compared with 28.1% in the preceding quarter).
With the completion of the construction phase of its 6 additional
rigs − scheduled to be delivered by the end of 2014 − Ensco is
expected to achieve significant growth. During the quarter, Ensco
received the delivery of ultra-deepwater drillship ENSCO DS-7 and
ultra-premium jackup ENSCO 120. Ensco has an $11 billion contract
revenue backlog, excluding bonus opportunities. The company's
solid backlog position provides it with excellent cash flow
visibility. Additionally, the company's impressive balance sheet
and sufficient liquidity help it to address operational or
The company retains a Zacks Rank #4 (Sell rating). However, there
are certain Zacks Ranked #1 stocks -
Stone Energy Corp.
Linn Energy LLC
) - that appear more rewarding for the short term.