Rowan Companies Inc
) posted better-than-expected second quarter 2012 results, owing to
greater demand and higher day rates in the majority of markets. The
company's quarterly earnings from continuing operations came in at
51 cents per share, a penny ahead of the Zacks Consensus Estimate.
The quarterly results also surpassed the year-ago level of 38
Total revenue expanded more than 57% year over year to $351.0
million in the reported quarter, and beat our expectation of
$343.0 million. The outperformance was mainly attributable to
increased activity from fleet additions and higher utilization of
existing rigs between periods.
Dayrates and Utilization
The company's Gulf of Mexico rigs experienced a dayrate of
$119,100 (versus $118,700 in the year-ago quarter), Middle East
rigs saw a dayrate of $130,800 (versus $123,600 a year ago) and
North Sea rigs showed $234,500 (versus $195,300 in the year-ago
quarter). The overall dayrate of all offshore rigs was $154,000
(versus $133,300 in the second-quarter 2011). Average utilization
of the company's rig improved to 79% from 70% in the year-earlier
As of June 30, 2012, cash balance was $665.6 million and
long-term debt (including current maturities) was $1,491.7
million. Debt-to-capitalization ratio was 25.1% versus 20.4% in
the prior quarter.
Houston, Texas-based Rowan Companies Inc. is a provider of
international and domestic contract drilling and aviation
services. During the quarter, the company experienced strong
demand as well as solid dayrates for high-specification jackups
in most of the markets. Rowan also contracted the first of its
three newbuild ultra-deepwater drillships - Rowan
As part of Rowan's efforts to diversify its markets
geographically, the company has also taken the decision to move
its official headquarters to the U.K., since most of its business
comes from outside the U.S. Rowan is the seventh largest offshore
drilling contractor in the world and the fifth largest jackup rig
) is the world's largest offshore drilling contractor.
Considering the volatile macro backdrop along with operational
hindrances that could put pressure on the company's performance
in the upcoming quarters, we see restricted upside potential for
Rowan's shares and expect the company to be on par with the
industry. Therefore, we maintain our long-term Neutral
Rowan also holds a Zacks #3 Rank that translates to a
short-term Hold rating.
ROWAN COS PLC (RDC): Free Stock Analysis Report
TRANSOCEAN LTD (RIG): Free Stock Analysis
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