$恩斯克国际(ESV)$ Ensco plc Reports Fourth Quarter and Full-Year 2018 Results
Shareholders Approve Merger with Rowan That Will Create an Industry-Leading Offshore Driller
Diverse High-Quality Fleet Leads to Contracting Success Across Water Depths and Geographies
ENSCO 123 Awarded Maiden Contract
Strong Operational and Safety Performance

February 27, 2019 06:54 PM Eastern Standard Time
LONDON--(BUSINESS WIRE)--Ensco plc (NYSE: ESV) today reported a loss of $0.47 per share for fourth quarter 2018 compared to a loss of $0.49 per share in fourth quarter 2017.

Several items influenced these comparisons:

$40 million or $0.09 per share of non-cash asset impairments recognized in fourth quarter 2018 compared to $183 million or $0.43 per share of non-cash asset impairments in fourth quarter 2017
$4 million or $0.01 per share of transaction costs related to the planned Rowan merger included in fourth quarter 2018 general and administrative expense compared to $49 million or $0.11 per share of transaction costs related to the Atwood acquisition in fourth quarter 2017, of which $42 million is included in general and administrative expense and $7 million in contract drilling expense
$6 million or $0.01 per share of discrete tax benefit in fourth quarter 2018 tax provision compared to $19 million or $0.05 per share of discrete tax expense in fourth quarter 2017 tax provision
$3 million or $0.01 per share benefit from the recovery of certain costs related to an ongoing legal matter included in fourth quarter 2018 general and administrative expense
$140 million or $0.33 per share bargain purchase gain related to the Atwood acquisition included in fourth quarter 2017 other income
Adjusted for the items noted above, the loss was $0.39 per share in fourth quarter 2018 compared to a loss of $0.23 per share in fourth quarter 2017.

Chief Executive Officer and President Carl Trowell said, “Last week, we were pleased to receive overwhelming approval from Ensco shareholders to merge with Rowan. Following closing of the transaction, Ensco and Rowan shareholders will benefit from $165 million of anticipated expense synergies that are expected to create approximately $1.1 billion of capitalized value. Furthermore, this combination will create an industry-leading offshore driller across all water depths that will provide shareholders of both companies with even greater upside as the industry recovery unfolds.”

Mr. Trowell added, “Despite recent oil price volatility, customer demand for offshore drilling rigs continues increasing at a measured rate as evidenced by higher levels of contracting and tendering activity, particularly for assets that deliver the greatest efficiencies for offshore well programs. By virtue of our diverse high-quality fleet, Ensco was awarded new contracts or extensions for several rigs including a one-year extension for drillship ENSCO DS-10 offshore Nigeria, a two-well contract for semisubmersible ENSCO DPS-1 offshore Australia and a multi-year contract offshore Saudi Arabia for jackup ENSCO 76. High-specification harsh environment jackup ENSCO 123 also won a two-well job in the North Sea that will serve as the rig’s maiden contract.”

Mr. Trowell concluded, “We delivered strong operational and safety results in 2018, with 98% operational uptime and a total recordable incident rate significantly better than the industry average. We also advanced new technologies and innovative solutions aimed at improving the drilling process and helping to reduce customers’ offshore project costs. By consistently providing safe operations and utilizing innovation and technology to drive efficiencies, we will continue to differentiate our performance from the competition.”

Fourth Quarter Results

Revenues decreased to $399 million in fourth quarter 2018 from $454 million a year ago primarily due to lower utilization for the floater fleet, the sale of two rigs that operated in the year-ago period and a decline in the average day rate to $129,000 from $157,000 in fourth quarter 2017. This was partially offset by the addition of ENSCO DS-9, ENSCO DS-10, ENSCO 140 and ENSCO 141 to the active fleet. Reported utilization increased to 53% from 50% in fourth quarter 2017.

Contract drilling expense declined to $323 million in fourth quarter 2018 from $334 million a year ago due to the sale of two rigs that operated in the year-ago period, lower rig reactivation expenses and $7 million of integration-related transaction costs related to the Atwood acquisition in fourth quarter 2017. This was partially offset by higher costs for four rigs that were added to the active fleet during 2018.

Fourth quarter 2018 results included a non-cash asset impairment of $40 million related to an older jackup rig compared to an impairment charge of $183 million recognized in fourth quarter 2017.

Depreciation expense increased to $122 million in fourth quarter 2018 from $120 million a year ago due to the addition of four rigs to the active fleet, partially offset by lower depreciation expense for assets that have been sold, fully depreciated or subject to impairment charges.

General and administrative expense declined to $24 million from $71 million a year ago. Adjusted for $4 million of transaction costs in fourth quarter 2018 related to the planned Rowan merger and $42 million of transaction costs in fourth quarter 2017 related to the Atwood acquisition, general and administrative expense was $20 million compared to $29 million a year ago. The year-to-year comparison was also influenced by the realization of synergies from the Atwood acquisition and a $3 million benefit from the recovery of certain costs related to an ongoing legal matter in fourth quarter 2018.

Other expense was $70 million in fourth quarter 2018 compared to other income of $87 million a year ago. Adjusted for a $140 million bargain purchase gain recognized upon closing the Atwood acquisition in fourth quarter 2017, other expense was $70 million compared to $53 million a year ago. Interest expense in fourth quarter 2018 was $69 million, net of $18 million of interest that was capitalized, compared to interest expense in fourth quarter 2017 of $57 million, net of $18 million of interest that was capitalized. The increase in interest expense was due to the issuance of new senior notes during first quarter 2018 and higher revolving credit facility commitment fees.

Tax expense decreased to $23 million in fourth quarter 2018 from $42 million a year ago. As noted above, the fourth quarter 2018 tax provision included $6 million of discrete tax benefit compared to $19 million of discrete tax expense in fourth quarter 2017. The decline in discrete tax expense was primarily related to changes in U.S. tax legislation that were enacted in fourth quarter 2017.

Segment Highlights

Floaters

Floater revenues decreased to $228 million in fourth quarter 2018 from $303 million a year ago due to a four percentage point decline in reported utilization and a decline in average day rates to $259,000 from $307,000 in fourth quarter 2017. These year-to-year comparisons were influenced by the sale of ENSCO 6001, which operated in the prior-year period, and the addition of ENSCO DS-9 and ENSCO DS-10 to the active fleet. Adjusted for uncontracted rigs and planned downtime, operational utilization was 97%, consistent with the year-ago period.

Contract drilling expense decreased to $173 million in fourth quarter 2018 from $193 million a year ago primarily due to the sale of ENSCO 6001 and a decline in reported utilization, which were partially offset by higher costs associated with rigs joining the active fleet.

Jackups

Jackup revenues were $156 million in fourth quarter 2018 compared to $137 million a year ago primarily due to an eight percentage point increase in reported utilization. These year-to-year comparisons were influenced by the addition of ENSCO 140 and ENSCO 141 to the active fleet, and the sale of ENSCO 80, which operated in the prior-year period. Adjusted for uncontracted rigs and planned downtime, operational utilization was 97% compared with 98% a year ago.

Contract drilling expense increased to $136 million in fourth quarter 2018 from $128 million a year ago primarily due to an increase in reported utilization and the addition of ENSCO 140 and ENSCO 141 to the active fleet. These items were partially offset by lower rig reactivation expenses in fourth quarter 2018 and the sale of ENSCO 80 as noted above.

Other

Other is composed of managed drilling rigs. Revenues increased to $16 million from $15 million in fourth quarter 2017, while contract drilling expense of $13 million was consistent with the year-ago period.