ENSCO PLC (NYSE:ESV) posted earnings of $0.28 per share for 3Q2016 compared to EPS of $1.24 a year earlier. Results from discontinued businesses came at zero cents per share in reported quarter and a loss of $0.10 a share in the comparable period. EPS from continuing businesses came at $0.28 for 3Q2016 against $1.34 a year earlier.
The management speaks
Carl Trowell, the President and CEO of ENSCO, said that market conditions continue to be tough for the offshore drilling division due to lower rig demand as consumers restrict capital spending. The focus is more on areas that the company believe can control, mainly expense management, capital discipline and operational excellence.
Trowell added that they have recorded progress on all fronts with safety performance and operational utilization, a 1-year extension of a part of revolving credit facility, additional expense savings and incremental debt repurchases to lessen balance sheet leverage.
After September 2016, the company has recorded best-ever safety show with a recordable incident rate coming at 0.22. Fleetwide operational utilization stood at 99%. Effective October 4, 2016, the firm extended maturity date for a part of revolving credit facility by 1 year into 2020.
ENSCO have taken additional measures since mid-year 2016 to minimize the expense base by lowering onshore support personnel and halting a discretionary compensation program. In aggregate, these measures are anticipated to lower costs by nearly $50 million on yearly basis from 2Q2016 levels. This supplements considerable expense savings recorded through fleet rearrangement during the market downturn.
The performance
ENSCO reported that revenues came at $548 million in 3Q2016 against revenue of $1.012 billion in the same period, a year earlier. This decline can be attributed to a drop in reported utilization, which came at 53% compared to 62% last year. Revenue reported in 3Q2015 included $129 million from initial contract dissolutions. The average fleet day rate stood at $184,000 in 3Q2016 compared to $232,000 a year earlier. Contract drilling expense came at $298 million, down from $434 million reported in last year following disciplined expense management and fewer rig operating days.
