Ensco plc (ESV) reported today that diluted earnings per share were $1.54 in fourth quarter 2013 compared to $0.94 in fourth quarter 2012. Discontinued operations primarily related to rigs and other assets no longer on the Company’s balance sheet reduced earnings by $0.02 per share in fourth quarter 2013 and $0.10 per share in fourth quarter 2012. Diluted earnings per share from continuing operations increased to $1.56 in fourth quarter 2013 from $1.04 a year ago.
Certain items influenced earnings per share from continuing operations comparisons year to year. Provision for income taxes in fourth quarter 2012 included $75 million, $0.33 per share, in discrete tax items including $51 million related to restructuring certain subsidiaries from the 2011 acquisition and $24 million of additional discrete tax items primarily related to adjustments of certain prior year tax positions. Adjusted for these items, fourth quarter earnings per share from continuing operations increased 14% to $1.56 from $1.37 a year ago.
Full-year 2013 diluted earnings per share were $6.07 compared to $5.04 in 2012. Discontinued operations resulted in a loss of $0.02 per share in 2013 and $0.19 per share in 2012. Diluted earnings per share from continuing operations increased 16% to $6.09 in 2013 from $5.23 per share in 2012. In 2013, revenues grew 14% to a record $4.920 billion and net income increased 21% to a record $1.418 billion.
Chairman, President and Chief Executive Officer Dan Rabun stated, “The past year has been a period of remarkable growth for Ensco. We achieved record revenues and earnings as we added three new ultra-deepwater rigs to our active fleet. Each of these rigs commenced work on multi-year contracts for repeat customers, reinforcing the advantages of fleet standardization.”
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“We also accepted delivery of our first two ultra-premium, harsh environment ENSCO 120 Series jackups,” Mr. Rabun added. “Both rigs were contracted well in advance of their delivery dates through direct negotiations with customers for multi-year programs. The patented cantilever system on these rigs provides significant drilling efficiencies.”
Mr. Rabun concluded, “Ensco’s fleet will continue to grow as we complete the construction of six additional rigs scheduled for delivery through 2016. Highgrading our fleet with technologically-advanced rigs is a key element of our success in achieving the highest levels of customer satisfaction. Recently, Ensco once again was rated #1 in total customer satisfaction by EnergyPoint, an independent research firm. This is the fourth year in a row and our offshore crews and onshore personnel are to be commended for this impressive accomplishment."
Fourth Quarter Results
Revenues grew 16% to $1.256 billion in fourth quarter 2013 from $1.086 billion a year ago. The average day rate for the fleet increased 16% to $230,000, mostly due to the addition of ENSCO 8506, ENSCO DS-6 and ENSCO DS-7 to the active fleet, as well as higher day rates for several floaters and an increase in the jackup segment average day rate.
Contract drilling expense was $616 million compared to $525 million in fourth quarter 2012. In fourth quarter 2012, favorable settlements of $11 million and deferred expenses related to shipyard upgrades reduced contract drilling expense. Adjusted for these items, contract drilling expense increased 13% year to year. This increase was primarily due to adding new floaters to the active fleet, as well as a previously anticipated increase in unit labor costs.
Floater revenues grew 16% to $779 million in fourth quarter 2013 from $672 million a year ago, primarily due to the commencement of new contracts for ENSCO 8506, ENSCO DS-6 and ENSCO DS-7. The average day rate increased 19% to $438,000 from $368,000 in fourth quarter 2012.
Reported utilization was 73% compared to 83% a year ago, mostly due to two factors. ENSCO 5002 and ENSCO 5004 were idle during fourth quarter 2013 due to the bankruptcy of OGX, a Brazilian operator. ENSCO 5000, which was stacked during fourth quarter 2013, was contracted during fourth quarter 2012. Adjusted for planned downtime and uncontracted rigs, operational utilization was 89% compared to 90% in fourth quarter 2012.
Floater contract drilling expense was $393 million in fourth quarter 2013, up 26% from $313 million in fourth quarter 2012. A growing active floater fleet contributed to this increase along with higher unit labor costs. In fourth quarter 2012, favorable settlements of $11 million and deferred expenses related to shipyard upgrades reduced contract drilling expense. Adjusted for these items, contract drilling expense increased 18% year to year.
Jackup revenues grew 17% to $461 million, up from $393 million a year ago. The increase was mostly due to a $16,000 increase in the average day rate to $127,000 driven by strong customer demand around the world. Reported utilization was 89% compared to 87% a year ago. Adjusted for planned downtime and uncontracted rigs, operational utilization was 97% compared to 99% in fourth quarter 2012. Contract drilling expense increased 7% to $211 million, mostly due to an increase in unit labor costs.