Ensco plc (NYSE: ESV) reported diluted earnings per share from continuing operations of $0.99 for fourth quarter 2011, compared to $0.90 per share in fourth quarter 2010. There were no discontinued operations in fourth quarter 2011. Earnings from discontinued operations in fourth quarter 2010 were $0.03 per share related to rigs no longer in the Company’s fleet. Diluted earnings per share were $0.99 in fourth quarter 2011, compared to $0.93 per share in fourth quarter 2010.
Full year 2011 diluted earnings per share from continuing operations were $3.08, compared to $3.80 per share in 2010. There were no earnings from discontinued operations in 2011, compared to $0.26 per share a year ago. Diluted earnings per share were $3.08 in 2011, compared to $4.06 per share in 2010.
On 31 May 2011, Ensco plc acquired Pride International, Inc. in a cash and stock transaction. Results from Pride International are included in the Company’s fourth quarter 2011 results with no corresponding amount in fourth quarter 2010. As required by generally accepted accounting principles, former Pride International drilling contracts were adjusted to their estimated fair market values at the acquisition date. Fourth quarter 2011 revenues include approximately $29 million related to these adjustments.
Professional fees, severance payments and other integration-related costs associated with the Pride International acquisition totaled approximately $8 million, $0.03 per share, in fourth quarter 2011 general and administrative expense. For full year 2011, these integration-related costs were approximately $47 million, $0.23 per share. In addition, fourth quarter 2011 contract drilling expense included approximately $4 million, $0.02 per share, of severance and relocation costs related to the acquisition. For full year 2011, approximately $9 million, $0.05 per share, of these expenses were included in contract drilling expense.
Chairman, President and Chief Executive Officer Dan Rabun stated, “One year ago, we announced our plans to acquire Pride International, which we completed last May. We are realizing the anticipated benefits of the acquisition through our larger customer base, expanded geographic presence and wider range of enhanced rig capabilities. In particular, we now have the world’s youngest ultra-deepwater fleet, the largest fleet of active premium jackups, and a major presence in the most strategic offshore basins across six continents. We also have a distinct advantage from standardization within our fleet, especially the ENSCO 8500 Series® semisubmersibles, Samsung DP-3 drillships and Keppel FELS premium jackups. The integration of our operations and systems is proceeding well, and we are on track to achieve our targeted synergies in 2012 and beyond.”
Mr. Rabun added, “Customer demand for offshore drilling has strengthened significantly since we announced our acquisition last year, and we recently have signed multi-year contracts for three newbuild rigs. Two ultra-deepwater semisubmersibles, ENSCO 8505 and ENSCO 8506, were contracted in the U.S. Gulf of Mexico with repeat customers, and our first ultra-premium harsh environment jackup, ENSCO 120, was contracted in the Central North Sea. Our newbuild rigs, rising average day rates and higher utilization will drive Ensco’s future earnings growth.”
Revenues in fourth quarter 2011 were $1.0 billion, compared to $409 million a year ago. Approximately $481 million of the $593 million increase was related to the Pride International acquisition. Adding new ultra-deepwater rigs to the active fleet, higher deepwater segment utilization and average day rates, and an increase in jackup segment utilization contributed to the increase in revenues.
Contract drilling expense was $516 million, up from $186 million in fourth quarter 2010. Excluding $282 million from the effect of the Pride International acquisition, contract drilling expense increased $48 million. Newly delivered ultra-deepwater rigs and higher costs from improved utilization in the deepwater and jackup segments also increased expenses. Contract drilling expense included approximately $4 million, $0.02 per share, of integration-related costs such as severance.
Depreciation expense rose to $140 million from $57 million a year ago. Excluding $73 million from the effect of the Pride International acquisition, the $10 million increase was driven mostly by the addition of new ultra-deepwater rigs to the fleet.
General and administrative expense was $40 million, compared to $23 million in fourth quarter 2010. The effect of the Pride International acquisition added $9 million to general and administrative expense. Professional fees, severance payments and other integration-related costs associated with the Pride International acquisition totaled approximately $8 million, $0.03 per share, in fourth quarter 2011. Approximately $1 million of severance and other expense items for former Pride International operations is included in both the $9 million effect from the Pride International acquisition and $8 million of integration-related costs noted above. Therefore, adjusted for the effect of the Pride International acquisition and integration-related costs, general and administrative expense increased $1 million from fourth quarter 2010.
Other expense in fourth quarter 2011 was $28 million, compared to $400,000 in fourth quarter 2010. Other expense in fourth quarter 2011 included $41 million of interest expense, net of $17 million of interest that was capitalized, partially offset by $8 million of interest income and $5 million of foreign currency exchange gains included in other, net. In fourth quarter 2010, all interest expense was capitalized. The increase in interest expense is due to the issuance of senior notes in March 2011 to fund a portion of the Pride International acquisition and assuming Pride International’s debt.
Source: Ensco
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