Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Oil and natural gas driller Ensco plc (ESV - Analyst Report) reported impressive second quarter 2013 results on the back of increased utilization, rising customer demand as well as new rigs joining the fleet.

Diluted second quarter earnings were $1.55 a share, which surpassed the Zacks Consensus Estimate of $1.50. Earnings increased 6.9% from $1.45 earned in the year-earlier quarter.

Total revenue grew 16.5% to $1,248.1 million from $1,071.1 million generated in the year-ago quarter. Total revenue also beat our expectation of $1,234.0 million.

Ensco attributed the deployment of new rigs over the past year that increased utilization and average dayrate and aided earnings growth. Moreover, a full quarter of operations for ENSCO 8505 also contributed to the growth.

A full quarter of operations by ENSCO 8506 and ENSCO DS-6 (the fourth Samsung DP3 drillship) for repeat customers emphasized the benefits provided by fleet standardization. Ensco ordered its eighth Samsung DP3 drillship, ENSCO DS-10 as well as a premium jackup – ENSCO 110 – for delivery in early 2015, in view of increased customer demand.

Second Quarter Segment Performance

In fourth quarter 2012, Ensco changed its reporting segments. The Floaters segment now consists of all its drillships as well as semisubmersibles. However, the Jackups and Other segments were unaffected.

Floaters: Revenues jumped 22.3% to $823.4 million in the reported quarter from the year-earlier level of $673.4 million. The improvement was mainly backed by the addition of three newbuild floaters.

Rig utilization in this segment dropped to 86% from 92% in the year-earlier quarter. Dayrate increased to $399,316 from the year-earlier level of $351,963.

Jackups: Revenues from the Jackup fleet jumped to $404.4 million from $376.6 million in the prior-year quarter, with its average dayrate climbing 15.9% to $122,083 from $105,356. However, overall jackup utilization decreased to 83% from 90% in the year-earlier quarter.

Other: Revenues came in at $20.3 million, down 4.7% from $21.3 million in the second quarter of 2012.

Costs and Expenses

On the cost front, depreciation expense increased 12.2%, contract drilling expenses rose 22.8%, while general and administrative expenses dropped 2.5% on a year-over-year basis.

Balance Sheet and Capex

At the end of the second quarter, Ensco had $489.8 million in cash. Long-term debt (inclusive of current maturities) was $4,806.2 million, with a debt-to-capitalization ratio of 28.1% (compared with 28.6% in the preceding quarter).

With the completion of the construction phase of its 6 additional rigs − scheduled to be delivered by the end of 2014 − Ensco is expected to achieve significant growth. Ensco has $11 billion contract revenue backlog, excluding bonus opportunities. The company’s solid backlog position provides it with excellent cash flow visibility. Additionally, the company’s impressive balance sheet and sufficient liquidity help it to address operational or corporate needs.

Zacks Rank

The company retains a Zacks Rank #3 (short-term Hold rating). However, there are certain Zacks Ranked #1 stocks – Memorial Production Partners L.P. (MEMP - Snapshot Report), Gulfmark Offshore, Inc. (GLF - Snapshot Report) and Dril-Quip, Inc. (DRQ - Analyst Report) – that appear more rewarding in the short term.
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
BITAUTO HOLD BITA 35.33 +14.82%
ANI PHARMACE ANIP 24.79 +14.66%
E HOUSECHINA EJ 10.99 +9.24%
CANADIAN SOL CSIQ 26.97 +7.15%
INTERNATIONA ICAGY 33.30 +5.38%