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Analyst Blog

Rowan Companies plc’s (RDC - Analyst Report) adjusted third quarter 2013 earnings from continuing operations came in at 42 cents per share, beating the Zacks Consensus Estimate by a penny.

Quarterly earnings also improved from the adjusted year-ago profit level of 39 cents. The growth was mainly attributable to higher average dayrates, increased activity from fleet additions and higher utilization of existing rigs between periods.

Total revenue grew 8.2% year over year to $382.8 million in the reported quarter and beat our expectation of $382.0 million.

Dayrates and Utilization

The company’s Gulf of Mexico rigs experienced a dayrate of $140,200 (versus $120,400 in the year-ago quarter), Middle East rigs saw a dayrate of $137,200 (versus $129,300 a year ago) and North Sea rigs’ dayrate was $281,100 (versus $250,200 in the year-ago quarter).

The overall dayrate of all offshore rigs was $169,200 (versus $161,500 in third-quarter 2012). Average utilization of the company’s rigs improved to 80% from 75% in the year-earlier quarter.


As of Sep 30, 2013, the cash balance was $1,008.9 million and long-term debt (including current maturities) was $2,008.9 million. The debt-to-capitalization ratio was 29.6% versus 29.9% in the prior quarter.

To Conclude

Houston, Texas-based Rowan Companies is a provider of international and domestic contract drilling and aviation services. During the quarter, the company experienced strong demand as well as solid dayrates for high-specification jackups in most of the markets.

Going forward, Rowan expects further strengthening in the jackup markets, especially demand for high-spec rigs, along with strong demand and encouraging new fixtures in the ultra-deepwater markets. To capitalize on this, the company is focused on improving the operation of newbuild drillships. Rowan expects rising demand and the resultant higher jackup day rates to lead to strong earnings growth.
Rowan holds a Zacks Rank #3 (Hold). However, there are other companies in the oil and gas industry that are expected to perform well in the short term. These include TransAtlantic Petroleum Ltd (TAT - Snapshot Report), Matador Resources Co. (MTDR - Snapshot Report) and Northern Oil and Gas, Inc. (NOG - Snapshot Report) with a Zacks Rank #1 (Strong Buy).