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Ensco (ESV) Q4 Loss Wider than Expected, Revenues Fall Y/Y

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Ensco plc (ESV - Free Report) reported adjusted fourth-quarter 2018 loss of 39 cents a share, wider than the Zacks Consensus Estimate of a loss of 38 cents and the year-ago loss of 23 cents.

Total revenues amounted to $399 million, down from $454.2 million in the year-ago quarter. The top line also missed the Zacks Consensus Estimate of $401.6 million.

The company’s results were impacted by lower utilization for the floater fleet, decreasing realized dayrates and higher depreciation costs. These factors were partially offset by the addition of four rigs to the active fleet.

Ensco plc Price, Consensus and EPS Surprise

Ensco plc Price, Consensus and EPS Surprise | Ensco plc Quote

Segmental Performance

Floaters: Revenues came in at $227.8 million compared with $302.8 million in the prior-year quarter. The downside was primarily due to the sale of ENSCO 6001. Decline in average day rate to $258,759 from $306,937 in the year-ago quarter also attributed to the revenue decline.

Reported utilization was 40%, down from the year-ago quarter’s 44%. Adjusted for rigs that are not under contract and planned downtime, operational utilization was 97%, in line with the prior-year quarter.

Jackups: Revenues totaled $155.5 million compared with $136.5 million in the prior-year period, as reported utilization rose to 62% from 54% in fourth-quarter 2017. Moreover, average day rates marginally rose to $76,222 from $76,037 in the prior-year quarter. However, adjusted for uncontracted rigs and planned downtime, operational utilization in the reported quarter was 97% compared with 98% in the year-ago period.

Other: Revenues increased to $15.7 million from $14.9 million in fourth-quarter 2017. Contract drilling expenses rose to $13.4 million from $12.9 million in the year-ago quarter.

Costs and Expenses

Depreciation expenses jumped to $122.4 million from $119.5 million in fourth-quarter 2017. This was due to the inclusion of four rigs to the active fleet. General and administrative expenses fell to $23.6 million from $70.9 million in the prior-year quarter. Overall contract drilling expenses fell 3% from the prior-year quarter to $322.8 million.

Balance Sheet

At the end of the fourth quarter, Ensco had $275.1 million in cash and cash equivalents. Long-term debt (including current maturities) was $5,010.4 million, with net debt-to-capitalization ratio of 38.2%.

Zacks Rank and Stocks to Consider

Currently, Ensco carries a Zacks Rank #3 (Hold). Investors interested in the energy sector can opt for some better-ranked stocks as given below:

Enbridge Inc. (ENB - Free Report) is a Calgary, Canada-based energy infrastructure provider. The company delivered average positive earnings surprise of 31.8% in the trailing four quarters. It currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Madrid, Spain-based Repsol, S.A. (REPYY - Free Report) is an integrated energy company. Its bottom line for 2019 is expected to increase 13.7% year over year. The company delivered average positive earnings surprise of 9% in the trailing four quarters. The stock currently has a Zacks Rank #2.

Austin, TX-based Jones Energy, Inc. (JONE - Free Report) is an exploration and production company. For 2019, its bottom line, which has witnessed one upside revision over the past 60 days, is expected to grow 19% year over year. The company currently holds a Zacks Rank #2.

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