Operators are showing more confidence in their ability to navigate the new post-Macondo permitting rules in the US Gulf of Mexico, providing just one more sign of an upbeat global outlook for deepwater drilling in 2012, Ensco International CEO Dan Rabun said Thursday.
Rabun offered his view during a conference call with analysts to discuss the drilling contractor's 2011 financial results, which included adjusted fourth-quarter earnings of $1.02/share that beat consensus expectations of $0.95. Shares of Ensco rose 4.7% Thursday to close at $59.17, just below their 52-week high of $60.31 in May and above a low of $37.39 from October.
"The Gulf of Mexico is now a catalyst for incremental demand," Rabun said, citing two long-term contracts for deepwater rigs signed recently for that region.
"US Gulf of Mexico demand continues to improve as evidenced by our multi-year agreements," Rabun said.
He referenced a pair of two-year deals for the recently constructed Ensco 8505 and 8506 semisubmersible floating rigs at dayrates of $470,000 and $530,000, respectively, for use in the Gulf by US independent Anadarko Petroleum.
In addition, Ensco said its first ultra-premium harsh environment jackup, the Ensco 120, has been contracted for use in the Central North Sea by Canada's Nexen at a dayrate of $230,000 once it becomes available next year.
Overall, Rabun painted a robust picture of operational growth in all rig classes for 2012, with a significant boost from Ensco's $8.6 billion acquisition of rival Pride International last year.
"We are realizing the anticipated benefits of the acquisition through our larger customer base, expanded geographic presence and wider range of enhanced rig capabilities," Rabun said.
For the quarter ended December 31, Ensco reported revenues of $1 billion, including a $481-million contribution from the former Pride assets. Net income came to $230 million, up 71% from the fourth quarter of 2010.
In its deepwater fleet, Ensco saw dayrates rise 26% from 2010 to $371,000 as utilization climbed to 80% from 67% in 2010.
The company predicted spending this year of $1.83 billion with $1.2 billion of that earmarked for costs of rigs under construction.
Ensco reported a 76% increase in net income for the quarter with $230 million.
"We think Ensco would be a prime beneficiary of increased drilling in Brazil and a return to drilling in the deepwater Gulf of Mexico, particularly if new regulations require the most modern equipment," noted Wells Fargo analyst Matt Conlan in his report on the company.
Drilling in the Gulf has been recovering in the wake of a moratorium that followed the 2010 disaster at BP's Macondo exploration well.
Shares of Ensco rose 4.7% Thursday to close at $59.17, just below their 52-week high of $60.31 in May and above a low of $37.39 from October.
