Rowan 3Q Operating Results

Wednesday, November 05, 2008

For the three months ended September 30, 2008, Rowan Companies, Inc. (NYSE: RDC) generated net income of $114.1m or $1.00 per share, compared to $130.8m or $1.16 per share in the third quarter of 2007 and $120.6m or $1.06 per share in the second quarter of 2008. Revenues were $527.1m in the third quarter of 2008, compared to $502.2m in the third quarter of 2007 and $587.1m in the second quarter of 2008.

The third quarter 2008 results included $21.4m, or $0.12 per share, of gains on asset sales, compared to $1.1m, or less than $0.01 per share, in the third quarter of 2007 and $1.5m, or $0.01 per share, in the second quarter of 2008.

Rowan's offshore rig utilization was 95% during the third quarter of 2008, compared to 96% in the second quarter of 2008 and 99% in the prior-year quarter, with much of the downtime in 2008 associated with rig relocations or modifications. The Company's average offshore day rate was $161,100 during the third quarter of 2008, down by $500 or less than 1% from the second quarter of 2008 and up by $2,900 or 2% over the third quarter of 2007. Rowan's land rig utilization was 97% during the third quarter of 2008, unchanged from the second quarter of 2008 and up from 96% in the prior-year quarter. The Company's average land rig day rate was $20,900 during the third quarter of 2008, down by $1,700 or 8% from the second quarter of 2008 and by $2,400 or 10% from the third quarter of 2007.

Rowan's drilling operations generated revenues of $357.1m during the third quarter of 2008, down by 3% from both the second quarter of 2008 and the prior-year quarter. The Company's income from drilling operations was $166.9m or 47% of revenues during the third quarter of 2008, up by 6% over the second quarter of 2008, but down by 9% from the third quarter of 2007.

Rowan's manufacturing operations generated external revenues of $170m during the third quarter of 2008, down by 23% from the second quarter of 2008, but up by 27% over the prior-year quarter. The Company's income from manufacturing operations was $5.3m during the third quarter of 2008, down by 78% from the second quarter of 2008 and by 64% from the third quarter of 2007.

Danny McNease, Chairman and Chief Executive Officer, commented, "As previously reported, our third quarter financial performance was impacted by Hurricane Ike, which caused the loss of our oldest offshore drilling rig, the Rowan-Anchorage, and significantly disrupted our Houston manufacturing operations.

"The recent capital markets and commodity price weakness have adversely affected opportunities for monetizing our investment in LTI for what we believe to be adequate value for Rowan stockholders. Therefore, at this time, we are not pursuing any further negotiations with potential partners. However, we will continue to review all strategic options, including a spin-off of LTI to our stockholders. We do not anticipate that a transaction, if any, will be completed until capital market conditions improve significantly.

"Continuing weakness in capital markets and commodity prices will, eventually, affect customer demand for our products and services, though we have experienced little impact thus far. To the contrary, we have over the past two months added significantly to our backlog of business, including almost $300m of term drilling contracts for our two newbuild jack-ups to be delivered later this month. We see continuing firm demand in both domestic and foreign markets for the right type of equipment having a proven drilling organization behind it.

"Thus, we remain optimistic for the prospects of our seven other jack-ups currently under construction or on order, though we are reviewing the scheduled timing of our third and fourth 240-C class jack-up rigs, currently planned for delivery in 2010 and 2011, for opportunities to preserve near-term liquidity. Of course, it's our continuing ownership of LTI that gives us the flexibility to alter these construction schedules, if that becomes necessary."

Rowan Companies, Inc. is a provider of international and domestic contract drilling services. The company also owns and operates a manufacturing division that produces equipment for the drilling, mining and timber industries. The Company's stock is traded on the New York Stock Exchange. Common Stock trading symbol: RDC.

(www.rowancompanies.com)

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