ENSCO International Incorporated expects that its third quarter earnings per share will be in the range of $.38 to $.42, and that its fourth quarter earnings per share is expected to be in the range of $.25 to $.30. This trend in results is due primarily to a decline in Gulf of Mexico drilling activity.
The company also announced that one of its subsidiaries has received notice of Chevron (CVX)
's intent to effect early termination of the ENSCO I, a barge drilling rig under long-term contract with Chevron in Venezuela. Not included in the third quarter earnings estimate given above is approximately $15 million of revenue resulting in a gain of approximately $10 million after tax, or $.07 per fully diluted share, from the early termination of this contract, if finally consummated.
Carl Thorne, Chairman and CEO of ENSCO, said "Due to further deterioration in the Gulf of Mexico offshore rig market, we are experiencing increased downtime relative to our Gulf of Mexico jackup
rigs. Several oil and gas companies have suspended Gulf of Mexico drilling programs, as significant percentages of the drilling budgets were spent earlier in the year when natural gas prices were exceptionally high. The Company currently has three rigs that are in shipyards for planned work and six rigs that are between contracts, although several of these rigs have pending contract commitments. We continue to see pressure on day rates, and do not expect improvement in the Gulf of Mexico jackup rig market until late this year. We will use this opportunity to accelerate regulatory dry dockings and planned upgrades of our Gulf of Mexico jackup rig fleet. International jackup activity remains strong, and ENSCO continues to respond to inquiries for international work. The only international jackup the company currently has available is a North Sea rig that completed a contract earlier than anticipated."