Rowan Profits Jump in 3Q

Rowan Companies, Inc. said profit in the third quarter jumped 50% on overseas demand for its offshore oil rigs and drilling services. The Houston drilling contractor and equipment maker said profit in the three months ended Sept. 30 rose to $130.8m, or $1.16 a share, from $87m, or 78 cents a share, in the year-earlier period. Profit in the most recent quarter included a penny a share in gains on asset sales. Revenue rose 20% to $502.2m, short of the $530m anticipated by Wall Street. Shares fell 2.1% to $38.17 by the close compared with a 1% drop in the Philadelphia Oil Service Index. Rowan said revenue from its drilling operations rose 27% to $369m as the pace of activity on its offshore rigs quickened, and it got paid more for daily operations. Its offshore rig utilization rate increased to 99% from 91% a year ago, while its offshore day rate jumped 8% to $158,200. Its land rig utilization rate, in contrast, fell 2 percentage points to 96% while its day rates for those rigs edged up 1%. The business of providing land rigs, which typically service the natural gas industry, has been sluggish as natural gas prices have fallen, prompting natural gas producers to scale back projects. Oil drilling demand, in contrast, has surged as crude prices have raced past $90 a barrel. Third-quarter rates for operating off-shore rigs in the North Sea, for instance, jumped 42% to $238,400, said Rowan. Reportedly, the company has received a letter of intent from an oil major for two years of work off the coast of Angola. Its rig the Gorilla VII should begin that work in the first quarter, generating revenue of about $264m. The company said it is close to finalizing a six-month commitment for its Gorilla II rig in the Gulf of Mexico that will fetch a day rate of $195,000, or 11% more than its current rate. It is negotiating a six-month extension of the Gorilla VI in the North Sea for a day rate of over $300,000. It said it plans to expand its fleet of jack-up rigs, or oil drilling rigs that have telescoping legs that rest on the ocean floor, by building six more jack-ups over the next four years. [Source: http://www.marketwatch.com]