For the quarter ended June 30, 2001, Chiles Offshore Inc.
reported net income of $5.0 million or $0.28 per basic share compared to net income of $3.3 million, or $0.42 per basic share, reported for the corresponding quarter ended June 30, 2000. Revenue for the quarter ended June 30, 2001, was $19.6 million compared to revenue of $14.5 million for the corresponding quarter ended June 30, 2000.
For the six-month period ended June 30, 2001, the Company reported net income of $10.3 million or $0.59 per basic share, on revenue of $38.2 million. Net income for the comparable period in 2000 was $3.1 million or $0.45 per basic share on revenue of $23.0 million.
For the quarter ended June 30, 2001, the rig fleet operated at 100% utilization and generated an average dayrate of $71,895, as compared to 100% utilization and an average dayrate of $55,374, for the corresponding quarter ended June 30, 2000.
As previously reported, in September 2000, the Company was served a legal action which was filed by an offshore worker employed by another drilling contractor on behalf of himself and those similarly situated, naming most of the offshore drilling contractors as defendants, including the Company. Filed in the U.S. District Court
, Southern District, Galveston Division, the action seeks to have the court certify a nationwide class and to recover damages to be proved, as well as treble damages, attorney's fees, expenses, costs and other relief deemed appropriate, for alleged violations of federal and state antitrust laws and for engaging in alleged unfair trade practices by suppressing wages and benefits of offshore workers.
While the Company believes that it has valid defenses in this matter, the Company has determined that protracted litigation will be a distraction to the operation of its business and consequently has agreed to settle the litigation out of court for a conditional payment of $1.0 million. As of June 30, 2001, the Company has fully accrued for the settlement amount, including legal expenses, classified as general and administrative expenses. The ultimate payment of the accrued amount is conditioned upon, among other things, the plaintiff being able to establish a valid nationwide class.
The impact of the $1.0 million settlement on earnings per basic share was $0.04 for the quarter ended June 30, 2001 and $0.04 for the six-month period ended June 2001. In July 2000, the Company entered into an agreement with Perforadora Central, S.A. de C.V. ("Perforadora"), a Mexican company, to acquire all of the equity of an entity that will own the ultra-premium jackup rig Tonala, which has been operated by the Company under a bareboat charter since the completion of construction of the rig in April 2000. Under the terms of the agreement, the Company will issue 2,679,723 shares of common stock and assume debt guaranteed by the U.S. Maritime Administration, which was approximately $61.7 million on June 30, 2001. The Company now expects the acquisition to close in July 2001, at which time the bareboat charter expense will cease. In November 2000, the Company and Perforadora agreed to enter into an amendment to the original agreement whereby the Company will be treated, from a commercial standpoint, as if it would have owned the Tonala since the date of the original agreement. Thus, the Company will be credited for cash flow received and charged for debt service payments made after July 2000.
William Chiles, Chief Executive Officer of the Company, commented: "Our two rigs currently under construction, the Chiles Discovery, at the Keppel FELS shipyard in Singapore, and the Chiles Galileo, at the AMFELS shipyard in Brownsville, Texas, are presently "on schedule" for delivery and commissioning during the second and third quarters of 2002, respectively. As previously announced, we have executed a Notice of Award with an affiliate of Phillips Petroleum for a drilling contract of approximately 600 days for operation of the Chiles Discovery in the Timor Gap Zone of Cooperation between Australia and East Timor."