GlobalSantaFe Reports 1Q Results

GlobalSantaFe Corporation reported net income for the quarter ended March 31, 2002, of $77.1 million, or $0.33 per diluted share, on revenues of $464.0 million. This compares to net income of $40.7 million, or $0.34 per diluted share, on revenues of $274.8 million for the quarter ended March 31, 2001. The 2001 financial results reflect only historical Global Marine, prior to the merger that formed GlobaSantaFe, so some comparisons to these results may not be meaningful.

"I continue to be very pleased with our progress in completing the integration of Global Marine and Santa Fe International into an industry leader," GlobalSantaFe President and CEO Sted Garber said. "Evidence of our success can be found in the strong operating performance in our first full quarter together and the enthusiastic response from our customers."

GlobalSantaFe's contract drilling business reported solid first quarter financial results, recording operating income of $97.5 million. With about 76 percent of its offshore rigs in international markets, which are generally strong, the company's financial performance remained largely insulated from the comparatively weak U.S. Gulf of Mexico drilling market. This significant international presence allowed the company to achieve a worldwide offshore fleet utilization of 88 percent in the first quarter, compared to the industry's worldwide offshore fleet utilization of 76 percent. During the quarter, the company had seven offshore rigs out of service for various periods for planned upgrades and maintenance, and two rigs out for repairs.

Operating income for GlobalSantaFe's worldwide drilling management services segment was $7.7 million for first quarter 2002. In the Gulf of Mexico, the company's domestic drilling management services subsidiary, Applied Drilling Technology Inc., had a total of 23 turnkey projects during the first quarter-18 turnkey wells and five turnkey well completions. While this project level is up 28 percent from fourth quarter 2001, it is down from activity levels in first quarter 2001. Despite the lower activity level, ADTI's operating income for first quarter 2002 was significantly higher than in the same quarter last year. This improvement reflects ADTI's excellent operating performance, which has remained strong for the last four quarters.

Market Outlook

"Looking forward," Garber said, "we anticipate most international markets to continue to be strong in 2002, as oil prices remain above a range that our major oil company customers require for their drilling programs. With a significant portion of our revenues coming from major oil company customers, our international offshore rigs are expected to continue to enjoy high utilization at attractive dayrates. Approximately 60 percent of the company's available offshore rig days for the remainder of the year are already committed, but in the U.S. Gulf of Mexico our contracts are short, allowing us to take advantage of the upside potential as that market improves. An average annual increase of $10,000 in Gulf of Mexico dayrates for each of the company's 10 jackup rigs can result in approximately $0.10 per share in additional annual earnings."

Speaking about the outlook for the domestic offshore drilling market, Garber commented: "The market is starting to show signs of improvement. Industry jackup rig utilization for the Gulf of Mexico averaged 57 percent during the first quarter of 2002, up from 54 percent in the fourth quarter of 2001. Because demand is strongest for high-specification rigs, GlobalSantaFe's premium jackup fleet was able to achieve an average utilization of 89 percent in the Gulf of Mexico during the first quarter, and recently contracted dayrates for its 300-foot jackup rigs have increased by several thousand dollars per day. We are optimistic the recent strength in U.S. natural gas prices will boost drilling activity in the area as cash-flow sensitive independent exploration and production companies ramp-up their 2002 drilling programs, which should ultimately push dayrates higher."