Post Earnings Coverage as Ensco Reported Quarterly Profit

Upcoming AWS Coverage on Enerplus Post-Earnings Results

LONDON, UK / ACCESSWIRE / March 15, 2017 / Active Wall St. announces its post-earnings coverage on Ensco PLC (NYSE: ESV). The Company reported its financial results for the fourth quarter fiscal 2016 and full year 2016 on February 27, 2017. The offshore contract drilling services Company surpassed earnings expectations. Register with us now for your free membership at:

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One of Ensco’s competitors within the Oil & Gas Drilling & Exploration space, Enerplus Corp. (NYSE: ERF), reported on February 24, 2017, its financial and operating results for the quarter and year ended December 31, 2016 , along with year-end 2016 reserves. AWS will be initiating a research report on Enerplus in the coming days.

Today, AWS is promoting its earnings coverage on ESV; touching on ERF. Get our free coverage by signing up to:

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Earnings Reviewed

Continued Operations

Ensco’s revenues from continuing operations were $505 million in the quarter ended December 31, 2016, compared to $828 million a year ago, primarily due to a decline in reported utilization to 51% from 63% in Q4 2015. The Company’s revenue numbers fell short of analysts’ consensus of $509 million. The average day rate for the fleet declined to $177,000 in the reported quarter from $216,000 in the year earlier comparable quarter.

Ensco’s contract drilling expense declined to $289 million in Q4 2016 from $415 million a year ago. Excluding a $17 million provision for doubtful accounts in the year-ago same period, contract drilling expense declined 27% due to fewer rig operating days and disciplined expense management. There was no loss on impairment in fourth quarter 2016. Fourth quarter 2015 results included a loss on impairment of $2.744 billion.

Ensco’s depreciation expense declined to $110 million in Q4 2016 from $150 million a year ago mostly due to asset impairments recorded in Q4 2015. The Company’s interest expense in Q4 2016 was $56 million, net of $9 million of interest that was capitalized, compared to interest expense of $57 million in Q4 2015, net of $20 million of interest that was capitalized. Lower interest expense due to debt repurchases was largely offset by reduced capitalized interest and the issuance of convertible notes.

Ensco reported earnings per share of $0.13 for Q4 2016 compared to a loss of $10.64 per share for Q4 2015. Earnings from discontinued operations were $0.03 per share in the reported quarter compared to a loss of $0.41 per share in the year ago corresponding period. The Company’s earnings per share from continuing operations were $0.10 for Q4 2016 compared to a loss of $10.23 per share a year ago. The Company’s earnings results topped Wall Street’s expectations of $0.05 per share.

Discontinued Operations

Ensco’s discontinued operations include one floater and one jack-up held for sale, as well as rigs and other assets no longer on the Company’s balance sheet. Net income from discontinued operations was $10 million for Q4 2016 compared to a net loss of $95 million a year ago. Excluding impairments and other discrete tax items, the net loss from discontinued operations was $0.3 million for Q4 2016 compared to net income of $1 million a year ago.

Segment Highlights

Ensco’s floater revenues were $303 million in Q4 2016 compared to $490 million a year ago, the decline was primarily attributed to fewer rig operating days and a decline in the average day rate to $358,000 from $397,000 a year ago. Reported utilization was 44% compared to 57% a year ago. Adjusted for uncontracted rigs and planned downtime, operational utilization was 98% compared to 96% in Q4 2015. Floater contract drilling expense declined to $151 million in Q4 2016 from $239 million a year ago.

Ensco’s revenues from the Jack-up segment totaled $187 million compared to $307 million a year ago, mostly due to fewer rig operating days and a decline in average day rates to $101,000 from $126,000 a year ago. Reported utilization was 54% compared to 66% in Q4 2015. Adjusted for uncontracted rigs and planned downtime, operational utilization in Q4 2016 was 96% compared to 99% a year ago. Jack-up’s contract drilling expense declined to $127 million from $149 million a year ago.

Other

Ensco’s Other segment is composed of managed drilling rigs. Revenues for Others’ declined to $15 million from $31 million in Q4 2015. Contract drilling expense declined to $11 million from $27 million in the year ago same period. The completion of three managed jackup contracts drove these revenue and contract drilling expense declined.

Financial Position

As of December 31, 2016, Ensco had $3.6 billion of contracted revenue backlog excluding bonus opportunities. The Company had $4.9 billion of liquidity, $2.60 billion of cash and short-term investments, $2.25 billion available revolving credit facility and $5.3 billion of total debt as on December 31, 2016.

In January 2017 Ensco completed its debt exchange for $650 million aggregate principal amount of senior notes that were repurchased for $333 million of cash consideration and $332 million aggregate principal amount of new senior notes. Post the completion, the Company noted that it had no debt maturities until Q2 2019 and $1.15 billion of debt maturing before 2024.

Stock Performance

At the close of trading session on Tuesday, March 14, 2017, Ensco’s stock price declined 2.64% to end the day at $8.48. A total volume of 9.10 million shares were exchanged during the session. The Company’s share price has gained 15.30% in the past six months. The Company’s shares are trading at a PE ratio of 2.68 and have a dividend yield of 0.47%. The stock currently has a market cap of $2.52 billion.

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