EX-99.1 2 release3q07.htm EARNINGS PRESS RELEASE release3q07.htm
 
EXHIBIT 99.1

News Release
 
Rowan Companies, Inc.
2800 Post Oak Boulevard, Suite 5450
   Houston, Texas 77056 (713) 621-7800

 
FOR IMMEDIATE RELEASE                                                                              November 1, 2007
 
ROWAN REPORTS RECORD QUARTERLY OPERATING RESULTS
HOUSTON, TEXAS -- For the three months ended September 30, 2007, Rowan Companies, Inc. (RDC-NYSE) generated record net income of $130.8 million, or $1.16 per share, compared to $87.0 million, or 78¢ per share, in the third quarter of 2006 and $128.1 million, or $1.14 per share, in the second quarter of 2007.  Revenues were $502.2 million in the third quarter of 2007, compared to $417.1 million in the third quarter of 2006 and $507.0 million in the second quarter of 2007.

The third quarter 2007 results included $1.1 million, or 1¢ per share, of gains on asset sales, compared to $2.3 million, or 2¢ per share, in the third quarter of 2006 and $14.6 million, or 8¢ per share, in the second quarter of 2007.  The prior-year results also included approximately $1.2 million, or 1¢ per share, of after-tax income from the Company’s discontinued aviation operations which were sold in 2004.

Rowan’s drilling operations generated record revenues of $368.8 million during the third quarter of 2007, up by $79.2 million, or 27%, from the third quarter of 2006 and by $15.7 million, or 4%, from the second quarter of 2007.  The Company’s income from drilling operations improved to $183.5 million, or 50% of revenues, during the third quarter of 2007, up by 44% from the third quarter of 2006 and by 1% from the second quarter of 2007.

Rowan’s offshore rig utilization was 99% during the third quarter of 2007, up from 91% in the third quarter of 2006 and 97% in the second quarter of 2007.  The Company’s average offshore day rate was $158,200 during the third quarter of 2007, up by $11,400, or 8%, from the third quarter of 2006 and by $1,100, or 1%, from the second quarter of 2007.  Rowan’s land rig utilization was 96% during the third quarter of 2007, down from 98% in the third quarter of 2006 and 97% in the second quarter of 2007, though the number of rig operating days increased between periods.  The Company’s average land rig day rate was $23,300 during the third quarter of 2007, up by $300, or 1%, from the third quarter of 2006 and by $900, or 4%, from the second quarter of 2007.

Rowan’s combined manufacturing operations generated revenues of $133.4 million during the third quarter of 2007, up by $5.9 million, or 5%, from the third quarter of 2006 and down by $20.5 million, or 13%, from the second quarter of 2007.  The Company’s income from manufacturing operations improved to $14.6 million, or 11% of revenues, during the third quarter of 2007, up by 232% from the third quarter of 2006 and by 12% from the second quarter of 2007.


Danny McNease, Chairman and Chief Executive Officer, commented, “Rowan’s drilling operations have again contributed record results, and recent contract negotiations support our confidence that this upward trend will continue into 2008 and beyond.  For example, we have received a letter of intent from a major integrated oil company for two years of work offshore Angola that the Gorilla VII should begin late in the first quarter of 2008, and from which we expect revenues of approximately $264 million.  In the Gulf of Mexico, we are nearing finalization of a six-month commitment for the Gorilla II commencing in April 2008 at a day rate of $195,000, or an 11% increase over the rig’s current rate.  In the North Sea, we are negotiating a six-month extension of the Gorilla VI and expect a day rate in excess of $300,000.

“We believe these fixtures reaffirm the Company’s strategy of building and operating a fleet of jack-up rigs that can efficiently drill high-pressure, high-temperature and extended- reach wells in challenging environments throughout the world.  Even in the Gulf of Mexico, where volatile natural gas prices have recently weakened overall rig activity and day rates, we have experienced solid demand for our more capable rigs.  Thus, as we have announced separately this morning, we intend to continue the process of upgrading and expanding our jack-up fleet by building six additional high-specification jack-ups over the next four years.

“Our manufacturing businesses are key to our strategy.  Rowan receives continuing innovation in jack-up rig designs and related drilling equipment and access to a proven shipyard that offers us the flexibility to modify construction schedules as market conditions may warrant.  Our manufacturing businesses are critical to keeping our rig fleet on the leading edge of capability.

“External market acceptance of our manufactured drilling products has continued growing as well.  Our announced backlog includes an additional offshore rig kit ordered during the third quarter for completion in mid 2008, our tenth external rig kit ordered in the last two and a half years.  We recently received an order from an Indian company for two complete land rigs that we expect to deliver this year, bringing the 2007 total to six land rigs.  One of those six is performing very well in Australia and we have in-hand a letter of intent for a second land rig for delivery there in 2008.  Just last week we signed a supply agreement with a Russian company under which we expect to ramp up to ten land rig packages per year by 2010.”

Rowan Companies, Inc. is a major provider of international and domestic contract drilling services. The Company also owns and operates a manufacturing division that produces equipment for the drilling, mining and timber industries. The Company’s stock is traded on the New York Stock Exchange. Common Stock trading symbol: RDC. Contact: William C. Provine, Vice-President - Investor Relations, 713-960-7575. Website: www.rowancompanies.com 
 

This report contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements as to the expectations, beliefs and future expected financial performance of the Company that are based on current expectations and are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected by the Company. Among the factors that could cause actual results to differ materially include oil and natural gas prices, the level of offshore expenditures by energy companies, energy demand, the general economy, including inflation, weather conditions in the Company’s principal operating areas and environmental and other laws and regulations. Other relevant factors have been disclosed in the Company’s filings with the U.S. Securities and Exchange Commission.
 
 
 

 
 
-2-

 
ROWAN COMPANIES, INC.
  
CONDENSED CONSOLIDATED BALANCE SHEETS
  
Unaudited (In Millions)
  
             
             
   
SEPTEMBER 30
  
   
2007
    
2006
  
             
ASSETS
            
             
Cash  and  cash  equivalents
   $
341.3
     $
282.9
  
Accounts  receivable
    
414.1
      
407.0
  
Inventories
    
481.7
      
282.1
  
Other  current  assets
    
91.0
      
85.8
  
     Total  current  assets
    
1,328.1
      
1,057.8
  
Restricted  cash
    
50.0
      
156.1
  
Property,  plant  and  equipment  -  net
    
2,375.3
      
2,035.5
  
Other  assets
    
41.6
      
36.4
  
     TOTAL
   $
3,795.0
     $
3,285.8
  
                 
                 
LIABILITIES  AND  STOCKHOLDERS'  EQUITY
                
                 
Current  maturities  of  long-term  debt
   $
64.9
     $
64.9
  
Accounts  payable
    
119.9
      
110.8
  
Other  current  liabilities
    
349.2
      
260.3
  
     Total  current  liabilities
    
534.0
      
436.0
  
Long-term  debt
    
434.2
      
499.2
  
Other  liabilities
    
622.8
      
508.1
  
Stockholders'  equity
    
2,204.0
      
1,842.5
  
     TOTAL
   $
3,795.0
     $
3,285.8
  
                 




 
 
 
-3-
 



ROWAN COMPANIES, INC.
  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  
Unaudited (In Millions Except Per Share Amounts)
  
                         
                         
   
THREE MONTHS
    
NINE MONTHS
  
   
ENDED SEPTEMBER 30
    
ENDED SEPTEMBER 30
  
   
2007
    
2006
    
2007
    
2006
  
                         
REVENUES
   $
502.2
     $
417.1
     $
1,471.5
     $
1,099.8
  
                                 
COSTS  AND  EXPENSES:
                                
  Operations    
252.9
      
245.7
      
832.2
      
618.8
  
Depreciation  and  amortization
    
29.8
      
23.3
      
86.3
      
65.4
  
Selling,  general  and  administrative
    
22.5
      
19.0
      
67.8
      
58.0
  
Gain  on  sale  of  property  and  equipment
     (1.1 )     (2.3 )     (39.8 )     (29.3 )
Total
    
304.1
      
285.7
      
946.5
      
712.9
  
INCOME  FROM  OPERATIONS
    
198.1
      
131.4
      
525.0
      
386.9
  
Net  interest  and  other  income
    
1.7
      
2.0
      
3.4
      
6.9
  
INCOME  BEFORE  INCOME  TAXES
    
199.8
      
133.4
      
528.4
      
393.8
  
Provision  for  income  taxes
    
69.0
      
47.6
      
183.1
      
139.2
  
INCOME  FROM  CONTINUING  OPERATIONS
   $
130.8
     $
85.8
     $
345.3
     $
254.6
  
Income  from  discontinued  operations,  net  of  tax
    
-
      
1.2
      
-
      
1.2
  
NET  INCOME
   $
130.8
     $
87.0
     $
345.3
     $
255.8
  
                                 
PER  SHARE  AMOUNTS:
                                
  Income  from  continuing  operations
   $
1.16
     $
.77
     $
3.08
     $
2.28
  
   Income  from  discontinued  operations,  net  of  tax
   $
-
     $
.01
     $
-
     $
.01
  
Net  income
   $
1.16
     $
.78
     $
3.08
     $
2.29
  
                                 
AVERAGE  DILUTED  SHARES
    
112.6
      
112.0
      
112.1
      
111.8
  
                                 
NOTE: See pages 6 and 7 for supplemental operating information.
                          


 
 
 
 
 
 
-4-
 
 
ROWAN COMPANIES, INC.
  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  
Unaudited (In Millions)
  
             
   
NINE MONTHS
  
   
ENDED SEPTEMBER 30
  
   
2007
    
2006
  
CASH  PROVIDED  BY  (USED  IN):
            
   Operations:
            
      Net income
   $
345.3
     $
255.8
  
      Adjustments  to  reconcile  net  income  to  net cash  provided  by  operations:
                
         Depreciation  and  amortization
    
86.3
      
65.4
  
         Deferred  income  taxes
    
30.1
      
68.7
  
         Gain  on  sale  of  assets
     (39.8 )     (30.5 )
         Other -  net
    
17.6
      
26.4
  
      Net  changes  in  current  assets  and  liabilities
     (133.6 )     (206.3 )
      Net  changes  in  other  noncurrent  assets  and  liabilities
    
15.9
      
9.9
  
   Net  cash  provided  by  operations
    
321.8
      
189.4
  
                 
   Investing  activities:
                
      Property,  plant  and  equipment  additions
     (318.7 )     (372.7 )
      (Increase)  decrease  in  Restricted  cash  balance
    
106.1
       (156.1 )
      Proceeds  from  disposals  of  assets
    
44.9
      
38.7
  
   Net  cash  used  in  investing  activities
     (167.7 )     (490.1 )
                 
   Financing  activities:
                
      Repayments  of  borrowings
     (51.2 )     (51.2 )
      Payment  of  cash  dividends
     (33.2 )     (49.5 )
      Net  proceeds  from  equity  compensation  plans  and  other
    
13.6
      
8.4
  
   Net  cash  used  in  financing  activities
     (70.8 )     (92.3 )
                 
INCREASE  (DECREASE)  IN  CASH  AND  CASH  EQUIVALENTS
    
83.3
       (393.0 )
CASH  AND  CASH  EQUIVALENTS,  BEGINNING  OF  PERIOD
    
258.0
      
675.9
  
CASH  AND  CASH  EQUIVALENTS,  END  OF  PERIOD
   $
341.3
     $
282.9
  
                 

 
 
 
 
 
 
-5-
 

 
ROWAN COMPANIES, INC.
  
SUPPLEMENTAL DRILLING INFORMATION
  
Unaudited (dollars in millions, except where otherwise indicated )
  
                                     
                                     
   
THREE MONTHS ENDED
  
   
September 30, 2007
    
June 30, 2007
    
September 30, 2006
  
   
  $  
    
% Revenues
             $    
% Revenues
              $    
% Revenues
  
                                           
DRILLING  OPERATIONS (a):
                                          
Revenues
   $
368.8
      
100
     $
353.1
      
100
     $
289.6
      
100
  
 Operating  costs
     (145.4 )     (39 )     (144.6 )     (41 )     (131.3 )     (45 )
   Depreciation  and  amortization  expense
     (25.3 )     (7 )     (25.3 )     (7 )     (20.2 )     (7 )
    Selling,  general  and  administrative  expenses (b)
     (15.8 )     (4 )     (16.0 )     (5 )     (13.3 )     (5 )
   Gain  on  sale  of  property  and  equipment
    
1.2
      
0
      
14.7
      
4
      
2.2
      
1
  
   Income  from  operations
   $
183.5
      
50
     $
181.9
      
52
     $
127.0
      
44
  
                                                 
OFFSHORE  RIG  DAYS:
                                                
Operating
    
1,907
              
1,848
              
1,599
          
Available
    
1,932
              
1,911
              
1,7529
          
Utilization
     99 %             97 %             91 %        
                                                 
LAND  RIG  DAYS:
                                                
Operating
    
2,391
              
2,377
              
1,768
          
Available
    
2,484
              
2,457
              
1,807
          
Utilization
     96 %             97 %             98 %        
                                                 
AVERAGE  DAY  RATES  (in  thousands):
                                                
 Gulf  of  Mexico  rigs
   $
132.1
             $
123.8
             $
150.6
          
 Middle  East  rigs
    
151.8
              
153.0
              
112.0
          
 North  Sea  rigs
    
238.4
              
249.5
              
167.5
          
 All  offshore  rigs
    
158.2
              
157.1
              
146.8
          
Land  rigs
    
23.3
              
22.4
              
23.0
          
                                                 
                                                 
(a) Amounts exclude effects of intercompany transactions.            
                        
(b) Amounts include corporate SG&A costs that are allocated between operating segments.          
              



 
 
 
-6-
 
 
 
                                     
ROWAN COMPANIES, INC.
  
SUPPLEMENTAL MANUFACTURING INFORMATION
  
Unaudited (dollars in millions)
  
                                     
                                     
   
THREE MONTHS ENDED
  
   
September 30, 2007
    
June 30, 2007
    
September 30, 2006
  
          $    
% Revenues
              $    
% Revenues
              $    
% Revenues
  
MANUFACTURING  OPERATIONS (a):
                                          
     Revenues    $
133.4
      
100
      $
153.9
      
100
      $
127.5
      
100
  
Direct  cost  of  sales
     (98.7 )     (74 )     (122.3 )     (79 )     (107.37 )     (84 )
Other  operating  costs
     (8.8 )     (7 )     (8.0 )     (5 )     (7.1 )     (6 )
 Depreciation  and  amortization  expense
     (4.5 )     (3 )     (3.6 )     (2 )     (3.1 )     (2 )
 Selling,  general  and  administrative  expenses (b)
     (6.7 )     (5 )     (6.9 )     (4 )     (54.7 )     (4 )
 Gain  (loss)  on  sale  of  property  and  equipment
     (0.1 )     (0 )    
(0.1
 )     
(0
 )     
0.1
      
0
  
Income  from  operations
   $
14.6
      
11
     $
13.0
      
8
     $
4.4
      
3
  
                                                 
                                                 
REVENUES (a):
                                                
Drilling  Products  and  Systems:
                                                
Drilling and Power Systems
   $
42.8
      
32
     $
65.8
      
43
     $
24.2
      
19
  
Offshore Products
    
40.9
      
31
      
46.5
      
30
      
45.5
      
36
  
Mining,  Forestry  and  Steel  Products
    
49.7
      
37
      
41.6
      
27
      
57.8
      
45
  
Total
   $
133.4
      
100
     $
153.9
      
100
     $
127.5
      
100
  
                                                 
                                                 
MANUFACTURING  BACKLOG:
                                                
Drilling  Products  and  Systems:
                                                
Drilling and Power Systems
   $
175.3
             $
162.4
             $
223.8
          
Offshore Products
    
167.3
              
166.4
              
294.3
          
Mining,  Forestry  and  Steel  Products
    
62.3
              
36.6
              
60.0
          
Total
   $
404.9
             $
365.4
             $
578.1
          
                                                 
(a) Amounts exclude effects of intercompany transactions.
                                          
(b) Amounts include corporate SG&A costs that are allocated between operating segments.
                                  


 
 
 
 
-7-