Ensco (IL/A): First Take - strong results with upside to estimates likely - Goldman Sachs - October 25, 2005
Net of an insurance deductible, ESV "clean" 3Q05 EPS of $0.52 was above our $0.46 and consensus $0.47 due to stronger jackup rig day rates and utilization, with contract drilling revenues and EBITDA both 4% above our estimate (+$0.03 positive impact). Tax rate (+$0.02) and interest expense (+ $0.01) were slightly below our expectations, while S,G&A and depreciation were essentially in-line. Ensco's average jackup dayrate of $75.4k and utilization of 85% for the quarter were 1% and 2%, respectively, above our estimates, offset slightly by contract drilling expense that was 3% higher. Contract renewals in the global jackup rig drilling market over the past few weeks confirm our view that dayrates are continuing to rise faster than consensus assumes, and we see upside to consensus estimates. We believe the announced loss of the Ensco 29 platform rig was widely anticipated.
KEY TOPICS FOR THE CALL INCLUDE:
(1) Uses of excess cash.
(2) Spillover of hurricane impact into 4Q05 on drilling activity in the US Gulf.
(3) Update on spot dayrates in the US Gulf and international jackup markets.
(4) Discussion of newbuild activity and an update on global shipyard capacity.
(5) Outlook for offshore operating cost inflation.
CONFERENCE CALL INFORMATION. Today, Tuesday, October 25 at 11am EST. Dial-in 719-457-2649.
Each of the analysts named below hereby certifies that, with respect to each subject company and its securities for which the analyst is responsible in this report, (1) all of the views expressed in this report accurately reflect his or her personal views about the subject companies and securities, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report: Jason Gilbert; Terry Darling. |
