I picked this up from the Yahoo threads. Evidently the warning came out this a.m.
Ensco warns on Q2,Q3, bullish on Q4 and 1999
April 16, 1998 11:17 AM
NEW YORK, April 16 (Reuters) - Ensco International Inc. warned
Thursday in a conference call after first quarter earnings that second
and third quarter earnings could be sequentially lower, but said that it
expects a pickup in rates it can charge for its rigs in the fourth quarter
and 1999.
"If we have to accommodate a long-standing customer to maintain a
relationship with lower rates, we will do exactly that," said chief
executive Carl Thorne.
Ensco earned a fully diluted $0.61 per share in the first quarter, up from
$0.25 per share a year ago and ahead of analyst forecasts of $0.58 per
share.
Thorne stressed that the current relative weakness in some parts of the
offshore drilling rig market was a temporary phenomenon, related to the
decline in oil prices.
"We will take a couple of steps to the side... to maintain our ability to
follow these rates up later in the year and early next year," Thorne said.
He noted that the decline in oil prices to a nine year low in the first
quarter had caused some projects to be deferred, but said none had
been canceled.
"It is only a question of time," he said.
Thorne was also bullish on a turnaround in the Southeast Asian market
as deferred projects came onstream and said 1999 could be a
"barnburner" in the region.
He said that as long as oil prices were in their historical $16-$18 per
barrel, the economics of the industry remained intact.
There is however some uncertainty in the North Sea market, where the
impacts of a proposed change in UK Petroleum Revenue Tax has
caused some companies to delay projects and where some rig
operators are offering rigs at rates which are 10 percent below the
prevailing benchmark price in an effort to find work, Thorne said.
Analysts estimate that Ensco will generate free cashflow of $500 million
this year and the company said it will spend $375 million on capital
projects this year.
Asked by an analyst whether this meant that Ensco would use some
funds to repurchase shares, Thorne said it was one among many
options under consideration.
Ensco shares fell 1-9/16 to 26-5/16 by midday.
((David Chance, New York Newsroom 212-859-1902. Email
david.chance@reuters.com))
REUTERS |
