Moody's cuts Ensco (NYSE:ESV) outlook to negative

     (Press release provided by Moody's Investors Service)
    NEW YORK, Dec 1 - Moody's Investors Service reduced ENSCO
International Inc.'s ratings outlook to negative from stable on
its Baa1 rated senior unsecured notes ($150 million of 6.75%
notes due 2007 and $150 million of 7.20% notes due 2027), its
Baa1 rated $185 million senior unsecured bank facility maturing
2003, and on wholly-owned Dual Drilling's Baa3 rated $74.7
million of 9.875% senior subordinated notes due 2004.
    The bank revolver is undrawn. Though ENSCO continues to
practice disciplined expansion and conservative debt policies,
an extended period of unfavorable sector commodity price and
day rate forces could overtake the current Baa1 rating.
    Moody's does note that, absent unexpected material
departures by ENSCO from its stated strategy/policies, the
firm's investment grade standing is not threatened.
    Moody's endeavors to rate through the cycle. But the next
severe downcycle in Gulf of Mexico (GOM) jack-up rates began
during 1H98, arrived sooner than projected, and is likely to
progressively reduce the cash flow cushion the Baa1 rating
required in order for ENSCO to execute its modest
diversification and stock buyback programs.
    One deepwater semi-submersible rig, one harsh environment
premium jack-up rig, and 3 premium barge rigs are under
construction, with the possibility of additional newbuild deep
semi's if ENSCO wins associated drilling contracts.
    A second 5 million share stock-buyback program has been
announced.
    The impact of a severe and extended oil price collapse on
oil companies' drilling programs triggered the downside of the
sector's innately highly elastic day rates.
    GOM jack-up day rates declined sharply through 1998, GOM
and Asia Pacific utilization declined in 1998, GOM marine
transportation day rates and utilization declined in 3Q98, and
South American barge day rates declined more moderately into
3Q98.
    Such weakness offset strong day rates in ENSCO's North Sea
and Asia Pacific fleets, and strong day rates and utilization
surge in the firm's GOM offshore platform rig fleet.
    Net debt is currently a very low $30 million, consisting of
$373 million of cash against $403 million of total debt.
    Though the current debt structure is more-than-amply
supported by 3Q98 and nine-month 1998 EBITDA ($95.5 million and
$401 million, respectively) and EBIT ($74.6 million and $340
million, respectively), Moody's expects ENSCO's earnings to
progressively decline well into 1999 and net debt to rise
moderately during 1999.
    Moody's believes 1999 capex would exceed cash flow by
approximately $75 million to $100 million. 3Q98 run-rate
EBITDA/Cash Interest Expense was 11.9x and EBIT/Book Interest
Expense was 9.3x.
    Gross Debt/Total Capital on 9/30/98 was 23.8% and Net
Debt/Total Capital was a very low 2%.
    Commensurately, the outlooks for prospective ratings under
ENSCO's $500mm universal shelf are also given a negative
outlook.
    Current shelf ratings include a (P)Baa1 on subsequent
senior unsecured note offerings, (P)Baa2 to ENSCO-level senior
subordinated offerings, and (P)baa2 to non-callable preferred
stock offerings.
    ENSCO International is headquartered in Dallas, Texas.