R&B Falcon reports 2nd quarter resultsCompany News // August 11, 2000
The net loss applicable to common stockholders was $42.6 million ($.22 per diluted share) for the current quarter and includes dividends of $13.3 million on redeemable preferred stock issued in April, 1999.
Net loss applicable to common stockholders for the same period in 1999 was $23.3 million ($.12 per diluted share), including dividends of $9.1 million on the preferred stock. Operating income for the second quarter of 2000 was $8.4 million on revenues of $211.9 million compared to operating income of $9.1 million on revenues of $226.5 million in the second quarter of 1999.
For the six months ending June 30, 2000, the net loss applicable to common stockholders was $94.6 million ($.49 per diluted share), including preferred stock dividends of $26.2 million, compared to a net loss applicable to common stockholders of $21.7 million ($.11 per diluted share) for the corresponding period in 1999.
The results for the six months ending June 30, 1999 includesan extraordinary loss of $1.7 million ($.01 per diluted share) for charges relating to the early elimination of debt and includes dividends of $9.1 million on the preferred stock issued in April, 1999.
Operating income through June 30, 2000, was $1.2 million on revenues of $419.4 million compared to operating income of $41.8 million on revenues of $470.3 million for the same period in 1999.
Operating income for the second quarter of 2000 was slightly below the comparable period in 1999 primarily due to lower earnings in the Engineering Services segment but were largely offset by higher earnings from the Shallow Water and Inland Water segments and lower general and administrative expenses.
Decreased earnings in the Engineering Services segment reflect lower international turnkey drilling activity following contract completion in April, 2000.
Significantly higher rig utilisation in the domestic jack-up and inland barge markets resulted in improved earnings in the Shallow Water and Inland Water segments.
Average fleet utilisation for the second quarter of 2000 was 42% compared to 39% for the same quarter in the preceding year. The decrease in general and administrative expenses is primarily due to corporate restructuring, the costs of which were accruedin the second quarter of 1999.
Interest expense, net of capitalised interest, for the three months ended June 30, 2000, was $50.6 million compared to $43.0 million for the three months ended June 30, 1999 due to higher debt levels and average interest rates. Capitalised interest forthe current quarter decreased by $3.0 million over the comparable period in 1999 due to lower investment in the Company's deep water construction program as it approaches completion.
Paul B Loyd, Jr, the Company's Chairman and Chief Executive Officer, said, "Increasing rig utilisation and higher day rates, particularly in the gas-driven domestic shallow and inland water markets, are the main factors which resulted in improved operating income in the second quarter following the low point of our earnings cycle in the prior quarter. Notwithstanding the net loss for this quarter, which was in line with our expectations, we will continue to see successive improvements in quarterly results.
"As demand strengthens for natural gas drilling in the Gulf of Mexico we will continue reactivating our shallow water jack-ups and drill barges in response to a trend that will ultimately result in full utilisation. We also expect earnings growth in subsequent quarters from the Deepwater segment following the recent start-up of our new Deepwater Nautilus and Deepwater Navigator units under long-term contracts, as well as higher sustained utilisation of our existing fleet in the ultra-deepwater marketsof the U.S., Brazil, West Africa, and North Sea.
"Our two remaining vessels under construction, the Deepwater Discovery and the Deepwater Horizon, will commence their long-term contracts during the third quarter 2000 and the first quarter 2001, respectively. We are confident that R&B Falcon, with the largest fleet of drilling rigs in the industry, will be the leading beneficiary as the overall worldwide demand for drilling improves."