HOUSTON , Aug. 1 /PRNewswire-FirstCall/ -- Worldwide oil and gas drilling contractor GlobalSantaFe Corporation (NYSE: GSF) today reported net income for the quarter ended June 30, 2007 , of $369.8 million , or $1.60 per diluted share, on revenues of $1.074 billion . The results compare with net income of $248.5 million , or $1.01 per diluted share, on revenues of $773 million for the second quarter of 2006.
Results for the second quarter of 2006 included hurricane-related, after-tax gains of $63.7 million , or 26 cents per diluted share. Excluding these gains, second-quarter 2006 net income was $184.8 million , or 75 cents per diluted share.
For the six months ended June 30, 2007 , GlobalSantaFe reported net income of $717.2 million , or $3.09 per diluted share, on revenues of $1.977 billion , compared with net income of $411.4 million , or $1.65 per diluted share, on revenues of $1.453 billion for the corresponding six-month period of 2006.
'GlobalSantaFe turned in another great quarter with record financial
results as we continued to benefit from strong international rig demand and
the resulting improvement in our average dayrates,' said GlobalSantaFe
President and CEO
Second Quarter 2007 Analysis
The company's contract drilling segment contributed operating income of $408.1 million in the second quarter of 2007, an 88 percent increase over contract drilling operating income of $216.7 million for the same period of 2006. This improvement was due primarily to a 56 percent increase in average revenues per day to $177,100 per rig in the second quarter of 2007 from $113,700 in the second quarter of 2006, partially offset by higher operating expenses in the 2007 period.
The combined drilling management services and oil and gas segments reported operating income of $25.2 million on revenues of $233.3 million for the second quarter of 2007, compared with operating income of $14.1 million on revenues of $189.8 million in the second quarter of 2006. The improvement resulted primarily from three successful turnkey projects in the North Sea. The segment reported a total of 21 turnkey projects during the second quarter of 2007.
Share Repurchases
GlobalSantaFe continued to repurchase its stock during the second quarter under a $2 billion buyback program authorized by its board of directors in March 2006 . The company has repurchased $1.53 billion of its ordinary shares through June 30, 2007 . By the close of the second quarter, the company had retired 25.3 million shares, or 10 percent of the shares that were outstanding at the commencement of this share repurchase program. Pursuant to the merger agreement with Transocean announced July 23, 2007 , GlobalSantaFe's repurchase program and quarterly dividend have been suspended.
Conference Call
GlobalSantaFe will hold a conference call to discuss its 2007 second quarter results on Thursday, Aug. 2, 2007 , at 10 a.m. CDT / 11 a.m. EDT . To listen to the live call by phone, dial 617-597-5310 (reference code 57323689). To listen over the Internet, go to the GlobalSantaFe Web site at http://www.globalsantafe.com.
A recording of the call will be available for replay from 1 p.m. CDT / 2 p.m. EDT on Aug. 2 through 12 a.m. CDT / 1 a.m. EDT on Aug. 16 . To hear the replay by phone, dial 617-801-6888 (reference code 42335869). To listen over the Internet, go to the GlobalSantaFe Web site at http://www.globalsantafe.com.
To the extent not provided in the call, reconciliations of any non-GAAP measures discussed in the call will be available on the Investor Relations page of the GlobalSantaFe Web site in the form of this earnings release or other materials. To access this information online, go to http://www.globalsantafe.com and click on the 'Investor Relations' link.
About GlobalSantaFe
GlobalSantaFe is one of the largest offshore oil and gas drilling contractors and the leading provider of drilling management services worldwide. The company owns or operates a contract drilling fleet of 37 premium jackup rigs; six heavy-duty, harsh environment jackups; 11 semisubmersibles and three dynamically positioned, ultra-deepwater drillships, as well as two semisubmersibles owned by third parties and operated under a joint venture agreement. In addition, an ultra-deepwater semisubmersible is under construction and scheduled for delivery in early 2009. For more information about GlobalSantaFe, go to http://www.globalsantafe.com.
Contact Information
Investors: Media:
Richard Hoffman Jeff Awalt
281-925-6441 281-925-6448
GlobalSantaFe Corporation
Condensed Consolidated Statement of Income
(In millions, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Revenues:
Contract drilling $840.2 $583.6 $1,607.9 $1,101.7
Drilling management services 212.9 176.0 339.1 320.7
Oil and gas 20.4 13.8 30.0 30.4
Total revenues 1,073.5 773.4 1,977.0 1,452.8
Expenses:
Contract drilling 353.5 297.0 686.7 566.0
Drilling management services 196.3 169.8 321.8 314.6
Oil and gas 7.4 3.5 12.8 9.1
Depreciation, depletion and
amortization 84.9 74.2 163.9 147.9
Involuntary conversion of
long-lived assets, net of related
recoveries, loss of hire
recoveries and gain on dispositions
of equipment (0.4) (66.4) (57.1) (85.3)
General and administrative 21.2 18.7 47.6 43.1
Total operating expenses 662.9 496.8 1,175.7 995.4
Operating income 410.6 276.6 801.3 457.4
Other income (expense):
Interest expense (11.6) (9.2) (22.5) (18.4)
Interest capitalized 3.7 7.6 7.2 15.2
Interest income 7.5 6.1 12.5 14.3
Other 2.0 (3.9) 2.4 (1.6)
Total other income (expense) 1.6 0.6 (0.4) 9.5
Income before income taxes 412.2 277.2 800.9 466.9
Provision for income taxes:
Current tax provision 20.0 19.0 45.2 35.7
Deferred tax provision 22.4 9.7 44.2 19.8
Total provision for income taxes 42.4 28.7 89.4 55.5
Income from continuing operations 369.8 248.5 711.5 411.4
Income from discontinued
operations, net of tax effect -- -- 5.7 --
Net income $369.8 $248.5 $717.2 $411.4
Earnings per ordinary share:
Basic
Income from continuing operations $1.62 $1.02 $3.11 $1.68
Income from discontinued operations -- -- 0.02 --
Net income $1.62 $1.02 $3.13 $1.68
Diluted
Income from continuing operations $1.60 $1.01 $3.06 $1.65
Income from discontinued operations -- -- 0.03 --
Net income $1.60 $1.01 $3.09 $1.65
Average ordinary shares:
Basic 227.7 243.3 229.0 244.9
Diluted 230.9 246.8 232.3 248.8
GlobalSantaFe Corporation
Condensed Consolidated Balance Sheet
(In millions)
June 30, December 31,
2007 2006
Current assets:
Cash and cash equivalents $648.7 $336.4
Marketable securities 25.2 12.5
Accounts receivable, net of allowances 783.0 653.4
Accounts receivable from insurers 104.8 138.9
Prepaid expenses 55.1 68.8
Other current assets 41.0 23.7
Total current assets 1,657.8 1,233.7
Net properties 4,627.5 4,514.6
Goodwill 334.4 339.2
Deferred income taxes 34.2 34.3
Other assets 129.3 98.4
Total assets $6,783.2 $6,220.2
Current liabilities:
Accounts payable $354.1 $284.5
Other accrued liabilities 262.0 278.6
Total current liabilities 616.1 563.1
Long-term debt 730.0 623.9
Capital lease obligations 16.1 15.4
Deferred income taxes 71.1 27.7
Other long-term liabilities 179.5 143.0
Shareholders' equity:
Ordinary shares and additional
paid-in capital 3,200.7 3,178.6
Retained earnings 2,070.2 1,764.1
Accumulated other comprehensive loss (100.5) (95.6)
Total shareholders' equity 5,170.4 4,847.1
Total liabilities and
shareholders' equity $6,783.2 $6,220.2
GlobalSantaFe Corporation
Condensed Consolidated Statement of Cash Flows
(In millions)
Six Months Ended
June 30,
2007 2006
Cash flows from operating activities:
Net income $717.2 $411.4
Adjustments to reconcile net income to net
cash flow provided by operating activities:
Depreciation, depletion and amortization 163.9 147.9
Deferred income taxes 44.2 19.8
Stock-based compensation expense 21.0 21.5
Involuntary conversion of long-lived assets,
net of related recoveries, loss of hire
recoveries and gain on dispositions of equipment (57.1) (85.3)
Cash received from insurance for loss of hire
and other recoveries 34.9 --
Increase in accounts receivable (154.1) (101.5)
(Increase) decrease in prepaid expenses and other
current assets (3.5) 2.3
Increase in deferred mobilization costs (8.0) (2.8)
Increase in accounts payable 71.9 37.9
Decrease in accrued liabilities (21.6) (5.3)
Increase in deferred revenues 26.5 10.2
(Decrease) increase in long-term liabilities (1.1) 17.3
Contributions to defined benefit plans (8.0) (57.6)
Other, net (8.3) (4.6)
Net cash flow provided by operating activities 817.9 411.2
Cash flows from investing activities:
Capital expenditures (292.3) (276.7)
Cash received from insurance for involuntary
conversion of long-lived assets 57.9 --
Purchases of available-for-sale marketable
securities (136.0) (915.3)
Proceeds from sales of available-for-sale
marketable securities 123.8 1,035.9
Proceeds from disposals of properties and equipment 32.9 1.5
Net cash flow used in investing activities (213.7) (154.6)
Cash flows from financing activities:
Dividend payments (103.4) (110.5)
Borrowings under credit facility 145.0 --
Payments on credit facility (35.0) --
Excess tax deduction resulting from option exercises 9.2 4.8
Payments on capitalized lease obligations (8.2) (8.4)
Proceeds from issuance of ordinary shares 77.0 125.4
Payments for ordinary shares repurchased and retired (376.5) (498.7)
Net cash flow used in financing activities (291.9) (487.4)
Increase (decrease) in cash and cash equivalents 312.3 (230.8)
Cash and cash equivalents at beginning of period 336.4 562.6
Cash and cash equivalents at end of period $648.7 $331.8
GlobalSantaFe Corporation
Results of Operations by Business Segment
(Dollars in millions, except average revenues per day)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Revenues:
Contract drilling (1) $884.7 $587.9 $1,654.2 $1,110.1
Drilling management services 222.1 186.2 353.0 335.2
Oil and gas 20.4 13.8 30.0 30.4
Intersegment elimination (53.7) (14.5) (60.2) (22.9)
Total revenues $1,073.5 $773.4 $1,977.0 $1,452.8
Operating income:
Contract drilling $408.1 $216.7 $767.6 $396.9
Drilling management services 16.6 6.2 17.3 6.1
Oil and gas 8.6 7.9 10.7 16.1
Involuntary conversion of long-
lived assets, net of related
recoveries, loss of hire recoveries
and gain on dispositions of
equipment 0.4 66.4 57.1 85.3
Corporate operating expenses (23.1) (20.6) (51.4) (47.0)
Total operating income 410.6 276.6 801.3 457.4
Interest (expense) income, net (0.4) 4.5 (2.8) 11.1
Other 2.0 (3.9) 2.4 (1.6)
Income before income taxes $412.2 $277.2 $800.9 $466.9
Depreciation, depletion and
amortization included in operating
income :
Contract drilling $78.6 $69.9 $153.6 $138.8
Drilling management - - - -
Oil and gas 4.4 2.4 6.5 5.2
Corporate 1.9 1.9 3.8 3.9
Total depreciation, depletion
and amortization $84.9 $74.2 $163.9 $147.9
Average rig utilization rate 90% 95% 90% 94%
Average revenues per day (2) $177,100 $113,700 $168,400 $107,400
Turnkey wells drilled 16 20 28 34
Turnkey well completions 5 8 9 12
(1) Expense reimbursements included in contract drilling revenues and
expenses totaled $27.5 million and $18.8 million for the three months
ended June 30, 2007 and 2006, respectively, and $38.7 million and
$43.1 million, respectively, for the six months ended June 30, 2007
and 2006. Operating income for these periods was not affected by these
reimbursements.
(2) Average revenues per day is the ratio of rig-related contract drilling
revenues divided by the aggregate contract days. The calculation of
average revenues per day excludes non-rig related revenues, consisting
mainly of reimbursed expenses, of $27.7 million and $19.2 million,
respectively, for the three months ended June 30, 2007 and 2006,
respectively, and $39.1 million and $43.8 million, respectively, for
the six months ended June 30, 2007 and 2006.
SOURCE GlobalSantaFe Corporation
