Rowan Companies Management Discusses Q4 2012 Results - Earnings Call Transcript
February 28, 2013 2:40 PM ET
Rowan Companies (RDC)
Q4 2012 Earnings Call
February 28, 2013 11:00 am ET
Suzanne M. Spera - Director of Investor Relations
W. Matt Ralls - Chief Executive Officer, President, Director and Chairman of Executive Committee
Thomas P. Burke - Chief Operating Officer
Mark A. Keller - Executive Vice President of Business Development
J. Kevin Bartol - Chief Financial Officer, Executive Vice President and Treasurer
Gregory Lewis - Crédit Suisse AG, Research Division
Eduardo Royes - Jefferies & Company, Inc., Research Division
Ian Macpherson - Simmons & Company International, Research Division
Greetings, and welcome to the Rowan Companies Fourth Quarter and Full Year 2012 Earnings Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.
It is my pleasure to introduce your host, Suzanne Spera, Director of Investor Relations for Rowan Companies. Thank you, Suzanne. You may begin.
Suzanne M. Spera
Thank you, Brenda, and good morning. Welcome to Rowan's Fourth Quarter and Full Year 2012 Earnings Conference Call. Joining me on the call this morning are Matt Ralls, President and Chief Executive Officer; Tom Burke, Chief Operating Officer; Mark Keller, Executive Vice President, Business Development; and Kevin Bartol, Executive Vice President, Chief Financial Officer, who will have prepared comments.
Before Matt begins his remarks, I'd like to remind you that during the course of this conference call, forward-looking statements may be made within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements about the change in corporate structure, as well as statements as to the expectations, beliefs and future expected financial performance of the company that are based on current expectations and are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected by the company. Other relevant factors have been and will be disclosed in the company's filings with the SEC.
With that, I'll turn the call over to Matt.
W. Matt Ralls
Thanks, Suzanne. Good morning, everyone, and thanks for joining our call. We're pleased overall with the results of 2012, which reflected delivery in February of last year of the final jack-up in our $3 billion jack-up newbuild program and a full year contribution of 6 others delivered throughout 2011.
We had many operational achievements during the year and a few setbacks, some of which Tom will discuss in his remarks, and we'll take the learnings from all of these events and build on them in 2013 as we prepare for the delivery and operation of our 4 new all ultra-deepwater drillships.
We'll be focused in 2013 on operational and project management execution, including our expanding operations in Norway, contractual upgrades on several jack-ups and delivery and startup of our first drillship toward the end of this year. Mark will update you in a minute on our view of the rig markets but I'll say, generally, that we see continued strength in demand in both jack-up and ultra-deepwater segments.
We remain optimistic about opportunities to contract our remaining 3 drillships on attractive terms and believe that we will follow-on work and higher day rates for our jack-ups with contract expirations later this year and in 2014.
With no new rigs being added to our fleet until the end of this year, our earnings growth in 2013 will be moderate compared to the substantial increases in revenues and earnings that we expect for 2014.
On related note, we ended the year with a contract backlog of $3.5 billion, down slightly from our all-time high of $3.8 billion at the end of the third quarter and expect our backlog to grow significantly in 2013 as we contract our 3 uncontracted newbuild drillships.
And with that, I'll turn it over to Tom to make some operational comments.
Thomas P. Burke
Thanks, Matt, and good morning. Rowan's operations had a strong safety performance in 2012, with a 14% reduction in our incident rates against 2011, making 2012 Rowan's safest year ever. We still have a ways to go to achieve our injury-free goal. But to all those Rowan employees listening to this call, very well done.
Operational highlights in the fourth quarter of 2012 included the following: the award of the expectance of compliance, or AoC, for the Rowan Norway, allowing the rig to move into the Norwegian sector of the North Sea at the start of its 3.5-year contract for ConocoPhillips. Unfortunately, the yard stay to achieved the AoC was somewhat longer than expected.
The EXL I began operations in Indonesia following a tanker collision in early 2012. The rig's yard stay in Singapore was much shorter than estimated. And additionally, the Gorilla VI shipyard period were also reduced as we executed a spud can inspection in much less time than planned.
In the fourth quarter, our unbillable downtime was 2.5%. By unbillable downtime, I mean off rate time when our rigs are on contact and available to earn day rates but we will off rate due to operational issues, such as equipment failure. This 2.5% last quarter compares well to 3.3% in the third quarter of 2012 and to 3.9% in the fourth quarter of 2011. All together, our unbillable downtime was 2.3% for the full year 2012, which compares favorably to 3.2% for the full year 2011.
While 2012 was an improvement over 2011 and represents a high level of uptime by industry standards, our technical services and field support teams continue to focus on putting improved systems in place to drive our operational downtime even lower.
Copyright 2013 Seeking Alpha
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.