Ensco (ESV) Q2 Earnings and Revenues Beat, Decrease Y/Y

Oil and natural gas driller Ensco plc ESV reported diluted second-quarter 2016 earnings of 51 cents a share (excluding one-time items), which surpassed the Zacks Consensus Estimate of 50 cents. The figure, however, decreased from $1.18 a share earned in the year-earlier quarter.

Total revenue decreased to $909.6 million from $1,059.0 million in the year-ago quarter. The top line, however, beat the Zacks Consensus Estimate of $742.0 million.

Segment Performance

Floaters: Revenues from floaters increased 0.3% to $636.4 million in the second quarter from $634.3 million a year ago. The decline was primarily due to lower utilization of several floaters in the U.S. Gulf of Mexico, which in turn, led to a fall in the average day rate to $359,575 from $417,463 a year ago. Reported utilization was 57% as against 76% in the prior-year quarter. Post adjustment of uncontracted rigs and planned downtime, operational utilization was 99% compared with 92% in the year-ago quarter. Floater contract drilling expenses declined 25% to $209 million from $278 million in second-quarter 2015.

Jackups: Revenues from this segment decreased 34.6% to $251.3 million from $384.1 million a year ago. The downside mainly stemmed from fewer rig operating days for several jackups and a decline a in the average day rate to $111,791 from $139,797. Reported utilization was 63% as against 77% a year ago. Post adjustment of uncontracted rigs and planned downtime, operational utilization rose to 99% from 98% a year ago. Contract drilling expenses decreased 37% year over year to $122 million in the second quarter. The decline was partly due to lower compensation, and repair and maintenance expenses.

Other: Revenues decreased significantly to $21.9 million from $40.6 million in second-quarter 2015. Contract drilling expenses fell to $19 million from $32 million a year ago.

ENSCO PLC Price, Consensus and EPS Surprise

ENSCO PLC Price, Consensus and EPS Surprise | ENSCO PLC Quote

Costs and Expenses

Depreciation expenses were $112.4 million compared with $140.5 million in second-quarter 2015. This was mainly due to non-cash asset impairments recorded in fourth quarter 2015. General and administrative expenses declined to $27.4 million from $29.7 million last year, mostly due to disciplined expense management.

Balance Sheet and Capex

At the end of the second quarter, Ensco had $790.3 million in cash and cash equivalents. Long-term debt (including current maturities) was $4,905.6 million, with debt-to-capitalization ratio of 38.3% compared with 40.3% in the year-ago quarter.

Zacks Rank

Ensco currently carries a Zacks Rank #4 (Sell). Some better-ranked players from the energy sector are Sasol Ltd SSL, Dril-Quip, Inc. DRQ and Murphy USA Inc MUSA. Each of these stocks sports a Zacks Rank #1 (Strong Buy).

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