Offshore services company Rowan Industries believes its future belongs at the bottom of the deep, blue sea.
The company sold off most of its onshore assets in 2011 and since then, it has concentrated on building up its offshore business. The company ordered four new ultradeep-water drillships, looking to cash in on the high $600,000 dayrates these vessels can command.
“We entered into an attractive three year contract for the first of those drillships, which contributed to a contract backlog at yearend of $3.5 billion,” said Matt Ralls, CEO of Rowan. “That backlog is near an all-time high for Rowan, and we expect it to grow substantially in 2013 as we contract our remaining three drillships.”
Rowan earned $54.1 million in the fourth quarter of 2012, or 44 cents a share, up 19 percent from $45.1 million, or 27 cents a share, in the fourth quarter of 2011.
It reported revenue of $354.2 million in the fourth quarter, up from $275.1 million for the same period last year. The company earned $180.6 million in 2012, down from $736.8 million in 2011, but the earnings spike was mostly due to the sale of onshore drilling concerns to Ensign United States Drilling for $540 million.
Rowan earned $203. 3 million in 2012 from continued operations, a healthy boost up from $135.7 million in 2011.
In the last two years, it has contracted to add four new drillships to its fleet by the end of 2015 and reported a backlog of $3.5 billion at the end of 2012.
“The new rigs diversify Rowan’s drilling operations into an attractive market that offers long-term contracts, higher margins, and more earnings stability than its jack-up operations,” wrote Morningstar in in an analyst’s note. “We think the expansion is a smart move.”