Ensco International reported net income of $299M on revenues of $662M for the 4Q08. Revenues were up 12.8% Y/Y for the fourth quarter while net income was up 25.6% Y/Y for the same quarter. For FY08, ESV reported net income of $1.15B, up 16% Y/Y, on revenues of $2.45B, up 14.3% Y/Y. The average day rate for the jackup fleet increased 14% to $160,000 as compared to $140,000 in the prior year. Utilization was 95% in 4Q08 as compared to 88% for the 4Q07. The balance sheet continues to remain strong with $790M in cash and $292M of debt. Dan Rabun, President and CEO, said that ESV is beginning to be impacted by lower oil and gas prices, tight credit markets and the global recession. He said that some of their jackup rigs will be without contracts for a portion of 2009. Management remains optimistic and said that despite the challenging outlook, they believe their strong balance sheet, favorable contract backlog, conservative approach to internally finding new rigs and the growing contribution from the deepwater fleet will provide ESV a competitive advantage over the next several years.
At this point, I still remain bullish on oil and feel that oil prices are going to stabilize between $60 and $80 per barrel. ESV is a well run company with excellent management. ESV has a very strong balance sheet, which is essential in this environment. I have updated the model but still have some work to do seeing they changed the way they report their segments now. I still feel ESV is a hold and will blog again once I come up with a price target.
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