Deepwater segment revenues grew to a record $130 million in the first quarter, or nearly 30% of total revenues, highlighting the success of their deepwater fleet expansion strategy initiated in 2005 and reinforcing their hybrid drilling strategy. Only one-third, or $1 billion, of the ENSCO 8500 Series(R) newbuild capital commitments are remaining.
*startup of ENSCO 8500 Series(R) semisubmersibles and the remaining rigs under construction are on schedule for their delivery dates. In the first quarter, achieved 99% utilization in their deepwater segment. ENSCO 8502, is their latest ultra-deepwater semisubmersible drilling rig, was delivered during the first quarter and is now mobilizing to the U.S. Gulf of Mexico to commence operations under a multi-year contract.
Deepwater segment revenues grew to $130 million in first quarter 2010, from zero dollars a year ago. ENSCO 7500, which operated during first quarter 2010, was mobilizing to Australia during first quarter 2009 when it was the only rig in the deepwater segment. Revenues related to the mobilization were deferred until drilling commenced in April 2009. Additionally, two new ENSCO 8500 Series(R) rigs commenced operations in 2009: ENSCO 8500 in June and ENSCO 8501 in October.
In first quarter 2010, the average day rate was $411,000 and utilization was 99%. Comparable figures for the prior year period are not applicable due to revenues being deferred while ENSCO 7500 was mobilizing.
Contract drilling expense was $45 million in first quarter 2010, up from $5 million in first quarter 2009. The increase was primarily due to the deferral of certain costs associated with the ENSCO 7500 mobilization to Australia during first quarter 2009 and the commencement of ENSCO 8500 and ENSCO 8501 operations in mid- and late-2009, respectively.
Total Jackup Segments
Revenues from the jackup fleet totaled $319 million in first quarter 2010, down from $500 million a year ago. The decline primarily was due to a six percentage point decrease in utilization to 76% and a $55,000 decline in average day rates to $113,000. Contract drilling expense was reduced by nine percent year to year as personnel and other costs were lowered to address declining utilization.
Total operating expenses in first quarter 2010 increased to $259 million from $215 million last year. Contract drilling and depreciation expense rose by 17% and 20%, respectively, driven by growth in the deepwater segment. General and administrative expense increased to $21 million, from $12 million in first quarter 2009, as a result of increases in share-based compensation expense, professional fees incurred in connection with the redomestication and costs related to opening the new London headquarters.
Strong Financial Position - 31 March 2010
Ensco continues to maintain a strong financial position:
Based on Ensco recent earnings, the current rig market, and my outlook on the future of the rig market compared to Ensco PLC's growth strategy. I still maintain the buy valuation.
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