Rowan Companies plc (NYSE:RDC) Q1 2015 Earnings Conference Call Transcript

May 06, 2015 • 11:00 am ET

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Rowan Companies plc (NYSE:RDC) Q1 2015 Earnings Conference Call Transcript

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Operator
operator

Good morning. My name is Suzanne, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rowan Company's First Quarter 2015 Earnings Result Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)

Thank you. Mr. Chris Pitre, Director of IR, you may begin your conference.

Executive
Chris Pitre

Welcome to Rowan's first quarter 2015 earnings call, and thank you for your interest in Rowan. A copy of the company's earnings report issued earlier this morning can be found at our website at rowan.com. Joining me on the call this morning are Tom Burke, President and CEO; Mark Keller, EVP of Business Development; and Stephen Butz, EVP and CFO.

(Forward-Looking Cautionary Statements)

With that, I would like to turn the call over to Tom Burke, Rowan's President and CEO. Tom?

Executive
Tom Burke

Good morning and welcome to our first quarter 2015 earnings call. The first quarter was our strongest quarter in recent years with earnings of $0.99 per share. This outstanding performance was due to our three newbuild ultra-deepwater drillships being on rate by the end of the quarter, low out-of-service time and significant cost-control efforts.

I'm very pleased with our deepwater startup. We now have three of the most desirable high-specification drillships in the world operating at attractive rates with a long-term contract with three professional, well-run operators. Our remaining newbuild drillship, the Rowan Relentless, is under way to the U.S. Gulf of Mexico and is expected to begin working for Freeport-McMoRan on a two-year contract in July.

I'm proud of our onshore and offshore employees who've worked tirelessly to deliver our state-of-the-art ships, find and hired talented and experienced crew members and prepared the company for operations in the ultra-deepwater market. While all of our drillships are contracted into or beyond 2017, when we consider eventually re-contracting them we know we will be marketing assets that even our peer drilling companies consider the best of the best.

At this time, we do not have any new assets under construction, and Stephen will guide you on our reduced CapEx. Our strong performance was also due to a lower out-of-service time of approximately 3% in the quarter, which is on the low end of our previous guidance. This was helped in part by our operations and project teams working diligently to conduct the Gorilla II special survey while the rig was on rate in a remote part of Indonesia.

Our idle time in the first quarter was approximately 5% compared to 3% last quarter. We made the decision to cold-stack the Rowan Louisiana during the quarter, which joins our two other cold-stacked slot rigs at our Sabine Pass, Texas yard. Our holding costs from these three rigs are minimal, but I expect to review their future this quarter. Today we have four jack-ups either warm or hot-stacked, two in Southeast Asia, where we are holding our warm-stacking costs low, and two