UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): January 13, 2012
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Ensco plc
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(Exact name of registrant as specified in its charter)
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||||||||
England and Wales
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1-8097
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98-0635229
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||||||
(State or other jurisdiction of
incorporation)
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(Commission File Number)
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(I.R.S. Employer
Identification No.)
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6 Chesterfield Gardens
London, England W1J 5BQ
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(Address of Principal Executive Offices and Zip Code)
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Registrant's telephone number, including area code: 44 (0) 20 7659 4660
Not Applicable
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(Former name or former address, if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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¨
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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¨
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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¨
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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¨
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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||
•
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Note 13 to our condensed consolidated financial statements as of and for the three-month periods ended March 31, 2011 and 2010, included in Part I, "Item 1. Financial Statements" of the Form 10-Q (filed as Exhibit 99.1 hereto); and
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•
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The Business Environment and Results of Operations sections, included in Part I, "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Form 10-Q (filed as Exhibit 99.2 hereto).
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•
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our ability to successfully integrate the operations of Ensco and Pride as contemplated and to realize the anticipated benefits of the Merger;
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•
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our ability to meet our increased debt service obligations as a result of the Merger and to fund planned expenditures, including construction costs for our remaining newbuild construction projects;
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•
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our ability to realize expected benefits from the December 2009 redomestication as a U.K. public limited company and the related reorganization of Ensco’s corporate structure (the "redomestication"), including the effect of any changes in laws, rules and regulations, or the interpretation thereof, or in the applicable facts, that could adversely affect our status as a non-U.S. corporation for U.S. tax purposes or otherwise adversely affect our anticipated consolidated effective income tax rate;
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•
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the continued impact of the Macondo well incident on offshore drilling operations, including current and any future actual or de facto drilling permit and operations delays, moratoria or suspensions, new and future regulatory, legislative or permitting requirements (including requirements related to certification and testing of blow-out preventers and other equipment or otherwise impacting operations), future lease sales, changes in laws, rules and regulations that have or may impose increased financial responsibility, additional oil spill abatement contingency plan capability requirements and other governmental actions that may result in claims of force majeure or otherwise adversely affect our existing drilling contracts;
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•
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governmental regulatory, legislative and permitting requirements affecting drilling operations, including limitations on drilling locations, such as the Gulf of Mexico during hurricane season;
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•
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changes in worldwide rig supply and demand, competition or technology, including changes as a result of delivery of newbuild drilling rigs;
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•
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changes in future levels of drilling activity and expenditures, whether as a result of global capital markets and liquidity, prices of oil and natural gas or otherwise, which may cause us to idle or stack additional rigs;
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•
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downtime and other risks associated with offshore rig operations or rig relocations, including rig or equipment failure, damage and other unplanned repairs, the limited availability of transport vessels, hazards, self-imposed drilling limitations and other delays due to severe storms and hurricanes and the limited availability or high cost of insurance coverage for certain offshore perils, such as hurricanes in the Gulf of Mexico or associated removal of wreckage or debris;
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•
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possible cancellation or suspension of drilling contracts as a result of mechanical difficulties, performance or other reasons;
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•
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risks inherent to shipyard rig construction, repair or enhancement, including risks associated with concentration of our construction contracts with two shipyards, unexpected delays in equipment delivery and engineering or design issues following delivery, or changes in the commencement, completion or service dates;
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•
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delays in actual contract commencement dates;
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•
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environmental or other liabilities, risks or losses, whether related to storm or hurricane damage, losses or liabilities (including wreckage or debris removal), collisions, groundings, blowouts, fires, explosions and other accidents or terrorism or otherwise, for which insurance coverage and contractual indemnities may be insufficient or otherwise unavailable;
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•
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our ability to attract and retain skilled personnel on commercially reasonable terms, whether due to labor regulations, unionization or otherwise;
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•
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governmental action, terrorism, piracy, military action and political and economic uncertainties, including uncertainty or instability resulting from civil unrest, political demonstrations, mass strikes, or an escalation or additional outbreak of armed hostilities or other crises in oil or natural gas producing areas of the Middle East, North Africa, West Africa or other geographic areas, which may result in expropriation, nationalization, confiscation or deprivation of our assets or result in claims of a force majeure situation;
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•
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the outcome of litigation, legal proceedings, investigations or other claims or contract disputes, including any inability to collect receivables or resolve significant contractual or day rate disputes, claims related to the Seahawk bankruptcy and related matters, any purported renegotiation, nullification, cancellation or breach of contracts with customers or other parties and any failure to negotiate or complete definitive contracts following announcements of receipt of letters of intent;
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•
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adverse changes in foreign currency exchange rates, including their effect on the fair value measurement of our derivative instruments; and
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•
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potential long-lived asset or goodwill impairments
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Exhibit No.
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Description
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15.1
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Letter Regarding Unaudited Interim Information.
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99.1 |
Updated Part I, "Item 1. Financial Statements" of our Quarterly Report on Form 10-Q for the period ended March 31, 2011.
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99.2 |
Updated Part I, "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Quarterly Report on Form 10-Q for the period ended March 31, 2011.
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101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
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XBRL Instance Document
XBRL Taxonomy Extension Schema
XBRL Taxonomy Extension Calculation Linkbase
XBRL Taxonomy Extension Definition Linkbase
XBRL Taxonomy Extension Label Linkbase
XBRL Taxonomy Extension Presentation Linkbase
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Ensco plc
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||
Date: January 13, 2012
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/s/ DOUGLAS J. MANKO
Douglas J. Manko
Controller
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Exhibit No.
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Description
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15.1 |
Letter Regarding Unaudited Interim Information.
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99.1 | Updated Part I, "Item 1. Financial Statements" of our Quarterly Report on Form 10-Q for the period ended March 31, 2011. | |
99.2 |
Updated Part I, "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Quarterly Report on Form 10-Q for the period ended March 31, 2011.
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101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
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XBRL Instance Document
XBRL Taxonomy Extension Schema
XBRL Taxonomy Extension Calculation Linkbase
XBRL Taxonomy Extension Definition Linkbase
XBRL Taxonomy Extension Label Linkbase
XBRL Taxonomy Extension Presentation Linkbase
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7
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Re: | Registration Statements on Form S-8 (Nos. 333-174611, 333-58625, 33-40282, 333-97757, 333-125048 and 333-156530) |
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Three Months Ended
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||||||||
March 31,
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||||||||
2011
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2010
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|||||||
OPERATING REVENUES
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$361.5
|
$448.6
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||||||
OPERATING EXPENSES
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||||||||
Contract drilling (exclusive of depreciation expense)
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191.6
|
182.4
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||||||
Depreciation
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59.5
|
51.7
|
||||||
General and administrative
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30.1
|
20.6
|
||||||
281.2
|
254.7
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|||||||
OPERATING INCOME
|
80.3
|
193.9
|
||||||
OTHER INCOME, NET
|
2.2
|
3.1
|
||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
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82.5
|
197.0
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||||||
PROVISION FOR INCOME TAXES
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||||||||
Current income tax expense
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26.3
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23.2
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||||||
Deferred income tax (benefit) expense
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(9.3
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) |
11.8
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|||||
17.0
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35.0
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|||||||
INCOME FROM CONTINUING OPERATIONS
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65.5
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162.0
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||||||
DISCONTINUED OPERATIONS
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||||||||
Income from discontinued operations, net
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--
|
.4
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||||||
Gain on disposal of discontinued operations, net
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--
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29.2
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||||||
--
|
29.6
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|||||||
NET INCOME
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65.5
|
191.6
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||||||
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
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(.9
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)
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(1.8
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)
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||||
NET INCOME ATTRIBUTABLE TO ENSCO
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$ 64.6
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$189.8
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||||||
EARNINGS PER SHARE - BASIC
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||||||||
Continuing operations
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$ .45
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$ 1.12
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||||||
Discontinued operations
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--
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.21
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||||||
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$ .45
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$ 1.33
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||||||
EARNINGS PER SHARE - DILUTED
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||||||||
Continuing operations
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$ .45
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$ 1.12
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||||||
Discontinued operations
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--
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.21
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||||||
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$ .45
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$ 1.33
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||||||
NET INCOME ATTRIBUTABLE TO ENSCO SHARES
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||||||||
Basic
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$ 63.6
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$187.4
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||||||
Diluted
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$ 63.6
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$187.4
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||||||
WEIGHTED-AVERAGE SHARES OUTSTANDING
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||||||||
Basic
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141.2
|
140.7
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||||||
Diluted
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141.4
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140.8
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||||||
CASH DIVIDENDS PER SHARE
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$ .35
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$ .025
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March 31,
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December 31,
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||||
2011
|
2010
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||||
(Unaudited)
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|||||
ASSETS
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|||||
CURRENT ASSETS
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|||||
Cash and cash equivalents
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$3,432.1
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$1,050.7
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|||
Accounts receivable, net
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269.3
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214.6
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|||
Other
|
183.8
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171.4
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|||
Total current assets
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3,885.2
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1,436.7
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|||
PROPERTY AND EQUIPMENT, AT COST
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7,012.0
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6,744.6
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|||
Less accumulated depreciation
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1,752.9
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1,694.7
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|||
Property and equipment, net
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5,259.1
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5,049.9
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|||
GOODWILL
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336.2
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336.2
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|||
OTHER ASSETS, NET
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184.6
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228.7
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|||
$9,665.1
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$7,051.5
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||||
LIABILITIES AND SHAREHOLDERS' EQUITY
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|||||
CURRENT LIABILITIES
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|||||
Accounts payable – trade
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$ 296.4
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$ 163.5
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|||
Accrued liabilities and other
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155.9
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168.3
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|||
Short-term debt | 2,462.9 | -- | |||
Current maturities of long-term debt
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17.2
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17.2
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|||
Total current liabilities
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2,932.4
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349.0
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|||
LONG-TERM DEBT
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240.1
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240.1
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|||
DEFERRED INCOME TAXES
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350.0
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358.0
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|||
OTHER LIABILITIES
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150.7
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139.4
|
|||
COMMITMENTS AND CONTINGENCIES
|
|||||
ENSCO SHAREHOLDERS' EQUITY
|
|||||
Class A ordinary shares, U.S. $.10 par value, 450.0 million shares
authorized, 150.0 million shares issued
|
15.0
|
15.0
|
|||
Class B ordinary shares, £1 par value, 50,000 shares authorized and issued
|
.1
|
.1
|
|||
Additional paid-in capital
|
648.3
|
637.1
|
|||
Retained earnings
|
5,319.4
|
5,305.0
|
|||
Accumulated other comprehensive income
|
13.2
|
11.1
|
|||
Treasury shares, at cost, 6.6 million shares and 7.1 million shares
|
(9.3
|
)
|
(8.8
|
)
|
|
Total Ensco shareholders' equity
|
5,986.7
|
5,959.5
|
|||
NONCONTROLLING INTERESTS
|
5.2
|
5.5
|
|||
Total equity
|
5,991.9
|
5,965.0
|
|||
$9,665.1
|
$7,051.5
|
Three Months Ended
March 31,
|
||||||
2011
|
2010
|
|||||
OPERATING ACTIVITIES
|
||||||
Net income
|
$ 65.5
|
$ 191.6
|
||||
Adjustments to reconcile net income to net cash
provided by operating activities of continuing operations:
|
||||||
Depreciation expense
|
59.5
|
51.7
|
||||
Share-based compensation expense
|
11.5
|
10.7
|
||||
Deferred income tax (benefit) expense
|
(9.3
|
) |
11.8
|
|||
Amortization expense
|
5.5
|
10.8
|
||||
Income from discontinued operations, net
|
--
|
|
(.4
|
)
|
||
Gain on disposal of discontinued operations, net
|
--
|
|
(29.2
|
)
|
||
Other
|
(2.9
|
) |
.2
|
|||
Changes in operating assets and liabilities:
|
||||||
(Increase) decrease in accounts receivable
|
(55.7
|
)
|
14.7
|
|
||
Decrease in trading securities
|
49.3
|
5.4
|
||||
(Increase) decrease in other assets | (9.2 | ) | 4.3 | |||
Increase (decrease) in liabilities
|
11.0
|
|
(111.9
|
)
|
||
Net cash provided by operating activities of continuing operations
|
125.2
|
159.7
|
||||
INVESTING ACTIVITIES
|
||||||
Additions to property and equipment
|
(131.0
|
)
|
(167.5
|
)
|
||
Proceeds from disposal of discontinued operations
|
--
|
94.7
|
||||
Proceeds from disposition of assets
|
.5
|
.2
|
||||
Net cash used in investing activities
|
(130.5
|
)
|
(72.6
|
)
|
||
FINANCING ACTIVITIES
|
||||||
Proceeds from short-term borrowings | 2,462.8 | -- | ||||
Cash dividends paid
|
(50.2
|
)
|
(3.5
|
)
|
||
Financing costs | (25.5 | ) | -- | |||
Other
|
(.5
|
)
|
(1.3
|
)
|
||
Net cash provided by (used in) financing activities
|
2,386.6
|
|
(4.8
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
.1
|
|
(.5
|
)
|
||
Net cash provided by operating activities of discontinued operations
|
--
|
6.2
|
||||
INCREASE IN CASH AND CASH EQUIVALENTS
|
2,381.4
|
88.0
|
||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
1,050.7
|
1,141.4
|
||||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$3,432.1
|
$1,229.4
|
2011
|
2010
|
||||
Income from continuing operations
|
$65.5
|
|
$162.0
|
||
Income from continuing operations attributable to noncontrolling interests
|
(.9
|
)
|
(1.6
|
)
|
|
Income from continuing operations attributable to Ensco
|
$64.6
|
$160.4
|
2010
|
||||
Income from discontinued operations
|
$29.6
|
|||
Income from discontinued operations attributable to noncontrolling interests
|
(.2
|
)
|
||
Income from discontinued operations attributable to Ensco
|
$29.4
|
2011
|
2010
|
||||
Net income attributable to Ensco
|
$64.6
|
$189.8
|
|||
Net income allocated to non-vested share awards
|
(1.0
|
)
|
(2.4
|
)
|
|
Net income attributable to Ensco shares
|
$63.6
|
|
$187.4
|
2011
|
2010
|
|||
Weighted-average shares - basic
|
141.2
|
140.7
|
||
Potentially dilutive share options
|
.2
|
.1
|
||
Weighted-average shares - diluted
|
141.4
|
140.8
|
Derivative Assets
|
Derivative Liabilities
|
|||
March 31,
2011
|
December 31,
2010
|
March 31,
2011
|
December 31,
2010
|
|
Derivatives Designated as Hedging Instruments
|
||||
Foreign currency forward contracts - current(1)
|
$13.3
|
$16.8
|
$ .1
|
$.6
|
Foreign currency forward contracts - non-current(2)
|
.2
|
.1
|
.3
|
.1
|
13.5 | 16.9 | .4 | .7 | |
Derivatives Not Designated as Hedging Instruments
|
||||
Foreign currency forward contracts – current(1) | .1 |
.2
|
.0 | -- |
.1 |
.2
|
.0 | -- | |
Total | $13.6 |
$17.1
|
$ .4 | $.7 |
(1)
|
Derivative assets and liabilities that have maturity dates equal to or less than twelve months from the respective balance sheet date were included in other current assets and accrued liabilities and other, respectively, on our condensed consolidated balance sheets.
|
(2)
|
Derivative assets and liabilities that have maturity dates greater than twelve months from the respective balance sheet date were included in other assets, net, and other liabilities, respectively, on our condensed consolidated balance sheets.
|
|
Gain (Loss)
Recognized in
Other Comprehensive
Income ("OCI")
(Effective Portion)
|
(Loss) Gain
Reclassified from
Accumulated Other
Comprehensive Income
("AOCI") into Income
(Effective Portion)
|
(Loss) Gain
Recognized in Income on
Derivatives (Ineffective
Portion and Amount
Excluded from
Effectiveness Testing)(1)
|
|||||||||
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
|||||||
Interest rate lock contracts(2)
|
$ --
|
$ --
|
$(.1)
|
$(.1)
|
$ --
|
$ --
|
||||||
Foreign currency forward contracts(3)
|
2.9
|
(1.4)
|
.9
|
1.4
|
(.4)
|
.0
|
||||||
Total
|
$ 2.9
|
$(1.4)
|
$ .8
|
$1.3
|
$(.4)
|
$.0
|
(1)
|
Gains and losses recognized in income for ineffectiveness and amounts excluded from effectiveness testing were included in other income, net, in our condensed consolidated statements of income.
|
(2)
|
Gains and losses on derivatives reclassified from AOCI into income (effective portion) were included in other income, net, in our condensed consolidated statements of income.
|
(3)
|
Gains and losses on derivatives reclassified from AOCI into income (effective portion) were included in contract drilling expense in our condensed consolidated statements of income.
|
Net unrealized gains to be reclassified to contract drilling expense
|
$1.8
|
|||
Net realized losses to be reclassified to other income, net
|
(.3
|
)
|
||
Net gains to be reclassified to earnings
|
$1.5
|
2011 | 2010 | ||
Deferred revenue
|
$ 49.6
|
$ 48.1
|
|
Personnel costs
|
39.3
|
58.0
|
|
Wreckage and debris removal
|
21.0
|
21.0
|
|
Taxes
|
20.7
|
22.1
|
|
Other
|
25.3
|
19.1
|
|
$155.9
|
$168.3
|
Weighted-average grant-date fair value
|
$19.31
|
|
Weighted-average exercise price
|
$55.34
|
Risk-free interest rate
|
1.7 | % |
Expected life (in years)
|
3.93 | |
Expected volatility
|
52.2 | % |
Dividend yield
|
2.5 | % |
2011 | 2010 | ||
Net income
|
$65.5 |
|
$191.6 |
Other comprehensive income:
|
|||
Net change in fair value of derivatives
|
2.9
|
|
(1.4)
|
Reclassification of gains and losses on derivative
instruments from other comprehensive income into net income
|
(.8)
|
|
(1.3)
|
Net other comprehensive income (loss)
|
2.1
|
|
(2.7)
|
Comprehensive income
|
67.6 |
|
188.9 |
Comprehensive income attributable to noncontrolling interests
|
(.9)
|
|
(1.8)
|
Comprehensive income attributable to Ensco
|
$66.7 |
|
$187.1 |
Quoted Prices
|
Significant
|
||||||||||||
in Active
|
Other
|
Significant
|
|||||||||||
Markets for
|
Observable
|
Unobservable
|
|||||||||||
Identical Assets
|
Inputs
|
Inputs
|
|||||||||||
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||
As of March 31, 2011
|
|||||||||||||
Supplemental executive retirement plan assets
|
$26.5
|
$ --
|
$ --
|
$26.5
|
|||||||||
Derivatives, net
|
--
|
13.2
|
--
|
13.2
|
|||||||||
Total financial assets
|
$26.5
|
$13.2
|
$ --
|
$39.7
|
|||||||||
As of December 31, 2010
|
|||||||||||||
Auction rate securities
|
$ --
|
$ --
|
$44.5
|
$44.5
|
|||||||||
Supplemental executive retirement plan assets
|
23.0
|
--
|
--
|
23.0
|
|||||||||
Derivatives, net
|
--
|
16.4
|
--
|
16.4
|
|||||||||
Total financial assets
|
$23.0
|
$16.4
|
$44.5
|
$83.9
|
2011
|
2010
|
|||||
Beginning Balance
|
$44.5
|
$60.5
|
||||
Sales
|
(49.3)
|
(5.4)
|
||||
Realized losses* | (.1) | -- | ||||
Unrealized gains*
|
4.9
|
.3
|
||||
Transfers in and/or out of Level 3
|
--
|
--
|
||||
Ending balance
|
$ --
|
$55.4
|
*
|
Realized losses and unrealized gains are included in other income, net, in our condensed consolidated statements of income.
|
March 31,
|
December 31,
|
||||||||
2011
|
2010
|
||||||||
Estimated
|
Estimated
|
||||||||
Carrying
|
Fair
|
Carrying
|
Fair
|
||||||
Value
|
Value
|
Value
|
Value
|
||||||
4.70% Senior Notes | $1,470.5 | $1,488.9 | $ -- | $ -- | |||||
3.25% Senior Notes | 992.4 | 1,001.1 | -- | -- | |||||
7.20% Debentures
|
148.9
|
168.4
|
148.9
|
165.0
|
|||||
6.36% Bonds, including current maturities
|
63.4
|
70.8
|
63.4
|
71.9
|
|||||
4.65% Bonds, including current maturities
|
45.0
|
50.0
|
45.0
|
50.6
|
2010 | |||
Revenues
|
$12.6
|
||
Operating expenses
|
10.8
|
||
Operating income before income taxes
|
1.8
|
||
Income tax expense
|
1.4
|
||
Gain on disposal of discontinued operations, net
|
29.2
|
||
Income from discontinued operations
|
$29.6
|
|
||||||||||||||
|
|
Operating
|
||||||||||||
|
|
|
Segments
|
Reconciling
|
Consolidated
|
|||||||||
Deepwater
|
Midwater
|
Jackup
|
Other
|
Total
|
Items
|
Total
|
||||||||
Revenues
|
$ 98.2
|
$ --
|
$ 263.3
|
$ --
|
$ 361.5
|
$ --
|
$ 361.5
|
|||||||
Operating expenses
Contract drilling (exclusive
of depreciation)
|
40.9
|
--
|
150.3
|
0.4
|
191.6
|
--
|
191.6
|
|||||||
Depreciation
|
16.3
|
--
|
42.4
|
0.4
|
59.1
|
.4
|
59.5
|
|||||||
General and administrative
|
--
|
--
|
--
|
--
|
--
|
30.1
|
30.1
|
|||||||
Operating income (loss)
|
$ 41.0
|
$ --
|
$ 70.6
|
$(0.8)
|
$ 110.8
|
$(30.5)
|
$ 80.3
|
|||||||
Property and equipment, net
|
$3,008.7
|
$ --
|
$2,232.8
|
$14.0
|
$5,255.5
|
$ 3.6
|
$5,259.1
|
|
||||||||||||||
|
|
Operating
|
||||||||||||
|
|
|
Segments
|
Reconciling
|
Consolidated
|
|||||||||
Deepwater
|
Midwater
|
Jackup
|
Other
|
Total
|
Items
|
Total
|
||||||||
Revenues
|
$ 130.4
|
$ --
|
$ 318.2
|
$ --
|
$ 448.6
|
$ --
|
$ 448.6
|
|||||||
Operating expenses
Contract drilling (exclusive
of depreciation)
|
45.0
|
--
|
137.0
|
0.4
|
182.4
|
--
|
182.4
|
|||||||
Depreciation
|
9.8
|
--
|
40.9
|
0.7
|
51.4
|
.3
|
51.7
|
|||||||
General and administrative
|
--
|
--
|
--
|
--
|
--
|
20.6
|
20.6
|
|||||||
Operating income (loss)
|
$ 75.6
|
$ --
|
$ 140.3
|
$(1.1)
|
$ 214.8
|
$(20.9)
|
$ 193.9
|
|||||||
Property and equipment, net
|
$2,341.5
|
$ --
|
$2,108.8
|
$28.1
|
$4,478.4
|
$ 4.2
|
$4,482.6
|
19
|
2011
|
2010
|
|||
Revenues
|
$361.5
|
|
$448.6
|
|
Operating expenses
|
||||
Contract drilling (exclusive of depreciation)
|
191.6
|
182.4
|
||
Depreciation
|
59.5
|
51.7
|
||
General and administrative
|
30.1
|
20.6
|
||
Operating income
|
80.3
|
193.9
|
||
Other income, net
|
2.2
|
3.1
|
||
Provision for income taxes
|
17.0
|
35.0
|
||
Income from continuing operations
|
65.5
|
162.0
|
||
Income from discontinued operations, net
|
--
|
29.6
|
||
Net income
|
65.5
|
191.6
|
||
Net income attributable to noncontrolling interests
|
(.9)
|
(1.8)
|
||
Net income attributable to Ensco
|
$ 64.6
|
$189.8
|
2011
|
2010
|
||||
Deepwater(1)
|
5
|
4
|
|||
Midwater(2) | -- | -- | |||
Jackup(3)
|
40
|
39
|
|||
Under construction(1)(4)
|
5
|
4
|
|||
Total(5)
|
50
|
47
|
(1)
|
ENSCO 8503 was delivered in September 2010 and commenced drilling operations in French Guiana under a short-term sublet agreement during the first quarter of 2011. ENSCO 8503 is expected to commence drilling operations in the U.S. Gulf of Mexico under a two-year contract during 2011.
|
||
(2)
|
In May 2011, midwater rigs were acquired in connection with the Merger. Therefore, our rig fleet did not consist of midwater rigs as of March 31, 2011 and 2010.
|
||
(3)
|
In July 2010, we acquired an ultra-high specification jackup rig. The rig was renamed ENSCO 109 and is currently operating offshore Australia.
|
||
(4)
|
In February 2011, we entered into agreements with Keppel FELS Limited ("KFELS") to construct two ultra-high specification harsh environment jackup rigs. These rigs currently are uncontracted and scheduled for delivery during the first and second half of 2013, respectively.
|
||
(5)
|
The total number of rigs for each period excludes rigs reclassified as discontinued operations.
|
2011
|
2010
|
|||
Rig utilization(1)
|
||||
Deepwater
|
77%
|
99%
|
||
Midwater(3) | N/A | N/A | ||
Jackup(4)
|
72%
|
79%
|
||
Total
|
72%
|
80%
|
Average day rates(2)
|
||||
Deepwater
|
$304,220
|
$ 411,090
|
||
Midwater(3) | N/A | N/A | ||
Jackup(4)
|
96,766
|
111,706
|
||
Total
|
$118,447
|
$138,684
|
(1)
|
Rig utilization is derived by dividing the number of days under contract by the number of days in the period. Days under contract equals the total number of days that rigs have earned a day rate, including days associated with compensated downtime and mobilizations. For newly constructed or acquired rigs, the number of days in the period begins upon commencement of drilling operations for rigs with a contract or when the rig becomes available for drilling operations for rigs without a contract.
|
|
(2)
|
Average day rates are derived by dividing contract drilling revenues, adjusted to exclude certain types of non-recurring reimbursable revenues and lump sum revenues, by the aggregate number of contract days, adjusted to exclude contract days associated with certain mobilizations, demobilizations, shipyard contracts and standby contracts.
|
|
(3) |
Rig utilization and average day rates were not applicable for the Midwater segment as our rig fleet did not consist of midwater rigs during the quarters ended March 31, 2011 and 2010.
|
|
(4)
|
ENSCO 69 has been excluded from rig utilization and average day rates for our Jackup operating segment during the period the rig was controlled and operated by Petrosucre, a subsidiary of Petróleos de Venezuela S.A., the national oil company of Venezuela (January 2009 - August 2010). For additional information on ENSCO 69, see Note 11 to our audited consolidated financial statements for the year ended December 31, 2010 included in our Annual Report on Form 10-K.
|
|
||||||||||||||
|
|
Operating
|
||||||||||||
|
|
|
Segments
|
Reconciling
|
Consolidated
|
|||||||||
Deepwater
|
Midwater
|
Jackup
|
Other
|
Total
|
Items
|
Total
|
||||||||
Revenues
|
$98.2
|
$ --
|
$263.3
|
$ --
|
$361.5
|
$ --
|
$361.5
|
|||||||
Operating expenses
Contract drilling (exclusive
of depreciation)
|
40.9
|
--
|
150.3
|
.4
|
191.6
|
--
|
191.6
|
|||||||
Depreciation
|
16.3
|
--
|
42.4
|
.4
|
59.1
|
.4
|
59.5
|
|||||||
General and administrative
|
--
|
--
|
--
|
--
|
--
|
30.1
|
30.1
|
|||||||
Operating income (loss)
|
$41.0
|
|
$ --
|
$ 70.6
|
$(0.8)
|
$110.8
|
$(30.5)
|
$ 80.3
|
|
||||||||||||||
|
|
Operating
|
||||||||||||
|
|
|
Segments
|
Reconciling
|
Consolidated
|
|||||||||
Deepwater
|
Midwater
|
Jackup
|
Other
|
Total
|
Items
|
Total
|
||||||||
Revenues
|
$130.4
|
$ --
|
$318.2
|
$ --
|
$448.6
|
$ --
|
$448.6
|
|||||||
Operating expenses
Contract drilling (exclusive
of depreciation)
|
45.0
|
--
|
137.0
|
.4
|
182.4
|
--
|
182.4
|
|||||||
Depreciation
|
9.8
|
--
|
40.9
|
.7
|
51.4
|
.3
|
51.7
|
|||||||
General and administrative
|
--
|
--
|
--
|
--
|
--
|
20.6
|
20.6
|
|||||||
Operating income (loss)
|
$ 75.6
|
$ --
|
$140.3
|
$(1.1)
|
$214.8
|
$(20.9)
|
$193.9
|
2011
|
2010
|
||||
Interest income
|
$ .2
|
$ .1
|
|||
Interest expense, net:
|
|||||
Interest expense
|
(18.5
|
)
|
(5.0
|
)
|
|
Capitalized interest
|
14.4
|
5.0
|
|||
(4.1
|
) |
--
|
|||
Other, net
|
6.1
|
3.0
|
|||
$ 2.2
|
$ 3.1
|
2011
|
2010
|
||||
Cash flow from operating activities of continuing operations
|
$125.2
|
$159.7
|
|||
Capital expenditures on continuing operations
|
|||||
New rig construction
|
$ 97.1
|
$151.5
|
|||
Rig enhancements
|
22.7
|
1.9
|
|||
Minor upgrades and improvements
|
11.2
|
14.1
|
|||
$131.0
|
$167.5
|
March 31,
|
December 31,
|
||||
2011
|
2010
|
||||
Long-term debt
|
$ 240.1
|
$ 240.1
|
|
||
Total capital(1)
|
6,226.8
|
6,199.6
|
|||
Long-term debt to total capital(2)
|
3.9%
|
3.9%
|
(1) | Total capital includes long-term debt and Ensco shareholders' equity. | |
(2) |
Due to the redemption features of our senior notes issued in March 2011, as described below, the senior notes were classified as short-term debt on our condensed consolidated balance sheet as of March 31, 2011 and will be reclassified as long-term debt in the event the merger is consummated within the proposed timeframe.
|
March 31,
|
December 31,
|
||||
2011
|
2010
|
||||
Cash and cash equivalents
|
$3,432.1
|
$1,050.7
|
|||
Working capital
|
952.8
|
1,087.7
|
|||
Current ratio*
|
1.3
|
4.1
|
* |
Due to the redemption features of our senior notes issued in March 2011, as described above, the Notes were classified as short-term debt on our condensed consolidated balance sheet as of March 31, 2011 and will be reclassified as long-term debt in the event the merger is consummated within the proposed timeframe.
|
•
|
The Internal Revenue Service and/or Her Majesty's Revenue and Customs may disagree with our interpretation of tax laws, treaties, or regulations with respect to our redomestication to the U.K. in December 2009.
|
|
•
|
During recent years, the number of tax jurisdictions in which we conduct operations has increased, and we currently anticipate that this trend will continue.
|
|
•
|
In order to utilize tax planning strategies and conduct operations efficiently, our subsidiaries frequently enter into transactions with affiliates that are generally subject to complex tax regulations and are frequently reviewed by tax authorities.
|
|
•
|
We may conduct future operations in certain tax jurisdictions where tax laws are not well developed, and it may be difficult to secure adequate professional guidance.
|
|
•
|
Tax laws, regulations, agreements and treaties change frequently, requiring us to modify existing tax strategies to conform to such changes.
|
17
|
Short-Term Debt (Details) (USD $)
In Millions, unless otherwise specified |
Mar. 31, 2011
|
Feb. 06, 2011
|
Mar. 17, 2011
Senior Notes, 3.25% [Member]
|
Mar. 17, 2011
Senior Notes, 4.70% [Member]
|
---|---|---|---|---|
Short-term Debt [Line Items] | ||||
Aggregate redemption price of notes | 100.00% | 100.00% | 100.00% | |
Aggregate redemption price of notes where merger is not consummated | 101.00% | 101.00% | ||
Aggregate redemption price of notes percentage | 102.00% | 102.00% | ||
Senior notes aggregate outstanding principal balance | $ 1,000.0 | $ 1,500.0 | ||
Discount to senior notes | 7.6 | 29.6 | ||
Bridge Loan | $ 2,750.0 |
Income Taxes (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | |
---|---|---|
Mar. 31, 2011
|
Mar. 31, 2010
|
|
Income Taxes [Abstract] | ||
Amount of income tax expense, inclusive of interest and penalties, related to a prior year tax examination | $ 4.7 | |
Recognition of a liability for unrecognized tax benefit from prior year | $ 3.2 | |
Consolidated effective income tax rate including tax expense attributable to prior period | 20.60% | |
Consolidated effective income tax rate excluding tax expense attributable to prior periods | 14.90% | 17.80% |
Fair Value Measurements (Summary Of Fair Value Measurements Of Auction Rate Securities Using Significant Level 3 Inputs) (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 31, 2011
|
Mar. 31, 2010
|
|||||
Fair Value Measurements [Abstract] | ||||||
Beginning Balance | $ 44.5 | $ 60.5 | ||||
Sales | (49.3) | (5.4) | ||||
Realized losses | (0.1) | [1] | [1] | |||
Unrealized gains | 4.9 | [1] | 0.3 | [1] | ||
Transfers in and/or out of Level 3 | ||||||
Ending balance | $ 55.4 | |||||
|
Earnings Per Share (Reconciliation Of Weighted-Average Shares Used In Earning Per Share Computations) (Details)
|
3 Months Ended | |
---|---|---|
Mar. 31, 2011
|
Mar. 31, 2010
|
|
Earnings Per Share [Abstract] | ||
Weighted-average shares - basic | 141,200,000 | 140,700,000 |
Potentially dilutive share options | 200,000 | 100,000 |
Weighted-average shares - diluted | 141,400,000 | 140,800,000 |
Antidilutive share options excluded from computation of diluted earning per share | 400,000 | 1,000,000 |
Comprehensive Income (Tables)
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2011
|
|||||||||||||||||||||||||||||||||||||||||
Comprehensive Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Components Of Other Comprehensive Income, Net Of Tax |
|
Share-Based Compensation (Weighted Average Assumptions) (Details)
|
3 Months Ended |
---|---|
Mar. 31, 2011
|
|
Share-Based Compensation [Abstract] | |
Risk-free interest rate | 1.70% |
Expected life (in years) | 3.93 |
Expected volatility | 52.20% |
Dividend yield | 2.50% |
Derivative Instruments (Estimated Net Gains Associated With Derivative Instruments, Net Of Tax That Will Be Reclassified To Earnings Within Twelve Months) (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended |
---|---|
Mar. 31, 2011
|
|
Net Unrealized Gains To Be Reclassified To Contract Drilling Expense [Member]
|
|
Derivative Instruments, Gain (Loss) [Line Items] | |
Net gains (losses) to be reclassified to earnings | $ 1.8 |
Net Realized Losses To Be Reclassified To Other Income, Net [Member]
|
|
Derivative Instruments, Gain (Loss) [Line Items] | |
Net gains (losses) to be reclassified to earnings | (0.3) |
Net Gain (Loss) To Be Reclassified Within Twelve Months [Member]
|
|
Derivative Instruments, Gain (Loss) [Line Items] | |
Net gains (losses) to be reclassified to earnings | $ 1.5 |
Fair Value Measurements (Schedule Of Carrying Values And Estimated Fair Values Of Debt Instruments) (Details) (USD $)
In Millions, unless otherwise specified |
Mar. 31, 2011
|
Dec. 31, 2010
|
---|---|---|
Carrying Value [Member]
|
||
Debt Instrument [Line Items] | ||
4.70% Senior Notes | $ 1,470.5 | |
3.25% Senior Notes | 992.4 | |
7.20% Debentures | 148.9 | 148.9 |
6.36% Bonds, including current maturities | 63.4 | 63.4 |
4.65% Bonds, including current maturities | 45.0 | 45.0 |
Estimate Fair Value [Member]
|
||
Debt Instrument [Line Items] | ||
4.70% Senior Notes | 1,488.9 | |
3.25% Senior Notes | 1,001.1 | |
7.20% Debentures | 168.4 | 165.0 |
6.36% Bonds, including current maturities | 70.8 | 71.9 |
4.65% Bonds, including current maturities | $ 50.0 | $ 50.6 |
Derivative Instruments
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Note 4 - Derivative Instruments
Our functional currency is the U.S. dollar. As is customary in the oil and gas industry, a majority of our revenues are denominated in U.S. dollars, however, a portion of the revenues earned and expenses incurred by certain of our subsidiaries are denominated in currencies other than the U.S. dollar ("foreign currencies"). These transactions are remeasured in U.S. dollars based on a combination of both current and historical exchange rates. We use foreign currency forward contracts ("derivatives") to reduce our exposure to foreign currency exchange rate risk. We maintain a foreign currency exchange rate risk management strategy that utilizes derivatives to reduce our exposure to unanticipated fluctuations in earnings and cash flows caused by changes in foreign currency exchange rates. Although no interest rate related derivatives were outstanding as of March 31, 2011 and December 31, 2010, we occasionally employ an interest rate risk management strategy that utilizes derivatives to minimize or eliminate unanticipated fluctuations in earnings and cash flows arising from changes in, and volatility of, interest rates. We minimize our credit risk relating to the counterparties of our derivatives by transacting with multiple, high-quality financial institutions, thereby limiting exposure to individual counterparties, and by monitoring the financial condition of our counterparties. We do not enter into derivatives for trading or other speculative purposes. All of our derivatives mature in the next 17 months.
All derivatives were recorded on our condensed consolidated balance sheets at fair value. Accounting for the gains and losses resulting from changes in the fair value of derivatives depends on the use of the derivative and whether it qualifies for hedge accounting. See "Note 9 - Fair Value Measurements" for additional information on the fair value measurement of our derivatives.
As of March 31, 2011 and December 31, 2010, our condensed consolidated balance sheets included net foreign currency derivative assets of $13.2 million and $16.4 million, respectively. Derivatives recorded at fair value in our condensed consolidated balance sheets as of March 31, 2011 and December 31, 2010 consisted of the following (in millions):
We utilize derivatives designated as hedging instruments to hedge forecasted foreign currency denominated transactions ("cash flow hedges"), primarily to reduce our exposure to foreign currency exchange rate risk associated with the portion of our remaining ENSCO 8500 Series® construction obligations denominated in Singapore dollars and contract drilling expenses denominated in various foreign currencies. As of March 31, 2011, we had cash flow hedges outstanding to exchange an aggregate $245.2 million for various foreign currencies, including $132.8 million for Singapore dollars, $95.7 million for British pounds, $8.4 million for Mexican pesos and $8.3 million for other currencies.
Gains and losses, net of tax, on derivatives designated as cash flow hedges included in our condensed consolidated statements of income for the quarters ended March 31, 2011 and 2010 were as follows (in millions):
We have net assets and liabilities denominated in numerous foreign currencies and use various methods to manage our exposure to foreign currency exchange rate risk. We predominantly structure our drilling contracts in U.S. dollars which significantly reduces the portion of our cash flows and assets denominated in foreign currencies. We occasionally enter into derivatives that hedge the fair value of recognized foreign currency denominated assets or liabilities but do not designate such derivatives as hedging instruments. In these situations, a natural hedging relationship generally exists whereby changes in the fair value of the derivatives offset changes in the fair value of the underlying hedged items. As of March 31, 2011, we had derivatives not designated as hedging instruments outstanding to exchange an aggregate $30.3 million for various foreign currencies, including $11.8 million for Australian dollars, $5.8 million for Swiss francs, $4.0 million for Indonesian rupiahs and $8.7 million for other currencies.
Net gains of $200,000 and $600,000 associated with our derivatives not designated as hedging instruments were included in other income, net, in our condensed consolidated statements of income for the quarters ended March 31, 2011 and 2010, respectively.
As of March 31, 2011, the estimated amount of net gains associated with derivatives, net of tax, that will be reclassified to earnings during the next twelve months was as follows (in millions):
|