(RTTNews) - Offshore drilling contractor Ensco International, Inc. (ESV: News ) on Wednesday reported a 47% year-over-year drop in profit for the third quarter, as revenues declined 31% due to fall in fleet utilization. Average day rates increased for the deepwater segment, while it declined for the premium jackup fleet. Earnings per share from continuing operations, however, came in ahead of analysts' expectations by a penny.

In a statement, chairman, president and chief executive officer, Dan Rabun said, "We recently added ENSCO 8501 to our active fleet of ultra-deepwater semisubmersibles, and we expect deepwater segment revenues to grow significantly in 2010 and 2011. We also are pleased to report that new and existing customers recently contracted several of our premium jackups. Jackup utilization is projected to rise, which will help to lessen the impact of declining day rates."

Third Quarter Results

Dallas, Texas-based Ensco reported net income of $147.8 million or $1.05 per share for the third quarter, lower than $278.8 million or $1.97 per share in the prior-year quarter.

Income from continuing operations was $150.4 million or $1.05 per share, compared to $283.7 million or $2.06 per share in the year-ago quarter. On average, 31 analysts polled by Thomson Reuters expected the company to earn $1.04 per share for the third quarter. Analysts' estimates typically exclude special items.

Ensco noted that earnings for the latest quarter were reduced by $0.19 per share, due to the unplanned downtime for Ensco 7500 and Ensco 8500 rigs in September. The company last month said that its third quarter earnings are likely to be negatively impacted due to unanticipated incremental downtime and repairs required the two offshore rigs. Ensco then projected third-quarter earnings to be reduced by about $0.14 to $0.18 per share.
Operating revenues for the quarter dropped 31% to $425.4 million from $619.5 million in the same quarter last year. Twenty-two analysts expected the company to report revenues of $438.61 million for the quarter.

Peer Performance

Among others in the industry, Hamilton, Bermuda-based Nabors Industries Ltd. (NBR: News ) reported on Tuesday a profit for the third quarter that plunged from last year, hurt by weak demand. Net income was $29.5 million or $0.10 per share, compared to $194.0 million or $0.67 per share in the prior-year quarter. Excluding items, adjusted net income was $42.5 million or $0.15 per share for the latest quarter. Total revenues and other income for the third quarter declined to $803.57 million from $1.44 billion in the same quarter last year. Looking ahead, the company sounded optimistic indicating higher rates and demand for its rigs in select markets.

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