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Rowan Companies (RDC) Incurs Narrower-than-Expected Q2 Loss

Contract drilling service provider, Rowan Companies plc RDC reported better-than-expected second-quarter 2017 results owning to recent contract awards along with lower costs and expenses, partially offset by slow industry recovery, fall in dayrates and average utilization.

The company’s adjusted second-quarter 2017 loss from continuing operations was 25 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 32 cents per share. The bottom line deteriorated significantly from the year-ago quarter profit of 75 cents per share.

Total revenue was $320 million in the second quarter compared with $612 million in the prior-year quarter. Revenues, however, beat the Zacks Consensus Estimate of $300 million.
 

Rowan Companies PLC Price, Consensus and EPS Surprise

Rowan Companies PLC Price, Consensus and EPS Surprise | Rowan Companies PLC Quote

Dayrates and Utilization

The company's deepwater rigs had a dayrate of $599,600 compared with $607,000 in the year-ago quarter. Jackup rigs saw a dayrate of $129,900 compared with $164,900 in the prior year quarter.

The overall dayrate of all rigs was $186,000 compared with $239,400 in second-quarter 2016. Average utilization of the company's rigs was 69% compared with 76% in the comparable quarter last year.

As of Jun 30, 2017, the company has a fleet of 29 mobile offshore drilling units including 25 jack-up rigs and four ultra-deepwater drillships.

Total Costs and Expenses

For the quarter, the company’s costs and expenses were $294.1 million compared with $335.6 million in the year-ago comparable period. The decline in expenses can be attributed to 19.3% fall in direct operating costs and 15.7% drop in selling, general and administrative costs.

Financials

As of Jun 30, 2017, the company's cash balance was $1,145.2 million and long-term debt (excluding current maturities) was $2,516.6 million. The long-term debt-to-capitalization ratio was 32.2%.

Price Performance

Shares of Rowan Companies have lost 34.3% in the second quarter of 2017, underperforming the industry’s 28.7% loss.

Zacks Rank and Stocks to Consider

Rowan Companies presently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the oil and energy sector include Braskem S.A. BAK, Global Partners LP GLP and Range Resources Corporation RRC. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Braskem’s sales for 2017 are expected to increase 11% year over year. The company delivered an average positive earnings surprise of 107.8% in the last four quarters.

Global Partners’ sales for the third quarter of 2017 are expected to increase 3.5% year over year. The partnership delivered an average positive earnings surprise of 415.3% in the last four quarters.

Range Resources’ sales for 2017 are expected to increase 123.1% year over year. The company delivered a positive earnings surprise of 250% in the second quarter of 2017.

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Global Partners LP (GLP): Free Stock Analysis Report
 
Braskem S.A. (BAK): Free Stock Analysis Report
 
Rowan Companies PLC (RDC): Free Stock Analysis Report
 
Range Resources Corporation (RRC): Free Stock Analysis Report
 
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