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Rowan says expects Saudi Aramco to keep employing its rigs

March 2, 2015
(Reuters) – Rowan Cos Plc said state-owned oil company Saudi Aramco was likely to continue employing about a third of the company’s 28 contracted rigs, sending the offshore driller’s shares up as much as 5.5 percent on Friday.
Rowan said it was in talks with Saudi Aramco to extend contracts for four of its drillships and was looking to win contracts for three jack-up rigs.
“We have been given every indication that Saudi Aramco intends to keep our jack-ups in their fleet,” Mark Keller, Rowan’s executive vice president of business development, said on a post-earnings call.
Rival Hercules Offshore Inc said on Thursday that Saudi Aramco had terminated a drilling contract for one of its rigs.
Rowan has 30 jack-up rigs, of which six are currently idle, with 12 up for contract renewal in 2015.
The company wrote down the value of 12 of its oldest jack-up rigs by $438.4 million in the fourth quarter, leading it to report a loss compared with a profit a year earlier.
Global crude oil prices have more than halved since June, forcing oil producers to scale back spending and drilling activity.
Rig providers have responded by shutting down rigs or retiring old rigs. Most have written down the value of their assets.
Transocean Ltd took a $992 million impairment charge on its contract drilling business in the December quarter, while Ensco Plc recorded a $3 billion goodwill impairment charge.
Rowan reported a net loss from continuing operations of $326.9 million, or $2.63 per share, in the quarter ended Dec. 31, compared with a profit of $49.7 million, or 40 cents per share, a year earlier.
Excluding the impairment charge, the company posted a quarterly net profit of 89 cents per share, matching the average analyst estimate, according to Thomson Reuters I/B/E/S.
Revenue rose 41 percent to $556.2 million as two ultra-deepwater rigs came into service in the quarter.
Rowan’s fleet utilization rate – a measure of the number of rigs deployed – rose slightly to 86 percent due to the new rig additions.
The company’s shares were up 4.8 percent at $21.68 in afternoon trading on the New York Stock Exchange, reversing early losses. Up to Thursday’s close, the stock had fallen nearly 37 percent over the past year. (Reporting By Kanika Sikka in Bengaluru; Writing by Swetha Gopinath; Editing by Simon Jennings)

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