Ensco (ESV) Q3 Earnings Beat, Revenues Miss; Decline Y/Y

Oil and natural gas driller, Ensco plc (NYSE:ESV) reported diluted third-quarter 2016 earnings of 25 cents a share (excluding one-time items), which surpassed the Zacks Consensus Estimate of 13 cents. The figure, however, decreased from 89 cents a share earned in the year-earlier quarter.

Total revenue decreased to $548.2 million from $1,012.2 million in the year-ago quarter. The top line also missed the Zacks Consensus Estimate of $553.81 million.

Segmental Performance

Floaters: Revenues from floaters plunged 51% to $319.3 million in the third quarter from $646.4 million a year ago. The decline primarily stemmed from lower utilization of several floaters in the U.S. Gulf of Mexico, which in turn, led to a fall in the average day rate to $353,187 from $421,903 a year ago. Reported utilization was 48% as against 59% in the prior-year quarter. Floater contract drilling expenses declined 37% to $153.7 million from $242.4 million in third-quarter 2015.

Jackups: Revenues from this segment decreased 34% to $213.8 million from $325.8 million a year ago. The downside mainly stemmed from fewer rig operating days for several jackups and a decline a in the average day rate to $109,379 from $133,619. Reported utilization fell to 55% from 64% a year ago. Contract drilling expenses decreased 17% year over year to $133.2 million in the third quarter. The decline was partly due to lower compensation, and repair and maintenance expenses.

Other: Revenues decreased significantly to $15.1 million from $40 million in third-quarter 2015. Contract drilling expenses fell to $11.2 million from $31.1 million a year ago.

ENSCO PLC Price, Consensus and EPS Surprise

ENSCO PLC Price, Consensus and EPS Surprise | ENSCO PLC Quote

Costs and Expenses

Depreciation expenses were $109.4 million compared with $145.2 million in third-quarter 2015. General and administrative expenses declined to $25.3 million from $28.4 million last year, mostly due to disciplined expense management.

Balance Sheet and Capex

At the end of the third quarter, Ensco had $465.4 million in cash and cash equivalents. Long-term debt was $4,677 million, with debt-to-capitalization ratio of 36.9% compared with 38.3% in the year-ago quarter.

Zacks Rank

Currently, Ensco carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy sector are Enviva Partners, LP (NYSE:EVA) , Helix Energy Solution Group (NYSE:HLX) and EQT Midstream Partners (NYSE:EQM) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Enviva Partners has a mixed earnings surprise history. The partnership posted positive earnings surprise in two of the last four quarters. It reported a positive earnings surprise of 20.51% in the preceding quarter.

Helix Energy posted a positive earnings surprise of 150.00% in the preceding quarter. It reported a positive earnings surprise in all of the four preceding quarters.

In the last reported quarter, EQT Midstream Partners delivered a positive earnings surprise of 6.72%. Coming to the earnings surprise history, the partnership beat estimates in three of the last four quarters.

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