Ensco plc Reports Third Quarter 2016 Results

Ensco plc (NYSE: ESV) today reported earnings per share of $0.28 for
third quarter 2016 compared to $1.24 a year ago. Results from
discontinued operations were zero cents per share in third quarter 2016
and a loss of $0.10 per share in the year-ago period. Earnings per share
from continuing operations were $0.28 for third quarter 2016 compared to
$1.34 a year ago.

Several items in continuing operations influenced these comparisons:

• $18 million or $0.06 per share gain included in third quarter 2016
  other income related to the repurchase of $189 million aggregate
  principal amount of senior notes at a discount
• $6 million or $0.02 per share of other discrete tax items that reduced
  the third quarter 2016 tax provision compared to $2 million or $0.01
  per share of other discrete tax items that increased the third quarter
  2015 tax provision
• $4 million or $0.01 per share of severance and other restructuring
  costs in third quarter 2016 contract drilling expense versus $5
  million or $0.02 per share of restructuring costs in third quarter
  2015 contract drilling expense
• $129 million or $0.55 per share from early contract terminations for
  customer convenience included in third quarter 2015 revenue
• $2 million or $0.01 per share loss on impairment in third quarter 2015

Chief Executive Officer and President Carl Trowell said, “Market
conditions remain challenging for the offshore drilling sector due to
declining rig demand as customers restrict capital spending. Our focus
is on areas we can control — namely operational excellence, capital
discipline and expense management. We have made progress on all three
fronts with record operational utilization and safety performance, a
one-year extension of a portion of our revolving credit facility,
incremental debt repurchases to further reduce balance sheet leverage
and additional expense savings.”

Through 30 September 2016, Ensco has achieved its best-ever safety
performance with a total recordable incident rate of 0.22 and record
fleetwide operational utilization of 99%. Effective 4 October 2016,
Ensco extended the maturity date for a portion of its revolving credit
facility by one year into 2020. Through 30 September 2019, total
commitments under the revolving credit facility are $2.25 billion, then
$1.13 billion through 30 September 2020. Debt was further reduced
through the repurchase of $189 million aggregate principal balance of
senior notes at a discount in third quarter 2016.

Additional steps have been taken since mid-year 2016 to reduce the
Company's expense base by reducing onshore support personnel and
suspending a discretionary compensation plan. In aggregate, these
actions are expected to reduce expenses by approximately $50 million on
an annualized basis from second quarter 2016 levels: $15 million is
reflected in third quarter 2016 results and was incorporated in the
Company's prior projections for third quarter 2016, an incremental $15
million is anticipated in fourth quarter 2016 and another $20 million is
expected beginning January 2017. This supplements significant expense
savings achieved through fleet restructuring during the market downturn.

Third Quarter Results

Continuing Operations
Revenues were
$548 million in third quarter 2016 compared to $1.012 billion a year
ago, primarily due to a decline in reported utilization to 53% from 62%
last year. As noted above, third quarter 2015 revenues included $129
million from early contract terminations. The average day rate for the
fleet declined to $184,000 in third quarter 2016 from $232,000 a year
ago.

Contract drilling expense declined 31% to $298 million from $434 million
last year due to fewer rig operating days and disciplined expense
management. Third quarter 2016 contract drilling expense included $4
million of severance and other restructuring costs related to a
reduction in onshore support personnel compared to $5 million of
restructuring costs a year ago.

Depreciation expense declined to $109 million from $145 million a year
ago mostly due to non-cash asset impairments recorded in fourth quarter
2015, partially offset by ENSCO DS-8 joining the active fleet. General
and administrative expense declined to $25 million in third quarter 2016
from $28 million last year, due in part to reduced compensation costs,
including staff reductions.

Other expense declined to $31 million from $52 million a year ago. The
year-to-year comparison was influenced by an $18 million gain on the
repurchase of $189 million aggregate principal amount of senior notes at
a discount during third quarter 2016. Interest expense in third quarter
2016 was $53 million, net of $12 million of interest that was
capitalized, compared to interest expense of $55 million in third
quarter 2015, net of $22 million of interest that was capitalized.
Excluding discrete tax items, the effective tax rate was 6.0% compared
to 12.6% a year ago.

Discontinued Operations
Discontinued
operations include one floater and one jackup held for sale, as well as
rigs and other assets no longer on the Company’s balance sheet. The net
loss from discontinued operations was $1 million for third quarter 2016
compared to $23 million a year ago. Third quarter 2015 results included
a $17 million net loss on impairment.

Segment Highlights for Continuing Operations

Floaters
Floater revenues were $319
million in third quarter 2016 compared to $646 million last year.
Excluding $129 million from early contract terminations in the year-ago
period noted above, revenues declined 38%. This year-to-year decline in
revenues was mostly due to lower utilization in the U.S. Gulf of Mexico
and a decline in the average day rate to $353,000 from $422,000 a year
ago. Reported utilization was 48% compared to 59% a year ago. Adjusted
for uncontracted rigs and planned downtime, operational utilization was
99% compared to 95% last year.

Floater contract drilling expense declined 37% to $154 million in third
quarter 2016 from $242 million a year ago. Rig operating days declined
year-to-year and unit labor and repair and maintenance costs were
reduced.

Jackups
Jackup revenues were $214
million compared to $326 million a year ago, mostly due to fewer rig
operating days and a decline in average day rates to $109,000 from
$134,000 a year ago. Reported utilization was 55% compared to 64% in
third quarter 2015. Adjusted for uncontracted rigs and planned downtime,
operational utilization in third quarter 2016 was 98.9% compared to
99.8% a year ago.

Contract drilling expense declined to $133 million from $160 million
last year. This decline in contract drilling expense was mostly due to
fewer rig operating days as well as reduced unit labor and repair and
maintenance costs.

Other
Other is composed of managed
drilling rigs. Revenues declined to $15 million from $40 million in
third quarter 2015. Contract drilling expense declined to $11 million
from $31 million a year ago. The completion of three managed jackup
contracts drove these revenue and contract drilling expense declines.

			Third Quarter
(in millions of $,			Floaters								Jackups								Other								Reconciling Items					Consolidated Total
except %)			2016		2015		Chg				2016		2015		Chg				2016		2015		Chg				2016		2015			2016		2015		Chg
Revenues			319.3		646.4		(51	)%			213.8		325.8		(34	)%			15.1		40.0		(62	)%			-		-			548.2		1,012.2		(46	)%
Operating expenses
Contract drilling			153.7		242.4		(37	)%			133.2		160.0		(17	)%			11.2		31.1		(64	)%			-		-			298.1		433.5		(31	)%
Loss on impairment			-		-		-				-		2.4		nm				-		-		-				-		-			-		2.4		nm
Depreciation			72.9		95.7		(24	)%			32.1		44.8		(28	)%			-		-		-				4.4		4.7			109.4		145.2		(25	)%
General and admin.			-		-		-				-		-		-				-		-		-				25.3		28.4			25.3		28.4		(11	)%
Operating income			92.7		308.3		(70	)%			48.5		118.6		(59	)%			3.9		8.9		(56	)%			(29.7	)	(33.1	)		115.4		402.7		(71	)%

Financial Position — 30 September 2016

• $3.8 billion of contracted revenue backlog excluding bonus
  opportunities
• $4.0 billion of liquidity
  • $1.8 billion of cash and short-term investments
  • $2.25 billion available revolving credit facility
• No debt maturities until second quarter 2019
• $4.7 billion of long-term debt — down from $5.9 billion at 31 December
  2015
• 27% net debt-to-capital ratio (net of $1.8 billion of cash and
  short-term investments)

Ensco will conduct a conference call at 10:00 a.m. Central Time (4:00
p.m. London time) on Thursday, 27 October 2016, to discuss third quarter
2016 results. The call will be webcast live at www.enscoplc.com.
Alternatively, callers may dial 1-855-239-3215 from within the United
States and +1-412-542-4130 from outside the U.S. Please ask for the
Ensco conference call. It is recommended that participants call 20
minutes before the scheduled start time. Callers may avoid delays by
pre-registering to receive a dial-in number and PIN at http://dpregister.com/10082957.

A webcast replay and transcript of the call will be available at www.enscoplc.com.
A replay will also be available through 27 November 2016 by dialing
1-877-344-7529 within the United States or +1-412-317-0088 from outside
the U.S. (conference ID 10082957).

Ensco plc (NYSE: ESV) brings energy to the world as a global provider of
offshore drilling services to the petroleum industry. For more than 28
years, the Company has focused on operating safely and going beyond
customer expectations. Ensco is ranked first in total customer
satisfaction in the latest independent survey by EnergyPoint Research -
the sixth consecutive year that Ensco has earned this distinction.
Operating one of the newest ultra-deepwater rig fleets and a leading
premium jackup fleet, Ensco has a major presence in the most strategic
offshore basins across six continents. Ensco plc is an English limited
company (England No. 7023598) with its registered office and corporate
headquarters located at 6 Chesterfield Gardens, London W1J 5BQ. To learn
more, visit our website at www.enscoplc.com.

Statements contained in this press release that are not historical
facts are forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Forward-looking statements include words or phrases such as
“anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,”
“project,” “could,” “may,” “might,” “should,” “will” and similar words
and specifically include statements involving expected financial
performance, effective tax rate, expected expense savings, day rates and
backlog, estimated rig availability; rig commitments and contracts;
contract duration, status, terms and other contract commitments; letters
of intent or letters of award; scheduled delivery dates for rigs; the
timing of delivery, mobilization, contract commencement, relocation or
other movement of rigs; our intent to sell or scrap rigs; and general
market, business and industry conditions, trends and outlook. Such
statements are subject to numerous risks, uncertainties and assumptions
that may cause actual results to vary materially from those indicated,
including commodity price fluctuations, customer demand, new rig supply,
downtime and other risks associated with offshore rig operations,
relocations, severe weather or hurricanes; changes in worldwide rig
supply and demand, competition and technology; future levels of offshore
drilling activity; governmental action, civil unrest and political and
economic uncertainties; terrorism, piracy and military action; risks
inherent to shipyard rig construction, repair, maintenance or
enhancement; possible cancellation, suspension or termination of
drilling contracts as a result of mechanical difficulties, performance,
customer finances, the decline or the perceived risk of a further
decline in oil and/or natural gas prices, or other reasons, including
terminations for convenience (without cause); the cancellation of
letters of intent or letters of award or any failure to execute
definitive contracts following announcements of letters of intent or
letters of award; the outcome of litigation, legal proceedings,
investigations or other claims or contract disputes; governmental
regulatory, legislative and permitting requirements affecting drilling
operations; our ability to attract and retain skilled personnel on
commercially reasonable terms; environmental or other liabilities, risks
or losses; debt restrictions that may limit our liquidity and
flexibility; our ability to realize the expected benefits from our
redomestication and actual contract commencement dates; tax matters,
including our effective tax rate; cybersecurity risks and threats; and
the occurrence or threat of epidemic or pandemic diseases or any
governmental response to such occurrence or threat. In addition to the
numerous factors described above, you should also carefully read and
consider “Item 1A. Risk Factors” in Part I and “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” in Part II of our most recent annual report on Form 10-K, as
updated in our subsequent quarterly reports on Form 10-Q, which are
available on the SEC’s website at www.sec.gov
or on the Investor Relations section of our website at www.enscoplc.com.
Each forward-looking statement speaks only as of the date of the
particular statement, and we undertake no obligation to publicly update
or revise any forward-looking statements, except as required by law.

ENSCO PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share amounts) (Unaudited)
			Three Months Ended September 30,									Nine Months Ended September 30,
			2016				2015					2016				2015
OPERATING REVENUES			$	548.2			$	1,012.2				$	2,271.8			$	3,235.1
OPERATING EXPENSES
Contract drilling (exclusive of depreciation)			298.1				433.5					1,012.0				1,454.4
Loss on impairment			-				2.4					-				2.4
Depreciation			109.4				145.2					335.1				422.8
General and administrative			25.3				28.4					76.1				88.2
			432.8				609.5					1,423.2				1,967.8
OPERATING INCOME			115.4				402.7					848.6				1,267.3
OTHER INCOME (EXPENSE)
Interest income			3.8				1.0					8.6				6.8
Interest expense, net			(53.4		)		(55.3		)			(172.5		)		(158.9		)
Other, net			18.7				1.9					278.3				(28.3		)
			(30.9		)		(52.4		)			114.4				(180.4		)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			84.5				350.3					963.0				1,086.9
PROVISION FOR INCOME TAXES			(3.5		)		33.2					104.6				168.9
INCOME FROM CONTINUING OPERATIONS			88.0				317.1					858.4				918.0
LOSS FROM DISCONTINUED OPERATIONS, NET			(.7		)		(23.3		)			(1.8		)		(33.6		)
NET INCOME			87.3				293.8					856.6				884.4
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS			(2.0		)		(1.8		)			(5.4		)		(7.4		)
NET INCOME ATTRIBUTABLE TO ENSCO			$	85.3			$	292.0				$	851.2			$	877.0
EARNINGS (LOSS) PER SHARE - BASIC AND DILUTED
Continuing operations			$	0.28			$	1.34				$	3.07			$	3.87
Discontinued operations			-				(0.10		)			-				(0.14		)
			$	0.28			$	1.24				$	3.07			$	3.73
NET INCOME ATTRIBUTABLE TO ENSCO SHARES - BASIC AND DILUTED			$	83.5			$	287.5				$	836.1			$	865.2
WEIGHTED-AVERAGE SHARES OUTSTANDING
Basic			298.6				232.4					272.0				232.2
Diluted			298.6				232.5					272.0				232.2

ENSCO PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in millions)
		September 30, 2016					December 31, 2015
		(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	465.4				$	121.3
Short-term investments		1,302.0					1,180.0
Accounts receivable, net		352.1					582.0
Other		346.2					401.8
Total current assets		2,465.7					2,285.1
PROPERTY AND EQUIPMENT, NET		10,959.7					11,087.8
OTHER ASSETS, NET		176.9					237.6
		$	13,602.3				$	13,610.5
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities and other		$	564.6				$	775.5
Current maturities of long-term debt		25.6					-
Total current liabilities		590.2					775.5
LONG-TERM DEBT		4,677.0					5,868.6
OTHER LIABILITIES		354.1					449.2
TOTAL EQUITY		7,981.0					6,517.2
		$	13,602.3				$	13,610.5

ENSCO PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
			Nine Months Ended September 30,
			2016					2015
OPERATING ACTIVITIES
Net income			$	856.6				$	884.4
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
Depreciation expense			335.1					422.8
(Gain) loss on debt extinguishment			(279.0		)			33.5
Deferred income tax expense			23.6					55.4
Discontinued operations, net			1.8					33.6
Other			7.8					24.1
Changes in operating assets and liabilities			48.9					(179.2		)
Net cash provided by operating activities of continuing operations			994.8					1,274.6
INVESTING ACTIVITIES
Purchases of short-term investments			(1,704.0		)			(850.0		)
Maturities of short-term investments			1,582.0					757.3
Additions to property and equipment			(255.5		)			(1,445.8		)
Other			7.7					1.4
Net cash used in investing activities of continuing operations			(369.8		)			(1,537.1		)
FINANCING ACTIVITIES
Reduction of long-term borrowings			(862.4		)			(1,072.5		)
Proceeds from equity issuance			585.5					-
Cash dividends paid			(8.5		)			(105.9		)
Proceeds from issuance of senior notes			-					1,078.7
Premium paid on redemption of debt			-					(30.3		)
Debt financing costs			-					(10.5		)
Other			(2.3		)			(8.4		)
Net cash used in financing activities			(287.7		)			(148.9		)
DISCONTINUED OPERATIONS
Operating activities			1.2					(12.7		)
Investing activities			6.2					(0.3		)
Net cash provided by (used in) discontinued operations			7.4					(13.0		)
Effect of exchange rate changes on cash and cash equivalents			(.6		)			-
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			344.1					(424.4		)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			121.3					664.8
CASH AND CASH EQUIVALENTS, END OF PERIOD			$	465.4				$	240.4

ENSCO PLC AND SUBSIDIARIES OPERATING STATISTICS (Unaudited)
		Third Quarter								Second Quarter
		2016				2015				2016
Rig Utilization(1)
Floaters			48	%			59	%			57	%
Jackups			55	%			64	%			63	%
Total			53	%			62	%			61	%
Average Day Rates(2)
Floaters		$	353,187			$	421,903			$	359,575
Jackups			109,379				133,619				111,791
Total		$	183,537			$	232,008			$	194,754

(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 and recognized day rate revenue, including days associated with early contract terminations, compensated downtime and mobilizations. When revenue is earned but is deferred and amortized over a future period, for example when a rig earns revenue while mobilizing to commence a new contract or while being upgraded in a shipyard, the related days are excluded from days under contract.
		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, lump sum revenues and revenues attributable to amortization of drilling contract intangibles, by the aggregate number of contract days, adjusted to exclude contract days associated with certain mobilizations, demobilizations, shipyard contracts and standby contracts.

Non-GAAP Financial Measures (Unaudited)

To supplement our condensed consolidated financial statements presented
on a GAAP basis, this press release provides investors with a net
debt-to-capital ratio. Net debt is a non-GAAP financial measure defined
as long-term debt less cash and short-term investments. We review net
debt as part of our overall liquidity, financial flexibility, capital
structure and leverage, and believe that this measure is useful to
investors as part of their assessment of our business. Non-GAAP
financial measures should be considered as a supplement to, and not as a
substitute for, or superior to, financial measures prepared in
accordance with GAAP.

View source version on businesswire.com: http://www.businesswire.com/news/home/20161026006999/en/

Source: Business Wire
(October 26, 2016 - 7:49 PM EDT)

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