* Q3 EPS $0.57 vs last yr $0.69
* Q3 shr view $0.51 - Thomson Reuters I/B/E/S
* Q3 rev up 11 pct, misses Street
* Signs deal for low $200,000s dayrate for rig
* Shares fall as much as 7 pct to 4-week low
(Recasts, adding conference call, analyst comments, shares)
By Thyagaraju Adinarayan
BANGALORE, Nov 2 Drilling contractor Rowan Cos
(RDC.N) posted lower third-quarter profit, and signed a
contract for a rig in the UK for lower-than-expected dayrates
to avoid idle time, sending its shares down 7 percent.
Fourth-quarter drilling revenues are expected to be down
from the third quarter as one of its rigs completed work in
Canada last month and another, the Bob Palmer rig, is being
mobilized to the Middle East, the company said on a conference
Rowan, which bought Norway's Skeie Drilling for about $250
million earlier this year, said one of the acquired rigs, Rowan
Viking, will soon mobilize for a 19-month assignment in the UK
at a dayrate in the low $200,000s.
Shares of Houston-based Rowan, which has outperformed the
S&P Oil & Gas Drilling sector index .GSPOILD by more than 40
percent year to date, fell $2.25 to an intra-day low of $30.59
on Tuesday, making it the biggest loser among its peers.
"The Rowan Viking contract is considerably less than what
we expected ... I was looking for $250,000-$300,000 a day,"
Global Hunter Securities analyst Matthew Beeby said. Rowan
known for its high specification jackup rigs -- so called
because they stand on legs on the seabed -- usually signs
contracts for higher dayrates than industry standards.
In September, Rowan Cos signed contracts with Saudi Aramco
for two of its Gulf of Mexico-based rigs for higher dayrates,
on track with its plans to move those rigs overseas.
"This contract for the Rowan Viking that we just took, and
in the low $200,000s, that's a contract that didn't need all of
the capabilities of that rig," a Rowan executive said on the
call. The company acknowledged the contract dayrate was below
Rowan, which went public in 1967, owns about half the
world's top rigs, and more than half its rigs are younger than
10 years old, against an industry average of nearly 20 years.
"The dayrate on the Rowan Viking should be viewed as
disappointing in light of previous management commentary (on
dayrates)," Bernstein Research analyst Scott Gruber said.
Rowan, which plans to spin-off its onshore and rig design
and manufacturing business LeTourneau Technologies, said low
gas prices could affect its current and future contracts on
land. LeTourneau sees continuing strong demand for new mining
While regulations in the Gulf of Mexico are delaying work
on new rigs, Rowan said the delays have led contractors to
tender their premium rigs out of the U.S. Gulf.
Q3 PROFIT FALLS
July-September net income was $67.2 million, or 57 cents a
share, down from $78.4 million, or 69 cents a share, last year.
Total revenue for the quarter rose 11 percent to $437.9
million. Dayrates from offshore rigs fell 19 percent.
Analysts, on average, had expected earnings of 51 cents a
share, excluding items, on revenue of $442.4 million, according
to Thomson Reuters I/B/E/S.
Rowan shares were last traded down 4 percent at $31.60 on
the New York Stock Exchange.
(Reporting by Thyagaraju Adinarayan in Bangalore; Editing by