* 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 (Reuters) - 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 call.
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. [ID:nSGE6800KV]
“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 its target.
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 equipment.
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.
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 Jarshad Kakkrakandy)