Ensco (NYSE:ESV) reported second quarter revenue growth of 6% to $1.203 billion, up from $1.130 billion in 2Q2013. With the $1.5 billion non-cash impairment charge, Ensco reported a loss of $5.07 per diluted share compared to $1.55 in 2Q2013. 2Q2014 earnings from continuing operations were $1.58 per share compared to $1.48 per share in 2Q2013, excluding the impairment charge. Ensco ended the second quarter with a contracted backlog of $11 billion and increased the average day rate of the fleet by 7% to $242,000.
During the second quarter the company contracted Ensco DS-8 to Total in Angola, the Ensco 121 commenced its initial contract with Wintershall in the North Sea and the Ensco 122 was delivered ahead of schedule on budget. Management followed through on its strategy to high-grade its fleet by selling older rigs, which will drive down expenses. Management also reaffirmed its commitment to maintain a $3.00 per share dividend payment.
In my original article, "Ensco: Underrated 5.8% Dividend Yield with Growth Ahead", I expected quicker growth than Ensco has delivered. Ensco still pays a 5.76% dividend yield, but has had trouble getting out of its 52 week low range of $50-$53 per share. Newbuilds and high-grading its fleet should pay-off, but it may be longer than I initially expected.
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