Global Marine Inc. and Key Energy Services Inc., leading offshore and onshore drilling contractors respectively, yesterday reported significant upticks in their quarterly earnings due to the ascending oil and gas drilling activity in the United States and worldwide.

Houston-based Global Marine posted a net income of $40.7 million, more than triple the $12.6 million that it turned in during the same period a year ago, on revenues of $275 million for the first quarter ended March 31. Chairman Bob Rose credited the strong results to the continued improvement of the company’s contract drilling business in core markets in the U.S. Gulf of Mexico, West Africa and the North Sea. Operating income from the segment rose 154% on revenues that were up 67% during the quarter, said Global Marine, one of the largest offshore drilling contractors in the world.

Key Energy Services of East Brunswick, NJ, the world’s largest well service company (with a focus on onshore operations), reported net earnings of about $17.4 million, up from a loss of $4.2 million in the year-earlier period, on revenues of $226 million for its third quarter ended March 31 of this year. For the nine-month period, it recorded net earnings of $37 million compared to a loss of $19 million a year ago. Nine-month revenues were $619.7 million against $465 million for the year-ago period. The company estimated that more than 60% of its revenues are derived from natural gas exploration and production activities in North America.

The improved results reflected the strong demand for drilling and well service equipment in all of Key Energy’s domestic and international markets, according to the company. Total rig hours rose to a record high of about 737,000 hours during the first quarter, an 8% increase over the 682,000 hours recorded last December and a 22% boost over the 607,000 hours posted during the first quarter in 2000, it said.

Global Marine reported a strengthening in the harsh-environment semi-submersible market during the first quarter, which provided it the opportunity to reactivate its two remaining idle semi-submersible rigs. Its fleet utilization rate climbed to 89% during the quarter compared to 76% a year ago. In addition, the company noted that its last idle jackup rig was reactivated this month, bringing its fleet utilization to 100% for the first time since July 1998.

As a result, dayrates continued their upward trend. The average dayrate for Global Marine’s premium jackup rigs in the Gulf of Mexico increased 7.3% to $51,200 from $47,700 in the fourth quarter, and the international markets strengthened as well, said Rose.

Despite profits elsewhere, operating income from Global Marine’s drilling management services segment was only slightly positive during the first quarter, Rose noted. “We experienced a typical first quarter lull in turnkey drilling in the Gulf of Mexico, where we employed an average of only eight rigs during the period. With that level of activity, we were unable to overcome the effects of a previously announced $4.4 million loss we incurred in January of this year on a well which encountered mechanical difficulties. However, as the second quarter begins, turnkey drilling activity is increasing.”

Key Energy Chairman Francis D. John said favorable gas prices, higher capital budgets by producers and greater producer confidence contributed to his company’s stellar performance in the quarter. “This year…..producers appear more confident of future commodity prices as [shown] by several of our major customers requesting multi-year guaranteed contracts for both well service and drilling equipment,” he said. This “rapidly escalating demand for workable rigs, particularly the company’s drilling rigs and deep gas workover rigs, has resulted in rate increases in all of our operating areas, which in turn has pushed margins to record levels.”

Throughout the quarter, Key Energy reported it continued to reduce debt and ongoing interest expense. It whittled down its interest expense to $13.5 million from $18.6 million for the same period last year. Global Marine said it took similar action, reducing its net debt to $703 million compared to $894 million in March 2000.

Global Marine is a major offshore drilling contractor with an active fleet of 33 mobile rigs worldwide, and the world’s largest provider of offshore drilling management services. Key Energy is considered the world’s top well service company and owns about 1,400 well service rigs and 1,200 oilfield service vehicles, as well as 75 drilling rigs. It serves seven regions in the United States — Permian Basin, Gulf Coast, Oklahoma, Michigan/Appalachian Basin, Rocky Mountains, the Four Corners and California — and Canada and Argentina.

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