Oceaneering Announces First Quarter 2011 Earnings

HOUSTON, Texas, April 27, 2011 /PRNewswire/ -- Oceaneering International, Inc. (NYSE: OII) today reported first quarter earnings for the period ended March 31, 2011.  On revenue of $470.4 million, Oceaneering generated net income of $42.1 million, or $0.77 per share.  During the corresponding period in 2010, Oceaneering reported revenue of $435.2 million and net income of $39.2 million, or $0.71 per share.    

Year over year, quarterly earnings per share (EPS) improved primarily as a result of a lower tax rate.  Subsea Products and Inspection operating income were higher but not enough to offset lower operating income from our other business segments.  Sequentially, quarterly EPS declined as anticipated due to a substantial reduction in operating income from Subsea Projects and lower profit contributions from Subsea Products and ROV.

T. Jay Collins, President and Chief Executive Officer, stated, “For the quarter, our EPS was above the top end of our $0.65 to $0.70 guidance range.  We achieved operating income slightly better than forecasted from all of our oilfield business segments and lowered our estimated annual tax rate from 34.5% to 31.5%.  Our reduced tax rate reflects our intent to reinvest in international operations, therefore, we are no longer providing for U.S. taxes on certain of our foreign earnings.  

“Year over year, Subsea Products operating income improved by $12 million, over 75%, on the strength of higher umbilical plant throughput and an increase in Installation, Workover, and Control System (IWOCS) service sales.  At the end of the quarter we acquired Norse Cutting & Abandonment AS for approximately $56 million.  This acquisition increases our subsea tooling product line and enhances our ability to participate as a subcontractor in the plug, abandonment, and decommissioning of production platforms and subsea wellheads.  Our Subsea Products backlog at quarter-end was $382 million, essentially flat with the end of 2010 and up $44 million from the end of March 2010.

“Inspection operating income, compared to the first quarter of last year, increased due to higher international service sales.

“Our outlook for 2011 overall remains positive and we now believe it is highly likely that we will achieve record EPS for the year.  We are raising our 2011 EPS guidance from the range $3.45 to $3.75 to a range of $3.65 to $3.90 to account for our lower estimated tax rate, first quarter operating results, and revised outlooks for Subsea Projects and Subsea Products.  

“We now forecast Subsea Projects to have lower operating income than previously anticipated.  It appears that our previous projection of demand for our services in the U.S. Gulf of Mexico (GOM) to perform installation projects and inspection, maintenance, and repair work during the remaining three quarters of 2011 was too high.  The extent to which this demand actually materializes is a major factor that will influence our 2011 results.  At this time, we are not revising our outlook for ROVs as we anticipate strong international demand will offset weak non-drill support demand in the GOM.  

“We now project Subsea Products to perform better on the strength of higher tooling and IWOCS service sales.  As a result, we anticipate Subsea Products operating income will be higher in 2011 than 2010.  

“For the second quarter of 2011, we expect improvements in demand for all of our oilfield business segments.  We are forecasting EPS of $0.90 to $1.00.  

“Our liquidity and projected cash flow provide us with ample resources to invest in Oceaneering’s growth.  At the end of the quarter we had $187 million of cash and $300 million available under our revolving credit facility.  For 2011 we anticipate generating at least $435 million of EBITDA.  

“Looking beyond 2011, our belief that the oil and gas industry will continue to invest in deepwater projects remains unchanged.  Deepwater remains one of the best frontiers for adding large hydrocarbon reserves with high production flow rates.  With our existing assets, we are well positioned to supply a wide range of the services and products required to support safe deepwater efforts of our customers.”

Statements in this press release that express a belief, expectation, or intention are forward looking.  The forward-looking statements in this press release include the statements concerning Oceaneering’s:   estimated annual 2011 tax rate; intent to reinvest in international operations and no longer provide for U.S. taxes on certain of its foreign earnings; overall 2011 outlook; belief that it likely will achieve record EPS for 2011; 2011 EPS guidance range of $3.65 to $3.90; forecast for Subsea Projects to have lower results than previously anticipated; assessment that its previous projection of demand for its services in the GOM to perform installation projects and inspection, maintenance, and repair work during the remaining three quarters of 2011 was too high; belief that its 2011 results will be influenced by the extent to which aforementioned demand actually materializes; anticipation that strong international demand for ROVs will offset weak non-drill support demand in the GOM; projection that Subsea Products will perform better on the strength of anticipated higher tooling and IWOCS service sales; anticipation of higher Subsea Products’ operating income in 2011 than 2010; expected improvements in demand for all of its oilfield business segments for the second quarter of 2011; second quarter 2011 forecasted EPS range of $0.90 to $1.00; expectation that its liquidity and projected cash flow will provide ample resources to invest in the company’s growth; anticipation of generating, during 2011, at least $435 million of EBITDA; belief that the oil and gas industry will continue to invest in deepwater projects; and belief that deepwater remains one of the best frontiers for adding large hydrocarbon reserves with high production flow rates.  These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on current information and expectations of Oceaneering that involve a number of risks, uncertainties, and assumptions.  Among the factors that could cause the actual results to differ materially from those indicated in the forward-looking statements are risks and uncertainties related to:  industry conditions; prices of crude oil and natural gas; the timing, pace, and level of floating drilling rig activity in the U.S. Gulf of Mexico during 2011; Oceaneering’s ability to obtain, and the timing of, new projects; changes in customers’ operational plans or schedules; contract cancellations or modifications; difficulties executing under contracts; and changes in competitive factors.  Should one or more of these risks or uncertainties materialize, or should the assumptions underlying the forward-looking statements prove incorrect, actual outcomes could vary materially from those indicated.  For a more complete discussion of these and other risk factors, please see Oceaneering’s annual report on Form 10-K for the year ended December 31, 2010 and subsequent quarterly reports on Form 10-Q  filed with the Securities and Exchange Commission.  

Oceaneering is a global oilfield provider of engineered services and products, primarily to the offshore oil and gas industry, with a focus on deepwater applications.  Through the use of its applied technology expertise, Oceaneering also serves the defense and aerospace industries.

For further information, please contact Jack Jurkoshek, Director Investor Relations, Oceaneering International, Inc., 11911 FM 529, Houston, Texas 77041; Telephone 713-329-4670; Fax 7133294653; E-Mail [email protected].  A live webcast of the company’s earnings release conference call, scheduled for Thursday, April 28, 2011 at 11:00 a.m. Eastern, can be accessed at www.oceaneering.com/investor-relations/.  

SOURCE Oceaneering International, Inc.