GW: Grey Wolf Earnings Strong, Outlook Grey
Mid Cap Watch List (Track at Marketocracy) member Grey Wolf, Inc. (GW - Annual Report) reported earnings:
Grey Wolf, Inc. reported net income of $58.6 million, or $0.27 per share on a diluted basis, for the three months ended March 31, 2007 compared with net income of $54.2 million, or $0.24 per share on a diluted basis, for the first quarter of 2006. Revenues for the first quarter of 2007 were $242.0 million compared with revenues for the first quarter of 2006 of $222.9 million. The first quarter 2006 results included an after tax gain of $5.9 million ($0.03 per diluted share) for the sale of five rigs formerly held for refurbishment.
Analysts were expecting the company to earn $0.23 on $235 million in revenues. CEO Tom Richards commented:
“The addition of newly built rigs into the land drilling market has created some excess rig capacity which has led to a decline in spot market dayrates. This downward pressure could continue as additional new rigs enter the market, however, Grey Wolf’s portfolio of term contracts and our premium quality equipment coupled with our skilled rig crews have helped buffer our exposure to the erosion in spot market dayrates. Because of strong commodity prices for both oil and natural gas, we believe there will be demand for additional land rigs later this year.”
For the second quarter, Grey Wolf expects to operate fewer rigs on average and to achieve lower day rates due to the factors mentioned above. Analyst estimates of $235 million in revenue for the quarter may thus be too high, although the stock was trading up after market hours.
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