<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1994
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _______________ to _______________
__________________
Commission File Number 1-8097
ENERGY SERVICE COMPANY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0232579
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2700 Fountain Place
1445 Ross Avenue, Dallas Texas 75202 - 2792
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 922-1500
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding twelve months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. YES _X_ NO ___
There were 61,192,265 shares of Common Stock, $.10 par value, of the
registrant outstanding as of November 9, 1994.
Page 1 of 25 sequentially numbered pages.
Exhibit index on page 24.
<PAGE>
ENERGY SERVICE COMPANY, INC.
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1994
PAGE
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet
September 30, 1994 and December 31, 1993 3
Consolidated Statement of Operations
Three Months Ended September 30, 1994 and 1993 4
Consolidated Statement of Operations
Nine Months Ended September 30, 1994 and 1993 5
Consolidated Statement of Cash Flows
Nine Months Ended September 30, 1994 and 1993 6
Notes to Consolidated Financial Statements 7 - 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10 - 21
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 22
SIGNATURE 23
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
ENERGY SERVICE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1994 1993
(Unaudited)
<S> <C> <C>
ASSETS (in Thousands)
CURRENT ASSETS
Cash and Cash Equivalents..................... $128,927 $128,060
Short-Term Investments........................ 5,869 -
Accounts Receivable, net...................... 51,731 51,232
Inventory..................................... 3,879 3,350
Net Assets of Discontinued Operations......... - 399
Prepaid Expenses and Other.................... 12,820 9,950
Total Current Assets.................... 203,226 192,991
INVESTMENTS..................................... 6,784 8,276
PROPERTY AND EQUIPMENT, AT COST................. 679,624 580,730
Less Accumulated Depreciation................. 142,989 124,713
Property and Equipment, net............. 536,635 456,017
OTHER ASSETS
Goodwill...................................... 26,656 28,636
Other......................................... 5,868 5,492
Total Other Assets...................... 32,524 34,128
$779,169 $691,412
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable.............................. $ 11,010 $ 3,448
Accrued Liabilities........................... 33,155 35,240
Current Maturities of Long-Term Debt.......... 38,646 27,198
Total Current Liabilities............... 82,811 65,886
LONG-TERM DEBT.................................. 169,528 125,983
DEFERRED INCOME TAXES........................... 28,428 26,856
OTHER LIABILITIES............................... 16,395 17,785
PREFERRED STOCK
$1.50 Cumulative Convertible Exchangeable
Preferred Stock, $25.00 stated, liquidation
and redemption value ....................... - 70,977
STOCKHOLDERS' EQUITY
Common Stock, $.10 par value, 125.0 million
and 500.0 million shares authorized, 66.5
million and 245.0 million shares issued..... 6,655 24,500
Additional Paid-in Capital.................... 612,127 520,775
<PAGE>
Accumulated Deficit, since January 1, 1984.... (80,123) (106,693)
Restricted Stock (Unearned Compensation)...... (5,773) (5,614)
Cumulative Translation Adjustment............. (1,090) (1,230)
Treasury Stock at Cost, 5.4 million and
21.0 million shares......................... (49,789) (47,813)
Total Stockholders' Equity ............. 482,007 383,925
$779,169 $691,412
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
ENERGY SERVICE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
1994 1993
(in Thousands, Except
Per Share Data)
<S> <C> <C>
OPERATING REVENUES........................... $ 63,167 $ 65,675
OPERATING EXPENSES
Operating Costs............................ 37,263 39,110
Depreciation and Amortization.............. 13,786 11,569
General and Administrative................. 2,160 2,925
53,209 53,604
OPERATING INCOME............................. 9,958 12,071
OTHER INCOME (EXPENSE)
Interest Income............................ 1,271 825
Interest Expense........................... (3,533) (2,601)
Income from Equity Affiliates, net......... 285 415
Other, net................................. 60 673
(1,917) (688)
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES AND MINORITY INTEREST......... 8,041 11,383
PROVISION FOR INCOME TAXES................... 685 2,139
INCOME BEFORE MINORITY INTEREST.............. 7,356 9,244
MINORITY INTEREST............................ 583 2,008
INCOME FROM CONTINUING OPERATIONS............ 6,773 7,236
LOSS FROM DISCONTINUED OPERATIONS............ - (379)
NET INCOME .................................. 6,773 6,857
PREFERRED STOCK DIVIDEND REQUIREMENT......... 5 1,065
INCOME APPLICABLE TO COMMON STOCK............ $ 6,768 $ 5,792
INCOME (LOSS) PER COMMON SHARE
Continuing Operations...................... $ 0.12 $ 0.14
Discontinued Operations.................... - (0.01)
Income Per Common Share.................... $ 0.12 $ 0.13
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING... 58,109 44,373
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
ENERGY SERVICE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1994 1993
(in Thousands, Except
Per Share Data)
<S> <C> <C>
OPERATING REVENUES........................... $195,607 $175,778
OPERATING EXPENSES
Operating Costs............................ 109,950 113,968
Depreciation and Amortization.............. 39,983 31,551
General and Administrative................. 6,653 9,408
156,586 154,927
OPERATING INCOME............................. 39,021 20,851
OTHER INCOME (EXPENSE)
Interest Income............................ 3,267 2,031
Interest Expense........................... (8,848) (6,971)
Income from Equity Affiliates, net......... 557 543
Other, net................................. (319) 952
(5,343) (3,445)
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES, MINORITY INTEREST AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE..... 33,678 17,406
PROVISION FOR INCOME TAXES................... 2,907 5,763
INCOME BEFORE MINORITY INTEREST.............. 30,771 11,643
MINORITY INTEREST............................ 2,066 5,321
INCOME FROM CONTINUING OPERATIONS............ 28,705 6,322
INCOME FROM DISCONTINUED OPERATIONS.......... - 2,774
INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE.......................... 28,705 9,096
CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET
OF MINORITY INTEREST....................... - (2,542)
NET INCOME................................... 28,705 6,554
PREFERRED STOCK DIVIDEND REQUIREMENT......... 2,135 3,195
INCOME APPLICABLE TO COMMON STOCK............ $ 26,570 $ 3,359
INCOME (LOSS) PER COMMON SHARE
Continuing Operations...................... $ 0.47 $ 0.09
Discontinued Operations.................... - 0.08
Cumulative Effect.......................... - (0.07)
Income Per Common Share.................... $ 0.47 $ 0.10
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING... 56,726 35,081
<PAGE>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
ENERGY SERVICE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1994 1993
(in Thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net Income........................................ $ 28,705 $ 6,554
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Net Cash Provided by Discontinued Operations. - 6,660
Depreciation and Amortization................ 39,983 18,562
Provision for Deferred Income Taxes.......... 1,572 2,330
Amortization of Debt Discount and
Other Assets............................... 2,106 1,673
Provision for Compensatory Stock Grants...... 782 737
Distributed Income (Undistributed Income)
from Equity Affiliates, net................ 534 (1,655)
Other Adjustments............................ 719 2,676
Changes in Operating Assets and Liabilities:
Decrease in Accounts Receivable............ 2,966 14,751
Increase in Inventory...................... (529) (199)
Increase in Prepaid Expenses and Other..... (1,026) (2,871)
Increase (Decrease) in Accounts Payable and
Accrued Liabilities...................... 3,131 (12,641)
Net Cash Provided By
Operating Activities................. 78,943 36,577
INVESTING ACTIVITIES
Additions to Property and Equipment............... (137,596) (69,405)
Net Proceeds from Sales of Discontinued
Operations...................................... 399 -
Proceeds from Disposition of Assets............... 12,594 1,076
Purchase of Short-Term Investments................ (5,869) -
Acquisitions, Net of Cash Disbursed............... - 36,861
Other............................................. (172) (837)
Net Cash Used by Investing Activities......... (130,644) (32,305)
FINANCING ACTIVITIES
Long-Term Borrowings.............................. 115,471 70,749
Reduction of Long-Term Borrowings................. (60,475) (12,620)
Exercise of Stock Options......................... 506 726
Preferred Stock Dividends......................... (2,135) (3,195)
Redemption of Preferred Stock..................... (799) -
Net Cash Provided By Financing Activities....... 52,568 55,660
INCREASE IN CASH AND CASH EQUIVALENTS............... 867 59,932
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD...... 128,060 25,503
CASH AND CASH EQUIVALENTS, END OF PERIOD............ $128,927 $ 85,435
</TABLE>
<PAGE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ENERGY SERVICE COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - UNAUDITED FINANCIAL STATEMENTS
The interim consolidated financial statements included herein have been
prepared by Energy Service Company, Inc. (the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission and in accordance with generally accepted accounting principles
and, in the opinion of management, reflect all adjustments (which consist
of normal recurring adjustments) which are necessary for a fair
presentation of the results of operations for the interim periods
presented.
In August 1993, the Company completed the acquisition (the "Penrod
Acquisition") of the remaining 63.7% of the outstanding common stock of
Penrod Holding Corporation ("Penrod") that was not then beneficially owned
by the Company. The Company has included the income from continuing
operations of Penrod in its consolidated results of operations beginning
January 1, 1993 and has presented the preacquisition earnings attributable
to the 63.7% of Penrod that the Company did not own prior to the Penrod
Acquisition as "Minority Interest" in calculating the Company's net income
for the three and nine months ended September 30, 1993.
The Company's consolidated statement of cash flows for the nine months
ended September 30, 1993 does not include the cash provided by operating
activities of Penrod or the cash flows from investing and financing
activities of Penrod prior to the Penrod Acquisition.
Certain previously reported amounts have been reclassified to conform to
the 1994 presentation.
It is recommended that these statements be read in conjunction with the
Company's consolidated financial statements and notes thereto for the year
ended December 31, 1993 included in the Company's Annual Report to the
Securities and Exchange Commission on Form 10-K.
NOTE 2 - SHORT-TERM INVESTMENTS
Short-term investments are comprised of debt instruments having maturities
of greater than three months and less than one year at the date of
purchase, and are stated at cost due to the Company's intent and ability to
hold the instruments to maturity. The aggregate fair value of short-term
investments at September 30, 1994 approximates cost.
NOTE 3 - ACQUISITION
On February 14, 1994, the Company purchased two jackup rigs located in the
North Sea and simultaneously entered into bareboat charter agreements with
the seller for an initial twelve month period. The purchase price for the
two rigs consisted of $50.0 million paid at closing and an additional $6.0
million to be credited against the bareboat charter payments during the
last four months of the initial twelve month bareboat charter agreements.
<PAGE>
NOTE 4 - DISPOSITION
On June 30, 1994, the Company completed the sale of its United States land
rig operations consisting of twelve land rigs and related equipment, as
well as an office building and yard, to an unrelated third party. The
total purchase price was approximately $15.5 million consisting of cash, a
promissory note and receivables. Included under the caption "Other, net"
in the consolidated statement of operations for the nine months ended
September 30, 1994 is a loss on the sale of $201,000. Revenues for the
United States land rig operations for the nine months ended September 30,
1994 were $9.5 million and for the three and nine months ended September
30, 1993 were $5.4 million and $14.2 million, respectively.
NOTE 5 - DEBT
In December 1993, a subsidiary of the Company entered into a financing
arrangement with a subsidiary of a Japanese corporation in connection with
the construction of four barge drilling rigs, which were completed in July
through September of 1994. Upon completion of construction of the barge
drilling rigs, the interim construction loans were repaid from the proceeds
of four secured term loans, totalling $78.8 million, made by the Japanese
corporation to a subsidiary of ENSCO Drilling (Caribbean), Inc. The five
year term loans bear interest at fixed rates ranging from 9.1% to 9.8%,
repayable in 60 equal monthly installments of principal and interest. The
term loans are each secured by a specific barge drilling rig, which rigs
together had a combined net book value of approximately $75.0 million at
September 30, 1994, and the charter contract on each rig. The secured term
loans are without recourse to the Company.
In March 1994, the Company redeemed its convertible subordinated debentures
consisting of $5.1 million principal amount of 8.25% convertible
subordinated debentures which were originally due July 1, 1995.
NOTE 6 - PREFERRED STOCK
In July 1994, the Company announced that it would redeem the 2,839,110
outstanding shares of the Company's $1.50 Cumulative Convertible
Exchangeable Preferred Stock ("$1.50 Preferred Stock") in August 1994.
Holders of 2,807,147 shares of the $1.50 Preferred Stock elected to convert
each of their shares into approximately 1.786 shares of the Company's
common stock, based on the $25.00 liquidation preference and the $14.00
conversion price per share of the $1.50 Preferred Stock. Such conversion
resulted in the issuance of 5,012,762 shares of the Company's common stock.
Holders of the remaining 31,963 shares of the $1.50 Preferred Stock elected
to redeem their shares for cash.
NOTE 7 - STOCKHOLDERS' EQUITY
At the Company's Annual Meeting of Stockholders held on May 24, 1994, the
stockholders approved a one share for four shares reverse stock split
("reverse stock split") of the Company's common stock. The reverse stock
split was effective June 1, 1994. Accordingly, all weighted average share
and per share amounts have been restated for both 1993 and 1994 to reflect
the reverse stock split. In connection with the reverse stock split, the
<PAGE>
aggregate par value of the common stock was reduced and additional paid-in
capital was increased to reflect the decreased aggregate par value of the
common stock outstanding subsequent to the reverse stock split.
NOTE 8 - PROVISION FOR INCOME TAXES
The income tax provisions for the three and nine months ended September 30,
1994 include provisions for U.S. alternative minimum taxes and for current
and deferred foreign taxes, primarily for operations in Venezuela. A
charge against earnings of $1.0 million was recorded during the three and
nine months ended September 30, 1994 to increase the Company's deferred
income tax liability due to the increase in the Venezuela tax rate from 30%
to 34%, effective January 1, 1995. The income tax provision was decreased
by $1.0 million during the three and nine months ended September 30, 1994
due to a reduction in the deferred tax asset valuation allowance as
management considers it more likely than not that certain additional U.S.
net operating losses will be utilized prior to their expiration. No
provision for regular U.S. federal income taxes has been recorded for the
three and nine months ended September 30, 1994 due to the utilization of
net operating loss carryforwards to offset taxes currently payable.
At September 30, 1994, the Company had regular and alternative minimum tax
net operating losses and investment tax credit carryforwards of
approximately $328.9 million, $193.9 million, and $3.6 million,
respectively.
NOTE 9 - SUBSEQUENT EVENTS
In October 1994, a wholly owned subsidiary of the Company entered into an
agreement with Lateral Vector Resources, Inc. ("LVR"), a Canadian company,
under which LVR purchased a 30% interest in a subsidiary of the Company for
$1.2 million. LVR has the option, through November 15, 1994, to purchase
an additional 10% interest in the subsidiary under the same terms at which
the 30% interest was purchased. The purpose of the sale was to combine
forces with LVR to conduct horizontal/directional drilling services in
Canada and certain areas of the U.S. The subsidiary will continue to be
included in the Company's consolidated financial statements. The Company
will record a gain on the sale of the 30% interest of approximately
$600,000 in October 1994.
In November 1994, a wholly owned subsidiary of the Company entered into an
agreement to sell two land rigs and related equipment, located in the
Middle East, to an unrelated third party. No significant gain or loss is
expected upon disposition.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
BUSINESS ENVIRONMENT
The Company conducts its business in three primary operating segments
serving the oil and gas industry: contract drilling, marine transportation,
and technical services. The demand for services provided by the Company
and, thus, the operating results of the Company are significantly affected
by worldwide expenditures of the energy industry for oil and gas drilling,
particularly in the Gulf of Mexico where the Company has a large
concentration of its rigs and vessels. Expenditures for oil and gas
drilling activities have been generally depressed since the early 1980's
when a sharp decline in oil and natural gas prices led to reduced
exploration and development activities.
A general increase in U.S. natural gas prices in the second half of 1992
resulted in increased exploration and development activity, particularly in
the Gulf of Mexico, which continued throughout 1993. This increased
activity resulted in higher average day rates and utilization levels for
offshore rigs in the Gulf of Mexico throughout 1993, which caused the
Company's revenues and operating margins to improve. However, the
Company's day rates have declined throughout the first three quarters of
1994 as a number of competitor's rigs have been mobilized to the Gulf of
Mexico. Management anticipates, based on current market conditions, that
average day rates should be little changed in the fourth quarter of 1994 as
compared to the third quarter of 1994.
Offshore rig and oilfield supply vessel industry utilization for the three
and nine months ended September 30, 1994 and 1993 is summarized below:
<TABLE>
<CAPTION>
INDUSTRY WIDE AVERAGES <F1>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Offshore Rigs
Gulf of Mexico:
All Rigs:
Rigs Under Contract 135 121 130 112
Total Rigs Available 178 154 173 148
% Utilization 75.8% 78.6% 75.1% 75.7%
Jackup Rigs:
Rigs Under Contract 111 97 106 90
Total Rigs Available 139 119 134 113
% Utilization 79.9% 81.5% 79.1% 79.6%
Worldwide:
All Rigs:
Rigs Under Contract 532 547 533 542
Total Rigs Available 663 664 660 667
% Utilization 80.2% 82.4% 80.8% 81.3%
<PAGE>
Jackup Rigs:
Rigs Under Contract 319 332 322 330
Total Rigs Available 392 394 391 395
% Utilization 81.4% 84.3% 82.4% 83.5%
Oilfield Supply Vessels:<F2>
Gulf of Mexico:
Vessels Under Contract 245 218 226 213
Total Vessels Available 272 247 259 246
% Utilization 90.1% 88.3% 87.3% 86.6%
<FN>
<F1> Industry utilization based on data published by
OFFSHORE DATA SERVICES, INC.
<F2> Excludes utility vessels
</TABLE>
Worldwide utilization for oilfield supply vessels is not readily
obtainable. The demand for oilfield supply vessels is closely related to
the level of drilling activity, particularly in the Gulf of Mexico.
RESULTS OF OPERATIONS
In August 1993, the Company completed the acquisition (the "Penrod
Acquisition") of the remaining 63.7% of the outstanding common stock of
Penrod Holding Corporation ("Penrod") that was not then beneficially owned
by the Company. The Company has included the operating results of Penrod
in its consolidated results of operations beginning January 1, 1993. The
preacquisition earnings attributable to the 63.7% of Penrod that the
Company did not own prior to the Penrod Acquisition has been deducted as
"Minority Interest" in calculating the Company's net income for the three
and nine months ended September 30, 1993.
The following analysis highlights the Company's operating results for the
three and nine months ended September 30, 1994 and 1993 (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
OPERATING RESULTS
Operating Revenues $ 63,167 $ 65,675 $195,607 $175,778
Operating Margin 25,904 26,565 85,657 61,810
Operating Income 9,958 12,071 39,021 20,851
Other Expense, Net (1,917) (688) (5,343) (3,445)
Provision for Income Tax (685) (2,139) (2,907) (5,763)
Minority Interest (583) (2,008) (2,066) (5,321)
Income from Continuing
Operations 6,773 7,236 28,705 6,322
Income (Loss) from
Discontinued Operations - (379) - 2,774
Cumulative Effect of
Accounting Change,
Net of Minority Interest - - - (2,542)
<PAGE>
Net Income 6,773 6,857 28,705 6,554
Preferred Stock Dividend
Requirements 5 1,065 2,135 3,195
Income Applicable to
Common Stock 6,768 5,792 26,570 3,359
OPERATING REVENUES
Contract Drilling $ 48,964 $ 51,479 $155,027 $135,508
Marine Transportation 10,128 8,729 27,781 25,707
Technical Services 4,075 5,467 12,799 14,563
Total $ 63,167 $ 65,675 $195,607 $175,778
OPERATING MARGIN
Contract Drilling $ 22,358 $ 22,432 $ 72,518 $ 52,589
Marine Transportation 2,687 3,196 9,204 6,807
Technical Services 859 937 3,935 2,414
Total $ 25,904 $ 26,565 $ 85,657 $ 61,810
</TABLE>
The Company's consolidated revenues and operating margin (defined as
operating revenues less operating expenses, exclusive of depreciation and
general and administrative expenses) for the three months ended September
30, 1994 decreased 3.8% and 2.5%, respectively, in comparison to 1993
levels. The decreases for the three months ended September 30, 1994 are
primarily attributable to lower day rates for the Company's domestic jackup
rigs in comparison to 1993 levels, offset in part by the revenues and
operating margins associated with six additional drilling rigs in 1994, of
which two were acquired and four were constructed and placed into service.
The Company's consolidated revenues and operating margin for the nine
months ended September 30, 1994 increased 11.3% and 38.6%, respectively, in
comparison to 1993 levels. The increases for the nine months ended
September 30, 1994 are primarily attributable to higher domestic day rates
for the Company's contract drilling and marine transportation segments in
comparison to 1993 levels, revenues and operating margins associated with
the six drilling rigs that were added in 1994 and a full nine months
contribution from four rigs constructed and placed into service in the
first half of 1993.
The Company reported a decrease in operating income for the three months
ended September 30, 1994 in comparison to the 1993 period, due primarily to
the reasons stated above with respect to the decreases in revenues and
operating margin from the prior year period and due to increased
depreciation and amortization. Operating income was positively impacted by
reduced general and administrative costs for the three months ended
September 30, 1994, as compared to the same period in 1993.
The Company reported a significant increase in operating income for the
nine months ended September 30, 1994 in comparison to the same period in
1993 due primarily to the reasons stated above with respect to the
increases in revenues and operating margin from the prior year period and
due to reduced general and administrative costs. Operating income was
negatively impacted by additional depreciation and amortization expense for
the nine months ended September 30, 1994, as compared to the same period in
1993.
<PAGE>
CONTRACT DRILLING OPERATIONS
Certain financial information regarding the Company's contract drilling
operations for the three and nine months ended September 30, 1994 and 1993
is summarized below (in thousands, except utilization rates and average day
rates):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
REVENUES
Jackup Rigs:
United States $ 26,096 $ 23,696 $ 80,232 $ 62,247
International 9,441 10,222 31,256 34,952
35,537 33,918 111,488 97,199
Barge Drilling Rigs
- Venezuela 12,419 10,194 30,691 18,538
Total Offshore Rigs 47,956 44,112 142,179 115,737
Land Rigs <F2> 1,008 7,367 12,848 19,771
Total $ 48,964 $ 51,479 $155,027 $135,508
OPERATING MARGIN
Jackup Rigs:
United States $ 10,462 $ 11,824 $ 37,018 $ 27,306
International 3,596 3,222 14,285 11,088
14,058 15,046 51,303 38,394
Barge Drilling Rigs
- Venezuela 8,220 6,635 20,273 11,968
Total Offshore Rigs 22,278 21,681 71,576 50,362
Land Rigs <F2> 80 751 942 2,227
Total $ 22,358 $ 22,432 $ 72,518 $ 52,589
UTILIZATION RATES
Jackup Rigs:
United States 91.4% 95.5% 88.9% 98.1%
International 58.4% 57.3% 67.1% 58.9%
80.9% 81.5% 82.2% 82.2%
Barge Drilling Rigs
- Venezuela 100.0% 100.0% 100.0% 100.0%
Total Offshore Rigs 86.0% 85.7% 86.4% 85.1%
Land Rigs <F1> <F2> 17.4% 75.3% 54.2% 74.4%
Total 78.0% 82.1% 77.6% 81.2%
AVERAGE DAY RATES
Jackup Rigs:
United States $ 20,694 $ 21,286 $ 22,030 $ 18,998
International 26,926 25,796 25,620 25,822
$ 22,125 $ 22,450 $ 22,930 $ 20,984
Barge Drilling Rigs
<PAGE>
- Venezuela $ 15,934 $ 16,274 $ 15,690 $ 14,395
Land Rigs <F1> <F2> $ 15,780 $ 6,652 $ 7,325 $ 6,503
<FN>
<F1> Excludes land rigs that are not being marketed.
<F2> U.S. and International land rigs combined.
</TABLE>
The Company's U.S. jackup rig revenues increased by 10.1% and operating
margin decreased by 11.5% for the three months ended September 30, 1994
compared to the same period in 1993. The revenue increase is primarily
attributable to three rigs that were mobilized from the North Sea and began
operating in the Gulf of Mexico in the third and fourth quarters of 1993.
These rigs were included in the international jackup rig results for a
portion or all of the three months ended September 30, 1993. The 1994
revenue increase was partially offset by, and the operating margin decrease
was primarily attributable to, decreases in average day rates and
utilization from the same period in 1993.
Revenues and operating margins for the Company's jackup rigs operating in
the U.S. increased substantially for the nine months ended September 30,
1994 compared to the same period in the prior year, primarily due to
improved market conditions in the Gulf of Mexico and to the relocation of
three additional rigs to the Gulf of Mexico which began operating in the
third and fourth quarters of 1993. For the nine months ended September 30,
1994, average day rates for the Company's rigs in the Gulf of Mexico
increased by 16.0% compared to the same period in 1993, with results offset
partially by decreased utilization from the prior year period. The
decreased utilization in 1994 was due, in part, to two of the Company's
Gulf of Mexico jackup rigs being upgraded in the first three months of 1994
and not available for work.
For the three and nine months ended September 30, 1994, revenues for the
Company's international jackup rigs decreased by 7.6% and 10.6%,
respectively, and operating margin increased by 11.6% and 28.8%,
respectively, as compared to the prior year periods. The revenue decreases
are primarily attributable to the mobilization in the second, third and
fourth quarters of 1993 of three of the Company's rigs located in the North
Sea to the Gulf of Mexico. These rigs were included in the international
jackup rig results for a portion or all of the three and nine months ended
September 30, 1993. The revenue decreases were partially offset by, and
the operating margin increases were primarily attributable to, two North
Sea jackup rigs acquired in mid-February 1994 which operate under bareboat
charter agreements. The Company anticipates that the bareboat charter
agreements on the two North Sea jackup rigs acquired in mid-February 1994
will not be extended beyond the initial twelve month period and that the
Company will contract the two rigs directly with the joint venture of major
oil and gas exploration companies for which the rigs are currently
operating.
The Company's jackup rig offshore Brazil completed its contract during the
second quarter of 1994 and was mobilized to the Gulf of Mexico during the
third quarter of 1994. The $1.5 million cost of the mobilization was
recorded as a charge against earnings in the third quarter of 1994. Upon
<PAGE>
arrival in the U.S., the rig was placed in the shipyard for enhancements,
including extending the rig's water depth capability from 300 feet to 350
feet. Due to the mobilization and shipyard enhancements, the rig was
unavailable for work in the third quarter of 1994. However, the rig is
currently under contract.
The Company's jackup rig in the Middle East is currently being mobilized to
the Gulf of Mexico. The cost of the mobilization, estimated to be $2.0
million, will be charged against earnings in the fourth quarter of 1994.
Upon arrival in the U.S., the rig will undergo modifications and
enhancements, including extending the rig's water depth capability to
approximately 400 feet. Due to the mobilization and shipyard enhancements,
the rig will be unavailable for work until approximately March 1, 1995.
The Company's barge drilling rigs are all located on Lake Maracaibo,
Venezuela. Revenues and operating margins from the Company's barge rigs
in Venezuela improved substantially for the three and nine months ended
September 30, 1994 compared to the same periods in 1993, primarily due to
the addition of four barge drilling rigs in March through June of 1993 and
four additional barge drilling rigs in July through September of 1994. All
eight of the new barge drilling rigs operate under separate five-year
contracts with Lagoven, S.A. ("Lagoven"), a subsidiary of the Venezuelan
national oil company. The Venezuelan currency has experienced significant
devaluation in 1994 and the Venezuelan government has established policies
to control the exchange rate of the Venezuelan currency and regulate the
level of currency exchanged. To date, the Company's Venezuelan subsidiary
has not experienced problems associated with receiving U.S. dollar payments
with respect to the U.S. dollar portion of its contracts with Lagoven.
Changes in these conditions, other policy enactments, or political
developments in Venezuela, could have an adverse effect upon the Company.
However, the Company believes such adverse effects are unlikely due to the
volume of U.S. dollars paid to the parent company of Lagoven for its oil
exports and the contractual protection available to the Company's
Venezuelan subsidiary if U.S. dollar payments are not made.
Revenues and operating margins for the land rig operations for the three
and nine months ended September 30, 1994 decreased from the comparable
prior year periods. The decreases are primarily attributable to the sale
of the Company's U.S. land rig operations, which was effective June 30,
1994, and decreased utilization, offset in part by increased day rates. In
November 1994, a wholly owned subsidiary of the Company entered into an
agreement to sell two land rigs and related equipment to an unrelated third
party. One of the land rigs is located in Dubai and the other is currently
being mobilized from Syria to Dubai. Subsequent to the sale, the Company
will continue to own two land rigs, both of which are located in Dubai.
MARINE TRANSPORTATION OPERATIONS
Certain financial information regarding the Company's marine transportation
operations for the three and nine months ended September 30, 1994 and 1993
is summarized below (in thousands, except utilization rates and average day
rates):
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
REVENUES
AHTS <F1> $ 4,712 $ 2,770 $10,791 $ 9,552
Supply 4,442 4,889 14,274 12,830
Mini-Supply 383 476 1,265 1,306
Utility 591 594 1,451 2,019
Total $10,128 $ 8,729 $27,781 $25,707
OPERATING MARGIN
AHTS <F1> $ 1,457 $ 939 $ 4,236 $ 2,423
Supply 1,297 2,135 4,953 4,169
Mini-Supply 86 207 434 577
Utility (153) (85) (419) (362)
Total $ 2,687 $ 3,196 $ 9,204 $ 6,807
UTILIZATION RATES
AHTS <F1> 84.2% 87.4% 78.9% 75.5%
Supply 86.7% 90.9% 85.4% 82.7%
Mini-Supply 85.1% 100.0% 93.4% 95.1%
Utility 60.3% 57.4% 52.6% 64.4%
Total 79.5% 81.8% 76.1% 77.2%
AVERAGE DAY RATES
AHTS <F1> $ 7,545 $ 6,203 $ 7,449 $ 6,701
Supply 2,924 3,043 3,221 2,877
Mini-Supply 1,630 1,726 1,645 1,677
Utility 1,065 1,040 990 1,065
Total $ 3,082 $ 3,007 $ 3,257 $ 2,856
<FN>
<F1> Anchor Handling/Tug Supply Vessels
</TABLE>
The Company's marine transportation division currently operates 39 vessels,
of which 35 are owned by the Company and four are leased under long-term
agreements. All of the Company's marine transportation vessels are
currently located in the Gulf of Mexico. The Company had six vessels
available for work in Singapore at the beginning of 1993. In April 1993,
one of these vessels obtained a towage contract to the U.S., after which
it was available for work in the Gulf of Mexico. A second vessel arrived
in the Gulf of Mexico from Singapore in the fourth quarter of 1993. The
Company operated the remaining four vessels in Singapore through a joint
venture during the second half of 1993 and most of the first half of 1994.
The Singapore joint venture was terminated in May 1994 and three of the
vessels were mobilized to the Gulf of Mexico. The remaining vessel, a
utility boat, was sold effective June 30, 1994. During most of 1993, the
Company operated two vessels offshore Brazil. One vessel returned to the
Gulf of Mexico in the fourth quarter of 1993 and the other vessel returned
to the Gulf of Mexico in February 1994.
<PAGE>
The Company's marine transportation segment reported a decreased operating
margin for the three months ended September 30, 1994 as compared to the
same period in 1993, due primarily to costs associated with moving three
vessels from Singapore to the Gulf of Mexico in the third quarter of 1994.
The marine transportation segment reported an increased operating margin
for the nine months ended September 30, 1994 compared to the same period in
1993 due primarily to increased day rates.
Drilling activity increased in the Gulf of Mexico during 1993, causing
utilization and day rates for the Company's marine transportation vessels
to increase throughout 1993. However, day rates on new contracts in the
Gulf of Mexico began to soften in the first half of 1994 and such softening
continued into the third quarter of 1994. Management anticipates that,
based on current market conditions, average marine transportation day
rates, which began improving at the end of the third quarter of 1994,
should average somewhat higher in the fourth quarter of 1994 as compared to
the third quarter of 1994.
In the fourth quarter of 1994, the Company anticipates entering into an
agreement with an unrelated third party to purchase a supply vessel,
convert four utility vessels into four larger, 146-foot mini-supply
vessels, and assign ownership of four utility vessels to the unrelated
third party. Subsequent to this transaction, the Company would have only
one utility vessel in its fleet which would be used as a training vessel.
No gain or loss is anticipated on the transaction. This transaction is
consistent with the Company's strategy to concentrate its fleet on the
larger, more capable vessels and to exit the unprofitable utility boat
market. Earlier in 1994 the Company sold one utility boat and converted
another to a 146-foot mini-supply vessel. Following completion of the
transaction, the Company would have a marine transportation fleet of 36
vessels consisting of six anchor handling, tug supply vessels, 21 supply
boats, eight mini-supply boats and one training vessel.
TECHNICAL SERVICES OPERATIONS
Certain financial and operational information regarding the Company's
technical services operations for the three and nine months ended September
30, 1994 and 1993 is summarized below (dollars in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Revenues $ 4,075 $ 5,467 $12,799 $14,563
Operating margin $ 859 $ 937 $ 3,935 $ 2,414
Operating statistics:
Jobs:
Horizontal wells drilled 22 22 70 78
MWD wells serviced 33 32 94 84
Wireline services 4 9 12 24
Total 59 63 176 186
<PAGE>
Average days per job:
Horizontal wells 23.4 28.4 22.2 24.2
MWD wells 12.9 16.1 16.0 14.5
Wireline services 21.5 17.7 14.7 15.1
Total 17.4 20.6 18.4 18.6
Average revenue per job:
Horizontal wells $ 113.3 $ 135.8 $ 109.4 $ 121.5
MWD wells 40.3 65.6 49.2 52.4
Wireline services 63.3 42.1 43.3 28.6
Total $ 69.1 $ 86.8 $ 72.7 $ 78.3
</TABLE>
The Company conducts its technical services operations primarily in the
Austin Chalk trend of Texas. The Company's horizontal drilling activity
was fairly flat for the three and nine months ended September 30, 1994 as
compared to the same periods of 1993. Operating margin was little changed
for the three months ended September 30, 1994, as compared to the same
period in 1993, however, operating margin increased for the nine months
ended September 30, 1994 as compared to the same period in 1993 due
primarily to reduced operating expenses in the first half of 1994.
In September 1994, a wholly owned subsidiary of the Company entered into an
exclusive alliance agreement with Halliburton Energy Services, a division
of Halliburton Company, to jointly provide coiled tubing, directional and
horizontal drilling services on a worldwide basis.
In October 1994, a wholly owned subsidiary of the Company entered into an
agreement with Lateral Vector Resources, Inc. ("LVR"), a Canadian company,
under which LVR purchased a 30% interest in a subsidiary of the Company for
$1.2 million. LVR has the option, through November 15, 1994, to purchase
an additional 10% interest in the subsidiary under the same terms at which
the 30% interest was purchased. The purpose of the sale was to combine
forces with LVR to conduct horizontal/directional drilling services in
Canada and certain areas of the U.S. The subsidiary will continue to be
included in the Company's consolidated financial statements. The Company
will record a gain on the sale of the 30% interest of approximately
$600,000 in October 1994.
DEPRECIATION AND AMORTIZATION
Depreciation and Amortization expense for the three and nine months ended
September 30, 1994 increased by $2.2 million and $8.4 million,
respectively, compared to the same periods in 1993. The increases are
primarily attributable to depreciation and amortization related to the
step-up in basis of the assets acquired in the Penrod Acquisition,
depreciation on four barge drilling rigs delivered to Venezuela in March
through June of 1993, depreciation on four additional barge drilling rigs
delivered to Venezuela in July through September of 1994 and depreciation
on two North Sea jackup rigs acquired in mid-February 1994. The 1994
increased depreciation was partially offset by the sale of the U.S. land
rig operation effective June 30, 1994.
GENERAL AND ADMINISTRATIVE
General and Administrative expense for the three and nine months ended
September 30, 1994 decreased by $765,000 and $2.8 million, respectively,
<PAGE>
compared to the same periods in 1993. The decreases are primarily
attributable to the consolidation of Penrod's general and administrative
functions with the Company's in 1993 following the Penrod Acquisition.
INTEREST INCOME
Interest income increased for the three and nine months ended September 30,
1994 by $446,000 and $1.2 million, respectively, compared to the same
periods in 1993 due to higher average cash levels and an increase in
interest rates.
INTEREST EXPENSE
Interest expense increased for the three and nine months ended September
30, 1994 by $932,000 and $1.9 million, respectively, compared to the same
periods in 1993 due primarily to higher average levels of debt outstanding
and an increase in interest rates.
INCOME FROM EQUITY AFFILIATES, NET
Income from Equity Affiliates, net for the nine months ended September 30,
1994 consists of the Company's 50% share of the earnings (loss) of a
Mexican joint venture formed in June 1993 to operate a jackup rig in the
Gulf of Mexico and a joint venture in Singapore formed in August 1993 to
operate marine vessels in Southeast Asia. The Singapore joint venture was
terminated in May 1994. Income from Equity Affiliates, net for the three
months ended September 30, 1994 consists solely of the Company's portion of
the Mexican joint venture's operations.
OTHER, NET
Other, net for the three months ended September 30, 1994 consists primarily
of net gains related to the sale of miscellaneous equipment. Other, net
for the nine months ended September 30, 1994 consists primarily of foreign
currency translation losses and the loss on the sale of the Company's U.S.
land rig operations. These losses were offset, in part, by net gains on
the sale of miscellaneous equipment and net gains related to equipment lost
downhole for which the customer reimbursement exceeded the net book value
of the equipment lost.
PROVISION FOR INCOME TAXES
The Company recorded income tax provisions of $685,000 and $2.9 million for
the three and nine months ended September 30, 1994, respectively, as
compared to $2.1 million and $5.8 million for the three and nine months
ended September 30, 1993, respectively. The 1994 provisions include U.S.
alternative minimum taxes and current and deferred foreign taxes primarily
related to the Company's operations in Venezuela. A charge against
earnings of $1.0 million was recorded during the three and nine months
ended September 30, 1994 to increase the Company's deferred income tax
liability due to the increase in the Venezuela tax rate from 30% to 34%,
effective January 1, 1995. The income tax provision was decreased by $1.0
million during the three and nine months ended September 30, 1994 due to a
reduction in the deferred tax asset valuation allowance as management
considers it more likely than not that certain additional U.S. net
operating losses will be utilized prior to their expiration. The 1993
provisions were primarily related to deferred foreign taxes in Venezuela
<PAGE>
and the United Kingdom.
At September 30, 1994, the Company had regular and alternative minimum tax
net operating loss and investment tax credit carryforwards of approximately
$328.9 million, $193.9 million, and $3.6 million, respectively.
MINORITY INTEREST
Minority Interest for the three and nine months ended September 30, 1994
decreased by $1.4 million and $3.3 million, respectively, compared to the
same periods in 1993. The minority interest charges for 1994 relate to the
minority shareholder's interest in the net income of ENSCO Drilling
(Caribbean), Inc. ("Caribbean"). The 1993 charges include the minority
shareholders interest in the net income of Caribbean and $975,000 and $4.0
million for the three and nine months ended September 30, 1993,
respectively, for the preacquisition earnings related to the 63.7% of
Penrod which the Company did not own prior to the Penrod Acquisition.
LIQUIDITY AND CAPITAL RESOURCES
The Company's consolidated statement of cash flows for the nine months
ended September 30, 1993 does not include the cash provided by operating
activities of Penrod nor the cash flows from Penrod's investing and
financing activities prior to the Penrod Acquisition.
CASH FLOW AND CAPITAL EXPENDITURES
The Company's cash flow from operations and capital expenditures for the
nine months ended September 30, 1994 and 1993 are as follows (in
thousands):
1994 1993
Cash Flow from Operations $ 78,943 $ 36,577
Capital Expenditures 137,596 69,405
Cash flow from operations increased $42.4 million in the first nine months
of 1994 compared to the same period in 1993. The improved cash flow is
primarily a result of improved operations and the contribution from the
cash flow of the ex-Penrod operations.
The Company's capital expenditures for the nine months ended September 30,
1994 consisted principally of $59.7 million towards the construction of
four barge drilling rigs delivered for operation in Venezuela in July
through September of 1994, $55.7 million for the purchase of two jackup
rigs located in the North Sea, $18.1 million for contract drilling
equipment and $4.1 million for other equipment, primarily for marine
transportation vessels and technical services operations. Management
anticipates that capital expenditures in 1994 will total approximately
$30.0 million for existing operations and upgrades, $64.0 million towards
the construction of the four barge drilling rigs and $55.7 million for the
purchase of the two jackup rigs located in the North Sea.
<PAGE>
FINANCING AND CAPITAL RESOURCES
The Company's long-term debt, total capital and debt to capital ratios at
September 30, 1994 and December 31, 1993 are summarized below (in
thousands, except percentages):
SEPTEMBER 30, DECEMBER 31,
1994 1993
Long-term Debt $169,528 $125,983
Total Capital 651,535 580,885
Long-term Debt to Total Capital 26.0% 21.7%
In November 1993, Caribbean signed four separate five-year contracts with
Lagoven, a subsidiary of the Venezuelan national oil company, to operate
four additional barge drilling rigs on Lake Maracaibo in Venezuela. In
December 1993, a subsidiary of the Company entered into a financing
arrangement with a subsidiary of a Japanese corporation in connection with
the construction of the four barge drilling rigs which were completed in
July through September of 1994. Upon completion of construction of the
barge drilling rigs, the interim construction loans were repaid from the
proceeds of four secured term loans, totalling $78.8 million, made by the
Japanese corporation to a subsidiary of Caribbean. The five year term
loans bear interest at fixed rates ranging from 9.1% to 9.8%, repayable in
60 equal monthly installments of principal and interest. The term loans
are each secured by a specific barge drilling rig, which rigs together had
a combined net book value of approximately $75.0 million at September 30,
1994, and the charter contract on each rig. The secured term loans are
without recourse to the Company. Under the terms of the Lagoven contracts,
the barges will earn day rates which the Company believes will be
sufficient to fully amortize the loans.
In December 1993, a subsidiary of the Company entered into a $100.0 million
loan arrangement with a group of international banks. The facility
consisted of a $60.0 million secured term loan and a $40.0 million
revolving line of credit. Proceeds of the secured term loan were used to
repay a revolving credit agreement and existing term loans of Penrod. The
revolver is reduced semi-annually by $1.0 million over five years with the
final $30.0 million line expiring at the end of the five year term. The
facility carries a floating interest rate, which was 7.25% at September 30,
1994. The revolver portion of the facility was undrawn at September 30,
1994.
In March 1994, the Company redeemed its convertible subordinated debentures
consisting of $5.1 million principal amount of 8.25% convertible
subordinated debentures which were originally due July 1, 1995. The
Company's cash reserves were used to redeem the convertible subordinated
debentures.
In July 1994, the Company announced that it would redeem the 2,839,110
outstanding shares of the Company's $1.50 Cumulative Convertible
Exchangeable Preferred Stock ("$1.50 Preferred Stock") in August 1994.
Holders of 2,807,147 shares of the $1.50 Preferred Stock elected to convert
each of their shares into approximately 1.786 shares of the Company's
common stock, based on the $25.00 liquidation preference and the $14.00
conversion price per share of the $1.50 Preferred Stock. Such conversion
resulted in the issuance of 5,012,762 shares of the Company's common stock.
<PAGE>
Holders of the remaining 31,963 shares of the $1.50 Preferred Stock elected
to redeem their shares for cash.
The Company's liquidity position at September 30, 1994 and December 31,
1993 is summarized in the table below (in thousands, except ratios):
SEPTEMBER 30, DECEMBER 31,
1994 1993
Cash and Short-Term
Investments $134,796 $128,060
Working Capital 120,415 127,105
Current Ratio 2.5 2.9
Based on current energy industry conditions, management believes cash flow
from operations, the Company's existing credit facilities and the Company's
working capital should be sufficient to fund the Company's debt and capital
additions for the next twelve months.
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits and Exhibit Index
Exhibit
No.
_______
* 27 Financial Data Schedule
____________________
* filed herewith
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ENERGY SERVICE COMPANY, INC.
Date: November 10, 1994 /s/ C, CHRISTOPHER GAUT
C. Christopher Gaut
Chief Financial Officer
/s/ H. E. MALONE
H. E. Malone, Corporate Controller
and Chief Accounting Officer
<PAGE>
EXHIBIT INDEX
SEQUENTIALLY
NUMBERED
EXHIBIT DOCUMENT
NO. DOCUMENT PAGE
27 Financial Data Schedule 25
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
EXHIBIT 27
Energy Service Company, Inc.
Financial Data Schedule
As of and for the Nine Months Ended September 30, 1994
(In thousands, except per share amounts)
(Unaudited)
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEPTEMBER 30, 1994 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
<S> <C>
<PERIOD-TYPE> 9-MOS
<PERIOD-END> SEP-30-1994
<CASH> $128,927
<SECURITIES> 5,869
<RECEIVABLES> 52,771
<ALLOWANCES> (1,040)
<INVENTORY> 3,879
<CURRENT-ASSETS> 203,226
<PP&E> 679,624
<DEPRECIATION> (142,989)
<TOTAL-ASSETS> 779,169
<CURRENT-LIABILITIES> 82,811
<BONDS> 169,528
<COMMON> 6,655
0
0
<OTHER-SE> 475,352
<TOTAL-LIABILITY-AND-EQUITY> 779,169
<SALES> 0
<TOTAL-REVENUES> 195,607
<CGS> 0
<TOTAL-COSTS> 109,950
<OTHER-EXPENSES> 46,636
<LOSS-PROVISION> (323)
<INTEREST-EXPENSE> 8,848
<INCOME-PRETAX> 33,678
<INCOME-TAX> 2,907
<INCOME-CONTINUING> 28,705
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,705
<EPS-PRIMARY> 0.47
<EPS-DILUTED> 0.47
<PAGE>
</TABLE>
