This summary is based on the first quarter fiscal 2008 earnings call conducted by Rowan Companies Inc. (RDC: chart) on May 1, 2008.

Management:

Chairman, President and CEO: D F McNease
EVP and CFO: William H Wells
VP, IR: William C Provine

Key Investor Issues:

- Quarterly EPS were 88 cents versus 77 cents in the year ago quarter.
- Q1 revenues decreased 22% sequentially from Q4 levels of $623.6 million.
- Net income for the quarter rose by $12.2 million from $86.4 million a year ago quarter.

First-Quarter Financial Highlights:

The management reported that the first quarter 2008 results included $5.4 million or 4 cents per share of gains on asset sales.

- This is in comparison with $24.1 million or 14 cents per share in the prior year period.
- The management advised that there were no significant asset sales in the fourth quarter of 2007.
- During the quarter, the business was driven by the continued excellence in operating performance combined with improvements in international day rates and the company’s reduced exposure to the Gulf of Mexico market.
- The first quarter results were adversely affected by several timing events that are not expected to impact on the long term prospects of the drilling and manufacturing businesses.
- The company’s new build program is ongoing and the offshore fleet is set to increase by more than 40% over the next three years.

- The quarterly net cash from operations was $108.6 million compared with $130.3 million for the same period in the previous year.

The management continued with the strategic initiative towards further diversifying its fleet geographically.

- During the quarter, the management completed the relocation of two of the company’s jack-up rigs.
- The company’s third Tarzan Class jack-up, the Bob Keller, is now in Dubai preparing for its three-year assignment with Saudi Aramco.
- The rig is forecast to operations in mid-May and to generate about $201 million in drilling revenue or $183,700 per day.
- Secondly, the Super Gorilla class jack-up, the Gorilla VII, is now offshore Angola near West Africa. The rig began operations for its two-year assignment for Cabinda Gulf in late April.
- The rig is anticipated to generate approximately $264 million in drilling revenue at a day rate of $332,000.
- The management reported that the company does not normally recognize the record revenue for its rigs during mobilization or modification periods.
- However, into the terms of the contract with Gorilla VII, a reduced day rate of $235,000 per day were earned during the quarter for part of the mobilization period for mid-January at the end of March.

The company remains focused on a new build program, which currently includes construction of nine jack-up rigs.

- The deliveries are anticipated to start in the third quarter of 2008 through 2011.
- The first two rigs currently under construction are scheduled for delivery in the third and fourth quarters of 2008 being the 240C Class Rowan Mississippi and the J.P Bussell respectively.
- The management reported that the third rig under construction is the Ralph Coffman and is scheduled for delivery in the third quarter of 2009.
- The company plans to deliver three more new jack-up rigs to 240C number 3 and the first two of the four Super 116E class jack-ups. Delivery is targeted to be done by the third quarter of 2010.
- By the third quarter of 2011, the management plans to deliver the last three of the company’s new jack-up rigs, being the 240C and the last two Super 116Es.
- The management is aggressively pursuing long term opportunities for these rigs worldwide with particular focus on the Middle East, North Sea, West Africa, South America and the Southeast Asia, where demand for high-specification jack-ups remains strong.

The company is working on the monetization of its wholly-owned subsidiary, LTI.

- The move is strategic given the manufacturing division’s record performance in 2007 and anticipated strength going forward.
- After the record breaking results in Q4 of 2007, the LTI experienced sequentially lower than expected operating results for Q1 of 2008 due to delays in shipments.
- The backlog of external orders is increasing and management expects revenues in excess of $900 million and gross margins of more than $200 million.
- During the first quarter, LTI’s backlog of external orders increased to $437 million versus $348 million at year end of 2007.
- The management reported that LTI is conducting business in the Middle East, Singapore, South America and Russia.

The company’s offshore rig utilization was 91% during the quarter.

This represents an increase from 84% in the first quarter of 2007 and a decrease from 97% in the fourth quarter of 2007. The current quarter utilization was negatively affected by mobilization and shipyard time incurred in preparation for term contracts.

- The company’s average offshore day rate was $159,700 during the quarter, an increase of $16,400 or 11% from the first quarter of 2007, but down by $4,600 or 3% from the fourth quarter of 2007.
- The company’s land rig utilization was 89% for the quarter compared with 92% in the first quarter of 2007 and 94% in the fourth quarter of 2007.
- The company’s average land rig day rate was $23,200 during the first quarter of 2008. This represents a decreased of $700 or 3% from the first quarter of 2007 but an increase of $200 or 1% from the fourth quarter of 2007.

The management reported that drilling operations generated revenues of $340.4 million during the quarter.

- This represents an increase of 18% from the first quarter of 2007 but a decrease of 9% from the fourth quarter of 2007.
- The income from drilling operations was $143.6 million or 42% of revenues during the quarter, an increase of 14% from the last year quarter but a sequential dip of 16%.
- The company’s current backlog of drilling contracts is estimated to be about $2 billion.