Probably the best way to describe Ensco's (NYSE:ESV) most recent earnings report is that it wasn't as bad as some others in the industry. While the company's net income numbers continue to slide, management really went out of its way to highlight one particular element this past quarter: Its balance sheet. The reason it wants this message to ring clear is because it wants to distinguish itself from the more financially distressed companies in the business. 

Here's how Ensco's fourth quarter results played out and why the company thinks it's in a strong position in the offshore rig market today. 

Offshore oil rigs in dockyard

Image source: Getty Images.

By the numbers

Results*Q4 2016Q3 2016Q4 2015
Revenue $504.6 $548.2 $828.3
Operational income $80.7 $115.4 ($2,510.8)
Net income $40.5 $85.3 ($2,470.3)
Earnings per share $0.13 $0.28 ($10.64)

*IN MILLIONS, EXCEPT PER-SHARE DATA DATA SOURCE: ENSCO EARNINGS RELEASE.

It's pretty easy to see that year-over-year results for Ensco are practically useless to compare. The company took $2.74 billion in charges related to asset impairment this time last year, which was a huge blow to the earnings but didn't really change the day to day operations of the company.

The declines in revenue and operational income from the prior quarter are more or less par for the course in the offshore rig market today. There has been some interest from producers to do some short contract work, but those long-term, lucrative contracts are in relatively short supply as of late and rigs are rolling off of those older contracts. At the end of the quarter, Ensco had a fleet utilization rate of 51% with an average day rate for the entire fleet of $176,700. 

What the company highlighted the most, though, was its balance sheet and the ability to weather the storm for much longer. Over the past several months the company completed two debt transactions: An issuance of $850 million in convertible senior notes, and a debt exchange that extended the maturity of its nearest-term debt out to 2024. As a result, the nearest debt maturity has been pushed out to 2019 and the company now has $2.3 billion in cash and short term investments on hand.  

One of the reasons that Ensco was so quick to highlight its balance sheet strength is because one of its largest competitors -- Seadrill (NYSE:SDRL) -- announced that it was in the middle of negotiations with creditors to deal with its heap of debt that is due within the next couple of months. Clearly, the market for offshore oil and gas drilling has been much, much slower than many expected. Therefore, strength of balance sheet and liquidity remain critical factors to keep the business afloat for longer.

What management had to say

CEO Carl Trowell on the company's most recent financial actions and how it sets the company up for the rest of the year and beyond. 

Recently, we completed two transactions -- an $850 million convertible senior notes offering in December and a debt exchange of $650 million of our nearest-term maturities for cash and new 2024 senior notes in January -- that raised $476 million of net proceeds. As a consequence of these transactions and other capital management actions taken during 2016, we have lowered our net debt by $1.9 billion and increased liquidity by $1.0 billion since the end of 2015. Additionally, we have reduced our debt maturities over the next seven years to $1.15 billion from $2.90 billion a year ago, providing us with enhanced capital management flexibility.

As we navigate through the downturn, we remain focused on what we can control -- delivering safe and efficient operations to our customers, proactively managing our capital structure and ensuring that we are well positioned for the eventual market upturn.

What a Fool believes

It's hard to call Ensco's most recent quarter great, or even good for that matter. Revenues and earnings continue to decline as producers are still tepid about plowing billions of dollars into multi-year offshore development projects. Eventually, offshore drilling will have to fill the needs from growing oil demand and the natural decline of production, but the burst of shale production has meant that need is pushed further into the future. 

Thanks to the moves Ensco has made involving its debt, the company is set up reasonably well to handle a continued decline for some time. Not all companies in this business can confidently say that right now, which bodes well for the company down the road.

Tyler Crowe owns shares of Seadrill. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.