In addition to ENSCO 8500, which commenced a four-year drilling contract in June 2009, and ENSCO 8501, which commenced a three-and-a-half-year drilling contract in October 2009, we have five ENSCO 8500 Series® rigs under construction with scheduled delivery dates during the first and fourth quarters of 2010, the second half of 2011 and the first and second half of 2012. Two of the five ENSCO 8500 Series® rigs under construction have secured long-term drilling contracts in the Gulf of Mexico and three are without contracts. Our ENSCO 7500 ultra-deepwater semisubmersible rig is operating under a long-term contract in Australia.
Asia Pacific
During the first half of 2008, Asia Pacific jackup rig utilization remained high and day rates stabilized as strong rig demand was offset by new rig deliveries. During the latter half of 2008, jackup rig demand was significantly impacted by the decline in oil and natural gas prices and global economic crisis, resulting in a significant reduction in utilization and day rates through the first nine months of 2009. With limited contract opportunities currently available and an expected increase in the supply of available jackup rigs from newbuild deliveries, cancelled tenders and unexercised contract extension options, we anticipate that utilization and day rates will remain under pressure in the near-term.
Europe and Africa
Our Europe and Africa offshore drilling operations are mainly conducted in northern Europe. During 2008, shortfalls in rig availability in this region led to sustained high utilization levels and day rates. Although utilization and day rates remained high during the first quarter of 2009, the decline in oil and natural gas prices during the latter half of 2008 resulted in several cancelled tenders and unexercised contract extension options. Tender activity in the region during the second and third quarters was minimal, and we expect this trend to continue for the remainder of the year. We anticipate that this market will experience excess rig availability, and utilization and day rates will remain under pressure, as a significant portion of the North Sea jackup fleet is scheduled to roll-off existing contracts in the coming months.
North and South America
The majority of our North and South America offshore drilling operations are conducted in Mexico, where demand for rigs increased during 2008 as Petróleos Mexicanos, the national oil company of Mexico ("PEMEX"), accelerated drilling activities in an attempt to offset continued depletion of its major oil and natural gas fields. During the first nine months of 2009, demand for jackup rigs in Mexico remained high and day rates remained comparable with international rates. PEMEX is expected to issue additional tenders during the next several quarters, but we expect future day rates in Mexico to face pressure as drilling contractors with idle rigs in other geographic regions pursue these contract opportunities.
Demand for jackup rigs in the Gulf of Mexico stabilized during 2008, and jackup rig supply continued to decline as rigs were relocated to more economically attractive regions. As a result, utilization levels and day rates improved during the first half of 2008. In September 2008, damage caused by Hurricanes Gustav and Ike reduced the supply of available jackup rigs, however, the reduction was more than offset by a decrease in demand resulting from the decline in oil and natural gas prices and global economic crisis. The Gulf of Mexico jackup market has remained extremely weak during 2009 with drilling activity reaching historic lows during recent months. As a result, utilization and day rates declined significantly during the first nine months of 2009. Based on current oil and natural gas prices and global economic conditions and reduced drilling by customers during hurricane season, we do not expect meaningful improvement in jackup rig demand in the near-term.

RESULTS OF OPERATIONS
    The following table summarizes our condensed consolidated results of
operations for the three-month and nine-month periods ended September 30, 2009
and 2008 (in millions):



                                                 Three Months Ended             Nine Months Ended
                                                    September 30,                 September 30,
                                               2009            2008            2009          2008

Revenues                                         $425.4          $619.5      $1,446.3      $1,788.8
Operating expenses
   Contract drilling (exclusive of
depreciation)                                     183.3           185.2         524.8         566.8
   Depreciation                                    53.3            47.0         149.8         139.4
   General and administrative                      13.6            15.2          41.6          41.7
-----------------------------------------------------------------------------------------------------
Operating income                                  175.2           372.1         730.1       1,040.9
Other income (expense), net                         3.6            (6.5 )         6.2           4.8
Provision for income taxes                         28.4            68.8         133.8         192.0
-----------------------------------------------------------------------------------------------------
Income from continuing operations                 150.4           296.8         602.5         853.7
Income (loss) from discontinued
operations, net                                      .4           (13.1 )       (28.2 )         1.6
-----------------------------------------------------------------------------------------------------
Net income                                        150.8           283.7         574.3         855.3
Less: Net income attributable to
noncontrolling interests                           (1.1 )          (1.4 )        (3.6 )        (4.3 )
-----------------------------------------------------------------------------------------------------
Net income attributable to Ensco                 $149.7          $282.3      $  570.7      $  851.0
-----------------------------------------------------------------------------------------------------


         27
---------------------

For the quarter ended September 30, 2009, revenues declined by $194.1 million, or 31%, and operating income declined by $196.9 million, or 53%, as compared to the prior year quarter. For the nine-month period ended September 30, 2009, revenues declined by $342.5 million, or 19%, and operating income declined by $310.8 million, or 30%, as compared to the prior year period. The revenue and operating income declines were primarily due to a decline in utilization of our jackup rigs in all geographic regions, partially offset by an increase in average day rates earned by our contracted jackup rigs in North and South America and ENSCO 7500.
Oil and natural gas prices have declined substantially from record-high 2008 levels. As a result, operators continue to defer and/or curtail drilling programs, which has resulted in a reduction in demand for jackup rigs and a decline in utilization and day rates. Revenue and operating income levels attributable to our jackup rig fleet during 2008 are unlikely to be achieved in the near-term.
Rig Locations, Utilization and Average Day Rates We manage our business through four operating segments. Our ultra-deepwater semisubmersible rigs are included in the Deepwater operating segment. Our fleet of 42 jackup rigs is spread across three geographic region operating segments based on each rig's geographic location. Our jackup rigs are mobile and occasionally move between operating segments in response to market conditions and contract opportunities. Our barge rig is included in the Asia Pacific operating segment. The following table summarizes our offshore drilling rigs by segment and rigs under construction as of September 30, 2009 and 2008:

                           September 30,       September 30,
                               2009                2008

Deepwater(1)                      3                   2
Asia Pacific                     20                  20
Europe and Africa                10                  10
North and South America          13                  13
Under construction(1)             5                   6
-------------------------------------------------------------
Total(2)                         51                  51
-------------------------------------------------------------

(1) During the second quarter of 2009, we accepted delivery of ENSCO 8501, which commenced drilling operations in the Gulf of Mexico under a three-and-a-half year contract in October 2009.

(2) The total number of rigs for each period excludes rigs reclassified as discontinued operations.

The following table summarizes our rig utilization and average day rates from continuing operations by operating segment for the three-month and nine-month periods ended September 30, 2009 and 2008:

                             Three Months Ended        Nine Months Ended
                               September 30,             September 30,
                               2009        2008         2009         2008
Rig Utilization(1)
Deepwater                         64%         87%          82%         93%
Asia Pacific(3)                   62%         96%          68%         95%
Europe and Africa                 63%         96%          83%         97%
North and South America           57%         98%          65%         96%
----------------------------------------------------------------------------
Total                             61%         97%          71%         96%
----------------------------------------------------------------------------

Average Day Rates(2)
Deepwater                    $387,407    $361,612     $436,340    $334,688
Asia Pacific(3)               141,945     156,951      150,241     150,956
Europe and Africa             175,861     226,080      208,259     219,021
North and South America       132,962     102,727      123,255      94,203
----------------------------------------------------------------------------
Total                        $159,067    $160,472     $166,477    $154,159
----------------------------------------------------------------------------

(1) Rig utilization is derived by dividing the number of days under contract, including days associated with compensated mobilizations, by the number of days in the period.

(2) Average day rates are derived by dividing contract drilling revenues, adjusted to exclude certain types of non-recurring reimbursable revenues and lump sum revenues, by the aggregate number of contract days, adjusted to exclude contract days associated with certain mobilizations, demobilizations, shipyard contracts and standby contracts.

(3) Rig utilization and average day rates for the Asia Pacific operating segment include our jackup rigs only. The ENSCO I barge rig has been excluded.

Detailed explanations of our operating results, including discussions of revenues, contract drilling expense and depreciation expense by operating segment, are provided below.
Operating Income
Our business consists of four operating segments: (1) Deepwater, (2) Asia Pacific, (3) Europe and Africa and (4) North and South America. Each of our four operating segments provides one service, contract drilling. Segment information for the three-month and nine-month periods ended September 30, 2009 and 2008 is presented below. General and administrative expense and depreciation expense incurred by our corporate office are not allocated to our operating segments for purposes of measuring segment operating income and were included in "Reconciling Items."

Three Months Ended September 30, 2009
(in millions)


                                                               North
                                                                and      Operating
                                       Asia        Europe      South     Segments    Reconciling    Consolidated
                         Deepwater    Pacific    and Africa   America      Total        Items          Total

Revenues                 $62.5      $161.6       $104.4      $96.9      $425.4       $   --           $425.4
Operating expenses
  Contract drilling
(exclusive
   of depreciation)       34.7        61.1         46.5       41.0       183.3           --            183.3
  Depreciation             6.5        22.3         11.1       13.1        53.0           .3             53.3
  General and
administrative              --          --           --         --          --         13.6             13.6
-----------------------------------------------------------------------------------------------------------------
Operating income
(loss)                   $21.3      $ 78.2       $ 46.8      $42.8      $189.1       $(13.9)          $175.2
-----------------------------------------------------------------------------------------------------------------

Three Months Ended September 30, 2008
(in millions)


                                                                North
                                                                 and      Operating
                                       Asia        Europe       South     Segments    Reconciling    Consolidated
                         Deepwater    Pacific    and Africa    America      Total        Items          Total

Revenues                 $27.1      $260.8       $209.3       $122.3     $619.5       $   --           $619.5
Operating expenses
  Contract drilling
(exclusive
   of depreciation)        8.3        75.3         62.8        38.8       185.2           --            185.2
  Depreciation             2.3        21.4         10.8        12.0        46.5           .5             47.0
  General and
administrative              --          --           --          --          --         15.2             15.2
------------------------------------------------------------------------------------------------------------------
Operating income
(loss)                   $16.5      $164.1       $135.7      $ 71.5      $387.8       $(15.7)          $372.1
------------------------------------------------------------------------------------------------------------------


         30
---------------------

Nine Months Ended September 30, 2009
(in millions)


                                                                North
                                                                 and      Operating
                                       Asia        Europe       South      Segments    Reconciling    Consolidated
                         Deepwater    Pacific    and Africa    America      Total         Items          Total

Revenues                $130.2      $544.0       $476.8      $295.3      $1,446.3      $   --         $1,446.3
Operating expenses
  Contract drilling
(exclusive
   of depreciation)       63.2       188.4        152.6       120.6         524.8          --            524.8
  Depreciation            12.5        66.2         33.0        37.2         148.9          .9            149.8
  General and
administrative              --          --           --          --            --        41.6             41.6
-------------------------------------------------------------------------------------------------------------------
Operating income
(loss)                  $ 54.5      $289.4       $291.2       $137.5     $  772.6     $(42.5)         $  730.1
-------------------------------------------------------------------------------------------------------------------

Nine Months Ended September 30, 2008
(in millions)


                                                                North
                                                                 and      Operating
                                       Asia        Europe       South      Segments    Reconciling    Consolidated
                         Deepwater    Pacific    and Africa    America      Total         Items          Total

Revenues                 $84.3      $779.5       $602.9       $322.1     $1,788.8      $   --         $1,788.8
Operating expenses
  Contract drilling
(exclusive
   of depreciation)       26.5       239.4        184.9       116.0         566.8          --            566.8
  Depreciation             6.8        63.7         32.1        35.4         138.0         1.4            139.4
  General and
administrative              --          --           --          --            --        41.7             41.7
-------------------------------------------------------------------------------------------------------------------
Operating income
(loss)                   $51.0      $476.4       $385.9      $170.7      $1,084.0      $(43.1)        $1,040.9
-------------------------------------------------------------------------------------------------------------------


         31
---------------------

Deepwater
Deepwater revenues for the quarter ended September 30, 2009 increased by $35.4 million as compared to the prior year quarter. The increase in revenues was due to the commencement of ENSCO 8500 drilling operations in June 2009, the recognition of ENSCO 7500 mobilization revenues and an increase in the ENSCO 7500 day rate. During the fourth quarter of 2008, ENSCO 7500 was relocated from the Gulf of Mexico to Australia where it commenced drilling operations under a new contract in April 2009 at a day rate of approximately $550,000. Revenues earned during the mobilization period were deferred and are being recognized ratably over the term of the contract at a rate of approximately $170,000 per day. Contract drilling expense increased by $26.4 million due to the commencement of ENSCO 8500 drilling operations, incremental expenses associated with operating ENSCO 7500 in Australia as compared to the Gulf of Mexico and an increase in ENSCO 7500 mobilization expense, which is being recognized over the contract term in the same manner as mobilization revenue. Depreciation expense increased by $4.2 million primarily due to ENSCO 8500, which was placed into service in June 2009.
Deepwater revenues for the nine-month period ended September 30, 2009 increased by $45.9 million as compared to the prior year period. The increase in revenues was due to an increase in the day rate earned by ENSCO 7500, the recognition of ENSCO 7500 mobilization revenues and the commencement of ENSCO 8500 drilling operations, partially offset by the deferral of ENSCO 7500 revenues during the rig's mobilization to Australia. Contract drilling expense increased by $36.7 million due to ENSCO 7500 mobilization expense, incremental expenses associated with operating ENSCO 7500 in Australia as compared to the Gulf of Mexico and the commencement of ENSCO 8500 drilling operations. Depreciation expense increased by $5.7 million primarily due to ENSCO 8500 as noted above.
Asia Pacific
Asia Pacific revenues for the quarter ended September 30, 2009 declined by $99.2 million, or 38%, as compared to the prior year quarter. The decline in revenues was primarily due to a decline in utilization to 62% from 96% in the prior year quarter and, to a lesser extent, a 10% decline in average day rates. The decline in utilization and average day rates occurred due to lower levels of spending by oil and gas companies in response to the significant decline in oil and natural gas prices during the latter half of 2008 coupled with excess rig availability in the region. Contract drilling expense declined by $14.2 million, or 19%, as compared to the prior year quarter, primarily due to the impact of decreased utilization. Depreciation expense increased by 4% primarily due to the ENSCO 53 capital enhancement project completed during the second quarter of 2009 and depreciation on minor upgrades and improvements completed during the latter half of 2008 and the first nine months of 2009.
Asia Pacific revenues for the nine-month period ended September 30, 2009 declined by $235.5 million, or 30%, as compared to the prior year period. The decline in revenues was primarily due to a decline in utilization to 68% from 95% in the prior year period. The decline in utilization occurred due to lower levels of spending by oil and gas companies as noted above, coupled with excess rig availability in the region. Contract drilling expense declined by $51.0 million, or 21%, as compared to the prior year period, primarily due to the impact of decreased utilization and a decline in repair and maintenance expense. Depreciation expense increased by 4% primarily due to the ENSCO 53 capital enhancement project completed during the second quarter of 2009 and depreciation on minor upgrades and improvements completed during 2008 and the first nine months of 2009.

Europe and Africa
Europe and Africa revenues for the quarter ended September 30, 2009 declined by $104.9 million, or 50%, as compared to the prior year quarter. The decline was primarily due to a decline in utilization to 63% from 96% in the prior year quarter and, to a lesser extent, a 22% decline in average day rates. The decline in utilization and average day rates occurred due to lower levels of spending by oil and gas companies in response to the significant decline in oil and natural gas prices during the latter half of 2008. Contract drilling expense declined by $16.3 million, or 26%, as compared to the prior year quarter, primarily due to the impact of decreased utilization and a decline in mobilization and repair and maintenance expense. Depreciation expense increased by 3% due to depreciation on minor upgrades and improvements to our Europe and Africa fleet completed during the latter half of 2008 and the first nine months of 2009.
Europe and Africa revenues for the nine-month period ended September 30, 2009 declined by $126.1 million, or 21%, as compared to the prior year period. The decline was primarily due to a decline in utilization to 83% from 97% in the prior year period. The decline in utilization occurred due to lower levels of spending by oil and gas companies as noted above. Contract drilling expense declined by $32.3 million, or 17%, as compared to the prior year period, primarily due to a decline in mobilization expense and the impact of decreased utilization. Depreciation expense increased by 3% due to depreciation on minor upgrades and improvements to our Europe and Africa fleet completed during 2008 and the first nine months of 2009.
North and South America
North and South America revenues for the quarter ended September 30, 2009 declined by $25.4 million, or 21%, as compared to the prior year quarter. The decline was primarily due to a decline in utilization to 57% from 98% in the prior year quarter, partially offset by a 29% increase in average day rates. The decline in utilization occurred due to lower levels of spending by oil and gas companies in response to the significant decline in oil and natural gas prices during the latter half of 2008. The increase in average day rates was largely due to the relocation of ENSCO 83, ENSCO 89, ENSCO 93 and ENSCO 98 to Mexico and ENSCO 68 to Venezuela during 2009, where day rates are generally higher than the Gulf of Mexico. Contract drilling expense increased by $2.2 million, or 6%, as compared to the prior year quarter, due to incremental expenses associated with operating in Mexico and Venezuela as compared to the Gulf of Mexico and an increase in repair and maintenance and mobilization expense, partially offset by the impact of decreased utilization. Depreciation expense increased by 9% primarily due to ENSCO 89 and ENSCO 93 capital enhancement projects completed during the second quarter of 2009, the ENSCO 98 capital enhancement project completed during the third quarter of 2009 and depreciation on minor upgrades . . .