Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Good morning. My name is Felicia and I will be your conference operator. At this time, I'd like to welcome everyone to the GulfMark fourth-quarter conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (OPERATOR INSTRUCTIONS). I will now like to turn the call over to Mr. Butters, Chairman of the Board. You may begin your conference, sir.
DAVID BUTTERS, CHAIRMAN OF THE BOARD, GULFMARK OFFSHORE: Thank you very much and welcome to GulfMark's fourth-quarter financial review and year-end review. We will follow the normal format this morning in our conference call with Ed Guthrie covering the financial performance of the quarter and then Bruce Streeter will review the operational highlights.
But before we begin, I would like to comment on a corporate governance milestone achieved during this fourth quarter and that is of course the appointment of Bruce Streeter as Chief Executive Officer, which was accomplished in December of this year. For those of you who know, Bruce joined the Company in 1990 when we acquired the supply boat business of Offshore Logistics, which then really consisted of just a handful of smaller vessels and he and his team have steadily and consistently built GulfMark into one of the premier players in the international deepwater oil service business.
Now to give you some perspective of his and his team's accomplishments during this period, just reflect on a second. At the time that we acquired those first vessels from offshore Logistics, Tidewater, then the acknowledged leader of the offshore supply industry, had a market capitalization of about 40 times that of GulfMark's. Today, Tidewater is just slightly over three times our market size.
Now in addition, in the accomplishment of the goal of creating shareholder value over the longer term just reflect again on shareholder value during that period, which increased about 40 times in the 16 years since Bruce has been with us. These are really outstanding accomplishments and speaking for myself, and I am sure for the whole Board, we are really proud and pleased to have Bruce now running the whole show.
And with that, I would like to turn the phone over to Ed Guthrie who will cover the financial performance.
ED GUTHRIE, CFO, GULFMARK OFFSHORE: Thank you, David. I will make the usual comment with regard to forward-looking statements that this conference call will include comments which are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors. These risks are more fully disclosed in our filings with the SEC. The forward-looking comments on this conference call should therefore not be regarded as representations that the projected outcomes can or will be achieved.
Following on with David's earlier comments, the year 2006 was a record year in many respects. We indicated in the press release that we set many records both from a financial perspective, as well as an operating perspective. The year was a $4.28 per share earnings level. Revenues of over $0.25 billion certainly were far and exceeded the previous record set by the Company. The highest quarter in the Company's history was established in the fourth quarter and all categories of revenue, operating income and net income, even excluding the positive impact from the sale of the Sentinel, which was some $3.6 million in income.
The only quarter that was better in the Company's history was the third quarter of this last year. We obviously exceeded the consensus estimate, which was around $0.90 on an [after-gain] normalized basis and we ended up almost 40% higher than what the group of analysts had estimated.
The question is how did this happen. Well, it was really twofold in reasons. One was we did spend less on dry docks in the quarter, approximately $1 million less than what we had earlier given guidance on and secondly, of course, was the fact that our revenue far exceeded all estimates, including even our own, with regard to the fourth quarter with most of the change coming from the North Sea. That increase overcame the loss revenue from the vessels that we had sold during the fourth quarter.
The revenue for the fourth quarter and the first quarter are usually the weaker quarters of the year. Therefore, it was not surprising that the fourth quarter trailed the third quarter in performance. It was down sequentially about 9% from Q3, but as was the case in the positive impact of the third quarter, the anchor handlers were a major factor in the quarter-to-quarter variance as the spot market did fall off somewhat and reduce revenue by some $3.5 million, accounting for almost 51% of this sequential change third quarter to fourth quarter.
The loss of the revenue from the vessels that were sold of $2.2 million was partially offset by the fourth-quarter effect of the newest vessel in the fleet in Southeast Asia, the Sea Sovereign, of $1.2 million.
The other major factor was the vessel which went on 10-year charter. We mentioned last quarter that it traded in the spot market during the third quarter that went on the long-term charter and that reduced revenue some $2.7 million. It had worked during the third quarter at record spot rates. Lower utilization in the Americas due to the vessel in Brazil being in dry dock also reduced revenue somewhat during the fourth quarter.
Bruce will talk more about sector day rates and certainly the third quarter to fourth quarter being down somewhat is not surprising as I indicated before. We looked to the first quarter and Bruce will talk more about that during his presentation.
Operating costs were up just slightly due principally to non-recurring labor-related costs in the Americas. The estimate for the first quarter at the same currency rates that we are at today will result in operating costs running someplace between $24 million and $25 million for Q1 of 2007.
As I mentioned earlier, our dry dock expense was $1 million. It was down $0.5 million from the third quarter, but it was off $1 million from what we had originally given guidance on of where we thought we were going to be. We only did two dry docks during the quarter and did not do the two anchor handlers, the Valor and the Endurance, during the quarter. Those will be done at some point in time during the first quarter of this year.
Total dry docks were 19 to date. For the whole year, we could have completed -- for the first quarter of this year, we have completed four in Q1 so far with potentially up to five more with all in the North Sea except one in Southeast Asia. Our costs if you look at the low side could be around $3.9 million for Q1 and on the high side could be up to $5.3 million if we do all the dry docks that we could do in the quarter.
As usual, we have tried to move most of the dry docks into the first quarter when activity levels are at the lower ebb and when we can be in position to take advantage of the second and third-quarter timeslots when spot rates are certainly much higher. We're currently estimating the total year of 2007 of 18 dry dockings at a cost of approximately $11.8 million.
Our G&A of $6.2 million was right within our guidance range for the quarter. Generally it was higher due to benefit costs in the North Sea region, as well as increased wage costs in all areas. Revised quarterly run rate is around $6.5 million to $7 million. This was due to higher benefit costs and due to staff additions. As …