ROWAN COMPANIES INC (Form: 10-Q, Received: 08/09/2005 17:13:21)

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2005

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM_____TO_____

1-5491

Commission File

Number

ROWAN COMPANIES, INC.

(Exact name of registrant as specified in its charter)

Delaware	75-0759420
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

2800 Post Oak Boulevard, Suite 5450 Houston, Texas	77056-6127
(Address of principal executive offices)	(Zip Code)

(713) 621-7800

Registrant's telephone number, including area code

Inapplicable

(Former name, former address and former fiscal year, if changed since last report)

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 12 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____

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes X No____

The number of shares of common stock, $.125 par value, outstanding at July 31, 2005 was 108,912,353.

ROWAN COMPANIES, INC.

	INDEX

		Page No .
PART I.	Financial Information:

Item 1.	Financial Statements (Unaudited):

	Consolidated Balance Sheets -- June 30, 2005 and December 31, 2004	2

	Consolidated Statements of Operations -- Three and Six Months Ended June 30, 2005 and 2004	4

	Consolidated Statements of Cash Flows -- Three and Six Months Ended June 30, 2005 and 2004	5

	Notes to Consolidated Financial Statements	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	11

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20

Item 4.	Controls and Procedures	20

PART II.	Other Information:

Item 1.	Legal Proceedings	21

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21

Item 6.	Exhibits	22

SIGNATURES		22

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
ROWAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

	 
	June
	30,

	December
	31,

	2005

	2004

	ASSETS

	(Unaudited)

	CURRENT
	ASSETS:

	Cash and cash equivalents

	$

	487,821

	$

	465,977

	Receivables - trade and other

	169,962

	132,445

	Inventories - at cost:

	Raw materials and supplies

	127,449

	126,706

	Work-in-progress

	51,862

	36,016

	Finished goods

	588

	1,391

	Prepaid expenses

	19,435

	13,578

	Deferred tax assets - net

	46,067

	19,332

	Current assets of discontinued boat operations

	3,667

	11,652

	Total
	current assets

	906,851

	807,097

	PROPERTY,
	PLANT AND EQUIPMENT - at cost:

	Drilling equipment

	2,285,247

	2,278,832

	Manufacturing plant and equipment

	160,975

	154,364

	Construction in progress

	148,144

	97,214

	Other property and equipment

	89,753

	98,860

	Total

	2,684,119

	2,629,270

	Less accumulated depreciation and amortization

	989,410

	959,776

	Property,
	plant and equipment - net

	1,694,709

	1,669,494

	GOODWILL
	AND OTHER ASSETS

	15,565

	15,695

	TOTAL

	$

	2,617,125

	$

	2,492,286

	See
	Notes to Consolidated Financial Statements.

-2-

	ROWAN COMPANIES,
	INC. AND
	SUBSIDIARIES

	CONSOLIDATED
	BALANCE SHEETS

	(IN THOUSANDS, EXCEPT
	SHARE
	AMOUNTS)

	 
	June
	30,

	December
	31,

	2005

	2004

	LIABILITIES
	AND STOCKHOLDERS' EQUITY

	(Unaudited)

	CURRENT
	LIABILITIES:

	Current
	maturities of long-term debt

	$

	64,922

	$

	64,922

	Accounts
	payable - trade

	42,371

	26,095

	Other
	current liabilities

	90,674

	139,719

	Current
	liabilities of discontinued boat operations

	4,064

	Total
	current liabilities

	197,967

	234,800

	LONG-TERM
	DEBT - less current maturities

	573,180

	574,350

	OTHER
	LIABILITIES

	118,612

	110,916

	DEFERRED
	INCOME TAXES - net

	234,918

	163,336

	STOCKHOLDERS'
	EQUITY:

	Preferred
	stock, $1.00 par value:

	Authorized
	5,000,000 shares issuable in series:

	Series
	A Preferred Stock, authorized 4,800 shares, none
	outstanding

	Series
	B Preferred Stock, authorized 4,800 shares, none
	outstanding

	Series
	C Preferred Stock, authorized 9,606 shares, none
	outstanding

	Series
	D Preferred Stock, authorized 9,600 shares, none
	outstanding

	Series
	E Preferred Stock, authorized 1,194 shares, none
	outstanding

	Series
	A Junior Preferred Stock, authorized 1,500,000 shares,

	none
	issued

	Common
	stock, $.125 par value:

	Authorized
	150,000,000 shares; issued 108,864,937 shares at

	June
	30, 2005 and 107,408,721 shares at December 31, 2004

	13,608

	13,426

	Additional
	paid-in capital

	942,393

	917,764

	Retained
	earnings

	607,229

	548,476

	Accumulated
	other comprehensive loss

	(70,782

	)

	(70,782

	)

	Total
	stockholders' equity

	1,492,448

	1,408,884

	TOTAL

	$

	2,617,125

	$

	2,492,286

	See
	Notes to Consolidated Financial Statements.

-3-

ROWAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

	 
	For
	The Three Months

	For
	The Six Months

	Ended
	June 30,

	Ended
	June 30,

	2005

	2004

	2005

	2004

	(Unaudited)

	(Unaudited)

	REVENUES:

	Drilling
	services

	$

	182,637

	$

	111,301

	$

	342,916

	$

	212,129

	Manufacturing
	sales and services

	61,923

	51,544

	124,036

	95,248

	Total

	244,560

	162,845

	466,952

	307,377

	COSTS
	AND EXPENSES:

	Drilling
	services

	99,182

	81,736

	188,607

	164,179

	Manufacturing
	sales and services

	51,687

	42,814

	108,361

	81,605

	Depreciation
	and amortization

	20,106

	19,456

	39,960

	38,345

	Selling,
	general and administrative

	16,086

	9,269

	29,346

	18,367

	Gain
	on sale of property and equipment

	(9,592

	)

	(110

	)

	(10,182

	)

	(403

	)

	Total

	177,469

	153,165

	356,092

	302,093

	INCOME
	FROM OPERATIONS

	67,091

	9,680

	110,860

	5,284

	OTHER
	INCOME (EXPENSE):

	Interest
	expense

	(6,318

	)

	(5,039

	)

	(12,174

	)

	(10,104

	)

	Less
	interest capitalized

	1,088

	535

	1,859

	1,332

	Interest
	income

	3,565

	867

	6,111

	1,527

	Gain
	on sale of investments

	1,852

	-

	9,553

	-

	Other
	- net

	233

	91

	569

	174

	Other
	income (expense) - net

	420

	(3,546

	)

	5,918

	(7,071

	)

	INCOME
	(LOSS) BEFORE INCOME TAXES

	67,511

	6,134

	116,778

	(1,787

	)

	Provision
	(credit) for income taxes

	24,325

	2,160

	43,053

	(603

	)

	INCOME
	(LOSS) FROM CONTINUING OPERATIONS

	43,186

	3,974

	73,725

	(1,184

	)

	Income
	(loss) from discontinued operations, net of tax

	(920

	)

	(6,099

	)

	11,963

	(12,249

	)

	NET
	INCOME (LOSS)

	$

	42,266

	$

	(2,125

	)

	$

	85,688

	$

	(13,433

	)

	PER
	SHARE AMOUNTS (Note 3):

	Income
	(loss) from continuing operations - basic

	$

	.40

	$

	.04

	$

	.68

	$

	(.01

	)

	Income
	(loss) from continuing operations - diluted

	$

	.39

	$

	.04

	$

	.67

	$

	(.01

	)

	Income
	(loss) from discontinued operations - basic

	$

	(.01

	)

	$

	(.06

	)

	$

	.11

	$

	(.12

	)

	Income
	(loss) from discontinued operations - diluted

	$

	(.00

	)

	$

	(.06

	)

	$

	.11

	$

	(.12

	)

	Net
	income (loss) - basic

	$

	.39

	$

	(.02

	)

	$

	.79

	$

	(.13

	)

	Net
	income (loss) - diluted

	$

	.39

	$

	(.02

	)

	$

	.78

	$

	(.13

	)

	See
	Notes to Consolidated Financial Statements.

-4-

ROWAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

	 
	For
	The Six Months

	Ended
	June 30,

	2005

	2004

	(Unaudited) 

	CASH
	PROVIDED BY (USED IN):

	Operations:

	Net
	income (loss)

	$

	85,688

	$

	(13,433

	)

	Adjustments
	to reconcile net income (loss) to net cash provided by
	operations:

	Depreciation
	and amortization

	40,047

	47,034

	Deferred
	income taxes

	44,847

	(6,990

	)

	Provision
	for pension and postretirement benefits

	13,836

	17,665

	Compensation
	expense

	1,936

	3,600

	Gain
	on disposals of property, plant and equipment

	(10,182

	)

	(5,500

	)

	Gain
	on sales of investments

	(9,553

	)

	Contributions
	to pension plans

	(66,052

	)

	(1,071

	)

	Postretirement
	benefit claims paid

	(1,950

	)

	(1,785

	)

	Changes
	in current assets and liabilities:

	Receivables-
	trade and other

	(30,120

	)

	(14,889

	)

	Inventories

	(18,771

	)

	(6,650

	)

	Other
	current assets

	(5,269

	)

	(9,078

	)

	Current
	liabilities

	29,114

	3,503

	Net
	changes in other noncurrent assets and liabilities

	65

	902

	Net
	cash provided by operations

	73,636

	13,308

	Investing
	activities:

	Capital
	expenditures

	(76,059

	)

	(76,914

	)

	Proceeds
	from disposals of property, plant and equipment

	24,030

	11,636

	Proceeds
	from sales of investments

	9,553

	Net
	cash used in investing activities

	(42,476

	)

	(65,278

	)

	Financing
	activities:

	Proceeds
	from borrowings

	28,302

	47,259

	Repayments
	of borrowings

	(29,472

	)

	(26,432

	)

	Payment
	of cash dividend

	(26,935

	)

	Proceeds
	from stock option and convertible debenture plans

	18,789

	2,616

	Proceeds
	from common stock offering, net of issue costs

	264,980

	Net
	cash provided by (used in) financing activities

	(9,316

	)

	288,423

	INCREASE
	IN CASH AND CASH EQUIVALENTS

	21,844

	236,453

	CASH
	AND CASH EQUIVALENTS, BEGINNING OF PERIOD

	465,977

	58,227

	CASH
	AND CASH EQUIVALENTS, END OF PERIOD

	$

	487,821

	$

	294,680

	See
	Notes to Consolidated Financial Statements.

-5-

ROWAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements of Rowan included in this Form 10-Q have been prepared without audit in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission. Certain information and notes have been condensed or omitted as permitted by those rules and regulations. We believe that the disclosures included herein are adequate, but suggest that you read these consolidated financial statements in conjunction with the financial statements and related notes included in our 2004 Annual Report to Stockholders and incorporated by reference in our Form 10-K for the year ended December 31, 2004.

We believe the accompanying unaudited consolidated financial statements contain all adjustments, which are of a normal recurring nature, necessary to present fairly Rowan’s financial position as of June 30, 2005 and December 31, 2004, and the results of its operations and cash flows for the three and six months ended June 30, 2005 and 2004.

Rowan’s results of operations and cash flows for the six months ended June 30, 2005 are not necessarily indicative of results to be expected for the full year. Certain reclassifications have been made in the 2004 amounts to conform to the 2005 presentations.

Rowan has two principal operating segments: contract drilling of oil and gas wells, both onshore and offshore (“Drilling”) and the manufacture and sale of heavy equipment for the mining and timber industries, alloy steel and steel plate and drilling products (“Manufacturing”). The following table presents certain financial information of Rowan by operating segment as of June 30, 2005 and 2004 and for the six month periods then ended (in thousands). See Note 8 for further information regarding Rowan’s discontinued operations.

					Discontinued
		Drilling		Manufacturing		Operations		Consolidated
2005
Total assets	$	2,289,243	$	324,215	$	3,667	$	2,617,125
Goodwill		1,493		10,863		-		12,356
Revenues		342,916		124,036		-		466,952
Income from operations		110,000		860		-		110,860

2004
Total assets	$	1,980,164	$	289,582	$	154,930	$	2,424,676
Goodwill		1,493		10,863		-		12,356
Revenues		212,129		95,248		-		307,377
Income from operations		2,926		2,358		-		5,284

Excluded from the preceding table are the effects of transactions between segments. During the six months ended June 30, 2005 and 2004, Rowan’s manufacturing division provided approximately $48 million and $49 million, respectively, of products and services to its drilling division.

-6-

3.	Rowan’s computations of basic and diluted income (loss) per share for the three and six months ended June 30, 2005 and 2004 are as follows (in thousands except per share amounts):

	Three Months Ended						Six Months Ended
		June 30,						June 30,
		2005			2004			2005		2004

Weighted average shares of common stock outstanding		108,559			105,819			108,188		103,975
Dilutive securities:
Stock options		994			-			1,168		-
Convertible debentures		199			-			211		-
Weighted average shares for diluted calculations		109,752			105,819			109,567		103,975

Income (loss) from continuing operations	$	43,186		$	3,974		$	73,725	$	(1,184	)

Income (loss) from continuing operations per share:
Basic	$	.40		$	.04		$	.68	$	(.01	)
Diluted	$	.39		$	.04		$	.67	$	(.01	)

Income (loss) from discontinued operations	$	(920	)	$	(6,099	)	$	11,963	$	(12,249	)
Income (loss) from discontinued operations per share:
Basic	$	(.01	)	$	(.06	)	$	.11	$	(.12	)
Diluted	$	(.00	)	$	(.06	)	$	.11	$	(.12	)

Net income (loss)	$	42,266		$	(2,125	)	$	85,688	$	(13,433	)
Net income (loss) per share:
Basic	$	.39		$	(.02	)	$	.79	$	(.13	)
Diluted	$	.39		$	(.02	)	$	.78	$	(.13	)

Incremental shares related to convertible debentures and stock options as set forth in the following table are excluded from the preceding computations of diluted income (loss) per share as their inclusion would have reduced the per share amount of loss for each period.

	Three Months Ended		Six Months Ended
		June 30, 2004		June 30, 2004

Convertible debentures		906		920
Stock options		763		855

Rowan had 4,445,047 and 5,342,008 stock options outstanding at June 30, 2005 and 2004, respectively. Another 1,176,830 and 2,293,869 shares, respectively, were issuable at those dates through the conversion of debentures.

-7-

Rowan uses the intrinsic value method of accounting for stock-based employee compensation, whereby the cost of each option is measured as the difference between the market price per share and the option price per share on the date of grant, in accordance with Accounting Principles Board Opinion No. 25. The following table is provided pursuant to Statement of Financial Accounting Standards No. 148 to illustrate the effect on Rowan’s net income (loss) and net income (loss) per share of measuring stock-based compensation cost based upon estimated fair values in accordance with Statement of Financial Accounting Standards No. 123 for the three and six months ended June 30, 2005 and 2004:

	Three Months Ended June 30,
					Per Share
		Total			Basic			Diluted
2005
Net income, as reported	$	42,266		$	.39		$	.39
Stock-based compensation, net of related tax effects:
As recorded under APB 25		537
Pro forma under SFAS 123		(1,025	)
Pro forma net income	$	41,778		$	.38		$	.38

2004
Net income (loss), as reported	$	(2,125	)	$	(.02	)	$	(.02	)
Stock-based compensation, net of related tax effects:
As recorded under APB 25		1,100
Pro forma under SFAS 123		(1,754	)
Pro forma net income (loss)	$	(2,779	)	$	(.03	)	$	(.03	)

	Six Months Ended June 30,
					Per Share
		Total			Basic			Diluted
2005
Net income, as reported	$	85,688		$	.79		$	.78
Stock-based compensation, net of related tax effects:
As recorded under APB 25		1,167
Pro forma under SFAS 123		(2,826	)
Pro forma net income	$	84,029		$	.78		$	.77

2004
Net income (loss), as reported	$	(13,433	)	$	(.13	)	$	(.13	)
Stock-based compensation, net of related tax effects:
As recorded under APB 25		2,385
Pro forma under SFAS 123		(3,926	)
Pro forma net income (loss)	$	(14,974	)	$	(.14	)	$	(.14	)

Under Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment”, as amended, Rowan will be required to expense stock-based compensation associated with unvested awards using the fair value method beginning January 1, 2006. We currently expect that the provisions of Statement No. 123 (revised) will reduce our 2006 quarterly net income by approximately $.01 per share from that measured under APB 25.

-8-

Rowan had no items of other comprehensive income during the six months ended June 30, 2005 and 2004. Interest payments (net of amounts capitalized) were $9.9 million and $9.1 million for the six months ended June 30, 2005 and 2004, respectively. Tax payments (net of refunds) were $1.1 million and $0.2 million for the six months ended June 30, 2005 and 2004, respectively. During the six months ended June 30, 2005, Rowan received approximately $9.6 million from the sale of marketable investment securities that had a nominal carrying cost.

6.	Since 1952, Rowan has sponsored defined benefit pension plans covering substantially all of its employees. In addition, Rowan provides certain health care and life insurance benefits for retired drilling and aviation employees.

Net periodic pension cost for the three and six months ended June 30, 2005 and 2004 included the following components (in thousands):

	Three Months						Six Months
		Ended June 30,						Ended June 30,
		2005			2004			2005			2004

Service cost	$	2,805		$	3,450		$	5,580		$	6,900
Interest cost		5,396			5,200			10,733			10,399
Expected return on plan assets		(5,721	)		(4,158	)		(11,378	)		(8,316	)
Recognized actuarial loss		2,571			2,257			5,114			4,296
Amortization of prior service cost		42			52			84			104
Total	$	5,093		$	6,801		$	10,133		$	13,383

Other benefits cost for the three and six months ended June 30, 2005 and 2004 included the following components (in thousands):

	Three Months						Six Months
		Ended June 30,						Ended June 30,
		2005			2004			2005			2004

Service cost	$	437		$	679		$	869		$	1,358
Interest cost		848			1,032			1,686			2,065
Recognized actuarial loss		66			319			132			638
Amortization of transition obligation		165			188			328			376
Amortization of prior service cost		(51	)		(77	)		(101	)		(155	)
Total	$	1,465		$	2,141		$	2,914		$	4,282

During the first six months of 2005, Rowan contributed approximately $68 million toward its pension and other benefit plans.

-9-

During the second quarter of 2005, the Company learned that a unit of the U. S. Department of Justice is conducting an investigation of potential anti-trust violations among helicopter transportation providers in the Gulf of Mexico. Rowan’s former aviation subsidiary, which was sold effective December 31, 2004, has received a subpoena in connection with the investigation. The Company has not been served with a subpoena in this matter and believes any involvement by it in the investigation will be minimal.

In the third quarter of 2004, the Company learned that a unit of the U. S. Department of Justice is conducting a criminal investigation of environmental matters involving several of Rowan’s offshore drilling rigs. Rowan is cooperating with the investigation. The Company does not have sufficient information at this time to comment on the outcome of the investigation.

The Company is involved in various other legal proceedings incidental to its businesses and is vigorously defending its position in all such matters. We believe that there are no known contingencies, claims or lawsuits that will have a material adverse effect on Rowan’s financial position, results of operations or cash flows.

On December 31, 2004, Rowan completed the sale of its aviation operations as conducted by Era Aviation, Inc. During the first six months of 2005, the Company recorded an incremental loss on the sale of $2.0 million, net of a related tax benefit of $1.1 million, which resulted from post-closing working capital adjustments pursuant to the sale agreement. For the first six months of 2004, the Company’s aviation operations incurred a loss of $9.7 million, net of a related tax benefit of $4.9 million.

In February 2005, Rowan sold the purchase options it held on four leased anchor-handling boats for approximately $21 million in cash. The leases covering the Company’s two remaining boats expired during the second quarter of 2005, when they were returned to the lessor and Rowan exited the marine vessel business. During the first six months of 2005, Rowan recognized $14.6 million of revenues and $13.3 million of expenses related to the marine vessel operations, and a $20.7 million gain on the sale of the purchase options. The aggregate effect of these items was reduced by an $8.1 million provision for income taxes. For the first six months of 2004, the Company’s marine vessel operations incurred a loss of $2.6 million, net of a related tax benefit of $1.3 million.

The revenues and expenses resulting from Rowan’s discontinued aviation and marine vessel operations for the three and six months ended June 30, 2005 and 2004, including the gain recognized upon sale of the boat purchase options, are shown collectively and net of tax as Income (loss) from discontinued operations in the Consolidated Statements of Operations.

During the second quarter of 2005, Rowan entered into an agreement to sell one of its 52-class jack-up rigs, the Rowan-Texas , for approximately $45 million in cash, after selling expenses. The closing of the sale is pending completion of the rig’s current drilling assignment, which should occur during the third quarter at which time the Company expects to record an after-tax gain on the transaction of approximately $25 million.

-10-

ROWAN COMPANIES, INC. AND SUBSIDIARIES

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

RESULTS OF OPERATIONS

Six Months Ended June 30, 2005 Compared to Six Months Ended June 30, 2004

Rowan generated net income of $85.7 million in the first six months of 2005 compared to a net loss of $13.4 million in the same period of 2004. Income from continuing operations was $73.7 million in the first six months of 2005 compared to a loss of $1.2 million in the same period of 2004. This improvement was largely due to the effects of increased rig utilization and average day rates in the Company’s drilling operations, which more than offset a nominal decrease in manufacturing results. In addition, the current period included significant after-tax gains from certain asset sales, including $6.4 from property and equipment and $6.0 from marketable investment securities.

Our after-tax income from discontinued operations was $12.0 million in the first six months of 2005 compared to a loss of $12.2 million in the same period of 2004. The current period included a $13.1 after-tax gain from the sale of the purchase options we held on four leased boats.

A comparison of the revenues and income (loss) from drilling, manufacturing and consolidated operations for the first six months of 2005 and 2004, respectively, is reflected below (dollars in thousands):

		Drilling						Manufacturing						Consolidated
		2005			2004			2005			2004			2005			2004

Revenues	$	342,916		$	212,129		$	124,036		$	95,248		$	466,952		$	307,377

Percent of Consolidated Revenues		73	%		69	%		27	%		31	%		100	%		100	%

Income from operations	$	110,000		$	2,926		$	860		$	2,358		$	110,860		$	5,284

Percent of Revenues		32	%		1	%		1	%		2	%		24	%		2	%

Net interest and other income (expense)													$	5,918		$	(7,071	)

Income (loss) from continuing operations													$	73,725		$	(1,184	)

As shown in the preceding table, Rowan’s consolidated operating results improved by $105.6 million when comparing the first six months of 2005 and 2004. Rowan’s drilling operations generated a $107.1 million improvement in operating income between periods. Drilling revenues increased by $130.8 million or 62% as our offshore fleet of 24 jack-ups and one semi-submersible was 97% utilized during the first six months of 2005, compared to 86% in the first six months of 2004, and achieved a 60% increase in average day rates between periods. Our fleet of 16 actively-marketed land rigs was 97% utilized during the first six months of 2005, compared to 93% in the first six months of 2004, and achieved a 49% increase in average day rates between periods.

Drilling expenses increased by $24.4 million or 15% between periods. The addition, in April 2004, of the first Tarzan Class jack-up Scooter Yeargain and the reactivation of one land rig in February 2005 collectively caused a $5.0 increase in expenses between periods. Our North Sea operations included $6.2 million of incremental costs, including $3.7 million resulting from the recognition of deferred contract start-up costs and $2.5 million incurred to abandon the Ardmore Field following termination of the Tuscan contract. Labor costs were approximately $4.6 million higher due to incremental short-term incentive plan compensation and an average 8% wage increase effective May 1, 2005. Repairs and maintenance expenses increased by $5.3 million between periods.

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Income from drilling operations included $10.2 million in net gains on property and equipment sold during the first half of 2005, an increase of $9.8 million over the comparable period of 2004. Selling, general and administrative expenses increased by $8.2 million or 68% between periods due primarily to increased professional services costs and the effects of incentive-based compensation increases.

Rowan’s manufacturing results declined despite a $28.8 million or 30% increase in revenues between periods. The aggregate effects of an $18.8 million or 33% increase in equipment group revenues, a $3.6 million or 27% increase in steel group revenues and a $6.3 million or 26% increase in drilling products group revenues between periods were offset by the recognition of a $2.3 million loss on the drilling products group’s dredge barge project. As a result, our average margin on direct costs decreased to 13% of revenues in 2005 from 14% in 2004, and our operating income as a percentage of revenues declined between periods. The equipment group shipped 16 mining loaders during the first half of 2005 compared to nine units in the first half of 2004.

Manufacturing operations exclude approximately $48 million of products and services provided to the drilling division during the first six months of 2005, most of which was attributable to construction progress on the second Tarzan Class rig, the Bob Keller , compared to about $49 million in the same period of 2004, which was primarily attributable to the Scooter Yeargain and the Bob Keller .

As previously announced, Rowan was awarded a contract by Perforadora Central, S.A. de C.V., a Mexican drilling contractor, to construct a Super 116E class jack-up rig. The rig will be an enhanced version of our Super 116-C class jack-up rig, with greater environmental and payload capacity. It will have 511 feet of leg, enabling operations in water depths up to 350 feet in areas like the Gulf of Mexico, Asia and the Persian Gulf. The rig will be constructed at the Company’s Vicksburg, Mississippi shipyard with delivery expected during the second quarter of 2007. In addition, we have obtained a contract to furnish vessel design and components (a kit) for the construction of two Super 116 Class jack-up drilling rigs. The rigs will be built by Keppel AmFELS for Scorpion Offshore. The kits, which comprise the rig’s legs, jacking systems, cranes and certain other components, will be delivered in stages in accordance with the construction schedules. Rowan estimates that the rig and kit construction contracts will provide an aggregate of approximately $182 million of revenues during 2006 and 2007. The division’s external backlog was approximately $252 million at June 30, 2005, up from approximately $59 million one year earlier.

Approximately $9.6 million of the $13.0 million increase in Net interest and other income shown in the preceding table was due to proceeds from the sale of marketable investment securities that had a nominal carrying cost. The remaining increase resulted primarily from rising short-term investment rates applied to a growing balance of cash and cash equivalents.

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The revenues and expenses resulting from Rowan’s discontinued aviation and marine vessel operations for the six months ended June 30, 2005 and 2004, including the gain recognized upon sale of the boat purchase options, are shown collectively and net of tax as Income (loss) from discontinued operations in the Consolidated Statements of Operations.

Three Months Ended June 30, 2005 Compared to Three Months Ended June 30, 2004

Rowan generated net income of $42.3 million in the second quarter of 2005 compared to a net loss of $2.1 million in the same period of 2004. Income from continuing operations was $43.2 million in the second quarter of 2005 compared to income of $4.0 million in the same period of 2004. This improvement was largely due to the effects of increased rig utilization and average day rates in the Company’s drilling operations, which more than offset a nominal decrease in manufacturing results. In addition, the current period included significant after-tax gains from certain asset sales, including $6.1 from property and equipment and $1.2 from marketable investment securities. Our after-tax loss from discontinued operations was $0.9 million in the second quarter of 2005 compared to a loss of $6.1 million in the same period of 2004.

A comparison of the revenues and income (loss) from drilling, manufacturing and consolidated operations for the second quarters of 2005 and 2004, respectively, is reflected below (dollars in thousands):

		Drilling						Manufacturing						Consolidated
		2005			2004			2005			2004			2005			2004

Revenues	$	182,637		$	111,301		$	61,923		$	51,544		$	244,560		$	162,845

Percent of Consolidated Revenues		75	%		68	%		25	%		32	%		100	%		100	%

Income from operations	$	64,628		$	6,794		$	2,463		$	2,886		$	67,091		$	9,680

Percent of Revenues		35	%		6	%		4	%		6	%		27	%		6	%

Net interest and other income (expense)													$	420		$	(3,546	)

Income from continuing operations													$	43,186		$	3,974

As shown in the preceding table, Rowan’s consolidated operating results improved by $57.4 million when comparing the second quarters of 2005 and 2004. Rowan’s drilling operations generated a $57.8 million improvement in operating income between periods. Drilling revenues increased by $71.3 million or 64% as our offshore fleet of 24 jack-ups and one semi-submersible was 96% utilized during the second quarter of 2005, compared to 88% in the second quarter of 2004, and achieved a 47% increase in average day rates between periods. Our fleet of 16 actively-marketed land rigs was 100% utilized during the second quarter of 2005, compared to 99% in the second quarter of 2004, and achieved a 50% increase in average day rates between periods.

Drilling expenses increased by $17.4 million or 21% between periods. The addition, in April 2004, of the first Tarzan Class jack-up Scooter Yeargain and the reactivation of one land rig in February 2005 collectively caused a $2.6 increase in expenses between periods. Our North Sea operations included $5.3 million of incremental costs, including $2.8 million resulting from the recognition of deferred contract start-up costs and $2.5 million incurred to abandon the Ardmore Field following termination of the Tuscan contract. Labor costs were approximately $3.1 million higher due to incremental short-term incentive plan compensation and an average 8% wage increase effective May 1, 2005. Repairs and maintenance expenses increased by $3.0 million between periods.

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Rowan’s manufacturing operating results declined slightly despite a $10.4 million or 20% increase in revenues between periods. The aggregate effects of a $10.1 million or 36% increase in equipment group revenues and a $1.8 million or 25% increase in steel group revenues were offset by a $1.5 million or 9% decrease in drilling products group revenues. Our average margin on direct costs was unchanged at 17% of revenues in 2005, though our operating income as a percentage of revenues declined between periods. The equipment group shipped seven mining loaders during the second quarter of 2005 compared to four units in the second quarter of 2004.

Manufacturing operations exclude approximately $31 million of products and services provided to the drilling division during the second quarter of 2005, most of which was attributable to construction progress on the second Tarzan Class rig, the Bob Keller , compared to about $21 million in the same period of 2004, which was primarily attributable to the Scooter Yeargain and the Bob Keller .

Approximately $1.9 million of the $4.0 million increase in Net interest and other income shown in the preceding table was due to proceeds from the sale of marketable investment securities that had a nominal carrying cost. The remaining increase resulted primarily from rising short-term investment rates applied to a growing balance of cash and cash equivalents.

In February 2005, Rowan sold the purchase options it held on four leased anchor-handling boats for approximately $21 million in cash. The leases covering the Company’s two remaining boats expired during the second quarter of 2005, when they were returned to the lessor and Rowan exited the marine vessel business. During the second quarter of 2005, Rowan recognized $5.2 million of revenues and $5.4 million of expenses related to the marine vessel operations, which were offset by a $0.1 million income tax benefit. For the second quarter of 2004, the Company’s marine vessel operations incurred a loss of $1.6 million, net of a related tax benefit of $0.8 million.

On December 31, 2004, Rowan completed the sale of its aviation operations as conducted by Era Aviation, Inc. During the second quarter of 2005, the Company recorded an incremental loss on the sale of $0.8 million, net of a related tax benefit of $0.5 million, which resulted from post-closing working capital adjustments pursuant to the sale agreement. For the second quarter of 2004, the Company’s aviation operations incurred a loss of $4.5 million, net of a related tax benefit of $2.5 million.

Outlook

Worldwide rig demand is inherently volatile and generally varies from one market to the next, as does the supply of competitive equipment. Exploration and development expenditures on the part of energy companies are affected by many factors beyond oil and natural gas price levels and trends, such as political and regulatory policies, seasonal weather patterns, lease expirations, mergers and acquisitions and new oil and gas discoveries. The outlook for most worldwide drilling markets appears to be stable or improving. However, the volatility inherent in the drilling business prevents us from being able to accurately predict whether existing market conditions will continue beyond the near term, or whether any expected improvements will materialize. In response to fluctuating market conditions, we can, as we have done in the past, relocate drilling rigs from one geographic area to another, but only when we believe such moves are economically justified. Our recently announced three-year contract for five rigs in the Middle East will bring more global diversification to Rowan’s drilling operations and, over time, should improve the average return on our investments. Currently, Rowan’s drilling operations are benefiting from predominantly favorable market conditions and are profitable. There is no assurance, however, that such conditions will be sustained beyond the near-term or that our drilling operations will remain profitable. Our drilling operations will be adversely affected if market conditions deteriorate.

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Though considerably less volatile than our drilling operations, our manufacturing operations, especially the equipment group, are impacted by world commodities prices; in particular, prices for copper, iron ore, coal and gold. In addition, prospects for our drilling products group are ultimately tied to the condition of the overall drilling industry and its demand for equipment, parts and services. Many commodity prices are at or near historically high levels due to growth in worldwide demand, and our external manufacturing backlog, at $252 million, has tripled over the past three months and is at an all-time high. We are optimistic that prices will remain firm, sustaining the demand for the types of mining and drilling equipment that we provide. We cannot, however, accurately predict the duration of current business conditions or their impact on our operations. Rowan’s manufacturing operations will be adversely affected if conditions deteriorate.

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LIQUIDITY AND CAPITAL RESOURCES

A comparison of key balance sheet figures and ratios as of June 30, 2005 and December 31, 2004 is as follows (dollars in thousands):

	June 30,	December 31,
	2005	2004

Cash and cash equivalents	$487,821	$465,977
Current assets	$906,851	$807,097
Current liabilities	$197,967	$234,800
Current ratio	4.58	3.44
Long-term debt - less current maturities	$573,180	$574,350
Stockholders' equity	$1,492,448	$1,408,884
Long-term debt/total capitalization	.28	.29

Reflected in the comparison above are the effects in the first six months of 2005 of net cash provided by operations of $73.6 million, proceeds from borrowings of $28.3 million, proceeds from the sale of investments of $9.6 million and proceeds from stock option and convertible debenture plans of $18.8 million, which were offset by capital expenditures of $76.1 million, a cash dividend payment of $26.9 million and debt repayments of $29.5 million. Operating cash flows included $80.9 million of non-cash charges or non-operating adjustments to Rowan’s net income, featuring deferred income taxes of $44.8 million and depreciation of $40.0 million, offset by $68.0 million of pension contributions and other benefit payments and a $25.0 million net investment in working capital during the period.

Capital expenditures during the first six months of 2005 were primarily related to the construction of our second and third Tarzan Class jack-up rigs.

Rowan’s second Tarzan Class rig, the Bob Keller , is at our Sabine Pass, Texas facility for final outfitting and should be delivered during the third quarter of 2005. We are financing up to $89.7 million of the cost of the Bob Keller through a 15-year bank loan guaranteed by the U. S. Department of Transportation’s Maritime Administration (“MARAD”) under its Title XI Program. The loan requires semiannual interest payments in each May and November, with semiannual principal repayments commencing on November 10, 2005, and the Bob Keller secures the government guarantee. At June 30, 2005, we had borrowed about $80.1 million under this loan, which bore interest at an annual rate of about 3.4%.

Construction of our third Tarzan Class jack-up, the Hank Boswell , is underway at our Vicksburg, Mississippi shipyard with delivery expected during the fourth quarter of 2006. A fourth Tarzan Class jack-up is tentatively planned, subject to current and anticipated market conditions. We have applied for Title XI government-guaranteed financing for up to $176 million of the cost of the third and fourth Tarzan Class rigs on terms and conditions similar to those in effect for the first two. However, there can be no assurance that we will obtain such financing or that other outside financing or working capital will be available.

Rowan currently estimates that remaining 2005 capital expenditures will be between $110 million and $120 million, including approximately $50-55 million towards the construction of the second and third Tarzan Class rigs.

Rowan’s debt agreements contain provisions that require minimum levels of working capital and stockholders’ equity, limit the amount of long-term debt and, in the event of noncompliance, restrict investment activities, asset purchases and sales, lease obligations, borrowings and mergers or acquisitions. The Company was in compliance with each of its debt covenants at June 30, 2005.

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Our Board of Directors has declared, in conjunction with the sale of several non-core assets, a special cash dividend of $.25 per share of common stock that will be paid on September 1, 2005 to shareholders of record on August 17, 2005. In January 2005, in conjunction with the sale of our aviation operations, our Board of Directors declared a special cash dividend of $.25 per share of common stock that was paid on February 25, 2005 to shareholders of record on February 9, 2005. Rowan did not pay any dividends during 2004 and, at June 30, 2005, had approximately $436 million of retained earnings available for distribution to stockholders under the most restrictive provisions of our debt agreements.

During 2002-2004, Rowan contributed approximately $50 million in aggregate to its defined benefit pension plans. Minimum contribution amounts are determined based upon actuarial calculations of pension assets and liabilities that involve, among other things, assumptions about long-term asset returns and interest rates. Similar calculations were used to estimate pension costs and obligations as reflected in our consolidated financial statements, which showed an accumulated other comprehensive loss resulting from unfunded pension liabilities of approximately $71 million at June 30, 2005. Recent actuarial calculations indicated that, assuming plan assets perform as expected and interest rates are unchanged from present levels, additional pension contributions would be required over the next several years, in average annual amounts that exceed the contribution rate of the past three years. For this reason, we elected to utilize a portion of the net proceeds received upon the sale of our aviation operations in December 2004 to make an additional contribution of $60 million to our pension plans in January 2005. Rowan currently expects to make additional contributions totaling approximately $2.7 million during the last half of 2005.

Based on current and anticipated near-term operating levels, we believe that 2005 operations, together with existing working capital and available financial resources, will be adequate to sustain planned capital expenditures and debt service and other requirements at least through the remainder of 2005. We currently have no other available credit facilities, but believe financing could be obtained if deemed necessary.

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Critical Accounting Policies and Management Estimates . Rowan’s significant accounting policies are outlined in Note 1 to our financial statements included in our 2004 Annual Report to Stockholders, which is incorporated by reference in our Form 10-K for the year ended December 31, 2004. These policies, and management judgments, assumptions and estimates made in their application, underlie reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. We believe that Rowan’s most critical accounting policies and management estimates involve property and depreciation, specifically capitalizable costs, useful lives and salvage values, and pension and other postretirement benefit liabilities and costs, specifically assumptions used in actuarial calculations, as changes in such policies and/or estimates would produce significantly different amounts from those reported herein.

Property and depreciation . Rowan provides depreciation under the straight-line method from the date an asset is placed into service based upon estimated service lives ranging up to 40 years and salvage values ranging up to 20%. Rowan continues to operate 20 offshore rigs that were placed into service during 1971-1986 and assigned lives ranging from 12 to 15 years. Our newest and most significant assets, the Super Gorilla and Tarzan Class rigs, which collectively comprise almost two-thirds of our property, plant and equipment carrying value, carry a 25-year service life. Expenditures for new property or enhancements to existing property are capitalized and expenditures for maintenance and repairs are charged to operations as incurred. Capitalized cost includes labor expended during installation and, on newly constructed assets, a portion of interest cost incurred during the construction period. Long-lived assets are reviewed for impairment whenever circumstances indicate their carrying amounts may not be recoverable, such as following a sustained deficit in operating cash flows caused by a prominent decline in overall rig activity and average day rates.

Pension and other postretirement benefit liabilities and costs . As previously mentioned, Rowan’s pension and other postretirement benefit liabilities and costs are based upon actuarial computations that reflect our assumptions about future events, including long-term asset returns, interest rates, annual compensation increases, mortality rates and other factors. Key assumptions for 2005 include a discount rate of 5.75%, an expected long-term rate of return on pension plan assets of 8.5% and annual healthcare cost trend rates ranging from 10% in 2005 to 5% in 2010 and beyond. The assumed discount rate is based upon the average yield for Moody’s Aa-rated corporate bonds and the rate of return assumption reflects a probability distribution of expected long-term returns that is weighted based upon plan asset allocations. A 1% change in the expected long-term rate of return on plan assets would change net benefits cost by approximately $2 million. A 1% increase in the assumed healthcare cost trend rate would increase 2005 other benefit costs by $0.7 million.

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Rowan uses the intrinsic value method of accounting for stock-based employee compensation pursuant to Accounting Principles Board Opinion No. 25. We estimate that use of the fair value method outlined by Statement of Financial Accounting Standards Nos. 123 and 148 would have reduced reported amounts of net income and net income per share by approximately $1.7 million, or $.01 per share for the six months ended June 30, 2005 and increased reported amounts of net loss and net loss per share by approximately $1.5 million, or $.01 per share, for the six months ended June 30, 2004.

Statement of Financial Accounting Standards No. 151, “Inventory Costs”, clarifies the distinction between costs that are allocable to inventory and those that are expensed as incurred. We believe that the provisions of Statement No. 151, which are effective for fiscal years beginning after June 15, 2005, will not materially impact our financial position or results of operations.

This report contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements as to the expectations, beliefs and future expected financial performance of Rowan that are based on current expectations and are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected by us. Among the factors that could cause actual results to differ materially are the following: oil, natural gas and other commodity prices; the level of offshore expenditures by energy companies; energy demand; the general economy, including interest rates and inflation; weather conditions in our principal operating areas; and environmental and other laws and regulations. Details of these and other risks have been disclosed in Rowan’s filings with the U. S. Securities and Exchange Commission.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Rowan believes that its exposure to risk of earnings loss due to changes in market interest rates is not significant. The Company’s outstanding debt at June 30, 2005 was comprised as follows: $386.4 million of fixed-rate notes bearing a weighted average annual interest rate of 4.6% and $251.7 million of floating-rate notes bearing a weighted average annual interest rate of 3.45%. In addition, virtually all of the Company’s transactions are carried out in U. S. dollars, thus Rowan’s foreign currency exposure is not material. Fluctuating commodity prices affect Rowan’s future earnings materially only to the extent that they influence demand for the Company’s products and services. Rowan does not hold or issue derivative financial instruments.

Item 4. Controls and Procedures

The Company’s management has evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures, as of the end of the period covered by this report, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Company’s Chief Executive Officer, along with the Company’s Chief Financial Officer, concluded that the Company’s disclosure controls and procedures as of the end of the period covered by this report were not effective as a result of a material weakness in internal controls as of December 31, 2004, as remediation efforts were not complete at June 30, 2005.

Our management is responsible for establishing and maintaining internal control over financial reporting. Our internal control system was designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations, and therefore can only provide reasonable assurance with respect to financial statement preparation and presentation.

An internal control material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements would not be prevented or detected on a timely basis by employees in the normal course of their work.

In order to address the material weakness identified, management has made and will continue to make corrective measures during 2005 including: 1) adding experienced personnel to our accounting and reporting function to provide the necessary resources to adequately review and monitor transactions, accounting processes and control activities and 2) initiating processes and procedures to better document employee responsibilities including transaction review and monitoring activities. In this regard, Rowan has engaged the independent risk consulting firm Protiviti to assist us with documentation and remediation efforts.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds

The Company did not repurchase any shares of its outstanding common stock during the first six months of 2005 or 2004. Under the terms of a Share Repurchase Program begun in June 1998, the Company was authorized, at June 30, 2005, to buy back up to approximately 1.5 million shares of its common stock.

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Item 6. Exhibits

The following is a list of Exhibits filed with this Form 10-Q:

10a	Amendment No. 1 dated June 15, 2005 to Commitment to Guarantee Obligations between Rowan and the Maritime Administration of the U. S. Department of Transportation
10b	Supplement No. 1 dated June 15, 2005 to Trust Indenture between Rowan and Citibank, N. A.
10c	Form of Non-Employee Director 2005 Restricted Stock Unit Grant Pursuant to the Terms of the Rowan Companies, Inc. 2005 Long-Term Incentive Plan
10d	Form of Non-Employee Director 2006 Restricted Stock Unit Grant Pursuant to the Terms of the Rowan Companies, Inc. 2005 Long-Term Incentive Plan
10e	Form of 2005 Rowan Companies, Inc. Long-Term Incentive Plan Restricted Stock Grant Agreement
10f	Form of 2005 Rowan Companies, Inc. Long-Term Incentive Plan Nonqualified Stock Option Agreement
10g	Form of 2005 Rowan Companies, Inc. Long-Term Incentive Plan Performance Share Award Agreement
31	Rule 13a-14(a)/15d-14(a) Certifications (Section 302 of the Sarbanes-Oxley Act of 2002)
32	Section 1350 Certifications (Section 906 of the Sarbanes-Oxley Act of 2002)

SIGNATURES

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.

		ROWAN COMPANIES, INC.
		(Registrant)

Date: August 9, 2005		/s/ W. H. WELLS
		W. H. Wells
		Vice President - Finance
		and Treasurer
		(Chief Financial Officer)


Date: August 9, 2005		/s/ GREGORY M. HATFIELD
		Gregory M. Hatfield
		Controller
		(Chief Accounting Officer)

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3.01

CONTRACT NO. MA-13837

AMENDMENT NO. 1

COMMITMENT TO GUARANTEE OBLIGATIONS

THIS AMENDMENT NO. 1, dated as of June 15, 2005 (the "Amendment"), to that certain Commitment to Guarantee Obligations, dated as of May 28, 2003 (the "Commitment"), is by and between the United States of America, represented by the Secretary of Transportation, acting by and through the Maritime Administration (the "Secretary"), and ROWAN COMPANIES, INC. (the "Shipowner", and together with the Secretary, the "Parties").

WHEREAS , on May 28, 2003, the Shipowner executed the Indenture, and issued thereunder a Floating Rate Note designated, "United States Government Guaranteed Ship Financing Obligations, SCOOTER YEARGAIN Series" (the "Initial Transaction") with a maximum principal amount of $91,198,000;

WHEREAS, pursuant to Title XI of the Merchant Marine Act, 1936, the Secretary guaranteed the payment of outstanding principal of and interest on the Floating Rate Note (“the Obligations”), the outstanding principal amount of which is currently $85,118,000;

WHEREAS, Section 4(b) of the Special Provisions of the Trust Indenture provides that the Shipowner may redeem or repay the Floating Rate Note, in whole or in part, on a Redemption Date designated by the Shipowner, from the proceeds of the issuance of a fixed rate note (the “Fixed Rate Note”); and

WHEREAS, the Parties wish to amend certain documents relating to the Initial Transaction in order to provide for the complete redemption of the Floating Rate Note, by the issuance of a Fixed Rate Note in the aggregate principal amount of $85,118,000;

NOW THEREFORE, in consideration of the mutual rights and obligations set forth herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

Section 1.01 Annexed to each counterpart of this Amendment No. 1 to the Commitment to Guarantee Obligations are the forms of the Obligation Purchase Agreement, Supplement No. 1 to the Trust Indenture, Amendment No. 2 to the Security Agreement, and the Obligations to be issued June 15, 2005, the forms of which are hereby approved by the Secretary.

Section 1.02 Article III of the Commitment shall be amended pursuant to Article V thereof, as follows:

The Obligations to be issued as a fixed rate note shall be as provided in the Indenture and in the form of the Fixed Rate Note annexed as Exhibit 3B to the Indenture. The Obligations shall be subject to all of the terms and conditions set forth in the Indenture. Supplement No. 1 to the Trust Indenture, Amendment No. 2 to the Security Agreement, and the Obligations to be issued as a fixed rate note shall be executed and delivered by the Shipowner on the Effective Date.

Except as so amended, the provisions of the Commitment shall apply to and govern this Amendment No. 1 to Commitment to Guarantee Obligations.

Capitalized terms not specifically defined herein shall have the respective meanings stated in Schedule A to the Trust Indenture dated May 28, 2003, as amended, between the Shipowner and the Indenture Trustee.

This Amendment No. 1 to Commitment to Guarantee Obligations may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

Notwithstanding any provision herein, in the event there are any inconsistencies between the original of this document held by the Secretary, and an original held by any other party to this transaction, the provisions of the original held by the Secretary shall prevail.

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IN WITNESS WHEREOF, this Amendment No. 1 to Commitment to Guarantee Obligations has been executed and sealed by the United States and accepted and sealed by the Shipowner on the day and year first above written.

UNITED STATES OF AMERICA

SECRETARY OF TRANSPORTATION

BY: MARITIME ADMINISTRATOR

(SEAL)

ATTEST: ____________________________

Secretary

___________________________

Assistant Secretary

ROWAN COMPANIES, INC.

(SEAL)

ATTEST: By: _______________________

Vice President- Finance and

Treasurer

___________________________

Secretary

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Exhibit 10b

4.04

SUPPLEMENT NO. 1

TRUST INDENTURE

THIS SUPPLEMENT NO. 1, dated as of June 15, 2005 (“Supplement No. 1"), to that certain Trust Indenture dated as of May 28, 2003 (the "Indenture") is by and between MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation (successor-in-interest to ALLFIRST TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association), as indenture trustee (the "Indenture Trustee"), and ROWAN COMPANIES, INC. (the "Shipowner", and together with the Indenture Trustee, the "Parties").

WHEREAS, Section 4(b) of the Special Provisions of the Indenture provides that the Shipowner may redeem or repay the Floating Rate Note, in whole or in part, on a Redemption Date designated by the Shipowner, from the proceeds of the issuance of a fixed rate note;

WHEREAS , the outstanding principal amount of the Floating Rate Note is currently $85,118,000; and

WHEREAS , the Parties wish to amend certain documents relating to the Initial Transaction in order to provide for the complete redemption of the Floating Rate Note by the issuance of a fixed rate note in the aggregate principal amount of $85,118,000.

ARTICLE FIRST

Section 1.01 Schedule A . Schedule A to the Indenture is hereby amended by adding or substituting the following definitions:

“Authorized Newspapers” means The Wall Street Journal , or if it ceases to exist, then in such other newspaper(s) as the Secretary may designate.

"Effective Date" means June 15, 2005.

"Fixed Rate Note" shall mean an Obligation substantially in the form of Exhibit 3B to the Indenture, appropriately completed.

“Letter of Representations” means the Blanket Issuer Letter of Representations between the Shipowner and DTC, any Riders thereto, and DTC’s Operational Arrangements, and other documentation necessary or desirable to effectuate the issuance of the Fixed Rate Notes as Global Obligations.

“Reinvestment Rate” means the yield determined by the Indenture Trustee, based on information received from the Holder or calculation agent, to be the yield of the issue of actively traded United States Treasury securities having a maturity equal to the Weighted Average Life to Final Maturity plus . 10%; provided, however, that if such Weighted Average Life to Final Maturity is not equal to the maturity of an actively traded United States Treasury security (rounded to the nearest one-twelfth of a year), such yield shall be obtained by linear interpolation from the yields of actively traded United States Treasury securities having the greater maturity closest to and the lesser maturity closest to such Weighted Average Life to Final Maturity. The yields shall be determined by reference to the yields as indicated by Telerate Access Service (page 8003 or the relevant page at the date of determination indicating such yields) (or, if such data ceases to be available, any publicly available sources of similar market data) at approximately 11:00 a.m. (New York City time) on the Make-Whole Premium Determination Date.

All other capitalized terms used herein have the meanings set forth in Schedule A to the Indenture, as amended.

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ARTICLE SECOND

The Indenture shall be amended as follows:

Section 2.01 The Obligations. Article 2(a) of the Special Provisions of the Indenture is hereby amended and restated in its entirety as follows:

(a) The Obligations issued hereunder shall be designated "United States Government Guaranteed Ship Financing Obligations, SCOOTER YEARGAIN Series," and shall be substantially in the form of Exhibit 3B to this Indenture; and, the aggregate principal amount of Obligations which may be issued under this Indenture shall not exceed $ 85,118,000 .

Section 2.02 Article 4(a) of the Special Provisions of the Indenture is hereby amended and restated in its entirety to read as follows:

(a) Scheduled Mandatory Redemption . The Obligations are subject to redemption at a Redemption Price equal to 100% of the principal amount thereof, together with interest accrued thereon to the applicable Redemption Date, through the operation of scheduled repayment providing for the semi-annual redemption on May 10 and November 10 of each year, from November 10, 2004 through May 10, 2005, and commencing November 1, 2005, on May 1 and November 1 of each year thereafter, of $3,040,000 of principal amount of Obligations, which amount represents approximately one thirtieth (1/30) of the Original Principal Amount of Obligations, plus interest accrued thereon to the Redemption Date. Unless redeemed earlier in accordance with this Indenture, there shall be a final redemption of the remaining outstanding principal of the Floating Rate Note on the Effective Date and a final redemption of the remaining outstanding principal of the Fixed Rate Notes on May 1, 2019.

Notwithstanding the foregoing provisions of this subsection (a), if the principal amount of Outstanding Obligations shall be reduced by reason of any redemption pursuant to Sections 3.04 or 3.06 of Exhibit 1 to this Indenture, the principal amount of Obligations to be redeemed pursuant to this subsection (a) on each subsequent Redemption Date for such Obligations shall be reduced by an amount equal to the principal amount of such Obligations

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retired by reason of such redemption pursuant to Sections 3.04 or 3.06 of Exhibit 1 hereto divided by the number of Redemption Dates (including the Stated Maturity of such Obligations) scheduled thereafter to May 1, 2019 in the case of Fixed Rate Note(s) (subject to such increase as shall be necessary so that the total principal amount of Obligations to be redeemed on any such Redemption Date shall be an integral multiple of $1,000); provided that , the entire unpaid principal amount of the Outstanding Obligations shall be paid not later than the Effective Date in the case of the Floating Rate Note and May 1, 2019 in the case of each Fixed Rate Note. The Shipowner shall, in accordance with Section 3.02(e) of Exhibit 1 hereto, promptly after each redemption pursuant to said Sections 3.04 or 3.06, furnish to the Secretary, the Indenture Trustee and each Holder a revised table of scheduled repayments reflecting the reductions made pursuant to this subsection (a) as a result of such redemption

Section 2.03 The first paragraph Article 4(e)(1) of the Special Provisions of the Indenture is hereby amended and restated in its entirety to read as follows:

(e) Fixed Rate Note Interest Rate Protection . (1) The Shipowner shall redeem the Floating Rate Note in full by causing to be issued one or more fixed rate obligations with a maturity equal to May 1, 2019 and using the proceeds thereof to repay the Floating Rate Note in full, whenever the Treasury constant maturities rate (10-year) as reported by the Federal Reserve Board in statistical release H.15 (519) (the “Treasury Rate”) equals or exceeds nine percent (9.0%) per annum (the “Trigger Event”).

Section 2.04 The phrase “in the form of Exhibit 3 hereto” in Article 5(f) of the Special Provisions of the Indenture is revised to read “in the form of Exhibit 3B to this Indenture.”

Section 2.05. Article 5(l) of the Special Provisions of the Indenture is hereby amended and restated in its entirety to read as follows:

(l) Concerning Section 3.05 . Section 3.05 is revised to read as follows:

SECTION 3.05. Redemption after Total Loss, or Requisition of Title, Seizure or Forfeiture of a Vessel . The Shipowner and the Secretary

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may Request a Redemption Date, at least forty (40) days but not more than sixty (60) days from the Indenture Trustee’s receipt of the Request, for the redemption of certain Obligations because of (1) an actual, constructive, agreed or compromised total loss of a Vessel, or (2) requisition of title to, or seizure or forfeiture of a Vessel. Upon receipt, the Indenture Trustee shall promptly give notice to the Holders of the Redemption Date as provided in Section 3.08 and on that date shall redeem, out of funds it receives from the Shipowner, such principal amount of Obligations together with the interest accrued thereon.

Section 2.06 Article 5(w) of the Special Provisions of the Indenture is hereby deleted in its entirety.

Section 2.07 Article 5(cc)(i), (ii), (iii)(2), (iii)(5) and (v) of the Special Provisions of the Indenture are hereby amended and restated in their entirety to read as follows:

(cc) Concerning Registered and Beneficial Ownership of the Obligations; Legends .

(i)The Fixed Rate Notes may be issued initially in the form of one or more permanent global Notes in definitive, fully registered form without interest coupons (each, a "Global Obligation"). Except as provided in paragraph (iii) below, owners of beneficial interests in Global Obligations ("Obligation Owners") shall not be entitled to receive separate certificated Notes ("Definitive Obligation") and shall not be considered the holders thereof. Each such Global Obligation shall be deposited with DTC or the Indenture Trustee, as custodian for DTC, registered in the name of Cede or such other nominee as may be requested by DTC, and duly executed by the Shipowner and authenticated by the Indenture Trustee as provided in the Indenture. Each Global Obligation shall bear such legend as DTC may require.

(ii) Members of, or participants in, DTC shall have no rights under the Indenture with respect to any Global Obligation held on their behalf by DTC or by the Indenture Trustee, as the custodian of DTC, or under such Global Obligation, and Cede or such other nominee as DTC may request may be treated by the Shipowner, the Indenture Trustee and any agent of the Shipowner or the Indenture Trustee as the absolute owner of such Global Obligation for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Shipowner, the Indenture Trustee or any agent of the Shipowner or the Indenture Trustee from giving effect to any written certification, proxy or other authorization furnished by DTC, Cede or such other nominee

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as DTC may request, or impair, as between DTC and its members and participants, the operation of customary practices of DTC governing the exercise of the rights of an owner of a beneficial interest in any Global Obligation.

* * *

(iii) (2) A Global Obligation shall be exchangeable for Definitive Obligations registered in the names of persons owning the beneficial interests in such Global Obligation only if DTC notifies the Shipowner, with a copy to the Indenture Trustee, that it is unwilling or unable to continue as depositary for such Global Obligation or DTC ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, at a time when DTC is required to be so registered in order to act as depositary, and a successor depositary is not appointed by the Shipowner within 90 days thereafter. In such event, the Indenture Trustee shall within 30 days from receipt of such notice instruct DTC to notify its direct and indirect participants of the need to re-register the Obligations in the names of the beneficial owners. Upon surrender by DTC of the Global Obligations issued in its name, the name of Cede or another nominee, the Shipowner shall issue at its sole cost and expense, and the Indenture Trustee shall authentic Definitive Obligations in the names provided to the Indenture Trustee by DTC.

* * *

(5) In the event of the occurrence of the event specified in paragraph (iii)(2), the Shipowner shall promptly make available to the Indenture Trustee a reasonable supply of Definitive Obligations.

* * *

(v) The Indenture Trustee shall have no responsibility or obligation to any owner of a beneficial interest in a Global Obligation, a member of, or a participant in, DTC or any other Obligation Owner with respect to the accuracy of the records of DTC or its nominee or of any participant or member thereof, with respect to any ownership interest in the Obligations or with respect to the delivery to any participant, member, beneficial owner or other Obligation Owner (other than DTC) of any notice (including any notice of redemption) or the payment of any amount or delivery of any Obligations (or other security or property) under or with respect to such Obligations. All notices and communications to be given to the Holders and all payments to be

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made to Holders in respect to the Obligations shall be given or made only to or upon the order of the registered Holders (which shall be DTC, Cede or such other nominee as may be requested by DTC, in the case of a Global Obligation). The rights of owners of beneficial interests in any Global Obligation shall be exercised only through DTC subject to the applicable rules and procedures of DTC. The Indenture Trustee may rely and shall be fully protected in relying upon information furnished by DTC with respect to its members, participants and any beneficial owners.

Section 2.08 Endorsement of Floating Rate Note . Upon surrender of the Floating Rate Note issued on May 28, 2003 to the Indenture Trustee by the Holder thereof following the payment in full of all amounts due thereunder, such Floating Rate Note shall be endorsed to show the redemption of the outstanding amount and thereupon shall be cancelled.

Section 2.09 Form of Fixed Rate Note . The form of Fixed Rate Note attached as Exhibit 3 to the Indenture is renumbered as Exhibit 3A and the form of Fixed Rate Note attached as an Exhibit to this Supplement is designated as Exhibit 3B to the Indenture.

Section 2.10 Issuance of Fixed Rate Note . On and after the Effective Date, the Shipowner shall issue and deliver to the Holders thereof Fixed Rate Note(s) in accordance with the Indenture substantially in the form of Exhibit 3B to the Indenture.

Except as so amended, the provisions of the Indenture are hereby confirmed, and shall remain in full force and effect.

This Supplement No. 1 to the Indenture may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

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IN WITNESS WHEREOF, this Supplement No. 1 to the Indenture has been duly executed by the Parties as of the day and year first above written.

(SEAL) ROWAN COMPANIES, INC.

ATTEST:

By:______________________

Vice President - Finance and

Treasurer

________________________

Secretary

MANUFACTURERS AND TRADERS TRUST

COMPANY

(SEAL) Indenture Trustee

ATTEST:

By:_______________________

Vice President

________________________

Vice President

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CONSENT:

Pursuant to Section 10.05 of the General Provisions Incorporated into the Trust Indenture by Reference attached as Exhibit 1 to the Trust Indenture, the Secretary hereby consents to this Supplement No. 1 to the Trust Indenture.

ATTEST: UNITED STATES OF AMERICA,

SECRETARY OF TRANSPORTATION

__________________ BY: MARITIME ADMINISTRATION

By:__________________________

Secretary

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NON-EMPLOYEE DIRECTOR 2005 RESTRICTED STOCK UNIT GRANT

PURSUANT TO THE TERMS OF THE

ROWAN COMPANIES, INC. 2005 LONG-TERM INCENTIVE PLAN

1. Grant of Restricted Stock Units . Pursuant to the Rowan Companies, Inc. 2005 Long-Term Incentive Plan (the “Plan”) Rowan Companies, Inc. (“Company”) hereby grants to ___________________(“Non-employee Director”) 3,000 Restricted Stock Units (“RSUs”) with respect to Non-Employee Director’s annual service period that ended April 22, 2005 (the “2005 Grant”). Such RSUs shall be (i) credited to the RSU Account (described in Paragraph 3) and (ii) subject to the terms of the Plan (which is incorporated herein by reference) and this document. By acceptance of this RSU Grant, Non-Employee Director agrees to be bound by all of the terms, provisions, conditions and limitations of the Plan as implemented by the RSU Grant. All capitalized terms in the RSU Grant have the meanings set forth in the Plan unless otherwise specifically provided.

2. Vesting . The 2005 Grant shall be immediately and fully vested and nonforfeitable.

3. E stablishment of Accounts . Company shall maintain an appropriate bookkeeping record (the “RSU Account”) that from time to time will reflect the Non-Employee Director’s name, the number of vested and unvested RSUs credited to Non-Employee Director and the Fair Market Value of the RSUs credited to the Non-Employee Director. Fair Market Value of a RSU shall be deemed to be equal to the Fair Market Value of one share of Common Stock. The 2005 Grant shall be credited to the Non-Employee Director’s RSU Account effective as of July 22, 2004.

4. Cash Dividends . As of each date on or after July 22, 2004 that cash dividends are paid with respect to Common Stock, to the extent that Non-Employee Director has any outstanding RSUs credited to his or her RSU Account, the Non-Employee Director shall have an additional amount credited to his or her RSU Account equal to the number of RSUs (rounded up to the nearest whole number) having a Fair Market Value equal to the dollar amount of dividends paid per share of Common Stock multiplied by the number of RSUs credited to Non-Employee Director’s RSU Account as of the payment date of such dividend.

5. Adjustments .

(a) Exercise of Corporate Powers . The existence of this Plan and any outstanding RSUs credited hereunder shall not affect in any manner the right or power of Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the capital stock of Company or its business or any merger or consolidation of Company, or any issue of bonds, debentures, preferred or prior preference stock (whether or not such issue is prior to, on a parity with or junior to the Common Stock) or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding of any kind, whether or not of a character similar to that of the acts or proceedings enumerated above.

(b) Recapitalizations, Reorganizations and Other Activities . In the event of any subdivision or consolidation of outstanding shares of Common Stock, declaration of a dividend payable in shares of Common Stock or other stock split, then (i) the number of RSUs and (ii) the appropriate Fair Market Value and other price determinations for such RSUs shall each be proportionately adjusted by the Committee or the Board to reflect such transaction. In the event of any other recapitalization or capital reorganization of the Company, any consolidation or merger of the Company with another corporation or entity, the adoption by the Company of any plan of exchange affecting the Common Stock or any distribution to holders of Common Stock of securities or property (other than normal cash dividends or dividends payable in Common Stock), the Committee or the Board shall, in its sole discretion make appropriate adjustments to (i) the number of RSUs and (ii) the appropriate Fair Market Value and other price determinations for such RSUs to give effect to such transaction; provided that such adjustments shall only be such as are necessary to preserve, without increasing or decreasing, the value of such units. In the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Committee or the Board shall be authorized to issue or assume units by means of substitution of new units, as appropriate, for previously issued units or an assumption of previously issued units as part of such adjustment.

6. Payment of Amounts in the RSU Account . As of the final termination date of Non-Employee Director’s service on the Board, the aggregate Fair Market Value of all vested RSUs then credited to Non-Employee Director’s RSU Account shall be calculated by multiplying the Fair Market Value of a share of Common Stock on such date times the number of RSUs then credited to the Non-Employee Director’s RSU Account. Notwithstanding the foregoing, no amount shall be paid prior to the earliest date that such amount may be paid upon “separation from service” within the meaning of Code section 409A, without imposition of an excise tax.

7. Form of Payment . Payment to Non-Employee Director of amounts due hereunder shall be made in Common Stock, or at the discretion of the Committee in cash in a lump sum as soon as administratively feasible, but no later than sixty (60) days following the date Non-Employee Director becomes entitled to payment.

8. Death Prior to Payment . In the event that Non-Employee Director dies prior to payment, all RSUs shall become fully vested and immediately payable to Non-Employee Director’s designated beneficiary, or if none, to his or her estate.

9. Change in Control .

(a) Change in Control . In the event of a Change in Control the Committee may waive all restrictions, conditions and/or limitations on payment in full under the RSU Grant; provided, however, that payment shall not be accelerated unless such Change of Control also constitutes a change of control event under section 409A of the Code and such acceleration of payment would not cause Non-Employee Director to be subject to excise tax pursuant to section 409A of the Code.

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(b) Right of Cash-Out . If approved by the Board prior to or within thirty (30) days after such time as a Change in Control (described above) shall be deemed to have occurred, the Board shall have the right for a forty-five (45) day period immediately following the date that the Change in Control is deemed to have occurred to require Non-Employee Director to transfer and deliver to Company the RSU Grant in exchange for an amount equal to the “cash value” (defined below) of the RSU Grant; provided, however, that the Board shall not have the right to accelerate payment or cash-out any RSU Grant if the exercise of such right would cause Non-employee Director to be subject to excise tax pursuant to section 409A of the Code. Such right shall be exercised by written notice to Non-Employee Director. The cash value of RSU Grant shall equal all cash to which Non-Employee Director would be entitled upon settlement of the RSU Grant as of the date of the Change in Control. The amount payable to Non-Employee Director by Company pursuant to this Paragraph 16(b) shall be in cash or by certified check.

10. Unfunded Arrangement . Nothing contained herein shall be deemed to create a trust of any kind or create any fiduciary relationship. This RSU Grant shall be unfunded. Any funds invested hereunder shall continue for all purposes to be part of the general funds of Company. To the extent that Non-Employee Director has a right to receive payments from Company under the RSU Grant, such right shall not be greater than the right of any unsecured general creditor of Company and such right shall be an unsecured claim against the general assets of Company. Although bookkeeping accounts may be established with respect to Non-Employee Director, any such accounts shall be used merely as a bookkeeping convenience. Company shall not be required to segregate any assets that may at any time be represented by cash or rights thereto, nor shall this RSU Grant be construed as providing for such segregation, nor shall Company, the Board or the Committee be deemed to be a trustee of any cash or rights thereto to be granted under this Plan. Any liability or obligation of Company to any Non-Employee Director with respect to cash or rights thereto under this RSU Grant shall be based solely upon any contractual obligations that may be created by this RSU Grant, and no such liability or obligation of Company shall be deemed to be secured by any pledge or other encumbrance on any property of Company. Neither Company nor the Board nor the Committee shall be required to give any security or bond for the performance of any obligation that may be created by this RSU Grant.

11. Title to Funds Remains with Company . Amounts credited to Non-Employee Director’s Account shall not be specifically set aside or otherwise segregated, but will be combined with corporate assets. Title to such funds will remain with the Company and the Company’s only obligation will be to make timely payments to Non-Employee Director in accordance with the RSU Grant.

12. Assignability . No right to receive payment hereunder shall be transferable or assignable by Non-Employee Director except by will or the laws of descent and distribution or pursuant to a domestic relations order. Notwithstanding the foregoing, RSUs granted hereunder may be transferred with Committee approval, and with such restrictions as the Committee may impose to any of (i) the spouse, children or grandchildren (“immediate family members”); (ii) a trust or trusts for the exclusive benefit of one of more immediate family members; (iii) a partnership or limited liability company whose only partners, shareholders or member are Participant’s immediate family members or (iv) an organization that has been determined by the Internal Revenue Service to be exempt under Section 501(c)(3) of the Code. Following any transfer of RSUs by the Non-Employee Director, such RSUs shall remain subject to the same terms and conditions set forth in the Plan and this Agreement. Any attempted assignment of any benefit under this RSU Grant in violation of this Paragraph shall be null and void.

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13. Amendment and Termination . No amendment or termination of the RSU Grant shall be made by the Board or the Committee at any time without the written consent of Non-Employee Director. No amendment or termination of the Plan will adversely affect the rights, privileges and option of Non-Employee Director under the RSU Grant without the written consent of Non-Employee Director except as the Committee may deem necessary or advisable to prevent adverse tax consequences to the Non-Employee Director under Section 409A of the Code.

14. No Guarantee of Tax Consequences . Neither Company nor any Parent or Subsidiary nor the Board or Committee makes any commitment or guarantee that any federal or state tax treatment will apply or be available to any person eligible for the benefits under the RSU Grant.

15. Severability . In the event that any provision of the RSU Grant shall be held illegal, invalid, or unenforceable for any reason, such provision shall be fully severable, but shall not affect the remaining provisions of the RSU Grant, and the RSU Grant shall be construed and enforced as if the illegal, invalid, or unenforceable provision had never been included herein.

16. Governing Law . The RSU Grant shall be construed in accordance with the laws of the State of Texas to the extent federal law does not supersede and preempt Texas law.

Executed this ____ day of ______________, 2005.

“COMPANY”

ROWAN COMPANIES, INC.

By:___________________________________

Printed Name:___________________________

Title:__________________________________

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Accepted this ____ day of ______________, 2005.

“NON-EMPLOYEE DIRECTOR”

By:___________________________________

Printed Name:___________________________

Title: Director

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Exhibit 10d

NON-EMPLOYEE DIRECTOR 2006 RESTRICTED STOCK UNIT GRANT

PURSUANT TO THE TERMS OF THE

ROWAN COMPANIES, INC. 2005 LONG-TERM INCENTIVE PLAN

1. Grant of Restricted Stock Units . Pursuant to the Rowan Companies, Inc. 2005 Long-Term Incentive Plan (the “Plan”) Rowan Companies, Inc. (“Company”) hereby grants to --_________________(“Non-Employee Director”) 2,700 Restricted Stock Units (“RSUs”) with respect to Non-Employee Director’s annual service period that began April 22, 2005 (the “2006 Grant”). Such RSUs shall be (i) credited to the RSU Account (described in Paragraph 3) and (ii) subject to the terms of the Plan (which is incorporated herein by reference) and this document. By acceptance of this RSU Grant, Non-Employee Director agrees to be bound by all of the terms, provisions, conditions and limitations of the Plan as implemented by the RSU Grant. All capitalized terms in the RSU Grant have the meanings set forth in the Plan unless otherwise specifically provided.

2. Vesting . The 2006 Grant shall be fully vested and nonforfeitable as of April 28, 2006; provided, however, that if Non-Employee Director resigns or is removed from the Board prior to such date, such 2006 Grant shall be forfeited.

3. E stablishment of Accounts . Company shall maintain an appropriate bookkeeping record (the “RSU Account”) that from time to time will reflect the Non-Employee Director’s name, the number of vested and unvested RSUs credited to Non-Employee Director and the Fair Market Value of the RSUs credited to the Non-Employee Director. Fair Market Value of a RSU shall be deemed to be equal to the Fair Market Value of one share of Common Stock. The 2006 Grant shall be credited to the Non-Employee Director’s RSU Account effective as of April 22, 2005.

4. Cash Dividends . As of each date on or after April 22, 2005 that cash dividends are paid with respect to Common Stock, to the extent that Non-Employee Director has any outstanding RSUs credited to his or her RSU Account, the Non-Employee Director shall have an additional amount credited to his or her RSU Account equal to the number of RSUs (rounded up to the nearest whole number) having a Fair Market Value equal to the dollar amount of dividends paid per share of Common Stock multiplied by the number of RSUs credited to Non-Employee Director’s RSU Account as of the payment date of such dividend.

5. Adjustments .

(b) Recapitalizations, Reorganizations and Other Activities . In the event of any subdivision or consolidation of outstanding shares of Common Stock, declaration of a dividend payable in shares of Common Stock or other stock split, then (i) the number of RSUs and (ii) the appropriate Fair Market Value and other price determinations for such RSUs shall each be proportionately adjusted by the Committee or the Board to reflect such transaction. In the event of any other recapitalization or capital reorganization of the Company, any consolidation or merger of the Company with another corporation or entity, the adoption by the Company of any plan of exchange affecting the Common Stock or any distribution to holders of Common Stock of securities or property (other than normal cash dividends or dividends payable in Common Stock), the Committee or the Board shall, in its sole discretion make appropriate adjustments to (i) the number of RSUs and (ii) the appropriate Fair Market Value and other price determinations for such RSUs to give effect to such transaction; provided that such adjustments shall only be such as are necessary to preserve, without increasing or decreasing, the value of such units. In the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Committee or the Board shall be authorized to issue or assume units by means of substitution of new units, as appropriate, for previously issued units or an assumption of previously issued units as part of such adjustment.

9. Change in Control .

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16. Governing Law . The RSU Grant shall be construed in accordance with the laws of the State of Texas to the extent federal law does not supersede and preempt Texas law.

Executed this ____ day of ______________, 2005.

“COMPANY”

ROWAN COMPANIES, INC.

By:__________________________________

Printed Name:__________________________

Title:_________________________________

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Accepted this ____ day of ______________, 2005.

“NON-EMPLOYEE DIRECTOR”

By:__________________________________

Printed Name:__________________________

Title: Director

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2005 ROWAN COMPANIES, INC. LONG-TERM INCENTIVE PLAN

RESTRICTED STOCK GRANT AGREEMENT

THIS RESTRICTED STOCK GRANT AGREEMENT (this “Agreement”) is made as of the ___ day of ______ (the “Grant Date”), between Rowan Companies, Inc., a Delaware corporation (the “Company”), and [name](“Participant”).

1. Grant of Restricted Shares . To carry out the purposes of the 2005 Rowan Companies, Inc. Long-Term Incentive Plan (the “Plan”), and subject to the conditions described in this agreement (the “Agreement”) and the Plan, Rowan Companies, Inc., a Delaware corporation (the “Company”), hereby grants to Participant all rights, title and interest in the record and beneficial ownership of [number] shares (the “Restricted Shares”) of common stock, $0.125 par value per share, of the Company (“Stock”). The grant of such Restricted Shares shall be effective as of the Grant Date. All capitalized terms not otherwise defined herein shall have the meanings set forth in the Plan, the terms of which are incorporated herein by reference. The Plan and this Agreement shall be administered by the Compensation Committee of the Board of Directors of the Company (the “Committee”).

2. Issuance and Transferability . The Restricted Shares may be evidenced in such a manner as the Committee shall deem appropriate. Any certificates representing the Restricted Shares granted hereunder shall be issued in the name of the Participant pursuant to the terms of the Plan as of the Grant Date and shall be marked with the following legend:

“ The shares represented by this certificate have been issued pursuant to the terms of the 2005 Rowan Companies, Inc. Long-Term Incentive Plan and may not be sold, pledged, transferred, assigned or otherwise encumbered in any manner except as is set forth in the terms of the Restricted Stock Grant Agreement dated ___________. ”

Until restrictions lapse, the Restricted Share certificates shall be left on deposit with the Company along with a stock power (substantially in the form attached thereto as Exhibit A) endorsed in blank and shall not be transferable except by will or the laws of descent and distribution or pursuant to a domestic relations order. No right or benefit hereunder shall in any manner be liable for or subject to any debts, contracts, liabilities, or torts of Participant. Any purported assignment, alienation, pledge, attachment, sale, transfer or other encumbrance of the Restricted Shares, prior to the lapse of restrictions that does not satisfy the requirements hereunder shall be void and unenforceable against the Company. Notwithstanding the foregoing, in the case of Participant’s Disability or death, Participant’s rights under this Agreement may be exercised by Participant’s guardian or legal representative.

3. Vesting/Forfeiture . Participant shall vest in his rights under the Restricted Shares and any accumulated dividends described in Paragraph 5 hereof, and the Company’s right to reclaim such shares or dividends shall lapse with respect to 25% of the Restricted Shares, on each of the first, second, third and fourth anniversaries of the Grant Date (the “Vesting Dates”), provided that Participant remains continuously employed by the Company from the Grant Date to such Vesting Date. Notwithstanding the foregoing, however, all Restricted Shares not then vested shall vest immediately if Participant’s employment with the Company terminates due to Participant’s Disability or death. In the event of a Change of Control or Participant’s Retirement prior to vesting, the Committee may, in its sole discretion, accelerate vesting. If Participant’s employment with the Company terminates other than by reason of Retirement (as defined in Paragraph 4 below), Disability or death, the Restricted Shares (to the extent not then vested) shall be forfeited as of the date Participant’s employment so terminates. As soon as administratively feasible following the vesting of the Restricted Shares, a Stock certificate evidencing the vested Restricted Shares, less the amount of Stock withheld pursuant to paragraph 7 hereof, shall be delivered without charge to the Participant, or his designated representative, free of all restrictions.

4. Retirement . For purposes of this Agreement, Retirement by an Employee shall have occurred if:

(a) in the case of an Employee who is an employee of Rowan Companies, Inc. or an employee of an Employing Company, as defined in the Rowan Pension Plan (the “Rowan Plan”), the Employee: (1) has satisfied the requirements for normal retirement pursuant to the rules of the Rowan Plan which, in terms of age, is a minimum of 60, and (2) has requested and received authorization from the administrative committee appointed by the Company’s Board of Directors to administer the Rowan Plan to commence receiving pension benefits; or

(b) in the case of an Employee who is an employee of LeTourneau, Inc. or an employee of an Employing Company, as defined in the LeTourneau Pension Plan (the “LeTourneau Plan”), the Employee: (1) has satisfied the requirements for either normal or late retirement pursuant to the rules of the LeTourneau Plan, (2) has requested and received authorization from the administrative committee appointed by the Board of Directors of LeTourneau, Inc. to administer the LeTourneau Plan to commence receiving pension benefits, and (3) would have satisfied the requirements for normal retirement pursuant to the rules of the Rowan Plan if he or she was an employee of Rowan Companies, Inc. or an employee of an Employing Company under the Rowan Plan.

Determination of the date of termination of employment by reason of Retirement shall be based on such evidence as the Committee may require and a determination by the Committee of such date of termination shall be final and controlling on all interested parties.

5. Ownership Rights/Dividends . Participant shall be entitled to all voting rights applicable to the Restricted Shares. Any cash dividends that may be paid on the Restricted Shares after the Grant Date shall be accumulated and held in an account or in escrow and held by the Company until such time as Participant shall vest in the Restricted Shares as described in paragraph 3 above. Participant shall receive a cash payment equal to the portion of the dividends paid (reduced by the amount of any taxes required to be withheld with respect to such payment) with respect to the Restricted Shares as they become vested. All accumulated dividends attributable to unvested Restricted Shares shall be forfeited, if and to the extent that the underlying Restricted Shares are forfeited.

6. Employment Relationship . For purposes of this Agreement, Participant shall be considered to be in the employment of the Company as long as Participant remains an Employee of either the Company, a parent or subsidiary corporation (as defined in section 424 of the Code) of the Company, or a corporation or a parent or subsidiary of such corporation assuming this Agreement. Any question as to whether and when there has been a termination of such employment, and the cause of such termination, shall be determined by the Committee in its sole discretion, and its determination shall be final.

7. Withholding of Taxes . The Company shall have the right to take any action as may be necessary or appropriate to satisfy any federal, state or local tax withholding obligations, including, but not limited to, the right to withhold cash or shares of Stock sufficient to pay the amount required to be withheld and to cause such Stock to be sold and the proceeds remitted to the Company. In the event that the proceeds of such sale shall exceed the legally required withholding amount, the Company shall remit the difference in cash to Participant. In the event that the proceeds of such sale are less than the legally required withholding amount, the Company may withhold the difference from any cash or Stock then or thereafter payable to Participant. Participant agrees that, if he makes an election under Section 83(b) of the Code with regard to the Restricted Shares, he will so notify the Company in writing within two (2) days after making such election, so as to enable the Company to timely comply with any applicable governmental reporting requirements.

8. Reorganization of the Company . The existence of this Agreement shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business; any merger or consolidation of the Company; any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Stock or the rights thereof; the dissolution or liquidation of the Company; any sale or transfer of all or any part of its assets or business; or any other corporate act or proceeding, whether of a similar character or otherwise.

9. Recapitalization Events . In the event of stock dividends, spin-offs of assets or other extraordinary dividends, stock splits, combinations of shares, recapitalizations, mergers, consolidations, reorganizations, liquidations, issuances of rights or warrants and similar transactions or events involving the Company (“Recapitalization Events”), then for all purposes references herein to Stock or to Restricted Shares shall mean and include all securities or other property (other than cash) that holders of Stock of the Company are entitled to receive in respect of Stock by reason of each successive Recapitalization Event, which securities or other property (other than cash) shall be treated in the same manner and shall be subject to the same restrictions as the underlying Restricted Shares.

10. Status of Stock . If required, the Company will register for issuance under the Securities Act of 1933, as amended (the “Act”), the shares of Stock acquired pursuant to this Agreement and to keep such registration effective. In the absence of such effective registration or an available exemption from registration under the Act, issuance of shares of Stock acquired pursuant to this Agreement will be delayed until registration of such shares is effective or an exemption from registration under the Act is available. The Company intends to use its reasonable efforts to ensure that no such delay will occur. In the event exemption from registration under the Act is available , Participant (or the person perm i tted to receive Participant’s shares in the event of Participant’s incapacity or death), if requested by the Company to do so, will execute and deliver to the Company in writing an agreement containing such provisions as the Company may require assuring compliance with applicable securities laws. The Company shall incur no liability to Participant for failure to register the Stock or maintain the registration.

Participant agrees that the shares of Stock , which Participant may acquire pursuant to this Agreement , will not be sold or otherwise disposed of in any manner that would constitute a violation of any applicable securities laws, whether federal or state. Participant also agrees (i) that the certificates representing such shares of Stock may bear such legend or legends as the Committee deems appropriate in order to assure compliance with applicable securities laws, (ii) that the Company may refuse to register the transfer of the shares of Stock acquired pursuant to this Agreement on the stock transfer records of the Company if such proposed transfer would in the opinion of counsel satisfactory to the Company constitute a violation of any applicable securities law and (iii) that the Company may give related instructions to its transfer agent, if any, to stop registration of the transfer of such shares.

11. Severability . In the event that any provision of this Agreement shall be held illegal, invalid, or unenforceable for any reason, such provision shall be fully severable and shall not affect the remaining provisions of this Agreement, and the Agreement shall be construed and enforced as if the illegal, invalid, or unenforceable provision had never been included herein.

12. Certain Restrictions . By executing this Agreement, Participant acknowledges that he will enter into such written representations, warranties and agreements and execute such documents as the Company may reasonably request in order to comply with the terms of this Agreement or the Plan, or securities laws or any other applicable laws, rules or regulations.

13. Amendment and Termination . Except as otherwise provided in the Plan or this Agreement, no amendment or termination of this Agreement shall be made by the Company without the written consent of the Participant.

14. No Guarantee of Tax Consequences . The Company makes no commitment or guarantee to Participant that any federal or state tax treatment will apply or be available to any person eligible for benefits under this Agreement.

15. Binding Effect . This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under Participant.

16. Governing Law and Venue . This Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas. The courts in Harris County, Texas shall be the exclusive venue for any dispute regarding the Plan or this Agreement.

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its officer thereunto duly authorized, and Participant has executed this Agreement, all as of the day and year first above written.

ROWAN COMPANIES, INC.

By:__________________________________________ Date:___________________________

Robert G. Croyle,

Vice Chairman and Chief Administrative Officer

PARTICIPANT:

_______________________________________ Date:___________________________

Address:

____________________________________________

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Exhibit A

STOCK POWER

FOR VALUE RECEIVED, [name] (“ Transferor ”) hereby sells, assigns and transfers unto Rowan Companies, Inc., ____________ shares of the common stock, $.125 par value (“ Common Stock ”), of Rowan Companies, Inc., a Delaware corporation (the “ Company ”), which shares of Common Stock are represented by certificate no(s).____________, and hereby irrevocably appoints W. H. Wells as attorney-in-fact to transfer such shares of Common Stock on the books of the Company, with full power of substitution on the premises.

Dated:

TRANSFEROR:

___________________________________________

Printed Name:_______________________________________

Exhibit 10f

2005 ROWAN COMPANIES, INC. LONG-TERM INCENTIVE PLAN

NONQUALIFIED STOCK OPTION AGREEMENT

THIS NONQUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) is made as of the ____ day of ______ (“Grant Date”), between Rowan Companies, Inc., a Delaware corporation (the “Company”) and [name] (“Participant”).

Grant of Option . To carry out the purposes of the 2005 Rowan Companies, Inc. Long-Term Incentive Plan (the “Plan”), by affording Participant the opportunity to purchase shares of common stock, $0.125 par value per share of the Company (“Stock”), and in consideration of the mutual agreements and other matters set forth herein and in the Plan, the Company hereby irrevocably grants to Participant the right and option (“Option”) to purchase all or any part of an aggregate of [number] shares of Stock, effective as of the Grant Date on the terms and conditions set forth herein and in the Plan, which Plan is incorporated herein by reference as a part of this Agreement. All capitalized terms not otherwise defined herein shall have the meanings set forth in the Plan. The Plan and this Option shall be administered by the Compensation Committee (the “Committee”) of the Board of Directors of the Company. This Option shall not be treated as an incentive stock option within the meaning of section 422(b) of the Internal Revenue Code of 1986, as amended (the “Code”).

2.	Purchase Price . The purchase price of Stock purchased pursuant to the exercise of this Option shall be $_____ per share.

Exercise of Option . This Option shall be exercisable in the manner described below for 25% of the aggregate number of shares offered by this Option on and after each of the first, second, third and fourth anniversaries of the Grant Date; provided, however, this Option may be exercised only prior to its expiration date and, except as otherwise provided below, only while Participant remains an Employee of the Company. The Option will terminate and cease to be exercisable upon Participant’s termination of employment with the Company, except that:

(a)

If Participant’s employment with the Company terminates by reason of Retirement, Participant may exercise this Option at any time during the period of five years following the date of such termination, but only as to the number of shares that Participant was entitled to purchase hereunder as of the date his employment so terminates, plus such additional number of shares, if any, that the Committee, in its sole discretion, determines to be exercisable as of such Retirement.

(b)

If Participant dies within the five-year period following the date of Participant’s termination of employment by reason of Retirement, Participant’s estate, or the person who acquires this Option by bequest or inheritance or otherwise by reason of the death of Participant, may exercise this Option at any time during the period of two years following the date of Participant’s death, but only as to the number of shares Participant was entitled to purchase hereunder as of the date Participant’s employment terminated by reason of Retirement.

(c)	If Participant’s employment with the Company terminates by reason of Disability, Participant may exercise this Option in full at any time during the period of five years following the date of such termination.

(d)

If Participant dies while in the employ of the Company or within the five-year period following the date of Participant’s termination of employment by reason of Disability, Participant’s estate, or the person who acquires this Option by bequest or inheritance or by reason of the death of Participant, may exercise this Option in full at any time during the period of two years following the date of Participant’s death.

If Participant’s employment with the Company terminates other than by reason of Retirement, Disability or death, this Option (to the extent not exercised prior thereto) shall terminate as of the date Participant’s employment so terminates. This Option shall not be exercisable in any event after the expiration of ten years from the Grant Date hereof.

Manner of Exercise . In order to exercise this Option, the Participant shall deliver to the Chief Financial Officer or other designated officer of the Company payment in full for (i) the shares being purchased and (ii) unless other arrangements have been made with the Committee, any required withholding taxes. The payment of the exercise price for each Option shall be either in cash or by check payable and acceptable to the Company; provided, however, with the consent of the Committee, which consent may be granted or withheld in the Committee’s sole discretion and subject to any instructions or conditions as the Committee may impose, payment of the exercise price and/or withholding may be made by (x) tendering to the Company shares of Stock having an aggregate Fair Market Value as of the date of exercise that is not greater than the full exercise price for the shares with respect to which the Option is being exercised and the amount required to be withheld, or (y) the Company may deliver certificates for the shares of Stock for which the Option is being exercised to a broker for sale on behalf of Participant, provided that Participant has irrevocably instructed such broker to remit directly to the Company on Participant’s behalf from the proceeds of such sale the full amount of the exercise price, plus all required withholding taxes. In the event that Participant, with the consent of the Committee, elects to make payment as allowed under clause (x) above, the Committee may, upon confirming that Participant owns the number of shares being tendered, authorize the issuance of a new certificate for the number of shares being acquired pursuant to the exercise of the Option, less the number of shares being tendered upon the exercise, and return to Participant (or not require surrender of) the certificate for the shares being tendered upon the exercise.

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5.	Retirement . For purposes of the Agreement and pursuant to the terms of the Plan, Retirement of an employee shall have occurred if:

(a)	in the case of an Employee who is an employee of Rowan Companies, Inc. or an employee of an Employing Company, as defined in the Rowan Pension Plan

(the “Rowan Plan”), the Employee: (1) has satisfied the requirements for normal retirement pursuant to the rules of the Rowan Plan which, in terms of age, is a minimum of 60 and (2) has requested and received authorization from the administrative committee appointed by the Company’s Board of Directors to administer the Rowan Plan to commence receiving pension benefits; or

(b)

in the case of an Employee who is an employee of LeTourneau, Inc. or an employee of an Employing Company, as defined in the LeTourneau Pension Plan (the “LeTourneau Plan”), the Employee: (1) has satisfied the requirements for either normal or late retirement pursuant to the rules of the LeTourneau Plan,

(2) has requested and received authorization from the administrative committee appointed by the Board of Directors of LeTourneau, Inc. to administer the LeTourneau Plan to commence receiving pension benefits, and (3) would have satisfied the requirements for normal retirement pursuant to the rules of the Rowan Plan if he or she was an employee of Rowan Companies, Inc. or an employee of an Employing Company under the Rowan Plan.

Determination of the date of termination of employment by reason of Retirement shall be based on such evidence as the Committee may require, and a determination by the Committee of such date of termination shall be final and controlling on all interested parties.

Status of Stock . The Company intends to register for issuance under the Securities Act of 1933, as amended (the “Act”), the shares of Stock acquirable upon exercise of this Option and to keep such registration effective throughout the period that this Option is exercisable. In the absence of such effective registration or an available exemption from registration under the Act, issuance of shares of Stock acquirable upon exercise of the Option will be delayed until registration of such shares is effective or an exemption from registration under the Act is available. The Company intends to use its reasonable efforts to ensure that no such delay will occur. In the event exemption from registration under the Act is available upon an exercise of this O p tion, Participant (or the person perm i tted to exercise this O p tion in the event of Participant’s incapacity or death), if requested by the Company to do so, will execute and deliver to the Company in writing an agreement containing such provisions as the Company may require assuring compliance with applicable securities laws. The Company shall incur no liability to Participant for failure to register the Stock or maintain the registration.

Participant agrees that the shares of Stock, which Participant may acquire by exercising this Option, will not be sold or otherwise disposed of in any manner that would constitute a violation of any applicable securities laws, whether federal or state. Participant also agrees (i) that the certificates representing the shares of Stock purchased under this Option may bear such legend or legends as the Committee deems appropriate in order to assure compliance with applicable securities laws, (ii) that the Company may refuse to register the transfer of the shares of Stock purchased under this Option on the stock transfer records of the Company if such proposed transfer would in the opinion of counsel satisfactory to the Company constitute a violation of any applicable securities law and (iii) that the Company may give related instructions to its transfer agent, if any, to stop registration of the transfer of the shares of Stock purchased under this Option.

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Employment Relationship . For purposes of this Agreement, Participant shall be considered to be in the employment of the Company as long as Participant remains an Employee of either the Company, a parent or subsidiary corporation (as defined in section 424 of the Code) of the Company, or a corporation or a parent or subsidiary of such corporation assuming or substituting a new option for this Option. Any question as to whether and when there has been a termination of such employment, and the cause of such termination, shall be determined by the Committee in its sole discretion, and its determination shall be final.

Withholding of Tax . To the extent that the exercise of this Option or the disposition of shares of Stock acquired by exercise of this Option results in compensation income to Participant for federal or state income tax purposes, Participant shall deliver to the Company at the time of such exercise or disposition such amount of money as the Company may require to meet its obligation under applicable tax laws or regulations, and if Participant fails to do so, the Company is authorized to withhold from any cash or Stock remuneration then or thereafter payable to Participant any tax required to be withheld by reason of such resulting compensation income. Upon an exercise of this Option, the Company is further authorized in its discretion to s a tisfy any withholding requirement out of any cash or shares of Stock dis t ributable to Participant upon such exercise.

Reorganization of the Company . The existence of this Agreement shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business; any merger or consolidation of the Company; any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Stock or the rights thereof; the dissolution or liquidation of the Company; any sale or transfer of all or any part of its assets or business; or any other corporate act or proceeding, whether of a similar character or otherwise.

10.

Recapitalization Events . In the event of stock dividends, spin-offs of assets or other extraordinary dividends, stock splits, combinations of shares, recapitalizations, mergers, consolidations, reorganizations, liquidations, issuances of rights or warrants and similar transactions or events involving the Company (“Recapitalization Events”), then for all purposes references herein to Stock shall mean and include all securities or other property (other than cash) that holders of Stock of the Company are entitled to receive in respect of Stock by reason of each successive Recapitalization Event, and the exercise price of the Option shall be adjusted as deemed necessary or appropriate in the sole discretion of the Committee to prevent enlargement or dilution of Participant’s rights under this Agreement.

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11.

Transfer of Option . Except as provided herein, all rights granted hereunder shall not be transferable other than by will or the laws of descent and distribution and shall be exercisable during the Participant’s lifetime only by the Participant or, in the case of the Participant’s death or incapacity, by the Participant’s guardian or legal representative. Participant (hereinafter the “Initial Optionee”) for the purposes of this Paragraph 11 may transfer this Option (in whole or in part) subject to Committee approval, and such conditions and limitations, if any, as the Committee may impose with respect to such transfer to any of (i) the spouse, children or grandchildren (“Immediate Family Members”) of the Initial Optionee, (ii) a trust or trusts for the exclusive benefit of one or more of the Immediate Family Members and, if applicable, the Initial Optionee, (iii) a partnership or limited liability company whose only partners, shareholders or members are the Initial Optionee and/or one or more Immediate Family Members or (iv) an organization that has been determined by the Internal Revenue Service to be exempt under Section 501 (c)(3) of the Code. Following any transfer by the Initial Optionee, this Option may not be transferred except back to the Initial Optionee, unless the Committee approves otherwise on such terms as it shall establish in its sole discretion. A transfer of this Option must be for no consideration, unless the Committee otherwise agrees to a transfer for consideration. The terms and conditions of the Plan and this Agreement shall continue to be subject to the same limitation, vesting and expiration provisions of (a), (b), (c) and (d) of Paragraph 3 above, which shall be applied “as i f” Participant continued to be the holder of the Option. If transferred, this Option shall not be exercisable unless arrangements satisfact o ry to the Company have been made to satisfy any tax withholding o b ligations the Company may have with respect to the transferee’s exercise of the Option. Further, the Company shall have no obligation to provide any notices to an Option transferee of any event, term or provision with respect to the Option, including, without limitation, the early termination of the Option on account of termination of Participant’s employment. No transfer of this Option shall be effective unless the Committee receives prior written notice of the terms and conditions of any intended transfer, determines that the transfer complies with the requirements imposed hereunder with respect to Option tr ansfers and approves the transfer. Any purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance of this Option that does not satisfy the requirements set forth hereunder shall be void and unenforceable against the Company.

12.

Severability . In the event that any provision of this Agreement shall be held illegal, invalid, or unenforceable for any reason, such provision shall be fully severable and shall not affect the remaining provisions of this Agreement, and the Agreement shall be construed and enforced as if the illegal, invalid or unenforceable provision had never been included herein.

13.

Certain Restrictions . By executing this Agreement, Participant acknowledges that he will enter into such written representations, warranties and agreements and execute such documents as the Company may reasonably request in order to comply with this Agreement, the securities laws or any other applicable laws, rules or regulations, or the terms of the Plan.

14.

Amendment and Termination . Except as otherwise provided in the Plan or this Agreement, no amendment or termination of this Agreement shall be made by the Company without the written consent of the Participant.

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15.

No Guarantee of Tax Consequences . The Company makes no commitment or guarantee to Participant that any federal or state tax treatment will apply or be available to any person eligible for benefits under this Agreement.

16.

Binding Effect . This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under Participant.

17.

Governing Law and Venue . This Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas. The courts in Harris County, Texas shall be the exclusive venue for any dispute regarding the Plan or this Agreement.

ROWAN COMPANIES, INC.

By:_________________________________________ Date:_____________________________

Robert G. Croyle,

Vice Chairman and Chief Administrative Officer

PARTICIPANT:

______________________________________ Date:______________________________

Address:

______________________________________

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2005 ROWAN COMPANIES, INC. LONG-TERM INCENTIVE PLAN

PERFORMANCE SHARE AWARD AGREEMENT

THIS PERFORMANCE SHARE AWARD AGREEMENT (this “Agreement”) is made as of the ____ day of ______ (“Award Date”) between Rowan Companies, Inc., a Delaware corporation (the “Company”) and [name] (“Participant”).

1. Agreement to Grant Performance Shares . Subject to the conditions described in this Agreement and the 2005 Rowan Companies, Inc. Long-Term Incentive Plan (the “Plan”), the Company hereby agrees to grant shares of common stock, $0.125 par value per share, of the Company (“Stock”) to Participant in consideration for services to be performed and contingent upon the occurrence of certain events as set forth herein. Prior to the actual issuance of such shares, Participant shall have no rights as a shareholder pursuant to this Agreement including but not limited to any rights to receive or accrue dividends with respect to such shares or the right to vote such shares.

2. Definitions . For purposes of this Agreement, the following terms shall have the following meaning:

“Average Stock Price” means the average of the closing prices for the Stock or the common stock of each of the Peer Group Companies on each of the twenty-five (25) trading days immediately preceding the date of the determination.

“Committee” means the Compensation Committee of the Board of Directors of the Company.

“Peer Group Companies” means the companies listed on Appendix A attached hereto.

“Performance Period” means a period of three years beginning on the Award Date and ending on the third anniversary thereof.

“Relative TSR Rank” means the Total Shareholder Return of the Stock and the Total Shareholder Return of the common stock of each of the Peer Group Companies ranked in descending order. Relative TSR Rank shall be expressed as a number from one to seven with the number one (1) representing the highest Relative TSR Rank and seven (7) the lowest.

“Retirement” by an Employee shall have occurred if:

(a) in the case of an Employee who is an employee of Rowan Companies, Inc. or an employee of an Employing Company, as defined in the Rowan Pension Plan (the “Rowan Plan”), the Employee: (1) has satisfied the requirements for normal retirement pursuant to the rules of the Rowan Plan which, in terms of age, is a minimum of 60 and (2) has requested and received authorization from the administrative committee appointed by the Company’s Board of Directors to administer the Rowan Plan to commence receiving pension benefits; or

“Target Shares” means the number of shares of Stock that will be transferred to Participant if the Relative TSR Rank of the Stock is four (4) and Total Shareholder Return is equal to one (1) or greater. Participant’s Target Shares shall be set forth in paragraph 3 below.

“Total Shareholder Return” or “TSR” means ^x ∕ _y where:

x = the sum of (i) the difference between the Average Stock Price as of the last trading day of the Performance Period and the Average Stock Price as of the first day of the Performance Period; and (ii) all dividends paid on the Stock during the Performance Period; and

y = the Average Stock Price as of the first day of the Performance Period.

All capitalized terms not otherwise defined herein shall have the meanings set forth in the Plan, the terms of which are incorporated herein by reference.

3. Determination of Performance Shares . Provided that Participant is continuously employed by the Company throughout the Performance Period as soon as administratively feasible, but not later than seventy-five (75) days after the last day of the Performance Period, the Company shall transfer to Participant a number of shares of Stock to be determined as a percentage of the Target Shares based on the Relative TSR Rank according to the following chart.

Rowan Relative TSR Rank	1	2	3	4	5	6	7
Target Share Payout if TSR ³ 1	200%	167%	133%	100%	25%	0%	0%
Target Share Payout - Negative If TSR < 1	150%	125%	100%	75%	20%	0%	0%

Participant’s Target Shares = [number].

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4. Retirement, Disability, Death, or Change of Control . Except as otherwise provided below, in the event that Participant’s employment with the Company terminates prior to the last day of the Performance Period for any reason other than Retirement, Disability or death, this Agreement shall terminate and all rights of Participant to receive Stock under this Agreement shall be forfeited. In the event of Participant’s termination of employment by reason of Retirement, Disability or death, Participant shall receive at the conclusion of the Performance Period a prorated portion of the Target Shares based on the period of employment during the Performance Period prior to such termination. In the event of Participant’s termination of employment following a Change of Control or Retirement, the Committee, in its sole discretion, may grant Stock to Participant in an amount in excess of the amount that would be otherwise granted to Participant; provided, however, that the maximum number of shares of Stock awarded Participant pursuant to this Agreement shall not exceed 200% of the Target Shares.

5. Status of Stock . The Company intends to register for issuance under the Securities Act of 1933, as amended (the “Act”), the shares of Stock acquired pursuant to this Agreement. In the absence of such effective registration or an available exemption from registration under the Act, issuance of shares of Stock pursuant to this Agreement will be delayed until registration of such shares is effective or an exemption from registration under the Act is available. The Company intends to use its reasonable efforts to ensure that no such delay will occur. In the event exemption from registration under the Act is available , Participant (or the person entitled to receive Participant’s shares in the event of Participant’s incapacity or death), if requested by the Company to do so, will execute and deliver to the Company in writing an agreement containing such provisions as the Company may require assuring compliance with applicable securities laws. The Company shall incur no liability to Participant for failure to register the Stock or maintain the registration.

Participant agrees that the shares of Stock, which Participant may acquire pursuant to this Agreement , will not be sold or otherwise disposed of in any manner that would constitute a violation of any applicable securities laws, whether federal or state. Participant also agrees (i) that the certificates representing such shares of Stock may bear such legend or legends as the Committee deems appropriate in order to assure compliance with applicable securities laws, (ii) that the Company may refuse to register the transfer of the shares of Stock acquired pursuant to this Agreement on the stock transfer records of the Company if such proposed transfer would in the opinion of counsel satisfactory to the Company constitute a violation of any applicable securities law and (iii) that the Company may give related instructions to its transfer agent, if any, to stop registration of the transfer of such shares.

7. Withholding of Taxes . The Company shall have the right to take any action as may be necessary or appropriate to satisfy any federal, state or local tax withholding obligations, including, but not limited to, the right to withhold shares of Stock sufficient to pay the amount required to be withheld and to cause such Stock to be sold and the proceeds remitted to the Company. In the event that the proceeds of such sale shall exceed the legally required withholding amount, the Company shall remit the difference in cash to Participant. In the event that the proceeds of such sale are less than the legally required withholding amount, the Company may withhold the difference from any cash or Stock then or thereafter payable to Participant.

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9. Recapitalization Events . In the event of stock dividends, spin-offs of assets or other extraordinary dividends, stock splits, combinations of shares, recapitalizations, mergers, consolidations, reorganizations, liquidations, issuances of rights or warrants and similar transactions or events involving the Company (“Recapitalization Events”), for all purposes references herein to Stock shall mean and include all securities or other property (other than cash) that holders of Stock of the Company are entitled to receive in respect of Stock by reason of each successive Recapitalization Event and the number of Target Shares and the Average Stock Price may be adjusted as deemed necessary or appropriate in the sole discretion of the Committee to prevent enlargement or diminution in Participant’s rights under this Agreement.

10. Severability . In the event that any provision of this Agreement shall be held illegal, invalid, or unenforceable for any reason, such provision shall be fully severable and shall not affect the remaining provisions of this Agreement, and the Agreement shall be construed and enforced as if the illegal, invalid or unenforceable provision had never been included herein.

11. Certain Restrictions . By executing this Agreement, Participant acknowledges that he will enter into such written representations, warranties and agreements and execute such documents as the Company may reasonably request in order to comply the terms of the Plan or this Agreement, or the securities law or any other applicable laws, rules or regulations.

12. Amendment and Termination . In the event that the common stock of any Peer Group Company ceases to be publicly traded during the Performance Period, the Committee shall have the authority to substitute the common stock of any successor in interest to the stock or assets of such Peer Group Company, provided that the common stock of such successor is publicly traded and provided further that such successor is determined by the Committee to be an appropriate Peer Group Company. If the Committee substitutes the common stock of a successor, the Total Shareholder Return of such successor common stock shall determine its Relative TSR Rank. If the Committee determines that the common stock of a successor cannot or should not be substituted for the common stock of a Peer Group Company that has ceased to be publicly traded, then Relative TSR Rank of such Peer Group Company shall be based on Total Sharehold Return of such common stock as of the date that such common stock ceases to be publicly traded. Except as otherwise provided in the Plan or this Agreement, no amendment or termination of this Agreement shall be made by the Company without the written consent of Participant.

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13. Binding Effect . This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under Participant.

14. Governing Law and Venue . This Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas. The courts in Harris County, Texas shall be the exclusive venue for any dispute regarding the Plan or this Agreement.

IN WITNESS WHEREOF , the Company has caused this Agreement to be duly executed by its officer thereunto duly authorized, and Participant has executed this Agreement, all as of the day and year first above written.

ROWAN COMPANIES INC.

By:_________________________________________ Date:_____________________________________

Robert G. Croyle,

Vice Chairman and Chief Administrative Officer

PARTICIPANT:

______________________________________ Date:_____________________________________

Address:

____________________________________________

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Appendix A

Diamond Offshore Drilling, Inc.

ENSCO International Incorporated

GlobalSantaFe Corporation

Noble Corporation

TODCO

Transocean Inc.

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EXHIBIT 31a

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, D. F. McNease, Chief Executive Officer of Rowan Companies, Inc., certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Rowan Companies, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2005		/s/ D. F. MCNEASE
		D. F. McNease
		Chairman, President and Chief Executive Officer

EXHIBIT 31b

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, W. H. Wells, Chief Financial Officer of Rowan Companies, Inc., certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Rowan Companies, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(a)

(b)

(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d)

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2005		/s/ W. H. WELLS
		W. H. Wells
		Vice President - Finance and Treasurer (Chief Financial Officer)

EXHIBIT 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U. S. C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Rowan Companies, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, D. F. McNease, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented.

Date: August 9, 2005		/s/ D. F. MCNEASE
		D. F. McNease
		Chairman, President and Chief Executive Officer

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U. S. C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Rowan Companies, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, W. H. Wells, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented.

Date: August 9, 2005		/s/ W. H. WELLS
		W. H. Wells
		Vice President - Finance and Treasurer (Chief Financial Officer)

	For The Three Months						For The Six Months
		Ended June 30,						Ended June 30,
		2005			2004			2005			2004
		(Unaudited)						(Unaudited)
REVENUES:
Drilling services	$	182,637		$	111,301		$	342,916		$	212,129
Manufacturing sales and services		61,923			51,544			124,036			95,248
Total		244,560			162,845			466,952			307,377

COSTS AND EXPENSES:
Drilling services		99,182			81,736			188,607			164,179
Manufacturing sales and services		51,687			42,814			108,361			81,605
Depreciation and amortization		20,106			19,456			39,960			38,345
Selling, general and administrative		16,086			9,269			29,346			18,367
Gain on sale of property and equipment		(9,592	)		(110	)		(10,182	)		(403	)
Total		177,469			153,165			356,092			302,093

INCOME FROM OPERATIONS		67,091			9,680			110,860			5,284

OTHER INCOME (EXPENSE):
Interest expense		(6,318	)		(5,039	)		(12,174	)		(10,104	)
Less interest capitalized		1,088			535			1,859			1,332
Interest income		3,565			867			6,111			1,527
Gain on sale of investments		1,852			-			9,553			-
Other - net		233			91			569			174
Other income (expense) - net		420			(3,546	)		5,918			(7,071	)

INCOME (LOSS) BEFORE INCOME TAXES		67,511			6,134			116,778			(1,787	)
Provision (credit) for income taxes		24,325			2,160			43,053			(603	)

INCOME (LOSS) FROM CONTINUING OPERATIONS		43,186			3,974			73,725			(1,184	)
Income (loss) from discontinued operations, net of tax		(920	)		(6,099	)		11,963			(12,249	)

NET INCOME (LOSS)	$	42,266		$	(2,125	)	$	85,688		$	(13,433	)

PER SHARE AMOUNTS (Note 3):
Income (loss) from continuing operations - basic	$	.40		$	.04		$	.68		$	(.01	)
Income (loss) from continuing operations - diluted	$	.39		$	.04		$	.67		$	(.01	)

Income (loss) from discontinued operations - basic	$	(.01	)	$	(.06	)	$	.11		$	(.12	)
Income (loss) from discontinued operations - diluted	$	(.00	)	$	(.06	)	$	.11		$	(.12	)

Net income (loss) - basic	$	.39		$	(.02	)	$	.79		$	(.13	)
Net income (loss) - diluted	$	.39		$	(.02	)	$	.78		$	(.13	)


See Notes to Consolidated Financial Statements.