- Revenues for first-quarter of $105.5
million with a revenue efficiency(a) of 98.0%
- Net Loss of $99.8 million, resulting in
$4.69 loss per diluted share
- Operating and G&A costs of $82.9
million, a reduction of 11.9% from a year ago
- Cash flow from operations for
first-quarter of $28.7 million
Pacific Drilling S.A. (NYSE: PACD) today announced net loss for
first-quarter 2017 of $99.8 million or $4.69 per diluted share,
compared to net loss of $43.0 million or $2.03 per diluted share
for fourth-quarter 2016, and net loss of $2.5 million or $0.12 per
diluted share for first-quarter 2016.
CEO Chris Beckett said, "We delivered another quarter of solid
operational performance with a first-quarter revenue efficiency of
98% and we continued to benefit from strong cost control. Market
conditions are still challenging, although we have experienced an
uptick in tenders and inquiries versus 2016. This supports our
previously stated expectation of demand improvement through 2017
partially offsetting increased supply from rigs rolling off
contract, which we believe will eventually lead to improving
utilization in 2018.”
First-Quarter 2017 Operational and
Financial Commentary
Contract drilling revenue for first-quarter 2017 was $105.5
million, which included $31.1 million of deferred revenue
amortization, compared to fourth-quarter 2016 contract drilling
revenue of $178.0 million, which included $29.4 million of deferred
revenue amortization. The decrease in revenues resulted primarily
from the Pacific Scirocco being offhire throughout the
first-quarter and the Pacific Santa Ana completing its contract in
January 2017, partially offset by the Pacific Bora going back to
work in February 2017 compared to being offhire throughout the
fourth-quarter 2016. During first-quarter 2017, our operating fleet
achieved average revenue efficiency of 98.0%.
Operating expenses for first-quarter 2017 were $60.4 million as
compared to $66.5 million for fourth-quarter 2016. Operating
expenses for first-quarter 2017 included $3.3 million in
amortization of deferred costs, $1.4 million in reimbursable
expenses, and $6.7 million in shore-based and other support costs.
The reduction in operating expenses was primarily the result of
lower costs throughout the fleet due to reduced activity, as well
as the continued benefits of our cost saving measures.
General and administrative expenses for first-quarter 2017 were
$22.5 million, compared to $18.9 million for fourth-quarter 2016.
Excluding certain legal and financial advisory fees of $6.1 million
in first-quarter 2017 and $7.1 million in fourth-quarter 2016, our
corporate overhead expenses(b) for first-quarter 2017 were $16.4
million, compared to $11.8 million for fourth-quarter 2016. The
increase in corporate overhead expenses in the first-quarter 2017
is primarily due to the timing of expense recognition of incentive
awards, including certain performance-based awards. These expenses
are expected to decrease in each of the remaining quarters of
2017.
EBITDA(c) for first-quarter 2017 was $21.9 million, compared to
EBITDA of $92.9 million in the fourth-quarter 2016.
Income tax expense for first-quarter 2017 was $2.1 million, as
compared to $14.5 million for fourth-quarter 2016, primarily as a
result of the application of quarterly tax accounting required
under U.S. GAAP during fourth-quarter 2016.
For first-quarter 2017, cash flow from operations was $28.7
million. Cash balances, including $8.5 million in restricted cash,
totaled $507.4 million as of March 31, 2017, and total outstanding
debt was $3.0 billion.
On March 16, 2017, we reported the expiration of certain
non-disclosure agreements we had entered into with an ad hoc group
of holders of our capital markets indebtedness. CFO Paul Reese
commented, “While currently, there is no consensus as to the form
or structure of any restructuring, we continue to be engaged in
discussions with all of our stakeholders, including our largest
shareholder, our bank lenders and the ad hoc group, regarding a
restructuring of our existing capital structure to be sustainable
in the longer term.”
The company will not be holding an earnings conference call this
quarter.
Footnotes
(a) Revenue efficiency is defined as
actual contractual dayrate revenue (excluding mobilization fees,
upgrade reimbursements and other revenue sources) divided by the
maximum amount of contractual dayrate revenue that could have been
earned during such period.
(b) Corporate overhead expenses is a
non-GAAP financial measure. For a definition of corporate overhead
expenses and a reconciliation to general and administrative
expenses, please refer to the schedule included in this
release.
(c) EBITDA is a non-GAAP financial
measure. For a definition of EBITDA and a reconciliation to net
income, please refer to the schedules included in this release.
About Pacific Drilling
With its best-in-class drillships and highly experienced team,
Pacific Drilling is committed to becoming the industry’s preferred
high-specification, floating-rig drilling contractor. Pacific
Drilling’s fleet of seven drillships represents one of the youngest
and most technologically advanced fleets in the world. For more
information about Pacific Drilling, including our current Fleet
Status, please visit our website at www.pacificdrilling.com.
Forward-Looking
Statements
Certain statements and information contained in this press
release constitute “forward-looking statements” within the meaning
of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995, and are generally identifiable by the use of
words such as “believe,” “estimate,” “expect,” “forecast,” “our
ability to,” “plan,” “potential,” “projected,” “target,” “would,”
or other similar words, which are generally not historical in
nature.
Our forward-looking statements express our current expectations
or forecasts of possible future results or events, including our
future financial and operational performance; revenue efficiency
levels; market outlook; forecasts of trends; future client contract
opportunities; contract dayrates; our business strategies and plans
and objectives of management; estimated duration of client
contracts; backlog; our ability to repay our debt; our expectations
regarding potential future covenant defaults on our long-term debt;
expected capital expenditures and projected costs and savings.
Although we believe that the assumptions and expectations
reflected in our forward-looking statements are reasonable and made
in good faith, these statements are not guarantees and actual
future results may differ materially due to a variety of factors.
These statements are subject to a number of risks and
uncertainties, many of which are beyond our control.
Important factors that could cause actual results to differ
materially from our expectations include: the global oil and gas
market and its impact on demand for our services; the offshore
drilling market, including reduced capital expenditures by our
clients; changes in worldwide oil and gas supply and demand; rig
availability and supply and demand for high-specification
drillships and other drilling rigs competing with our fleet; costs
related to stacking of rigs; our ability to enter into and
negotiate favorable terms for new drilling contracts or extensions;
possible cancellation, renegotiation, termination or suspension of
drilling contracts as a result of market changes or other reasons;
our substantial level of indebtedness; our ability to obtain
waivers or amendments to our maximum leverage ratio covenant at the
end of the third quarter of 2017 if necessary, or with respect to
other potential future debt covenant defaults; our ability to
continue as a going concern and any potential bankruptcy
proceeding; our ability to repay debt and adequacy of and access to
sources of liquidity; and the other risk factors described in our
filings with the SEC, including our Annual Report on Form 20-F and
Current Reports on Form 6-K. These documents are available through
our website at www.pacificdrilling.com or through the SEC’s
Electronic Data and Analysis Retrieval System at www.sec.gov.
Readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date hereof.
We undertake no obligation to publicly update or revise any
forward-looking statements after the date they are made, whether as
a result of new information, future events or otherwise.
PACIFIC DRILLING S.A. AND SUBSIDIARIES
Condensed Consolidated Statements of
Operations
(in thousands, except per share
information) (unaudited)
Three Months Ended March 31,
December 31, March 31, 2017 2016
2016 Revenues Contract drilling $ 105,509 $ 177,957 $
205,378
Costs and expenses Operating expenses (60,448 )
(66,547 ) (78,973 ) General and administrative expenses (22,461 )
(18,908 ) (15,126 ) Depreciation expense (69,631 )
(69,881 ) (68,076 ) (152,540 ) (155,336 )
(162,175 )
Operating income (loss) (47,031 ) 22,621
43,203
Other income (expense) Interest expense (50,011 )
(51,547 ) (45,493 ) Other income (expense) (729 ) 419
1,632
Loss before income taxes (97,771
) (28,507 ) (658 ) Income tax expense (2,076 )
(14,529 ) (1,853 )
Net loss $ (99,847 ) $ (43,036 ) $
(2,511 )
Loss per common share, basic $ (4.69 ) $ (2.03 ) $
(0.12 )
Weighted average number of common shares, basic
21,273 21,184 21,121
Loss per common share, diluted $ (4.69 ) $ (2.03 ) $ (0.12 )
Weighted average number of common shares, diluted
21,273 21,184 21,121
PACIFIC DRILLING S.A. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands, except par value)
(unaudited)
March 31, December 31,
2017 2016 Assets: Cash and cash equivalents $
498,890 $ 585,980 Restricted cash 8,505 40,188 Accounts receivable
40,411 94,622 Materials and supplies 94,482 95,679 Deferred costs,
current 10,183 10,454 Prepaid expenses and other current assets
8,505 13,892 Total current assets
660,976 840,815 Property and equipment,
net 4,848,409 4,909,873 Long-term receivable 202,575 202,575 Other
assets 46,942 44,944 Total assets $
5,758,902 $ 5,998,207
Liabilities and
shareholders’ equity: Accounts payable $ 20,671 $ 17,870
Accrued expenses 37,020 45,881 Long-term debt, current 467,802
496,790 Accrued interest 33,059 14,164 Deferred revenue, current
24,327 45,755 Total current liabilities
582,879 620,460 Long-term debt, net of
current maturities 2,547,888 2,648,659 Deferred revenue 27,430
32,233 Other long-term liabilities 30,473
30,655 Total long-term liabilities 2,605,791
2,711,547 Shareholders’ equity: Common shares, $0.01
par value per share, 5,000,000 shares authorized, 22,551 shares
issued and 21,284 and 21,184 shares outstanding as of March 31,
2017 and December 31, 2016, respectively 213 212 Additional paid-in
capital 2,362,458 2,360,398 Accumulated other comprehensive loss
(17,375 ) (19,193 ) Retained earnings 224,936
324,783 Total shareholders’ equity 2,570,232
2,666,200 Total liabilities and shareholders’ equity
$ 5,758,902 $ 5,998,207
PACIFIC DRILLING S.
A. AND SUBSIDIARIES Condensed Consolidated Statements
of Cash Flows (in thousands) (unaudited) Three
Months Ended March 31, December 31,
March 31, 2017 2016 2016 Cash
flow from operating activities: Net loss $ (99,847 ) $ (43,036
) $ (2,511 ) Adjustments to reconcile net loss to net cash provided
by operating activities: Depreciation expense 69,631 69,881 68,076
Amortization of deferred revenue (31,079 ) (29,413 ) (12,658 )
Amortization of deferred costs 3,306 4,057 2,835 Amortization of
deferred financing costs 8,091 7,858 3,625 Amortization of debt
discount 305 208 323 Deferred income taxes 908 12,693 1,715
Share-based compensation expense 2,215 1,766 2,164 Changes in
operating assets and liabilities: Accounts receivable 54,211 19,685
30,591 Materials and supplies 1,197 1,588 2,010 Prepaid expenses
and other assets (1,495 ) (16,720 ) (7,055 ) Accounts payable and
accrued expenses 16,421 (23,013 ) (2,412 ) Deferred revenue
4,848 35,175 — Net cash provided
by operating activities 28,712 40,729
86,703
Cash flow from investing activities:
Capital expenditures (10,127 ) (9,819 )
(28,588 ) Net cash used in investing activities (10,127 )
(9,819 ) (28,588 )
Cash flow from financing
activities: Net payments from shares issued under share-based
compensation plan (154 ) — — Proceeds from long-term debt — 215,000
235,000 Payments on long-term debt (134,540 ) (41,652 ) (1,875 )
Payments for financing costs (2,664 ) (23,408 )
— Net cash provided by (used in) financing activities
(137,358 ) 149,940 233,125 Net
increase (decrease) in cash and cash equivalents (118,773 ) 180,850
291,240 Cash, cash equivalents and restricted cash, beginning of
period 626,168 445,318 116,033
Cash, cash equivalents and restricted cash, end of period $
507,395 $ 626,168 $ 407,273
EBITDA Reconciliation
EBITDA is defined as earnings before interest, taxes,
depreciation and amortization. EBITDA does not represent and should
not be considered an alternative to net income, operating income,
cash flow from operations or any other measure of financial
performance presented in accordance with generally accepted
accounting principles in the United States of America (“GAAP”) and
our calculation of EBITDA may not be comparable to that reported by
other companies. EBITDA is included herein because it is used by
management to measure the company's operations. Management believes
that EBITDA presents useful information to investors regarding the
company's operating performance.
PACIFIC DRILLING S.A. AND SUBSIDIARIES
Supplementary Data—Reconciliation of Net Loss to Non-GAAP
EBITDA (in thousands) (unaudited) Three
Months Ended March 31, December 31,
March 31, 2017 2016 2016 Net
loss $ (99,847 ) $ (43,036 ) $ (2,511 )
Add: Interest
expense 50,011 51,547 45,493 Depreciation expense 69,631 69,881
68,076 Income tax expense 2,076 14,529
1,853
EBITDA $ 21,871 $ 92,921 $ 112,911
Corporate Overhead
Expenses Reconciliation
Corporate overhead expenses is a non-GAAP
financial measure defined as general and administrative expenses
less certain unusual legal expenses related to our arbitration
proceeding and patent litigation, as well as legal and financial
advisory expenses related to our on-going debt restructuring
efforts. We included corporate overhead herein because it is used
by management to measure the company's ongoing corporate overhead.
Management believes that ongoing corporate overhead expenses
present useful information to investors regarding the financial
impact of company's cost savings measures and optimization of
overhead support structure during the periods presented below.
Non-GAAP financial measures should be considered as a supplement
to, and not as a substitute for, or superior to, financial measures
prepared in accordance with GAAP.
PACIFIC DRILLING S.A. AND SUBSIDIARIES
Supplementary Data—Reconciliation of
General and Administrative Expenses to Non-GAAP Corporate Overhead
Expenses
(in thousands) (unaudited)
Three Months Ended March 31,
December 31, March 31, 2017 2016
2016 General and administrative expenses $ 22,461 $
18,908 $ 15,126
Subtract: Legal and advisory expenses
(6,067 ) (7,103 ) (2,790 )
Corporate overhead
expenses $ 16,394 $ 11,805 $ 12,336
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version on businesswire.com: http://www.businesswire.com/news/home/20170504006895/en/
Pacific Drilling SAJohannes (John) P. Boots, +352 26 84 57
81Investor@pacificdrilling.com
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