Quarterly Report (10-q)

Date : 08/05/2019 @ 3:12PM
Source : Edgar (US Regulatory)
Stock : Diamond Offshore Drilling Inc (DO)
Quote : 7.69  -0.09 (-1.16%) @ 12:59AM

Quarterly Report (10-q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2019

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from               to              

Commission file number 1-13926

 

DIAMOND OFFSHORE DRILLING, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

76-0321760

(State or other jurisdiction of incorporation

or organization)

 

(I.R.S. Employer

Identification No.)

 

15415 Katy Freeway

Houston, Texas  

77094

(Address of principal executive offices)

(Zip Code)

(281) 492-5300

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Common Stock, $0.01 par value per share

 

DO

 

New York Stock Exchange

 

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    No    

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes    No    

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes    No   

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of July 31, 2019 Common stock, $0.01 par value per share   137,694,313 shares

 

 

 


DIAMOND OFFSHORE DRILLING, INC.

 

TABLE OF CONTENTS FOR FORM 10-Q

 

QUARTER ENDED JUNE 30, 2019

 

 

 

 

 

PAGE NO.

 

 

 

 

 

COVER PAGE

 

1

 

 

 

TABLE OF CONTENTS

 

2

 

 

 

PART I. FINANCIAL INFORMATION

 

3

 

 

 

 

ITEM 1.

Financial Statements (Unaudited)

 

3

 

 

Condensed Consolidated Balance Sheets

 

3

 

 

Condensed Consolidated Statements of Operations

 

4

 

 

Condensed Consolidated Statements of Comprehensive Income or Loss

 

5

 

 

Condensed Consolidated Statements of Stockholders’ Equity

 

6

 

 

Condensed Consolidated Statements of Cash Flows

 

8

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

9

 

 

 

 

 

 

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

 

21

 

 

 

 

 

 

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

 

30

 

 

 

 

 

 

ITEM 4.

Controls and Procedures

 

30

 

 

 

 

 

PART II. OTHER INFORMATION

 

31

 

 

 

 

 

 

ITEM 1.

Legal Proceedings

 

31

 

 

 

 

 

 

ITEM 1A.

Risk Factors

 

31

 

 

 

 

 

 

ITEM 6.

Exhibits

 

32

 

 

 

 

 

SIGNATURES

 

33

 

 

 

 

2


PART I.  FINANCIAL INFORMATION

ITEM 1. Financial Statements.

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share data)

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

147,509

 

 

$

154,073

 

Marketable securities

 

 

149,945

 

 

 

299,849

 

Accounts receivable, net of allowance for bad debts

 

 

163,086

 

 

 

168,620

 

Prepaid expenses and other current assets

 

 

130,124

 

 

 

163,396

 

Total current assets

 

 

590,664

 

 

 

785,938

 

Drilling and other property and equipment, net of

 

 

 

 

 

 

 

 

accumulated depreciation

 

 

5,163,696

 

 

 

5,184,222

 

Other assets

 

 

222,876

 

 

 

65,534

 

Total assets

 

$

5,977,236

 

 

$

6,035,694

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

60,533

 

 

$

43,933

 

Accrued liabilities

 

 

192,194

 

 

 

172,228

 

Taxes payable

 

 

16,722

 

 

 

20,685

 

Total current liabilities

 

 

269,449

 

 

 

236,846

 

Long-term debt

 

 

1,974,816

 

 

 

1,973,922

 

Deferred tax liability

 

 

74,281

 

 

 

104,380

 

Other liabilities

 

 

259,793

 

 

 

135,893

 

Total liabilities

 

 

2,578,339

 

 

 

2,451,041

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock (par value $0.01, 25,000,000 shares authorized, none

   issued and outstanding)

 

 

 

 

 

 

Common stock (par value $0.01, 500,000,000 shares authorized;

   144,764,125 shares issued and 137,690,627 shares outstanding

   at June 30, 2019; 144,383,662 shares issued and 137,438,353

   shares outstanding at December 31, 2018)

 

 

1,448

 

 

 

1,444

 

Additional paid-in capital

 

 

2,021,095

 

 

 

2,018,143

 

Retained earnings

 

 

1,582,099

 

 

 

1,769,415

 

Accumulated other comprehensive (loss) gain

 

 

(6

)

 

 

21

 

Treasury stock, at cost (7,073,498 and 6,945,309 shares of common stock

   at June 30, 2019 and December 31, 2018, respectively)

 

 

(205,739

)

 

 

(204,370

)

Total stockholders’ equity

 

 

3,398,897

 

 

 

3,584,653

 

Total liabilities and stockholders’ equity

 

$

5,977,236

 

 

$

6,035,694

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

3


DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract drilling

 

$

207,273

 

 

$

265,353

 

 

$

433,970

 

 

$

553,279

 

Revenues related to reimbursable expenses

 

 

9,433

 

 

 

3,508

 

 

 

16,278

 

 

 

11,092

 

Total revenues

 

 

216,706

 

 

 

268,861

 

 

 

450,248

 

 

 

564,371

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract drilling, excluding depreciation

 

 

224,782

 

 

 

189,321

 

 

 

392,210

 

 

 

374,010

 

Reimbursable expenses

 

 

9,313

 

 

 

3,414

 

 

 

16,057

 

 

 

10,884

 

Depreciation

 

 

88,253

 

 

 

81,825

 

 

 

175,151

 

 

 

163,650

 

General and administrative

 

 

15,294

 

 

 

18,236

 

 

 

32,605

 

 

 

36,749

 

Impairment of assets

 

 

 

 

 

27,225

 

 

 

 

 

 

27,225

 

Restructuring and separation costs

 

 

 

 

 

1,265

 

 

 

 

 

 

4,276

 

Gain on disposition of assets

 

 

(9,436

)

 

 

(50

)

 

 

(5,149

)

 

 

(560

)

Total operating expenses

 

 

328,206

 

 

 

321,236

 

 

 

610,874

 

 

 

616,234

 

Operating loss

 

 

(111,500

)

 

 

(52,375

)

 

 

(160,626

)

 

 

(51,863

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

1,933

 

 

 

2,001

 

 

 

4,346

 

 

 

3,638

 

Interest expense, net of amounts capitalized

 

 

(31,159

)

 

 

(29,585

)

 

 

(61,084

)

 

 

(57,903

)

Foreign currency transaction (loss) gain

 

 

(721

)

 

 

411

 

 

 

(1,806

)

 

 

858

 

Other, net

 

 

105

 

 

 

262

 

 

 

438

 

 

 

842

 

Loss before income tax benefit

 

 

(141,342

)

 

 

(79,286

)

 

 

(218,732

)

 

 

(104,428

)

Income tax benefit

 

 

27,354

 

 

 

10,012

 

 

 

31,416

 

 

 

54,475

 

Net loss

 

$

(113,988

)

 

$

(69,274

)

 

$

(187,316

)

 

$

(49,953

)

Loss per share, Basic and Diluted

 

$

(0.83

)

 

$

(0.50

)

 

$

(1.36

)

 

$

(0.36

)

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares of common stock

 

 

137,691

 

 

 

137,429

 

 

 

137,607

 

 

 

137,362

 

Dilutive potential shares of common stock

 

 

 

 

 

 

 

 

 

 

 

 

Total weighted-average shares outstanding

 

 

137,691

 

 

 

137,429

 

 

 

137,607

 

 

 

137,362

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 


4


DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OR LOSS

(Unaudited)

(In thousands)

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net loss

 

$

(113,988

)

 

$

(69,274

)

 

$

(187,316

)

 

$

(49,953

)

Other comprehensive gains (losses), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification adjustment for gain included in net loss

 

 

(2

)

 

 

(1

)

 

 

(3

)

 

 

(3

)

Investments in marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gain

 

 

9

 

 

 

31

 

 

 

23

 

 

 

31

 

Reclassification adjustment for gain included in net loss

 

 

(15

)

 

 

-

 

 

 

(47

)

 

 

-

 

Total other comprehensive (loss) gain

 

 

(8

)

 

 

30

 

 

 

(27

)

 

 

28

 

Comprehensive loss

 

$

(113,996

)

 

$

(69,244

)

 

$

(187,343

)

 

$

(49,925

)

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

 

 

5


DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands, except number of shares)

 

 

 

Three Months Ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Retained

 

 

Comprehensive

 

 

Treasury Stock

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Gains (Losses)

 

 

Shares

 

 

Amount

 

 

Equity

 

April 1, 2019

 

 

144,606,992

 

 

$

1,446

 

 

$

2,019,555

 

 

$

1,696,087

 

 

$

2

 

 

 

7,026,789

 

 

$

(205,214

)

 

$

3,511,876

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(113,988

)

 

 

 

 

 

 

 

 

 

 

 

(113,988

)

Stock-based compensation, net of tax

 

 

157,133

 

 

 

2

 

 

 

1,540

 

 

 

 

 

 

 

 

 

46,709

 

 

 

(525

)

 

 

1,017

 

Net loss on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6

)

 

 

 

 

 

 

 

 

(6

)

Net loss on derivative financial

   instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

 

 

 

 

 

 

(2

)

June 30, 2019

 

 

144,764,125

 

 

$

1,448

 

 

$

2,021,095

 

 

$

1,582,099

 

 

$

(6

)

 

 

7,073,498

 

 

$

(205,739

)

 

$

3,398,897

 

 

 

 

Six Months Ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Retained

 

 

Comprehensive

 

 

Treasury Stock

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Gains (Losses)

 

 

Shares

 

 

Amount

 

 

Equity

 

January 1, 2019

 

 

144,383,662

 

 

$

1,444

 

 

$

2,018,143

 

 

$

1,769,415

 

 

$

21

 

 

 

6,945,309

 

 

$

(204,370

)

 

$

3,584,653

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(187,316

)

 

 

 

 

 

 

 

 

 

 

 

(187,316

)

Stock-based compensation, net of tax

 

 

380,463

 

 

 

4

 

 

 

2,952

 

 

 

 

 

 

 

 

 

128,189

 

 

 

(1,369

)

 

 

1,587

 

Net loss on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24

)

 

 

 

 

 

 

 

 

(24

)

Net loss on derivative financial

   instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

(3

)

June 30, 2019

 

 

144,764,125

 

 

$

1,448

 

 

$

2,021,095

 

 

$

1,582,099

 

 

$

(6

)

 

 

7,073,498

 

 

$

(205,739

)

 

$

3,398,897

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

 

 

6


DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY – Continued

(Unaudited)

(In thousands, except number of shares)

 

 

 

Three Months Ended June 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Retained

 

 

Comprehensive

 

 

Treasury Stock

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Gains (Losses)

 

 

Shares

 

 

Amount

 

 

Equity

 

April 1, 2018

 

 

144,249,563

 

 

$

1,442

 

 

$

2,012,993

 

 

$

1,969,006

 

 

$

(7

)

 

 

6,906,592

 

 

$

(203,802

)

 

$

3,779,632

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(69,274

)

 

 

 

 

 

 

 

 

 

 

 

(69,274

)

Anti-dilution adjustment

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

3

 

Stock options exercised

 

 

3,773

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation, net of tax

 

 

120,670

 

 

 

2

 

 

 

869

 

 

 

 

 

 

 

 

 

36,498

 

 

 

(532

)

 

 

339

 

Net gain on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31

 

 

 

 

 

 

 

 

 

31

 

Net loss on derivative financial instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

(1

)

June 30, 2018

 

 

144,374,006

 

 

$

1,444

 

 

$

2,013,862

 

 

$

1,899,735

 

 

$

23

 

 

 

6,943,090

 

 

$

(204,334

)

 

$

3,710,730

 

 

 

 

Six Months Ended June 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Retained

 

 

Comprehensive

 

 

Treasury Stock

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Gains (Losses)

 

 

Shares

 

 

Amount

 

 

Equity

 

December 31, 2017

 

 

144,085,292

 

 

$

1,441

 

 

$

2,011,397

 

 

$

1,964,497

 

 

$

(5

)

 

 

6,857,510

 

 

$

(203,069

)

 

$

3,774,261

 

Impact of change in accounting principle

 

 

 

 

 

 

 

 

 

 

 

(14,812

)

 

 

 

 

 

 

 

 

 

 

 

(14,812

)

Adjusted balance at January 1, 2018

 

 

144,085,292

 

 

$

1,441

 

 

$

2,011,397

 

 

$

1,949,685

 

 

$

(5

)

 

 

6,857,510

 

 

$

(203,069

)

 

$

3,759,449

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(49,953

)

 

 

 

 

 

 

 

 

 

 

 

(49,953

)

Anti-dilution payments

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

3

 

Stock options exercised

 

 

3,773