HOUSTON, Oct. 30, 2017
/PRNewswire/ -- Diamond Offshore Drilling, Inc. (NYSE: DO) today
reported the following results for the third quarter of 2017:
|
Three Months
Ended
|
|
|
|
|
Thousands of
dollars, except per share data
|
September 30,
2017
|
|
June 30,
2017
|
|
Change
|
|
Total
revenues
|
$
366,023
|
|
$
399,289
|
|
(8)
|
%
|
|
Operating
income
|
58,581
|
|
20,824
|
|
181
|
%
|
|
Adjusted operating
income
|
58,581
|
|
92,092
|
|
(36)
|
%
|
|
Net income
|
10,799
|
|
15,949
|
|
(32)
|
%
|
|
Adjusted net
income
|
33,787
|
|
62,273
|
|
(46)
|
%
|
|
Earnings per diluted
share
|
$
0.08
|
|
$
0.12
|
|
(33)
|
%
|
|
Adjusted earnings per
diluted share
|
$
0.25
|
|
$
0.45
|
|
(44)
|
%
|
"Despite the continued weakness in the offshore drilling market,
we achieved favorable third quarter results," said Marc Edwards, President and Chief Executive
Officer. "During the quarter we were able to secure additional work
for our proficient moored fleet, with new wins for the Ocean
Apex and Ocean Patriot, at rates well above cash flow
breakeven. In addition, we took proactive measures during the
quarter to further enhance our liquidity runway and better position
Diamond for the eventual recovery."
As of September 30, 2017, the
Company's total contracted backlog was $2.6
billion, which represents 20 rig years of work.
CONFERENCE CALL
A conference call to discuss Diamond Offshore's earnings results
has been scheduled for 7:30 a.m. CDT
today. A live webcast of the call will be available online on
the Company's website, www.diamondoffshore.com. Those interested in
participating in the question and answer session should dial
844-492-6043 or 478-219-0839 for international callers. The
conference ID number is 95338408. An online replay will also be
available on www.diamondoffshore.com following the call.
ABOUT DIAMOND OFFSHORE
Diamond Offshore is a leader in offshore drilling, providing
contract drilling services to the energy industry around the globe.
Additional information and access to the Company's SEC filings are
available at www.diamondoffshore.com. Diamond Offshore is owned 53%
by Loews Corporation (NYSE: L).
FORWARD-LOOKING STATEMENTS
Statements contained in this press release or made during the
above conference call that are not historical facts are
"forward-looking statements" within the meaning of the federal
securities laws. Forward-looking statements are inherently
uncertain and subject to a variety of assumptions, risks and
uncertainties that could cause actual results to differ materially
from those anticipated or expected by management of the
Company. A discussion of certain of the important risk
factors and other considerations that could materially impact these
matters as well as the Company's overall business and financial
performance can be found in the Company's reports filed with the
Securities and Exchange Commission, and readers of this press
release are urged to review those reports carefully when
considering these forward-looking statements. Copies of these
reports are available through the Company's website at
www.diamondoffshore.com. These risk factors include, among
others, risks associated with worldwide demand for drilling
services, level of activity in the oil and gas industry, renewing
or replacing expired or terminated contracts, contract
cancellations and terminations, maintenance and realization of
backlog, competition and industry fleet capacity, impairments and
retirements, operating risks, litigation and disputes, changes in
tax laws and rates, regulatory initiatives and compliance with
governmental regulations, construction of new builds, casualty
losses, and various other factors, many of which are beyond the
Company's control. Given these risk factors, investors and
analysts should not place undue reliance on forward-looking
statements. Each forward-looking statement speaks only as of
the date of this press release. The Company expressly
disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statement to reflect
any change in the Company's expectations with regard thereto or any
change in events, conditions or circumstances on which any
forward-looking statement is based.
|
DIAMOND OFFSHORE
DRILLING, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(Unaudited)
|
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
September
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Contract
drilling
|
$
357,683
|
|
$
339,636
|
|
$
1,113,410
|
|
$
1,140,568
|
|
Revenues related to
reimbursable expenses
|
8,340
|
|
9,542
|
|
26,128
|
|
67,900
|
|
Total
revenues
|
366,023
|
|
349,178
|
|
1,139,538
|
|
1,208,468
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Contract drilling,
excluding depreciation
|
198,072
|
|
186,654
|
|
597,812
|
|
597,831
|
|
Reimbursable
expenses
|
8,220
|
|
7,965
|
|
25,488
|
|
51,283
|
|
Depreciation
|
83,281
|
|
86,473
|
|
262,492
|
|
295,729
|
|
General and
administrative
|
17,806
|
|
15,237
|
|
54,299
|
|
48,774
|
|
Impairment of
assets
|
-
|
|
-
|
|
71,268
|
|
678,145
|
|
Loss (gain) on
disposition of assets
|
63
|
|
(1,222)
|
|
(2,085)
|
|
(2,265)
|
|
Total operating
expenses
|
307,442
|
|
295,107
|
|
1,009,274
|
|
1,669,497
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
58,581
|
|
54,071
|
|
130,264
|
|
(461,029)
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Interest
income
|
776
|
|
150
|
|
1,347
|
|
592
|
|
Interest
expense
|
(28,562)
|
|
(19,032)
|
|
(83,409)
|
|
(68,704)
|
|
Foreign currency
transaction loss
|
(677)
|
|
(712)
|
|
(517)
|
|
(7,833)
|
|
Loss on extinguishment
of senior notes
|
(35,366)
|
|
-
|
|
(35,366)
|
|
-
|
|
Other, net
|
1,447
|
|
269
|
|
1,322
|
|
(11,199)
|
|
|
|
|
|
|
|
|
|
(Loss) income
before income tax benefit
|
(3,801)
|
|
34,746
|
|
13,641
|
|
(548,173)
|
|
|
|
|
|
|
|
|
|
Income tax benefit
(expense)
|
14,600
|
|
(20,819)
|
|
36,646
|
|
59,588
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
10,799
|
|
$
13,927
|
|
$
50,287
|
|
$
(488,585)
|
|
|
|
|
|
|
|
|
|
Income (loss) per
share
|
$
0.08
|
|
$
0.10
|
|
$
0.37
|
|
$
(3.56)
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
Shares of common
stock
|
137,227
|
|
137,170
|
|
137,208
|
|
137,167
|
|
Dilutive potential
shares of common stock
|
14
|
|
84
|
|
29
|
|
-
|
|
Total weighted-average
shares outstanding
|
137,241
|
|
137,254
|
|
137,237
|
|
137,167
|
|
|
|
|
|
|
|
|
|
DIAMOND OFFSHORE
DRILLING, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED RESULTS OF OPERATIONS
|
|
(Unaudited)
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
2017
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
REVENUES
|
|
|
|
|
|
|
Floaters:
|
|
|
|
|
|
|
Ultra-Deepwater
|
$
275,859
|
|
$
282,535
|
|
$
217,275
|
|
Deepwater
|
35,634
|
|
66,905
|
|
66,011
|
|
Mid-water
|
39,616
|
|
36,543
|
|
56,350
|
|
Total
Floaters
|
351,109
|
|
385,983
|
|
339,636
|
|
Jack-ups
|
6,574
|
|
6,187
|
|
-
|
|
Total Contract
Drilling Revenue
|
$
357,683
|
|
$
392,170
|
|
$
339,636
|
|
|
|
|
|
|
|
Revenues Related
to Reimbursable Expenses
|
$
8,340
|
|
$
7,119
|
|
$
9,542
|
|
|
|
|
|
|
|
CONTRACT DRILLING
EXPENSE
|
|
|
|
|
|
|
Floaters:
|
|
|
|
|
|
|
Ultra-Deepwater
|
$
139,619
|
|
$
136,661
|
|
$
124,099
|
|
Deepwater
|
27,139
|
|
31,340
|
|
36,226
|
|
Mid-water
|
17,753
|
|
15,771
|
|
17,634
|
|
Total
Floaters
|
184,511
|
|
183,772
|
|
177,959
|
|
Jack-ups
|
6,197
|
|
6,978
|
|
1,833
|
|
Other
|
7,364
|
|
5,467
|
|
6,862
|
|
Total Contract
Drilling Expense
|
$
198,072
|
|
$
196,217
|
|
$
186,654
|
|
|
|
|
|
|
|
Reimbursable
Expenses
|
$
8,220
|
|
$
6,790
|
|
$
7,965
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
|
|
|
|
|
|
Floaters:
|
|
|
|
|
|
|
Ultra-Deepwater
|
$
136,240
|
|
$
145,874
|
|
$
93,176
|
|
Deepwater
|
8,495
|
|
35,565
|
|
29,785
|
|
Mid-water
|
21,863
|
|
20,772
|
|
38,716
|
|
Total
Floaters
|
166,598
|
|
202,211
|
|
161,677
|
|
Jack-ups
|
377
|
|
(791)
|
|
(1,833)
|
|
Other
|
(7,364)
|
|
(5,467)
|
|
(6,862)
|
|
Reimbursable expenses,
net
|
120
|
|
329
|
|
1,577
|
|
Depreciation
|
(83,281)
|
|
(85,982)
|
|
(86,473)
|
|
General and
administrative expense
|
(17,806)
|
|
(19,010)
|
|
(15,237)
|
|
Impairment of
assets
|
-
|
|
(71,268)
|
|
-
|
|
(Loss) gain on
disposition of assets
|
(63)
|
|
802
|
|
1,222
|
|
Total Operating
Income
|
$
58,581
|
|
$
20,824
|
|
$
54,071
|
|
|
|
|
|
|
|
|
DIAMOND OFFSHORE
DRILLING, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited)
|
|
(In
thousands)
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
2017
|
|
2016
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
276,686
|
|
$
156,233
|
|
Accounts receivable,
net of allowance for bad debts
|
271,390
|
|
247,028
|
|
Prepaid expenses and
other current assets
|
97,803
|
|
102,146
|
|
Assets held for
sale
|
2,598
|
|
400
|
|
Total current
assets
|
648,477
|
|
505,807
|
|
|
|
|
|
Drilling and other
property and equipment, net of accumulated
|
|
|
|
|
depreciation
|
5,432,689
|
5,726,935
|
|
Other
assets
|
117,062
|
|
139,135
|
|
Total
assets
|
$
6,198,228
|
|
$
6,371,877
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Short-term
borrowings
|
$
-
|
|
$
104,200
|
|
Other current
liabilities
|
180,970
|
|
236,299
|
|
Long-term
debt
|
1,971,852
|
|
1,980,884
|
|
Deferred tax
liability
|
124,929
|
|
197,011
|
|
Other
liabilities
|
115,715
|
|
103,349
|
|
Stockholders'
equity
|
3,804,762
|
|
3,750,134
|
|
Total liabilities and
stockholders' equity
|
$
6,198,228
|
|
$
6,371,877
|
|
|
|
|
|
DIAMOND OFFSHORE
DRILLING, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
|
(In
thousands)
|
|
|
|
|
|
Nine Months
Ended
|
|
September
30,
|
|
2017
|
|
2016
|
|
Operating
activities:
|
|
|
|
|
Net income
(loss)
|
$
50,287
|
|
$
(488,585)
|
|
Adjustments to
reconcile net income (loss) to net cash
|
|
|
|
|
provided by operating
activities
|
|
|
|
|
Depreciation
|
262,492
|
|
295,729
|
|
Loss on impairment of
assets
|
71,268
|
|
678,145
|
|
Loss on extinguishment
of senior notes
|
35,366
|
|
-
|
|
Deferred income,
net
|
8,379
|
|
(23,381)
|
|
Deferred expenses,
net
|
32,701
|
|
(1,099)
|
|
Deferred tax
provision
|
(73,873)
|
|
(114,405)
|
|
Other
|
2,090
|
|
17,976
|
|
Net changes in
operating working capital
|
(22,075)
|
127,614
|
|
Net cash provided by
operating activities
|
366,635
|
|
491,994
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
Capital expenditures
(including rig construction)
|
(100,613)
|
|
(598,236)
|
|
Proceeds from
disposition of assets, net of disposal costs
|
4,017
|
|
169,038
|
|
Other
|
31
|
|
4,603
|
|
Net cash used in
investing activities
|
(96,565)
|
|
(424,595)
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
Redemption of senior
notes
|
(500,000)
|
|
-
|
|
Payment of debt
extinguishment costs
|
(34,395)
|
|
-
|
|
Proceeds from issuance
of senior notes
|
496,360
|
|
-
|
|
Net repayment of
short-term borrowings
|
(104,200)
|
|
(104,489)
|
|
Other
|
(7,382)
|
|
(609)
|
|
Net cash used in
financing activities
|
(149,617)
|
|
(105,098)
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
120,453
|
|
(37,699)
|
|
Cash and cash
equivalents, beginning of period
|
156,233
|
|
119,028
|
|
Cash and cash
equivalents, end of period
|
$
276,686
|
|
$
81,329
|
|
|
|
|
|
DIAMOND OFFSHORE
DRILLING, INC. AND SUBSIDIARIES
|
|
|
AVERAGE DAYRATE,
UTILIZATION AND OPERATIONAL EFFICIENCY
|
|
|
(Dayrate in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third
Quarter
|
Second
Quarter
|
Third
Quarter
|
|
|
2017
|
2017
|
2016
|
|
|
Average
Dayrate
(1)
|
Utilization
(2)
|
Operational
Efficiency
(3)
|
Average
Dayrate
(1)
|
Utilization
(2)
|
Operational
Efficiency
(3)
|
Average
Dayrate
(1)
|
Utilization
(2)
|
Operational
Efficiency
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ultra-Deepwater
Floaters
|
$407
|
61%
|
92.0%
|
$436
|
59%
|
97.1%
|
$452
|
48%
|
87.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepwater
Floaters
|
$195
|
33%
|
99.6%
|
$270
|
45%
|
96.0%
|
$303
|
34%
|
94.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mid-Water
floaters
|
$322
|
27%
|
98.8%
|
$397
|
20%
|
100.0%
|
$311
|
33%
|
98.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jack-ups
|
$75
|
95%
|
95.3%
|
$75
|
86%
|
90.8%
|
--
|
--
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fleet
Total
|
|
|
94.3%
|
|
|
96.6%
|
|
|
91.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Average dayrate is
defined as contract drilling revenue for all of the specified rigs
in our fleet per revenue-earning day. A revenue-earning day
is defined as a 24-hour period during which a rig earns a dayrate
after commencement of operations and excludes mobilization,
demobilization and contract preparation days.
|
|
|
|
(2)
|
Utilization is
calculated as the ratio of total revenue-earning days divided by
the total calendar days in the period for all specified rigs in our
fleet (including cold-stacked rigs). Our current fleet
includes three ultra-deepwater and three deepwater semisubmersible
rigs that are cold stacked.
|
|
|
|
(3)
|
Operational
efficiency is calculated as the ratio of total revenue-earning days
divided by the sum of total revenue-earning days plus the number of
days (or portions thereof) associated with unanticipated equipment
downtime.
|
Non-GAAP Financial Measures (Unaudited)
To supplement the Company's unaudited condensed consolidated
financial statements presented on a GAAP basis, this press release
provides investors with adjusted operating income, adjusted net
income and adjusted earnings per diluted share, which are non-GAAP
financial measures. Management believes that these measures
provide meaningful information about the Company's performance by
excluding certain charges that may not be indicative of the
Company's ongoing operating results. This allows investors
and others to better compare the company's financial results across
previous and subsequent accounting periods and to those of peer
companies and to better understand the long-term performance of the
Company. Non-GAAP financial measures should be considered to
be a supplement to, and not as a substitute for, or superior to,
financial measures prepared in accordance with GAAP.
In order to fully assess the financial operating results of the
Company, management believes that the results of operations
adjusted to exclude the second quarter 2017 asset impairments, the
third quarter 2017 loss on extinguishment of debt, as well as the
related tax effects thereof, are appropriate measures of the
continuing and normal operations of the Company. However,
these measures should be considered in addition to, and not as a
substitute for, or superior to, contract drilling revenue, contract
drilling expense, operating income, cash flows from operations or
other measures of financial performance prepared in accordance with
GAAP.
|
|
Three Months
Ended
|
|
|
September
30,
|
|
June
30,
|
|
|
2017
|
|
2017
|
|
Reconciliation of
As Reported Operating Income to
Adjusted Operating Income:
|
|
|
|
|
(In
thousands)
|
|
|
|
|
|
|
As reported
operating income
|
$
58,581
|
|
$
20,824
|
|
|
|
|
|
|
Impairments and other
charges:
|
|
|
|
|
Impairment of
rigs(1)
|
-
|
|
71,268
|
|
|
|
|
|
|
Adjusted operating
income
|
$
58,581
|
|
$
92,092
|
|
|
|
|
|
|
Reconciliation of
As Reported Net Income to Adjusted
Net Income:
|
|
|
|
|
(In
thousands)
|
|
|
|
|
|
|
As reported net
income
|
$
10,799
|
|
$
15,949
|
|
|
|
|
|
|
Impairments and other
charges:
|
|
|
|
|
Impairment of
rigs(1)
|
-
|
|
71,268
|
|
Loss on extinguishment
of senior notes (2)
|
35,366
|
|
-
|
|
|
|
|
|
|
Tax effect of
impairments and other charges:
|
|
|
|
|
Impairment of rigs
(3)
|
-
|
|
(24,944)
|
|
Loss on extinguishment
of senior notes (4)
|
(12,378)
|
|
-
|
|
|
|
|
|
|
Adjusted net
income
|
$
33,787
|
|
$
62,273
|
|
|
|
|
|
|
Three Months
Ended
|
|
September
30,
|
|
June
30,
|
|
2017
|
|
2017
|
|
Reconciliation of
As Reported Income per Diluted Share
to Adjusted Earnings per Diluted Share:
|
|
|
|
|
|
|
|
|
As reported income
per diluted share
|
$
0.08
|
|
$
0.12
|
|
Impairments and other
charges:
|
|
|
|
|
Impairment of rigs
(1)
|
-
|
|
0.51
|
|
Loss on extinguishment
of senior notes (2)
|
0.26
|
|
-
|
|
|
|
|
|
Tax effect of
impairments and other charges:
|
|
|
|
|
Impairment of rigs
(3)
|
-
|
|
(0.18)
|
|
Loss on extinguishment
of senior notes (4)
|
(0.09)
|
|
-
|
|
|
|
|
|
Adjusted earnings per
diluted share
|
$
0.25
|
|
$
0.45
|
|
|
|
|
|
(1)
|
Represents the
aggregate amount of impairment loss recognized during the second
quarter of 2017 related to two semisubmersible drilling
rigs.
|
|
(2)
|
Represents the loss
recognized during the third quarter of 2017 related to the
redemption of our 5.875% senior notes due 2019.
|
|
(3)
|
Represents the income
tax effect of the aggregate impairment loss recognized in the
second quarter of 2017. The income tax effect of the
impairment loss has been calculated on a discrete tax basis,
utilizing the statutory tax rates for the applicable tax
jurisdictions of the rig-owning companies. We believe that this
approach provides investors and others with useful information
regarding the actual tax impact of these transactions when the
appropriate tax returns are filed with the taxing
authorities.
|
|
(4)
|
Represents the income
tax effect of the loss on extinguishment of the 2019 senior notes
recognized in the third quarter of 2017. The income tax
effect of the loss was calculated using the U.S. corporate tax
rate.
|
Contact:
Samir Ali
Sr. Director, Investor Relations
& Corporate Development
(281) 647-4035
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SOURCE Diamond Offshore Drilling, Inc.