- Added $482 Million of Backlog in
Fourth Quarter
- Earned Sixth Performance Bonus in Senegal
- Progressed Ocean GreatWhite Reactivation
HOUSTON, Feb. 27,
2023 /PRNewswire/ -- Diamond Offshore Drilling, Inc.
(NYSE: DO) today reported the following results for the fourth
quarter of 2022:
|
Three Months
Ended
|
|
Thousands of
dollars, except per share data
|
December 31,
2022
|
|
|
September 30,
2022
|
|
Total
revenues
|
$
|
223,264
|
|
|
$
|
226,073
|
|
Operating
loss
|
|
(12,191)
|
|
|
|
(7,575)
|
|
Adjusted
EBITDA
|
|
12,480
|
|
|
|
18,421
|
|
Net (loss)
income
|
|
(52,438)
|
|
|
|
5,510
|
|
(Loss) income per
diluted share
|
$
|
(0.52)
|
|
|
$
|
0.05
|
|
Bernie Wolford, Jr., President
and Chief Executive Officer, stated "Diamond delivered another
strong operational quarter with 96.4% revenue efficiency and
industry-leading safety performance. This completes a strong year
in which our overall revenue efficiency was just under 94% and our
safety performance beat industry averages by a large margin. I
would like to thank the entire Diamond team for continuing to
deliver for our customers, enabling us to strengthen our
relationships and favorably positioning the Company for future
contract awards.
"We finished the year with approximately $1.8 billion, or 17.6 rig years of backlog,
including $482 million added during
the fourth quarter, and importantly we will have repricing
opportunities for two high-specification drillships and two
semisubmersibles in the next 12 months."
Fourth Quarter Results
Contract drilling revenue for the fourth quarter, excluding
reimbursable revenue, totaled $208
million compared to $190
million in the third quarter of 2022. The increase in
revenue was due to a full quarter of operation in Senegal for the Ocean BlackHawk, the
Ocean BlackLion operating for a full quarter at its higher
dayrate, and the Vela going on contract in the fourth
quarter. The increased revenue was partially offset by reduced
revenues from the Ocean Onyx, which was cold stacked during
the quarter, and the Ocean Endeavor which was in the
shipyard for repairs, regulatory surveys, and steel renewals.
Contract drilling expense as a percentage of revenue remained
relatively flat compared to the prior quarter despite expenses
associated with the reactivation of the Ocean GreatWhite,
the Vela commencing its maiden contract under Diamond
management, and the Ocean Endeavor being in shipyard for two
months of the quarter.
Adjusted EBITDA for the fourth quarter was $12.5 million compared to $18.4 million in the prior quarter, primarily as
a result of the reactivation expenses associated with the Ocean
GreatWhite. Net loss for the fourth quarter was $52.4 million compared to net income of
$5.5 million in the third quarter.
The decrease in net income was largely a result of a swing in
discrete, non-cash tax adjustments of approximately $49 million quarter to quarter. Tax expense
during the fourth quarter was $26
million, primarily a result of the mix of the Company's
quarterly earnings and the lack of tax benefit on losses in certain
jurisdictions as well as the increase in certain tax reserves for
potential tax exposures. The tax benefit during the third quarter
was $23 million, primarily due to the
recognition of certain deferred tax assets, the release of a
valuation allowance, and the reversal of tax reserves after the
expiration of the applicable statute of limitations in certain
jurisdictions.
Free cash flow during the fourth quarter was $15 million compared to negative free cash flow
during the third quarter of $30
million, primarily due to changes in working capital.
Operational Highlights
During the fourth quarter, the Ocean BlackHawk and
Ocean BlackRhino combined efforts to earn a well-based
performance bonus for the second consecutive quarter. This marks
the sixth performance bonus earned by a combination of these rigs
working on the Woodside Energy campaign in Senegal. The Company's owned and managed fleet
continued to perform well during the quarter, achieving a revenue
efficiency of 96.4%. During the quarter, the Company made good
progress on the reactivation of the Ocean GreatWhite. The
rig is currently undergoing acceptance testing and is expected to
commence its contract in March.
Wolford concluded, "Diamond's performance continues to
demonstrate our ability to deliver operational excellence to our
customers in an efficient and industry-leading safe manner and
positions us well to be a key beneficiary of this burgeoning
upcycle in deepwater offshore drilling."
CONFERENCE CALL
A conference call to discuss Diamond Offshore's earnings results
has been scheduled for 8:00 a.m. CDT on Tuesday, February 28, 2023. A live webcast of the
call will be available online on the Company's website,
www.diamondoffshore.com. Participants who want to join the
call via telephone or want to participate in the
question-and-answer session may register here to receive the
dial-in numbers and unique PIN to access the call. 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
innovation, thought leadership and contract drilling services to
solve complex deepwater challenges around the globe. Additional
information and access to the Company's SEC filings are available
at http://www.diamondoffshore.com/.
FORWARD-LOOKING STATEMENTS
Statements contained in this press release and made in the
referenced conference call that are not historical facts are
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking
statements include, but are not limited to, any statement that may
project, indicate or imply future results, events, performance or
achievements, including statements relating to future financial
results; future recovery in the offshore contract drilling
industry; expectations regarding the Company's plans, strategies
and opportunities; expectations regarding the Company's business or
financial outlook; future borrowing capacity and liquidity;
expected utilization, dayrates, revenues, operating expenses, rig
commitments and availability, cash flows, contract status, terms
and duration, contract backlog, capital expenditures, insurance,
financing and funding; the effect, impact, potential duration and
other implications of the ongoing COVID-19 pandemic; the offshore
drilling market, including supply and demand, customer drilling
programs, repricings, stacking of rigs, effects of new rigs on the
market and effect of the volatility of commodity prices; expected
work commitments, awards and contracts; future operations;
increasing regulatory complexity; general market, business and
industry conditions, trends and outlook; and general political
conditions, including political tensions, conflicts and war.
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 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 Item 1A "Risk Factors" in the
Company's most recent annual report on Form 10-K and the Company's
other 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,
levels 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, permits and
approvals for drilling operations, the COVID-19 pandemic and
related disruptions to the global economy, supply chain and normal
business operations across sectors and countries, changes in tax
laws and rates, regulatory initiatives and compliance with
governmental regulations, casualty losses, and various other
factors, many of which are beyond the Company's control. Given
these risk factors and other considerations, 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, and 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
|
|
|
|
December
31,
|
|
|
September
30,
|
|
|
|
2022
|
|
|
2022
|
|
Revenues:
|
|
|
|
|
|
|
Contract
drilling
|
|
$
|
207,752
|
|
|
$
|
189,861
|
|
Revenues related to
reimbursable expenses
|
|
|
15,512
|
|
|
|
36,212
|
|
Total
revenues
|
|
|
223,264
|
|
|
|
226,073
|
|
Operating
expenses:
|
|
|
|
|
|
|
Contract drilling,
excluding depreciation
|
|
|
178,363
|
|
|
|
155,567
|
|
Reimbursable
expenses
|
|
|
15,030
|
|
|
|
35,765
|
|
Depreciation
|
|
|
24,764
|
|
|
|
26,069
|
|
General and
administrative
|
|
|
17,391
|
|
|
|
16,320
|
|
Gain on disposition of
assets
|
|
|
(93)
|
|
|
|
(73)
|
|
Total operating
expenses
|
|
|
235,455
|
|
|
|
233,648
|
|
Operating
loss
|
|
|
(12,191)
|
|
|
|
(7,575)
|
|
Other income
(expense):
|
|
|
|
|
|
|
Interest
income
|
|
|
6
|
|
|
|
11
|
|
Interest
expense
|
|
|
(11,631)
|
|
|
|
(10,364)
|
|
Foreign currency
transaction (loss) gain
|
|
|
(2,738)
|
|
|
|
237
|
|
Other, net
|
|
|
(220)
|
|
|
|
172
|
|
Loss before income
tax (expense) benefit
|
|
|
(26,774)
|
|
|
|
(17,519)
|
|
Income tax (expense)
benefit
|
|
|
(25,664)
|
|
|
|
23,029
|
|
Net (loss)
income
|
|
$
|
(52,438)
|
|
|
$
|
5,510
|
|
(Loss) income per
share, Basic and Diluted
|
|
$
|
(0.52)
|
|
|
$
|
0.05
|
|
Weighted-average
shares outstanding, Basic
|
|
|
101,170
|
|
|
|
100,875
|
|
Weighted-average
shares outstanding, Diluted
|
|
|
101,170
|
|
|
|
102,273
|
|
DIAMOND OFFSHORE
DRILLING, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited)
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
2022
|
|
|
2021
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
63,041
|
|
|
$
|
38,388
|
|
Restricted
cash
|
|
|
34,293
|
|
|
|
24,341
|
|
Accounts receivable,
net of allowance for credit losses
|
|
|
172,053
|
|
|
|
146,335
|
|
Prepaid expenses and
other current assets
|
|
|
48,695
|
|
|
|
61,440
|
|
Asset held for
sale
|
|
|
-
|
|
|
|
1,000
|
|
Total current
assets
|
|
|
318,082
|
|
|
|
271,504
|
|
Drilling and other
property and equipment, net of
|
|
|
|
|
|
|
accumulated
depreciation
|
|
|
1,141,908
|
|
|
|
1,175,895
|
|
Other assets
|
|
|
67,966
|
|
|
|
84,041
|
|
Total
assets
|
|
$
|
1,527,956
|
|
|
$
|
1,531,440
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Other current
liabilities
|
|
$
|
261,661
|
|
|
$
|
232,762
|
|
Long-term
debt
|
|
|
360,644
|
|
|
|
266,241
|
|
Noncurrent finance
lease liabilities
|
|
|
131,393
|
|
|
|
148,358
|
|
Deferred tax
liability
|
|
|
700
|
|
|
|
1,626
|
|
Other
liabilities
|
|
|
93,888
|
|
|
|
114,748
|
|
Stockholders'
equity
|
|
|
679,670
|
|
|
|
767,705
|
|
Total liabilities and
stockholders' equity
|
|
$
|
1,527,956
|
|
|
$
|
1,531,440
|
|
DIAMOND OFFSHORE
DRILLING, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
|
|
December
31,
|
|
|
|
2022
|
|
Operating
activities:
|
|
|
|
Net loss
|
|
$
|
(103,211)
|
|
Adjustments to
reconcile net loss to net cash used in
operating activities:
|
|
|
|
Depreciation
|
|
|
103,478
|
|
Gain on disposition of
assets
|
|
|
(4,895)
|
|
Deferred tax
provision
|
|
|
479
|
|
Stock-based
compensation expense
|
|
|
20,159
|
|
Contract liabilities,
net
|
|
|
(36,292)
|
|
Contract assets,
net
|
|
|
1,694
|
|
Deferred contract
costs, net
|
|
|
(1,594)
|
|
Collateral
deposits
|
|
|
17,479
|
|
Other assets,
noncurrent
|
|
|
(2,950)
|
|
Other liabilities,
noncurrent
|
|
|
115
|
|
Other
|
|
|
2,256
|
|
Net changes in
operating working capital
|
|
|
12,146
|
|
Net cash provided by
operating activities
|
|
|
8,864
|
|
|
|
|
|
Investing
activities:
|
|
|
|
Capital
expenditures
|
|
|
(60,023)
|
|
Proceeds from
disposition of assets, net of disposal costs
|
|
|
5,959
|
|
Deposits on asset
sales
|
|
|
1,670
|
|
Net cash used in
investing activities
|
|
|
(52,394)
|
|
|
|
|
|
Financing
activities:
|
|
|
|
Borrowings under credit
facility
|
|
|
94,000
|
|
Principal payments of
finance lease liabilities
|
|
|
(15,865)
|
|
Net cash provided by
financing activities
|
|
|
78,135
|
|
|
|
|
|
Net change in cash,
cash equivalents and restricted cash
|
|
|
34,605
|
|
Cash, cash equivalents
and restricted cash, beginning of period
|
|
|
62,729
|
|
Cash, cash equivalents
and restricted cash, end of period
|
|
$
|
97,334
|
|
DIAMOND OFFSHORE
DRILLING, INC. AND SUBSIDIARIES
|
AVERAGE DAYRATE,
UTILIZATION AND OPERATIONAL EFFICIENCY
|
(Dayrate in
thousands)
|
|
|
|
|
|
|
|
|
TOTAL
FLEET
|
Fourth
Quarter
|
Third
Quarter
|
2022
|
2022
|
Average Dayrate
(1)
|
|
Utilization
(2)
|
Revenue
Efficiency $
(3)
|
Average Dayrate
(1)
|
|
Utilization
(2)
|
Revenue
Efficiency
$
(3)
|
|
|
|
|
|
|
|
|
$
|
249
|
|
65 %
|
96.4 %
|
$
|
235
|
|
68 %
|
96.4 %
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Average dayrate is
defined as total contract drilling revenue for all of the rigs in
our fleet (including managed rigs) 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 rigs in our fleet
(including managed and cold-stacked rigs).
|
(3)
|
Revenue Efficiency $ is
calculated as actual contract drilling revenue earned divided by
potential revenue, assuming a full dayrate is earned.
|
Non-GAAP Financial Measures (Unaudited)
To supplement the Company's unaudited condensed consolidated
financial statements presented on a basis in conformity with
generally accepted accounting principles in the United States (GAAP), this press release
provides investors with adjusted earnings before interest, taxes
and depreciation and amortization (or Adjusted EBITDA), which is a
non-GAAP financial measure. Management believes that this measure
provides meaningful information about the Company's performance by
excluding certain items 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 a supplement to,
and not as a substitute for, or superior to, contract drilling
revenue, contract drilling expense, operating income or loss, cash
flows from operations or other measures of financial performance
prepared in accordance with GAAP.
Reconciliation of
Loss Before Income Tax (Expense) Benefit to Adjusted
EBITDA:
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
December
31,
|
|
|
September
30,
|
|
|
|
2022
|
|
|
2022
|
|
|
|
|
|
|
|
|
As reported loss
before income tax (expense) benefit
|
$
|
(26,774)
|
|
|
$
|
(17,519)
|
|
|
Interest
expense
|
|
11,631
|
|
|
|
10,364
|
|
|
Interest
income
|
|
(6)
|
|
|
|
(11)
|
|
|
Foreign currency
transaction loss (gain)
|
|
2,738
|
|
|
|
(237)
|
|
|
Depreciation
|
|
24,764
|
|
|
|
26,069
|
|
|
Gain on disposition of
assets
|
|
(93)
|
|
|
|
(73)
|
|
|
Other, net
|
|
220
|
|
|
|
(172)
|
|
Adjusted
EBITDA
|
$
|
12,480
|
|
|
$
|
18,421
|
|
Contact:
Kevin Bordosky
Senior Director, Investor Relations
(281) 647-4035
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SOURCE Diamond Offshore Drilling, Inc.