- Awarded $212 million in New
Contracts
- Ocean GreatWhite Completes Reactivation and Commences
Contract
- Performance Bonus Earned by Senegal Rigs for Third
Consecutive Quarter
- Revenue and Adjusted EBITDA increased compared to the
4th quarter 2022
HOUSTON, May 8, 2023
/PRNewswire/ -- Diamond Offshore Drilling, Inc. (NYSE: DO) today
reported the following results for the first quarter of 2023:
|
Three Months
Ended
|
|
Thousands of
dollars, except per share data
|
March 31,
2023
|
|
|
December 31,
2022
|
|
Total
revenues
|
$
|
232,021
|
|
|
$
|
223,264
|
|
Operating
loss
|
|
(4,960)
|
|
|
|
(12,191)
|
|
Adjusted
EBITDA
|
|
21,733
|
|
|
|
12,480
|
|
Net income
(loss)
|
|
7,229
|
|
|
|
(52,438)
|
|
Income (loss) per
diluted share
|
$
|
0.07
|
|
|
$
|
(0.52)
|
|
Diamond Offshore announced contract awards for the
7th generation drillship Ocean BlackHawk in the
U.S. Gulf of Mexico and the harsh
environment semisubmersibles, Ocean Patriot, Ocean Endeavor and
Ocean GreatWhite in the U.K. North Sea. The $212 million in contract awards for the Company
is in addition to the $1.6 billion of
backlog reported as of April 1,
2023.
Bernie Wolford, Jr., President
and Chief Executive Officer of Diamond Offshore, stated "Securing
work at significantly improved dayrates with quality customers
further demonstrates the value our crews and assets are delivering.
These awards reflect the continued strength of both the drillship
and semisubmersible markets and our ability to capture meaningful
upside as our rigs become available."
The Ocean BlackHawk has been awarded a one-year contract
with a one-year priced option with Anadarko Petroleum Corporation,
a wholly-owned subsidiary of Occidental, in the U.S. Gulf of
Mexico. The contract is expected to commence in the fourth
quarter of 2023.
In the U.K. North Sea, the Ocean Patriot has secured a
two-well contract. The contract is expected to commence in
the second half of the third quarter. Wolford added, "A
potential second new contract currently under negotiation would
fill out the remaining availability in 2023 and keep the rig
contracted through the winter season." The Ocean
Endeavor has been awarded an extension covering two wells with
an estimated duration of 120 days with its current client.
The contract is expected to commence in early November 2023.
Further, the Ocean GreatWhite had its first option well
exercised by its current client with an estimated duration of 60
days. The option well is expected to commence in mid-January 2024 after completion of the
initial five-well firm period. There are priced options
remaining for up to seven additional wells.
First Quarter Results
Contract drilling revenue for the first quarter totaled
$232 million compared to $223 million in the fourth quarter of 2022. The
increase in revenue quarter-over-quarter was primarily driven by
the Ocean BlackHornet commencing its second option period
with bp at a higher dayrate. Results for the first quarter also
reflect the completion of the reactivation of the Ocean
GreatWhite and commencement of its contract in the North Sea
near the end of March.
Contract drilling expense for the first quarter decreased to
$173 million, compared to
$178 million in the prior quarter,
largely due to the Ocean Onyx being cold-stacked for the
entire quarter.
General and administrative expenses were $20 million in the first quarter compared to
$17 million in the prior
quarter. The increase was primarily attributable to higher
personnel costs and professional fees.
Tax benefit for the first quarter was $26
million as compared to a tax expense of $26 million in the prior quarter. The tax
benefit recorded in the first quarter is based on the computation
and application of the Company's annual effective tax rate in
accordance with U.S. GAAP accounting standards, adjusted for
discrete items. The fourth quarter tax provision was
attributable to the lack of tax benefit on losses in certain
jurisdictions as well as the increase in certain tax reserves for
potential tax exposures.
Operational Highlights
The reactivation of the Ocean GreatWhite was completed in
the first quarter, and the rig commenced an approximate 300-day
contract with bp, its first contract award since stacking in 2020.
The Ocean BlackRhino, operating in Senegal, earned a performance bonus from
Woodside Energy, marking the third consecutive quarter during which
the Company's Senegal rigs earned
a bonus. The Ocean Endeavor returned to work for Shell in
the North Sea after completing its shipyard stay for its special
hull survey and structural upgrades.
Revenue efficiency for the quarter remained level at
approximately 96%, demonstrating consistent and efficient
operations.
Also during the quarter, the Company engaged a broker to assist
in evaluating the potential sale of the Ocean Monarch, a
deepwater semisubmersible rig, which is currently cold stacked. The
rig is reported as "Asset Held for Sale" on the Company's balance
sheet.
Outlook
Commenting on the outlook for the offshore drilling market,
Wolford concluded, "The market exhibits the characteristics
underpinning the continuation of the broad based upcycle, as
demonstrated by our recent fixtures for both drillships and
semisubmersibles across multiple regions and tendering activity for
longer term prospects. As we move through 2023 and into 2024, our
EBITDA and cash flow from operations should continue to improve
quarter over quarter, further strengthening Diamond's financial
position."
CONFERENCE CALL
A conference call to discuss Diamond Offshore's earnings results
has been scheduled for 8:00 a.m. CDT on
Tuesday, May 9, 2023. A live webcast of the call will
be available online on the Company's website,
www.diamondoffshore.com. A copy of the slide
presentation used in connection with the conference call is
available on the investor relations section of the Company's
website under Calendar of Events. 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 during 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
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2023
|
|
|
2022
|
|
Revenues:
|
|
|
|
|
|
|
Contract
drilling
|
|
$
|
214,383
|
|
|
$
|
207,752
|
|
Revenues related to
reimbursable expenses
|
|
|
17,638
|
|
|
|
15,512
|
|
Total
revenues
|
|
|
232,021
|
|
|
|
223,264
|
|
Operating
expenses:
|
|
|
|
|
|
|
Contract drilling,
excluding depreciation
|
|
|
173,490
|
|
|
|
178,363
|
|
Reimbursable
expenses
|
|
|
17,213
|
|
|
|
15,030
|
|
Depreciation
|
|
|
27,906
|
|
|
|
24,764
|
|
General and
administrative
|
|
|
19,585
|
|
|
|
17,391
|
|
Gain on disposition of
assets
|
|
|
(1,213)
|
|
|
|
(93)
|
|
Total operating
expenses
|
|
|
236,981
|
|
|
|
235,455
|
|
Operating
loss
|
|
|
(4,960)
|
|
|
|
(12,191)
|
|
Other income
(expense):
|
|
|
|
|
|
|
Interest
income
|
|
|
7
|
|
|
|
6
|
|
Interest
expense
|
|
|
(12,040)
|
|
|
|
(11,631)
|
|
Foreign currency
transaction loss
|
|
|
(1,271)
|
|
|
|
(2,738)
|
|
Other, net
|
|
|
(152)
|
|
|
|
(220)
|
|
Loss before income
tax benefit (expense)
|
|
|
(18,416)
|
|
|
|
(26,774)
|
|
Income tax benefit
(expense)
|
|
|
25,645
|
|
|
|
(25,664)
|
|
Net income
(loss)
|
|
$
|
7,229
|
|
|
$
|
(52,438)
|
|
Income (loss) per
share, Basic and Diluted
|
|
$
|
0.07
|
|
|
$
|
(0.52)
|
|
Weighted-average
shares outstanding, Basic
|
|
|
101,331
|
|
|
|
101,170
|
|
Weighted-average
shares outstanding, Diluted
|
|
|
103,936
|
|
|
|
101,170
|
|
DIAMOND OFFSHORE
DRILLING, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited)
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2023
|
|
|
2022
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
18,552
|
|
|
$
|
63,041
|
|
Restricted
cash
|
|
|
22,776
|
|
|
|
34,293
|
|
Accounts receivable,
net of allowance for credit losses
|
|
|
182,018
|
|
|
|
172,053
|
|
Prepaid expenses and
other current assets
|
|
|
60,633
|
|
|
|
48,695
|
|
Asset held for
sale
|
|
|
1,000
|
|
|
|
—
|
|
Total current
assets
|
|
|
284,979
|
|
|
|
318,082
|
|
Drilling and other
property and equipment, net of
|
|
|
|
|
|
|
accumulated
depreciation
|
|
|
1,140,800
|
|
|
|
1,141,908
|
|
Other assets
|
|
|
85,350
|
|
|
|
67,966
|
|
Total
assets
|
|
$
|
1,511,129
|
|
|
$
|
1,527,956
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Total current
liabilities
|
|
$
|
259,343
|
|
|
$
|
261,661
|
|
Long-term
debt
|
|
|
345,750
|
|
|
|
360,644
|
|
Noncurrent finance
lease liabilities
|
|
|
126,983
|
|
|
|
131,393
|
|
Deferred tax
liability
|
|
|
1,394
|
|
|
|
700
|
|
Other
liabilities
|
|
|
86,822
|
|
|
|
93,888
|
|
Stockholders'
equity
|
|
|
690,837
|
|
|
|
679,670
|
|
Total liabilities and
stockholders' equity
|
|
$
|
1,511,129
|
|
|
$
|
1,527,956
|
|
DIAMOND OFFSHORE
DRILLING, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
March 31,
|
|
|
|
2023
|
|
Operating
activities:
|
|
|
|
Net loss
|
|
$
|
7,229
|
|
Adjustments to
reconcile net loss to net cash used in
operating activities:
|
|
|
|
Depreciation
|
|
|
27,906
|
|
Gain on disposition of
assets
|
|
|
(1,213)
|
|
Deferred tax
provision
|
|
|
(14,457)
|
|
Stock-based
compensation expense
|
|
|
4,414
|
|
Contract liabilities,
net
|
|
|
297
|
|
Contract assets,
net
|
|
|
(270)
|
|
Deferred contract
costs, net
|
|
|
(2,560)
|
|
Other assets,
noncurrent
|
|
|
(400)
|
|
Other liabilities,
noncurrent
|
|
|
1,883
|
|
Other
|
|
|
706
|
|
Net changes in
operating working capital
|
|
|
(31,712)
|
|
Net cash used in
operating activities
|
|
|
(8,177)
|
|
Investing
activities:
|
|
|
|
Capital
expenditures
|
|
|
(29,413)
|
|
Proceeds from
disposition of assets, net of disposal costs
|
|
|
663
|
|
Net cash used in
investing activities
|
|
|
(28,750)
|
|
Financing
activities:
|
|
|
|
Repayment of borrowings
under credit facility
|
|
|
(15,000)
|
|
Principal payments of
finance lease liabilities
|
|
|
(4,079)
|
|
Net cash used in
financing activities
|
|
|
(19,079)
|
|
Net change in cash,
cash equivalents and restricted cash
|
|
|
(56,006)
|
|
Cash, cash equivalents
and restricted cash, beginning of period
|
|
|
97,334
|
|
Cash, cash equivalents
and restricted cash, end of period
|
|
$
|
41,328
|
|
DIAMOND OFFSHORE
DRILLING, INC. AND SUBSIDIARIES
|
AVERAGE DAYRATE,
UTILIZATION AND OPERATIONAL EFFICIENCY
|
(Dayrate in
thousands)
|
|
|
|
|
|
|
|
|
TOTAL
FLEET
|
First
Quarter
|
Fourth
Quarter
|
2023
|
2022
|
Average Dayrate
(1)
|
|
Utilization
(2)
|
Revenue
Efficiency
(3)
|
Average Dayrate
(1)
|
|
Utilization
(2)
|
Revenue
Efficiency
(3)
|
|
|
|
|
|
|
|
|
$
|
272
|
|
63 %
|
95.9 %
|
$
|
249
|
|
65 %
|
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 Benefit (Expense) to Adjusted
EBITDA:
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
As reported loss
before income tax benefit (expense)
|
$
|
(18,416)
|
|
|
$
|
(26,774)
|
|
|
Interest
expense
|
|
12,040
|
|
|
|
11,631
|
|
|
Interest
income
|
|
(7)
|
|
|
|
(6)
|
|
|
Foreign currency
transaction loss
|
|
1,271
|
|
|
|
2,738
|
|
|
Depreciation
|
|
27,906
|
|
|
|
24,764
|
|
|
Gain on disposition of
assets
|
|
(1,213)
|
|
|
|
(93)
|
|
|
Other, net
|
|
152
|
|
|
|
220
|
|
Adjusted
EBITDA
|
$
|
21,733
|
|
|
$
|
12,480
|
|
Contact:
Kevin Bordosky
Senior Director, Investor Relations
(281) 647-4035
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SOURCE Diamond Offshore Drilling, Inc.