- Backlog of $229 Million
Added During Second Quarter
- Ocean GreatWhite Completes Second Well
Post-Reactivation; First Option Exercised
- Ocean BlackHawk Completes Senegal Contract;
Commences Shipyard Project
- Ocean Apex Completes Shipyard Project; Mobilizing to
Location Offshore Australia
HOUSTON, Aug. 7, 2023
/PRNewswire/ -- Diamond Offshore Drilling, Inc. (NYSE: DO)
today reported the following results for the second quarter of
2023:
|
Three Months
Ended
|
|
Thousands of
dollars, except per share data
|
June 30,
2023
|
|
|
March 31,
2023
|
|
Total
revenues
|
$
|
281,563
|
|
|
$
|
232,021
|
|
Operating income
(loss)
|
|
10,240
|
|
|
|
(4,960)
|
|
Adjusted
EBITDA
|
|
36,213
|
|
|
|
21,733
|
|
Net income
|
|
238,783
|
|
|
|
7,229
|
|
Income per diluted
share
|
$
|
2.29
|
|
|
$
|
0.07
|
|
Bernie Wolford, Jr., President and Chief Executive Officer
of Diamond Offshore, stated "Our clients continue to commit
additional capital to offshore drilling and make critical
investments in long-lead subsea equipment. This coupled with strong
commodity demand outlooks and favorable economics for deepwater
projects are setting the stage for sustainable demand for our
drilling services as momentum continues to build in this cycle.
During the quarter, we secured term work for the Ocean
BlackHawk and added a two-well contract for the Ocean
Patriot, both at higher dayrates. We also extended the
Ocean Endeavor by two wells, and our customers exercised
options for the Ocean GreatWhite and the Ocean
BlackRhino. These wins, which total more than $229 million in additional backlog, provide
increased visibility to our 2024 revenue stream and are a testament
to our team's performance.
We now have $1.6 billion of
backlog with notable average day-rate improvement as we transition
to new contracts in the back half of this year."
Second Quarter Results
Contract drilling revenue for the second quarter totaled
$282 million compared to $232 million in the first quarter of 2023. The
increase in revenue quarter-over-quarter was primarily driven by a
full quarter's utilization for the Ocean Endeavor and the
Ocean GreatWhite, and the Ocean BlackHornet
benefiting from a full quarter at its higher dayrate, partially
offset by the Ocean Apex being in the shipyard the entire
quarter for its special periodic survey and upgrades. Results for
the second quarter also included $12.2
million in revenue associated with the previously announced
termination of the Ocean Patriot's contract in the North
Sea.
Contract drilling expense for the second quarter increased to
$213 million, compared to
$173 million in the prior quarter,
largely due to higher charter costs for the Company's managed rigs
as a result of higher dayrates and more revenue earning days in the
quarter and the Ocean Apex incurring additional costs
associated with its shipyard activity in the quarter.
General and administrative expenses were $17 million in the second quarter compared to
$20 million in the prior quarter. The
decrease was primarily attributable to lower personnel costs and
professional fees.
Tax benefit for the second quarter was $243 million as compared to $26 million in the prior quarter. The unusually
high tax benefit recorded in the second quarter reflects the
results of the computation and application of the Company's annual
effective tax rate in accordance with U.S. GAAP accounting
standards, adjusted for discrete items. We expect our tax
expense to normalize and the recorded benefit to reverse by year
end.
Operational Highlights
Operationally, the Company's rigs continued to perform
exceptionally well, achieving revenue efficiency of at least 96%
for the fifth consecutive quarter. This is a notable achievement
with the Ocean GreatWhite having been reactivated in
March 2023 and the Ocean
Endeavor coming back online following its special periodic
survey. In addition, the Ocean BlackHawk successfully
completed its campaign in Senegal
in early July and has mobilized to Las
Palmas for its upgrades and preparation for its return to
the Gulf of Mexico.
CONFERENCE CALL
A conference call to discuss Diamond Offshore's earnings results
has been scheduled for 8:00 a.m. CDT on
Tuesday, August 8, 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, tax rates and accounting
treatment, contract status, terms and duration, contract backlog,
capital expenditures, insurance, financing and funding; the effect,
impact, potential duration and other implications of the 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, including Russia's invasion of Ukraine and related sanctions. 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
|
|
|
|
June 30,
|
|
|
March
31,
|
|
|
|
2023
|
|
|
2023
|
|
Revenues:
|
|
|
|
|
|
|
Contract
drilling
|
|
$
|
264,990
|
|
|
$
|
214,383
|
|
Revenues related to
reimbursable expenses
|
|
|
16,573
|
|
|
|
17,638
|
|
Total
revenues
|
|
|
281,563
|
|
|
|
232,021
|
|
Operating
expenses:
|
|
|
|
|
|
|
Contract drilling,
excluding depreciation
|
|
|
212,947
|
|
|
|
173,490
|
|
Reimbursable
expenses
|
|
|
15,579
|
|
|
|
17,213
|
|
Depreciation
|
|
|
27,906
|
|
|
|
27,906
|
|
General and
administrative
|
|
|
16,824
|
|
|
|
19,585
|
|
Gain on disposition of
assets
|
|
|
(1,933)
|
|
|
|
(1,213)
|
|
Total operating
expenses
|
|
|
271,323
|
|
|
|
236,981
|
|
Operating income
(loss)
|
|
|
10,240
|
|
|
|
(4,960)
|
|
Other income
(expense):
|
|
|
|
|
|
|
Interest
income
|
|
|
5
|
|
|
|
7
|
|
Interest
expense
|
|
|
(12,755)
|
|
|
|
(12,040)
|
|
Foreign currency
transaction loss
|
|
|
(1,968)
|
|
|
|
(1,271)
|
|
Other, net
|
|
|
136
|
|
|
|
(152)
|
|
Loss before income
tax benefit
|
|
|
(4,342)
|
|
|
|
(18,416)
|
|
Income tax
benefit
|
|
|
243,125
|
|
|
|
25,645
|
|
Net
income
|
|
$
|
238,783
|
|
|
$
|
7,229
|
|
Income per
share
|
|
|
|
|
|
|
Basic
|
|
$
|
2.35
|
|
|
$
|
0.07
|
|
Diluted
|
|
$
|
2.29
|
|
|
$
|
0.07
|
|
Weighted-average
shares outstanding, Basic
|
|
|
101,487
|
|
|
|
101,331
|
|
Weighted-average
shares outstanding, Diluted
|
|
|
104,236
|
|
|
|
103,936
|
|
DIAMOND OFFSHORE
DRILLING, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited)
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2023
|
|
|
2022
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
29,685
|
|
|
$
|
63,041
|
|
Restricted
cash
|
|
|
14,284
|
|
|
|
34,293
|
|
Accounts receivable,
net of allowance for credit losses
|
|
|
201,080
|
|
|
|
172,053
|
|
Prepaid expenses and
other current assets
|
|
|
137,473
|
|
|
|
48,695
|
|
Asset held for
sale
|
|
|
1,000
|
|
|
|
—
|
|
Total current
assets
|
|
|
383,522
|
|
|
|
318,082
|
|
Drilling and other
property and equipment, net of
|
|
|
|
|
|
|
accumulated
depreciation
|
|
|
1,138,544
|
|
|
|
1,141,908
|
|
Other assets
|
|
|
265,704
|
|
|
|
67,966
|
|
Total
assets
|
|
$
|
1,787,770
|
|
|
$
|
1,527,956
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Total current
liabilities
|
|
$
|
257,028
|
|
|
$
|
261,661
|
|
Long-term
debt
|
|
|
365,859
|
|
|
|
360,644
|
|
Noncurrent finance
lease liabilities
|
|
|
122,499
|
|
|
|
131,393
|
|
Deferred tax
liability
|
|
|
705
|
|
|
|
700
|
|
Other
liabilities
|
|
|
108,753
|
|
|
|
93,888
|
|
Stockholders'
equity
|
|
|
932,926
|
|
|
|
679,670
|
|
Total liabilities and
stockholders' equity
|
|
$
|
1,787,770
|
|
|
$
|
1,527,956
|
|
DIAMOND OFFSHORE
DRILLING, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
June 30,
2023
|
|
|
|
|
|
Operating
activities:
|
|
|
|
Net income
|
|
$
|
246,012
|
|
Adjustments to
reconcile net income to net cash provided by
operating activities:
|
|
|
|
Depreciation
|
|
|
55,812
|
|
Gain on disposition of
assets
|
|
|
(3,146)
|
|
Deferred tax
provision
|
|
|
(200,658)
|
|
Stock-based
compensation expense
|
|
|
8,082
|
|
Contract liabilities,
net
|
|
|
(2,707)
|
|
Contract assets,
net
|
|
|
(1,980)
|
|
Deferred contract
costs, net
|
|
|
4,893
|
|
Other assets,
noncurrent
|
|
|
2,577
|
|
Other liabilities,
noncurrent
|
|
|
16,870
|
|
Other
|
|
|
1,501
|
|
Current income tax
assets
|
|
|
(85,266)
|
|
Net changes in other
operating working capital
|
|
|
(31,247)
|
|
Net cash provided by
operating activities
|
|
|
10,743
|
|
Investing
activities:
|
|
|
|
Capital
expenditures
|
|
|
(58,953)
|
|
Proceeds from
disposition of assets, net of disposal costs
|
|
|
348
|
|
Net cash used in
investing activities
|
|
|
(58,605)
|
|
Financing
activities:
|
|
|
|
Borrowings under credit
facility, net of repayments
|
|
|
5,000
|
|
Principal payments of
finance lease liabilities
|
|
|
(10,503)
|
|
Net cash used in
financing activities
|
|
|
(5,503)
|
|
Net change in cash,
cash equivalents and restricted cash
|
|
|
(53,365)
|
|
Cash, cash equivalents
and restricted cash, beginning of period
|
|
|
97,334
|
|
Cash, cash equivalents
and restricted cash, end of period
|
|
$
|
43,969
|
|
DIAMOND OFFSHORE
DRILLING, INC. AND SUBSIDIARIES
|
AVERAGE DAYRATE,
UTILIZATION AND OPERATIONAL EFFICIENCY
|
(Dayrate in
thousands)
|
|
|
|
|
|
|
|
|
TOTAL
FLEET
|
Second
Quarter
|
First
Quarter
|
2023
|
2023
|
Average Dayrate
(1)
|
|
Utilization
(2)
|
Revenue
Efficiency
(3)
|
Average Dayrate
(1)
|
|
Utilization
(2)
|
Revenue
Efficiency
(3)
|
|
|
|
|
|
|
|
|
$
|
299
|
|
70 %
|
95.8 %
|
$
|
272
|
|
63 %
|
95.9 %
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
|
|
June 30,
|
|
|
March
31,
|
|
|
|
2023
|
|
|
2023
|
|
|
|
|
|
|
|
|
As reported loss
before income tax benefit
|
$
|
(4,342)
|
|
|
$
|
(18,416)
|
|
|
Interest
expense
|
|
12,755
|
|
|
|
12,040
|
|
|
Interest
income
|
|
(5)
|
|
|
|
(7)
|
|
|
Foreign currency
transaction loss
|
|
1,968
|
|
|
|
1,271
|
|
|
Depreciation
|
|
27,906
|
|
|
|
27,906
|
|
|
Gain on disposition of
assets
|
|
(1,933)
|
|
|
|
(1,213)
|
|
|
Other, net
|
|
(136)
|
|
|
|
152
|
|
Adjusted
EBITDA
|
$
|
36,213
|
|
|
$
|
21,733
|
|
Contact:
Kevin Bordosky
Senior Director, Investor Relations
(281) 647-4035
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SOURCE Diamond Offshore Drilling, Inc.