- Awarded $240 Million in New
Contracts, including a 35-well P&A Campaign for the Ocean
Patriot
- Issued $550 Million 8.5%
Senior Secured Second Lien Notes due 2030
- 7th Performance Bonus Earned by Senegal
Rigs
- Ocean BlackHawk Mobilized to Gulf of Mexico for Q4 Contract
Commencement
- Ocean Courage Shipyard Project Commenced; Multi-year
Contract to Commence in Late Q4
HOUSTON, Nov. 6, 2023
/PRNewswire/ -- Diamond Offshore Drilling, Inc. (NYSE: DO) today
reported the following results for the third quarter of 2023:
|
Three Months
Ended
|
|
Thousands of
dollars, except per share data
|
September 30,
2023
|
|
|
June 30,
2023
|
|
Total
revenues
|
$
|
244,958
|
|
|
$
|
281,563
|
|
Operating
income
|
|
863
|
|
|
|
10,240
|
|
Adjusted
EBITDA
|
|
27,693
|
|
|
|
36,213
|
|
Net (loss)
income
|
|
(145,016)
|
|
|
|
238,783
|
|
Adjusted net (loss)
income
|
|
(138,792)
|
|
|
|
238,783
|
|
(Loss) income per
diluted share
|
$
|
(1.42)
|
|
|
$
|
2.29
|
|
Adjusted (loss) income
per diluted share
|
$
|
(1.36)
|
|
|
$
|
2.29
|
|
Bernie Wolford, Jr., President and Chief Executive Officer
of Diamond Offshore, stated "Our business continues to benefit from
improving energy industry fundamentals. As we enter the
fourth quarter, we see a continuation of positive indicators of a
strong and lasting upcycle, including growing rig demand, increased
investment in offshore upstream projects, and shrinking rig
availability. Particularly encouraging is the increased demand we
are seeing in the U.K. sector. Recently, we signed a thirty-five
well P&A campaign for the Ocean Patriot, representing
approximately three years of firm work estimated to commence in
early 2025 with up to seventeen additional P&A wells under
priced options that would add a fourth year of duration. In
addition, our customer in the U.K. exercised its second and third
options for the Ocean GreatWhite that extends its contracted term
to August 2024. We now have
$1.6 billion of backlog with notable
day-rate improvement, as we transition to new contracts.
As previously announced, we completed a refinancing transaction
that resulted in the issuance of $550
million of senior secured second lien notes at a
meaningfully lower interest rate and later maturity date than our
previously outstanding debt as well as an amended $300 million revolving credit facility. Our
balance sheet is now stronger with an improved liquidity position,
more financial and operational flexibility, and with debt
maturities extended to 2030."
Third Quarter Results
Revenue for the third quarter totaled $245 million compared to $282 million in the second quarter of 2023. The
decrease in revenue quarter-over-quarter was primarily driven by
the Ocean BlackHawk's completion of its
Senegal contract and being in
shipyard for upgrades and contract preparation work for the
duration of the quarter along with the Ocean Patriot being
between contracts, partially offset by the Ocean Apex's
return to work after completion of its second quarter shipyard
projects and special survey.
Contract drilling expense for the third quarter was $182 million, or a $31.0
million decrease from the prior quarter, largely due to
lower operating costs and the deferral of certain costs associated
with the Ocean BlackHawk's shipyard activities, as the
Company prepared the rig for its contract commencing in the fourth
quarter in the Gulf of Mexico. The
decrease in contract drilling expense in the quarter also reflected
lower repair and maintenance-related costs for the Company's owned
and managed fleet.
General and administrative expenses were $17 million in the third quarter, in line with
the prior quarter.
Third quarter results also included a $6.5 million pre-tax loss on extinguishment of
debt as a result of the retirement of all existing debt upon the
issuance of the senior secured second lien notes.
Tax expense for the third quarter was $125 million compared to a $243 million tax benefit in the prior quarter.
The tax expense in the third quarter reflects the expected
normalization of the Company's tax expense and reversal of a
portion of the previously recorded benefit. The Company expects
further normalization of its tax expense in the fourth quarter
without any meaningful impact to cash tax expense expectations for
the full year.
Operational Highlights
Operationally, the Company's rigs continued to perform well,
achieving revenue efficiency of approximately 95% across the fleet
during the quarter. This is a notable achievement given the
extensive movement of rigs in and out of shipyards and the
completion and start-up of contracts during the quarter. Of note,
the Ocean BlackHawk completed upgrades and contract
preparation work in Las Palmas and
has now mobilized to the Gulf of
Mexico, the Ocean Apex resumed its drilling program
after completion of a second quarter shipyard stay and the Ocean
Courage has now moved to Guanabara Bay after completion of a
long-term campaign to prepare for its next multi-year contract
offshore Brazil. In addition, the
Company earned a seventh bonus for efficient, injury-free
performance in Senegal as a result
of the combined efforts of the Ocean BlackHawk and Ocean
BlackRhino.
CONFERENCE CALL
A conference call to discuss Diamond Offshore's earnings results
has been scheduled for 8:00 a.m. CST on
Tuesday, November 7, 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
|
|
|
|
September 30,
|
|
|
June
30,
|
|
|
|
2023
|
|
|
2023
|
|
Revenues:
|
|
|
|
|
|
|
Contract
drilling
|
|
$
|
224,929
|
|
|
$
|
264,990
|
|
Revenues related to
reimbursable expenses
|
|
|
20,029
|
|
|
|
16,573
|
|
Total
revenues
|
|
|
244,958
|
|
|
|
281,563
|
|
Operating
expenses:
|
|
|
|
|
|
|
Contract drilling,
excluding depreciation
|
|
|
181,954
|
|
|
|
212,947
|
|
Reimbursable
expenses
|
|
|
18,662
|
|
|
|
15,579
|
|
Depreciation
|
|
|
27,785
|
|
|
|
27,906
|
|
General and
administrative
|
|
|
16,649
|
|
|
|
16,824
|
|
Gain on disposition of
assets
|
|
|
(955)
|
|
|
|
(1,933)
|
|
Total operating
expenses
|
|
|
244,095
|
|
|
|
271,323
|
|
Operating
income
|
|
|
863
|
|
|
|
10,240
|
|
Other income
(expense):
|
|
|
|
|
|
|
Interest
income
|
|
|
161
|
|
|
|
5
|
|
Interest
expense
|
|
|
(13,774)
|
|
|
|
(12,755)
|
|
Foreign currency
transaction gain (loss)
|
|
|
184
|
|
|
|
(1,968)
|
|
Loss on extinguishment
of long-term debt
|
|
|
(6,529)
|
|
|
|
—
|
|
Other, net
|
|
|
(485)
|
|
|
|
136
|
|
Loss before income
tax (expense) benefit
|
|
|
(19,580)
|
|
|
|
(4,342)
|
|
Income tax (expense)
benefit
|
|
|
(125,436)
|
|
|
|
243,125
|
|
Net (loss)
income
|
|
$
|
(145,016)
|
|
|
$
|
238,783
|
|
(Loss) Income per
share
|
|
|
|
|
|
|
Basic
|
|
$
|
(1.42)
|
|
|
$
|
2.35
|
|
Diluted
|
|
$
|
(1.42)
|
|
|
$
|
2.29
|
|
Weighted-average
shares outstanding, Basic
|
|
|
102,215
|
|
|
|
101,487
|
|
Weighted-average
shares outstanding, Diluted
|
|
|
102,215
|
|
|
|
104,236
|
|
DIAMOND OFFSHORE
DRILLING, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited)
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2023
|
|
|
2022
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
146,826
|
|
|
$
|
63,041
|
|
Restricted
cash
|
|
|
25,556
|
|
|
|
34,293
|
|
Accounts receivable,
net of allowance for credit losses
|
|
|
171,425
|
|
|
|
172,053
|
|
Prepaid expenses and
other current assets
|
|
|
136,211
|
|
|
|
48,695
|
|
Asset held for
sale
|
|
|
1,000
|
|
|
|
—
|
|
Total current
assets
|
|
|
481,018
|
|
|
|
318,082
|
|
Drilling and other
property and equipment, net of
|
|
|
|
|
|
|
accumulated
depreciation
|
|
|
1,157,337
|
|
|
|
1,141,908
|
|
Other assets
|
|
|
167,453
|
|
|
|
67,966
|
|
Total
assets
|
|
$
|
1,805,808
|
|
|
$
|
1,527,956
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Other current
liabilities
|
|
$
|
261,485
|
|
|
$
|
261,661
|
|
Long-term
debt
|
|
|
535,194
|
|
|
|
360,644
|
|
Noncurrent finance
lease liabilities
|
|
|
117,889
|
|
|
|
131,393
|
|
Deferred tax
liability
|
|
|
702
|
|
|
|
700
|
|
Other
liabilities
|
|
|
103,377
|
|
|
|
93,888
|
|
Stockholders'
equity
|
|
|
787,161
|
|
|
|
679,670
|
|
Total liabilities and
stockholders' equity
|
|
$
|
1,805,808
|
|
|
$
|
1,527,956
|
|
DIAMOND OFFSHORE
DRILLING, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
|
September 30,
|
|
|
|
2023
|
|
Operating
activities:
|
|
|
|
Net loss
|
|
$
|
100,996
|
|
Adjustments to
reconcile net loss to net cash provided by
operating
activities:
|
|
|
|
Depreciation
|
|
|
83,596
|
|
Gain on disposition of
assets
|
|
|
(4,102)
|
|
Loss on extinguishment
of debt
|
|
|
6,529
|
|
Deferred tax
provision
|
|
|
(110,651)
|
|
Stock-based
compensation expense
|
|
|
10,941
|
|
Contract liabilities,
net
|
|
|
(7,111)
|
|
Contract assets,
net
|
|
|
(4,183)
|
|
Deferred contract
costs, net
|
|
|
(4,576)
|
|
Collateral
deposits
|
|
|
(16,773)
|
|
Other assets,
noncurrent
|
|
|
3,489
|
|
Other liabilities,
noncurrent
|
|
|
12,581
|
|
Other
|
|
|
2,089
|
|
Net changes in
operating working capital
|
|
|
(52,620)
|
|
Net cash provided by
operating activities
|
|
|
20,205
|
|
Investing
activities:
|
|
|
|
Capital
expenditures
|
|
|
(99,878)
|
|
Proceeds from
disposition of assets, net of disposal costs
|
|
|
857
|
|
Net cash used in
investing activities
|
|
|
(99,021)
|
|
Financing
activities:
|
|
|
|
Issuance of $550
million 8.5% Second Lien Notes due 2030
|
|
|
550,000
|
|
Borrowings under credit
facility
|
|
|
40,000
|
|
Extinguishment of
long-term debt
|
|
|
(192,182)
|
|
Repayment of borrowings
under credit facility
|
|
|
(214,000)
|
|
Debt issuance costs and
arrangement fees
|
|
|
(15,140)
|
|
Principal payments of
finance lease liabilities
|
|
|
(14,814)
|
|
Net cash provided by
financing activities
|
|
|
153,864
|
|
Net change in cash,
cash equivalents and restricted cash
|
|
|
75,048
|
|
Cash, cash equivalents
and restricted cash, beginning of period
|
|
|
97,334
|
|
Cash, cash equivalents
and restricted cash, end of period
|
|
$
|
172,382
|
|
DIAMOND OFFSHORE DRILLING, INC. AND
SUBSIDIARIES
|
AVERAGE DAYRATE, UTILIZATION AND OPERATIONAL
EFFICIENCY
|
(Dayrate in
thousands)
|
|
|
|
|
|
|
|
|
TOTAL FLEET
|
Third Quarter
|
Second Quarter
|
2023
|
2023
|
Average Dayrate
(1)
|
|
Utilization
(2)
|
Revenue Efficiency
(3)
|
Average Dayrate
(1)
|
|
Utilization
(2)
|
Revenue Efficiency
(3)
|
|
|
|
|
|
|
|
|
$
|
307
|
|
57 %
|
94.9 %
|
$
|
299
|
|
70 %
|
95.8 %
|
|
|
(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,
depreciation and amortization and loss on extinguishment of debt
(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
|
|
|
|
September 30,
|
|
|
June
30,
|
|
|
|
2023
|
|
|
2023
|
|
|
|
|
|
|
|
|
As reported loss
before income tax (expense) benefit
|
$
|
(19,580)
|
|
|
$
|
(4,342)
|
|
|
Interest
expense
|
|
13,774
|
|
|
|
12,755
|
|
|
Interest
income
|
|
(161)
|
|
|
|
(5)
|
|
|
Foreign currency
transaction (gain) loss
|
|
(184)
|
|
|
|
1,968
|
|
|
Loss on extinguishment
of long-term debt
|
|
6,529
|
|
|
|
—
|
|
|
Depreciation
|
|
27,785
|
|
|
|
27,906
|
|
|
Gain on disposition of
assets
|
|
(955)
|
|
|
|
(1,933)
|
|
|
Other, net
|
|
485
|
|
|
|
(136)
|
|
Adjusted
EBITDA
|
$
|
27,693
|
|
|
$
|
36,213
|
|
Reconciliation of As
Reported Net (Loss) Income to Adjusted Net (Loss)
Income:
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
September
30,
|
|
|
June
30,
|
|
|
|
2023
|
|
|
2023
|
|
As reported net
(loss) income
|
|
$
|
(145,016)
|
|
|
$
|
238,783
|
|
|
|
|
|
|
|
|
Loss on extinguishment
of long-term debt
|
|
|
6,529
|
|
|
|
—
|
|
|
|
|
|
|
|
|
Tax effect:
|
|
|
|
|
|
|
Loss on extinguishment
of long-term debt
|
|
|
(305)
|
|
|
|
—
|
|
|
|
|
|
|
|
|
Adjusted net (loss)
income
|
|
$
|
(138,792)
|
|
|
$
|
238,783
|
|
Reconciliation of As
Reported (Loss) Income per Diluted Share to Adjusted (Loss) Income
per Diluted Share:
|
|
|
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
September
30,
|
|
|
June
30,
|
|
|
|
2023
|
|
|
2023
|
|
As reported (loss)
income per diluted share
|
$
|
(1.42)
|
|
|
$
|
2.29
|
|
|
|
|
|
|
|
|
Loss on extinguishment
of long-term debt
|
|
|
0.06
|
|
|
|
—
|
|
|
|
|
|
|
|
|
Tax effect:
|
|
|
|
|
|
|
Loss on extinguishment
of long-term debt
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
Adjusted (loss)
income per diluted share
|
$
|
(1.36)
|
|
|
$
|
2.29
|
|
Contact:
Kevin Bordosky
Senior Director, Investor Relations
(281) 647-4035
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multimedia:https://www.prnewswire.com/news-releases/diamond-offshore-reports-third-quarter-2023-results-and-announces-contract-awards-of-240-million-301979223.html
SOURCE Diamond Offshore Drilling, Inc.