Diamond Offshore Announces First Quarter 2016 Results

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May 02, 2016, 06:00 ET

HOUSTON, May 2, 2016 /PRNewswire/ -- Diamond Offshore Drilling, Inc. (NYSE: DO) today reported net income of $87 million, or $0.64 per share, in the first quarter of 2016 compared to a loss of $256 million, or a loss of $1.86 per share, in the first quarter of 2015. Revenues in the first quarter of 2016 were $471 million, compared to revenues of $620 million in the first quarter of 2015.

"I am pleased with our solid first quarter results, which demonstrate Diamond Offshore's ongoing efforts to manage costs while remaining focused on safe operations and fleet reliability," said Marc Edwards, President and Chief Executive Officer. "Fleet-wide, we achieved operational efficiency for the quarter of 98.2 percent, which is reflected in our earnings results and improved project economics for our clients."

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 800-247-9979 or 973-321-1100, for international callers. The conference ID number is 89517726. 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 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, declaration of dividends, operating risks, 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 CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share data)
		Three Months Ended
		March 31,
		2016		2015

Revenues:
Contract drilling	$	443,523	$	599,577
Revenues related to reimbursable expenses		27,020		20,479
Total revenues		470,543		620,056

Operating expenses:
Contract drilling, excluding depreciation		212,841		350,658
Reimbursable expenses		26,791		20,092
Depreciation		104,240		137,299
General and administrative		15,398		17,452
Impairment of assets		--		358,528
Restructuring and separation costs		--		6,168
Gain on disposition of assets		(296)		(611)
Total operating expenses		358,974		889,586

Operating income (loss)		111,569		(269,530)

Other income (expense):
Interest income		173		583
Interest expense		(25,516)		(23,982)
Foreign currency transaction gain (loss)		(3,608)		5,590
Other, net		578		221

Income (loss) before income tax benefit		83,196		(287,118)

Income tax benefit		4,229		31,409

Net income (loss)	$	87,425	$	(255,709)

Earnings (loss) per share, Basic and Diluted	$	0.64	$	(1.86)

Weighted average shares outstanding:
Shares of common stock		137,162		137,151
Dilutive potential shares of common stock		44		--
Total weighted average shares outstanding		137,206		137,151

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES RESULTS OF OPERATIONS (Unaudited) (In thousands)
		Three Months Ended
		March 31,		December 31,		March 31,
		2016		2015		2015

REVENUES
Floaters:
Ultra-Deepwater	$	325,961	$	395,798	$	251,396
Deepwater		59,117		92,125		138,770
Mid-Water		47,672		44,766		176,357
Total Floaters		432,750		532,689		566,523
Jack-ups		10,773		11,440		33,054
Total Contract Drilling Revenue	$	443,523	$	544,129	$	599,577

Revenues Related to Reimbursable Expenses	$	27,020	$	11,434	$	20,479

CONTRACT DRILLING EXPENSE
Floaters:
Ultra-Deepwater	$	123,736	$	147,991	$	154,539
Deepwater		47,509		60,010		63,675
Mid-Water		23,884		28,767		99,320
Total Floaters		195,129		236,768		317,534
Jack-ups		6,055		10,749		21,570
Other		11,657		8,876		11,554
Total Contract Drilling Expense	$	212,841	$	256,393	$	350,658

Reimbursable Expenses	$	26,791	$	11,146	$	20,092

OPERATING INCOME(LOSS)
Floaters:
Ultra-Deepwater	$	202,225	$	247,807	$	96,857
Deepwater		11,608		32,115		75,095
Mid-Water		23,788		15,999		77,037
Total Floaters		237,621		295,921		248,989
Jack-ups		4,718		691		11,484
Other		(11,657)		(8,876)		(11,554)
Reimbursable expenses, net		229		288		387
Depreciation		(104,240)		(114,448)		(137,299)
General and administrative expense		(15,398)		(15,574)		(17,452)
Impairment of assets		--		(499,367)		(358,528)
Restructuring and separation costs		--		(1,043)		(6,168)
Gain on disposition of assets		296		2,309		611
Total Operating Income (Loss)	$	111,569	$	(340,099)	$	(269,530)

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands)

				March 31,		December 31,
				2016			2015

ASSETS

Current assets:
	Cash and cash equivalents		$	128,928	$		119,028

	Marketable securities			5,067			11,518

	Accounts receivable, net of allowance for bad debts			363,597			405,370

	Prepaid expenses and other current assets			110,842			119,479

	Assets held for sale			6,600			14,200

				615,034			669,595

Drilling and other property and equipment, net of
accumulated depreciation				6,219,242			6,378,814

Other assets				110,323			101,485
		Total assets	$	6,944,599	$		7,149,894

LIABILITIES AND STOCKHOLDERS' EQUITY

Short-term borrowings			$	--	$		286,589
Other current liabilities				380,987			339,134

Long-term debt				1,980,049			1,979,778

Deferred tax liability				230,332			276,529

Other liabilities				158,451			155,094

Stockholders' equity				4,194,780			4,112,770

		Total liabilities and stockholders' equity	$	6,944,599	$		7,149,894

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES AVERAGE DAYRATES AND UTILIZATION (Dayrate in thousands)

	First Quarter 2016			Fourth Quarter 2015			First Quarter 2015
	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	$533	61%	98.4%	$531	70%	95.5%	$497	51%	81.5%

Deepwater Floaters	$334	28%	97.1%	$337	42%	97.7%	$486	45%	95.1%

Mid-Water Floaters	$263	25%	97.7%	$249	24%	97.8%	$266	49%	94.1%

Jack-ups	$118	18%	100%	$124	17%	100%	$92	66%	99.4%

Fleet Total			98.2%			96.6%			91.2%


(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, but excluding rigs under construction). As of March 31, 2016, our cold-stacked rigs included three ultra-deepwater semisubmersibles, four deepwater semisubmersibles, five mid-water semisubmersibles and four jack-up rigs.

(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.