Diamond Offshore Announces Third Quarter 2017 Results
-- Net income of $11 million, or $0.08 per diluted share
-- Adjusted net income of $34 million, or $0.25 per diluted share, excluding costs associated with the redemption of our 2019 senior notes
HOUSTON, Oct. 30, 2017 /PRNewswire/ -- Diamond Offshore Drilling, Inc. (NYSE: DO) today reported the following results for the third quarter of 2017:
| Three Months Ended |
||||||
| Thousands of dollars, except per share data |
September 30, 2017 |
June 30, 2017 |
Change |
|||
| Total revenues |
$ 366,023 |
$ 399,289 |
(8) |
% |
||
| Operating income |
58,581 |
20,824 |
181 |
% |
||
| Adjusted operating income |
58,581 |
92,092 |
(36) |
% |
||
| Net income |
10,799 |
15,949 |
(32) |
% |
||
| Adjusted net income |
33,787 |
62,273 |
(46) |
% |
||
| Earnings per diluted share |
$ 0.08 |
$ 0.12 |
(33) |
% |
||
| Adjusted earnings per diluted share |
$ 0.25 |
$ 0.45 |
(44) |
% |
||
"Despite the continued weakness in the offshore drilling market, we achieved favorable third quarter results," said Marc Edwards, President and Chief Executive Officer. "During the quarter we were able to secure additional work for our proficient moored fleet, with new wins for the Ocean Apex and Ocean Patriot, at rates well above cash flow breakeven. In addition, we took proactive measures during the quarter to further enhance our liquidity runway and better position Diamond for the eventual recovery."
As of September 30, 2017, the Company's total contracted backlog was $2.6 billion, which represents 20 rig years of work.
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 844-492-6043 or 478-219-0839 for international callers. The conference ID number is 95338408. 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 certain 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, operating risks, litigation and disputes, 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 |
|||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||
| (Unaudited) |
|||||||
| (In thousands, except per share data) |
|||||||
| Three Months Ended |
Nine Months Ended |
||||||
| September 30, |
September 30, |
||||||
| 2017 |
2016 |
2017 |
2016 |
||||
| Revenues: |
|||||||
| Contract drilling |
$ 357,683 |
$ 339,636 |
$ 1,113,410 |
$ 1,140,568 |
|||
| Revenues related to reimbursable expenses |
8,340 |
9,542 |
26,128 |
67,900 |
|||
| Total revenues |
366,023 |
349,178 |
1,139,538 |
1,208,468 |
|||
| Operating expenses: |
|||||||
| Contract drilling, excluding depreciation |
198,072 |
186,654 |
597,812 |
597,831 |
|||
| Reimbursable expenses |
8,220 |
7,965 |
25,488 |
51,283 |
|||
| Depreciation |
83,281 |
86,473 |
262,492 |
295,729 |
|||
| General and administrative |
17,806 |
15,237 |
54,299 |
48,774 |
|||
| Impairment of assets |
- |
- |
71,268 |
678,145 |
|||
| Loss (gain) on disposition of assets |
63 |
(1,222) |
(2,085) |
(2,265) |
|||
| Total operating expenses |
307,442 |
295,107 |
1,009,274 |
1,669,497 |
|||
| Operating income (loss) |
58,581 |
54,071 |
130,264 |
(461,029) |
|||
| Other income (expense): |
|||||||
| Interest income |
776 |
150 |
1,347 |
592 |
|||
| Interest expense |
(28,562) |
(19,032) |
(83,409) |
(68,704) |
|||
| Foreign currency transaction loss |
(677) |
(712) |
(517) |
(7,833) |
|||
| Loss on extinguishment of senior notes |
(35,366) |
- |
(35,366) |
- |
|||
| Other, net |
1,447 |
269 |
1,322 |
(11,199) |
|||
| (Loss) income before income tax benefit |
(3,801) |
34,746 |
13,641 |
(548,173) |
|||
| Income tax benefit (expense) |
14,600 |
(20,819) |
36,646 |
59,588 |
|||
| Net income (loss) |
$ 10,799 |
$ 13,927 |
$ 50,287 |
$ (488,585) |
|||
| Income (loss) per share |
$ 0.08 |
$ 0.10 |
$ 0.37 |
$ (3.56) |
|||
| Weighted-average shares outstanding: |
|||||||
| Shares of common stock |
137,227 |
137,170 |
137,208 |
137,167 |
|||
| Dilutive potential shares of common stock |
14 |
84 |
29 |
- |
|||
| Total weighted-average shares outstanding |
137,241 |
137,254 |
137,237 |
137,167 |
|||
| DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES |
||||||
| CONDENSED CONSOLIDATED RESULTS OF OPERATIONS |
||||||
| (Unaudited) |
||||||
| (In thousands) |
||||||
| Three Months Ended |
||||||
| September 30, |
June 30, |
September 30, |
||||
| 2017 |
2017 |
2016 |
||||
| REVENUES |
||||||
| Floaters: |
||||||
| Ultra-Deepwater |
$ 275,859 |
$ 282,535 |
$ 217,275 |
|||
| Deepwater |
35,634 |
66,905 |
66,011 |
|||
| Mid-water |
39,616 |
36,543 |
56,350 |
|||
| Total Floaters |
351,109 |
385,983 |
339,636 |
|||
| Jack-ups |
6,574 |
6,187 |
- |
|||
| Total Contract Drilling Revenue |
$ 357,683 |
$ 392,170 |
$ 339,636 |
|||
| Revenues Related to Reimbursable Expenses |
$ 8,340 |
$ 7,119 |
$ 9,542 |
|||
| CONTRACT DRILLING EXPENSE |
||||||
| Floaters: |
||||||
| Ultra-Deepwater |
$ 139,619 |
$ 136,661 |
$ 124,099 |
|||
| Deepwater |
27,139 |
31,340 |
36,226 |
|||
| Mid-water |
17,753 |
15,771 |
17,634 |
|||
| Total Floaters |
184,511 |
183,772 |
177,959 |
|||
| Jack-ups |
6,197 |
6,978 |
1,833 |
|||
| Other |
7,364 |
5,467 |
6,862 |
|||
| Total Contract Drilling Expense |
$ 198,072 |
$ 196,217 |
$ 186,654 |
|||
| Reimbursable Expenses |
$ 8,220 |
$ 6,790 |
$ 7,965 |
|||
| OPERATING INCOME |
||||||
| Floaters: |
||||||
| Ultra-Deepwater |
$ 136,240 |
$ 145,874 |
$ 93,176 |
|||
| Deepwater |
8,495 |
35,565 |
29,785 |
|||
| Mid-water |
21,863 |
20,772 |
38,716 |
|||
| Total Floaters |
166,598 |
202,211 |
161,677 |
|||
| Jack-ups |
377 |
(791) |
(1,833) |
|||
| Other |
(7,364) |
(5,467) |
(6,862) |
|||
| Reimbursable expenses, net |
120 |
329 |
1,577 |
|||
| Depreciation |
(83,281) |
(85,982) |
(86,473) |
|||
| General and administrative expense |
(17,806) |
(19,010) |
(15,237) |
|||
| Impairment of assets |
- |
(71,268) |
- |
|||
| (Loss) gain on disposition of assets |
(63) |
802 |
1,222 |
|||
| Total Operating Income |
$ 58,581 |
$ 20,824 |
$ 54,071 |
|||
| DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES |
|||
| CONDENSED CONSOLIDATED BALANCE SHEETS |
|||
| (Unaudited) |
|||
| (In thousands) |
|||
| September 30, |
December 31, |
||
| 2017 |
2016 |
||
| ASSETS |
|||
| Current assets: |
|||
| Cash and cash equivalents |
$ 276,686 |
$ 156,233 |
|
| Accounts receivable, net of allowance for bad debts |
271,390 |
247,028 |
|
| Prepaid expenses and other current assets |
97,803 |
102,146 |
|
| Assets held for sale |
2,598 |
400 |
|
| Total current assets |
648,477 |
505,807 |
|
| Drilling and other property and equipment, net of accumulated |
|||
| depreciation |
5,432,689 |
5,726,935 |
|
| Other assets |
117,062 |
139,135 |
|
| Total assets |
$ 6,198,228 |
$ 6,371,877 |
|
| LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
| Short-term borrowings |
$ - |
$ 104,200 |
|
| Other current liabilities |
180,970 |
236,299 |
|
| Long-term debt |
1,971,852 |
1,980,884 |
|
| Deferred tax liability |
124,929 |
197,011 |
|
| Other liabilities |
115,715 |
103,349 |
|
| Stockholders' equity |
3,804,762 |
3,750,134 |
|
| Total liabilities and stockholders' equity |
$ 6,198,228 |
$ 6,371,877 |
|
| DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES |
|||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||
| (Unaudited) |
|||
| (In thousands) |
|||
| Nine Months Ended |
|||
| September 30, |
|||
| 2017 |
2016 |
||
| Operating activities: |
|||
| Net income (loss) |
$ 50,287 |
$ (488,585) |
|
| Adjustments to reconcile net income (loss) to net cash |
|||
| provided by operating activities |
|||
| Depreciation |
262,492 |
295,729 |
|
| Loss on impairment of assets |
71,268 |
678,145 |
|
| Loss on extinguishment of senior notes |
35,366 |
- |
|
| Deferred income, net |
8,379 |
(23,381) |
|
| Deferred expenses, net |
32,701 |
(1,099) |
|
| Deferred tax provision |
(73,873) |
(114,405) |
|
| Other |
2,090 |
17,976 |
|
| Net changes in operating working capital |
(22,075) |
127,614 |
|
| Net cash provided by operating activities |
366,635 |
491,994 |
|
| Investing activities: |
|||
| Capital expenditures (including rig construction) |
(100,613) |
(598,236) |
|
| Proceeds from disposition of assets, net of disposal costs |
4,017 |
169,038 |
|
| Other |
31 |
4,603 |
|
| Net cash used in investing activities |
(96,565) |
(424,595) |
|
| Financing activities: |
|||
| Redemption of senior notes |
(500,000) |
- |
|
| Payment of debt extinguishment costs |
(34,395) |
- |
|
| Proceeds from issuance of senior notes |
496,360 |
- |
|
| Net repayment of short-term borrowings |
(104,200) |
(104,489) |
|
| Other |
(7,382) |
(609) |
|
| Net cash used in financing activities |
(149,617) |
(105,098) |
|
| Net change in cash and cash equivalents |
120,453 |
(37,699) |
|
| Cash and cash equivalents, beginning of period |
156,233 |
119,028 |
|
| Cash and cash equivalents, end of period |
$ 276,686 |
$ 81,329 |
|
| DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES |
||||||||||
| AVERAGE DAYRATE, UTILIZATION AND OPERATIONAL EFFICIENCY |
||||||||||
| (Dayrate in thousands) |
||||||||||
| Third Quarter |
Second Quarter |
Third Quarter |
||||||||
| 2017 |
2017 |
2016 |
||||||||
| Average |
Utilization |
Operational |
Average |
Utilization |
Operational |
Average |
Utilization |
Operational |
||
| Ultra-Deepwater Floaters |
$407 |
61% |
92.0% |
$436 |
59% |
97.1% |
$452 |
48% |
87.1% |
|
| Deepwater Floaters |
$195 |
33% |
99.6% |
$270 |
45% |
96.0% |
$303 |
34% |
94.5% |
|
| Mid-Water floaters |
$322 |
27% |
98.8% |
$397 |
20% |
100.0% |
$311 |
33% |
98.4% |
|
| Jack-ups |
$75 |
95% |
95.3% |
$75 |
86% |
90.8% |
-- |
-- |
-- |
|
| Fleet Total |
94.3% |
96.6% |
91.0% |
|||||||
| (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). Our current fleet includes three ultra-deepwater and three deepwater semisubmersible rigs that are cold stacked. |
| (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. |
Non-GAAP Financial Measures (Unaudited)
To supplement the Company's unaudited condensed consolidated financial statements presented on a GAAP basis, this press release provides investors with adjusted operating income, adjusted net income and adjusted earnings per diluted share, which are non-GAAP financial measures. Management believes that these measures provide meaningful information about the Company's performance by excluding certain charges 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 to be a supplement to, and not as a substitute for, or superior to, financial measures prepared in accordance with GAAP.
In order to fully assess the financial operating results of the Company, management believes that the results of operations adjusted to exclude the second quarter 2017 asset impairments, the third quarter 2017 loss on extinguishment of debt, as well as the related tax effects thereof, are appropriate measures of the continuing and normal operations of the Company. However, these measures should be considered in addition to, and not as a substitute for, or superior to, contract drilling revenue, contract drilling expense, operating income, cash flows from operations or other measures of financial performance prepared in accordance with GAAP.
| Three Months Ended |
||||
| September 30, |
June 30, |
|||
| 2017 |
2017 |
|||
| Reconciliation of As Reported Operating Income to |
||||
| (In thousands) |
||||
| As reported operating income |
$ 58,581 |
$ 20,824 |
||
| Impairments and other charges: |
||||
| Impairment of rigs(1) |
- |
71,268 |
||
| Adjusted operating income |
$ 58,581 |
$ 92,092 |
||
| Reconciliation of As Reported Net Income to Adjusted |
||||
| (In thousands) |
||||
| As reported net income |
$ 10,799 |
$ 15,949 |
||
| Impairments and other charges: |
||||
| Impairment of rigs(1) |
- |
71,268 |
||
| Loss on extinguishment of senior notes (2) |
35,366 |
- |
||
| Tax effect of impairments and other charges: |
||||
| Impairment of rigs (3) |
- |
(24,944) |
||
| Loss on extinguishment of senior notes (4) |
(12,378) |
- |
||
| Adjusted net income |
$ 33,787 |
$ 62,273 |
||
| Three Months Ended |
|||
| September 30, |
June 30, |
||
| 2017 |
2017 |
||
| Reconciliation of As Reported Income per Diluted Share |
|||
| As reported income per diluted share |
$ 0.08 |
$ 0.12 |
|
| Impairments and other charges: |
|||
| Impairment of rigs (1) |
- |
0.51 |
|
| Loss on extinguishment of senior notes (2) |
0.26 |
- |
|
| Tax effect of impairments and other charges: |
|||
| Impairment of rigs (3) |
- |
(0.18) |
|
| Loss on extinguishment of senior notes (4) |
(0.09) |
- |
|
| Adjusted earnings per diluted share |
$ 0.25 |
$ 0.45 |
|
| (1) |
Represents the aggregate amount of impairment loss recognized during the second quarter of 2017 related to two semisubmersible drilling rigs. |
| (2) |
Represents the loss recognized during the third quarter of 2017 related to the redemption of our 5.875% senior notes due 2019. |
| (3) |
Represents the income tax effect of the aggregate impairment loss recognized in the second quarter of 2017. The income tax effect of the impairment loss has been calculated on a discrete tax basis, utilizing the statutory tax rates for the applicable tax jurisdictions of the rig-owning companies. We believe that this approach provides investors and others with useful information regarding the actual tax impact of these transactions when the appropriate tax returns are filed with the taxing authorities. |
| (4) |
Represents the income tax effect of the loss on extinguishment of the 2019 senior notes recognized in the third quarter of 2017. The income tax effect of the loss was calculated using the U.S. corporate tax rate. |
Contact:
Samir Ali
Sr. Director, Investor Relations
& Corporate Development
(281) 647-4035
SOURCE Diamond Offshore Drilling, Inc.
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