Diamond Offshore Announces Third Quarter 2018 Results
HOUSTON, Nov. 5, 2018 /PRNewswire/ -- Diamond Offshore Drilling, Inc. (NYSE: DO) today reported the following results for the third quarter of 2018:
Three Months Ended
Thousands of dollars,
except per share data September 30, 2018 June 30, 2018
---
Total revenues $286,322 $268,861
Operating loss (23,043) (52,375)
Adjusted operating
loss (4,794) (23,885)
Net loss (51,112) (69,274)
Adjusted net loss (35,257) (44,900)
Loss per diluted share $(0.37) $(0.50)
Adjusted loss per
diluted share $(0.26) $(0.33)
"We achieved another strong contracting quarter by securing approximately 30 months of additional backlog," said Marc Edwards, President and Chief Executive Officer. "The new fixtures were awarded for the Ocean GreatWhite in the North Sea, the Ocean Apex in Australia, and the Ocean Monarch in Myanmar."
Edwards added, "Diamond Offshore continues to take the necessary steps to position the Company for long-term success. As such, we entered into a new $950 million revolving credit facility maturing October 2023 and amended our existing credit facility. Combined, this provides $1.275 billion of availability and further enhances our liquidity runway."
As of October 1, 2018, the Company's total contracted backlog was $2.0 billion, not including a $135 million margin commitment from one of the Company's customers.
CONFERENCE CALL
A conference call to discuss Diamond Offshore's earnings results has been scheduled for 8:00 a.m. CST 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 6584488. 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 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, 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.
Contact:
Samir Ali
Vice President, Investor Relations & Corporate Development
(281) 647-4035
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,
--- ---
2018 2017 2018 2017
---
Revenues:
Contract drilling $280,691 $357,683 $833,970 $1,113,410
Revenues related to
reimbursable expenses 5,631 8,340 16,723 26,128
Total revenues 286,322 366,023 850,693 1,139,538
---
Operating expenses:
Contract drilling,
excluding depreciation 188,456 198,072 562,466 597,812
Reimbursable expenses 5,574 8,220 16,458 25,488
Depreciation 81,884 83,281 245,534 262,492
General and administrative 33,308 17,806 70,057 54,299
Impairment of assets 27,225 71,268
Restructuring and
separation costs 649 4,925 -
(Gain) loss on disposition
of assets (506) 63 (1,066) (2,085)
Total operating expenses 309,365 307,442 925,599 1,009,274
---
Operating (loss) income (23,043) 58,581 (74,906) 130,264
Other income (expense):
Interest income 2,364 776 6,001 1,347
Interest expense (34,293) (28,562) (92,196) (83,409)
Foreign currency
transaction gain (loss) (743) (677) 115 (517)
Loss on extinguishment of
senior notes (35,366) (35,366)
Other, net (179) 1,447 664 1,322
---
(Loss) income before income
tax benefit (55,894) (3,801) (160,322) 13,641
Income tax benefit 4,782 14,600 59,257 36,646
---
Net (loss) income $(51,112) $10,799 $(101,065) $50,287
(Loss) income per share $(0.37) $0.08 $(0.74) $0.37
Weighted-average shares outstanding:
Shares of common stock 137,434 137,227 137,386 137,208
Dilutive potential shares
of common stock 14 29
Total weighted-average
shares outstanding 137,434 137,241 137,386 137,237
===
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
(Unaudited)
(In thousands)
Three Months Ended
September 30,
June 30,
September 30,
2018 2018 2017
REVENUES RELATED TO CONTRACT
DRILLING $280,691 $265,353 $357,683
REVENUES RELATED TO
REIMBURSABLE EXPENSES 5,631 3,508 8,340
TOTAL REVENUES $286,322 $268,861 $366,023
===
CONTRACT DRILLING EXPENSE,
EXCLUDING DEPRECIATION $188,456 $189,321 $198,072
REIMBURSABLE EXPENSES $5,574 $3,414 $8,220
OPERATING (LOSS) INCOME
Contract drilling services,
net $92,235 $76,032 $159,611
Reimbursable expenses, net 57 94 120
Depreciation (81,884) (81,825) (83,281)
General and administrative
expense (33,308) (18,236) (17,806)
Impairment of assets - (27,225)
Restructuring and separation
costs (649) (1,265) -
Gain (loss) on disposition
of assets 506 50 (63)
Total Operating (Loss)
Income $(23,043) $(52,375) $58,581
===
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
September 30, December 31,
2018 2017
ASSETS
Current assets:
Cash and cash equivalents $201,853 $376,037
Marketable securities 274,690 -
Accounts receivable, net of
allowance for bad debts 198,701 256,730
Prepaid expenses and other
current assets 139,191 157,625
Assets held for sale - 96,261
---
Total current assets 814,435 886,653
Drilling and other property and equipment, net of accumulated
depreciation 5,191,841 5,261,641
Other assets 62,047 102,276
Total assets $6,068,323 $6,250,570
===
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $208,317 $223,288
Long-term debt 1,973,488 1,972,225
Deferred tax liability 114,736 167,299
Other liabilities 110,643 113,497
Stockholders' equity 3,661,139 3,774,261
Total liabilities and
stockholders' equity $6,068,323 $6,250,570
===
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Nine Months Ended
September 30,
2018 2017
---
Operating activities:
Net (loss) income $(101,065) $50,287
Adjustments to reconcile net (loss) income to net cash
provided by operating activities
Depreciation 245,534 262,492
Loss on impairments of assets 27,225 71,268
Loss on extinguishment of senior
notes 35,366
Deferred contract costs, net 34,901 32,701
Deferred tax provision (69,109) (73,873)
Other (7,520) 10,469
Net changes in operating working
capital 58,790 (22,075)
Net cash provided by operating
activities 188,756 366,635
---
Investing activities:
Capital expenditures (159,751) (100,613)
Proceeds from maturities of
marketable securities 775,000 31
Purchase of marketable securities (1,047,453)
Proceeds from disposition of
assets, net of disposal costs 69,533 4,017
Net cash used in investing
activities (362,671) (96,565)
---
Financing activities:
Redemption of senior notes (500,000)
Payment of debt extinguishment
costs (34,395)
Proceeds from issuance of senior
costs 496,360
Net repayment of short-term
borrowings (104,200)
Other (269) (7,382)
Net cash used in financing
activities (269) (149,617)
---
Net change in cash and cash
equivalents (174,184) 120,453
Cash and cash equivalents,
beginning of period 376,037 156,233
Cash and cash equivalents, end of
period $201,853 $276,686
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
AVERAGE DAYRATE, UTILIZATION AND OPERATIONAL EFFICIENCY
(Dayrate in thousands)
Third Quarter Second Quarter Third Quarter
2018 2018 2017
Average Utilization Operational Average Utilization Operational Average Utilization Operational
Dayrate (2) Efficiency Dayrate (2) Efficiency Dayrate (2) Efficiency
(1) (3) (1) (3) (1) (3)
---
Floaters $333 54% 97.0% $317 53% 90.8% $357 46% 94.2%
Jack-ups -- $75 95% 95.3%
Fleet Total 97.0% 90.8% 94.3%
(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 four
floaters 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, non-
revenue earning 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 restructuring and separation costs incurred in 2018, costs incurred in the third quarter 2018 for settlement of a previously pending legal claim, the loss on a rig sale recognized in the third quarter 2018 and 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,
September 30,
2018 2018 2017
Reconciliation of As Reported
Operating (Loss)
Income to Adjusted Operating
(Loss) Income:
(In thousands)
As reported operating (loss)
income $(23,043) $(52,375) $58,581
Impairments and other charges:
Impairment of rigs 27,225
Legal settlement 17,500
Restructuring and separation costs 649 1,265
Loss on sale of rigs 100
Adjusted operating (loss) income $(4,794) $(23,885) $58,581
Reconciliation of As Reported Net
(Loss) Income to
Adjusted Net (Loss) Income:
(In thousands)
As reported net (loss) income $(51,112) $(69,274) $10,799
Impairments and other charges:
Impairment of rigs 27,225
Loss on early extinguishment of
senior notes 35,366
Legal settlement 17,500
Restructuring and separation costs 649 1,265
Loss on sale of rigs 100
Tax effect of impairments and
other charges:
Impairment of rigs (3,933)
Loss on early extinguishment of
senior notes (12,378)
Legal settlement (2,296)
Restructuring and separation costs (85) (183)
Loss on sale of rigs (13)
Adjusted net (loss) income $(35,257) $(44,900) $33,787
Three Months Ended
September 30,
June 30,
September 30,
2018 2018 2017
Reconciliation of As Reported
(Loss) Income per Diluted
Share to Adjusted (Loss) Earnings
per Diluted Share:
As reported (loss) income per
diluted share $(0.37) $(0.50) $0.08
Impairments and other charges:
Impairment of rigs 0.19
Loss on early extinguishment of
senior notes 0.26
Legal settlement 0.12
Restructuring and separation costs 0.01 0.01
Loss on sale of rigs
Tax effect of impairments and
other charges:
Impairment of rigs (0.03)
Loss on early extinguishment of
senior notes (0.09)
Legal settlement (0.02)
Restructuring and separation costs
Loss on sale of rigs
Adjusted (loss) income per diluted
share $(0.26) $(0.33) $0.25
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SOURCE Diamond Offshore Drilling, Inc.
