Diamond Offshore Announces Second Quarter 2019 Results

HOUSTON, Aug. 5, 2019 /PRNewswire/ -- Diamond Offshore Drilling, Inc. (NYSE: DO) today reported the following results for the second quarter of 2019:

                                                               Three Months Ended




       
              Thousands of dollars, except per share data    June 30, 2019   March 31, 2019

    ---


       Total revenues                                                   $216,706        $233,542



       Operating loss                                                  (111,500)       (49,127)



       Adjusted operating loss                                         (120,366)       (49,127)



       Net loss                                                        (113,988)       (73,328)



       Adjusted net loss                                               (136,299)       (73,328)



       Loss per diluted share                                            $(0.83)        $(0.53)



       Adjusted loss per diluted share                                   $(0.99)        $(0.53)

"During the quarter, the Ocean GreatWhite successfully completed its first well, delivering over 97.5% operating efficiency," said Marc Edwards, President and Chief Executive Officer. "We also completed the reactivation and upgrade of the Ocean Endeavor and the upgrade of the Ocean Apex. Both rigs commenced operations in May."

Diamond Offshore recently announced the launch of its Stack-View(TM) service, which allows the Company to shift to predictive maintenance from time-based maintenance by utilizing 24/7 real-time monitoring, data visualization, and advanced analytics. "This is yet another example of Diamond continually working to improve offshore drilling economics by reducing the total cost of the well," said Edwards. "Stack-View will streamline maintenance and mitigate subsea downtime while improving BOP reliability, which will significantly enhance the operational efficiency of a drilling campaign."

As of July 1, 2019, the Company's total contracted backlog was $2.0 billion, including over $450 million of backlog secured year to date and excluding approximately a $130 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. 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 2482667. 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.

                                                                 
     
       DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES


                                                                 
     
       CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                        
              (Unaudited)


                                                                    
     (In thousands, except per share data)




                                                                           
              
                Three Months Ended                                    Six Months Ended

                                                                                                                                                     ---

                                                        June 30,             March 31,               
              
            June 30,  
     
      June 30,   
             
                June 30,


                                                                                  2019                                        2019            2018                               2019          2018

                                                                                                                                                                                            ---




     
                Revenues:



     Contract drilling                                                       $207,273                                    $226,697        $265,353                           $433,970      $553,279



     Revenues related to reimbursable expenses                                  9,433                                       6,845           3,508                             16,278        11,092



     Total revenues                                                           216,706                                     233,542         268,861                            450,248       564,371

                                                                                                                                                                                            ---




     
                Operating expenses:



     Contract drilling, excluding depreciation                                224,782                                     167,429         189,321                            392,210       374,010



     Reimbursable expenses                                                      9,313                                       6,743           3,414                             16,057        10,884



     Depreciation                                                              88,253                                      86,898          81,825                            175,151       163,650



     General and administrative                                                15,294                                      17,312          18,236                             32,605        36,749



     Impairment of assets                                                                                                                27,225                                          27,225



     Restucturing and separation costs                                                                                                    1,265                                           4,276



     (Gain) loss on disposition of assets                                     (9,436)                                      4,287            (50)                           (5,149)        (560)



     Total operating expenses                                                 328,206                                     282,669         321,236                            610,874       616,234

                                                                                                                                                                                            ---




     
                Operating loss                                            (111,500)                                   (49,127)       (52,375)                         (160,626)     (51,863)





     
                Other income (expense):



     Interest income                                                            1,933                                       2,414           2,001                              4,346         3,638



     Interest expense, net of amounts capitalized                            (31,159)                                   (29,925)       (29,585)                          (61,084)     (57,903)



     Foreign currency transaction (loss) gain                                   (721)                                    (1,085)            411                            (1,806)          858



     Other, net                                                                   105                                         333             262                                438           842

                                                                                                                                                                                            ---




     
                Loss before income tax benefit                            (141,342)                                   (77,390)       (79,286)                         (218,732)    (104,428)





     
                Income tax benefit                                           27,354                                       4,062          10,012                             31,416        54,475

                                                                                                                                                                                            ---




     
                Net loss                                                 $(113,988)                                  $(73,328)      $(69,274)                        $(187,316)    $(49,953)






     
                Loss per share                                              $(0.83)                                    $(0.53)        $(0.50)                           $(1.36)      $(0.36)






     
                Weighted-average shares outstanding:



     Shares of common stock                                                   137,691                                     137,522         137,429                            137,607       137,362



     Dilutive potential shares of common stock                                                                                                                                               -




     Total weighted-average shares outstanding                                137,691                                     137,522         137,429                            137,607       137,362

                                                                                                                                                                                            ===

                                                                  
       
       DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES


                                                                    
       
           CONDENSED CONSOLIDATED BALANCE SHEETS


                                                                           
              (Unaudited)


                                                                          
              (In thousands)




                                                                                                                             June 30,           December 31,


                                                                                                                                 2019                    2018




     
                ASSETS



     Current assets:



     Cash and cash equivalents                                                                                              $147,509                $154,073



     Marketable securities                                                                                                   149,945                 299,849



     Accounts receivable, net of allowance for bad debts                                                                     163,086                 168,620



     Prepaid expenses and other current assets                                                                               130,124                 163,396




     Total current assets                                                                                                    590,664                 785,938





     Drilling and other property and equipment, net of accumulated



        depreciation                                                                                                       5,163,696 5,184,222



     Other assets                                                                                                            222,876                  65,534




     Total assets                                                                                                         $5,977,236              $6,035,694

                                                                                                                                                         ===




     
                LIABILITIES AND STOCKHOLDERS' EQUITY



     Other current liabilities                                                                                              $269,449                $236,846



     Long-term debt                                                                                                        1,974,816               1,973,922



     Deferred tax liability                                                                                                   74,281                 104,380



     Other liabilities                                                                                                       259,793                 135,893



     Stockholders' equity                                                                                                  3,398,897               3,584,653




     Total liabilities and stockholders' equity                                                                           $5,977,236              $6,035,694

                                                                                                                                                         ===

                                      
              
                DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES


                                       
              
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                               
              (Unaudited)


                                                              
              (In thousands)




                                                                                                                                Six months ended


                                                                                                                                June 30,



                                                                                                                      2019                             2018

                                                                                                                                                       ---


     
                Operating activities:



     Net loss                                                                                                  $(187,316)                       $(49,953)



     Adjustments to reconcile net loss to net cash (used in)



     provided by operating activities



     Depreciation                                                                                                 175,151                          163,650



     Loss on impairment of assets                                                                                                                  27,225



     Deferred tax provision                                                                                      (31,125)                        (61,160)



     Contract liabilities, net                                                                                     14,017                          (3,255)



     Deferred contract costs, net                                                                                  26,879                           24,703



     Other                                                                                                        (4,174)                             422



     Net changes in operating working capital                                                                       3,885 29,135



     Net cash (used in) provided by operating activities                                                          (2,683)                         130,767

                                                                                                                                                       ---




     
                Investing activities:



     Capital expenditures                                                                                       (172,335)                        (90,432)



     Proceeds from maturities of marketable securities                                                          2,025,000                          300,000



     Purchase of marketable securities                                                                        (1,872,107)                       (573,837)



     Proceeds from disposition of assets, net of disposal costs                                                    15,573                            1,723



     Net cash used in investing activities                                                                        (3,869)                       (362,546)

                                                                                                                                                       ---




     
                Financing activities:



     Other                                                                                                           (12)                            (90)



     Net cash used in financing activities                                                                           (12)                            (90)

                                                                                                                                                       ---




     
                Net change in cash and cash equivalents                                                         (6,564)                       (231,869)



     Cash and cash equivalents, beginning of period                                                               154,073                          376,037



     Cash and cash equivalents, end of period                                                                    $147,509                         $144,168


                                                                        
         
            DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES


                                                                    
           
          AVERAGE DAYRATE, UTILIZATION AND OPERATIONAL EFFICIENCY


                                                                                  
              (Dayrate in thousands)








                             
       
     TOTAL FLEET



             Second Quarter        First Quarter            Second Quarter


     
              
               2019                                   2019                      2018


                 Average            Utilization               Operational                   Average                           Utilization              Operational           Average   Utilization               Operational
     Dayrate                                 (2)  Efficiency                    Dayrate                                               (2)   Efficiency               Dayrate                   (2)    Efficiency
                        (1)                                            (3)                      (1)                                                            (3)               (1)                                     (3)

                                                                                                                                                                                                                         ---



                       $273                   51%                     88.7%                     $309                                    48%                    96.5%              $317            53%                     90.8%



     
     (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
              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 loss, adjusted net loss and adjusted loss 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 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 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 various items and their related tax effects are appropriate measures of the continuing and normal operations of the Company. The amounts excluded from our adjusted results include an impairment loss and restructuring and separation costs incurred during the second quarter of 2018, the gain recognized in the second quarter of 2019 from the sale of the Ocean Guardian, the loss on sale of mooring equipment recognized during the second quarter of 2019 in relation to a new leasing initiative and other discrete tax items recognized in the second quarter of 2019. 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 or loss, cash flows from operations or other measures of financial performance prepared in accordance with GAAP.

                                                                                   
     
        Three Months Ended



                                                                                         June 30,            March 31,   June 30,


                                                                                             2019                  2019        2018




              
                Reconciliation of As Reported Operating Loss to
    Adjusted Operating Loss:



              (In thousands)





              
                As reported operating loss                                 $(111,500)            $(49,127)  $(52,375)





              Impairments and other items:



              Impairment of rigs                                                               -                          27,225



              Restructuring and separation costs                                               -                           1,265



              Gain on sale of rig                                                       (14,300)                               -



              Loss on sale of mooring equipment                                            5,434                                -






              Adjusted operating loss                                                 $(120,366)            $(49,127)  $(23,885)

                                                                                                                              ===




              
                Reconciliation of As Reported Net Loss to Adjusted Net
    Loss:



              (In thousands)





              
                As reported net loss                                       $(113,988)            $(73,328)  $(69,274)





              Impairments and other items:



              Impairment of rigs                                                               -                          27,225



              Restructuring and separation costs                                               -                           1,265



              Gain on sale of rig                                                       (14,300)                               -



              Loss on sale of mooring equipment                                            5,434                                -





              Tax effect of impairments and other items:



              Impairment of rigs                                                               -                         (3,933)



              Restructuring and separation costs                                               -                           (183)



              Gain on sale of rig                                                          1,227                                -



              Loss on sale of mooring equipment                                            (466)                               -



              Other discrete items (1)                                                  (14,206)                               -






              Adjusted net loss                                                       $(136,299)            $(73,328)  $(44,900)

                                                                                                                              ===

                                                                                    
     
     Three Months Ended



                                                                                        June 30,           March 31,  June 30,


                                                                                            2019                 2019       2018




              
                Reconciliation of As Reported Loss per Diluted Share to
    Adjusted Loss per Diluted Share:





              
                As reported loss per diluted share                           $(0.83)             $(0.53)   $(0.50)





              Impairments and other items:



              Impairment of rigs                                                                                         0.19



              Restructuring and separation costs                                                                         0.01



              Gain on sale of rig                                                        (0.10)



              Loss on sale of mooring equipment                                            0.04





              Tax effect of impairments and other items:



              Impairment of rigs                                                                                       (0.03)



              Restructuring and separation costs



              Gain on sale of rig                                                          0.01



              Loss on sale of mooring equipment                                          (0.01)



              Other discrete items (1)                                                   (0.10)






              Adjusted loss per diluted share                                           $(0.99)             $(0.53)   $(0.33)



              
                (1)              Represents a discrete income
                                               tax adjustment recognized
                                               during the second quarter of
                                               2019 in relation to final
                                               regulations issued by the
                                               Internal Revenue Service in
                                               June 2019 with respect to the
                                               calculation of the toll
                                               charge associated with the
                                               deemed repatriation of
                                               previously deferred earnings
                                               of our non-U.S. subsidiaries
                                               in response to the Tax Cuts
                                               and Jobs Act enacted in 2017,
                                               or Transition Tax.  Based on
                                               the new regulations, we
                                               recorded a net tax benefit of
                                               $14.2 million in the second
                                               quarter of 2019.

Contact:
Samir Ali
Vice President, Investor Relations & Corporate Development
(281) 647-4035

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SOURCE Diamond Offshore Drilling, Inc.