×

Diamond Offshore Announces Third Quarter 2017 Results

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
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

$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
Adjusted Operating Income:




(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
Net Income:




(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
to Adjusted Earnings 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

View original content with multimedia:http://www.prnewswire.com/news-releases/diamond-offshore-announces-third-quarter-2017-results-300545204.html

SOURCE Diamond Offshore Drilling, Inc.