LOEWS CORPORATION 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
Dayrate (2) Efficiency Dayrate (2) Efficiency Dayrate (2) Efficiency
(1) (3) (1) (3) (1) (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.
