LOEWS CORPORATION HOUSTON, Oct. 31, 2016 /PRNewswire/ -- Diamond Offshore Drilling, Inc. (NYSE: DO) today reported results for the third quarter of 2016.
Three Months Ended
------------------
Thousands
of
dollars,
except
per share
data September 30, 2016 June 30, 2016 Change
---------- ------------------ ------------- ------
Total
revenues $349,178 $388,747 (10)%
Operating
income
(loss) 54,071 (626,669) --
Adjusted
operating
income 54,071 51,476 5%
Net
income
(loss) 13,927 (589,937) --
Adjusted
net
income 13,927 22,295 (38)%
Earnings
(loss)
per
diluted
share $0.10 $(4.30) --
Adjusted
earnings
per
diluted
share $0.10 $0.16 (38)%
"Despite continued market headwinds, Diamond Offshore achieved earnings per share of $0.10," said Marc Edwards, President and Chief Executive Officer. "Overall, I am pleased with our third quarter results and our ability to manage costs, while remaining focused on maintaining our backlog position."
During the quarter, the Company announced new contracts for the Ocean Valiant and Ocean Scepter with Maersk in the UK and Fieldwood in Mexico, respectively. The addition of these two contracts adds 20 months of backlog.
As of September 30, 2016, the Company's total contracted backlog was $4.1 billion, which represents 27 rig years of work. Approximately 96% of the Company's available ultra-deepwater rig days for the remainder of 2016 are contracted with top tier customers.
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 800-247-9979 or 973-321-1100, for international callers. The conference ID number is 89455433. 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 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, 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
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2016 2015 2016 2015
---- ---- ---- ----
Revenues:
Contract drilling $339,636 $599,036 $1,140,568 $1,816,055
Revenues related to reimbursable expenses 9,542 10,706 67,900 47,775
----- ------ ------ ------
Total revenues 349,178 609,742 1,208,468 1,863,830
------- ------- --------- ---------
Operating expenses:
Contract drilling, excluding depreciation 186,654 277,944 597,831 971,471
Reimbursable expenses 7,965 10,476 51,283 46,904
Depreciation 86,473 118,086 295,729 378,714
General and administrative 15,237 16,888 48,774 50,888
Impairment of assets -- 2,546 678,145 361,074
Restructuring and separation costs -- 1,574 -- 8,735
(Gain) loss on disposition of assets (1,222) 794 (2,265) 19
------ --- ------ ---
Total operating expenses 295,107 428,308 1,669,497 1,817,805
------- ------- --------- ---------
Operating income (loss) 54,071 181,434 (461,029) 46,025
Other income (expense):
Interest income 150 629 592 1,796
Interest expense (19,032) (21,350) (68,704) (70,800)
Foreign currency transaction (loss) gain (712) (1,163) (7,833) 954
Other, net 269 217 (11,199) 702
--- --- ------- ---
Income (loss) before income tax (expense) 34,746 159,767 (548,173) (21,323)
benefit
Income tax (expense) benefit (20,819) (23,345) 59,588 (7,578)
------- ------- ------ ------
Net income (loss) $13,927 $136,422 $(488,585) $(28,901)
======= ======== ========= ========
Income (loss) per share $0.10 $0.99 $(3.56) $(0.21)
===== ===== ====== ======
Weighted-average shares outstanding:
Shares of common stock 137,170 137,159 137,167 137,156
Dilutive potential shares of common stock 84 44 -- --
--- --- --- ---
Total weighted-average shares outstanding 137,254 137,203 137,167 137,156
======= ======= ======= =======
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
(Unaudited)
(In thousands)
Three Months Ended
------------------
September 30, June 30, September 30,
------------- -------- -------------
2016 2016 2015
---- ---- ----
REVENUES
Floaters:
Ultra-Deepwater $217,275 $214,102 $376,195
Deepwater 66,011 67,191 136,668
Mid-water 56,350 56,694 69,500
------ ------ ------
Total Floaters 339,636 337,987 582,363
Jack-ups -- 19,422 16,673
Total Contract Drilling Revenue 339,636 $357,409 $599,036
======= ======== ========
Revenues Related to Reimbursable Expenses $9,542 $31,338 $10,706
====== ======= =======
CONTRACT DRILLING EXPENSE
Floaters:
Ultra-Deepwater $124,099 $127,185 $156,107
Deepwater 36,226 34,776 67,630
Mid-water 17,634 25,862 35,784
------ ------ ------
Total Floaters 177,959 187,823 259,521
Jack-ups 1,833 6,876 12,507
Other 6,862 3,637 5,916
----- ----- -----
Total Contract Drilling Expense $186,654 $198,336 $277,944
======== ======== ========
Reimbursable Expenses $7,965 $16,527 $10,476
====== ======= =======
OPERATING INCOME (LOSS)
Floaters:
Ultra-Deepwater $93,176 $86,917 $220,088
Deepwater 29,785 32,415 69,038
Mid-water 38,716 30,832 33,716
------ ------ ------
Total Floaters 161,677 150,164 322,842
Jack-ups (1,833) 12,546 4,166
Other (6,862) (3,637) (5,916)
Reimbursable expenses, net 1,577 14,811 230
Depreciation (86,473) (105,016) (118,086)
General and administrative expense (15,237) (18,139) (16,888)
Impairment of assets -- (678,145) (2,546)
Restructuring and separation costs -- -- (1,574)
Gain (loss) on disposition of assets 1,222 747 (794)
Total Operating Income (Loss) $54,071 $(626,669) $181,434
======= ========= ========
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
September 30, December 31,
2016 2015
---- ----
ASSETS
Current assets:
Cash and cash equivalents $81,329 $119,028
Marketable securities 46 11,518
Accounts receivable, net of allowance for bad debts 273,982 405,370
Prepaid expenses and other current assets 114,166 119,479
Assets held for sale 7,600 14,200
Total current assets 477,123 669,595
Drilling and other property and equipment, net of accumulated 5,819,309 6,378,814
depreciation
Other assets 112,743 101,485
------- -------
Total assets $6,409,175 $7,149,894
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $182,100 $286,589
Other current liabilities 297,781 339,134
Long-term debt 1,980,602 1,979,778
Deferred tax liability 164,389 276,529
Other liabilities 151,375 155,094
Stockholders' equity 3,632,928 4,112,770
--------- ---------
Total liabilities and stockholders' equity $6,409,175 $7,149,894
========== ==========
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
AVERAGE DAYRATE, UTILIZATION AND OPERATIONAL EFFICIENCY
(Dayrate in thousands)
Third Quarter Second Quarter Third Quarter
2016 2016 2015
---- ---- ----
Average Operational Efficiency Average Operational Efficiency Average Operational Efficiency
Dayrate (1) Utilization (2) (3) Dayrate (1) Utilization (2) (3) Dayrate Utilization (2) (3)
(1)
--- ---
Ultra-Deepwater
Floaters $452 48% 87.1% $452 47% 86.7% $479 71% 96.8%
Deepwater
Floaters $303 34% 94.5% $301 35% 100% $361 59% 90.3%
Mid-Water
floaters $311 33% 98.4% $313 30% 99.4% $289 31% 97.5%
Jack-ups -- -- -- $335 13% 100% $97 31% 99.8%
Fleet Total 91.0% 92.7% 95.5%
(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, but excluding rigs
under construction). As of September 30,
2016, our cold-stacked rigs included four
ultra-deepwater semisubmersibles, three
deepwater semisubmersibles, three mid-
water semisubmersibles and four marketed-
for-sale jack-up rigs.
(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 2016 impairment of rigs and associated inventory, as well as the related tax effect thereof and other second quarter discrete tax items, 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,
2016
2016
Reconciliation of As Reported Operating (Loss) Income to
Adjusted Operating Income:
(In thousands)
As reported operating income (loss) $54,071 $(626,669)
Impairments and other charges:
Impairment of rigs and associated inventory (1) -- 678,145
--- -------
Adjusted operating income $54,071 $51,476
======= =======
Reconciliation of As Reported Net Loss to Adjusted Net Income:
(In thousands)
As reported net income (loss) $13,927 $(589,937)
Impairments and other charges:
Impairment of rigs and associated inventory (1) -- 678,145
Tax effect of impairments and other charges:
Impairment of rigs and associated inventory (2) -- (143,165)
Discrete tax items (3) 77,252
Adjusted net income $13,927 $22,295
======= =======
Three Months Ended
September 30, June 30,
2016
2016
Reconciliation of As Reported Income (Loss) per Diluted Share
to Adjusted Earnings per Diluted Share:
As reported income (loss) per diluted share $0.10 $(4.30)
Impairments and other charges:
Impairment of rigs and associated inventory (1) -- 4.94
Tax effect of impairments and other charges:
Impairment of rigs and associated inventory (2) -- (1.04)
Other discrete tax items (3) -- 0.56
---
Adjusted earnings per diluted share $0.10 $0.16
===== =====
(1) Represents the aggregate
amount of impairment losses
recognized during the second
quarter of 2016 related to
eight of our drilling rigs
and associated inventory.
(2) Represents the income tax
effects of the aggregate
impairment loss recognized in
the second quarter of 2016.
(3) Represents the aggregate of
certain discrete income tax
adjustments recognized during
the second quarter of 2016,
primarily related to
valuation allowances for
current and prior year tax
assets associated with
foreign tax credits, which we
no longer expect to be able
to utilize to offset income
taxes in the U.S. tax
jurisdiction.
Contact:
Samir Ali
Sr. Director, Investor Relations & Corporate Development
(281) 647-4035
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SOURCE Diamond Offshore Drilling, Inc.
