HOUSTON, Aug. 1, 2016 /PRNewswire/ -- Diamond
Offshore Drilling, Inc. (NYSE: DO) today reported results for the
second quarter of 2016.
|
|
Three Months
Ended
|
|
|
Thousands of
dollars, except per share
data
|
|
June 30,
2016
|
|
March 31,
2016
|
|
Change
|
|
|
Total
revenues
|
|
$
388,747
|
|
$
470,543
|
|
(17)%
|
|
|
|
|
|
|
|
Operating (loss)
income
|
|
(626,669)
|
|
111,569
|
|
(662)%
|
|
|
|
|
|
|
|
Adjusted operating
income
|
|
51,476
|
|
111,569
|
|
(54)%
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
(589,937)
|
|
87,425
|
|
(775)%
|
|
|
|
|
|
|
|
Adjusted net
income
|
|
22,295
|
|
87,425
|
|
(74)%
|
|
|
|
|
|
|
|
(Loss) earnings per
diluted share
|
|
($4.30)
|
|
$0.64
|
|
(772)%
|
|
|
|
|
|
|
|
Adjusted earnings per
diluted share
|
|
$0.16
|
|
$0.64
|
|
(75)%
|
|
|
|
|
|
|
|
"Despite facing both market and operational headwinds during the
quarter, Diamond was able to record adjusted earnings per share of
$0.16," said Marc Edwards, President and Chief Executive
Officer.
Results for the second quarter were significantly impacted by
impairment charges and related taxes of $612
million, or $4.46 per diluted
share, primarily relating to the carrying value of eight
semisubmersible rigs and associated inventory.
Operational efficiency of the Company's fleet was 92.7% in the
second quarter, compared to 98.2% in the first quarter of 2016. The
decline in operational efficiency was primarily driven by issues
experienced within the ultra-deepwater floater category,
specifically as it relates to four unplanned retrievals of blowout
preventers.
Utilization in the deep-water segment increased by 25% in the
second quarter of 2016, compared to the first quarter of 2016. The
increase was driven by the Ocean Apex beginning its 18-month
contract with Woodside in Australia at a rate of $285,000 per day. The rig was recently awarded a
three-month extension at $205,000 per
day, which will keep the rig working until February 2018.
During the quarter, the Company elected to cold stack the
Ocean Endeavor and Ocean Scepter. The Company's
decision was guided by its desire to minimize costs associated with
the rigs, while ensuring the rigs are preserved in such a manner as
to enable a quick reactivation when the market recovers.
Additionally, the Company intends to scrap the Ocean Quest
and Ocean Star.
As of June 30, 2016, the Company's
total contracted backlog was $4.4
billion, which represents 28 rig years of work.
Approximately 86% of the Company's available ultra-deepwater rig
days for the remainder of 2016 are contracted with top tier
customers.
Edwards also commented on the recently announced Helical
Buoyancy™ riser joint development agreement with Trelleborg,
stating, "This is another example of Diamond Offshore
differentiating itself in an oversupplied market. As with our
Pressure Control by the Hour™ service model, Diamond
Offshore is providing the industry with thought leadership to drive
efficiencies and lower the cost of operating offshore."
Reflecting on the market, Edwards went on to say, "Although the
market continues to be challenged, our focus is on striking a
balance between controlling costs and laying the foundation to
ensure Diamond Offshore is well positioned for the recovery."
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 47948706. 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
|
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Contract drilling
|
$
|
357,409
|
$
|
617,442
|
$
|
800,932
|
$
|
1,217,019
|
Revenues related to reimbursable expenses
|
|
31,338
|
|
16,590
|
|
58,358
|
|
37,069
|
Total revenues
|
|
388,747
|
|
634,032
|
|
859,290
|
|
1,254,088
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Contract drilling, excluding depreciation
|
|
198,336
|
|
342,869
|
|
411,177
|
|
693,527
|
Reimbursable expenses
|
|
16,527
|
|
16,336
|
|
43,318
|
|
36,428
|
Depreciation
|
|
105,016
|
|
123,329
|
|
209,256
|
|
260,628
|
General and administrative
|
|
18,139
|
|
16,548
|
|
33,537
|
|
34,000
|
Impairment of assets
|
|
678,145
|
|
--
|
|
678,145
|
|
358,528
|
Restructuring and separation costs
|
|
--
|
|
993
|
|
--
|
|
7,161
|
Gain on disposition of assets
|
|
(747)
|
|
(164)
|
|
(1,043)
|
|
(775)
|
Total operating expenses
|
|
1,015,416
|
|
499,911
|
|
1,374,390
|
|
1,389,497
|
|
|
|
|
|
|
|
|
|
Operating (loss)
income
|
|
(626,669)
|
|
134,121
|
|
(515,100)
|
|
(135,409)
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Interest income
|
|
269
|
|
584
|
|
442
|
|
1,167
|
Interest expense
|
|
(24,156)
|
|
(25,468)
|
|
(49,672)
|
|
(49,450)
|
Foreign currency transaction (loss) gain
|
|
(3,513)
|
|
(3,473)
|
|
(7,121)
|
|
2,117
|
Other, net
|
|
(12,046)
|
|
264
|
|
(11,468)
|
|
485
|
|
|
|
|
|
|
|
|
|
(Loss) income
before income tax benefit (expense)
|
|
(666,115)
|
|
106,028
|
|
(582,919)
|
|
(181,090)
|
|
|
|
|
|
|
|
|
|
Income tax benefit
(expense)
|
|
76,178
|
|
(15,642)
|
|
80,407
|
|
15,767
|
Net (loss)
income
|
$
|
(589,937)
|
$
|
90,386
|
$
|
(502,512)
|
$
|
(165,323)
|
|
|
|
|
|
|
|
|
|
(Loss) income per
share
|
$
|
(4.30)
|
$
|
0.66
|
$
|
(3.66)
|
$
|
(1.21)
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
Shares of common stock
|
|
137,170
|
|
137,159
|
|
137,166
|
|
137,155
|
Dilutive potential shares of common stock
|
|
--
|
|
42
|
|
--
|
|
--
|
Total weighted average shares outstanding
|
|
137,170
|
|
137,201
|
|
137,166
|
|
137,155
|
|
|
|
|
|
|
|
|
|
DIAMOND OFFSHORE
DRILLING, INC. AND SUBSIDIARIES
|
RESULTS OF
OPERATIONS
|
(Unaudited)
|
(In
thousands)
|
|
|
|
Three Months
Ended
|
|
|
June
30,
|
|
March 31,
|
|
June
30,
|
|
|
2016
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
REVENUES
|
|
|
|
|
|
|
Floaters:
|
|
|
|
|
|
|
Ultra-Deepwater
|
$
|
214,102
|
$
|
325,961
|
$
|
315,670
|
Deepwater
|
|
67,191
|
|
59,117
|
|
181,104
|
Mid-water
|
|
56,694
|
|
47,672
|
|
96,926
|
Total
Floaters
|
|
337,987
|
|
432,750
|
|
593,700
|
Jack-ups
|
|
19,422
|
|
10,773
|
|
23,742
|
Total Contract
Drilling Revenue
|
$
|
357,409
|
$
|
443,523
|
$
|
617,442
|
|
|
|
|
|
|
|
Revenues Related
to Reimbursable Expenses
|
$
|
31,338
|
$
|
27,020
|
$
|
16,590
|
|
|
|
|
|
|
|
CONTRACT DRILLING
EXPENSE
|
|
|
|
|
|
|
Floaters:
|
|
|
|
|
|
|
Ultra-Deepwater
|
$
|
127,185
|
$
|
123,736
|
$
|
161,485
|
Deepwater
|
|
34,776
|
|
47,509
|
|
86,464
|
Mid-water
|
|
25,862
|
|
23,884
|
|
66,735
|
Total
Floaters
|
|
187,823
|
|
195,129
|
|
314,684
|
Jack-ups
|
|
6,876
|
|
6,055
|
|
20,873
|
Other
|
|
3,637
|
|
11,657
|
|
7,312
|
Total Contract
Drilling Expense
|
$
|
198,336
|
$
|
212,841
|
$
|
342,869
|
|
|
|
|
|
|
|
Reimbursable
Expenses
|
$
|
16,527
|
$
|
26,791
|
$
|
16,336
|
|
|
|
|
|
|
|
OPERATING (LOSS)
INCOME
|
|
|
|
|
|
|
Floaters:
|
|
|
|
|
|
|
Ultra-Deepwater
|
$
|
86,917
|
$
|
202,225
|
$
|
154,185
|
Deepwater
|
|
32,415
|
|
11,608
|
|
94,640
|
Mid-water
|
|
30,832
|
|
23,788
|
|
30,191
|
Total
Floaters
|
|
150,164
|
|
237,621
|
|
279,016
|
Jack-ups
|
|
12,546
|
|
4,718
|
|
2,869
|
Other
|
|
(3,637)
|
|
(11,657)
|
|
(7,312)
|
Reimbursable
expenses, net
|
|
14,811
|
|
229
|
|
254
|
Depreciation
|
|
(105,016)
|
|
(104,240)
|
|
(123,329)
|
General and
administrative expense
|
|
(18,139)
|
|
(15,398)
|
|
(16,548)
|
Impairment of
assets
|
|
(678,145)
|
|
--
|
|
--
|
Restructuring
and separation costs
|
|
--
|
|
--
|
|
(993)
|
Gain on
disposition of assets
|
|
747
|
|
296
|
|
164
|
Total Operating (Loss) Income
|
$
|
(626,669)
|
$
|
111,569
|
$
|
134,121
|
DIAMOND OFFSHORE
DRILLING, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
(In
thousands)
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
103,279
|
$
|
119,028
|
|
|
|
|
|
|
|
Marketable
securities
|
|
57
|
|
11,518
|
|
|
|
|
|
|
|
Accounts receivable,
net of allowance for bad debts
|
|
324,588
|
|
405,370
|
|
|
|
|
|
|
|
Prepaid expenses and
other current assets
|
|
112,293
|
|
119,479
|
|
|
|
|
|
|
|
Assets held for
sale
|
|
6,200
|
|
14,200
|
|
|
|
|
|
|
|
|
Total current
assets
|
|
546,417
|
|
669,595
|
|
|
|
|
|
Drilling and other
property and equipment, net of
|
|
|
|
|
accumulated
depreciation
|
|
5,848,172
|
|
6,378,814
|
|
|
|
|
|
|
Other
assets
|
|
110,689
|
|
101,485
|
|
|
Total
assets
|
$
|
6,505,278
|
$
|
7,149,894
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
$
|
327,300
|
$
|
286,589
|
Other current
liabilities
|
|
300,688
|
|
339,134
|
|
|
|
|
|
Long-term
debt
|
|
1,980,324
|
|
1,979,778
|
|
|
|
|
|
Deferred tax
liability
|
|
114,384
|
|
276,529
|
|
|
|
|
|
Other
liabilities
|
|
164,505
|
|
155,094
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
3,618,077
|
|
4,112,770
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$
|
6,505,278
|
$
|
7,149,894
|
|
|
|
|
|
DIAMOND OFFSHORE
DRILLING, INC. AND SUBSIDIARIES
|
AVERAGE DAYRATE,
UTILIZATION AND OPERATIONAL EFFICIENCY
|
(Dayrate in
thousands)
|
|
|
Second
Quarter 2016
|
First
Quarter 2016
|
Second
Quarter 2015
|
|
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
|
$452
|
47%
|
86.7%
|
$533
|
61%
|
98.4%
|
$483
|
63%
|
90.9%
|
|
|
|
|
|
|
|
|
|
|
Deepwater
Floaters
|
$301
|
35%
|
100%
|
$335
|
28%
|
97.1%
|
$451
|
63%
|
99.3%
|
|
|
|
|
|
|
|
|
|
|
Mid-Water
floaters
|
$313
|
30%
|
99.4%
|
$263
|
25%
|
97.7%
|
$278
|
32%
|
99.7%
|
|
|
|
|
|
|
|
|
|
|
Jack-ups
|
$335
|
13%
|
100%
|
$118
|
18%
|
100%
|
$83
|
53%
|
98.6%
|
|
|
|
|
|
|
|
|
|
|
Fleet
Total
|
|
|
92.7%
|
|
|
98.2%
|
|
|
95.9%
|
|
|
(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 June 30, 2016, our cold-stacked rigs
included four ultra-deepwater semisubmersibles, four deepwater
semisubmersibles, four mid-water semisubmersibles and five 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.
|
|
|
Three Months
Ended June 30,
2016
|
Reconciliation of
As Reported Operating (Loss) Income to Adjusted Operating
Income: (In
thousands)
|
|
|
|
As reported
operating loss
|
$
(626,669)
|
|
|
Impairments and other charges:
|
|
Impairment
of rigs and associated inventory (1)
|
678,145
|
|
|
Adjusted operating
income
|
$
51,476
|
|
|
Reconciliation of
As Reported Net Loss to Adjusted Net
Income: (In
thousands)
|
|
|
|
As reported net
loss
|
$
(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
|
$
22,295
|
|
|
Reconciliation of
As Reported Loss per Diluted Share to Adjusted Earnings per Diluted
Share:
|
|
|
|
As reported loss
per diluted share
|
$
(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
|
$
0.16
|
______________________________
|
(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.