HOUSTON, Feb. 6, 2017 /PRNewswire/ -- Diamond Offshore Drilling, Inc. (NYSE: DO) today reported results for the fourth quarter of 2016.

 


Three Months Ended



Thousands of dollars, except per share data

December 31, 2016

September 30, 2016

Change



Total revenues

$

391,874

$

349,178

12%



Operating income


104,145


54,071

93%



Net income


73,063


13,927

425%



Earnings per diluted share

$

0.53

$

0.10

430%










 

"Considering current market headwinds, I am pleased with our fourth quarter results, driven in part by continuing cost controls and improving rig efficiencies," said Marc Edwards, President and Chief Executive Officer. "Despite an extremely challenging market environment, the Ocean GreatWhite, Ocean Scepter and the Ocean BlackRhino will all commence term contracts in the first quarter, contributing to our strong backlog and liquidity positions."

During the quarter, the Company executed a new contract for the Ocean Monarch with BHP Billiton in Australia, which is scheduled to commence at the end of the second quarter of 2017. The new contract runs through late third quarter of 2017.

As of December 31, 2016, the Company's total contracted backlog was $3.6 billion, which represents 25 rig years of work. Approximately 94% of the Company's available ultra-deepwater rig days for 2017 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. CST 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 54377143. 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
December 31,


Twelve Months Ended
December 31,


2016


2015


2016


2015









Revenues:








    Contract drilling

$

384,646


$

544,129


$

1,525,214


$

2,360,184

    Revenues related to reimbursable expenses

7,228


11,434


75,128


59,209

            Total revenues

391,874


555,563


1,600,342


2,419,393









Operating expenses:








    Contract drilling, excluding depreciation

174,342


256,393


772,173


1,227,864

    Reimbursable expenses

6,775


11,146


58,058


58,050

    Depreciation

86,031


114,448


381,760


493,162

    General and administrative

14,786


15,574


63,560


66,462

    Impairment of assets

--


499,367


678,145


860,441

    Restructuring and separation costs

--


1,043


--


9,778

    Bad debt recovery

(265)


--


(265)


--

    Loss (gain) on disposition of assets

6,060


(2,309)


3,795


(2,290)

            Total operating expenses

287,729


895,662


1,957,226


2,713,467









Operating income (loss)

104,145


(340,099)


(356,884)


(294,074)









Other income (expense):








    Interest income

176


1,526


768


3,322

    Interest expense

(21,230)


(23,134)


(89,934)


(93,934)

    Foreign currency transaction (loss) gain

(3,689)


1,511


(11,522)


2,465

    Other, net

472


171


(10,727)


873









Income (loss) before income tax (expense)   
    benefit

79,874


(360,025)


(468,299)


(381,348)









Income tax (expense) benefit

(6,811)


114,641


52,777


107,063









Net income (loss)

$

73,063


$

(245,384)


$

(415,522)


$

(274,285)









Income (loss) per share

$

0.53


$

(1.79)


$

(3.03)


$

(2.00)









Weighted-average shares outstanding:








    Shares of common stock

137,170


137,159


137,168


137,157

    Dilutive potential shares of common stock

93


--


--


--

            Total weighted-average shares outstanding

137,263


137,159


137,168


137,157









 

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS

(Unaudited)

(In thousands)



Three Months Ended


December 31,


September 30,


December 31,


2016


2016


2015







REVENUES






   Floaters:






      Ultra-Deepwater

$

231,820


$

217,275


$

395,798

      Deepwater

64,678


66,011


92,125

      Mid-water

88,130


56,350


44,766

            Total Floaters

384,628


339,636


532,689

   Jack-ups

18


--


11,440

Total Contract Drilling Revenue

384,646


339,636


$

544,129







Revenues Related to Reimbursable Expenses

$

7,228


$

9,542


$

11,434







CONTRACT DRILLING EXPENSE






   Floaters:






      Ultra-Deepwater

$

119,490


$

124,099


$

147,991

      Deepwater

30,481


36,226


60,010

      Mid-water

16,814


17,634


28,767

         Total Floaters

166,785


177,959


236,768

   Jack-ups

3,090


1,833


10,749

   Other

4,467


6,862


8,876

Total Contract Drilling Expense

$

174,342


$

186,654


$

256,393







Reimbursable Expenses

$

6,775


$

7,965


$

11,146







OPERATING INCOME (LOSS)






   Floaters:






      Ultra-Deepwater

$

112,330


$

93,176


$

247,807

      Deepwater

34,197


29,785


32,115

      Mid-water

71,316


38,716


15,999

         Total Floaters

217,843


161,677


295,921

   Jack-ups

(3,072)


(1,833)


691

   Other

(4,467)


(6,862)


(8,876)

   Reimbursable expenses, net

453


1,577


288

   Depreciation

(86,031)


(86,473)


(114,448)

   General and administrative expense

(14,786)


(15,237)


(15,574)

   Impairment of assets

--


--


(499,367)

   Restructuring and separation costs

--


--


(1,043)

   Bad debt recovery

265


--


--

   (Loss) gain on disposition of assets

(6,060)


1,222


2,309

         Total Operating Income (Loss)

$

104,145


$

54,071


$

(340,099)








                      

 

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)






December 31,


December 31,


2016


2015

ASSETS




Current assets:




      Cash and cash equivalents

$

156,233


$

119,028

      Marketable securities

35


11,518

      Accounts receivable, net of allowance for bad debts

247,028


405,370

      Prepaid expenses and other current assets

102,111


119,479

      Assets held for sale

400


14,200

            Total current assets

505,807


669,595





Drilling and other property and equipment, net of accumulated
  depreciation

 

5,726,935


 

6,378,814

Other assets

139,135


101,485

            Total assets

$

6,371,877


$

7,149,894





LIABILITIES AND STOCKHOLDERS' EQUITY




Short-term borrowings

$

104,200


$

286,589

Other current liabilities

236,299


339,134

Long-term debt

1,980,884


1,979,778

Deferred tax liability

197,011


276,529

Other liabilities

146,368


155,094

Stockholders' equity

3,707,115


4,112,770

            Total liabilities and stockholders' equity

$

6,371,877


$

7,149,894

 

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands, except per share data)



Year ended December 31,


2016


2015

Operating activities:




      Net loss

$

(415,522)


$

(274,285)

      Adjustments to reconcile net loss to net cash




         provided by operating activities




         Depreciation

381,760


493,162

         Loss on impairment of assets

678,145


860,441

         Deferred tax provision

(106,263)


(242,034)

      Other

(27,696)


(69,771)

      Net changes in operating working capital

136,130


(31,086)

            Net cash provided by operating activities

646,554


736,427

Investing activities:




      Capital expenditures (including rig construction)

(652,673)


(830,655)

      Proceeds from disposition of assets, net of disposal costs

221,722


13,049

      Proceeds from sale and maturities of marketable securities

4,614


51

            Net cash used in investing activities

(426,337)


(817,555)

Financing activities:




      Repayment of long-term debt

--


(250,000)

      (Repayment of) proceeds from short-term borrowings, net

(182,389)


286,589

      Debt issuance costs and arrangement fees

(215)


(624)

      Payment of dividends and anti-dilution payments

(408)


(69,432)

            Net cash used in financing activities

(183,012)


(33,467)

Net change in cash and cash equivalents

37,205


(114,595)

      Cash and cash equivalents, beginning of year

119,028


233,623

      Cash and cash equivalents, end of year

$

156,233


$

119,028

 

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 charges recorded for the impairment of rigs and associated inventory, as well as the related tax effect thereof and other 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


 

Twelve Months Ended


December 31,

September 30,


December 31,


2016

2016


2016

2015

Reconciliation of As Reported
Operating Income (Loss) to
Adjusted Operating Income:

(In thousands)












As reported operating income (loss)

$

104,145

$

54,071


$

(356,884)

$

(294,074)







      Impairments and other charges:






          Impairment of rigs and associated
             inventory(1)

 

--

 

--


 

678,145

860,441

          Restructuring and separation costs(2)

--

--


--

9,778







Adjusted operating income

$

104,145

$

54,071


$

321,261

$

576,145







Reconciliation of As Reported Net
Income (Loss) to Adjusted Net
Income:

(In thousands)












As reported net income (loss)

$

73,063

$

13,927


$

(415,522)

$

(274,285)







      Impairments and other charges:






Impairment of rigs and associated
   inventory(1)

 

--

 

--


678,145

860,441

          Restructuring and separation costs(2)

--

--


--

9,778







Tax effect of impairments and other
    charges:






Impairment of rigs and associated
   inventory(3)

--

 

--


(143,165)

(167,129)

          Restructuring and separation costs(4)

--

--


--

(2,529)

          Discrete tax items(5)

--

--


77,252

--







Adjusted net income

$

73,063

$

13,927


$

196,710

$

426,276

 



Three Months Ended


Twelve Months Ended



December 31,

September 30,


December 31,



2016

2016


2016


2015

Reconciliation of As Reported Income
(Loss) per Diluted Share to Adjusted
Earnings per Diluted Share:
















As reported income (loss) per diluted
share


$

0.53

$

0.10


 

$

(3.03)


$

(2.00)

      Impairments and other charges:









Impairment of rigs and associated
    inventory(1)


 

--

--


4.94



 

6.27

          Restructuring and separation costs(2)


--

--


--



.07










Tax effect of impairments and other
    charges:









Impairment of rigs and associated
    inventory(3)


 

--

 

--


(1.04)



 

(1.22)

           Restructuring and separation costs(4)


--

--


--



(.02)

        Other discrete items(5)


--

--


0.56



--










Adjusted earnings per diluted share


$

0.53

$

0.10


$

1.43


$

3.10













                      

(1) Represents the aggregate amount of impairment losses recognized during 2015 and 2016 related to several of our drilling rigs and associated inventory. 
(2) Represents the aggregate amount of restructuring and separation costs recognized in 2015 associated with a planned reduction in workforce at our onshore bases and corporate facilities.
(3) Represents the income tax effects of the aggregate impairment loss recognized for the 2015 and 2016 impairments.
(4) Represents the income tax effects of the aggregate restructuring and separation costs recognized in 2015.
(5) 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. 

 

 

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

AVERAGE DAYRATE, UTILIZATION AND OPERATIONAL EFFICIENCY

(Dayrate in thousands)






Fourth Quarter

2016

Third Quarter

2016

Fourth 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

$456

49%

92.0%

$452

48%

87.1%

$531

70%

95.5%











Deepwater Floaters

$287

39%

92.1%

$303

34%

94.5%

$337

42%

97.7%











Mid-Water floaters

$478

35%

99.9%

$311

33%

98.4%

$249

24%

97.8%











Jack-ups

--

--

--

--

--

--

$124

17%

100.0%











Fleet Total



93.5%



91.0%



96.6%



(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).  Our current fleet includes four ultra-deepwater semisubmersibles, three deepwater semisubmersibles, three mid-water semisubmersibles 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.

 

Contact:
Samir Ali
Sr. Director, Investor Relations & Corporate Development
(281) 647-4035

 

 

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SOURCE Diamond Offshore Drilling, Inc.

Copyright 2017 PR Newswire

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