Diamond Offshore Announces Fourth Quarter 2018 Results

HOUSTON, Feb. 11, 2019 /PRNewswire/ -- Diamond Offshore Drilling, Inc. (NYSE: DO) today reported the following results for the fourth quarter of 2018:


Three Months Ended

Thousands of dollars, except per share data

December 31, 2018


September 30, 2018

Total revenues 

$                  232,522


$                  286,322

Operating loss

(37,277)


(23,043)

Adjusted operating loss

(37,161)


(4,794)

Net loss

(79,207)


(51,112)

Adjusted net loss

(57,776)


(35,257)

Loss per diluted share 

$                      (0.58)


$                      (0.37)

Adjusted loss per diluted share 

$                      (0.42)


$                      (0.26)

"We continued to make strong progress with another active contracting quarter resulting in approximately 33 months of additional backlog secured," said Marc Edwards, President and Chief Executive Officer. "Among the new fixtures is a 15-month contract for the Ocean Valiant and a one-year contract for the Ocean Onyx, which we are upgrading and reactivating for the new work. Additional awards were for the Ocean Apex and Ocean Monarch in Australia."

As of January 1, 2019, the Company's total contracted backlog was $2.0 billion, not including $135 million margin commitment from one of the Company's customers.

CONFERENCE CALL

A conference call to discuss Diamond Offshore's earnings results has been scheduled for 8:00 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 7757436. 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 innovation, thought leadership and contract drilling services to solve complex deepwater challenges 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, 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.

Contact:     
Samir Ali
Vice President, Investor Relations & Corporate Development
(281) 647-4035

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)












Three Months Ended 


Twelve Months Ended 

December 31,


September 30,


December 31,

December 31,


2018


2018


2017


2018


2017











Revenues:










Contract drilling 

$          226,003


$          280,691


$          337,809


$   1,059,973


$   1,451,219

Revenues related to reimbursable expenses 

6,519


5,631


8,399


23,242


34,527

Total revenues 

232,522


286,322


346,208


1,083,215


1,485,746











Operating expenses:










Contract drilling, excluding depreciation 

160,368


188,456


204,152


722,834


801,964

Reimbursable expenses 

6,459


5,574


8,256


22,917


33,744

Depreciation 

86,255


81,884


86,203


331,789


348,695

General and administrative 

15,294


33,308


20,206


85,351


74,505

Impairment of assets 

-


-


28,045


27,225


99,313

Restucturing and separation costs

116


649


14,146


5,041


14,146

Loss (gain) on disposition of assets 

1,307


(506)


(8,415)


241


(10,500)

Total operating expenses 

269,799


309,365


352,593


1,195,398


1,361,867











Operating (loss) income  

(37,277)


(23,043)


(6,385)


(112,183)


123,879











Other income (expense):










Interest income 

2,476


2,364


1,126


8,477


2,473

Interest expense, net of amounts capitalized 

(31,044)


(34,293)


(30,119)


(123,240)


(113,528)

Loss on extinguishment of senior notes

-


-


-


-


(35,366)

Foreign currency transaction loss

(494)


(743)


(611)


(379)


(1,128)

Other, net 

36


(179)


908


700


2,230











Loss before income tax benefit 

(66,303)


(55,894)


(35,081)


(226,625)


(21,440)











Income tax (expense) benefit 

(12,904)


4,782


3,140


46,353


39,786











Net (loss) income  

$           (79,207)


$           (51,112)


$           (31,941)


$    (180,272)


$       18,346











(Loss) earnings per share 

$              (0.58)


$              (0.37)


$              (0.23)


$          (1.31)


$           0.13











Weighted-average shares outstanding:










Shares of common stock 

137,436


137,434


137,228


137,399


137,213

Dilutive potential shares of common stock 

-


-


-


-


52

Total weighted-average shares outstanding 

137,436


137,434


137,228


137,399


137,265

 

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)






December 31,


December 31,


2018


2017

ASSETS




Current assets:




Cash and cash equivalents 

$         154,073


$         376,037

Marketable securities

299,849


-

Accounts receivable, net of allowance for bad debts   

168,620


256,730

Prepaid expenses and other current assets   

163,396


157,625

Assets held for sale   

-


96,261

Total current assets 

785,938


886,653





Drilling and other property and equipment, net of accumulated 




depreciation 

5,184,222

5,261,641

Other assets 

65,534


102,276

Total assets 

$      6,035,694


$      6,250,570





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities 

$         236,846


$         223,288

Long-term debt 

1,973,922


1,972,225

Deferred tax liability 

104,380


167,299

Other liabilities 

135,893


113,497

Stockholders' equity 

3,584,653


3,774,261

Total liabilities and stockholders' equity 

$      6,035,694


$      6,250,570

 

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)






Years Ended 


December 31,


2018


2017

Operating activities:




Net (loss) income 

$        (180,272)


$           18,346

Adjustments to reconcile net (loss) income to net cash




provided by operating activities




Depreciation   

331,789


348,695

Loss on impairments of assets

27,225


99,313

Loss on extinguishment of senior notes

-


35,366

Deferred tax provision   

(75,993)


(72,127)

Deferred contract costs, net

22,765


46,337

Other   

(534)


24,991

Net changes in operating working capital   

107,078

(7,113)

Net cash provided by operating activities 

232,058


493,808





Investing activities:




Capital expenditures 

(222,406)


(139,581)

Proceeds from disposition of assets, net of disposal costs

70,067


15,196

Proceeds from maturities of marketable securities

1,600,000


35

Purchase of marketable securities

(1,895,997)


-

Net cash used in investing activities 

(448,336)


(124,350)





Financing activities:




Redemption of senior notes

-


(500,000)

Payment of debt extinguishment costs

-


(34,395)

Proceeds from issuance of senior costs

-


496,360

Repayment of short-term borrowings, net

-


(104,200)

Other   

(5,686)


(7,419)

Net cash used in financing activities 

(5,686)


(149,654)





Net change in cash and cash equivalents 

(221,964)


219,804

Cash and cash equivalents, beginning of period 

376,037


156,233

Cash and cash equivalents, end of period   

$         154,073


$         376,037

 

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

AVERAGE DAYRATE, UTILIZATION AND OPERATIONAL EFFICIENCY

(Dayrate in thousands)










































Fourth Quarter

Third Quarter

Fourth Quarter

2018

2018

2017


Average Dayrate
(1)

Utilization
(2)

Operational Efficiency
(3)

Average Dayrate
(1)

Utilization
(2)

Operational Efficiency
(3)

Average Dayrate
(1)

Utilization
(2)

Operational Efficiency
(3)











Floaters

$315

46%

95.4%

$333

54%

97.0%

$366

49%

98.7%











Jack-ups

--

--

--

--

--

--

$75

65%

100.0%











Fleet Total



95.4%



97.0%



98.8%


(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 floaters 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, non-revenue earning 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 restructuring and separation costs incurred in 2018, costs incurred in the third quarter 2018 for settlement of a previously pending legal claim, the loss on a rig sale recognized in the third quarter 2018, as well as the related tax effects 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 



December 31,


September 30,



2018


2018

Reconciliation of As Reported Operating Loss to
Adjusted Operating Loss:




(In thousands)






As reported operating loss

$           (37,277)


$           (23,043)






Impairments and other charges:




Legal settlement

-


17,500

Restructuring and separation costs

116


649

Loss on sale of rigs

-


100






Adjusted operating loss

$           (37,161)


$             (4,794)






Reconciliation of As Reported Net Loss to Adjusted Net
Loss:




(In thousands)






As reported net loss

$           (79,207)


$           (51,112)






Impairments and other charges:




Legal settlement

-


17,500

Restructuring and separation costs

116


649

Loss on sale of rigs

-


100






Tax effect of impairments and other charges:




Legal settlement

-


(2,296)

Restructuring and separation costs

(26)


(85)

Loss on sale of rigs

-


(13)

Other discrete items (1) 

21,341


-






Adjusted net loss

$           (57,776)


$           (35,257)

 



Three Months Ended 



December 31,


September 30,



2018


2018

Reconciliation of As Reported Loss per Diluted Share to
Adjusted Loss per Diluted Share:









As reported loss per diluted share 

$               (0.58)


$               (0.37)

Impairments and other charges:




Legal settlement

-


0.12

Restructuring and separation costs 

-


0.01






Tax effect of impairments and other charges:




Legal settlement

-


(0.02)

Restructuring and separation costs

-


-

Other discrete items (1) 

0.16


-






Adjusted loss per diluted share 

$               (0.42)


$               (0.26)


(1)

Represents the aggregate of certain discrete income tax adjustments recognized during the fourth quarter of 2018, primarily related to limitations of our foreign tax credit utilization as a result of recently proposed regulations corresponding to the U.S. tax reform legislation enacted in December of 2017.

 

Diamond Offshore Drilling, Inc. Logo. (PRNewsFoto/Diamond Offshore Drilling, Inc.)

 

 

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