HOUSTON, Feb. 12, 2018 /PRNewswire/ -- Diamond Offshore Drilling, Inc. (NYSE: DO) today reported the following results for the fourth quarter of 2017:
Three Months Ended
Thousands of dollars, except per share data
December 31, 2017
September 30, 2017
Operating (loss) income
Adjusted operating income
Net (loss) income
Adjusted net (loss) income
(Loss) earnings per diluted share
Adjusted (loss) earnings per diluted share
"Although market conditions continue to be challenging, we were able to secure additional work for the Ocean Valor and Ocean Valiant, extending both of the rigs' current contracts through 2020," said Marc Edwards, President and Chief Executive Officer. "These contract extensions comprise a majority of the additional 48 months of backlog Diamond was able to secure this past quarter." Edwards went on to say, "The moored market continues to tighten, evidenced by our three other contract wins during the quarter."
Operational efficiency of the Company's fleet was 98.8% in the fourth quarter, compared to 94.3% in the third quarter of 2017, reflecting continued improvements from the Company's Pressure Control by the Hour® service model.
As of December 31, 2017, the Company's total contracted backlog was $2.4 billion, which represents approximately 21 rig years of work.
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 7894978. 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).
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.
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended
Twelve Months Ended
Revenues related to reimbursable expenses
Contract drilling, excluding depreciation
General and administrative
Impairment of assets
Restucturing and separation costs
(Gain) loss on disposition of assets
Total operating expenses
Operating (loss) income
Other income (expense):
Interest expense, net of amounts capitalized
Foreign currency transaction loss
Loss on extinguishment of senior notes
(Loss) income before income tax benefit
Income tax benefit
Net (loss) income
(Loss) income per share
Weighted-average shares outstanding:
Shares of common stock
Dilutive potential shares of common stock
Total weighted-average shares outstanding
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS
Total Contract Drilling Revenue
Revenues Related to Reimbursable Expenses
CONTRACT DRILLING EXPENSE
Total Contract Drilling Expense
OPERATING (LOSS) INCOME
Reimbursable expenses, net
General and administrative expense
Restucturing and separation costs
Gain (loss) on disposition of assets
Total Operating (Loss) Income
CONDENSED CONSOLIDATED BALANCE SHEETS
Cash and cash equivalents
Accounts receivable, net of allowance for bad debts
Prepaid expenses and other current assets
Assets held for sale
Total current assets
Drilling and other property and equipment, net of accumulated
LIABILITIES AND STOCKHOLDERS' EQUITY
Other current liabilities
Deferred tax liability
Total liabilities and stockholders' equity
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Net income (loss)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Loss on impairment of assets
Deferred tax provision
Deferred income, net
Deferred expenses, net
Net changes in operating working capital
Net cash provided by operating activities
Capital expenditures (including rig construction)
Proceeds from disposition of assets, net of disposal costs
Net cash used in investing activities
Redemption of senior notes
Payment of debt extinguishment costs
Proceeds from issuance of senior notes
Net repayment of short-term borrowings
Net cash used in financing activities
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
AVERAGE DAYRATE, UTILIZATION AND OPERATIONAL EFFICIENCY
(Dayrate in thousands)
Average Dayrate (1)
Operational Efficiency (3)
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.
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 two deepwater semisubmersible rigs that are cold stacked.
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 impairment charges related to rigs and associated inventory, gains and losses on the sale of rigs, the fourth quarter 2017 restructuring and separation costs, which include costs associated with the termination of our Brazilian agency agreement, and the third quarter 2017 loss on extinguishment of debt, 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.
Reconciliation of As Reported Operating (Loss) Income to Adjusted Operating Income:
As reported operating (loss) income
Impairments and other charges:
Impairment of rigs(1)
Restructuring and separation costs (2)
(Gain) loss on sale of rigs (3)
Reconciliation of As Reported Net (Loss) Income to Adjusted Net (Loss) Income:
As reported net (loss) income
Loss on extinguishment of senior notes (4)
Tax effect of impairments and other charges:
Impairment of rigs (5)
Restructuring and separation costs (5)
(Gain) loss on sale of rigs (5)
Loss on extinguishment of senior notes (5)
Other discrete items (6)
Adjusted net (loss) income
Reconciliation of As Reported (Loss) Income per Diluted Share to Adjusted Earnings per Diluted Share:
As reported (loss) income per diluted share
Represents the aggregate amount of impairment losses recognized during 2016 and 2017 related to certain of our drilling rigs and associated inventory.
Represents restructuring and separation costs recognized in the fourth quarter of 2017 associated with a plan to restructure our world-wide operations, including a reduction in workforce at our corporate facilities and onshore bases, and costs associated with the termination of our Brazilian agency agreement.
Represents the aggregate amount of (gains) losses recognized during 2016 and 2017 related to the sale of one ultra-deepwater, two deepwater and six mid-water semi-submersible rigs and five jack-up rigs.
Represents the loss recognized during the third quarter of 2017 related to the early retirement of our 5.875% senior notes due 2019.
Represents the income tax effects of the aggregate impairment losses and (gains) losses on the sale of rigs recognized during 2016 and 2017, the aggregate restructuring and separation costs recognized in the fourth quarter of 2017 and the loss on extinguishment of the 2019 senior notes recognized in the third quarter of 2017. The income tax effects have been calculated on a discrete tax basis, utilizing the statutory tax rates for the applicable tax jurisdictions. 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.
Represents the aggregate of certain discrete income tax adjustments recognized during the fourth quarter of 2017, related to the recently enacted U.S. tax reform legislation and 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 AliVice President, Investor Relations & Corporate Development(281) 647-4035
SOURCE Diamond Offshore Drilling, Inc.