CONSOLIDATED SUBSIDIARY OVERVIEW
HOUSTON, July 31, 2017 /PRNewswire/ -- Diamond Offshore Drilling, Inc. (NYSE: DO) today reported the following results for the second quarter of 2017:
Three Months Ended
Thousands of dollars, except per share data
June 30, 2017
March 31, 2017
Adjusted operating income
Adjusted net income
Earnings per diluted share
Adjusted earnings per diluted share
"I am pleased with our second quarter results with adjusted earnings per share of $0.45," said Marc Edwards, President and Chief Executive Officer. "Though the market remains challenged, Diamond Offshore secured two new contracts this quarter. Further, our operational efficiency continues to improve on the back of Pressure Control by the Hour®."
Results for the second quarter were impacted by impairment charges and related taxes of $46 million or $0.33 per diluted share, relating to the carrying value of two semisubmersible rigs.
As of June 30, 2017, the Company's total contracted backlog was $2.9 billion, which represents 22 rig years of work.
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 844-492-6043 or 478-219-0839, for international callers. The conference ID number is 48696379. 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, 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
(In thousands, except per share data)
Three Months Ended
Six Months Ended
Revenues related to reimbursable expenses
Contract drilling, excluding depreciation
General and administrative
Impairment of assets
Gain on disposition of assets
Total operating expenses
Operating income (loss)
Other income (expense):
Foreign currency transaction (loss) gain
(Loss) income before income tax benefit
Income tax benefit
Net income (loss)
Income (loss) per share
Weighted-average shares outstanding:
Shares of common stock
Dilutive potential shares of common stock
Total weighted-average shares outstanding
RESULTS OF OPERATIONS
Total Contract Drilling Revenue
Revenues Related to Reimbursable Expenses
CONTRACT DRILLING EXPENSE
Total Contract Drilling Expense
OPERATING INCOME (LOSS)
Reimbursable expenses, net
General and administrative expense
Total Operating Income (Loss)
CONDENSED CONSOLIDATED BALANCE SHEETS
Cash and cash equivalents
Accounts receivable, net of allowance for bad debts
Prepaid expenses and other current assets
Asset 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
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
(Repayment of) proceeds from short-term borrowings, net
Net cash (used in) provided by 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 three 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 second quarter 2017 and 2016 asset impairments, 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 Income (Loss) to Adjusted Operating Income:
As reported operating income (loss)
Impairments and other charges:
Impairment of rigs and associated inventory (1)
Reconciliation of As Reported Net Income (Loss) to Adjusted Net Income:
As reported net income (loss)
Tax effect of impairments and other charges:
Impairment of rigs and associated inventory (2)
Discrete tax items (3)
Reconciliation of As Reported Income (Loss) per Diluted Share to Adjusted Earnings per Diluted Share:
As reported income (loss) per diluted share
Other discrete tax items (3)
Represents the aggregate amount of impairment losses recognized during (i) the second quarter of 2017 related to two semisubmersible drilling rigs and (ii) the second quarter of 2016 related to eight drilling rigs and associated inventory.
Represents the income tax effects of the aggregate impairment losses recognized in the second quarters of 2017 and 2016. The income tax effects of the impairment losses have been calculated on a discrete tax basis, utilizing the statutory tax rates for the applicable tax jurisdictions of the rig-owning companies. 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 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 AliSr. Director, Investor Relations & Corporate Development(281) 647-4035
SOURCE Diamond Offshore Drilling, Inc.