LOEWS CORPORATION 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 Twelve Months Ended
December 31, 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) 79,874 (360,025) (468,299) (381,348)
benefit
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,
December 31, September 30,
------------ -------------
2015
2016 2016
---- ----
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 678,145
inventory(1)
-- -- 860,441
Restructuring and separation costs(2) -- -- -- 9,778
Tax effect of impairments and other
charges:
Impairment of rigs and associated (143,165) (167,129)
inventory(3)
-- --
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 $0.53 $0.10 (3.03) $
share (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 (1.04)
inventory(3)
-- -- (1.22)
Restructuring and separation costs(4) -- -- -- (.02)
Other discrete items(5) -- -- 0.56 --
--- --- ---- ---
3.10
Adjusted earnings per diluted share $0.53 $0.10 $1.43 $
===== ===== ===== ===
((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 Third Quarter Fourth Quarter
2016 2016 2015
---- ---- ----
Average Operational Efficiency Average Operational Efficiency Average Operational Efficiency
Dayrate Utilization (2) (3) Dayrate (1) Utilization (2) (3) Dayrate Utilization (2) (3)
(1)
(1)
--- ---
Ultra- $456 49% 92.0% $452 48% 87.1% $531 70% 95.5%
Deepwater Floaters
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
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/diamond-offshore-announces-fourth-quarter-2016-results-300402268.html
SOURCE Diamond Offshore Drilling, Inc.
