LOEWS CORPORATION 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 Change
------------ ------------- -------------- ------
Total
revenues $399,289 $374,226 7%
Operating
income 20,824 50,859 (59)%
Adjusted
operating
income 92,092 50,859 81%
Net income 15,949 23,539 (32)%
Adjusted net
income 62,273 23,539 165%
Earnings per
diluted
share $0.12 $0.17 (29)%
Adjusted
earnings
per diluted
share $0.45 $0.17 165%
"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.
CONFERENCE CALL
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).
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, 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 Six Months Ended
June 30, June 30,
-------- --------
2017 2016 2017 2016
---- ---- ---- ----
Revenues:
Contract drilling $392,170 $357,409 $755,727 $800,932
Revenues related to reimbursable expenses 7,119 31,338 17,788 58,358
Total revenues 399,289 388,747 773,515 859,290
------- ------- ------- -------
Operating expenses:
Contract drilling, excluding depreciation 196,217 198,336 399,740 411,177
Reimbursable expenses 6,790 16,527 17,268 43,318
Depreciation 85,982 105,016 179,211 209,256
General and administrative 19,010 18,139 36,493 33,537
Impairment of assets 71,268 678,145 71,268 678,145
Gain on disposition of assets (802) (747) (2,148) (1,043)
Total operating expenses 378,465 1,015,416 701,832 1,374,390
------- --------- ------- ---------
Operating income (loss) 20,824 (626,669) 71,683 (515,100)
Other income (expense):
Interest income 396 269 571 442
Interest expense (27,251) (24,156) (54,847) (49,672)
Foreign currency transaction (loss) gain (927) (3,513) 160 (7,121)
Other, net (62) (12,046) (125) (11,468)
--- ------- ---- -------
(Loss) income before income tax benefit (7,020) (666,115) 17,442 (582,919)
Income tax benefit 22,969 76,178 22,046 80,407
------ ------ ------ ------
Net income (loss) $15,949 $(589,937) $39,488 $(502,512)
======= ========= ======= =========
Income (loss) per share $0.12 $(4.30) $0.29 $(3.66)
===== ====== ===== ======
Weighted-average shares outstanding:
Shares of common stock 137,224 137,170 137,199 137,166
Dilutive potential shares of common stock 3 - 36 -
--- --- --- ---
Total weighted-average shares outstanding 137,227 137,170 137,235 137,166
======= ======= ======= =======
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
(Unaudited)
(In thousands)
Three Months Ended
------------------
June 30, March 31, June 30,
2017 2017 2016
---- ---- ----
REVENUES
Floaters:
Ultra-Deepwater $282,535 $243,465 $214,102
Deepwater 66,905 67,943 67,191
Mid-Water 36,543 48,285 56,694
------ ------ ------
Total Floaters 385,983 359,693 337,987
Jack-ups 6,187 3,864 19,422
----- ----- ------
Total Contract Drilling Revenue $392,170 $363,557 $357,409
======== ======== ========
Revenues Related to Reimbursable Expenses $7,119 $10,669 $31,338
====== ======= =======
CONTRACT DRILLING EXPENSE
Floaters:
Ultra-Deepwater $136,661 $141,873 $127,185
Deepwater 31,340 33,080 34,776
Mid-Water 15,771 19,267 25,862
------ ------ ------
Total Floaters 183,772 194,220 187,823
Jack-ups 6,978 5,323 6,876
Other 5,467 3,980 3,637
----- ----- -----
Total Contract Drilling Expense $196,217 $203,523 $198,336
======== ======== ========
Reimbursable Expenses $6,790 $10,478 $16,527
====== ======= =======
OPERATING INCOME (LOSS)
Floaters:
Ultra-Deepwater $145,874 $101,592 $86,917
Deepwater 35,565 34,863 32,415
Mid-Water 20,772 29,018 30,832
------ ------ ------
Total Floaters 202,211 165,473 150,164
Jack-ups (791) (1,459) 12,546
Other (5,467) (3,980) (3,637)
Reimbursable expenses, net 329 191 14,811
Depreciation (85,982) (93,229) (105,016)
General and administrative expense (19,010) (17,483) (18,139)
Impairment of assets (71,268) - (678,145)
Gain on disposition of assets 802 1,346 747
--- ----- ---
Total Operating Income (Loss) $20,824 $50,859 $(626,669)
======= ======= =========
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
June 30, December 31,
2017 2016
---- ----
ASSETS
Current assets:
Cash and cash equivalents $160,969 $156,233
Accounts receivable, net of
allowance for bad debts 311,517 247,028
Prepaid expenses and other
current assets 107,690 102,146
Asset held for sale - 400
--- ---
Total current assets 580,176 505,807
Drilling and other property and equipment, net of
accumulated
depreciation 5,490,158 5,726,935
Other assets 122,929 139,135
------- -------
Total assets $6,193,263 $6,371,877
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ - $104,200
Other current liabilities 157,091 236,299
Long-term debt 1,981,458 1,980,884
Deferred tax liability 143,619 197,011
Other liabilities 119,277 103,349
Stockholders' equity 3,791,818 3,750,134
--------- ---------
Total liabilities and
stockholders' equity $6,193,263 $6,371,877
========== ==========
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended
June 30,
--------
2017 2016
---- ----
Operating activities:
Net income (loss) $39,488 $(502,512)
Adjustments to reconcile net income (loss) to net
cash
provided by operating activities
Depreciation 179,211 209,256
Loss on impairment of
assets 71,268 678,145
Deferred tax provision (54,425) (162,531)
Other 28,883 7,093
Net changes in operating
working capital (87,544) 76,019
Net cash provided by
operating activities 176,881 305,470
------- -------
Investing activities:
Capital expenditures
(including rig
construction) (71,889) (533,412)
Proceeds from disposition
of assets, net of disposal
costs 4,077 167,298
Other 23 4,592
--- -----
Net cash used in investing
activities (67,789) (361,522)
------- --------
Financing activities:
(Repayment of) proceeds
from short-term
borrowings, net (104,200) 40,711
Other (156) (408)
Net cash (used in) provided
by financing activities (104,356) 40,303
-------- ------
Net change in cash and cash
equivalents 4,736 (15,749)
Cash and cash equivalents,
beginning of period 156,233 119,028
------- -------
Cash and cash equivalents,
end of period $160,969 $103,279
======== ========
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
AVERAGE DAYRATE, UTILIZATION AND OPERATIONAL EFFICIENCY
(Dayrate in thousands)
Second Quarter First Quarter Second Quarter
2017 2017 2016
---- ---- ----
Average Dayrate Utilization Operational Efficiency Average Dayrate Utilization Operational Efficiency Average Dayrate Utilization Operational Efficiency
(1) (2) (3) (1) (2) (3) (1) (2) (3)
--- --- --- --- --- --- --- --- ---
Ultra-Deepwater
Floaters $436 59% 97.1% $450 50% 91.1% $452 47% 86.7%
Deepwater
Floaters $270 45% 96.0% $260 48% 96.6% $301 35% 100.0%
Mid-Water
Floaters $397 20% 100.0% $268 40% 100.0% $313 30% 99.4%
Jack-ups $75 86% 90.8% $75 29% 99.9% $335 13% 100.0%
Fleet Total 96.6% 94.3% 92.7%
---- ---- ----
(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
ultra-
deepwater and
three deepwater
semisubmersible
rigs 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.
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.
Three Months Ended
------------------
June 30, June 30,
2017 2016
---- ----
Reconciliation of As Reported Operating Income (Loss) to
Adjusted Operating Income:
(In thousands)
As reported operating income (loss) $20,824 $(626,669)
Impairments and other charges:
Impairment of rigs and associated inventory (1) 71,268 678,145
------ -------
Adjusted operating income $92,092 $51,476
======= =======
Reconciliation of As Reported Net Income (Loss) to
Adjusted Net Income:
(In thousands)
As reported net income (loss) $15,949 $(589,937)
Impairments and other charges:
Impairment of rigs and associated inventory (1) 71,268 678,145
Tax effect of impairments and other charges:
Impairment of rigs and associated inventory (2) (24,944) (143,165)
Discrete tax items (3) - 77,252
--- ------
Adjusted net income $62,273 $22,295
======= =======
Three Months Ended
------------------
June 30, June 30,
2017 2016
---- ----
Reconciliation of As Reported Income (Loss) per Diluted
Share to Adjusted Earnings per Diluted Share:
As reported income (loss) per diluted share $0.12 $(4.30)
Impairments and other charges:
Impairment of rigs and associated inventory (1) 0.51 4.94
Tax effect of impairments and other charges:
Impairment of rigs and associated inventory (2) (0.18) (1.04)
Other discrete tax items (3) - 0.56
--- ----
Adjusted earnings per diluted share $0.45 $0.16
===== =====
(1) 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.
(2) 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.
(3) 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 Ali
Sr. Director, Investor Relations & Corporate Development
(281) 647-4035
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SOURCE Diamond Offshore Drilling, Inc.
