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Diamond Offshore Announces Q2 Earnings, Baroness Letter of Intent, Rover & Jack-up Upgrades
HOUSTON--(BUSINESS WIRE)--July 17, 2001--Diamond Offshore Drilling Inc. (NYSE:DO) today reported net income before extraordinary items for the second quarter of 2001 of $51.5 million, or $0.37 per share on a diluted basis, compared to net income for the prior year quarter of $3.6 million, or $0.03 per share on a diluted basis. Revenues for the second quarter of 2001 were $227.3 million compared to revenues of $143.3 million for the second quarter of 2000. Net income for the quarter ended June 30, 2001 was $43.8 million after extraordinary items related to the early retirement of debt, or $0.32 per share on a diluted basis.
For the six months ended June 30, 2001, the Company reported net income before extraordinary items of $88.3 million, or $0.64 per share on a diluted basis compared to net income of $33.1 million, or $0.24 per share on a diluted basis for the same period in 2000. Revenue for the six months ended June 30, 2001 were $432.6 million compared to revenues of $311.1 million for the first six months of 2000. Net income after extraordinary items related to the early retirement of debt was $80.6 million, or $0.59 per share on a diluted basis, for the six months ended June 30, 2001.
Baroness Letter of Intent
Diamond Offshore has received a letter of intent from Murphy Sabah Oil Co., Ltd., a subsidiary of Murphy Oil Corporation, to contract the "Ocean Baroness" to drill two wells, with options for additional wells, in deep waters off Southeast Asia. The "Ocean Baroness" is currently undergoing a Victory-class upgrade -- which is already 70% complete -- to fifth-generation capability. The rig is scheduled for delivery at the end of the first quarter of 2002 at a cost expected to be less than the $180 million originally projected. The contract with Murphy Sabah Oil is to commence upon the completion of the semisubmersible's upgrade.
Rover Upgrade
As part of Diamond Offshore's ongoing efforts to build shareholder value, its board of directors has approved a commitment to upgrade the "Ocean Rover" to specifications similar to the enhanced "Ocean Baroness." It is estimated that this upgrade will cost about $200 million and will take approximately 19 months to complete -- almost 18 months and $150 million less than required to build a new rig of equivalent specification.
Larry Dickerson, Diamond Offshore Drilling Inc. president and chief operating officer, stated, "Based upon the interest received in the "Ocean Baroness," we have decided to deliver another Victory-class rig with fifth-generation capabilities by upgrading the "Ocean Rover." The last newbuild cycle in our industry produced a number of deepwater drillships that are ideal for exploratory drilling. We believe, however, that drilling rigs that are more ideally suited to develop recent deepwater discoveries are currently in deficient supply. We expect the "Ocean Baroness," and now the "Ocean Rover," to be the tools of choice in this next phase of deepwater drilling."
Jack-up Upgrades
Diamond Offshore also announced that it plans to spend approximately $100 million over the next 12-24 months to upgrade six of its jack-up rigs. The "Ocean Titan" and the "Ocean Tower," both 350' independent-leg slot rigs, will be converted to 350' independent-leg cantilever rigs. The "Ocean Spartan," the "Ocean Spur," the "Ocean Sovereign," and the "Ocean Heritage," all 250' independent-leg cantilever rigs, will be upgraded to 300' independent-leg cantilever rigs.
Dickerson remarked further, "We consider the "Ocean Rover" and the jack-up rig upgrades to be a continuation of our long-term strategy of delivering high capacity, cost effective and expeditious upgrades. This strategy began in 1995 with our 3 successful Victory-class upgrades, and was followed by deepwater rig upgrades for the "Ocean Clipper," "Ocean Confidence" and most recently, the "Ocean Baroness." The results of our deepwater upgrade program have given Diamond Offshore the world's second largest fleet of rigs capable of drilling in water depths greater than 5,000 feet. Diamond Offshore continually strives to expand its fleet capabilities in an effort to better serve the needs of our customers and to maximize dayrates and utilization to create value for our shareholders. Our substantial net cash position gives us the flexibility to undertake these projects. Future upgrades to the Diamond Offshore fleet are expected to include additional Victory-class upgrades, as well as other rig upgrades designed to enhance our fleet capabilities."
As of June 30, 2001, there were 133.4 million common shares outstanding. Depending on market conditions, the Company may, from time to time, purchase shares of its outstanding common stock in the open market or otherwise. During the second quarter of 2001, the Company repurchased 100 thousand shares of its common stock at an aggregate cost of $3.3 million.
Diamond Offshore is a leader in deep water drilling. The Company's fleet of 45 offshore drilling rigs consists of 30 semisubmersibles, 14 jack-ups and one drillship. The fleet operates in the waters of six of the world's seven continents.
As previously announced, Diamond Offshore will provide an online, real-time simulcast and rebroadcast of its 2001 second quarter earnings release conference call. The live broadcast of the Diamond Offshore Drilling Inc. quarterly conference call will be available online at www.diamondoffshore.com on July 17, 2001, beginning at 9:00 a.m. Central Time. The online replay will follow immediately and continue for 5 days after the original call. Please go to the Web site at least 15 minutes before the broadcast to register, download and install any necessary audio software.
Statements in this press release that contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected. A discussion of the risk factors that could impact these areas and the Company's overall business and financial performance can be found in the Company's reports filed with the Securities and Exchange Commission. Given these concerns, investors and analysts should not place undue reliance on forward-looking statements.
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 INCOME
(Unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
2001 2000 2001 2000
------ ------ ------ ------
Revenues $227,331 $143,317 $432,556 $311,145
Operating expenses:
Contract drilling 114,556 102,883 223,253 203,706
Depreciation and
amortization 42,171 36,617 83,730 73,492
General and
administrative 6,079 5,915 12,966 11,935
-------- -------- -------- --------
Total operating
expenses 162,806 145,415 319,949 289,133
-------- -------- -------- --------
Operating
income (loss) 64,525 (2,098) 112,607 22,012
Other income
(expense):
Gain on sale of
assets 88 65 209 14,082
Interest income 11,593 9,912 23,280 18,534
Interest expense (6,119) (1,607) (14,437) (2,841)
Other, net 6,927 (597) 10,032 (686)
-------- -------- -------- --------
Income before
income tax expense
and extraordinary
item 77,014 5,675 131,691 51,101
Income tax expense (25,532) (2,038) (43,381) (17,976)
-------- -------- -------- --------
Income before
extraordinary item 51,482 3,637 88,310 33,125
-------- -------- -------- --------
Extraordinary item-
loss on early debt
extinguishment,
less applicable
income tax
of $4,158 (7,722) -- (7,722) --
-------- -------- -------- --------
Net income $43,760 $3,637 $80,588 $33,125
======== ======== ======== ========
Earnings per share:
Basic
Income before
extraordinary
item $0.39 $0.03 $0.66 $0.24
Extraordinary item (0.06) -- (0.06) --
-------- -------- -------- --------
Net $0.33 $0.03 $0.60 $0.24
======== ======== ======== ========
Diluted
Income before
extraordinary
item $0.37 $0.03 $0.64 $0.24
Extraordinary item (0.05) -- (0.05) --
-------- -------- -------- --------
Net $0.32 $0.03 $0.59 $0.24
======== ======== ======== ========
Weighted average
shares outstanding
Common shares 133,447 135,532 133,307 135,610
Dilutive potential
common shares 15,825 -- 9,372 10,828
-------- -------- -------- --------
Total weighted
average shares
outstanding 149,272 135,532 142,679 146,438
======== ======== ======== ========
DIAMOND OFFSHORE DRILLING INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
(Unaudited)
(In thousands)
Three Months Ended
June 30,
------------------
2001 2000
------ ------
REVENUES
High Specification Floaters $82,552 $48,004
Other Semisubmersibles 97,062 67,835
Jack-ups 47,490 27,033
Integrated Services 18 1,350
Other 209 (628)
Eliminations -- (277)
-------- --------
Total Revenues $227,331 $143,317
======== ========
CONTRACT DRILLING EXPENSE
High Specification Floaters $31,476 $24,844
Other Semisubmersibles 56,027 51,594
Jack-ups 26,318 24,627
Integrated Services (181) 881
Other 916 1,214
Eliminations -- (277)
-------- --------
Total Contract Drilling Expense $114,556 $102,883
======== ========
OPERATING INCOME
High Specification Floaters $51,076 $23,160
Other Semisubmersibles 41,035 16,241
Jack-ups 21,172 2,406
Integrated Services 199 469
Other (707) (1,842)
Depreciation and Amortization Expense (42,171) (36,617)
General and Administrative Expense (6,079) (5,915)
-------- --------
Total Operating Income (Loss) $64,525 $(2,098)
======== ========
DIAMOND OFFSHORE DRILLING INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, December 31,
---------- --------------
2001 2000
------ ------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $157,038 $144,456
Marketable securities 788,690 717,678
Accounts receivable 211,544 153,452
Rig inventory and supplies 40,802 40,698
Prepaid expenses and other 56,410 44,673
---------- ----------
Total current assets 1,254,484 1,100,957
Drilling and other property and
equipment, net of accumulated
depreciation 1,915,896 1,902,415
Goodwill, net of accumulated
amortization 46,654 55,205
Other assets 31,793 20,929
---------- ----------
Total assets $3,248,827 $3,079,506
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $143,208 $123,013
Long-term debt 923,757 856,559
Deferred tax liability 338,895 316,627
Other liabilities 14,844 15,454
Stockholders' equity 1,828,123 1,767,853
---------- ----------
Total liabilities and
stockholders' equity $3,248,827 $3,079,506
========== ==========
DIAMOND OFFSHORE DRILLING INC. AND SUBSIDIARIES
AVERAGE DAYRATES AND UTILIZATION
Second Quarter First Quarter Second Quarter
2001 2001 2000
------------------------------------------------------
Dayrate Utili- Dayrate Utili- Dayrate Utili-
zation zation zation
------------------------------------------------------
(Dayrate in thousands)
High
Specification
Floaters $118 96% $112 95% $102 74%
Other
Semi-
submersibles $65 75% $65 63% $61 53%
Jack-ups $44 85% $40 87% $23 93%
--30--EB/ho*
| CONTACT: | Diamond Offshore Drilling Inc., Houston |
|---|---|
| Caren W. Steffes, 281/492-5393 | |