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Diamond Offshore Drilling Inc. Announces Fourth Quarter/Year End 2004 Results
HOUSTON--(BUSINESS WIRE)--Feb. 9, 2005--Diamond Offshore Drilling Inc. (NYSE:DO) today reported net income for the fourth quarter of 2004 of $11.3 million, or $0.09 per share on a diluted basis, compared with net income of $1.3 million, or $0.01 per share on a diluted basis, in the same period a year earlier. Revenues for the fourth quarter of 2004 were $237.3 million, compared with revenues of $187.7 million for the fourth quarter of 2003.
Pretax results for the fourth quarter included other income of $11.4 million resulting from the settlement of a lawsuit against an equipment manufacturer. Significant items offsetting pretax income included revenue reductions of $7.2 million related to downtime from storm damage, $8.6 million in reactivation costs and operating expense to bring the mid-water semisubmersible Ocean Voyager out of cold-stack, and $3.4 million related to a combination of storm damage and higher operating costs due to the relocation of the Ocean Vanguard to Norway. The Company also recorded an additional charge to tax expense in the fourth quarter that was $3.8 million higher than the effective 27.7% tax rate experienced in the third quarter and anticipated for the fourth quarter of 2004. The increased charge resulted from a change in the mix between domestic and international earnings as well as a change in the mix of international tax jurisdictions during the quarter.
For the year ended Dec. 31, 2004, the Company reported a net loss of $7.2 million, or $0.06 per share on a diluted basis, compared with a net loss of $48.4 million, or $0.37 per share on a diluted basis, for the year ended Dec. 31, 2003. Revenue for the year ended Dec. 31, 2004 was $814.7 million, compared with $680.9 million for the year 2003.
The overall market for the Company's drilling rigs continued to improve in the fourth quarter of 2004 and early in 2005. Particular strength was evident in the Gulf of Mexico (GOM) and the Southeast Asia floater markets, where effective industry utilization is near 100%. In the GOM, the dayrate on one of our mid-water semisubmersibles has reached $110,000 for work beginning in early June 2005. In addition, dayrates for work commencing in the third quarter of 2005 on two of Diamond Offshore's 4th generation semisubmersibles located in the GOM are at $150,000 per day. The market for jack-up rigs in the GOM has also continued to improve, with dayrates for the Company's 300-ft. units in the high $40,000s to low $50,000s and dayrates for our 350-ft. jack-ups in the mid $50,000s. Additionally, as previously announced, the Company has signed two Letters of Intent (LOI) for contracts totaling approximately $243 million and covering a total of 1,315 days for the 5th generation semisubmersibles Ocean Baroness and Ocean Rover. Both contracts are expected to commence late in the third quarter or early in the fourth quarter of 2005. Under the LOIs, the Ocean Baroness is expected to relocate to the GOM, while the Ocean Rover would remain in Southeast Asia.
Larry Dickerson, president and chief operating officer, said, "We remain confident in the strength of our markets in 2005 and are encouraged as we begin to build backlog extending into 2006, 2007 and beyond."
Diamond Offshore provides contract drilling services to the energy industry around the globe and is a leader in deepwater drilling. The Company's fleet of 45 offshore drilling rigs consists of 30 semisubmersibles, 14 jack-ups and one drillship.
As previously announced, Diamond Offshore will provide a simulcast and rebroadcast of its fourth quarter and year end 2004 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 Feb. 9, 2005, beginning at 9:00 a.m. Central time. The online replay will follow immediately and continue for the remainder of the first calendar quarter 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 may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include, but are not limited to, statements concerning commitments for drilling work or contracts, future dayrates, future contract revenues and future contracts. Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those anticipated or projected, including the risk that a Letter of Intent may not result in a binding contract or the risk that the markets for the Company's services will not continue to improve. A discussion of additional risk factors that could impact these areas and the Company's overall business and financial performance can be found in the Company's reports and other filings with the Securities and Exchange Commission. These factors include, among others, general economic and business conditions, casualty losses, industry fleet capacity, changes in foreign and domestic oil and gas exploration and production activity, competition, changes in foreign, political, social and economic conditions, regulatory initiatives and compliance with governmental regulations, customer preferences and various other matters, many of which are beyond the Company's control. Given these concerns, 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
AVERAGE DAYRATES AND UTILIZATION
Fourth Quarter Third Quarter Fourth Quarter
2004 2004 2003
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Utili- Utili- Utili-
Dayrate zation Dayrate zation Dayrate zation
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(Dayrate in thousands)
High
Specification
Floaters $94 95% $92 89% $97 84%
Other
Semi-
submersibles $63 81% $55 75% $56 69%
Jack-ups $42 88% $40 89% $30 72%
DIAMOND OFFSHORE DRILLING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
----------------------------------------
2004 2003 2004 2003
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Revenues:
Contract drilling $227,870 $180,278 $782,405 $652,098
Revenues related to
reimbursable expenses 9,450 7,407 32,257 28,843
--------- --------- --------- ---------
Total revenues 237,320 187,685 814,662 680,941
--------- --------- --------- ---------
Operating expenses:
Contract drilling 159,860 122,629 568,628 487,839
Reimbursable expenses 8,526 6,579 28,899 26,050
Depreciation 44,718 43,492 178,835 175,578
General and administrative 8,482 6,273 32,759 28,868
Write down of rigs -- -- -- 1,598
Loss (gain) on sale of
assets 272 (522) 1,613 (669)
--------- --------- --------- ---------
Total operating expenses 221,858 178,451 810,734 719,264
--------- --------- --------- ---------
Operating income (loss) 15,462 9,234 3,928 (38,323)
Other income (expense):
Interest income 4,624 1,772 12,205 12,007
Interest expense (9,873) (6,543) (30,257) (23,928)
Gain (loss) on sale of
marketable securities 23 426 254 (6,884)
Other, net 10,670 -- 10,337 2,891
--------- --------- --------- ---------
Income (loss) before income
tax (expense) benefit 20,906 4,889 (3,533) (54,237)
Income tax (expense) benefit (9,623) (3,587) (3,710) 5,823
--------- --------- --------- ---------
Net income (loss) $11,283 $1,302 $(7,243) $(48,414)
========= ========= ========= =========
Earnings (loss) per share:
Basic $0.09 $0.01 $(0.06) $(0.37)
========= ========= ========= =========
Diluted $0.09 $0.01 $(0.06) $(0.37)
========= ========= ========= =========
Weighted average shares
outstanding:
Shares of common stock 128,545 130,005 129,021 130,253
Dilutive potential shares of
common stock 108 -- -- --
--------- --------- --------- ---------
Total weighted average
shares outstanding 128,653 130,005 129,021 130,253
========= ========= ========= =========
DIAMOND OFFSHORE DRILLING INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
(In thousands)
Three Months Ended
December 31,
-----------------------------
2004 2003
-----------------------------
CONTRACT DRILLING REVENUE
High Specification Floaters $82,524 $74,862
Other Semisubmersibles 93,433 74,711
Jack-ups 50,000 28,086
Other 1,913 2,619
-----------------------------
Total Contract Drilling Revenue $227,870 $180,278
=============================
Revenues Related to Reimbursable
Expenses $9,450 $7,407
=============================
CONTRACT DRILLING EXPENSE
High Specification Floaters $45,347 $40,093
Other Semisubmersibles 84,591 59,790
Jack-ups 28,093 22,365
Integrated Services -- (419)
Other 1,829 800
-----------------------------
Total Contract Drilling Expense $159,860 $122,629
=============================
Reimbursable Expenses $8,526 $6,579
=============================
OPERATING INCOME
High Specification Floaters $37,177 $34,769
Other Semisubmersibles 8,842 14,921
Jack-ups 21,907 5,721
Integrated Services -- 419
Other 84 1,819
Reimbursables, net 924 828
Depreciation Expense (44,718) (43,492)
General and Administrative Expense (8,482) (6,273)
(Loss) Gain on Sale and Disposal of
Assets (272) 522
-----------------------------
Total Operating Income $15,462 $9,234
=============================
DIAMOND OFFSHORE DRILLING INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
-------------- --------------
2004 2003
-------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $266,007 $106,345
Investments and marketable securities 661,849 503,995
Accounts receivable 187,558 154,124
Rig inventory and supplies 47,590 48,035
Prepaid expenses and other 32,677 22,764
-------------- --------------
Total current assets 1,195,681 835,263
Drilling and other property and
equipment, net of accumulated
depreciation 2,154,593 2,257,876
Goodwill, net of accumulated
amortization -- 11,099
Other assets 29,112 30,781
-------------- --------------
Total assets $3,379,386 $3,135,019
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $484,102 $11,969
Other current liabilities 129,805 88,031
-------------- --------------
Total current liabilities 613,907 100,000
Long-term debt 709,413 928,030
Deferred tax liability 369,722 384,505
Other liabilities 60,516 42,004
Stockholders' equity 1,625,828 1,680,480
-------------- --------------
Total liabilities and stockholders'
equity $3,379,386 $3,135,019
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CONTACT: Diamond Offshore Drilling Inc., Houston
Les Van Dyke, 281-492-5370
SOURCE: Diamond Offshore Drilling Inc.