Press Release
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Diamond Offshore Drilling Inc. Announces Second Quarter 2004 Results
HOUSTON--(BUSINESS WIRE)--July 21, 2004--Diamond Offshore Drilling Inc. (NYSE:DO) today reported a net loss for the second quarter of 2004 of $10.5 million, or $0.08 per share on a diluted basis, compared with a net loss of $16.7 million, or $0.13 per share on a diluted basis in the same period a year earlier. Revenues for the second quarter of 2004 were $184.9 million, compared with revenues of $163.2 million for the second quarter of 2003.
For the six months ended June 30, 2004, the Company reported a net loss of $21.5 million, or $0.17 per share on a diluted basis compared with a net loss of $38.3 or $0.29 per share on a diluted basis for the same period in 2003. Revenue for the six months ended June 30, 2004 was $369.1 million, compared with $309.3 million for the first six months of 2003.
Results for the quarter were impacted by planned regulatory surveys as well as lower utilization of several of the Company's mid-water and deepwater units in the Gulf of Mexico. In particular, the semisubmersible rig Ocean Alliance experienced a series of sub-sea and electrical problems after returning to work following a scheduled regulatory survey and sub-sea equipment upgrade. As a result, gross revenue was negatively impacted by $8.9 million and net income, including approximately $1.5 million of repair costs on the Ocean Alliance, by $7.8 million ($0.06 per share on a diluted basis). The Alliance has continued to operate on term contract for Petrobras in Brazil since returning to work on July 2.
Regulatory surveys and related costs caused higher than normal contract drilling expense during the quarter. A survey for the Ocean Vanguard, which was scheduled for the second quarter of 2005, was accelerated in conjunction with that rig returning to work in the U.K. sector of the North Sea. In addition, planned regulatory surveys for the Ocean Yatzy and the Ocean Confidence were conducted during the period, and a survey for the Ocean Winner, which extended into the second quarter, was completed. Together, costs for the four surveys and related expenses totaled approximately $6 million for the period.
Diamond Offshore President and Chief Operating Officer Larry Dickerson noted that, "The market for all classes of our jack-up rigs in the U.S. Gulf of Mexico experienced firming utilization and improving dayrates during the second quarter of 2004. As a result, utilization averaged 90% in the period compared with 85% in the first quarter of 2004, and dayrates increased an average of approximately $1,000 per day across our jack-up fleet to average approximately $37,000. The gains also factored into our decision in late June to reactivate the Ocean Champion from cold-stack status. The rig is currently in Lake Charles, La., being prepared for a return to work anticipated in mid-August 2004.
"Outside of the U.S. Gulf, markets for our rigs have seen generally increasing demand and improving dayrates. Both the North Sea and Australasia have shown recent strength, and additional rigs are also being drawn to the Mid-East," Mr. Dickerson said.
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 2004 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 21, 2004, 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 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, and are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those anticipated or 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 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
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Revenues:
Contract drilling $176,685 $157,038 $353,925 $296,897
Revenues related to
reimbursable expenses 8,261 6,162 15,219 12,452
--------- --------- --------- ---------
Total revenues 184,946 163,200 369,144 309,349
--------- --------- --------- ---------
Operating expenses:
Contract drilling 133,483 124,606 268,161 238,276
Reimbursable expenses 7,519 5,525 13,753 11,263
Depreciation 44,554 41,553 89,074 88,830
General and administrative 8,760 8,214 17,549 15,414
Loss (gain) on sale of
assets 130 (57) (195) (58)
--------- --------- --------- ---------
Total operating expenses 194,446 179,841 388,342 353,725
--------- --------- --------- ---------
Operating loss (9,500) (16,641) (19,198) (44,376)
Other income (expense):
Interest income 3,114 3,337 4,682 7,493
Interest expense (6,373) (5,378) (12,727) (10,953)
Gain (loss) on sale of
marketable securities 283 (1,071) 258 (1,132)
Other, net (257) 1,290 (411) 3,032
--------- --------- --------- ---------
Loss before income tax
benefit (12,733) (18,463) (27,396) (45,936)
Income tax benefit 2,238 1,776 5,929 7,683
--------- --------- --------- ---------
Net loss $(10,495) $(16,687) $(21,467) $(38,253)
========= ========= ========= =========
Loss per share:
Basic $(0.08) $(0.13) $(0.17) $(0.29)
========= ========= ========= =========
Diluted $(0.08) $(0.13) $(0.17) $(0.29)
========= ========= ========= =========
Weighted average shares
outstanding:
Shares of common stock 129,322 130,366 129,322 130,336
Dilutive potential shares
of common stock - - - -
--------- --------- --------- ---------
Total weighted average
shares outstanding 129,322 130,366 129,322 130,336
========= ========= ========= =========
DIAMOND OFFSHORE DRILLING INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
(Unaudited)
(In thousands)
Three Months Ended
June 30,
-------------------
2004 2003
--------- ---------
CONTRACT DRILLING REVENUE
High Specification Floaters $59,088 $72,660
Other Semisubmersibles 75,128 61,265
Jack-ups 42,304 23,116
Other 165 (3)
Eliminations -- --
--------- ---------
Total Contract Drilling Revenue $176,685 $157,038
========= =========
Revenues Related to Reimbursable Expenses $8,261 $6,162
========= =========
CONTRACT DRILLING EXPENSE
High Specification Floaters $40,668 $38,555
Other Semisubmersibles 67,960 57,810
Jack-ups 24,082 27,012
Integrated Services -- 841
Other 773 388
Eliminations -- --
--------- ---------
Total Contract Drilling Expense $133,483 $124,606
========= =========
Reimbursable Expenses $7,519 $5,525
========= =========
OPERATING LOSS
High Specification Floaters $18,420 $34,105
Other Semisubmersibles 7,168 3,455
Jack-ups 18,222 (3,896)
Integrated Services -- (841)
Other (608) (391)
Reimbursables, net 742 637
Depreciation Expense (44,554) (41,553)
General and Administrative Expense (8,760) (8,214)
(Loss) gain on Sale of Assets (130) 57
--------- ---------
Total Operating Loss $(9,500) $(16,641)
========= =========
DIAMOND OFFSHORE DRILLING INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, December 31,
-------------- --------------
2004 2003
-------------- --------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $129,327 $106,345
Investments and marketable securities 35,755 503,995
Receivable from sale of marketable
securities 448,992 --
Accounts receivable 147,047 154,124
Rig inventory and supplies 48,296 48,035
Prepaid expenses and other 32,531 22,764
-------------- --------------
Total current assets 841,948 835,263
Drilling and other property and
equipment, net of accumulated
depreciation 2,220,509 2,257,876
Goodwill, net of accumulated
amortization 4,291 11,099
Other assets 29,920 30,781
-------------- --------------
Total assets $3,096,668 $3,135,019
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities 99,372 100,000
Long-term debt 935,996 928,030
Deferred tax liability 377,312 384,505
Other liabilities 41,146 42,004
Stockholders' equity 1,642,842 1,680,480
-------------- --------------
Total liabilities and stockholders'
equity $3,096,668 $3,135,019
============== ==============
DIAMOND OFFSHORE DRILLING INC. AND SUBSIDIARIES
AVERAGE DAYRATES AND UTILIZATION
Second Quarter First Quarter Second Quarter
2004 2004 2003
---------------------------------------------------------------------
Utili- Utili- Utili-
Dayrate zation Dayrate zation Dayrate zation
---------------------------------------------------------------------
(Dayrate in thousands)
High
Specification
Floaters $98 66% $93 77% $96 92%
Other Semi-
submersibles $55 71% $57 66% $58 52%
Jack-ups $37 90% $36 85% $27 68%
CONTACT: Diamond Offshore Drilling Inc., Houston
Les Van Dyke, 281-492-5370
SOURCE: Diamond Offshore Drilling Inc.