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Diamond Offshore Drilling Inc. Announces Third Quarter 2004 Results
HOUSTON--(BUSINESS WIRE)--Oct. 19, 2004--Diamond Offshore Drilling Inc. (NYSE:DO) today reported net income for the third quarter of 2004 of $2.9 million, or $0.02 per share on a diluted basis, compared with a net loss of $11.5 million, or $0.09 per share on a diluted basis, in the same period a year earlier. Revenues for the third quarter of 2004 were $208.2 million, compared with revenues of $183.9 million for the third quarter of 2003.
Results for the period were negatively impacted by $.04 per share for the deductible portion of insurance claims made for damage caused by Hurricane Ivan. Additionally, the Ocean Alliance incurred 29 days of downtime during the quarter due to equipment repairs, which negatively impacted net income by $.02 per share. The Company also recorded a provision for potential labor cost increases in the U.K. related to mandated legislative benefits that negatively impacted net income by $.01 per share. In addition, the Company incurred reactivation costs to bring the jack-up Ocean Champion out of cold-stack and into the U.S. Gulf of Mexico ("GOM") market, which negatively impacted net income by $.01 per share.
For the nine months ended Sept. 30, 2004, the Company reported a net loss of $18.5 million, or $0.14 per share on a diluted basis, compared with a net loss of $49.7 million or $0.38 per share on a diluted basis for the same period in 2003. Revenue for the nine months ended Sept. 30, 2004 was $577.3 million, compared with $493.3 million for the first nine months of 2003.
The Company has received contracts and Letters of Intent for nine of its semisubmersible units for work in the GOM and North Sea beginning in the fourth quarter of 2004 and early 2005 at rates substantially higher than average rates recorded for these units in the third quarter of 2004. Commitments for Diamond Offshore's fourth generation rigs have reached as high as $140,000 per day for GOM work beginning in 2005. Improving dayrates were a factor in the Company's decision to begin reactivation of the Ocean Voyager for the mid-water GOM market. The Voyager is expected to be ready to begin work by mid-December and has a contract for an initial well at a dayrate in the low $70,000s. Reactivation costs are estimated to be approximately $8 million.
In the North Sea, the Ocean Vanguard recently arrived in Norway where it began an approximate 15 month series of contracts for a dayrate in the low $140,000s. Both the Ocean Guardian and Ocean Princess have one year extensions in the U.K. at $80,000 dayrates. The Ocean Nomad is in the process of mobilizing from West Africa to the U.K. where, following shipyard work, it will begin a one-year contract at a dayrate of $80,000.
As of Sept. 30, 2004, there were 128.5 million shares of Diamond Offshore common stock outstanding. During the third quarter of 2004, the Company repurchased 782,200 shares of its common stock at an aggregate cost of $18.1 million, or $23.11 per share. Depending on market conditions, the Company may, from time to time, purchase shares of its outstanding common stock in the open market or otherwise.
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 is located in the waters of six of the world's seven continents.
As previously announced, Diamond Offshore will provide a simulcast and rebroadcast of its third quarter 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 Oct. 19, 2004, beginning at 9:00 a.m. Central time. The online replay will follow immediately and continue for the remainder of the fourth 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, the timing and expense of the Ocean Voyager's reactivation, future contracts and share repurchases. 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. 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
AVERAGE DAYRATES AND UTILIZATION
Third Quarter Second Quarter Third Quarter
2004 2004 2003
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Utili- Utili- Utili-
Dayrate zation Dayrate zation Dayrate zation
---------------------------------------------------------------------
(Dayrate in thousands)
High
Specification
Floaters $92 89% $98 66% $97 90%
Other
Semi-
submersibles $55 75% $55 71% $60 57%
Jack-ups $40 89% $37 90% $28 64%
DIAMOND OFFSHORE DRILLING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Nine Months
Ended Ended
Sept. 30, Sept. 30,
---------------------------------------
2004 2003 2004 2003
---- ---- ---- ----
Revenues:
Contract drilling $200,610 $174,923 $554,535 $471,820
Revenues related to
reimbursable expenses 7,588 8,984 22,807 21,436
--------- --------- --------- ---------
Total revenues 208,198 183,907 577,342 493,256
--------- --------- --------- ---------
Operating expenses:
Contract drilling 140,607 126,934 408,768 365,210
Reimbursable expenses 6,620 8,208 20,373 19,471
Depreciation 45,043 43,256 134,117 132,086
General and administrative 6,728 7,181 24,277 22,595
Loss on sale and disposal of
assets 1,536 1,509 1,341 1,451
--------- --------- --------- ---------
Total operating expenses 200,534 187,088 588,876 540,813
--------- --------- --------- ---------
Operating income (loss) 7,664 (3,181) (11,534) (47,557)
Other income (expense):
Interest income 2,899 2,742 7,581 10,235
Interest expense (7,657) (6,432) (20,384) (17,385)
Gain (loss) on sale of
marketable securities (27) (6,179) 231 (7,310)
Other, net 78 (140) (333) 2,891
--------- --------- --------- ---------
Income (loss) before income
tax expense (benefit) 2,957 (13,190) (24,439) (59,126)
Income tax benefit (expense) (16) 1,727 5,913 9,410
--------- --------- --------- ---------
Net income (loss) $2,941 $(11,463) $(18,526) $(49,716)
========= ========= ========= =========
Earnings (loss) per share:
Basic $0.02 $(0.09) $(0.14) $(0.38)
========= ========= ========= =========
Diluted $0.02 $(0.09) $(0.14) $(0.38)
========= ========= ========= =========
Weighted average shares
outstanding:
Shares of common stock 128,899 130,366 129,180 130,336
Dilutive potential shares
of common stock 42 - - -
--------- --------- --------- ---------
Total weighted average
shares outstanding 128,941 130,366 129,180 130,336
========= ========= ========= =========
DIAMOND OFFSHORE DRILLING INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
(Unaudited)
(In thousands)
Three Months Ended
Sept. 30,
----------------------------
2004 2003
---------------- -----------
CONTRACT DRILLING REVENUE
High Specification Floaters $75,502 $79,688
Other Semisubmersibles 79,357 72,588
Jack-ups 45,268 23,006
Other 483 (359)
Eliminations -- --
---------------- -----------
Total Contract Drilling Revenue $200,610 $174,923
================ ===========
Revenues Related to Reimbursable Expenses $7,588 $8,984
================ ===========
CONTRACT DRILLING EXPENSE
High Specification Floaters $43,697 $39,974
Other Semisubmersibles 62,185 62,494
Jack-ups 34,354 23,677
Integrated Services -- (6)
Other 371 795
Eliminations -- --
---------------- -----------
Total Contract Drilling Expense $140,607 $126,934
================ ===========
Reimbursable Expenses $6,620 $8,208
================ ===========
OPERATING INCOME (LOSS)
High Specification Floaters $31,805 $39,714
Other Semisubmersibles 17,172 10,094
Jack-ups 10,914 (671)
Integrated Services -- 6
Other 112 (1,154)
Reimbursables, net 968 776
Depreciation Expense (45,043) (43,256)
General and Administrative Expense (6,728) (7,181)
(Loss) on Sale and Disposal of Assets (1,536) (1,509)
---------------- -----------
Total Operating Income (Loss) $7,664 $(3,181)
================ ===========
DIAMOND OFFSHORE DRILLING INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Sept. 30, Dec. 31,
-------------- -------------
2004 2003
-------------- -------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $213,875 $106,345
Investments and marketable securities 669,284 503,995
Accounts receivable 153,952 154,124
Rig inventory and supplies 48,099 48,035
Prepaid expenses and other 34,144 22,764
-------------- -------------
Total current assets 1,119,354 835,263
Drilling and other property and equipment,
net of accumulated depreciation 2,190,616 2,257,876
Goodwill 887 11,099
Other assets 30,719 30,781
-------------- -------------
Total assets $3,341,576 $3,135,019
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $479,190 $11,969
Other current liabilities 104,646 88,031
-------------- -------------
Total current liabilities 583,836 100,000
Long-term debt 722,220 928,030
Deferred tax liability 373,584 384,505
Other liabilities 42,111 42,004
Stockholders' equity 1,619,825 1,680,480
-------------- -------------
Total liabilities and stockholders'
equity $3,341,576 $3,135,019
============== =============
CONTACT: Diamond Offshore Drilling Inc., Houston
Les Van Dyke, 281-492-5370
SOURCE: Diamond Offshore Drilling Inc.